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HRA 08/27/1982 SPEC - 29383CITY OF FRIDLEY HOUSING & REDEVELOPMENT AUTHORITY SPECIAL MEETING AUGUST 27, 1982 CALL TO ORDER: Chairperson Commers called the August 27, 1982, Housing & Redevelopment Authority special meeting to order at 5:33 p.m. ROLL CALL: Members Present: Larry Commers, Elmars Prieditis, Carolyn Svendsen, Duane Prairie, Walter Rasmussen Members Absent: None Others Present: Jerrold Boardman, City Planner Mark Haggerty, Smith, Juster, Feikema Law Firm Tom Berg, Miller Securities Dennis Schneider, City Council Bob Barnette, City Council • CONSIDERATION OF PROPOSED. 36,493 SQ. FT. OFFICE BUILDING TO BE-LOCATED-IMMEDIATELY TO THE SOUTHEAST-OF CITY HALL Mr. Commers asked Mr. Boardman to review the differences and changes in this proposal as compared to the last office building proposal from Mr. Haggerty. Mr. Boardman stated there were approximately three changes, one of which was the most complex. Mr. Boardman stated he had underlined the major changes in Mr. Haggerty's letter of August 20, 1982. Mr. Boardman stated what is being proposed is that instead of purchasing the property at 63rd & Univeristy (Mr. Gus Doty's property), they are requesting that the HRA put up $90,000 up -front money as an investment into the project. That money would go to pay for the issuance of the bond up to $90,000. In return for that $90,000, the HRA will get an option on Mr. Doty's property. That option will run until Feb. 1, 1986, one month past the option on the clinic. If at that time, the HRA exercises its option on the property, they will pay an additional $10,000 plus taxes, and the HRA will own the property. If the HRA doesn't exercise the option on the property, Mr. Haggerty will pay the HRA its $90,000 investment back with interest at a 10% interest rate. Mr. Boardman stated the partnership would be willing to pay $560 per month to rent from the Fridley HRA the building the HRA would acquire from Mr. Haggerty (the Madsen building just north of City Hall). Before the arrangement was they • would remain in the building rent -free. The $560 per month is what is now being 0 HOUSING & REDEVELOPMENT AUTHORITY'SPECIAL MEETING,'AUGUST-27, 1982 -' PAGE 2 netted from that property. Mr. Haggerty and the law firm would be responsible as the master leasers of that building for all the maintenance and taxes while renting the property, and the HRA would get the $560 per month net rent. Mr. Boardman stated #4 in Mr. Haggerty's letter was changed to read: "The Fridley HRA would commence construction of a plaza to be approved by the Fridley HRA and located immediately to the west of the proposed building site during 7983." He stated they did not want to tie it down to 'a value because the HRA hasn't yet determined what they are looking at as far as a plaza. Mr. Boardman stated one additional change was outlined in Ill of Mr..Haggerty's letter: "The development partnership would be willing to put up a'$10;000 non- refundable good faith deposit which would be retained by the Fridleif the partnership did not commence the devolb mOnt on-or' efore ec. . In t e event that the development artnershi ' oes commence construction or ior to Dec. 37, 1982,_ the $105000 Would " e refun'e''to-t e' eve opment partnership." Mr. Boardman stated he had brought some bond runs to the meeting for the HRA's review. Mr. Commers asked what the option price works out to be on Mr. Doty's property. Mr. Boardman stated the option price is $100,000 - -the $90,000 HRA investment plus • the $10,000, which comes out at $3.32/sq. ft. He stated the HRA had to understand that the option runs to 1986. Leon Madsen from the City felt the present value on that property was justifable up to $3 /sq. ft. Looking at that over a four year period, they have at least another 4% per year increase in values, and that is a conservative estimate in increased values. So, over a four year period, they are looking at an investment over $10,000. Mr. Boardman stated they did time the length of the option on Mr. Doty's proeprty to be one month after the option on the clinic runs out. He stated he felt very comfortable with that because they do have the option to use that property if they need it in negotiations for additional parking. Mr. Boardman stated the contract documents have been prepared. They have been partially prepared by Mr. Herrick and partially prepared by Mr. Haggerty and himself. He stated he was now looking for some approval from the HRA of the contract documents based on legal review and approval Mr. Boardman asked Mr. Haggerty about the financing. Mr. Haggerty stated Mr. Berg from Miller Securities was at the meeting. He stated Miller Securities has given them a signed letter on the terms and conditions Miller Securities would be willing to underwrite the project. With the proposal as it has been presented to the HRA, they would be able to obtain the financing. Mr. Berg stated they have been working on this project since early spring and they have given Mr. Haggerty several letters on the terms and conditions with which they would agree to buy the bonds and market the bonds. He stated he had not read the contract documents, but they are willing to do a firm underwriting. HOUSING & REDEVELOPMENT AUTHORITY SPECIAL MEETING, AUGUST 27, 1982 PAGE 3 i MOTION BY MR. RASMUSSEN, SECONDED BY MR. PRIEDITIS, TO APPROVE THE "CONTRACT FOR PRIVATE REDEVELOPMENT BY AND BETWEEN THE HOUSING & REDEVELOPMENT AUTHORITY OF THE CITY OF FRIDLEY AND FRIDLEY PLAZA PARTNERSHIP," SUBJECT TO FINAL REVIEW BY LEGAL COUNSEL. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. Mr. Boardman stated he has another document, Resolution No. HRA 5 -1982 which is a resolution requesting the City Council to authorize bond sales for the Center City Redevelopment Tax Increment District Phase II. If the HRA approves the resolution at this meeting, it would go before the City Council on Sept. 13, with a .possible bond sale on Oct. 4. That is pretty much in line with when Mr. Haggerty is talking about selling his bonds for the office building. If on Oct. 4, Mr. Haggerty has not sold his bonds, then the City can delay at the City Council level_, but they would prefer to be in the position to sell those bonds on Oct.4 and get in on the good interest rate. MOTION BY MR. RASMUSSEN, SECONDED BY MR. PRIEDITIS, TO ADOPT RESOLUTION NO. 5 -1982, "A RESOLUTION OF THE HOUSING & REDEVELOPMENT AUTHORITY OF THE CITY OF FRIDLEY TO REQUEST THE FRIDLEY CITY COUNCIL TO AUTHORIZE BOND SALES FOR THE CENTER CITY REDEVELOPMENT TAX INCREMENT DISTRICT PHASE II." UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. ADJOURNMENT: Chairperson Comers declared the August 27, 1982, Housing & Redevelopment Authority Special Meeting adjourned at 6:15 p.m. Respectfully sub itted, y Saba Recording Secretary 0