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06-26-06 Special CITY OF RICHFIELD, MINNESOTA MONDAY, JUNE 26, 2006 SPECIAL HOUSING AND REDEVELOPMENT AUTHORITY MEETING RICHFIELD CITY HALL COUNCIL CHAMBERS 6700 PORTLAND AVENUE 7:00 P.M. AGENDA Call to order 1. Approval of minutes of (1) Regular HRA Meeting of April 17, 2006; (2) Special Concurrent HRAlCity Council/Planning Commission Vvorksession of April 24, 2006; (3) Special HRA Meeting of May 2,2006; and (4) Special HRA Meeting of May 30, 2006 Notes: 2. HRA approval of agenda 3. Consent Calendar contains several separate items which are acted upon by the HRA in one motion. Once the Consent Calendar has been approved, the individual items and recommended actions have also been approved. No further HRA action is necessary. However, any HRA Commissioner may request that an item be removed from the Consent Calendar and placed on the regular agenda for HRA discussion and action. All items listed on the Consent Calendar are recommended for approval. A. Consideration of approval of bid minutes/tabulation and award of contract for demolition of 6400, 6520 and 6528 Cedar Avenue; Cedar Point project, to Michael Scott Construction, including identifying award of contract to alternate bidder #1 to Doboszenski & Sons, Inc., and alternate bid #2 to Carl Bolander & Sons Co. should Michael Scott Construction not be able to perform S.R. No. 21 B. Consideration of approval of execution of professional services agreement with Cornejo Consulting to conduct analyses of Richfield Redevelopment Project Area related to proposed establishment of Cedar Corridor Tax Increment Financing District S. R. No. 22 Notes: 4. Consideration of status of LaurentlSchatzlein mixed use redevelopment proposal for northeast quadrant of 76th Street and Lyndale Avenue and providing direction to staff with proceeding wiih redevelopment Staff Report No. 23 Notes: 5. Consideration of resolution authorizing replacement Letter of Credit for Penn Place Townhomes, LLC; 69th Street/Penn Avenue Staff Report No. 24 Notes: 6. Consideration of Metropolitan Council report "Determining Affordable Housing Need in the Twin Cities, 2011-2020" and providing direction to staff regarding additional actions Staff Report No. 25 Notes: 7. Consideration of resolution approving first amendment to contract for private development with Ryan Companies US, Inc. for Cedar Point Staff Report No. 26 Notes: 8. Consideration of . Resolution approving business subsidy agreement between HRA and Target Corporation assigning to Target portions thereof original business subsidy agreement for Cedar Point Commons project Resolution approving business subsidy agreement between HRA and Home Depot Corporation assigning to Home Depot portions thereof original business subsidy agreement for Cedar Point Commons project Staff Report No. 27 Notes: 9. Consideration of resolution approving escrow agreement with Ryan Companies US, Inc.; Cedar Point Staff Report No. 28 Notes: 10. Consideration of resolution approving waiver and satisfaction of contingencies of contract for private development with Ryan Companies US, Inc. for Cedar Point Staff Report No. 29 Notes: 11. Consideration of resolution authorizing purchase agreement with City of Richfield for purchase of land; Cedar Point project Staff Report No. 30 Notes: 12. Executive Director report Notes: 13. Claims and payroll Adjournment Auxiliary aids for individuals with disabiliti s are availabl upon request. Requests must be made at least 96 hours in advance to the City Clerk at 612-861-9738. I AGENDA ITEM # 3A REpORT # 21 ..... STAFF REpORT RICHFIELD HOUSING AND REDEVELOPMENT AUTHORITY MEETING JUNE 26, 2006 REpORT PREPARED By: KA TIA MEDVETSKI, REDEVELOPMENT SPECIALIST NAME, TITLE REpORT PRESENTER: PATRICK SMITH, COMMUNITY DEVELOPMENT MANAGER DEPARTMENT DIRECTOR REVIEw: NAME, TITLE SIGNA URE REVIEWED By EXECUTIVE DIRECTOR: ITEM FOR HRA CONSIDERATION: Consideration of award of contract for demolition of 6400,6520 and 6528 Cedar Avenue, Cedar Point Proiect. 1. RECOMMENDED ACTION: By Motion: Accept the bid minutes and tabulation and award contract for demolition of 6400,6520 and 6528 Cedar Avenue, Cedar Point Project, based on revised bid tabulation, to Michael Scott Construction, including identifying awarding contract to alternate bidder #1 to Doboszenski & Sons, Inc., and alternate bidder #2 to Carl Bolander & Sons Co. should Michael Scott Construction not be able to perform. I II. BACKGROUND I . On April 17, 2006 the Richfield Housing and Redevelopment Authority (HRA) approved an agreement titled "Cooperative Agreement Funding and Demolition of Parcels in Cedar Point Project Area" (Agreement) with the City of Richfield (City) for undertaking demolition and site clearance of HRA and City owned properties at 6400, 6520, and 6528 Cedar Avenue in preparation for the construction of Cedar Point Commons. 062606 AwardDemoContr . At the same time, the HRA approved plans and specifications and advertisement for bids for this work. . On April 25, 2006 the City approved the same Agreement with the HRA. . Advertisement for bids for this contract were published in the Richfield Sun- Current on May 4, 2006 and May 11, 2006 and in the Construction Bulletin on May 5,2006 and May 12, 2006. . A pre-bid conference and building open house was held on May 18, 2006. . Sealed bids were received and opened on May 25, 2006. . There were 14 plan holders for the bid. Bids were received from 10 contractors as listed in Exhibit A, Bid MinuteslTabulation. . The HRA sought additional, clarifying information on the bids from all contractors on June 2, 2006 that resulted in a revised bid tabulation (see Exhibit B). . Based on the revised bid tabulation, Michael Scott Construction of Watertown, MN was the low bidder for the work at $83,279.00 and remained in the same bid position under the revised bid tabulation; alternate bidder #1 was Doboszenski & Sons, Inc. of Loretto, MN with a bid at $85,425.00; and alternate bidder #2 was Carl Bolander & Sons of St. Paul, MN with a bid at $93,210.00. . Due to the tight time frame for demolition and site clearance in relation to the construction start date, alternate bidders need to be identified and approved should the primary bidder not be able to perform their duties or unable to meet other bidding requirements (e.g. bonds and insurance). I III. BASIS OF RECOMMENDATION I I A. POLICY I . Demolition and site clearance of the subject properties is necessary to make the land available for redevelopment within the Cedar Point project area in accordance with the Contract for Private Development between the HRA and Ryan Companies US, Inc., (Developer) dated July 27, 2005 (Developer's Agreement). . The HRA is able to solicit additional clarifying information from all bidders that would be in the best interest of the demolition project but which could potentially impact the ranking outcome of bidders from the original bid tabulation. . The HRA utilized the administrative services of the City for conducting the bid opening and preparing bid minutes and tabulating bid results. I B. CRITICAL ISSUES I . Environmental abatement work is part of the demolition contract and will need to be completed before demolition occurs. . Demolition must substantially be completed by September 1, 2006, with final completion by September 15, 2006. . An evaluation of the three bidders indicates they have a record of performing responsibly. I C. FINANCIAL I . Bids ranged from $83,279.00 to $147,210.00. . Michael Scott Construction is the low bidder at $83,279.00. . Doboszenski & Sons, Inc. is alternate bidder #1 at $85,425.00. . Carl Bolander & Sons is alternate bidder #2 at $93,210.00. . Multi-Jurisdictional Program Funds (MJP) from Hennepin County are available for payment of this contract. I D. LEGAL I . The HRA is required to accept the lowest, qualified bidder. . The HRA is allowed under the plans and specifications to identify successive, qualified lowest bidders in order to ensure timely commencement and completion of the specified work. I IV. ALTERNATIVE RECOMMENDATION(S) I . The HRA may choose to reject all bids and direct staff to obtain new bids; however, the prices received for this work are being considered competitive and fair, and staff does not believe lower prices can be obtained from a reputable contractor within the time frame needed. . The HRA may choose to reject all bids and direct staff to pursue demolition and site clearance by the Developer in order to maintain the construction schedule. This alternative recommendation would require an amendment to the Developer's Agreement, including agreement on cost to undertake the work. I V. ATTACHMENTS . Exhibit A - Bid minutes/tabulation . Exhibit B - Revised Bid Tabulation I VI. PRINCIP AL PARTIES EXPECTED AT MEETING . N/A CITY OF RICHFIELD, MINNESOTA 8A-1 &A;b,J A Bid Opening May 25, 2006 11 :00 a.m. 2006 Demolition of Cedar Avenue- Apartment Properties Pursuant to requirements of Resolution No. 1015, a meeting of the Administrative Staff . was called by NalJcy Gibbs, City Clerk, who announced that the purpose of the meeting was to receive, open and read aloud bids for 2006 Demolition of Cedar Avenue . Apartment Properties, as advertised in the official newspaper on May 4 & 11, 2006 and the Construction Bulletin on May 5 & 12, 2006. .. ' Present: Nancy Gibbs, City Clerk Katia Medvetski, Community Development Representative Cheryl Krumholz, City Manager Representative The following bids were submitted and read aloud: ..' , Bidder's Name Bid Security Lump Sum Bid Price Carl Boland~r & Sons Co. Provided $93,210.00 Doboszenski & Sons, Inc. . Provided $85,425.00 '-. Ginther Excavating, Inc. Provided $89,000.00 Max Steninger, Inc. Provided $126,850.00 . Rachel Contracting Provided $119,113.00 Ramsey Excavating Co., In.c. Provided $147,210.00 . '. , Veit & Company, Inc. Provided $110,530.00 . , Wickenhauser Excavating, Inc. Provided $135,750.00 C 8. H Excavating Co. . . Provided $92,000.00 , -c Michael Scot! Construction Provided f $83,279.00 The City' Clerk announced that the bids would be tabulated and considered at the June 19, 200~ HRA Meeting. . , ~Oo~ .CityClerk ~ . . l 3A-;L EXHIBIT B RICHFIELD HOUSING AND REDEVELOPMENT AUTHORITY REVISED BID TABULATION 2006 DEMOLITION OF CEDAR AVENUE PROPERTIES Bidder Rank Lump Sum Bid Price Michael Scott Construction 1 $83,279.00 Doboszenski & Sons, Inc. 2 $85,425.00 Carl Bolander & Sons Co. 3 $93,210.00 Max SteininQer, Inc. 4 $126,850.00 AGENDA ITEM # 3B REpORT # 22 ...... STAFF REpORT RICHFIELLJ HOUSING AND REDEVELOPMENT AUTHORITY MEETING JUNE 26, 2006 REpORT PREPARED By: KA TIA MEDVETSKI, REDEVELOPMENT SPECIALIST NAME, TITLE REpORT PRESENTER: PATRICK SMITH, COMMUNITY DEVELOPMENT MANAGER NAME, TITLE DEPARTMENT DIRECTOR REVIEW: REVIEWED BY EXECUTIVE DIRECTOR: ITEM FOR HRA CONSIDERATION: Consideration of a Professional Services Agreement with Cornejo Consulting to conduct analyses of the Richfield Redevelopment Project Area related to proposed establishment of Cedar Corridor Tax Increment Financing (TIF) District. I. RECOMMENDED ACTION: By Motion: Approve the execution of a Professional Services Agreement with Cornejo Consulting to conduct analyses of the Richfield Redevelopment Project Area related to proposed establishment of the Cedar Corridor Tax Increment Financing (TIF) District. I II. BACKGROUND I . Redevelopment must take place within the Richfield Redevelopment Project Area (Project Area). The boundaries of the Project Area are coincidental with those of the City of Richfield. . On May 16, 2005 the Richfield Housing and Redevelopment Authority (HRA) entered into a Contract for Private Development with Ryan Companies US, Inc. (Developer) for the construction of a retail center, Cedar Point Commons, financed primarily with tax abatement. 062606 PSA_Cornejo Subsequently on June 14, 2005 the City Council held a public hearing and approved a Modification to the Redevelopment Plan (Modified Plan) for the Project Area for the Cedar Point Development Area (Cedar Point). On June 20, 2005 the HRA approved the Modified Plan. · The purpose of the Modified Plan was to incorporate Cedar Point into the redevelopment plan for the Project Area by providing a comprehensive review of public purpose documented by the numerous comprehensive studies that examined the impact of airport operations, providing a blight assessment of the Cedar Point site, expanding the statement of goals and objectives of the Project Area, and review the private and public development activities to be undertaken in the Project Area as a result of Cedar Point. · A component of the Cedar Point Commons development, as evidenced in an early 2005 Cedar Point concept plan and most recently in a preliminary plat, is a retail strip that lies immediately adjacent and west of Cedar Point on 17th Avenue (west side of 6500 block of 17th Avenue). · This area is not officially within Cedar Point as addressed by the Modified Plan approved last year. However, it is within the overall Project Area. Nonetheless, in order for the redevelopment of this site area to proceed, a new redevelopment plan modification (New Plan Modification) with a new blight assessment report supporting it is needed. · In addition to the proposed New Plan Modification, a new tax increment financing district, Cedar Avenue Corridor TIF District (New TIF District) is being proposed to be established to financially assist the Developer with this portion of Cedar Point Commons. The TIF will also encompass the area south of 66th Street. The New TIF District will be established under the special legislation enacted in 2005. The process for the New Modified Plan and New TIF District is scheduled to begin in July 2006. Also, a new contract with the Developer will need to be negotiated and prepared and presented to the HRA for this portion of Cedar Point Commons west of 17th Avenue. · The current proposal to enter into a Professional Services Agreement with Cornejo Consulting is the first step in the overall process. · Dan Cornejo of Cornejo Consulting prepared last year's Blight Assessment Report for the Cedar Point site area. His work under consideration for the New Modified Plan and establishment of the New TIF District can be viewed as an extension of last year's work as many, if not all, of the comprehensive airport noise studies will be revisited and an extensive blight assessment for a much larger area will be prepared. Previous to Cedar Point, Mr. Cornejo prepared similar reports for the Lyndale Gateway West and City Bella projects. · The cost for the blight assessment report that addresses the balance of the Cedar Avenue Corridor is proposed to not exceed $13,200 (see attached proposal dated May 25,2006). Last year, the contract cost for only the Cedar Point site was $9,400. Work is scheduled to be completed by mid July. I III. BASIS OF RECOMMENDATION I A. POLICY I · In order to properly plan for, and accommodate, new or revised redevelopment plans, the Richfield Redevelopment Project Area must be modified. · Such modifications should be based on findings that require a technical analysis of the redevelopment area. · Cornejo Consulting has provided a proposal to perform these technical analyses. I B. CRITICAL ISSUES I · The Developer has been purchasing property in the 6500 block of 17th Avenue. · The City has identified two properties on this block (1614 and 1620 E. 66th Street) for the new 17th Avenue roundabout in which remnant land could be conveyed to the Developer to complete site assembly. · Proceeding with the Blight Assessment Report at this time will allow for other needed plans and agreements to follow with construction of the subject site area to essentially begin with the overall Cedar Point Commons area. I C. FINANCIAL I · HRA financial resources are available to fund the purchase of the proposed contract services. I D. LEGAL I · Legal counsel has been working with staff to ensure that the scope of services and services to be performed will result in findings that meet legislative requirements. · The contract form is the standard form used for HRA contracts. I IV. ALTERNATIVE RECOMMENDATION(S) , · Delay or do not approve the work with Cornejo Consulting at this time. I V. ATTACHMENTS I · Proposal from Cornejo Consulting, dated May 25,2006 · Professional Services Agreement with Cornejo Consulting · Map - Cedar Avenue Corridor Tax Increment Financing District I VI. PRINCIPAL PARTIES EXPECTED AT MEETING . N/A 38-1 PROFESSIONAL SERVICES AGREEMENT Cornejo Consulting THIS AGREEMENT made and entered into by and between the Housing and Redevelopment Authority in and for the City of Richfield, State of Minnesota, hereinafter referred to as the "HRA", and Cornejo Consulting, hereinafter referred to as "CORNEJO". WITNESSETH: WHEREAS, the HRA wishes to purchase the services of CORNEJO; and WHEREAS, there are funds available for the purchase of these services. NOW, THEREFORE, in consideration of the mutual undertakings and agreements hereinafter set forth, the HRA and CORNEJO agree as follows: 1. TERMS AND COST OF THE AGREEMENT CORNEJO agrees to furnish services to the HRA for the implementation of a modified redevelopment plan that include planning services and redevelopment area analysis for the Cedar Point redevelopment project, as described in the CORNEJO proposal dated May 25, 2006. The total cost of this Agreement shall not exceed $13,200 unless amended by the HRA. This figure does not include the cost for out-of-pocket expenses including pringting of reports. Should additional services be required, an amendment to the AGREEMENT will be necessary. All reports, memos, and other data produced by CORNEJO become the property of the HRA. 2. PAYMENT FOR SERVICES Invoices may be submitted monthly. Payment for services shall be made directly to CORNEJO by check. Invoices shall be of sufficient detail for the HRA to determine the line item task being completed. Payment shall be made within 30 days of receipt of an invoice by the HRA. The cost of the work conducted under this Agreement shall not exceed $13,200 unless amended by the HRA. 3. INDEPENDENT CONTRACTOR CORNEJO shall select the means, method, and manner of performing the services herein in consultation with the HRA. Nothing is intended or should be construed in any manner as creating or establishing the relationship of copartners between CORNEJO and the HRA or as constituting CORNEJO as the agent, representative, or employee of the HRA for any purpose or in any 1 38-;). manner whatsoever. CORNEJO is to be and shall remain an independent contractor with respect to all services performed under this Agreement. CORNEJO represents that it has or will secure at its own expense all personnel required in performing services under this Agreement. Any and all personnel of CORNEJO or other persons while engaged in the performance of any work or services required by this Agreement shall have no contractual relationship with the HRA, and shall not be considered employees of the HRA. Any and all claims that mayor might arise under the Unemployment Compensation Act or the Workers' Compensation Act of the State of Minnesota on behalf of said personnel, arising out of employment or alleged employment, including, without limitation, claims of discrimination against CORNEJO, its officers, agents, contractors, or employees shall in no way be the responsibility of the HRA. CORNEJO shall defend, indemnify, and hold the HRA, its officers, agents, and employees harmless from any and all such claims irrespective of any determination of any pertinent tribunal, agency, board, commission, or court. Such personnel or other persons shall neither require nor be entitled to any compensation, rights, or benefits of any kind whatsoever from the HRA, including, without limitation, tenure rights, medical and hospital care, sick and vacation leave, Workers' Compensation, Unemployment Insurance, disability, severance pay, and PERA. 4. NONDISCRIMINATION The HRA operates in accordance with the City of Richfield's policies against discrimination. No person shall be excluded from or denied the benefits of any service performance or contemplated under the terms of this Agreement on the grounds of race, color, creed, religion, age, sex, disability, marital status, public assistance status, ex-offender status, or national origin; and no person who is protected by applicable Federal or State laws against discrimination shall be otherwise subjected to discrimination. CORNEJO shall (1) furnish all information and reports which may be required by the City of Richfield's Affirmative Action Policy, and (2) it shall comply with the City of Richfield's Equal Employment Opportunity/Affirmative Action Policies with regard to employment and contracting (See Exhibit A). 5. INDEMNITY AND INSURANCE CORNEJO agrees to defend, indemnify, and hold the HRA, its officers, and employees harmless from any liability claims, damages, costs, judgments, or expenses, including reasonable attorney, fees, resulting directly or indirectly from a negligent act or omission (including without limitation professional errors or omissions) of CORNEJO, its agents, employees, or assignees in performance of the services provided by this contract, and against all loss by reason of the failure of CORNEJO to fully performance in any respect, all obligations under this contract. 2 36-3 6. RECORDS - AVAILABILITY CORNEJO agrees that the HRA, the State Auditor, or any of their duly authorized representatives at any time during normal business hours and as often as they may reasonably deem necessary, shall have access to and the right to examine, audit, excerpt, and transcribe any books, documents, papers, records, etc., which are pertinent to the accounting practices and procedures of CORNEJO and involve transactions relating to this Agreement. Records shall be retained for three years from date of final payment with respect to the project. 7. DATA PRACTICES COMPLIANCE This contract is governed by Minnesota Statutes, S 13.05, subds. 6 and 11, the provisions of which are incorporated by reference into this contract. The HRA agrees to give CORNEJO access to data collected or maintained by the HRA as necessary to perform CORNEJO's obligations under this contract. CORNEJO agrees to maintain all data obtained from the HRA consistent with the requirements of the Minnesota Government Data Practices Act, Minn. Stat. SS 13.02 et seq. (the "Act"). CORNEJO will not release or disclose the contents of data classified as not public to any person except at the written direction of the HRA. CORNEJO agrees to defend and indemnify the HRA from any claim, liability, damage or loss asserted against HRA as a result of CORNEJO's failure to comply with the requirements of this paragraph; provided that CORNEJO shall have no duty to defend or indemnify where the CORNEJO has acted in conformance with the HRA's written directions. Upon termination of this contract, CORNEJO agrees to return data to the HRA, as requested by the HRA. 8. NON-ASSIGNMENT CORNEJO shall not assign, subcontract, transfer, or pledge this contract and/or the services to be performed hereunder, whether in whole or in part, without the prior written consent of the HRA. 9. MERGER AND MODIFICATION a. It is understood and agreed that the entire Agreement between the parties is contained herein and that Agreement supersedes all oral agreements and negotiations between the parties relating to the subject matter hereof. All items referred to in this Agreement are incorporated or attached and are deemed to be part of this Agreement. b. Any material alterations, variations, modifications, or waivers of provisions of this Agreement shall only be valid when they have been reduced to writing as an amendment to this Agreement signed by the parties hereto. 3 38-'1 10. DEFAULT AND CANCELLATION a. If CORNEJO fails to perform any of the provisions of this Agreement or so fails to administer the work as to endanger the performance of the Agreement, this shall constitute a default. Unless the default is excused, the HRA, may upon written notice, immediately cancel the Agreement in its entirety. b. The HRA's failure to insist upon strict performance of any provision or to exercise any right under this Agreement shall not be deemed a relinquishment or waiver of the same, unless consented to in writing. Such consent shall not constitute a general waiver or relinquishment throughout the entire term of the Agreement. c. This Agreement may be canceled without cause by either party upon thirty (30) days written notice. 11. CONTRACT ADMINISTRATION In order to coordinate the services of CORNEJO with the activities of the HRA so as to accomplish the purposes of this contract, Bruce Palmborg, Director of Community Development, shall manage this contract on behalf of the HRA. In addition, from time to time, meetings shall be held between CORNEJO and HRA staff. CORNEJO may also report directly to the HRA Board of Commissioners. 12. NOTICES Any notice or demand which must be given or made by a party hereto under the terms of this Agreement shall be in writing. . Notices shall be sent as follows: Richfield Housing and Redevelopment Authority ATTN: Katia Medvetski, Redevelopment Specialist Richfield City Hall 6700 Portland Avenue South Richfield, MN 55423 Cornejo Consulting A TTN: Dan Cornejo 1657 Saunders Avenue St. Paul, MN 55116 4 38-5 CORNEJO having signed this contract, and the HRA having duly approved this contract on , 2006, and pursuant to such approval and the proper HRA officials having signed this contract, the parties hereto agree to be bound by the provisions herein set forth. THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA By: Suzanne M. Sandahl Its: Chairperson By: Steven L. Devich Its: Executive Director CORNEJO CONSULTING By: Dan Cornejo Its: Principal 5 S8-/P EXHIBIT A AFFIRMATIVE ACTION REQUIREMENTS On January 1, 1988, the Richfield City Council approved an affirmative action program which requires the City "to provide equality of opportunity in employment to all person and to prohibit discrimination because of race, color, religion, national origin, place of residents, political affiliation, disability, marital status, status with regard to public assistance, sex, or age in all aspects of the City of Richfield's personnel policies, programs, and practices". The program further requires that the City support the various relationships with contractors, subcontracts and vendors. Therefore, requirements have been adopted for contracts as follows: a. The contractor shall submit a signed statement (Exhibit B) signifying that they are in compliance with the standards of equal employment and anti- discrimination as cited in the Civil Rights Act of 1964 as amended in 1972 by the Equal Employment Opportunity Act. b. In accordance with the City of Richfield's Affirmative Action policy, no person shall, on the ground of race, creed, color, sex, age, disability, or national origin be excluded from full employment rights in, participation in, be denied the benefits of, or be otherwise subjected to discrimination under any program, service, or activity for which the parties received, or will receive financial assistance under the provisions of any and all applicable federal and state laws against discrimination. The contractor will furnish all information and reports if required by the City of Richfield or by Executive Order No. 11246 and Revised Order No.4, and by the rules and regulations and orders of the Secretary of Labor or the State of Minnesota for purposes of investigation to ascertain compliance with such rules, regulations, and orders. c. 1971 Minnesota Statutes 181.59 is made a part of this contract. See Exhibit C. 38-7 EXHIBIT B STATEMENT OF COMPLIANCE The undersigned, in his/her capacity as agent for CORNEJO, hereby states that CORNEJO is in compliance with the standards of equal employment and anti- discrimination as cited in the Civil Rights Act of 1964 as amended in 1972 by the Equal Employment Opportunity Act. Dated: By: Its: 38-8 EXHIBIT C 181.59 DISCRIMINATION ON ACCOUNT OF RACE, CREED, OR COLOR PROHIBITED IN CONTRACT. Every contract for or on behalf of the State of Minnesota, or any county, city, town, township, school, school district, or any other district in the state, for materials, supplies, or construction shall contain provisions by which the contractor agrees: (1) That, in the hiring of common or skilled labor for the performance of any work under any contract, or any subcontract, no contractor, material supplier, or vendor, shall, by reason of race, creed, or color, discriminate against the person or persons who are citizens of the United States or resident aliens who are qualified and available to perform the work to which the employment relates; (2) That no contractor, material supplier, or vendor, shall, in any manner, discriminate against, or intimidate, or prevent the employment of any person or persons identified in clause (1) of this section, or on being hired, prevent, or conspire to prevent, the person or persons from the performance of work under any contract on account of race, creed, or color; (3) That a violation of this section is a misdemeanor; and (4) That this contract may be canceled or terminated by the state, county, city, town, school board, or any other person authorized to grant the contracts for employment, and all money due, or to become due under the contract, may be forfeited for a second or' any subsequent violation of the terms or conditions of this contract. History: 1941 c 238; 1973 c 123 art 5 s 7; 1984 c 609 s 11 COMMUNITY PLANNING + DESIGN May 25, 2006 Ms. Katia Medvetski Redevelopment Specialist Richfield Housing and Redevelopment Authority 6700 Portland Avenue Richfield, MN 55423 Re: Blight Assessment (Cedar Avenue Corridor) Dear Ms. Medvetski: CORNEJO CONSULTING is pleased to submit this proposal for professional services to conduct analyses, including assessment of blighting conditions, to enable the Richfield Housing and Redevelopment Authority (HRA) to modify the Richfield Redevelopment Project Area to facilitate redevelopment of the Cedar Avenue Corridor area. Scope of Work This proposed scope of work is based on my current understanding of the project and my discussions with you last Wednesday. Primary tasks involved in the blight assessment include the following: 1. Gather and Review Background Policy Data, including review of the previous policy reports contained in the Cedar Point Area Blight Assessment Report (June 3, 2005), i.e., the report of the Governor's Airport Community Stabilization Funding Task Force (January, 2000) and the MSP International Airport Low Frequency Noise Policy Committee Report (August, 2000), The City of Richfield - Legislative Proposal (for) Proposed Low-Frequency Noise TIF Area (March 8, 2005), and the Cedar Avenue Corridor Redevelopment Concept Master Plan (September, 2004). 2. Review property tax data and building permit data within the project study area. 3. Conduct and Document Field Survey of the approx. 170 properties in the Cedar Avenue Corridor, including site visits to observe and document existing conditions of properties within project study area and surrounding context. Photograph properties within project study area to provide a visual record of the blighting conditions. 4. Conduct Blight Assessment, including analysis of the background data and documentation from the field survey and photos to determine the presence of Cornejo Consulting - 1657 Saunders Avenue - Saint Paul, MN 55116-2430 P 651.699.1927 F 651.698.0212 E dancornejo@comcast.net 38--)0 CORNE.JO CONSULTING COMMUNITY PLANNING + DESIGN blighting conditions according to the statutory definition; review compliance with the Zoning Code; review consistency with Comprehensive Plan direction and other City policy documents. Identify the presence or lack thereof of blighting conditions on individual properties within the project study area and within the project study area as a whole. Develop a qualitative analysis to establish the relative degree to which the various blighting conditions are evident. 5. Prepare Preliminary Report, including text, figures, tables, photographs, etc. Prepare this Preliminary Report as part of a combined Cedar Point/Cedar Corridor Blight Analysis, combining the information from the June 3, 2005 Cedar Point Area report with the new information from this broader Cedar Corridor analysis which includes all the properties in the Redevelopment Area. Meet with staff to review draft preliminary report. Revise preliminary report as necessary to address staff comments. 6. Meeting Participation. Assist staff, as required, in presenting Preliminary Report to Planning Commission, City Council, and HRA. 7. Prepare Final Report, addressing any issues, concerns, or conditions that may be identified or established during review by Planning Commission, City Council, and HRA. Richfield HRA Tasks I Responsibilities In accordance with our discussions, Richfield Community Development staff will work with me to obtain available background information (policy reports, tax and building permit data) and to develop maps for this project. Schedule Upon your authorization, I will commence the work and complete the draft Preliminary Report for the Blight Assessment by July 7, 2006. I will participate in the Planning Commission meeting and the City Council/HRA meeting to present this report and respond to questionsl discussion. Relationship of Parties The City of Richfield and the Consultant, Dan Cornejo I CORNEJO CONSULTING, understand and agree that for all purposes the Consultant is an independent contractor in the performance of these services. The Consultant is not an employee of the City of Richfield. Cornejo Consulting - 1657 Saunders Avenue - Saint Paul, MN 55116-2430 P 651.699.1927 F 651.698.0212 E dancornejo@comcast.net CORNEJO CONSULTING 38 COMMUNITY PLANNING + DESIGN Compensation Labor is estimated to be 120 hours. Compensation will be made on an hourly basis ($1101hr), with a total cost not to exceed $13.200 plus reimbursement of out-of-pocket expenses including mileage (at 44.5 cents/mile) and printing of reports. These latter expenses will be billed on a cost-recovery basis. The maximum fee billed will not exceed this amount without your prior authorization. Invoices will be sent monthly, with payment within thirty days. Payment will be mailed to the Consultant at the following address: CORNEJO CONSULTING 1657 Saunders Avenue Saint Paul, MN 55116 The Consultant is a Sole Proprietor; the Consultant's Social Security number will be provided at a later date. The City of Richfield shall issue Internal Revenue Form 1099 to the Consultant at the end of tax year 2006. Agreement This letter represents the entire understanding between CORNEJO CONSULTING and the City of Richfield with respect to this project, and may only be modified in writing and signed by both parties. It is understood that if this letter satisfactorily sets forth your understanding of our Agreement. a separate agreement entitled "Professional Services Agreement" will be prepared and signed upon approval by the HRA. I look forward to working with you on this project. If you have any questions or comments about this proposal, please contact me at 651-699-1927, or email atdancorneio@comcast.net. Sincerely, G~~o Dan Cornejo Principal Cornejo Consulting - 1657 Saunders Avenue - Saint Paul, MN 55116-2430 P 651.699.1927 F 651.698.0212 E dancornejo@comcast.net Cedar Avenue Corridor Redevelopment Area - 36--/ ;).. 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BACKGROUND I In May 2005 the Housing and Redevelopment Authority (HRA) directed staff to work with John Laurent and Bill Schatzlein (Developer) to formulate a contract for redevelopment and determine the financial feasibility of their proposal. The Developer envisioned a $30 million mixed use development with approximately 18,000 sq. ft. of first floor commercial space and 85 condominium units on the upper three floors with underground parking and surface parking set in a landscaped court yard. (See attached drawings). 062606 Laurant Schatzlein I III. BASIS OF RECOMMENDATION I I A. POLICY I . The 1996 Lyndale Gateway Redevelopment Plan and Strategy is a guide to the redevelopment of Lyndale Avenue between 74th and 77th Streets. By reference this document is a part of the Comprehensive Plan. The document states that for those quadrants at 76th Street and Lyndale Avenue which undergo redevelopment buildings should be two to three stories in height. Development should be orientated to a mix of retail/commercial and office uses with higher density residential uses in combination with retail or office. . The zoning of this site is not consistent with the Comprehensive Plan as the four residences on Garfield Avenue are zoned R single family and the three commercial uses on Lyndale Avenue are zoned C-2. . The other development in the area Casteel Place, Kensington Park and Mainstreet village and office condominium reflect the guiding of the Comprehensive Plan with higher density and a mix of uses. I B. CRITICAL ISSUES I . There are four homeowners on the Garfield Avenue frontage of the site who are apparently "ready to get on with their lives" and sell their property subject to satisfactory negotiations. . The Developer reportedly had an option to purchase the Dairy Queen, which they did not exercise and has now expired. They also reported they had come to an understanding with the other two commercial property owners regarding the basics of a "deal". . CVS a drug store company would like to locate two stores in Richfield according to Mr. Stephen Alexander of Velmeir Companies Bloomfield, Michigan. Mr. Alexander is responsible for identifying sites for CVS in the metropolitan area. He reports that CVS has an interest in this site. Mr. Alexander has been advised by the HRA's Executive Director, Mr. Devich, that the City would welcome a CVS facility as part of the mixed-use development in this quadrant. The Developer did contact Mr. Alexander but they have, to date, not had the opportunity for detailed conversations. Attached are some pictures of CVS facilities in the metropolitan area. . Striking a balance amongst competing needs of the community is important and difficult. Richfield has a history of waiting for the right development project. In the early '90s the HRA purchased the former Cloverleaf Motel site at 1-494 and 35W. There were several developers that proposed car dealerships, supermarkets and even a preliminary concept for an amusement facility. The waiting was for an office building, a class A office building. One office proposal, the COR project, failed. Meridian Crossings was competed and opened in 1999. The site where Kensington Park is located was first identified for redevelopment in 1985. I C. FINANCIAL I . In 2005 when the HRA directed staff to work out a Development Agreement with the Developer there was also direction to determine the need ("but~for") for use of TIF and financial feasibility of the proposal. The high site assembly cost, which encompasses the seven parcels as well as the need for underground parking provided a need for TIF. It was determined that the site would qualify as a Renovation and Renewal District with a maximum of 15 years of TI F payout. The overall project also seemed to have financial feasibility. . Several months ago the Developer began to seek financing for the project. To date, they have not been successful. In general, the' condominium market is weakening. Lenders are becoming more cautious. However, at the same time there are projects, which are proceeding. While the search for financing continues other project matters have been halted. I D. LEGAL I . The HRA designated Laurent/Schatzlein as the Developer and directed staff to prepare a draft of a Contract for Redevelopment and determine the need and feasibility for use of TIF. I IV. ALTERNATIVE RECOMMENDATION(S) I . Direct staff to continue to work exclusively with Lau!ent/Schatzlein for a time period determined during the HRA meeting. . Direct staff to continue to work with Laurent/Schatzlein and to seek other developers who may be interested in pursuing a mixed-use project, which may include a CVS and for sale or rental housing. . Request the City Council to rezone the site to bring it into conformance with the Comprehensive Plan. (If the HRA directs staff to pursue any redevelopment options this item should be included.) . Discontinue the pursuit of redevelopment of this quadrant and let the market determine the future of the site. I V. ATTACHMENTS . Aerial photo . Laurent/Schatzlein concept . CVS pictures of existing facilities I VI. PRINCIPAL PARTIES EXPECTED AT MEETING . Laurent/Schatzlein . Possibly a representative of CVS . Some of the site property owners 4-{ 7500 Block of Lyndale 80 120 N A Redevelopment Are o 20 40 - - 160 Feet . . '. ';'1. "I.. r. / . ::,~\,. +i" .; . ")~ ".:"';, /. ~'f~ Q) en <D ..c .... (.) :::l C en .... 0 ...c: <D CJ) <..) <D ..= en Q) :::l > c:: 0 ....... <D ~ :::l COO} "'0 ....c ~ 0__ (.) (.)> <D Q) Q)CO >- LU CI CI 0... . ~ tf-3 en "0 0... 0} c ~ .... co 0... en Q) ..c (.) c Q) CO ,....... n\... ... on _ ._~ ~.._._.._ ~nU~AV PI~y.rnD Q) ~ ....... Cf) I C o .... 2 c CO 0... 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STAFF REpORT RICHFIELD HOUSING AND REDEVELOPMENT AUTHORITY MEETING JUNE 26, 2006 REpORT PREPARED By: BRUCE NORDQUIST, HOUSING AND REDEVELOPMENT 11ANAGER NAME, TITLE REpORT PRESENTER: BRUCE NORDQUIST, HOUSING AND REDEVELOPMENT 11ANAGER NAME, TITLE DEPARTMENT DIRECTOR REVIEW: REVIEWED BY EXECUTIVE DIRECTOR: ITEM FOR HRA CONSIDERATION: Discussion of the Metropolitan Council's Report: "Determining Affordable Housing Need in the Twin Cities, 2011-2020". I. RECOMMENDED ACTION: By Motion: Discuss the Metropolitan Council's Report and provide direction to staff concerning additional actions. I II. BACKGROUND I The Metropolitan Council provided the report to the City in March 2006. A memo to the Housing and Redevelopment Authority (HRA) on April 13 provided a Q&A of the report findings. A memo to the HRA on May 11 provided a draft of responsive talking points to consider. For the June HRA meeting the talking points have been finalized for review and discussion. The HRA has a strong commitment to meeting affordable housing needs and does that through production of new units, rehabilitation of existing units, and the administration of rent assistance programs. The HRA also recognizes that the vitality of the community requires that affordable housing needs of the Region be balanced with other needs. Richfield's redevelopment of commercial areas and the creation of mixed income and generational urban villages are successful examples of why Richfield is a vital community. 062606 Met Council Report The Metropolitan Council's Report should raise concerns for Richfield about balance, responsibility, fair share responsiveness, the cost to produce housing, the lack of resources, and a healthy respect for differing needs and opportunities that exist for developed and developing cities in the Region. I III. BASIS OF RECOMMENDATION I I A. POLICY I . Demographic, economic, and social trends in low wage job locations when combined with transit service result in new conclusions about where affordable housing should be located. . Proposed Metropolitan Council policies challenge vitality and are in conflict with thoughtfully established Richfield goals. . The Metropolitan Council expects the production of more affordable housing in Richfield without due process or new resources I B. CRITICAL ISSUES I . The Comprehensive Plan update, due in 2008, must reflect a commitment to Metropolitan Council affordable housing production findings. . If implemented, the concentration of lower income households will increase in Richfield and the new calculations of "fair-share" housing become increasingly unfair. I C. FINANCIAL I . The financial cost related to redevelopment and housing write-down to Richfield to redevelop and produce 765 units of affordable housing ranges from $38 million to $69 million. . There are no provisions for providing increased funding. I D. LEGAL I . By statute, Richfield is subject to Comprehensive Plan and affordable housing requirements of the Metropolitan Council. I IV. ALTERNATIVE RECOMMENDATION(S) I . Send the response to the Metropolitan Council. . Discuss the response with Russ Susag, a Metropolitan Council member and a Metropolitan Council staff person at a future HRA meeting. . Forward the response to the City Council or others for additional discussion and input. . Share the response with other HRA's and Cities that are similarly impacted. . Accept the Metropolitan Council's conclusions without challenge. . Consider other options. . Given the agenda for the HRA meeting on June 26 and the length of the agenda the HRA may wish to continue this item to the July meeting. I V. ATTACHMENTS I . Richfield's response with supporting attachments. . The Metropolitan Council Report. I VI. PRINCIPAL PARTIES EXPECTED AT MEETING . N/A ~-, June 2006 Richfield's Response to Metropolitan Council's Summery Report: "Determining Affordable Housing Need in the Twin Cities 2011-2020" In March 2005 the Metropolitan Council distributed a report with a calculated number of units of affordable housing need from 2011 to 2020. This forecast, referenced below as "the Report", is to be used by Richfield to determine housing goals and objectives for the updated Comprehensive Plan due to the Metropolitan Council in 2008. To calculate future need, the Metropolitan Council used four data indicators, a methodology for analysis and an allocation formula. The indicators used include: . Household growth, net growth forecasted for 2011 to 2020 . Low wage job proximity . Current affordable housing stock . Transit service level To summarize: . Richfield needs to add 765 newly constructed housing units affordable at 60 percent of the median income ($46,200 in 2005) for forecasted growth of 1,500 households between 2011 and 2020. . 92 of the 765 units are required because there are a greater number of low- wage jobs (paying less than $40,800) within ten miles of the center of town than there are affordable housing opportunities. . 29 percent of Richfield's housing stock is considered affordable at 60 percent of median income. 30 percent is seen as desirable as a share of the regions need. The conclusions of the report clearly challenges Richfield's understanding of it's affordable housing stock, it's 25 year fair share partnership in providing affordable housing in the Region, and it's position as one of the "first suburbs". The Report limits the way the existing housing stock and other important data indicators are considered. The Report states that low income households that find housing in older units such as Richfield are not counted as part of the supply because they were not "directly consuming land". Yet, the most affordable housing in the Region has already been built - been built in Richfield. The following are key talking points as part of what is hoped to be an ongoing dialog about future Metropolitan Council and Richfield housing policies and programs: ~-~ Page 2 The conclusions of the Report are very different from th shared Metropolitan Council/Richfield vision of the Livable Communities Act of 1996: . Richfield's "Housing Goals and Action Plan, 1996 to 2010", found that 97 percent of the single family housing stock and 64 percent of the rental housing stock was affordable. . Richfield was encouraged and successful, given our high levels of affordability, in pursuing 850 new affordable and life cycle housing units in a fully developed community. . However, the housing stock that was so affordable in 1996, the same single family homes built by G.I's from 1945 to 1960, and the class "c" apartments of the 1960's are now found to not be affordable. . The data and indicators used for the 2011 to 2020 forecasts are too narrow in application due to a focus on jobs and transit rather than community vitality, household income, credit for the affordability of the existing housing stock and thoughtful land planning. The City of Richfield continues to support the following 1996 Metropolitan Livable Community Act principles: . A balanced housing supply, with housing available for people at all income levels. . The accommodation of all racial and ethnic groups in the purchase, sale, rental and location of housing within the community. . A variety of housing types for people in all stages of the life cycle. . Housing development that respects the natural environment of the community while striving to accommodate the need for a variety of housing types and costs. . The availability of a full range of services and facilities for its residents, and the improvement of access to and linkage between housing and employment. The key indicators that need to be added for consideration before determining an expanded Richfield role in affordable housing for the region include: . Richfield's present housing policies. . The body of research that emphasizes multiple community priorities of which affordable housing is only a part. . Metropolitan Council's "Regional Development Framework, 2004"; matching new households and new jobs . Metropolitan Council's "2030 Transit System"; the expanding transit system that should guide affordable housing locations. . U.S. Census and more recent projections of median household and median family income and Richfield's relative position. . Median sale price data for single family homes in the region and Richfield's relative position. (P-3 Page 3 . Avoiding the creation of "areas of concentration" of affordable housing. . The actual cost of developing affordable housing in an otherwise fully developed community. . Resources are inadequate to subsidize the housing and acquire the location for 765 affordable housing units. . The responsibility for affordably housing, in Richfield, lower wage workers within ten miles of the center of town. This includes workers in Richfield's recognized commuteshed and laborshed of Bloomington, Edina and Minneapolis. But, it also includes housing workers from St. Paul, Roseville, Golden Valley, St. Louis Park, Hopkins, Minnetonka, Eden Prairie, Shakopee, Savage, Burnsville, Apple Valley, and Eagan. . Where Richfield residents travel to work (commuteshed). . Where Richfield workers travel from (Iaborshed). . The Report's departure from the "fair share" concept, county by county. . The Report's departure from the "fair share" concept city by city, particularly for fully developed communities in Hennepin County were for 2011 to 2020 more than 50 percent of new growth in housing must be affordable to households at 60 percent of median income. . The faulty recognition that the production of new units of affordable housing at 60 percent of median income ($46,200 in 2005), is the only way to meet affordable housing needs for a fully developed community like Richfield. To the contrary, Richfield's 350 units of Section 8 Housing Choice Vouchers and 30 units through Kids @ Home and ten units of public housing provide ongoing and years of commitment to households with incomes less than 50 percent of median income (less than $40,000). . The reality, given the need to remove existing housing to redevelop new housing, that performance to achieve the goals in the report will actually result in no net increase in affordability by production. The study acknowledges it did not take this into consideration although it is an essential result of new housing growth in a fully developed city. Housing policies at 60 percent of median do nothing to help true affordable housing needs at 30 to 50 percent of median income or housing households at the official poverty line of $19,806 or below. If a new formula or policy must be established, make it one that serves households with the greatest needs. Finally, the process and results of the Report must be challenged. There has been no due process during the work of the panel, the focus group, the preparation of the Report that has included an opportunity for Richfield to express our policy concerns. Through the following paragraphs and the supporting attachments, Richfield's position is further supported. Only with this additional analysis and consideration can affordable ~-'f Page 4 housing needs in the region be adequately addressed. Concluding paragraphs follow this next section to offer a different policy direction. A detailed discussion of Richfield's key indicators Richfield's present housing policies: . Livable Communities Act, 1996 Principles, as summarized on a previous page. . 2020 Focus on the Future; 2000 Strategy: 20 percent of replacement housing should be set aside as affordable at 30 to 60 percent AMI. 20 percent should be targeted for upper income brackets. The remaining 60 percent of the housing should be rented or sold at whatever occurs competitively in the marketplace. . Use the Comprehensive Plan as the guide for developing new housing choices. The body of research that emphasizes multiple priorities of which affordable housing is only part: . The Brookings Institution-Center on Urban and Metropolitan Policy (Brookings: www.brookings.edu) finds that a "first suburb" such as Richfield has a distinct set of market and demographic conditions and fiscal challenges that set them apart in a Region. The Report does not recognize this. . Regional growth strategies as discovered by Brookings need to do more to strengthen the health and vitality of first suburbs before they decline. Livable Community policies supported this. The Report does not. . The Brookings research offers five first suburb priorities of which affordable housing can be an element but not the element within multi-generational and economically diverse new development: 1. Moderate the increasing poverty found in first suburbs. 2. Maintain and sustain the older housing stock. 3. Provide senior housing choices. 4. Promote higher density private development. 5. Collaborate regionally to achieve these priorities. . It needs to be acknowledged that Brookings research also recently determined an "affordability index" linked to the location of transit and housing. The two should be linked but not to the detriment of first suburbs or with the addition of "low paying jobs within ten miles" of a fully developed community to the formula. Metropolitan Council's "Regional Development Framework, 2004; matching households and new jobs: . By 2030, developed communities of the Region will have 30 percent of the new households and 50 percent of the new jobs. (P-5 Page 5 . By 2030 developinq communities of the Region will have 60 percent of the new households and 40 percent of the new jobs. . New affordable households and the percent of affordability should match where the growth in housing is rather than where the jobs are. Using data from the Report: Performance from 2011 to 2020 by the ten developing high growth communities that issued the most building permits in 2004: PERCENT OF FORECASTED FUTURE NEW UNITS GROWTH AFFORDABLE AFFORDABLE CURRENTLY (HOUSING UNITS REQUIRED BY CITY AFFORDABLE UNITS) REQUIRED 2020 Woodbury 9% 7,494 2,202 29% Blaine 27% 5,300 1,267 24% Lakeville 13% 8,300 2,288 28% Shakopee 18% 4,500 2,105 46% Maple Grove 7% 5,644 1,844 32% Ramsey 4% 6,500 1,402 21% Brooklyn Park 27% 3,832 1,590 41% Rosemount 14% 3,200 853 26% Compare this with performance from 2011 to 2020 by eight fully developed communities in Hennepin County required by the Report to produce about 50 percent of their new units to be affordable: PERCENT OF FORECASTED FUTURE NEW UNITS GROWTH AFFORDABLE AFFORDABLE CURRENTL Y (HOUSING UNITS REQUIRED CITY AFFORDABLE UNITS) REQUIRED BY 2020 Richfield 29% 1,500 765 51% Eden Prairie 10% 1,300 685 53% Edina 20% 400 212 53% Golden Vallev 18% 200 104 52% Hopkins 43% 300 143 48% Minneapolis 47% 9,000 4088 45% Minnetonka 12% 811 431 53% St. Louis Park 26% 1,000 501 50% to -Co Page 6 Metropolitan Council's "2030 Transit System"; the expanding transit system that should impact affordable housing locations: . The emphasis of the report is on the location of jobs as of 2003 and present transit service. . The proposed Regional transit system of 2030 is expansive and spreading to the edge of the Region. . Therefore, affordable housing can more closely match these corridors to the edge of the Region. It is future transit that links affordable housing to jobs, not the location of affordable housing. U.S. Census and more recent projections of median household/median family income and Richfield's relative position: . According to HUD, the 2006 median household income for the Region is $78,500. . According to Claritas, a private data research firm, the 2006 median household income for Richfield is $64,153. . That means that at least half of Richfield's 15,100 household are already at 82 percent of the median income or less for the Region. While not 60 percent of the median, it demonstrates that half of Richfield's households are "Iow- income" . . Richfield is "supplying" more affordable housing than it is given credit for. According to the 2000 Census, the following shows Richfield's relative position with other fully developed communities: (In 2006, relative positions are similar.) 2000 CENSUS PERCENT AFFORDABLE MEDIAN HOUSEHOLD TODAY ACCORDING TO CITY INCOME REPORT Reaion $54,332 To be determined. Richfield $45,519 29% Bloomington $54,628 21% Brooklyn Center $44,570 30% Brooklvn Park $56,572 27% Eden Prairie $78,328 10% Edina $66,019 20% Golden Vallev $62,003 18% Hopkins $39,203 43% Maple Grove $76,111 7% Minneapolis $37,974 47% St. Louis Park $49,260 26% Apple Vallev $69,752 18% Burnsville $57,965 25% Eaaan $67,388 22% Savage $75,097 8% St. Paul $38,774 47% Roseville $51,056 26% ~-l Page 7 Median sale price data for single family homes in the Region and Richfield's relative position. . The attached table provides 2005 Multiple Listing Service Home Sales data. Richfield's median price of $221 ,000 closely approximates median assessor's value for the same time period. . The table also shows the median prices for cities in the Region. First suburbs tend to be lower in median price, have more affordable housing, and are required to produce a higher amount of affordable housing in the future. Avoiding the creation of "areas of concentration" of affordable housing. . Areas of concentration in affordable housing should not be created based on the limitations of transit services and the location of jobs. . There are 12 census tracts in the City of Richfield. According to the 2000 census, two of these tracts had a poverty concentration of 10% considered by HUD to be a high concentration and two other tracts had a poverty concentration of 9%. The tracts with the lowest concentration of poverty are primarily established single family homes and will not likely be redeveloped. . Based on median income, sales price, and rental rates alone, Richfield as a community is already "an area of concentration". . The Richfield HRA performs a rental housing survey annually. Two-thirds of Richfield's 4,899 rental units already are below the rental thresholds used in the Report but do not appear to be credited. . The Richfield HRA has 25 years of infill/scattered site single family experience. A home valued today at the maximum affordable amount of $145,000 referenced in the Report would be evaluated for demolition as substandard and obsolete in Richfield. Given the median valued average in 2005 of $220,000 in Richfield, a $145,000 home is 35 percent deficient and more than half the value is in the land. The actual cost of developing affordable housing in a fully developed community: . The cost to subsidize development of rental or ownership housing at 60 percent of the median income approximates $30,000 to $50,000 per unit. Multiple cities, HRA's and developers can confirm this. . For Richfield that is a subsidy of $23 to $38 million for 765 units. . In addition a fully developed Richfield can redevelop only through the added expense of acquisition, demolition, and relocation. The estimated additional cost when it is not a "green field" is $20,000 to $40,000 per unit; $15 to $30 million that yields a location for 765 units. f.o-~ Page 8 Resources are inadequate to subsidize the housing and acquire the location for 765 affordable housing units. . With a requirement that more than 50 percent of the forecasted units must be affordable; density, economic integration, tax increment, tax credits, existing county, regional, states, and Federal programs, are all inadequate to produce the forecasted amount. . National trends, regulations, and experiences would confirm that Richfield's goals are thoughtful and appropriate. Generally, required affordability of from 1 0 to 35 percent was reported. . Inclusionary housing that limits more affordable housing in first suburbs is encouraged by Brookings. Some states and cities have inclusionary housing laws to provide affordability in new developments REQUIRED PERCENT AGE OF LOCATION AFFORDABILlTY Massachusetts, state 10% Madison, Wisconsin 15% Boston, Massachusetts 15% Denver, Colorado 10% Sacramento, California 15% Boulder, Colorado 20% Highland Park, Illinois 20% The responsibility for affordable housing lower wage workers. . Richfield, being at the center of everything already houses nearby workers affordability. . The Report asks too much to also make Richfield responsible for jobs in communities ten miles away. . The Report uses 2003 data to compare the number of low-wage jobs and low-wage working residents within a ten-mile radius form Richfield's center point. Richfield's low-wage proximity ratio was calculated to be 1.93, or almost two jobs for every local low-wage worker. The assumption that one housing unit should be available for every low-wage worker does not consider that most households consist of more than one worker. Co-q Page 9 Where Richfield residents travel to work: WHERE RICHFIELD RESIDENTS GO TO PERCENT OF WORKERS WORK Minneapolis 24% Bloomington 17% Edina 12% Richfield 7% St. Paul 6% Eden Prairie 5% St. Louis Park 3% Minnetonka 3% Eagan 3% Other 20% Where Richfield workers travel from: WHERE WORKERS TRAVEL FROM TO WORK IN RICHFIELD PERCENT OF WORKERS Minneapolis 15% Richfield 13% Outside MN 10% BloominQton 8% St. Paul 6% Burnsville 3% Eagen 3% Apple Valley 3% Edina 2% Eden Prairie 2% Other 35% The Report's departure from "fair share", county by county UNITS OF NEW NUMBER OF PERCENT OF NEW COUNTY GROWTH AFFORDABLE THAT IS UNITS AFFORDABLE Anoka 21 ,890 5,298 24% Carver 17,442 4,738 27% Dakota 27,861 7,604 27% Hennepin 44,737 16,514 37% Ramsey 12,259 4,526 37% Scott 18,830 6,559 35% Washington 23,528 5,791 25% &,-10 Page 10 The Report's departure from ~'fair share", city by city. Performance from 2011 to 2020 by eight fully developed communities in Hennepin County required by the Report to produce about 50 percent of their new units to be affordable: PERCENT OF FORECASTED FUTURE NEW UNITS GROWTH AFFORDABLE AFFORDABLE CURRENTLY (HOUSING UNITS REQUIRED CITY AFFORDABLE UNITS) REQUIRED BY 2020 Richfield 29% 1,500 765 51% Eden Prairie 10% 1,300 685 53% Edina 20% 400 212 53% Golden Valley 18% 200 104 52% Hopkins 43% 300 143 48% Minneapolis 47% 9,000 4088 45% Minnetonka 12% 811 431 53% S1. Louis Park 26% 1,000 501 50% Performance from 2011 to 2020 by 11 developing communities in the Region that don't provide a higher level of affordability: PERCENT OF FORECASTED FUTURE NEW UNITS GROWTH AFFORDABLE AFFORDABLE CURRENTL Y (HOUSING UNITS REQUIRED CITY AFFORDABLE UNITS) REQUIRED BY 2020 Ramsev 4% 6,500 1 ,402 21% DahlQren Twp 9% 4,310 985 22% Dayton 22% 6,000 942 15% Farmington 14% 3,000 492 16% Rogers 5% 488 112 23% Elko 9% 1,380 235 17% New Market 9% 1,350 221 16% Cottage 9% 4,400 1,112 25% Grove Hugo 10% 4,000 877 22% Lake Elmo 22% 1,985 528 26% Stillwater 19% 546 142 26% to-I' Page 11 The faulty recognition that the production of new units is the only way to meet affordable housing needs. . Richfield has a number of affordable housing programs that serve low wage workers annually without the cost of production or removal of existing housing: . 350 units - Section 8 Rent Assistance . 30 units - Kids @ Home Rent Assistance . 10 units - public housing . 10 units low income home rehab . While developing suburbs can produce more affordable housing, Richfield manages the existing housing stock affordably. . Up until 2003, over 1,000 rental apartments in Richfield were in the 4(d), property tax incentive program that dedicated these units to households at less than 60 percent to median income. A policy like this should be reestablished. The removal of the existing housing stock to redevelop new housing results in no net increase in affordability and prevents fully developed communities from "performing" . . The Report determines this impact cannot be measured because of the unknowns of future location of redevelopment in fully developed communities. . To the contrary, Richfield's Comprehensive Plan today clearly indicates that most redevelopment will occur within the following planning areas: Lakes at Lyndale, Cedar Avenue, 1-494. . The reason redevelopment is appropriate in those areas is due to Regional transportation and development policies and resulting decline. All of these 16 additional indictors could easily be dismissed as outside the scope of the Report. Instead, the following are action steps offered for the City and Region because of the consideration of these indicators. 1. Richfield and other fully developed first suburbs must be recognized as already being areas of concentration with at least 50 percent of its households having a lower income. 2. A balanced housing stock should be sought where no more (or less) than 30 percent of affordability exists and with goals of no greater than 30 percent production of affordable housing. This is realistic and responsible land use planning for a city and for a region. 3. Determine the cost to the Metropolitan Council of adding sewer and transit capacity per unit of housing in developing areas. 4. Consider more indicators in a study of this type. The use of the right indicators helps to make better policy decisions. 5. Apply Livable Community policies to the Report to achieve the fair distribution of life cycle and affordable housing. (P-I L Page 12 6. Match new housing growth in developing cities with a greater share of affordability and alternative ways developed cities provide affordability. 7. If transit and low wage job locations must be the only indicators, then the . cities with the jobs within ten miles, through a fiscal disparities formula, must provide resources to impacted communities for affordable housing. As job growth continues in the fully developed area, employers must contribute to affordable housing and the true cost of producing low wage jobs. 8. Develop policies like 4(d) that cost effectively, dedicate affordable housing choices in existing housing. 9. Formulate affordable housing policies that serve households with the greatest need. fo-/'3 2030 Transitway System Figure 4 - 2 Transitways on Dedicated ROW Tier 1 Northstar Northwest Cedar Avenue 1-35W Central Tier 2 Red Rock Rush Line Southwest '" Transitways on Dedicated ROW Express Commuter Bus System August 2004 1 4+ Division III , Minneapolis $372,0~8 $255,000 300 ' Mpls:Calhoun-lsles 301 , Mpls-Carilden $1 491 $163,900 302 Mpls-Central 640 $247,045 303, Mpls-Lo,ngfellow 133 $211.000 304 ' Mpls~Nok~mis 4a3 $223,450 ,~05, Mpls-North ,173 $159.000 ,~.o6 Mpls-l\IoJ:tlleast .454 $205,900 307 Mpls-Phillips 4 $181,357 $174,500 308 Mp/s-Powderhorn 176 $192,626 $193,400 309 Mpls-Southwest 508 $334,398 $285,000 310 Mpls-University 42 $252,909 $239,414 Suburban and other areas 340 Buffalo 441 6 115 192 128 $235,955 $200,000 341 Wri,ght County (Except Buffalo) 2,151 45 ,5.77 904 $241,140 $218,000 342 Hutchinson 352 3 150 $173,593 $158,250 343 Mcleod County 288 3 ':143 $163,395 $'157,494 360 Robbinsda/e, 273 16 148 $193,651 $196,900 361 Crystal , 413 7 247 $201,502 , $197,500 362 New Hope 326 20 152 $219,47,3 $224,400 363 Brooklyn Center 482 5 277 $194,124 $195.000 364 Brooklyn Park 1,466 18 514 $248,074 $229,000 365 Maple Grl)vefOsseo 1.409 2 4,68 $290;334 $242,000 366 Champlin 463 1 193 $11 ,376,503 $253,513 $226,900 367 Hennepin-North 231 2 70 $68,304,934 $295,692 $285,000 368 Hennepin-Northwest 253 1 85 $131,625,962 $520,261 $393,000 370 Sibley County 109 1 53 $17,289,364 $160,087 $146,100 373 Golden Valley 398 6 188 $124,381,510 $312,516 $260,500 374 Plymouth 1,253 32 367 $405,481,194 $323,608 $290,000 378 Richfield 664 93 335 $146,663,818 $221,212 $221,000 379 Bloomington-East 19 $218 5 380 Bloomingto,n-West 381 LakeMinn'etonka 385 Edina " . ,386 Hopkins . 387 Mlnnetonka 391 Saint Louis Parll. 392 Eden Pral,rle 394 ,Carver County 396 Chanhassen 397 Chaska 398 Victoria Division II , 600 West St. Paul 602 South St. Paid 604 Men!lotafLilydalefMe -605 Sunfish Lake, 608 Inver Grove Heigh , 610, 'Eagan- ' 612 Burnsville' '614 ,Apple Valley' 616 Rosemount 487 1 617 Hastings 409 2 618 Eastern Dakota County 28 0 624 Farmington 652 0 626 Lakeville 1,058 3 628 Southern Dakota County 45 0 630 Northfield 353 4 632 Rice County 44 7 640 'S!1akopee' 642 Prior Lake. 644 Savage. ' 646 Jordan, 6,48 New Prague " ' , 650, BellePlalne,_ ' ",658 Lesueur' County, 560 Goodh'ue' County Division I 702 Falcon H g hts/La u d e rda le/Rsev i lie 499 38 254 98 $251,424 705 Lino Lakes/Hugo/Centerville 686 0 274 251 $301,904 706 North Central Surburban 355 8 100 134 $322,878 707 Ham Lake 197 1 65 118 $363,343 708 White Bear Area 696 8 274 232 $303,513 709 217 168 71 .59 24 7'1 343 206 7 342 203 7 101 55 , , 714, 251 98 716 SP-H 406 126 720 SP-Sou 't st. Paul 85 30 721 - Lakeland/Afton/'O'enma 35 '44 722 Newport/St. Paul Prk/Cottage Grove 762 3 120 334 305 725 Pine Springs/Lake ElmofOakdale 570 0 186 220 164 726 Woodbury 1,419 9 465 363 581 727 Sti Ilwater/Bayport 567 7 140 210 209 728 SP-Riverview/Cherokee 168 3 35 95 35 738 SP-Home Croft/W 7Th 113 6 38 49 20 740 SP-Crocus Hill 327 99 114 49 64 (Continued on page 6) 2 . 2005 Residential Activity Report . February 2006 (p;-/ ~ TEN MILE RADIUS FROM THE CENTER OF RICHFIELD 6. N o 1 2 3 4 Miles I ilgislcom dev/stafflbilVprojects/richftd 10 mi radius.apr 5-25-06 i f~ ~j 1 .$ lo-l (p "'Co, ~ .VJ ..!!1 ~ v """,:- ::;~'~~ Ii . ~.( , e VJ VJ ~ ~ tii (} .fr ~ .~ 's ~ ::> ~ .Q ODD ..ll:: g . m l- ei) · Q.. II) .Q o "'") ~ <9, $' z.~ ~ N ~ , C' Co, .( LO ci o . . . . . .. .' . . . . ....... . . .. .... . ,. ." . . . . .. . ... : , , .. . .. . .. Ii; .g, ~ (5 ~ ~'" - ~g'lli oC\lcn $:50 @"C~ ~~~ ~ 1t~ 6~(5 ~~~ 'taUJa. o~~ . It . ~i ~~ .- ~ ~ ~ ~> s~ .s tn-c (I) (I) .- J: :=tn 0(1) .. c ~ .- E .!E tn 0 · 0 -c - (I) .- ...- J: (.) D2 ~/(1 Cil <: Ll"J .0, e "i:: 0 o ...... (58 ~ ~o~ ~ C\l en g.l::o >OM 0""0::2: ~~~ Cli en" ""0 ~5.s 1;; m cn~o .e~o. ~~~ v "C~i C'..( ~>. __r. ~f C', .' III ~ ..21 ..(<9 '..( ~"<t '..( III '<9<9 (I) .lI:: r/J E U . -9<9, C") ~ iii -0 0 i:3 0. Qi m <C' "u It= Z.~ .S '2 ..s::: s.. . <9C' , N ~ ~ .2 CI) :2 a:: D.. ..(..( ODD II) 0..( .c , lD 0 ..( d -, 0 ~ , , . . . , tI ~. .-"ftj"ll '., .,. : .. ". L _.. . ..... e. ' ::. ;~W -it'.. ,~.1..~'.9 . ... -fi. ,., e!;J. .-:.:. . -.-1 · ,'':;', t' 1 .oj:; It ._~. B. · 'it' _.r" , .~ .... .. ',' ",9~1:...., .. ..:;.:.. ........ . . . l..... _f""l.t:i~_: .... . . ,-t. e" ~____--.,~. .. . .. .. .'." ,. ., .. .. . , .. I. .0". .. . ' .. .. .e, , . . . . , " . - . "" to-I g Summary Report: Determining Affordable Housing Need in the Twin Cities 2011 - 2020 A Report by an Advisory Panel to Metropolitan Council Staff January 2006 0-( q Summary Report: Determining Affordable Housing Need in the Twin Cities 2011 - 2020 Introduction This report presents a new forecast of the affordable housing need in the Metropolitan Area during the decade 2011 - 2020, and describes the process used in determining each community's share of this regional need. Communicating forecasted affordable housing need numbers is the first step in helping communities determine the housing goals and objectives to be included in the housing element of their comprehensive land use plans. Conveying need numbers to communities also helps them envision and plan their role in addressing their share of the forecasted regional affordable housing need. This report outlines a methodology established by an advisory panel to Metropolitan Council staff for: a) determining a forecasted regional affordable housing need; and b) allocating that need to individual communities. This report begins with background information about the necessity of determining regional affordable housing need, and the Metropolitan Council's role in this process. This report concludes with a series of tables showing how many newly- constructed affordable units will be required in each community to meet the forecasted demand for affordable housing between 2011 and 2020. Backe:round: The Necessitv for Determinine: Ree:ional Affordable Housine: Need Enacted in 1976, the Metropolitan Land Use Planning Act (MLUPA),Minn. Stat. Sec. 473.859, subdivision 2, paragraph [c], requires communities in the region to include in their comprehensive land-use plans a housing element that acknowledges the city's share of the forecasted regional need for low- and moderate~income housing. A [local] land use plan shall.. .include a housing element containing standards, plans and programs for providing adequate housing opportunities to meet existing and projected local and regional housing needs, including but not limited to the use of official controls and land use planning to promote the availability of land for the development of low and moderate income housing. The Metropolitan Council must also prepare and adopt guidelines and procedures to help local governmental units accomplish the provisions of the Metropolitan Land Use Planning Act, including this affordable housing planning responsibility. This guidance is provided through the Council's Local Planning Handbook, online at www.metrocouncil.org/planningILPH/handbook.htm. It references the housing element and housing implementation provisions ofthe Land Planning Act, providing information about each community's share of the forecasted regional low- and moderate-income housing need, as well as tools and methods cities can use to create and promote affordable housing opportunities. Prepared by an Advisory Panel to Metropolitan Council Staff b,-Dl-D Summary Report: Determining Affordable Housing Need in the Twin Cities 2011 - 2020 Page 2 In 1977, the Council responded to the affordable housing planning charge in the MLUPA with guidelines for comprehensive plans due by 1980. The Council used a five-factor formula that compared communities in the region with regard to: 1) total number of households; 2) anticipated household growth to 1990; 3) number of jobs; 4) anticipated growth injobs to 1990; and 5) the number of low- and moderate-income households minus the number of existing low- income housing units. For this first round of local comprehensive plans completed in the early 1980s, cities prepared housing elements that included the housing numbers identified by the Council, and guided sufficient land in their land use plan to accommodate these low- and moderate-income housing numbers through high-density residential development. Following the 1995 legislation that required local comprehensive plan updates prepared for the period of 1998 to 2008, the Council asked communities to plan for new affordable and life-cycle housing in numbers consistent with the housing goals negotiated as a condition of participation in the Livable Communities Act (LCA). For non-participant communities, the Council asked communities to set goals consistent with the LCA goals framework employed by the 100 plus LCA cities and townships. . That goals framework was not based upon analysis of households with a housing need, limited household income or housing condition. It was based solely upon keeping the production of new affordable units at a level similar or better than the existing situation in the community between 1996 and 2010. In creating this goal-setting framework, the Council established benchmark ranges for each community in six categories: percent affordable rental and ownership housing, percent non- single-family detached units, owner-renter split, single-family and multifamily density of housing stock. A community's benchmark was a range in each of the six categories that represented the average for all communities at a similar stage of development. The Council and local governments negotiated goals to increase or maintain percentages or numbers in each category. Only two communities failed to submit comprehensive plan updates with affordable housing goals as reflected in the LCA goals-setting framework. The MLUPA also requires that comprehensive plans include an implementation section identifying the housing programs-local, state and federal fiscal devices such as bonding, TIF, tax abatement, and official controls including the guiding and zoning of land-that communities will employ in addressing their share of regional need for affordable housing. Foremost.among these implementation efforts is the guiding of sufficient land for the development of new housing that may provide the opportunity for the production of affordable units. Comprehensive plans must identify sufficient land to accommodate the communities' share of the region's need for low- and moderate-income housing. Typically, the development of new affordable units requires the use of housing programs or tools and the availability ofland to accommodate the development of affordable units. This is why the Land Planning Act requires both the recognition of regional share of need, and the guiding of land to accommodate this need. Prepared by an Advisory Panel to Metropolitan Council Staff b-~' Summary Report: Determining Affordable Housing Need in the Twin Cities 2011 - 2020 Page 3 Overview of the Methodolo2V in This Report Staff of the Metropolitan Council, through work with an advisory panel, 1 initiated a two-part study to determine the 2011 - 2020 regional need for new affordable housing in the Twin Cities, and the allocation of this regional need to communities. The two steps to the study are broadly summarized in the following way: . Part 1: Forecast the Regional Affordable Housing Need and Determine the Amount of Need That Will Consume Land (new construction only) in Sewer-Serviced Communities. . Part 2: Allocate the New Construction Affordable Housing Need to Communities, Adjusting for Criteria That Are Important to Locating Affordable Housing. In determining the overall affordable housing need for the Twin Cities, the Metropolitan Council tied forecasted affordable housing need to forecasted household growth in sewer-serviced areas. To be precise, this methodology guides affordable housing need to those communities that are experiencing growth in households serviced by Metro Sewerage District or by municipal treatment facilities in "rural center" communities. By following this approach, the Metropolitan Council is allocating the region's forecasted affordable housing need in a manner that is consistent with overall goals to guide growth within the urbanized portion of the Twin Cities. A Land Plan nine Exercise This methodology has been designed to assist cities with land planning for the next round of comprehensive plan updates (in 2008). It is only concerned with newly-constructed affordable housing, a development action that consumes land. Forecasted affordable housing need between 2011 and 2020 that can be accommodated by units that exist in the current housing stock is not relevant to this exercise. To further explain this point, some of the new affordable housing need that arises between 2011 and 2020 will be satisfied by units that exist in the private market today. As academic research has shown,2 the amount of low-income housing in the private market expands from decade-to- decade as older units depreciate in price to maintain occupancy, a process known as "filtering." This movement between market-rate and affordable pricing does not generally occur among subsidized units, which generally are never "priced up" into the market-rate category. New, low- income households that find housing in older, market-rate units that have "filtered down" in price have their housing needs satisfied without directly consuming land. It is critically important to acknowledge the private market's role in providing affordable housing in this study, both through filtering and through new, un subsidized construction. Historically, the private sector has provided the bulk of all low-income housing in the region; in 2000, the private sector provided affordable housing to approximately 40% of low-income Prepared by an Advisory Panel to Metropolitan Council Staff b-~~ Summary Report: Determining Affordable Housing Need in the Twin Cities 2011 - 2020 Page 4 households in the Twin Cities. Comparatively, the public and philanthropic sectors, using subsidies, provided affordable housing to only 15% of all low-income households. (Less than 2% oflow-income households were homeless in 2000. The remaining 44% oflow-income households were housed in private-market units, but with rental or owner costs exceeding 30% of gross income). Definitions and Concepts Underlvine the Methodolo2V The following definitions and concepts are important for understanding the methodology behind the advisory panel's determination and allocation of affordable housing need in the Twin Cities between 2011 and 2020. The application of each concept is explained in a following section titled "Specific Steps in the Methodology." . Affordable Housing: In this report, a unit is affordable if it is priced at or below 30% of gross income of a household earning 60% of the Twin Cities median family income (or $46,200 in 2005). The 60% income threshold is determined by the U.S. Department of Housing and Urban Development (HUD) and is the cutoff for tax-credit housing development, the main program for new affordable rental housing construction nationwide. Fifty-nine percent (59%) of all first-time homebuyers in the Twin Cities area assisted by MHF A in FFY 2005 had incomes at or below 60% of median income. . Household Growth: The methodology in this report relies on Metropolitan Council forecasts of growth in sewer-serviced households between 2010 and 2020. These forecasts were included in System Statements issued to cities in September 2005. Forecasts for 18 communities have been recently revised by mutual agreement of the Metropolitan Council and local officials; these forecast revisions are scheduled for Metropolitan Council action in February 2006. . "Healthv-market" Vacancy (5%): Vacant units are vital to a healthy housing market because they help maintain stable prices. An insufficient number of vacant units creates upward pressure on prices as housing consumers compete for too few units. In the affordable housing sector, upward price movements reduce the supply of units, working against housing policy and public investment in affordable housing. . Low-Wage Job Proximity Ratio: This report's methodology makes adjustments in affordable housing need for communities that are net importers of low-wage workers (employment centers) or net exporters of low-wage workers (bedroom communities). The ratio is a comparison of local low-wage jobs (within 10 miles of the community's geographic center-point) divided by local working residents (living within 10 miles of the center-point).3 A ratio higher than 1: 1 indicates an imbalance (communities that are net importers of workers) that may be mitigated to a certain extent by the creation of more local affordable housing. Prepared by an Advisory Panel to Metropolitan Council Staff {o-';)..3 Summary Report: Determining Affordable Housing Need in the Twin Cities 2011 - 2020 Page 5 . Affordable Housing Stock: This report's need allocation methodology also considers a community's existing supply of affordable housing, giving credit to those communities that supply higher levels. This measure estimates the existing share of a community's housing stock that is affordable using Minnesota Department of Revenue data on 2004 market values, Census 2000 rent levels, and Metropolitan Council data on 2004 manufactured housing units.4 . Transit Service Level: A final factor considered in allocating affordable housing need is the level of transit service (destinations and frequency) in a given community. Low- income households are more sensitive to transit services than middle- and upper-income households, and locating affordable housing near transit opportunities is a public policy goal. The methodology in this report makes adjustments based on a classification of transit service available in communities, as expressed by one of four levels: 1 = regular, frequent transit service to many points all through the day (only Minneapolis and St. Paul fall in this category) 2 = a frequent amount of service, but limited destinations (mostly inner-ring suburbs in this category) 3 = some transit service, but very limited in frequency and destinations (many second- and third-tier suburbs in this category) 4 = no regular transit service Streo!!ths of This Methodolo!!ical Approach The methodology employed by the advisory panel for this report has the following strengths: . The approach is consistent with the work completed for The Next Decade of Housing in Minnesota, a key planning document used to forecast affordable housing need across Minnesota. The Next Decade report has been widely accepted by policymakers, and many housing stakeholders are basing affordable housing planning on its results. This report follows key methodological approaches and employs specific production assumptions from The Next Decade study. The Next Decade study was sponsored by the Metropolitan Council, the Minnesota Housing Finance Agency (MHF A), Family Housing Fund (FHF) and Greater Minnesota Housing Fund (GMHF). . Metropolitan Council household growth forecasts provide the basis for need allocation in this study. These forecasts are determined through a collaborative effort between local government and Metropolitan Council staff to identify growth areas and to quantify reasonable market expectations, land capacity, and systems capacity. They, therefore, are the strongest forecasts of future household growth by community. Prepared by an Advisory Panel to Metropolitan Council Staff co -d.- ~ Summary Report: Determining Affordable Housing Need in the Twin Cities 2011 - 2020 Page 6 . The process of allocating affordable housing need in this report takes into consideration community characteristics that are critical in locating new affordable housing: proximity to low-wage jobs, transit service and current affordable housing stock. These factors are widely recognized by national housing policymakers as vital considerations to successful affordable housing placement/development. Regarding job proximity, this methodology is particularly strong in that it considers the location of low-wage iobs. Most other allocation methodologies consider total employment (or perhaps retail employment) without segmenting by wage level. . . The methodology was developed with input from city officials. MHF A staff. Association of Metropolitan Municipalities (AMM) staff and private-market housing experts. The advisory panel advising the study was comprised of ten individuals with deep experience in housing policy and development. This group considered numerous allocation factors and tested several approaches to calculating housing need. The advisory panel also solicited important feedback from six city officials in a focus session in January 2006. Limitations of This Methodolo!!ical Aooroach/Caveats The methodology employed by the advisory panel for this study also has limitations. They include the following: . The forecast period covered in this analysis is relatively long-term. Any methodological approach would suffer from this limitation, but it is important to say that many factors are difficult to forecast 15 years in advance. Factors in 2020 such as the economic conditions in the Twin Cities, migration patterns, demographic changes, housing interest rates, construction costs, and more, are simply unpredictable, but will have an impact on affordable housing need. Significant variances from the assumption made on any of these factors could prompt a re-examination of the needs numbers. . The methodology likely errs on the conservative side in estimating affordable housing need. This methodology assumes that the stock of affordable housing in the private sector (unsubsidized) will expand significantly between 2011 and 2020 through the mechanism of downward price filtering. For planning purposes, this is a conservative approach. However, ifthe private market supplies fewer affordable units than assumed, the new affordable housing construction need for the decade will be larger than is documented here. . The forecasted overall housing need calculations do not consider units that may be needed to replace substandard units or units lost to gentrification or demolition. This adds another layer of conservativeness to the forecasts. There is no reliable data to project occupied, affordable units that are substandard in condition and in need of replacement. As well, housing units that may be lost to gentrification or demolition are not estimated in this report, due to the lack of reliable data on the value/price of demolished units and the difficulty in predicting areas that will be gentrified. Prepared by an Advisory Panel to Metropolitan Council Staff b-(}S Summary Report: Determining Affordable Housing Need in the Twin Cities 2011 - 2020 Page 7 Specific Steps in the Methodolo!!V Part 1: Forecast the Regional Affordable Housing Need and Determine the Amount of Need That Will Consume Land (new construction only) in Sewer-Serviced Communities. The following bullet points describe the specific steps that the advisory panel employed to estimate affordable housing need across the Twin Cities, and to determine the amount of need represented by new construction. This methodology is also graphically illustrated in Exhibit 1. . SteD 1: Determine forecasted household growth in sewer-serviced parts of the region. Metropolitan Council regularly prepares city- and town-level forecasts of sewer-serviced households (serviced by the Metro Sewerage District or by municipal treatment facilities), as well as un-sewered households (with septic systems), for decennial milestones (years 2010, 2020, 2030). Net growth expected in the sewer-serviced part of the Twin Cities is forecast at 166,547 households, or about 98% of total household growth expected in the period 2010-2020. . Step 2: Determine the Droportion of growth made up bv low-income households. Of all new households added to the Twin Cities between 2010 and 2020,38% (64,100 households) will earn at or below 60% of Twin Cities median family income, according to the advisory panel projection for this study. This projection was based on historical income distribution patterns, applied to the 2010 and 2020 household forecasts. . Step 3: Estimate the number of affordable housing units that the Drivate market will provide to new low-income households. As explained previously, the advisory panel expects that 20,300 low-income households added to the Twin Cities after 2010 will find housing in privately-owned, market-rate units that exist now, but will depreciate down to an affordable level during the next decade. This assumption is consistent with work from BBC Consulting in The Next Decade of Housing in Minnesota. An additional 5,600 new low-income households between 2011 and 2020 are likely to find housing in newly-constructed units produced at affordable prices without public aid. The BBC Consulting methodology includes this category of affordable housing in its tally of "private market provision," but the methodology for this report must add them into the land-consumptive component (Step 4, below). . Step 4: Calculate the net need for newlv-constructed affordable housing units. Subtracting those new low-income households that are expected to find housing in existing private- sector units that become newly affordable (20,300) from total low- income household growth for the next decade (64,100) yields gross demand for new affordable construction in 2011 - 2020: 43,800 units. (This figure includes 5,600 units that the private-market is expected to produce on its own, without subsidy, at prices affordable to low-income households.) Prepared by an Advisory Panel to Metropolitan Council Staff 00 <U en ~ ~ !:: ';;;) ::s o ::c: <U :0 ~ "'Cl - ;... -!-S Ot+-i ~< ~ !:: C"a c= .- 5 E 52 = <U 00.0 " C III Q N Q N I .... .... 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(I) (I) E .c I: o ;"!i CJ 1:1- .= ';: CI) 0 ~{l5S~ .Jo't'.:~ ~.c.!(I)<D (l)4ICJ't'Ui zg:~B~ ~~~~o (I) 't' III CJ (I) 't' III :::I o .:; ~ c- .: i 't' 'c (I) :::I t:c (1)0 IIIC ;!!1 01 "= ~ ~ ::s :::: Q) " III g ~ Ula::.o:: ~ u 8 ~ :::su....."O olXl(l)~ CIllXl:il::>o ~ c: '. :::s CI) 0 ~u :::s..... o CI) CIl:il ~ ~ r;s :-- ~ =:: :: a =:: -S! :.::: ~ ~ .::: ~ .s - ~ =:: ~ C> ~ .~ ~ ~ ~ =:: ~ ~ ~ ~ ~ & ~ l:,.- ~l Summary Report: Determining Affordable Housing Need in the Twin Cities 2011 - 2020 Page 9 However, to arrive at a net total that reflects the full picture of new construction need, the advisory panel added in a 5% vacancy provision (2,200 units) and 5,000 units for homeless households that wi11lack housing at the start of the next decade.5 The vacancy adjustment is vital to maintaining price stability in the housing market. The addition of units for homeless households is based on Wilder Foundation forecasts of homeless housing production and its timing. The total need for newly-constructed affordable housing units in the Twin Cities between 2011 and 2020 is estimated at 51.000 (or 30.6% of forecasted growth in sewer-serviced households). This number represents the regional new construction need. This number of affordable housing units is allocated to Twin Cities communities in Part 2 below. Part 2: Allocate the New Construction Affordable Housing Need to Communities, Adjusting for Criteria That Are Important to Locating Affordable Housing. Many local and regional governments across the country, including the Metropolitan Council, have developed formulas for allocating affordable housing need across a number of communities. While these formulas vary greatly in their complexity and differ in the set of variables under consideration, most attempt to allocate need along some measurement of household or job growth, making adjustments for location-criteria that are important to affordable housing policy (e.g., transit service, location of social services, proximity to jobs). The advisory panel strove to limit the number of critical assumptions, recognizing that the addition of more assumptions can increase the potential for error without necessarily increasing accuracy. The advisory panel believes that an allocation formula based on a series of complex assumptions and intricate mathematical steps would reduce the transparency of the formula, making it more difficult for affordable housing stakeholders to understand. For this report, the advisory panel used the following factors in its formula to allocate affordable housing need across the Twin Cities for the period 2011 - 2020: . Household growth potential . Ratio of local low-wage jobs to low-wage workers . Current provision of affordable housing . Transit service These four criteria are addressed in the formula through the following questions: 1. How much household growth is a community planning to absorb from 2010 to 2020? 2. What is the relative balance of low-wage jobs based in the area vs. low-wage working residents? 3. To what extent does a community offer affordable housing now? 4. What level of transit service is available in a community? Prepared by an Advisory Panel to Metropolitan Council Staff G,,-~~ Summary Report: Determining Affordable Housing Need in the Twin Cities 2011 - 2020 Page 10 The answers to these questions determine the amount of affordable housing allocated to a given community per the formula in this study. As detailed in the previous section, the advisory panel projects the number of low-income households in the region to grow by 64,100. Also 5,000 households in the region will be homeless at the start of the decade. Some of these low-income households will find housing that exists in 2010; the balance will require an estimated 51,000 new housing units (equivalent to 30.6% of sewer-serviced household growth). The following steps provide more detail on the method for allocating need amounts by community. Exhibits 1 and 2 following this report indicate the results of these calculations for each community's share of the regional need. . SteD 1: ADDortion new low-income housing need in each community according its household growth. In this step, the advisory panel relied on its 2010-2020 sewer-serviced household forecasts and assumed that 30.6% of all new housing units in each community would be affordable to low-income renters or buyers, the same share as for the Twin Cities overall. This is a uniform allocation of affordable housing need, following the pattern of where overall residential growth can be accommodated.6 . Step 2: Make adiustments (additions or subtractions) to the housing need in each community according to the local low-wage iobs/workers ratio. existing affordable housing stock Dercentage. and transit service. After establishing the baseline allocation of affordable housing need according to household growth in sewer-serviced communities (Step 1), the advisory panel made the following adjustments to each community: o Low-wage iob proximity: Communities with more local low-wage jobs than local low-wage working residents in the area (net importers of workers, or above a 1:1 ratio) increase their share of need by the proportional amount they were above 1: 1 parity. Cities below 1: 1 parity have their need share proportionally diminished.7 o Affordable housing stock: For communities in which more than 30% of all existing housing units are affordable, the formula reduces the need number by the proportional amount they were above this threshold. For communities in which the percentage of affordable housing is currently below 30%, the need share number is proportionally increased. o Transit service: For communities with regular, frequent transit service (transit service levels 1 or 2; see page 5 for definitions), the formula increases the community's share by 20%. For communities with little current transit service (category 3), the formula makes no adjustment. For communities with no regular transit service (category 4), the formula decreases the community's share by 20%. Prepared by an Advisory Panel to Metropolitan Council Staff to-aot Summary Report: Determining Affordable Housing Need in the Twin Cities 2011 - 2020 Page 11 The allocation formula can be expressed mathematically: Affordable housing needc = (HH growthc * K1) * { 1 + (Jobs/Workersc - 1) + (0.30 - Existing aft housingc) + (Transit Adjustmentc)} * K2 where Kl is 30.6%, the forecast for regionwide affordable housing need as a share offorecast growth, and K2 is an adjustment to ensure the regional total of 51 ,030 needed affordable units. Formula Results The allocation formula described above results in need allocations that range from a few units, at the low end, to thousands of units in those communities that expect the most growth and/or that are proximate to employment centers. The map on the following page shows the allocation of new-construction affordable housing need by community between 2011 and 2020, according to the methodology described in this report. Exhibits 2 and 3 presents tables summarizing the amount of new construction affordable housing need in each community, and for each county in the Twin Cities. The tables also show the adjustment amounts related to each of the three factors. Prepared by an Advisory Panel to Metropolitan Council Staff (g-30 Page 12 Summary Report: Determining Affordable Housing Need in the Twin Cities 2011 - 2020 Twin Cities Region Affordable Housing Units Needed, 2011 to 2020 1 to 99 100 to 499 500 to 999 _ 1,000 to 1,999 _ 2,000 to 2,999 _ 4,088 (Minneapolis) UI'MOOdTwp, None Columbus Twp. Ham Lake Forest Lake WASHI~~!9_t-I-, I I I I ____nL__,__ r;-- ~~ Hol~od Twp. VlJatertown Twp. ~MaOOlt- ,:7r<l-'~J~] iNiningerTwp....J 1 ~ Hastings f-....'~ _ -) ; ------------'-'.:....Coa~--',-------~~-L" '---l~ r Vermillion Twp. i Ve~ion, Marshan Twp. R~venna T JQA!<OTA/______ ~'-. I I H!~1j:'n Nev(1"1r ~iesylll : Castle RockTwp. HarJ'lltonTwp. :DouglasTwp,--' EurekaTwp. 2.5 10 15 20 MHes 25 r--.-..--!----y~.- conley/293 1/10/06 ~ Metropolitan Council Prepared by an Advisory Panel to Metropolitan Council Staff (;-3/ Summary Report: Determining Affordable Housing Need in the Twin Cities 2011 - 2020 Page 13 Endnotes: 1 Advisory Panel Members: Tom O'Neil-Committee Chair (DSU), Guy Peterson (Met Council), Todd Graham (Met Council), Kathy Johnson (Met Council), Tim Marx (MHFA), Tonja Orr (MHFA), Anne Hurlburt (City of Plymouth), Patricia Nauman (Association of Metropolitan Municipalities), Linda Barthel (City of Blaine), Angie Skildum (Family Housing Fund). 2 This issue is very complex and no article or study reviewed for this report yielded a methodology that was suitable to measure the number of units moving across price categories in the Twin Cities. However, the advisory panel assumed that the supply of low-income housing in the private market would expand between 2011 and 2020, a conservative approach to need estimation. This approach is consistent with the findings of The Next Decade of Housing in Minnesota study (November 2003) in which BBC Consulting stated that 40.3% of new low- income households added to the Twin Cities between 2000 and 2010 (about 24,000 out of 60,000) will find housing in private market units that have f1ltered downward in price or that have been developed as affordable without public aid. The advisory panel applied this same percentage for the decade 2011 - 2020. In the decade 2011 - 2020, the 40.3% figure translates to 25,830 new low-income households that will find affordable housing in the private market: about 20,260 of them will find housing in existing units that have filtered down in price (no land consumption), and 5,570 in newly-constructed units (consuming land) developed as affordable without public aid. The latter figure was based on extrapolations of: 1) GV A Marquette counts of new, affordably-priced, private market apartments constructed in the Twin Cities so far this decade; and 2) Metropolitan Council counts of new owner units constructed in the Twin Cities so far this decade. 3 The ratio was calculated for each community by the Metropolitan Council using the U.S. Census Bureau's Local Employment Dynamics data set for 2003. This data set identifies the specific location of iobs by wage level and the specific residence of workers by wage level. This data set counts jobs by location for the following wage categories (annual wages): less than $15,000, $15,000 to $40,800, above $40,800. "Low-wage" jobs for use in this report were those paying $40,800 and below. This level is reasonably close to the 60% median family income figure for the Twin Cities in 2005 ($46,200). 4 To estimate the number of affordable owner units by community, Metropolitan Council staff tallied all homestead housing units with a 2005 estimated market value of $145,200 or less, per Minnesota Department of Revenue. The research staff estimated affordable rental units by reviewing Census 2000 counts at the following price thresholds: $639 for efficiencies, $684 for one-bedroom units, $820 for two-bedroom units and $948 for all three-bedroom+ units. The research staff assumed an even distribution of values across the Census unit size/price categories, which did not match directly with those thresholds cited above. 5 Any growth in homeless households after 2010 is already accounted in the growth forecasts of low-income households. Therefore, housing production to serve them is implicitly factored into the need calculations. 6 Some current affordable housing exists in un-sewered communities. Also, it is possible that some new affordable housing may be built in un-sewered communities, but that is not planned or assumed in this study. 7 Local low-wage jobs "in the area" are defined as joba within 10 miles of the community's geographic center-point. Local working residents are defined as workers residing within 10 miles of the center-point. 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The tables entitled, "2011 - 2020 Allocation of Affordable Housina Need bv CitvlTownship" will be the most current and accurate representation of each community's share of the new construction affordable housing need for purposes of preparing the 2008 comprehensive plan updates. If a community's forecasted growth is formally revised, its new unit affordable need number will also be revised. The most current affordable housing needs, including any needed revisions, are online at www.metrocouncil.ora/plannina/housina/HousinaNeed.pdf AGENDA ITEM # 5 RE;PORT# 24 ....... STAFF REpORT RICHFIELD I I HOUSING AND REDEVELOPMENT AUTHORITY MEETING JUNE 26, 2006 REpORT PREPARED By: KELLY BERG, HOUSING COORDINATOR NAME, TITLE REpORT PRESENTER: BRUCE NORDQUIST, HOUSING AND REDEVELOPMENT MANAGER DEPARTMENT DIRECTOR REVIEw: NAME, TITLE REVIEWED BY EXECUTIVE DIRECTOR: ITEM FOR lIRA CONSIDERATION: Consideration of resolution authorizing the replacement of the Penn Place Letter of Credit. I. RECOMMENDED ACTION: By Motion: Approve the attached resolution authorizing the Replacement of the Penn Place Letter of Credit. I II. BACKGROUND I In 2002 the Housing and Redevelopment Authority (HRA) approved a Purchase and Private Redevelopment Agreement with Penn Place Townhouses LLC for the construction of seven attached townhomes at the northeast corner of Penn Avenue and 69th Street. The Agreement requires Penn Place Townhouses LLC to pay $80,000 from proceeds of sale for the cost of the land previously owned by the HRA. At closing, the Developer provided a Letter of Credit. The Letter of Credit called for payment of the $80,000 if any of the following events occurred: 1) in the event of default under the terms of the Agreement, 2) in the event of the sale of the seventh townhouse, or 3) in any case, on December 14, 2005. 062606 Penn Place LOC The HRA authorized the purchase of the property with the understanding that Penn Place Townhouses LLC would reimburse the HRA when all seven units were sold. Four of the seven townhouses are unsold. There are no events of default. Since the $80,000 was not drawn upon on December 14, 2005, the Letter of Credit has expired. It is recommended that the Developer, Penn Place Townhouses LLC, replace the Letter of Credit to allow for the $80,000 payment when all seven units have been sold or on December 31,2007, whichever occurs first. I III. BASIS OF RECOMMENDATION I I A. POLICY I · The Purchase and Private Redevelopment Agreement functions as a Purchase Agreement and sets forth the conditions for the land sale. · The Purchase and Private Redevelopment Agreement states in Article III, Section 3.4: "The purchase price shall be paid by the Redeveloper in cash at closing, unless the parties agree to a Letter of Credit or property lien." · The Developer provided a Letter of Credit. I B. CRITICAL ISSUES I · The current Letter of Credit has expired and needs to be replaced. . Four of seven units are unsold. The intent of the original Agreement was to delay payment until all units were sold. I C. FINANCIAL I · The Letter of Credit secures the $80,000 payment. Its replacement will allow the $80,000 payment when all units have been sold or on December 31, 2007, whichever occurs first. I D. LEGAL I · David Gepner is an HRA Commissioner and must recuse himself from voting on this matter and remove himself from the dais to the public seating area of the Chambers. · The form of Letter of Credit will be reviewed by legal counsel after it is prepared by the financial institution. I IV. ALTERNATIVE RECOMMENDATION(S) I · Request the immediate payment of the $80,000. · Request a payment equal to 50% due now, and 50% due when the seventh townhouse has been sold. · Select an alternative date for the new Letter of Credit. I V. ATTACHMENTS . Resolution I VI. PRINCIPAL PARTIES EXPECTED AT MEETING I · David Gepner, Penn Place Townhouses LLC 5-1 HRA RESOLUTION NO. RESOLUTION AUTHORIZING THE REPLACEMENT OF PENN PLACE LETTER OF CREDIT WHEREAS, the Housing and Redevelopment Authority in and for the City of Richfield and Penn Place Townhouses LLC have Purchase and Private Redevelopment Agreement for the development of seven townhouses at Penn Avenue and 69th Street; and WHEREAS, the Purchase and Private Redevelopment Agreement is secured by a Letter of Credit; and WHEREAS, the Letter of Credit expired as of December 14, 2005. NOW, THEREFORE, BE IT RESOLVED, by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota, that the Penn Place Letter of Credit be provided to secure payment of land upon the sale of the seventh townhouse or December 31,2007, whichever occurs first. Adopted by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota this 26th day of June, 2006. Suzanne Sandahl, Chair ATTEST: Donna Drummond, Secretary AGENDA ITEM # 7 REpORT # 26 .... STAFF REpORT RICHFIELD HOUSING AND REDEVELOPMENT AUTHORITY MEETING JUNE 26, 2006 REpORT PREPARED By: PATRICK SMITH, COMMUNITY DEVELOPMENT 11ANAGER NAME, TITLE REpORT PRESENTER: PATRICK SMITH, COMMUNITY DEVELOPMENT 11ANAGER NAME, TITLE DEPARTMENT DIRECTOR REVIEW: REVIEWED By EXECUTIVE DIRECTOR: ITEM FOR HRA CONSIDERATION: Consideration of First Amendment to the Contract for Private Development with Ryan Companies US, Inc. I. RECOMMENDED ACTION: By Motion: Approve the attached Resolution, which approves the First Amendment to the Contract for Private Development with Ryan Companies US, Inc. I II. BACKGROUND I . On May 30, 2006 the Housing and Redevelopment Authority (HRA) approved the First Amendment (Amendment) to the Contract for Private Development (Contract) with Ryan Companies US, Inc. (Ryan). The Amendment was not executed as further clarification to the Amendment. Is needed. The proposed changes to the First Amendment since the HRA review on May 30th include: . Eliminating the request that the HRA use eminent domain to acquire certain properties. . Requiring the HRA to enter into separate Business Subsidy Agreements with Target and Home Depot after the respective buildings are under construction. 062606 first amendment to Ryan Dev Agmt-use this one . Requiring the HRA to sell HRA property to Ryan pursuant to the terms and conditions of the Contract and the Resolution of HRA approving the First Amendment. . Assigning Ryan's responsibility of constructing the Target and Home Depot stores to Target and Home Depot, respectively. . Obligating the HRA to reimburse Ryan for its utility relocation work based on Ryan's time and material plus 8% for profit if the HRA or City fails to satisfy any of the conditions set forth in the escrow agreement. . Obligating the HRA to assume Ryan's obligation to purchase the Third Party Properties in the event the HRA does not give final approval to the land sale to Ryan by the agreed upon date. I III. BASIS OF RECOMMENDATION I I A. POLICY I . On July 27,2005 the HRA entered into a Contract for Private Development with Ryan Companies US, Inc; . The Contract purports that the HRA may enter into separate Business Subsidy Agreements with any of Ryan's successors in ownership to portions of the Development. I B. CRITICAL ISSUES I . For Ryan to move forward with necessary steps in the development process, according to the development schedule, Ryan is requesting the HRA to approve the proposed First Amendment to the Contract. I C. FINANCIAL . N/A I D. LEGAL I . The HRA's legal counsel and Ryan's attorney are continuing to negotiate the First Amendment, and the final proposed amendment will be presented at the HRA meeting by legal counsel. I IV. ALTERNATIVE RECOMMENDATION(S) . Do not approve the Amendment. I V. ATTACHMENTS . Resolution . First Amendment to the Contract for Private Development with Ryan Companies US, Inc. I VI. PRINCIPAL PARTIES EXPECTED AT MEETING I . A Representative of Ryan Companies US, Inc. . HRA Legal Council 1-~ HRA RESOLUTION NO. RESOLUTION APPROVING FIRST AMENDMENT TO CONTRACT FOR PRIVATE DEVELOPMENT WHEREAS, the Housing and Redevelopment Authority ("the HRA") and Ryan Companies US, Inc. ("Ryan") did on or about July 27, 2005 enter into an agreement entitled, Contract for Private Development, (the "Contract"), calling for the redevelopment of an area of land (the "Property") lying within the City of Richfield; and WHEREAS, events subsequent to the Contract have occurred that require the amendment to the Contract for the project to move forward; and WHEREAS, the parties desire to address such matters through certain amendments to the Contract; and WHEREAS, the HRA has reviewed and is familiar with the proposed amendment to the Contract entitled: First Amendment to Contract For Private Redevelopment ("First Amendment"), and is satisfied that the terms thereof carry out the intentions of the parties, and are necessary and appropriate for the Development. NOW, THEREFORE, BE IT RESOLVED, by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota as follows: 1. The proposed first amendment is hereby in all respects approved. 2. Upon completion of such modifications, the Executive Director and Board Chair are directed to take all steps and do all things necessary to effectuate the provisions of the First Amendment, including the conveyance to Ryan of the "HRA Properties" as described in the Contract. Adopted by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota this 26th day of June, 2006. Suzanne Sandahl, Chair ATTEST: Donna Drummond, Secretary 1],- 3 062206 FIRST AMENDMENT TO CONTRACT FOR PRIVATE DEVELOPMENT This First Amendment to Contract for Private Development ("First Amendment") is entered into as of this _ day of June, 2006, by and between THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA, a Minnesota public body corporate a politic (the "HRA"), and RYAN COMPANIES US, INC., a Minnesota corporation ("Dev A. The HRA and Developer e Development dated July 27,2005 (the "Develop B. The HRA and Developer provided in this First Amendment. or Private Agreement as C. Defined terms not otherw' Development Agreement. ned as set forth in the NOW, THEREFORE, for goo which are hereby acknowledged, the as follows: the receipt and sufficiency of opment Agreement is amended 1. Ordinance. of the section: de the following sentence at the end ot occur unless the City has taken the action that is ter into the Intersection and Special Assessment of First Refusal Agreement, including, but not ances to authorize the City to sell the Excess Land reement. Section 4.5 is amended by adding the following s raph: "Notwithstanding anything to the contrary in this Sect (i) the HRA and Developer at the time of Closing will enter into the eement in the form attached as Exhibit F -1, (ii) upon the Developer's mmencement of construction of the Home Depot Minimum Improvements, Exhibit F-2, within the time period provided in Section 5.3 hereof, the HRA and Horn will enter into the separate Business Subsidy Agreement in the form of Exhibit F-2, and, (iI upon Developer's request after commencement of construction of the Target Minimum Improvements, as defined in Exhibit F-3, within the time period provided in Section 5.3 hereof, the HRA and Target Corporation will enter into the separate Business Subsidy Agreement in the form of Exhibit F-3." 3. Completion of Construction. Section 5.3 is amended to clarify that Developer is not required to substantially complete construction of the (i) Target Store prior to a date which is 1 7-i the closest to the date for the regularly scheduled Target Store openings during March, July or October of a year and which date is after eighteen (18) months following the Closing of the Developer's acquisition of the Development Property and (ii) Home Depot Store which is prior to a date which is closest to the date for the regularly scheduled Home Depot openings during the spring or fall of a year and which date is after eighteen (18) months following the Closing of the Developer's acquisition of the Development Property. 4. Reduction of Taxes. is the following: and substituted therefore Section 7.2. Reduction of T ' assigns may agree pursuant to a separa that an owner of any portion of the De assigns will not (a) cause a reduction in the Development Property through Improvements, the Additional Improveme a deferral of property tax on the Dev Statutes, section 469.181, or any conveyance or transfer of the D from the payment of real pro accordance with Section 11.6 of legal or administrative re Minimum Improvement th upon by Developer a agreements shall be incorporated in Se .3 is deleted in its entirety and substituted therefore is Developer and its successors and assigns greement that with regard to the Minimum ditional Improvements that the owner of any such ssors and assigns shall pay real estate taxes agreed h successor and assign which shall result in the City taxes being not less than such amount per square foot ments and the Additional Improvements as is necessary ayments on the Note (the "Minimum Per Square Foot h separate agreement shall be provided to the HRA and shall endment to and incorporated in Section 7.3 of this Agreement. 6. Insurance. Section 6.1 is amended by including the following subparagraph "(f)": (f) As an alternative to the foregoing insurance requirements, Developer, Target and Home Depot may (i) provide the HRA with insurance comparable to the foregoing as reasonably approved by the HRA or (ii) self-insure against such risks, provided the HRA 2 7 - .5" reasonably approves the credit rating for the party that desires to self-insure. The HRA approves the credit rating for Target or Home Depot to self-insure. 7. Prohibition Against Developer's Transfer of Property and Assignment of Agreement. Section 9.2(a) is amended by including as the last sentence the following: Notwithstanding the foregoing to Developer to a Third Party shall purposes of Article IX. round lease from be a Transfer for 8. Independent Obligations. Section 10.7: e following ubparagraph 5. of Section 11.7 is amended by word "ea with the word "north" and deleting the introductory not including the sub-numbered paragraphs, and substituting losing, the Developer and the City will enter into an contain the following elements, or such other elements eveloper and the City. 10. Ex usiness Subsid A reement. Exhibit F attached to the Development Agreement is amen y replacing the Business Subsidy Agreement in its entirety with the Business Subsidy Agreement attached hereto as Exhibit F -1. 11. Utility Relocation. In the event the HRA or the City fails to satisfy any of the conditions set forth in the escrow agreement among Developer, the HRA, the City and Old Republic National Title Insurance Company dated June 30, 2006 (the "Escrow Agreement") and Developer exercises its right to terminate the Escrow Agreement, then Developer shall have the right to cease performing any work relating to the relocation of the utilities as provided in the 3 7- (P. . Public Improvement and Special Assessment Agreement between Developer and the City, as amended (the "Utility Relocation Work") and the BRA will pay Developer for its Utility Relocation Work to date based on Developer's time and material, including internal time for design and engineering at its typical rates charged on other projects, plus 8% for profit. The BRA's payment to Developer shall be within thirty (30) days of receipt of Developer's invoice. 12. Sale of BRA Property to Developer. The Developer pursuant to the terms and conditions of resolution of the BRA approving this First Amend agrees to sell the BRA Property to ent Agreement and the 13. Amendment. Except as set fi remain unmodified and in full force and effect. 4 7-1 IN WITNESS WHEREOF, the parties have executed this First Amendment effective as of the day and year first above written. HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA 5 '7--~ EXHIBIT F-1 TO FIRST AMENDMENT TO CONTRACT FOR PRIVATE DEVELOPMENT Ryan Companies US, Inc. Form of Bus in as to the entire Developme 7-q BUSINESS SUBSIDY AGREEMENT THIS AGREEMENT, made and entered into this _day of , 2006 by and between THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA, a Minnesota public bo 0 ate and politic (the "HRA"), and RYAN COMPANIES US, INC., a Minnesota corpor veloper"). Section 1 Business Subsidy Agreement. "business subsidy agreement" for the purposes 0 (a) (1) For the purpose of this Agr are defined in the Contract for Private Developmen 2005 (the "Contract") shall have the meanings . er consis f (i) the sum of financing te, and (ii) conveyance of a portion than fair market value. Each represents a forgivable loan that . s Section. As of the date of this be estimated with any degree of of the business subsidy payable under rms). s of the subsidy are to redevelop an area that has been . nue to be impacted by airport operations on land stablish a mixed commercial development that is with th acts, and which will serve as a buffer to land uses to nt Property and to implement the City's land use goals identified or the subsidy are: to secure completion of the Minimum opment and the related Public Improvements by the Completion to operate the Minimum Improvements for at least five years as elow. (5) the goals described in clause (4) are not met, the Developer or its successors and assigns must make the payments to the Authority described in Section 1 (c). (6) The subsidy is needed because the cost of land acquisition, demolition and site clearance, does not make the development of the Minimum Improvements financially feasible without public assistance, all as determined by the Authority and City. I '7- IV (7) The Developer and its successors and assigns must continue operation of the Minimum Improvements for at least five years after the date of issuance of the Certificate of Completion for the portion of the Minimum Improvements covered by the certification.. F or the purpose of this Section, space will ,be considered to be maintained in operation if it is leased, or available for lease, to any person or entity, or occupied by Developer for use in its trade or business. (8) (9) The Developer has not re assistance from any other "grantor" as with the Development Property or the (b) Job and Wage Goals. In accor Authority has determined after a public hearing th of this redevelopment effort. Accordingly, the wa (c) Remedies. 1. If the Develo Improvements within the tim Authority the full amount of the construction of the Minimum he Developer shall repay the d in subparagraph (a)(2) above.. 2. If the within the time provo will be reduced to tion of the Minimum Improvements ct, the amount of the business subsidy mences construction of the Minimum Improvements as but fails to complete construction within the time loper shall repay the Authority $2,500,000. of the Developer under either subparagraph 1,2 or 3 above tore, or only to the Home Depot Store, then the amount of bparagraphs will be equal to 58.09% if the failure relates to the e failure relates to the Home Depot Store multiplied by the full sidy due under (c) 1,2 or 3, as the case may be. eveloper commences and completes construction of the Minimum n the times provided in the Contract, the amount of the Business Subsidy will duced to $1,000,000, which is allocated as follows: $580,900 to the Target Store and $419,100 to the Home Depot Store. If only the Target Store is commenced and completed within the times provided in the Contract, then the amount of the Business Subsidy under this Agreement relating to the Target Store shall be reduced to $580,900. If only the Home Depot Store is commenced and completed within the times provided in the Contract, then the amount of the Business Subsidy under this Agreement relating to the Home Depot Store shall be reduced to $419,100. 2 7- (( 6. If the Developer commences and completes construction of the Minimum Improvements within the times provided in the Contract, but the Target Store and/or the Home Depot Store are not operated for at least five years after the date of issuance of its Certificate of Completion, then the Developer shall repay the Authority a portion of the Business Subsidy determined as follows: (i) if such failure to operate for such five years relates to the Target Store, then the amount that sh be rep . d to the Authority shall equal $580,900 multiplied by the number of days remai ve year period and divided by 1,825 which represents the number of da . t riod and (ii) if such failure to operate for such five years relates to th n the amount that shall be repaid to the Authority shall equal $419 r of d s remaining in such five year period and divided by 1, in the five year period. Any demand for repayment must be in wr' Contract. Payment shall also include interest at th Statutes, Section 275.50, subd. 2, accrued from Nothing in this Section shall be c of the Contract in the event of a violaf set forth in this paragraph (c) are the e Agreement. In addition to the exc1usiv understands that it may not a e defined in the Business Subsi or a per the Developer satisfies its re obligation Authori remedies under Article X of the Contract, but the remedies comply with the terms of this ection, the Developer agrees and m the Authority or any grantor (as s from the date of the failure or until ction, whichever occurs first. (d) business s 200 days m r must submit to the Authority a written report regarding ater than March 1 of each year, commencing March 1, ate the goals stated Section l(a)(4) are met; (ii) 30 ribed in Section l(a)(7); or (iii) if the goals are not ce with Section 1 ( c). The report must comply with of the Business Subsidy Act. The Authority will provide ing the required forms. If the Developer fails to timely file any e Authority will mail by certified mail return receipt requested orth in Section 11.7 of the Contract a warning within one week fter 30 days after receipt of the warning, the Developer fails to ust pay to the Authority a penalty of $1 00 for each subsequent day e by the Authority to deliver a timely warning notice will not relieve o pay a penalty within 30 days after receipt of a notice to pay. The ty payable under this Section is $1,000. t after t provide a until the repo the Developer's 0 maximum aggregate 3 ?-t 2- IN WITNESS WHEREOF, the HRA and Developer have caused this Agreement to be duly executed by their duly authorized representatives as of the date first above written. HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA 4 7-/3' STATE OF MINNESOTA ) ) SS. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this _ day of , 2006 by Susanne Sandahl, the Chair of the Housing and Develo ent Authority in and for the City of Richfield, Minnesota, on behalf of the Authority. STATE OF MINNESOTA ) ) SS. COUNTY OF HENNEPIN ) The foregoing instrument was ackno Steve Devich, the Executive Director of City of Richfield, Minnesota, on behalf day of , 2006 by uthority in and for the Its ment was acknowledged before me this _ day of , 2006 by , the of Ryan Companies US, Inc., a Minnesota corporation, on behalf of the corporation. Notary Public 4030891 3.DOC 062006 5 ?- It EXHIBIT F-2 TO FIRST AMENDMENT TO CONTRACT FOR PRIVATE DEVELOPMENT Ryan Companies US, Inc. Form of Busin for the Home Depot 7~15 BUSINESS SUBSIDY AGREEMENT THIS AGREEMENT, made and entered into this _day of , 2006 by and between THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA, a Minnesota public b corpo ate and politic (the "HRA"), and HOME DEPOT , a co' "Home Depot"). 1. Business Subsidy Agreement. "business subsidy agreement" for the purposes 1.1 General Terms. The parties agr 1.1.2 The subsidy prov' consists of (i) the sum of finan . Note, and (ii) conveyance 0 Developer for less than fair described in such Articl in accordance with thi subsidy cannot be es . total amount of th present value te ompanies , Inc. (the "Developer") uthority and City in the form of the operty by the Authority to ursement, payment or waiver at is repayable by the Developer Agreement, the aggregate business ainty, however, in no event will the er the Contract exceed $6,889,750 (in of the subsidy are to redevelop an area that has been ue to be impacted by airport operations on land , establish a mixed commercial development that is with the pacts, and which will serve as a buffer to land uses pment Property and to implement the City's land use goals ive plan. or the subsidy are: to secure completion of the Minimum evelopment and the related Public Improvements by the at Phase, and to operate the Minimum Improvements for at least a in clause (6) below. 1.1.5 the goals described in clause (4) are not met, the Developer or its successors and assigns must make the payments to the Authority described in Section l(d). 1.1.6 The subsidy is needed because the cost of land acquisition, demolition and site clearance, does not make the development of the Minimum Improvements financially feasible without public assistance, all as determined by the Authority and City. 1 7-f(P 1.1.7 The Developer and its successors and assigns must continue operation of the Minimum Improvements for at least five years after the date of issuance of the Certificate of Completion for the portion of the Minimum Improvements covered by the certification.. For the purpose of this Section, space will be considered to be maintained in operation if it is leased, or available for lease, to any person or entity, or occupied by Developer for use in its trade or business. 1.1.8 The Developer does not have a par 1.1.9 The Developer has not rec assistance from any other "grantor" as with the Development Property or the pect to receive, financial idy Act, in connection 1.1.10 The Developer has entere HRA dated ,2006 (the "Deve ~ the Home Depot Store Improvements"). 1.2 Job and Wage Goals. Authority has determined after a pub goal of this redevelopment effort. Ac ection 1 J.994, subdivision 4, the or retention of jobs is not the oals are set at zero. 1.3 Assignment an under the Ryan Business Improvements as provide undertake and perform t has assigned all of its obligations to the Home Depot Minimum epot and Home Depot has agreed to greement. s commenced construction of the Home Depot within time provided in Section 5.3 of the Contract, the bsidy allocated to the Home Depot Minimum Improvements is f$2,887,494 to $1,047,750. loper fails to complete construction of the Home Depot ithin the time period provided in Section 5.3 of the Contract, pay the Authority the amount of$1,047,750. e Home Depot Minimum Improvements are commenced and completed the times provided in Section 5.3 of the Contract, the amount of the Business Subsi y allocated to the Home Depot Minimum Improvements will be reduced from $1,047,750 to $419,100. (d) If the Home Depot Minimum Improvements are commenced and completed within the times provided in Section 5.3 of the Contract, but the Home Depot Store is not operated for at least five years after the date of issuance of its Certificate of Completion for the Home Depot Store, then Home Depot shall repay the Authority a 2 7~11 portion of the Business Subsidy allocated to the Home Depot Minimum Improvements equal to $419,100 multiplied by the number of days remaining in such five year period and divided by 1,825 which represents the number of days in the five year period. Any demand for repayment must be in writing and is subject to the cure provisions of the Contract. Payment shall also include interest at the implicit price deflator as defined in Minnesota Statutes, Section 275.50, subd. 2, accrued from the Closing te to the date of payment. The remedies set forth in this paragraph (d) ar with the terms of this Agreement. In addition to t Home Depot agrees and understands that it may or any grantor (as defined in the Business Subsi the failure or until Home Depot satisfies its repa occurs first. dies for failure to comply cribed in this Section, . dy from the Authority date of chever 1.5 Reports. Home Depot must sub business subsidy goals and results by no later 2008 and continuing until the later of (i) t days after expiration of the five-year pe . not met, the date the subsidy is repaid with Section 116J.994, subdivision 7 information to Home Depot regarding report required under this Se t requested to Home Depot at warning within one week warning, Home Depot fa' of $100 for each subsequ timely wa' . e will n after re pay. $1,0 a written report regarding commencing March 1, l(a)(4) are met; (ii) 30 ; or (iii) if the goals are ion 1 (d). The report must comply . The Authority will provide e Depot fails to timely file any by certified mail return receipt a f, after 30 days after receipt of the e a report, epot must pay to the Authority a penalty '1 the report is filed. Failure by the Authority to deliver a me Depot's obligation to pay a penalty within 30 days um aggregate penalty payable under this Section is hereby agrees that the Developer is released of all liability sidy Agreement to the extent of Home Depot's obligations this Agreement shall be construed to limit the Authority's er Article X of the Contract in the event of a violation of any 3 7- 'lg IN WITNESS WHEREOF, the HRA and Developer have caused this Agreement to be duly executed by their duly authorized representatives as of the date first above written. HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA 4 7-' I q STATE OF MINNESOTA ) ) SS. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this _ day of 2006 by Susanne Sandahl, the Chair of the Housing and lopm ntAuthority in and for the City of Richfield, Minnesota, on behalf of the Authority. STATE OF MINNESOTA ) ) SS. COUNTY OF HENNEPIN ) The foregoing instrument was ackno 2006 by Steve Devich, the Executive Dire for the City of Richfield, Minnesota, on day of , ment Authority in and Its The fo 2006 by a Minnesota corporat ent was acknowledged before me this _ day of , ,the of Ryan Companies US, Inc., , on behalf of the corporation. Notary Public 4046173v l.DOC 062006 5 7 -- ':)..0 EXHIBIT F-3 TO FIRST AMENDMENT TO CONTRACT FOR PRIVATE DEVELOPMENT Target Corporation Form of Business Subsidy 062006 7~ ~) BUSINESS SUBSIDY AGREEMENT THIS AGREEMENT, made and entered into this _day of , 2006 by and between THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA, a Minnesota public b corpo ate and politic (the "HRA"), and TARGET CORPORATION, a Minnesota corporatio "). 2. Business Subsidy Agreement. "business subsidy agreement" for the purposes 2.1 General Terms. The parties agr s: 2.1.1 For the purpose of this which are defined in the Contract for Priv as of July 27,2005 (the "Contract") sh 2.1.2 The subsidy provo consists of (i) the sum of finan Note, and (ii) conveyance 0 Developer for less than fair described in such Articl re in accordance with thi subsidy cannot be es . total amount of th present value te ompanies , Inc. (the "Developer") uthority and City in the form of the operty by the Authority to ursement, payment or waiver at is repayable by the Developer Agreement, the aggregate business ainty, however, in no event will the er the Contract exceed $6,889,750 (in of the subsidy are to redevelop an area that has been ue to be impacted by airport operations on land , establish a mixed commercial development that is with the pacts, and which will serve as a buffer to land uses pment Property and to implement the City's land use goals ive plan. or the subsidy are: to secure completion of the Minimum evelopment and the related Public Improvements by the at Phase, and to operate the Minimum Improvements for at least a in clause (6) below. 2.1.5 the goals described in clause (4) are not met, the Developer or its successors and assigns must make the payments to the Authority described in Section l(d). 2.1.6 The subsidy is needed because the cost of land acquisition, demolition and site clearance, does not make the development of the Minimum Improvements financially feasible without public assistance, all as determined by the Authority and City. 1 7~;)..':A 2.1.7 The Developer and its successors and assigns must continue operation of the Minimum Improvements for at least five years after the date of issuance of the Certificate of Completion for the portion of the Minimum Improvements covered by the certification.. For the purpose of this Section, space will be considered to be maintained in operation if it is leased, or available for lease, to any person or entity, or occupied by Developer for use in its trade or business. 2.1.8 The Developer does not have a pa 2.1.9 The Developer has not rec assistance from any other "grantor" as with the Development Property or the pect to receive, financial sidy Act, in connection 2.1.10 The Developer has entere HRA dated ,2006 (the "Deve 2.1.11 The Developer has commence the Minimum Improvements (the "T e Target Store portion of "). 2.2 Job and Wage Goals. Authority has determined after a pub goal of this redevelopment effort. Ac 2.3 Assignment an under the Ryan Business Sub provided in this Agreeme obligations set forth in t . has assigned all of its obligations Target Minimum Improvements as greed to undertake and perform the commenced construction of the Target Minimum time pr ed in Section 5.3 of the Contract, the amount of the d to the Target Minimum Improvements is reduced from a $1,452,250. per fails to complete construction of the Target Minimum Ime period provided in Section 5.3 of the Contract, then Target the amount of$I,452,250. Target Minimum Improvements are commenced and completed within the t rovided in Section 5.3 of the Contract, the amount of the Business Subsidy alloca ed to the Target Minimum Improvements will be reduced from $1,452,250 to $580,900. (d) If the Target Minimum Improvements are commenced and completed within the times provided in Section 5.3 of the Contract, but the Target Store is not operated for at least five years after the date of issuance of its Certificate of Completion for the Target Store, then Target shall repay the Authority a portion of the Business 2 7~~3 Subsidy allocated to the Target Minimum Improvements equal to $580,900 multiplied by the number of days remaining in such five year period and divided by 1,825 which represents the number of days in the five year period. Any demand for repayment must be in writing and is subject to the cure provisions ofthe Contract. Payment shall also include interest at the implicit price deflator as defined in Minnesota Statutes, Section 275.50, subd. 2, accrued from the Closing te to the date of payment. The remedies set forth in this paragraph (d) ar with the terms of this Agreement. In addition to t Target agrees and understands that it may not a r grantor (as defined in the Business Subsidy Act failure or until Target satisfies its repayment obh dies for failure to comply cribed in this Section, m the Authority or any fthe curs first. 2.5 Reports. Target must submit to th subsidy goals and results by no later than March continuing until the later of (i) the date the go expiration of the five-year period describe date the subsidy is repaid in accordance 116J.994, subdivision 7 ofthe Busine Target regarding the required forms. Section, the Authority will mail by ce required filing date. If, after 3 Target must pay to the Au filed. Failure by the A obligation to pay a pen aggregate able un es that the Developer is released of all liability ent to the extent of Target's obligations under this ment sha be construed to limit the Authority's remedies against e Contract in the event of a violation of any other provision of 3 7- ;;LLf IN WITNESS WHEREOF, the HRA and Developer have caused this Agreement to be duly executed by their duly authorized representatives as of the date first above written. HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA 4 7 <- '~5 STATE OF MINNESOTA ) ) SS. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this _ day of 2006 by Susanne Sandahl, the Chair of the Housing and elo m nt Authority in and for the City of Richfield, Minnesota, on behalf of the Authority. STATE OF MINNESOTA ) ) SS. COUNTY OF HENNEPIN ) The foregoing instrument was ackno 2006 by Steve Devich, the Executive Dire for the City of Richfield, Minnesota, on Its The fo 2006 by a Minnesota corporat ent was acknowledged before me this _ day of , the of Ryan Companies US, Inc., , on behalf of the corporation. Notary Public 4045001_2.DOC 062006 5 AGENDA ITEM # 8 REpORT # 27 ~ STAFF REpORT RICHFIELD I I HOUSING AND REDEVELOPMENT AUTHORITY MEETING JUNE 26, 2006 REpORT PREPARED By: CHRISTINE COSTELLO, COMMUNITY DEVELOPMENT SPECIALIST NAME, TITLE REpORT PRESENTER: REVIEWED BY EXECUTIVE DIRECTOR: NAME, TITLE DEPARTMENT DIRECTOR REVIEW: ITEM FOR BRA CONSIDERATION: Business Subsidy Agreement between the Housing and Redevelopment Authority and Target Corporation and Home Depot assigning to Target and Home Depot portions thereof the oriqinal Business Subsidy Aqreement for the Cedar Point Commons proiect. I. RECOMMENDED ACTION: By Motion: 1. Approve the attached resolution approving a Business Subsidy Agreement between the Housing and Redevelopment Authority and Target Corporation assigning to Target portions thereof the original Business Subsidy Agreement for the Cedar Point Commons project. 2. Approve the attached resolution approving a Business Subsidy Agreement between the Housing and Redevelopment Authority and Home Depot assigning to Home Depot portions thereof the original Business Subsidy Agreement for the Cedar Point Commons proiect. I II. BACKGROUND The Housing and Redevelopment Authority (HRA) approved the Business Subsidy Agreement (Agreement) on November 11, 2005. The City Council approved the agreement on December 12, 2005. The HRA approved an amendment to the 062606 Second Amendment to BusSubsidy- Cedar Point Agreement for the correction of typographical errors and language clarification on May 30, 2006. This proposed amendment request clarifies the tasks to be completed between Ryan Companies US, Inc., (Ryan) and the Target Corporation (Target) and Ryan and Home Depot. The current Agreement remains in effect until construction of the two buildings has been commenced, at which point the proposed assignment of the Agreements to Target and Home Depot becomes effective. The Contract for Private Development (Contract) with the HRA defines minimum improvements as the construction and related site work of the SuperTarget and Home Depot buildings. The changes to the Agreement do not increase the total amount of public assistance, which has been previously approved by the HRA as part of the Contract. The subsidy, as identified in the Agreement, is not to exceed $6,889,750. It is also consistent with a resolution adopted by the City Council on May 24, 2005 agreeing to provide the tax abatement. The proposed changes to the Agreement clarify the performance standards in the Remedies section of the Agreement. The change to the performance standards make Target and Home Depot responsible for the performance standards of their respective buildings. I III. BASIS OF RECOMMENDATION I I A. POLICY I . The Agreement complies with the established criteria for business subsidy. . The City Council will review the revised Agreement at their June 27th meeting. . Neither the HRA nor the City Council action on the proposal requires a public hearing. I B. CRlTICAL ISSUES I . The proposed public funding for the Ryan Companies redevelopment of Cedar Point cannot proceed without the approval of the proposed amendment to the Agreement. I C. FINANCIAL I . The public funding identified in the attached Agreement has been previously approved by the HRA and City Council. I D. LEGAL I . Legal counsel has reviewed the proposed amended Agreements and the attached resolutions. I IV. ALTERNATIVE RECOMMENDATION(S) I . Do not approve the proposed amended Agreements. . Defer approval of the proposed amended Agreements to a later date. I V. ATTACHMENTS . Resolution with Target Corporation . Resolution with Home Depot . Amended Agreement with Target Corporation . Amended Agreement with Home Depot I VI. PRINCIPAL PARTIES EXPECTED AT MEETING I . A representative of Ryan Companies US, Inc. 3-1 HRA RESOLUTION NO. RESOLUTION APPROVING BUSINESS SUBSIDY AGREEMENT CEDAR POINT-TARGET CORPORATION WHEREAS, the Housing and Redevelopment Authority in and for the City of Richfield (the "HRA"); and Ryan Companies US, Inc. ("Ryan") have previously executed and entered into a Business Subsidy Agreement pursuant to action of the HRA and the City Council approving the same (the "Basic Agreement"); and WHEREAS, the Basic Agreement has thereafter been amended time to time; and WHEREAS, in accordance with the terms of the Basic Agreement and the Contract for Private Redevelopment between Ryan and the HRA, Ryan is now requesting that the HRA approve a further Business Subsidy Agreement wherein a portion of Ryan's rights and obligations under the Basic Agreement are assigned to and assumed by Target corporation (the "Assignment Agreement"); and WHEREAS, the HRA has reviewed a proposed Assignment Agreement between the HRA and Target Corporation and Target Corporation has received the recommendation of staff; and WHEREAS, the HRA has determined that the Assignment Agreement neither changes any essential provisions of the Basic Agreement, nor increases the amount of the business subsidy to be provided. NOW, THERE FORE, BE IT RESOLVED, by the HRA as follows: 1. The Assignment Agreement in substantially the form of the attached Exhibit A is hereby approved and the Executive Director and Chair are authorized and directed to execute and deliver the same to Ryan. 2. The approval contained in paragraph 1 above is subject to prior review and approval of the Assignment Agreement by the City Council. Approved by the Housing and Redevelopment Authority In and for the City of Richfield this 26th day of June, 2006. Suzanne M. Sandahl, Chair ATTEST: Donna Drummond, Secretary <3-- ~ HRA RESOLUTION NO. RESOLUTION APPROVING BUSINESS SUBSIDY AGREEMENT CEDAR POINT-HOME DEPOT WHEREAS, the Housing and Redevelopment Authority in and for the City of Richfield (the "HRA"); and Ryan Companies US, Inc. ("Ryan") have previously executed and entered into a Business Subsidy Agreement pursuant to action of the HRA and the City Council approving the same (the "Basic Agreement"); and WHEREAS, the Basic Agreement has thereafter been amended time to time; and WHEREAS, in accordance with the terms of the Basic Agreement and the Contract for Private Redevelopment between Ryan and the HRA, Ryan is now requesting that the HRA approve a further Business Subsidy Agreement wherein a portion of Ryan's rights and obligations under the Basic Agreement are assigned to and assumed by Home Depot (the "Assignment Agreement"); and WHEREAS, the HRA has reviewed a proposed Assignment Agreement between the HRA and Home Depot and Home Depot has received the recommendation of staff; and WHEREAS, the HRA has determined that the Assignment Agreement neither changes any essential provisions of the Basic Agreement, nor increases the amount of the business subsidy to be provided. NOW, THERE FORE, BE IT RESOLVED, by the HRA as follows: 1. The Assignment Agreement in substantially the form of the attached Exhibit B is hereby approved and the Executive Director and Chair are authorized and directed to execute and deliver the same to Ryan. 2. The approval contained in paragraph 1 above is subject to prior review and approval of the Assignment Agreement by the City Council. Approved by the Housing and Redevelopment Authority In and for the City of Richfield this 26th day of June, 2006. Suzanne M. Sandahl, Chair ATTEST: Donna Drummond, Secretary Target ~-~ 062006 BUSINESS SUBSIDY AGREEMENT THIS AGREEMENT, made and entered into this _day of , 2006 by and between THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA, a Minnesota public body corporate and politic (the "HRA"), and TARGET CORPORATION, a Minnesota corporation (the "Target"). 2. Business Subsidy Agreement. The provisions of this Agreement constitute the "business subsidy agreement" for the purposes of the Business Subsidy Act. 2.1 General Terms. The parties agree and represent to each other as follows: 2.1.1 For the purpose of this Agreement, the terms used in this Agreement which are defined in the Contract for Private Development between the parties and dated as of July 27, 2005 (the "Contract") shall have the meanings given them in the Contract. 2.1.2 The subsidy provided to Ryan Companies US, Inc. (the "Developer") consists of (i) the sum of financing provided by the Authority and City in the form of the Note, and (ii) conveyance of a portion of the HRA Property by the Authority to Developer for less than fair market value. Each disbursement, payment or waiver described in such Article represents a forgivable loan that is repayable by the Developer in accordance with this Section. As of the date of this Agreement, the aggregate business subsidy cannot be estimated with any degree of certainty, however, in no event will the total amount of the business subsidy payable under the Contract exceed $6,889,750 (in present value terms). 2.1.3 The public purposes of the subsidy are to redevelop an area that has been significantly impacted, and will continue to be impacted by airport operations on land adjacent to the Development Property, establish a mixed commercial development that is designed to be compatible with the impacts, and which will serve as a buffer to land uses to the West of the Development Property and to implement the City's land use goals identified in the comprehensive plan. 2.1.4 The goals for the subsidy are: to secure completion of the Minimum Improvements of the Development and the related Public Improvements by the Completion Date for that Phase, and to operate the Minimum Improvements for at least five years as described in clause (6) below. 2.1.5 If the goals described in clause (4) are not met, the Developer or its successors and assigns must make the payments to the Authority described in Section l(d). 2.1.6 The subsidy is needed because the cost of land acquisition, demolition and site clearance, does not make the development of the Minimum Improvements financially feasible without public assistance, all as determined by the Authority and City. 1 g-Lf 2.1.7 The Developer and its successors and assigns must continue operation of the Minimum Improvements for at least five years after the date of issuance of the Certificate of Completion for the portion of the Minimum Improvements covered by the certification.. For the purpose of this Section, space will be considered to be maintained in operation if it is leased, or available for lease, to any person or entity, or occupied by Developer for use in its trade or business. 2.1.8 The Developer does not have a parent corporation. 2.1.9 The Developer has not received, and does not expect to receive, financial assistance from any other "grantor" as defined in the Business Subsidy Act, in connection with the Development Property or the Minimum Improvements. 2.1.10 The Developer has entered into a Business Subsidy Agreement with the HRA dated ,2006 (the "Developer Business Subsidy Agreement"). 2.1.11 The Developer has commenced construction of the Target Store portion of the Minimum Improvements (the "Target Minimum Improvements"). 2.2 Job and Wage Goals. In accordance with Section 116J.994, subdivision 4, the Authority has determined after a public hearing that the creation or retention of jobs is not the goal of this redevelopment effort. Accordingly, the wage and job goals are set at zero. 2.3 Assignment and Assumption. The Developer has assigned all of its obligations under the Ryan Business Subsidy Agreement relating to the Target Minimum Improvements as provided in this Agreement to Target and Target has agreed to undertake and perform the obligations set forth in this Agreement. 2.4 Remedies. (a) Since the Developer has commenced construction of the Target Minimum Improvements within the time provided in Section 5.3 of the Contract, the amount of the Business Subsidy allocated to the Target Minimum Improvements is reduced from a maximum of $4,002,255 to $1,452,250. (b) If the Developer fails to complete construction of the Target Minimum Improvements within the time period provided in Section 5.3 of the Contract, then Target shall repay the Authority the amount of $1,452,250. (c) If the Target Minimum Improvements are commenced and completed within the times provided in Section 5.3 of the Contract, the amount of the Business Subsidy allocated to the Target Minimum Improvements will be reduced from $1,452,250 to $580,900. (d) If the Target Minimum Improvements are commenced and completed within the times provided in Section 5.3 of the Contract, but the Target Store is not operated for at least five years after the date of issuance of its Certificate of Completion for the Target Store, then Target shall repay the Authority a portion of the Business 2 3-5 Subsidy allocated to the Target Minimum Improvements equal to $580,900 multiplied by the number of days remaining in such five year period and divided by 1,825 which represents the number of days in the five year period. Any demand for repayment must be in writing and is subject to the cure provisions of the Contract. Payment shall also include interest at the implicit price deflator as defined in Minnesota Statutes, Section 275.50, subd. 2, accrued from the Closing Date to the date of payment. The remedies set forth in this paragraph (d) are the exclusive remedies for failure to comply with the terms of this Agreement. In addition to the exclusive remedy described in this Section, Target agrees and understands that it may not a receive a business subsidy from the Authority or any grantor (as defined in the Business Subsidy Act) for a period of five years from the date of the failure or until Target satisfies its repayment obligation under this Section, whichever occurs first. 2.5 Reports. Target must submit to the Authority a written report regarding business subsidy goals and results by no later than March 1 of each year, commencing March 1, 2008 and continuing until the later of (i) the date the goals stated Section 1(a)(4) are met; (ii) 30 days after expiration of the five-year period described in Section l(a)(7); or (iii) if the goals are not met, the date the subsidy is repaid in accordance with Section l(d). The report must comply with Section 1161.994, subdivision 7 of the Business Subsidy Act. The Authority will provide information to Target regarding the required forms. If Target fails to timely file any report required under this Section, the Authority will mail by certified mail return receipt requested to Target at a warning within one week after the required filing date. If, after 30 days after receipt of the warning, Target fails to provide a report, Target must pay to the Authority a penalty of $100 for each subsequent day until the report is filed. Failure by the Authority to deliver a timely warning notice will not relieve Target's obligation to pay a penalty within 30 days after receipt of a notice to pay. The maximum aggregate penalty payable under this Section is $1,000. 2.6 Release. The City hereby agrees that the Developer is released of all liability under the Developer Business Subsidy Agreement to the extent of Target's obligations under this Agreement. Nothing in this Agreement shall be construed to limit the Authority's remedies against the Developer under Article X of the Contract in the event of a violation of any other provision of the Contract. 3 ~~G IN WITNESS WHEREOF, the HRA and Developer have caused this Agreement to be duly executed by their duly authorized representatives as of the date first above written. HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA By Its Chairperson By Its Executive Director 4 8-1 . ST ATE OF MINNESOTA) ) SS. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this _ day of 2006 by Susanne Sandahl, the Chair of the Housing and Development Authority in and for the City of Richfield, Minnesota, on behalf of the Authority. Notary Public STATE OF MINNESOTA ) ) SS. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this _ day of 2006 by Steve Devich, the Executive Director of the Housing and Development Authority in and for the City of Richfield, Minnesota, on behalf of the Authority. Notary Public RYAN COMPANIES US, INC. By Its STATE OF MINNESOTA ) ) SS. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this _ day of 2006 by , the of Ryan Companies US, Inc., a Minnesota corporation, on behalf of the corporation. Notary Public 404500L2.DOC 062006 5 {S,- g Home Depot BUSINESS SUBSIDY AGREEMENT THIS AGREEMENT, made and entered into this _day of , 2006 by and between THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA, a Minnesota public body corporate and politic (the "HRA"), and HOME DEPOT , a corporation (the "Home Depot"). 1. Business Subsidv Agreement. The provisions of this Agreement constitute the "business subsidy agreement" for the purposes of the Business Subsidy Act. 1.1 General Terms. The parties agree and represent to each other as follows: 1.1.1 For the purpose of this Agreement, the terms used in this Agreement which are defined in the Contract for Private Development between the parties and dated as of July 27, 2005 (the "Contract") shall have the meanings given them in the Contract. 1.1.2 The subsidy provided to Ryan Companies US, Inc. (the "Developer") consists of (i) the sum of financing provided by the Authority and City in the form of the Note, and (ii) conveyance of a portion of the HRA Property by the Authority to Developer for less than fair market value. Each disbursement, payment or waiver described in such Article represents a forgivable loan that is repayable by the Developer in accordance with this Section. As of the date of this Agreement, the aggregate business subsidy cannot be estimated with any degree of certainty, however, in no event will the total amount of the business subsidy payable under the Contract exceed $6,889,750 (in present value terms). 1.1.3 The public purposes of the subsidy are to redevelop an area that has been significantly impacted, and will continue to be impacted by airport operations on land adjacent to the Development Property, establish a mixed commercial development that is designed to be compatible with the impacts, and which will serve as a buffer to land uses to the West of the Development Property and to implement the City's land use goals identified in the comprehensive plan. 1.1.4 The goals for the subsidy are: to secure completion of the Minimum Improvements of the Development and the related Public Improvements by the Completion Date for that Phase, and to operate the Minimum Improvements for at least five years as described in clause (6) below. 1.1.5 If the goals described in clause (4) are not met, the Developer or its successors and assigns must make the payments to the Authority described in Section l(d). 1.1.6 The subsidy is needed because the cost of land acquisition, demolition and site clearance, does not make the development of the Minimum Improvements financially feasible without public assistance, all as determined by the Authority and City. 1 g-9 1.1.7 The Developer and its successors and assigns must continue operation of the Minimum Improvements for at least five years after the date of issuance of the Certificate of Completion for the portion of the Minimum Improvements covered by the certification.. For the purpose of this Section, space will be considered to be maintained in operation if it is leased, or available for lease, to any person or entity, or occupied by Developer for use in its trade or business. 1.1.8 The Developer does not have a parent corporation. 1.1.9 The Developer has not received, and does not expect to receive, financial assistance from any other "grantor" as defined in the Business Subsidy Act, in connection with the Development Property or the Minimum Improvements. 1.1.10 The Developer has entered into a Business Subsidy Agreement with the HRA dated ,2006 (the "Developer Business Subsidy Agreement"). 1.1.11 The Developer has commenced construction of the Home Depot Store portion of the Minimum Improvements (the "Home Depot Minimum Improvements"). 1.2 Job and Wage Goals. In accordance with Section 116J.994, subdivision 4, the Authority has determined after a public hearing that the creation or retention of jobs is not the goal of this redevelopment effort. Accordingly, the wage and job goals are set at zero. 1.3 Assignment and Assumption. The Developer has assigned all of its obligations under the Ryan Business Subsidy Agreement relating to the Home Depot Minimum Improvements as provided in this Agreement to Home Depot and Home Depot has agreed to undertake and perform the obligations set forth in this Agreement. 1.4 Remedies. (a) Since the Developer has commenced construction of the Home Depot Minimum Improvements within the time provided in Section 5.3 of the Contract, the amount of the Business Subsidy allocated to the Home Depot Minimum Improvements is reduced from a maximum of $2,887,494 to $1,047,750. (b) If the Developer fails to complete construction of the Home Depot Minimum Improvements within the time period provided in Section 5.3 of the Contract, then Home Depot shall repay the Authority the amount of $1,047,750. (c) If the Home Depot Minimum Improvements are commenced and completed within the times provided in Section 5.3 of the Contract, the amount of the Business Subsidy allocated to the Home Depot Minimum Improvements will be reduced from $1,047,750 to $419,100. (d) If the Home Depot Minimum Improvements are commenced and completed within the times provided in Section 5.3 of the Contract, but the Home Depot Store is not operated for at least five years after the date of issuance of its Certificate of Completion for the Home Depot Store, then Home Depot shall repay the Authority a ~-IO portion of the Business Subsidy allocated to the Home Depot Minimum Improvements equal to $419,100 multiplied by the number of days remaining in such five year period and divided by 1,825 which represents the number of days in the five year period. Any demand for repayment must be in writing and is subject to the cure provisions of the Contract. Payment shall also include interest at the implicit price deflator as defined in Minnesota Statutes, Section 275.50, subd. 2, accrued from the Closing Date to the date of payment. The remedies set forth in this paragraph (d) are the exclusive remedies for failure to comply with the terms of this Agreement. In addition to the exclusive remedy described in this Section, Home Depot agrees and understands that it may not a receive a business subsidy from the Authority or any grantor (as defined in the Business Subsidy Act) for a period of five years from the date of the failure or until Home Depot satisfies its repayment obligation under this Section, whichever occurs first. 1.5 Reports. Home Depot must submit to the Authority a written report regarding business subsidy goals and results by no later than March 1 of each year, commencing March 1, 2008 and continuing until the later of (i) the date the goals stated Section 1(a)(4) are met; (ii) 30 days after expiration of the five-year period described in Section 1(a)(7); or (iii) if the goals are not met, the date the subsidy is repaid in accordance with Section l(d). The report must comply with Section 116J.994, subdivision 7 of the Business Subsidy Act. The Authority will provide information to Home Depot regarding the required forms. If Home Depot fails to timely file any report required under this Section, the Authority will mail by certified mail return receipt requested to Home Depot at a warning within one week after the required filing date. If, after 30 days after receipt of the warning, Home Depot fails to provide a report, Home Depot must pay to the Authority a penalty of $100 for each subsequent day until the report is filed. Failure by the Authority to deliver a timely warning notice will not relieve Home Depot's obligation to pay a penalty within 30 days after receipt of a notice to pay. The maximum aggregate penalty payable under this Section is $1,000. 1.6 Release. The City hereby agrees that the Developer is released of all liability under the Developer Business Subsidy Agreement to the extent of Home Depot's obligations under this Agreement. Nothing in this Agreement shall be construed to limit the Authority's remedies against the Developer under Article X of the Contract in the event of a violation of any other provision of the Contract. ?>-l \ IN WITNESS WHEREOF, the HRA and Developer have caused this Agreement to be duly executed by their duly authorized representatives as of the date first above written. HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA By Its Chairperson By Its Executive Director 8-(2- STATE OF MINNESOTA) ) SS. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this _ day of 2006 by Susanne Sandahl, the Chair of the Housing and Development Authority in and for the City of Richfield, Minnesota, on behalf of the Authority. Notary Public STATE OF MINNESOTA ) ) SS. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this _ day of 2006 by Steve Devich, the Executive Director of the Housing and Development Authority in and for the City of Richfield, Minnesota, on behalf of the Authority. Notary Public RYAN COMPANIES US, INe. By Its STATEOFMINNESOTA ) ) SS. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this _ day of 2006 by , the of Ryan Companies US, Inc., a Minnesota corporation, on behalf of the corporation. Notary Public 4046173v1.DOC 062006 AGENDA ITEM # 9 REpORT # 28 ....... STAFF REpORT RICHFIELD HOUSING AND REDEVELOPMENT AUTHORITY MEETING JUNE 26, 2006 REpORT PREPARED By: PATRICK SMITH, COMMUNITY DEVELOPMENT MANAGER NAME, TITLE REpORT PRESENTER: PATRICK SMITH, COMMUNITY DEVELOPMENT MANAGER NAME, TITLE REVIEWED By EXECUTIVE DIRECTOR: DEPARTMENT DIRECTOR REVIEW: . ITEM FOR HRA CONSIDERATION: Consideration of a resolution approving an Escrow Agreement with Ryan Companies US, Inc. II 1. RECOMMENDED ACTION: By Motion: Adopt the attached resolution approving an Escrow Aareement with Ryan Companies US, Inc. I II. BACKGROUND I On May 16, 2005 the Richfield Housing and Redevelopment Authority (HRA) approved a Contract for Private Redevelopment (Contract) with Ryan Companies US, Inc. (Ryan) for the redevelopment of the Cedar Point area. The Contract lists 14 conditions that must be met prior to Ryan closing on HRA and City-owned properties. The proposed Escrow Agreement helps facilitate the closing on the HRA and City- owned properties. Under the proposed Escrow Agreement, the HRA, City Council and Ryan agree to place the listed documents in escrow until Ryan closes on the HRA and City-owned property, but not later than September 30, 2006. 062606 Escrow Agreement Ryan I III. BASIS OF RECOMMENDATION I I A. POLICY I . In July 2005 the HRA approved a Contract for Private Development with Ryan to build a SuperTarget and Home Depot store at the northwest corner of TH 77 and 66th Street. . On June 13, 2006 the City Council approved the rezoning, Final .Development Plan, Conditional Use Permit and Preliminary Plat of the Cedar Point Commons project. I B. CRITICAL ISSUES I . Contingencies to be satisfied by September 30th as part of the Escrow Agreement include: 1) Ryan's Acquisition of the Third-Party Properties as defined in the Contract. 2) HRA title complete as to all HRA Property (including Haag, Johnson, Gap parcels, and KBL easement). 3) Contemporaneous closing for acquisition of HRA Property and all of the Third-Party Property. 4) The nine Representations of the HRA as set forth in Section 2.2 of the Contract are still true as of the Closing. 5) All Target Agreements (Business Subsidy Agreement) have been executed. 6) All Home Depot Agreements (Business Subsidy Agreement) have been executed. 7) The rezoning of Block 1, Cedar Point Commons is effective. 8) The Final Development Plan for Block 1, Cedar Point Commons, is effective on the date that the rezoning of said Block is effective. 9) The street vacations for development of Block 1, Cedar Point Commons, is effective on the date that the rezoning of said Block is effective. . For Ryan to move forward with necessary steps in the development process, according to the development schedule, Ryan is requesting the City to approve the attached Escrow Agreement. I C. FINANCIAL . N/A I D. LEGAL I . The HRA's legal counsel and Ryan's attorney are continuing to negotiation provisions of the Escrow Agreement. The proposed final version will be presented to the HRA at the meeting by legal counsel. I IV. ALTERNATIVE RECOMMENDATION(S) I . Approve the proposed Escrow Agreement with added provisions or modifications. . Do not approve the proposed agreement. . Delay consideration. I V. ATTACHMENTS . Resolution . Escrow Agreement I VI. PRINCIPAL PARTIES EXPECTED AT MEETING I . A representative of Ryan Companies US, Inc. q-f HRA RESOLUTION NO. RESOLUTION APPROVING ESCROW AGREEMENT WITH RYAN COMPANIES US, INC. WHEREAS, the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota (the "Authority") is undertaking a redevelopment project called Cedar Point, hereinafter called the "Project"; and WHEREAS, the Project is included within The Richfield Redevelopment Project Area, duly established by Resolution No. 8030, adopted on June 14, 1993 (the "Project Area"); and WHEREAS, The Authority and Ryan Companies US, Inc ("Ryan") entered into that certain Contract for Private Development dated July 27, 2005, as amended by the First. Amendment to Contract for Private Development dated June 26, 2006 (the "Development Agreement"); and WHEREAS, the HRA and Ryan desire to satisfy the preconditions to Closing set forth in Section 3.12 of the Development Agreement; and WHEREAS, the HRA has reviewed the terms of a proposed escrow agreement (the "Agreement") with Ryan, and has received the recommendation of HRA staff regarding the terms of the amended Agreement. NOW, THEREFORE, BE IT RESOLVED by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota as follows: 1. The Agreement is approved in substantially the form presented. 2. The Executive Director and Board Chair are directed to execute the Agreement on behalf of the HRA and to take all actions and do all things that are reasonable necessary to the fulfillment of the HRA's obligations under the Agreement. Adopted by the Housing and Redevelopment authority in and for the City of Richfield, Minnesota this 26th day of June, 2006. Suzanne Sandahl, Chair ATTEST: Donna Drummond, Secretary q-~ ESCROW AGREEMENT THIS ESCROW AGREEMENT (this "Agreement") is made as of June 30, 2006, by and among RYAN COMPANIES US, INC., a Minnesota corporation ("Ryan"), THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA, a Minnesota public body corporate olifc (the "HRA"), CITY OF RICHFIELD, a Minnesota municipal corporation ( and OLD REPUBLIC NATIONAL TITLE INSURANCE COMPANY, i ation ("Escrow Agent"). Ryan, the HRA, the City and Escrow Agent ar i ly referred to herein as a "Party" and collectively referred to herein as t A. Ryan and the HRA are parties to dated July 27, 2005, as amended by that cert Development dated June _, 2006 (the "Dev real property located in Richfield, He Exhibit A to the Development Agreem developed. Capitalized terms not defi them in the Development Agreement. B. In order to fac' Property pursuant to the Dev into this Agreement. development of the Development e HRA and the City desire to enter C. required by Agreem condi . onsiderat on of the mutual covenants of the parties contained luable consideration, the receipt and sufficiency of which is ree as follows: es. The sole duties of Escrow Agent shall be those described herein, provided herein, Escrow Agent shall be under no obligation to determine ies are complying with any requirements of law or the terms and conditions of a s other than this Agreement. Escrow Agent may conclusively rely upon and shall be d in acting upon any notice, consent, order or other document that it believes to be genuine and to have been signed or presented by the proper Party or Parties. Escrow Agent shall have no duty or obligation to verify any such notice, consent, order or other document, and its sole responsibility shall be to act as expressly set forth in this Agreement. Escrow Agent shall be under no obligation to institute or defend any action, suit or proceeding in connection with this Agreement unless first indemnified to its satisfaction. Escrow Agent may consult with its counsel with respect to any question arising under this Agreement and shall not be liable for any action taken or omitted in good faith upon advice of such counsel. Escrow 9~:2 Agent hereby agrees to act as escrow agent and hold all documents and funds in accordance with the terms of this Escrow Agreement. 2. Deposit of Documents. The Parties have delivered to Escrow Agent four (4) fully executed and, if applicable, acknowledged originals of each of the documents identified on Exhibit A attached hereto (the "Escrowed Documents"), all of which documents are dated June _, 2006, unless otherwise indicated on Exhibit B. 3. Marked-up Title Commitments. Th title commitments issued by Escrow Agent: (a Exhibit B attached hereto (the "Ryan Commi committing to insure title to the HRA Property insure title in the condition shown in the Ryan of the deeds conveying the Development Prope objections, claims and/or appeals by condemnee acquired by condemnation; and (b) a marked-up tit hereto (the "City Com"1itment") naming the C' Third Party Property in Ryan. The Ryan C insure title to the Third Party Property . between Ryan and the current owners 0 on or before July I, 2006, written nof agreements have been satisfied or WaI letter of undertaking in form re bl acquisition of the Third Party P ents include the following mmitment in the form of its lender as insureds, mitting to f recording uring against of the De opment Property e form of Exhibit C attached . ing to insure title to the itment shall commit to n (i) the mg purchase agreements , (ii) Ryan sending to said owners vor of Ryan in said purchase delivering to Escrow Agent a Agent, undertaking to close on its agreements. acquired title to and be prepared to convey to Ryan the entire uding without limitation the Haag parcel located at 6500 h (the "Haag Parcel"), the Johnson parcel located at 6300 th (the "Johnson Parcel"), the "Gap Parcels", and not subject ent). (c) s on Ryan's acquisition of the entire HRA Property and the entire y Property shall occur simultaneously. (d) The representations of the HRA set forth in Section 2.2 of the Development Agreement shall be true and correct as of the Closing. (e) Ryan and Target Corporation shall have executed and delivered all agreements, instruments and other documents as Ryan deems necessary or appropriate for the development of a Target store on the Development Property. 2 9-Y (f) Ryan and Home Depot shall have executed and delivered all agreements, instruments and other documents as Ryan deems necessary or appropriate for the development of a Home Depot store on the Development Property. (g) The City shall have irrevocably rezoned as the Development Property that Ryan intends to replat as Block 1, Cedar Point Commons ("Block I"). (h) The City's approval for the Final Dev lop lock 1 shall be effective. (i) All existing streets within Block G) The following events shall ha dates: respective 7/11/06 7/11/06 The City shall have app The City shall have a HRA of the porti legally describ the ordinanc be effective 7/17/06 7/25/06 of the HRA Property to Ryan. orized the condemnation of the ed on Exhibit E attached hereto operties") shall have acquired title to the Haag Parcel. shall have duly executed and delivered to Escrow Agent ents necessary to convey the HRA Property to Ryan that sing from the Escrowed Documents. HRA shall have acquired possession of the Haag Parcel. 5. Ryan's Right to Terminate. If the City fails to approve the ordinance or plat of the Development Property as required pursuant to paragraph 4 of the Agreement dated June _, 2006 between Ryan and the City, then Ryan may terminate this Agreement by providing written notice to the City, the HRA and Escrow Agent. Upon such termination: (a) The transactions contemplated by the Escrowed Documents shall be deemed rescinded and void ab initio, except that the obligations of the HRA, the City and 3 9-5 Escrow Agent under this Section 5 shall forever survive the termination of this Agreement and the rescission of the Escrowed Documents pursuant to this Section 5. (b) The Escrowed Documents shall be returned to the respective Party that delivered such documents into escrow, except that Escrow Agent shall destroy any Escrowed Documents that have been exec d by more than one Party. (c) The City and the HRA shall withi f the termination of this Agreement, (1) with respect to an Party Property owned by Ryan at the time of such termi y from Ryan via Quit Claim Deed in its AS-IS condit' y Property Purchase Price (as defined belo f the Third Party Property that Ryan has a et acquired, (i) accept an assignment of Ryan' ume Ryan s igations, under any purchase agreement for the p operty, (ii) pay to Ryan the Third Party Property Assignm Price (as low), (iii) faithfully and diligently perform all of R ions un chase agreements and otherwise related to the template rein (including without limitation paying, as an Ie purchase price for the property, any brokerage commis tion with the transaction, and any relocation paymen ccupant of such property), and (iv) indemnify, d om and against any claim, loss, liability, dam sts or uding reasonable attorneys' fees) asserted agai curred by ult of the City's or the HRA's, as the case may re to per n's obligations under said purchase agreemen ise related to the transactions contemplated therein. As in this p hird Party Property Purchase Price" shall mean the otal 0 . g amounts: the purchase price paid by Ryan to the to acq plicable portion of the Third Party Property; any ission p y Ryan in connection with the purchase of such . g or other out-of-pocket costs incurred by Ryan in connection f such property (including without limitation taxes, recording ed to environmental testing and other investigation of the osts, title-insurance premiums and fees, and reasonable y relocation payments paid or owed to any owner or occupant and any costs or expenses related to the relocation of any owner such property (including without limitation the costs of any cialists and consultants). As used in this paragraph, "Third Party Prop ssignment Price" shall mean the Third Party Property Purchase Price, less the amount thereof that will be paid directly by the City and the HRA. (d) The HRA shall immediately reimburse Ryan for all out-of-pocket costs incurred by Ryan to relocate the utilities pursuant to the First Amendment to Contract for Private Development dated June _, 2006, between Ryan and the HRA. If Ryan does not give a notice of termination at or prior to the Closing, the contingencies in Section 4 shall be deemed to be satisfied or waived by Ryan and the Parties shall proceed to 4 q-~ Closing in accordance with the other terms and conditions hereof and of the Escrowed Documents. The contingencies in Section 4 are specifically for the sole and exclusive benefit of Ryan, and Ryan may unilaterally waive any contingency by written notice to the other Parties. 6. Release of Escrowed Documents; Termination of Escrow. Upon the consummation of the Closing, Escrow Agent shall (i) deliver one (1) original of each of the Escrowed Documents to all Parties to such Escrowed Do ents including any Party in whose favor the Escrowed Document was delivered); (ii) file the Escrowed Documents which are designated at the time of the delivery 0 uc at the same shall be duly recorded by the Escrow Agent, (iii) deliver t olicy of Title Insurance conforming to the Ryan Commitment, and (i wner's Policy of Title Insurance conforming to the City Commitment. 7. Closing. Notwithstanding anythi the Closing shall occur ten (10) days after the dat requesting the same; provided, however, that this not occur on or before September 30, 2006. U on such te Escrowed Documents shall be returned t tive Part into escrow, except that Escrow Agent Escrowe cuments that have been executed by more than one Party; contemplated by the Escrowed Documents shall be deemed rescinded 8. Notices. If at an terms of this Agreement to an served when presented pers United States mail, regist ible to give any notice under the '11 be deemed to have been given or ch notice has been deposited in the , addressed as follows: Charles F. Diessner, Esq. Fredrikson & Byron, P.A. 200 South Sixth Street, Suite 4000 Minneapolis, Minnesota 55402-1425 Facsimile No.: 612/492-7077 Richfield Housing and Redevelopment Authority 6700 Portland Avenue Minneapolis, MN 55423 Attention: Executive Director Facsimile No.: 5 9-7 with a copy to: John B. Dean, Esq. Kennedy & Graven, Chartered 470 US Bank Plaza 200 South Sixth Street Minneapolis, MN 55402 If to the City: City of Richfield 6700 Portland Aven Minneapolis, Attention: Facsimile with a copy to: If to Escrow Agent: Any party hereto may change . hereto not less than fifteen (15 written notice to the other parties e of such change. [Signature pages follow] 6 9-8 IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of the day and year first stated above. RYAN COMPANIES US, INC. [SIGNATURE PAGE TO ESCROW AGREEMENT] 7 q-Cj THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA [SIGNATURE PAGE TO ESCROW AGREEMENT] 8 9-/CJ CITY OF RICHFIELD By: Its: [SIGNATURE PAGE TO ESCROW AGREEMENT] 9 q-// OLD REPUBLIC NATIONAL TITLE INSURANCE COMPANY By: Its: #4046870 _1.Doe 062206 [SIGNATURE PAGE TO ESCROW AGREEMENT] 10 9-/:< EXHIBIT A TO ESCROW AGREEMENT ESCROWED DOCUMENTS 1. Contract for Private Development dated July 27,2 2. First Amendment to Contract for Private De Ryan and the HRA. 3. Business Subsidy Agreement between 4. Waiver Agreement between Ryan and t 5. Right of Entry Agreement dated 6. Agreement dated 7. Public Improvements and Sped between Ryan and the City. ,2006, 8. Option and Right of First Re 9. 10. Haag Stipulation/W . Haag] . I between the HRA and [Glynn R. 11. , 2006, between the HRA ts (asd n the Development Agreement), all of which shall with Es row Agent and shall be dated by Escrow Agent as of ed in the Development Agreement). _, 2006, between the City, [Ryan] and Marvin F. Johnson. 14. owledged on behalf of the City conveying the portion of HRA e City to the HRA, which deed shall be undated when escrowed and shall be dated by Escrow Agent as of the date of Closing. 15. Ryan Commitment. 16. City Commitment. 9-/~ EXHIBIT B TO ESCROW AGREEMENT RYAN COMMITMENT [Marked-up title commitment on issued by Old Republic Nation naming Ryan and is attached.] 9-/y EXHIBIT C TO ESCROW AGREEMENT CITY COMMITMENT [Marked-up title commitment ori . issued by Old Republic Nation naming the City as insured is att 9-/5 EXHIBIT D TO ESCROW AGREEMENT LEGAL DESCRIPTION OF CITY PORTION OF THE HRA PROPERTY J [Insert the legal description of the portion of the HRA Pr 9-/& EXHIBIT E TO ESCROW AGREEMENT DESCRIPTION OF THE 66th STREET PROPERTIES [Insert the legal descriptions or the addresses of the 66th S AGENDA ITEM # 10 REpORT # 29 ........ STAFF REpORT RICHFIELD HOUSING AND REDEVELOPMENT AUTHORITY MEETING JUNE 26, 2006 REpORT PREPARED By: PATRICK SMITH, COMMUNITY DEVELOPMENT MANAGER NAME, TITLE REpORT PRESENTER: PATRICK SMITH, COMMUNITY DEVELOPMENT MANAGER DEPARTMENT DIRECTOR REVIEW: NAME, TITLE REVIEWED BY EXECUTIVE DIRECTOR: ITEM FOR HRA CONSIDERATION: Consideration of a resolution approving the Waiver Agreement for the Cedar Point Commons proiect 1. RECOMMENDED ACTION: By Motion: Adopt the attached resolution approving the Waiver Agreement for the Cedar Point Commons project I II. BACKGROUND I Ryan Companies US, Inc. (Ryan) plans to send gO-day notices to all Third-Party Properties on July 1, 2006, which requires all Third Party closing documents to be executed and escrowed within 10 days. This will obligate Ryan to purchase all of the Third-Party Properties - 33 single-family homes. Prior to this obligation Ryan is requesting the City, Housing and Redevelopment Authority (HRA) and Ryan waive or satisfy outstanding contingencies by June 30th. The outstanding contingencies that Ryan is agreeing to satisfy or waive by June 30, 2006 include: . Approves title to HRA Property, subject to completion of condemnation proceedings and expiration of rights to appeal. (Haag and Gap Parcels and termination of the KBL Easement.) 062606 Waiver of Contingencies - Cedar Point . Accepts condition of HRA Property for environmental, soils, wetland and survey. . Obtains all necessary land use and governmental approvals for construction and operation of the Minimum Improvements, except for all items to be completed by HRA and City (See Timeline). . The Project is feasible based on cost to acquire Third-Party Property, projected costs and the level of public funds available. . Right to terminate if costs exceed specified amount. Ryan is requesting that the HRA satisfies or waives by June 30, 2006 . HRA approval of the title commitment for the Third-Party Property - Section 3.3 of the Contract for Private Development (Contract). . Approval of Construction Plans - Section 5.2 of the Contract. . Right to terminate if costs exceed specified amount - Section 3.13 of the Contract. . Right to reappraise all or part of the HRA Property if the closing does not take place on or before August 1, 2006 - Section 3.8 of the Contract. I III. BASIS OF RECOMMENDATION I I A. POLICY I . In July 2005 the HRA approved a Contract for Private Development with Ryan to build a SuperTarget and Home Depot store at the northwest corner of TH 77 and 66th Street. . On June 13, 2006 the City Council approved the rezoning, Final Development Plan, Conditional Use Permit and Preliminary Plat of the Cedar Point Commons project. I B. CRITICAL ISSUES I . For Ryan to move forward with necessary steps in the development process Ryan is requesting the HRA to waive or satisfy certain agreements by June 30, 2006. I C. FINANCIAL . N/A I D. LEGAL I The HRA's legal counsel and Ryan's attorney are continuing to negotiation provisions of the Waiver Agreement. The proposed final version will be presented to the HRA at the meeting by legal counsel. I IV. ALTERNATIVE RECOMMENDATION(S) I . Approve the proposed Agreement with added provisions or modifications. . Do not approve the proposed Agreement. . Delay consideration. I V. ATTACHMENTS . Resolution . Waiver Agreement I VI. PRINCIPAL PARTIES EXPECTED AT MEETING I . A representative of Ryan Companies US, Inc. ID-I HRA RESOLUTION NO. RESOLUTION APPROVING WAIVER AGREEMENT WITH RYAN COMPANIES US, INC. FOR CEDAR POINT COMMONS WHEREAS, the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota (the "Authority") is undertaking a redevelopment project called Cedar Point, hereinafter called the "Project"; and WHEREAS, the Project is included within The Richfield Redevelopment Project Area, duly established by Resolution No. 8030, adopted on June 14, 1993 (the "Project Area"); and WHEREAS, The Authority and Ryan Companies US, Inc ("Ryan") entered into that certain Contract for Private Development dated July 27, 2005, as amended by the First Amendment to Contract for Private Development dated June 26, 2006 (the "Development Agreement"); and WHEREAS, the HRA and Ryan desire to satisfy the contingencies set forth in the Development Agreement; and WHEREAS, the HRA has reviewed the terms of the proposed Waiver Agreement (the "Waiver Agreement") with Ryan, and has received the recommendation of HRA staff regarding the terms of the Waiver Agreement. NOW, THEREFORE, BE IT RESOLVED by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota as follows: 1. The Waiver Agreement is approved in substantially the form presented. 2. The Executive Director and Board Chair are authorized to execute the Agreement on behalf of the HRA and to take all actions and do all things that are reasonable necessary to the fulfillment of the HRA's obligations under the Waiver Agreement. Approved by the Housing and Redevelopment Authority in and for the City of Richfield this 26th day of June 2006. Suzanne Sandahl, Chair ATTEST: Donna Drummond, Secretary IO,-d..- WAIVER AGREEMENT THIS WAIVER AGREEMENT (this "Agreement") is made as of June 29,2006, by and between RYAN COMPANIES US, INC., a Minnesota corporation ("Ryan"), and THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA, a Minnesota public body c rate a d politic (the "HRA"). A. Ryan and the HRA are parties dated July 27, 2005, as amended by that c Development dated as of the date hereof (the certain real property located in Richfield, Henne Exhibit A to the Development Agreement will be Development or Private t to which r described in B. Ryan and the HRA desire to w . the satisfaction of certain conditions under in and to acknowledge I as set forth below. C. Capitalized terms not d to them in the Development Agreeme NOW THEREFORE, in herein, and for other good a hereby acknowledged, the p venants of the parties contained receipt and sufficiency of which is 1. Development Third P forever waives its rights (a) under Section 3.8 of appraise lor part of the HRA Property if the Closing does not . and (b) under Section 3.13 of the Development Agreement to ment if the costs to acquire certain portions of the HRA In Favor of R an. Ryan acknowledges and agrees as follows: (a) Ry es the condition of title to the HRA Property as shown in the Title Comm ents and Surveys provided by the HRA pursuant to Section 3.5 of the Development Agreement, subject to the HRA (i) completing any condemnation proceedings to terminate the KBL Easement and acquire portions of the HRA Property, including any gap parcels which are being condemned pursuant to the condemnation proceedings known as the "Haag Proceeding", "Johnson Proceeding" and the "KBL Easement Proceeding" and expiration of all condemnees' rights to appeal in connection with such proceedings; and 1 10-3 (ii) acquiring fee title to the entire HRA Property, including without limitation the Haag parcel located at 6500 Cedar Avenue South. (b) Ryan is satisfied with the condition of the HRA Property as disclosed by its environmental, soils and wetland reviews, all as contemplated in Section 3.6 of the Development Agreement. (c) Except for any of the required approvals the timeline on Exhibit A attached he eto, necessary land-use and governme p the Minimum Improvements, Development Agreement. and the City referred to in led that it has obtained all truction and operation of . Section 3.7 of the (d) Ryan is satisfied that, based on th and its current projected costs for the level of Public Funds availabl Development Agreement. 4. Satisfied Conditions in F agrees as follows: (a) (b) t may be executed in counterparts, each of which ther which shall constitute one and the same ay be ered by facsimile transmittal or other electronic counterparts. 2 lo~tf IN WITNESS WHEREOF, the parties have cau,sed this Agreement to be executed as of the day and year first stated above. RYAN COMPANIES US, INC. By: Its: Executive Director 3 10-6 EXHIBIT A TO WAIVER AGREEMENT TIMELINE OF CITY AND HRA APPROVALS AND EFFECTIVE DATES Date Item/Approval 6/26/06 HRA approves business subsi Home Depot HRA approves first amend 6/26/06 6/26/06 HRA approves agreement to p hearing on sale to Ryan 6/26/06 6/26/06 6/26/06 6/27/06 6/27/06 orizing sale to HRA of city sidy agreement for Ryan, Target and 'ust compensation for properties on 66th inance for separate rezoning and platting for waiver and satisfaction of contingencies 6/27/06 This repeats item 3 lines above City amends ordinance for vacating I ih Avenue 6/27/06 6/27/06 City approves Amendment to FDP to split into Block I and Block 2 this only establishes effective date as same as rezoning, and Blocks 1 and 2 are both effective 30 days after publication A-I IO-fp Date Iteml ADDroval 6/27/06 City approves Agreement and Public Improvement and Option Agreements 6/27/06 City approves first reading of ordinance authorizing sale to HRA 6/27/05 7/17106 7/11/06 7/11/06 HRA approves sale to Ryan City approves final plat City approves ordinance A-2 AGENDA ITEM # 11 REpORT # 30 ..... STAFF REpORT RICHFIELD HOUSING AND REDEVELOPMENT AUTHORITY MEETING JUNE 26, 2006 REpORT PREPARED By: KA TIA MEDVETSKI, REDEVELOPMENT SPECIALIST NAME, TITLE REpORT PRESENTER: DEPARTMENT DIRECTOR REVIEW: NAME, TITLE REVIEWED By EXECUTIVE DIRECTOR: ITEM FOR HRA CONSIDERATION: Consideration of a Resolution authorizing a Purchase Agreement with the City of Richfield for the purchase of land. 1. RECOMMENDED ACTION: By Motion: Adopt the attached Resolution authorizing a Purchase Agreement with the City of Richfield for the purchase of land. I II. BACKGROUND I . On May 16, 2005 the Richfield Housing and Redevelopment Authority (HRA) approved a Contract for Private Development (Developer's Agreement) with Ryan Companies US, Inc. (Developer) for a retail development, Cedar Point Commons (Development Project) that contemplates certain land conveyances. . On October 25, 2005 the City Council approved a two-lane roundabout design for the new intersection at 66th Street and 17th Avenue and a financing plan concept for proposed improvements. Excess right-of-way from these takings will be required for the additional retail development on the 6500 block of 17th Avenue (west side of 17th Avenue). 062606 PurAgmtCityLand . In order to meet time frames for development to proceed it is now appropriate for the HRA to authorize purchase from the City (1) excess right- of way real property related to the bridge/ramp project at 66th Street / TH 77; (2) certain other city-owned real property; and (3) certain additional land proposed to be acquired by the City for the new roundabout contingent upon the City's ability to obtain title and possession to the real property. . Resale of said property to the Developer will be undertaken in accordance with the Developer's Agreement following an HRA public hearing to be scheduled for the July HRA meeting on the 17th. . Legal counsel has prepared the attached Purchase Agreement for land conveyances between the City and HRA. The City will be requested to consider this Purchase Agreement on July 11, 2006 following first reading on June 27,2006. I III. BASIS OF RECOMMENDATION I I A. POLICY I . The Developer's Agreement contemplates the sale of certain land to the Developer for the Development Project. I B. CRITICAL ISSUES I . At this writing, the Planning Commission is scheduled to consider a Resolution finding that the sale of certain properties related to the Development Project conforms to the general plans for the development and redevelopment of the city. . The City will be requested to consider this Purchase Agreement on July 11, 2006. . Certain land conveyances are subject to the City's ability to obtain title and possession. . In order for the project to move forward, certain representations as to land matters need to be made to the Developer by June 30, 2006. Approving this Purchase Agreement would provide the Developer the required assurance. I C. FINANCIAL I . The various funding agreements from original property acquisitions specify the resale values of the properties to the HRA. Essentially, there is no payback requirement if the property is redeveloped for airport mitigative purposes within certain time frames. Legal counsel continues to work with staff on this matter. I D. LEGAL I Legal counsel is working with staff on land valuation matters. . Legal counsel prepared the Purchase Agreement and resolution. I IV. ALTERNATIVE RECOMMENDATION(S) I . Delay or do not approve the Purchase Agreement. I V. ATTACHMENTS . Resolution . Purchase Agreement . Maps I VI. PRINCIPAL PARTIES EXPECTED AT MEETING . N/A , {-( HRA RESOLUTION NO. RESOLUTION AUTHORIZING PURCHASE AGREEMENT WITH THE CITY OF RICHFIELD FOR THE PURCHASE OF LAND WHEREAS, the City is the owner of certain real estate in the City of Richfield legally described in the attached Purchase Agreement; and WHEREAS, the City desires to sell, and the Housing and Redevelopment Authority in and for the City of Richfield (the "HRA") desires to purchase such real estate; and WHEREAS, a proposed purchase Agreement (the "Purchase Agreement") for the transaction has been reviewed by the HRA Board and is informed as to it contents. NOW THEREFORE, BE IT RESOLVED by the Housing and Redevelopment Authority in and for the City of Richfield: 1. The Purchase Agreement is approved, contingent upon City Council approval of a sale ordinance as required by the City Charter. Execution and delivery of a deed of conveyance by the City shall be deemed conclusive determination that the contingency has been met. 2. Subject to the contingency, the Chairperson and Executive Director are authorized to take all steps and do all things necessary to accomplish the transaction contemplated by this Agreement. Adopted by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota this 26th day of June, 2006. Suzanne Sandahl, Chair ATTEST: Donna Drummond, Secretary ll-2 PURCHASE AGREEMENT This Agreement is made as of , 2006 by and between the CITY OF RICHFIELD, a Minnesota municipal corporation ("Seller") and HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, a public body corporate and politic under the laws of Minnesota ("Buyer"). Recitals A. Seller is the owner of certain real estate in the City of Richfield, County of Hennepin, legally described on the attached Exhibit A (the "Properties"). Seller intends to acquire the real estate legally described on the attached Exhibit B (the "Contingent Properties") but does not yet own those properties. B. Seller acquired some of the Properties for the purpose of airport noise mitigation, and the remaining portion of the Properties and Contingent Properties represent excess land acquired or to be acquired in connection with road improvement projects at Trunk Highway 77 and 66th Street and at 17th Avenue and 66th Street. C. Buyer desires to acquire the Properties and Contingent Properties in furtherance of a redevelopment project that will further Seller's objective to provide additional airport noise mitigation in the area of the Properties. D. Seller deems it to be in the public interest to convey the Properties and Contingent Properties to Buyer pursuant to the terms of this agreement. E. This agreement is made pursuant to Minn. Stat. S 465.035 and S 471.64. Terms 1. Purchase Price. The purchase price for the Properties and Contingent Properties is One Dollar ($1.00), which Buyer shall pay at closing. 2. Deed. Seller agrees to convey the Properties and Contingent Properties to Buyer by one or more quit claim deeds. Seller and Buyer agree to execute and deliver customary closing documents, including but not limited to affidavit of seller. 3. Contingency. Seller's obligation to convey the Contingent Properties is contingent upon Seller's ability to acquire fee title to the Contingent Properties. 4. Title. Buyer shall be responsible for reviewing the condition oftitle to the Properties and Contingent Properties and for resolving any title defects, if any. Buyer may refuse to accept title to any individual property if Buyer finds the condition of title to that property to be unsatisfactory in any respect. 292313v2 CAH RC145-549 1 I (,.. 3 5. Closing. The closing shall occur on a date that is mutually agreeable to the parties. 6. Closing Costs. Seller shall pay real estate taxes, if any, due and payable in the year of closing and prior years. Buyer shall assume real estate taxes due and payable in the year following closing. Seller shall pay all special assessments levied against the Properties and Contingent Properties prior to Closing. Buyer shall assume all pending special assessments. Buyer shall pay deed tax and all other closing costs not specifically mentioned in this paragraph. CITY OF RICHFIELD By Its Mayor By Its City Manager HOUSING AND REDEVELOMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD By Its Chairperson By Its Executive Director 292313v2 CAH RC145-549 2 t l-i EXHIBIT A Legal Descriptions of Properties 6301-6539 All those parts of Lots 1 through 10 inclusive, Block 1, and Lots 1 Cedar Avenue through 12, inclusive, Block 8, and Lots 3 through 12 inclusive, Block 15, as dedicated in the plat of NEW FORD TOWN, according to the recorded plat thereof, Hennepin County, Minnesota 1820 66th Street E Lots 1, 13, and the South 50 feet of Lot 2, Block 1, Iverson's Third Addition, Hennepin County Minnesota 1800 66th Street E Lot 14, Block 1, Iverson's Third Addition, Hennepin County, Minnesota 1720 66th Street E Lot 1, Block 4, Iverson's Third Addition, Hennepin County, Minnesota 1714 66th Street E Lot 2, Block 4, Iverson's Third Addition, Hennepin County, Minnesota 1708 66th Street E Lot 3, Block 4, Iverson's Third Addition, Hennepin County, Minnesota 1700 66th Street E Lot 4, Block 4, Iverson's Third Addition, Hennepin County, Minnesota 6328 Cedar Avenue S Lot 3 and the North 40 feet of Lot 2, Block 3, Iverson's Third Addition, Hennepin County, Minnesota 6344 Cedar Avenue S Lot 1 and the South 60 feet oflot 2, Block 3, Iverson's Third Addition, Hennepin County, Minnesota 6400 Cedar Avenue S Lot 6, Block 2, Iverson's Third Addition, Hennepin County, Minnesota 6412 Cedar Avenue S Lots 4, 5, and the North 'l'2 of Lot 3, Block 2, Iverson's Third Addition, Hennepin County, Minnesota 6444 Cedar Avenue S Lots 1,2 and the South 'l'2 of Lot 3, Block 2, Iverson's Third Addition, Hennepin County, Minnesota 6520 Cedar Avenue S Lot 4 and the South 71 feet of Lot 5, Block 1, Iverson's Third Addition, Hennepin County, Minnesota 6315 18th Avenue S Lot 9, Block 3, Iverson's Third Addition, Hennepin County, Minnesota 6321 18th Avenue S Lot 10, Block 3, Iverson's Third Addition, Hennepin County, Minnesota 6327 18th Avenue S Lot 11, Block 3, Iverson's Third Addition, Hennepin County, Minnesota 6333 18th Avenue S Lot 12, Block 3, Iverson's Third Addition, Hennepin County, Minnesota 6339 18th Avenue S Lot 13, Block 3, Iverson's Third Addition, Hennepin County, Minnesota 6345 18th Avenue S Lot 14, Block 3, Iverson's Third Addition, Hennepin County, Minnesota 6401 18th Avenue S Lot 7, Block 2, Iverson's Third Addition, Hennepin County, Minnesota 6409 18th Avenue S Lot 8, Block 2, Iverson's Third Addition, Hennepin County, Minnesota 6415 18th Avenue S Lot 9, Block 2, Iverson's Third Addition, Hennepin County, Minnesota 292313v2 CAH RC145-549 II-~ 6421 18th Avenue S Lot 10, Block 2, Iverson's Third Addition, Hennepin County, Minnesota 6427 18th Avenue S Lot 11, Block 2, Iverson's Third Addition, Hennepin County, Minnesota 6433 18th Avenue S Lot 12, Block 2, Iverson's Third Addition, Hennepin County, Minnesota 6439 18th Avenue S Lot 13, Block 2, Iverson's Third Addition, Hennepin County, Minnesota 6445 18th Avenue S Lot 14, Block 2, Iverson's Third Addition, Hennepin County, Minnesota 6509 18th Avenue S Lot 8, Block 1, Iverson's Third Addition, Hennepin County, Minnesota 6515 18th Avenue S Lot 9, Block 1, Iverson's Third Addition, Hennepin County, Minnesota 6521 18th Avenue S Lot 10, Block 1, Iverson's Third Addition, Hennepin County, Minnesota 6527 18th Avenue S Lot 11, Block 1, Iverson's Third Addition, Hennepin County, Minnesota 6533 18th Avenue S Lot 12, Block 1, Iverson's Third Addition, Hennepin County, Minnesota 6314 18th Avenue S Lot 14, Block 6, Iverson's Third Addition, Hennepin County, Minnesota 6320 18th Avenue S Lot 13, Block 6, Iverson's Second Addition, Hennepin County, Minnesota 6326 18th Avenue S Lot 12, Block 6, Iverson's Second Addition, Hennepin County, Minnesota 6332 18th Avenue S Lot 11, Block 6, Iverson's Second Addition, Hennepin County, Minnesota 6344 18th Avenue S Lot 9, Block 6, Iverson's Second Addition, Hennepin County, Minnesota 6400 18th Avenue S Lot 16, Block 5, Iverson's Second Addition, Hennepin County, Minnesota 6408 18th Avenue S Lot 15, Block 5, Iverson's Second Addition, Hennepin County, Minnesota 6414 18th Avenue S Lot 14, Block 5, Iverson's Second Addition, Hennepin County, Minnesota 1614 66th Street E Lot 2, Block 5, Iverson's Third Addition, Hennepin County, Minnesota 1620 66th Street E Lot 1, Block 5, Iverson's Third Addition, Hennepin County, Minnesota Between 6511 Cedar Avenue All of Lot 5, Block 1, New Ford Town, except the North 20 feet and 6521 Cedar Avenue and except the South30 feet thereof. Between 1820 East 66th Street All of Lot 2, Block 1, Iverson's Third Addition, except the South and 6528 Cedar Avenue 50 feet and except the North 46 feet thereof. Between 6520 Cedar Avenue All of ot 5, Block 1, Iverson's Third Addition, except the South 71 South and 6500 Cedar Avenue feet and except the North 25 feet thereof. South Between 6344 Cedar Avenue All of Lot 2, Block 3, Iverson's Third Addition, except the South South and 6528 Cedar Avenue 60 feet and except the North 40 feet thereof. South 292313v2 CAH RC145-549 11-(0 Exhibit B Legal Descriptions of Contingent Properties 1614 66th Street E Lot 2, Block 5, Iverson's Third Addition, Hennepin County, Minnesota 1620 66th Street E Lot 1, Block 5, Iverson's Third Addition, Hennepin County, Minnesota 292313v2 CAH RC145-549 , , " , , ' " , : " , I ;;' ,..... '" .. r .., .. .' j " f ~, . . :' .">.' , : ':.,: '. ::.,: . ,n . : . '.. .. , .' ,i :... '" . ". ~.. , TAFT PARK - . : ,-,....~." ~15 6314 ~ .r-':' "J : ..-." : . , --"""l r 63RD ST. E:: 6315 a'JOO: 6321 6320 6327 6328 6333 6339 6344 6345 64TH ST. 6401 6409 6415 ui 6421 ~ 6427 ::E: ~ 6433 ..... 6439 6400 6444 6412 11-, , " , :' .: ". j ;' .', ui ~ g w (,) 6301 6311 II 6315 6325 6333 6341 6345 6405 6409 6417 6421 6425 6429 IIi 6437 6441 6445 N~ 6501 6509 6511 6521 6525 6529 6533 I ~537 U ~~1 6320 6327 6326 . :.'; 6445 65TH ST. ~1 :~:: . ~~;;R t..'" Oi>UU 6509 : 6515 6520 6521 65h I 1.6528 6533 I c c ~ 1820 : .j 4: ;.~: !'l:. 15;<,~: ~/:; , . , : . :. ~ .. B ; , '. ~ ',' 1.:;~ ~-:: : .' " !;.: ~ 200 0 200 400 600 800 Feet ~- I/GIS/COMDEV/STAFFIBIWPROJECTSlCEDAR PT REDEV ASSESSMT. APR , -- 6333 6332 6339 ~~38r~: : 11345 6344 L'..L.N",_'. 6401 6400 I~: : 6408 ~15 6414 ",:: ~ ~~1:: ~~Q).j C( :"6:!2,ll ::E: 64~k -'81 S ~~l~: t 643~ ;'~~9 64~ .6445 ~. <Vi: :: :.- ::;/Ii::1 ::;\, F.' ::: :+J:: !!,5P1 m: llOUIVi ~9 6~~~: >V'<' ~ .. ~%5 6511 ~~~~:itj. ~( ~__.. -;Iff ~ 6~ll o co :! 0 ~ ~ ~ ~ CITY OF RICHFIELD CEDAR POINT LAND CONVEYANCE PROPERTIES Legend .---, Cedar Point L........J Project Boundary D D City owned lanCl HRA owned and eminent domain proceedings land City proposed lanCl acquisition ~ N JUNE, 2006 . tJ) ..J L1J o ~ <( c. ~ ~ u.. o f 02 rn rn L1J o >< L1J I C. <( ~ I MOlas aas . aU!I 4o~eVII ., [I.. ... I~ L ,... i I I f:f: 09 f- ool I . I ,~ 1 eal ~L t.)\ I L :iI oJ,S H.L....9 r I I I ~ I .. ~~: ~ l- ':W I ~~: ~ I .. ~;~ I r- .~ I I I ~ I ~ I .. I- ~ j"- ~/- ~ I .. I ~L . L :iI~' J,S nG9 1---- .r: () .... Q) .:t. (f) C o :p C. 'i: () (fJ Q) o o ...J W - LL I () - ~ LL o >- I- - () , ....~ , r (L:; '" - ~I .. CD ~[..~ ;;jtJ1 ~I -" Ii .. 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