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HRA 06/12/1986 - 29340CITY OF FRIDLEY HOUSING & REDEVELOPMENT AUTHORITY MEETING, JUNE 12, 1986 CALL TO ORDER: Chairperson Commers called the June 12, 1986, Housing & Redevelopment Authority meeting to order at 7:15 p.m. ROLL CALL: Members Present: Larry Commers, Virginia Schnabel, John Meyer, Duane Prairie Members Absent: Walter Rasmussen Others Present: Mayor Nee Councilman Goodspeed Councilman Barnette Councilman Fitzpatrick Councilman Schneider Nasim Qureshi, HRA Director Jock Robertson,Community Development Director JohnFlora, Public Works Director Rick Pribyl, City Finance Director Julie Burt, Asst. Finance Officer Dave Newman, HRA Attorney June Lundgren, 1140 Minnesota Building, St. Paul Cherry Lundgren, 1140 Minnesota Building, St. Paul Robert Levy (Rice Plaza), 100 S. 5th St. Mark Haggerty, Miller & Schroeder Jim Winkels, 5780 Lincoln Drive Bob Deike, 5248 Ewing Ave. S. Dave Weir, 10201 Wayzata Boulevard Linda Fisher, Legal Counsel for Woodbridge Properties (See attached list) APPROVAL OF MAY 8, 1986, HOUSING & REDEVELOPMENT AUTHORITY MINUTES: MOTION BY MS. SCHNABEL, SECONDED BY MR. COMMERS, TO APPROVE THE MAY 8, 1986, HOUSING AND REDEVELOPMENT AUTHORITY MINUTES AS WRITTEN. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. Mr. Commers took this opportunity to introduce John Meyer to the other Commission members and welcome him as a new member of the Housing & Redevelop- ment Authority. HOUSING & REDEVELOPMENT AUTHORITY I MEETING, JUNE 12, 1986 PAGE 2 1. UPDATE ON DEVELOPMENT AGREEMENT WITH LOU LUNDGREN: Mr. Qureshi stated he would outline some of the changes that were different from the Agreement originally entered into with Mr. Lundgren that was now null and void. In the old Agreement, it was provided that the HRA would build an underground parking structure and lease it to the development. The mortgage company had problems with that so the Agreement has been restructured to say that there will be land acquired for the development of the multiple housing and whatever the HRA's cost is for acquisition of the property will be placed as a second mortgage on the proposed development. Mr. Qureshi stated that because of some shift in the timetable, they have adjusted some dates. It provided that Mr. Lundgren has to provide a new letter of credit by July 1, 1986; and if he cannot get financing by August 1, 1986,(if the HRA approves this agreement), the agreement will become null and void at that time. Mr. Qureshi stated there were some other items in the Agreement like the mini- mum improvements provided have to be at 82 million, and then on Sheet 1 -A they had some assessment agreement. He stated that in checking with Anoka County, they were surprised to learn that Anoka County carried a very flow value for apartment houses, so it was Staff's recommendation that the assessed value be $7 million instead of $82 million and they would proportionately reduce the other values accordingly. • Mr. Qureshi stated all the documents the HRA had with the adjustment have been agreed upon and signedby the developer. He stated representatives for Lundgren were in the audience, and they have copies of the signed documents. Mr. Commers asked what the situation was with regard to the parking ramp itself. Mr. Qureshi stated the developer will build the parking ramp. The only thing the HRA is providing is land acquisition which will become a second mortgage on the property. Mr. Newman stated the most significant change, as pointed out by Mr. Qureshi, was that the HRA was not doing the leasing arrangement. They are doing a d1'trect sale. The HRA is providing assistance up to $500,000. What they are doing is providing a loan to the developer in the amount equal to the cost of acquiring the parcel in an amount not to exceed $500,000. The developer will then pay that amount back to the HRA over a period of 15 years. Ms. Cherry Lundgren stated they have submitted the documents to the City for review. She stated there were some changes in amenities within the units, The units have been upgraded to meet the needs of the competitive market, but they feel it is the same product, if not an improved product. Ms. Schnabel asked when the apartment building would be constructed. HOUSING & REDEVELOPMENT AUTHORITY MEETING; JUNE 12; 1986 PAGE 3 • Ms. Lundgren stated that as soon as the property was able to be conveyed, because of the very tight timetable up front, they will be ready to start construction on the day they close on the property. Ms. Schnabel asked if it was the developer's intention to complete the project as originally proposed after the construction of the first building. Ms. Lundgren stated that was their intention. They feel the elderly project will probably be more attractive with the current financial situation as far as market rate bonds. " MOTION BY MS. SCHNABEL, SECONDED BY MR. MEYER, TO APPROVE RESOLUTION NO. HRA' 7 - 1986, A RESOLUTION APPROVING AND AUTHORIZING THE EXECUTION OF A CONTRACT FOR PRIVATE DEVELOPMENT WITH THE FRIDLEY PLAZA ASSOCIATES LIMITED PARTNERSHIP. Mr. Ron Schoneman, Ron's Barber Shop, 246 Mississippi St., asked how much longer were the tenants going to be left hanging, or was something going to be done finally? It was his understanding that June 12th was the end, and there would be no more extensions. Mr, Commers stated there were no more extensions with respect to the signing of the contract. This meeting was the deadline for the signing of the contract. If the developer does not meet the deadlines of July 1 and August 1, the project will not go forward. If the deadlines are met, the project will move forward. He stated that it looked like the completion of the apart-nent building was Feb. 1988, and it was contemplated in the developer's plans that the front part of Rice Plaza was not required at this time. Mr. Qureshi stated the project being discussed at this time was essentially on open land. Once Mr. Lundgren proposes development in addition to the apartment building,there will be subsequent action by the HRA. At this time, the proposed development would not disturb the tenants in Rice Plaza. Ms. Schnabel stated she appreciated Mr. Schoneman's concern and the tenants' concerns. She felt the HRA has finally draw the line as far as a timetable, and she felt it behooved Lou Lundgren to meet this particular timetable. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. 2. RECEIVING COMMUNICATION FROM MR. FRED LEVY (MAY 19. 1986 Mr. Newman stated he had indicated to the HRA at their last meeting that Mr. Levy would like to have a representative at the June 12th meeting to express his concerns. He stated Mr. Levy's son, Bob Levy, was at the meeting. Mr. Newman stated Mr. Levy had forwarded to him copies of his leases. Mr. Levy had asked that these not be part of public record. Mr. Newman stated he has is reviewed the leases. It was his understanding that the County, as a result HOUSING & REDEVELOPMENT AUTHORITY MEETING; JUNE 12; 1986 PAGE 4 of the May 8th HRA meeting, also was in the process of getting an appraisal for the whole property including the Holly Shopping Center. They had hoped to have a rough number available for this meeting, but apparently the County has not yet furnished that information. Mr, Bob Levy stated he was the attorney for Rice Plaza, as well as some of the partners. The problem they have was a very simple one and that was that the original development, after it was put in the tax increment district, was before the HRA more than five years ago. Since then, there have been 3-4 prospective developers. It seemed that each time a different developer comes forth, the dust is stirred up, there are public hearings, the process goes forward, but the existing property owners and tenants suffer the conse- quences. For one reason or another, the developments have not gone through, but the property owners suffer difficulty in keeping the property leased. Existing tenants do not know how to deal with their long range plans. The developer goes away, but the owners have spent a lot of time and energy trying to soothe the nerves of the tenants; and no sooner do they think the issue has died, then the HRA finds a new developer and the process starts all over again. Mr. Levy stated it was a circumstance such as this that precipitated the acquisition of the hardware store site. At that time, about five years ago, they had entered into a verbal understanding to lease that property to a hardware store that would have taken the place of the Our Own Hardware store. He stated they try to be fair in their dealings with their tenants. They have been a member of the Fridley business community since 1968. They are not going to lease property without telling the prospective tenant that some- thing is pending. They want to be fair to prospective tenants; yet, they do not know what to tell them, so they refer them to the City and HRA staff to hear the story. Of course, as soon as that happens, the prospective tenant refuses to sign the lease because there are other opportunities where they can lease space without having to be faced with a "cloud of condemnation ". Mr. Levy stated they now have the situation again where they have a vacancy in the shopping center. They have one tenant that has expressed a desire to expand if space was available. That space has become available. They suggested that the tenant talk directly to Staff about development plans; and after talking to Staff, the tenant withdrew any intention of leasing the adjoining space. They have another prospective new tenant; and they will be referring that tenant to the City Staff. They are very nervous that this tenant will walk away also once they hear about the latest development plans. Mr. Levy stated they have one tenant in the shopping center right now who is in poor health, unable to be in the store on a regular basis. He put the operation up for sale last fall, had a buyer; but again, not wanting to be guilty of misrepresentation,sent the buyer over to City Hall to find out the status of the property, and the buyer backed out of the deal. • HOUSING & REDEVELOPMENT AUTHORITY MEETING ;JUNE 12; 1986 PAGE 5 Mr. Levy stated he felt art of the res onsibilit for these circumstances p P Y fell upon the HRA. At the same time, they are trying to be cooperative with the City and HRA. They recognize the HRA serves a public good and a public motive here, and that is to maximize the utilization of that property. Mr. Levy stated the Rice Plaza partnership would like the HRA to do one of two things: (1) either pull the property out of the tax increment district and leave them alone and the tenants alone; or, (2) take the property. Mr. Levy stated the motives here are public motives, not private motives for the existing property; yet the HRA has asked the property owners to take the risk and the financial burden attendant to the HRA's proposed development plans - -the difficulty in leasing and continuing to renew leasing for existing tenants. This was not Rice Plaza's responsibility, it was the HRA's responsi- bility. If the HRA has these goals and objectives and motives, that was fine; but then the risks attendant to that are on the HRA's shoulders, not on the existing property owner. Mr. Levy stated the HRA had a unique opportunity at this time. The County was going to be taking frontage to expand Mississippi St. One circumstance that Rice Plaza as the property owner could not tolerate was to have their property cut up into little pieces. In the condemnation game, the sum of the parts does not necessarily equal the value of the whole. The value of the property was greater taken as a whole. He stated the County has recog- nized this; they recognize they are going to be facing a problem in how to deal with the severance issue by taking part of the property for county right - of -way. At the same time, they recognize the HRA will be needing to take the rest of the property in the relatively near future and decided it was silly to be addressing the issue separate from the HRA so they have decided to have their appraiser conduct an appraisal of the entire parcel. Mr. Levy stated they were at the point now whether Mr. Lundgren meets his timetable or not, Rice Plaza intends to resolve the issue. They hope to do this on a friendly basis with friendly negotiations; but, if necessary, on an adversary basis. Mr. Commers stated that as he understood it, there were some preliminary steps being taken to obtain some values and appraisals on the property and to assess the possibility of acquiring the Rice Plaza property. Mr. Levy stated one of his concerns was that obviously the existing project at this time dealt only with the vacant parcel of land. That did not make their problem go away. They will have the problem of how do they lease up the existing space, do they make improvements to the property, do the tenants make improvements, can they make plans for expansion, etc.? So, they are looking at the entire parcel, not just the vacant land in back and not just the land in front that the County is looking at. They are looking at posi- tive indication from the HRA that they are going to take the necessary steps to acquire the entire parcel. 0 HOUSING & REDEVELOPMENT AUTHORITY MEETING, JUNE 12, 1986 PAGE 6 Mr. Qureshi stated that as information becomes available as far as value on the property, they will make that information available to the HRA. At that time, the HRA can make the determination whether or not it is prudent to acquire the property. -Mr. Commers stated the HRA did appreciate Mr. Levy's position and they under- stood that position. The HRA would like to have a completed project as soon as they can, too. They have not been very pleased with the circumstances that have occurred over the last few years; but, hopefully, they will get something that will enable them to all go forward. He thanked Mr. Levy for coming to the meeting. 3. UPDATE ON WOODBRIDGE PROPERTIES' LAKE POINTE CORPORATE CENTER DEVELOPMENT: Yr. Qureshi stated City Staff had provided the HRA with some information on the Lake Pointe Corporate Center development at their last meeting. Since the HRA entered into an agreement with Woodbridge Properties in Dec. 1985, there were some timelines required, some commitments required by the HRA, and action required by the City Council. As far as the City Council and HRA are concerned, they have taken all the actions necessary to fulfill their part of the timetable commitment on the Agreement they entered into with Woodbridge. Mr. Qureshi stated Staff had also advised the HRA that one item that was . �roviding some concern was the requirement by the PCA for an Indirect Source ermit (ISP) which the developer is required to provide when the development has more than 2,000 automobiles. Because this development has more than 2,000 automobiles, the developer made an application for an ISP. The ISP essentially controls the noise and air quality of the development and surrounding area affected by the development. The ISP, as originally submitted, necessitated certain improvements of the intersection at West Moore Lake Drive and Highway 65 and provided that as a condition of the year 2000 that when the total development was in, the air quality level at this intersection would be 8.6. The required level acceptable by PCA standards is 9. Because of the closeness of these two readings, there was some concern by the PCA of requiring improve- ment of Highway 65 itself. The City has all along contemplated improving the cross streets; but because of the high air quality reading, it necessitated that Highway 65 also be improved. The City had also indicated that if that was a requirement, in all practicality, they could not get the Highway Dept. to fund the improvement in a timely manner to meet the desire of the developer for the improvement of the intersection. Since then, Staff has met with the consultants again to find out what other options are available other than improving the highway to reduce the air quality number. Mr. Qureshi stated the developer has an option on the house next to the property the HRA is in the process of acquiring on W. Moore Lake Dr. By removing the structure from this location,the reading dropped to 4.6 which was a sub-_ stantial decrease and provided a much more comfort level to the need for improvement of the highway. r� LJ F__1 L.J S HOIJ$ING & REDEVEU AUTHORITY'MEETING; JUNE 12; 1986 PAGE 7 Mr. Qureshi stated one of the other conditions monitoring of every phase of the development. to the developer and the City because it could ment to proceed with the project if the readin standards. Mr. Qureshi stated that the proposed permit has been on public record, has paper, and now is in the 30 -day review period. potentially that permit will be issued legally proposed by the ISP was the That was of serious concern physically impair the develop - gs are too close to the been published in the Minneapolis If everything goes well, on July 15. Mr. Qureshi stated that because of the desire of the developer to have the West Moore Lake Drive /Highway 65 intersection improved quickly and the potential inability of the Highway Dept. to provide funding of the intersec- tion in a timely manner as desired by the developer, they have tried to evaluate available options to expedite the construction. One option was to provide funding other than from the Highway Dept. He stated a few days after the last HRA meeting, they had tried to evolve a shared agreement between the developer and the HRA to fund the cost of the Highway 65 improvement. The developer was quite insistent that the cost be totally funded by the HRA. Since then, they have had meetings and discussions and have proposed several agreements regarding the intersection improvement. (Mr. Prairie arrived at 8:20 p.m.) Mr. Qureshi stated that basically what the HRA had provided the developer in the Dec. 1985 agreement was that if the developer completes the proposed development, land would be essentially paid back to him through the increment. The HRA would provide $2.1 million worth of public improvement on the land, the HRA would package the land between the 100 Twin property and Jerry Johnson property, and the HRA would provide improvements to the Highway 65 /West Moore Lake Drive intersection. Additionally, he was willing to recommend that the HRA provide total improvement to the intersection at no -,additional cost to the developer. Mr. Qureshi stated the HRA members had a copy of by Dave Newman which embodied all the items the to what was additionally proposed by Woodbridge. to the Contract for Private Redevelopment By and Pointe Investment Co., a Limited Partnership ". a drafted agreement written Staff feels are responsive It was entitled, "Addendum Between the HRA and Lake Ms. Schnabel asked if there was an estimated dollar figure for the total project upon completion- Mr. Qureshi stated they have estimated the total value would be ove r $80 million if the project is completed as planned. Mr. Newman stated Section 3.6 of the agreement, Material Frustration, was due to the fact that on May 1, 1986, the ISP was not available, and under the agreement, all governmental permits had to be in by May 1. It was hi-s HOUSING & REDEVELOPMENT AUTHORITY MEETING, JUNE 12, 1986 PAGE 8. • interpretation, as well as that of Jim O'Meara's who was involved in the initial document, that by the HRA agreeing to pay for the cost of the intersection in order to obtain an ISP, that then addressed the problems Woodbridge has raised and eliminate the reason for Material Frustration. The purpose of Material Frustration was to allow 90 days for parties to negotiate and address the problems. Mr. Newman stated the agreement presented to the HRA was a rough draft, and in discussions with City Staff and the developer, it was Staff's position that this was as far as the City could go in recommendations, at least for the charges.as they presently understand them. He reviewed the proposed agreement with the HRA members and summarized the major items as follows: A. That the HRA would assume responsibility for paying the necessary costs associated with the highway and intersection improvements required by the Indirect Source Permit. B. That the Fridley City Council would grant final approval to the rezoning, special. use permit, and plat applications within 45 days of Lake Pointe acquiring the Access Parcel. C. Lake Pointe would agree to purchase the access parcel for the previously agreed sum of $1,000,000.00, upon the issuance of the Indirect Source Permit. D. That within 45 days of the issuance of the Indirect Source Permit the HRA would award the Contracts for the Public Improvements.and this work would then . be completed within 11 months of the awarding of the Contracts. E. That the implementation of the Minimum Market Values for the Minimum Improvements would be delayed one year. F. That if in fact the improvements to Highway 65 are not substantially completed by December 31, 1987, then for each additional year that these improvements are delayed, Lake Pointe's cost of acquiring the Access Parcel would be reduced by $100,000.00 Additionally, if the improvements to Highway 65 are not completed by December 31, 1987, then the implementation of the Minimum Market Value for the Minimum Improvements would be delayed a second year. Mr. Commers stated there were significant changes in this draft, especially in the Assessments, that created a substantial additional risk to the HRA. Mr. Weir stated he would address some of the assumptions they had in November and December prior to signing the Agreement. This site was very alluring with a lot of potential. The area, however, was not an area that was established as a multi= tenant corporate headquarters rental -type office location in a north suburban area. They felt and shared the same dreams as the City that it did have the potential. It was not without substantial risks to undertake that, but the potential was there and it was an unusual opportunity. • HOUSING & REDEVELOPMENT AUTHORITY.MEETING, JUNE 12, 1986 PAGE 9 • Mr. Weir stated the first assumption was that they would be in a position to sign an assessment agreement that would put the City in the position of being assured of having tax revenues as a result of Woodbridge being assured of being able to have a development. That ability of being able to have a development, obviously, was a function of a variety of different permits and the complexity of obtaining them was beyond their wildest imagination. He stated there has been a lot of frustration and hard work on both sides. Mr. Wier stated the PCA, even though it has issued a draft on the ISP, just the issuance of the ISP itself did not facilitate Woodbridge to do all the things the City would like them to be committed to doing. They did not have the ISP by May 1, and that put them into a position of material frustration. As a result of being in that.position, they have and face, if they are to proceed, substantial costs as a result of that delay. Mr. Wier stated the second assumption was that, based upon the risk in the marketplace in this particular area, they had always contemplated that the site improvements would be installed and completed during 1986 for a variety of reasons: a) to create an entirely different atmosphere for the site than it currently has b) at that time, they believed the reconfiguration of the inter- change would be under construction during 1987; c) construction would definitely impede the ability to rent the property. Mr. Weir stated they had always assumed they would have the park campus -like improvements this year and would have the ability to start a new facility this summer so that next spring when the interchange was under construction, they would have at least their selling environment with an image they could be merchandising to future tenants. HOUSING & REDEVELOPMENT AUTHORITY MEETING, JUNE 12; 1986 PAGE10 Mr. Weir stated the result of this delay nd as a result of the permit, Y they were in the position where now they, collectively all of them, cannot guarantee any realistic likelihood that improvements can be delivered to that point during 1986. Not anyone was really at fault; it was just that because of circumstances that have occurred referred to in the Material Frustration _section, they are going to be unable to be in that position. That imposes one level of delay and additional costs. Mr. Weir stated that in its present format as the contracts have been proposed, there was substantial likelihood there will be increased costs even if the contracts are awarded in the form they are today. Mr. Weir stated that the ISP as it is proposed talks about Phase 1 and Phase 2. Phase 1 refers to the initial building of an 120,000 sq. ft. office building and a restaurant. The ISP in its current form says they cannot commence construction of anything other than the first building and the restaurant until the entire intersection and cross streets and Highway 65 have been totally completed. The City has some legitimate concerns that this improvement might be delayed beyond 1987. The Staff has worked incredi- bly hard to try to get the Highway Department's support, and maybe it can be done, but the potential undefinable costs of delay as a result of that can be enormous. Ms. Linda Fisher, Legal Counsel for Woodbridge Properties, stated the ISP . was out for review in draft form. Based on their experience in the past and with the information presented in the permit which was also out for a 30 -day public comment period in the'Environmental Assessment Worksheet, she would say the ISP was close to 100% that it would be issued. To clarify what Mr. Weir had said, the way the draft permit reads right now, they cannot proceed beyond the first building and restaurant (Phase 1) until the inter- section is completed. It was possible they could conduct additional traffic and air quality analyses of what conditions would be for a second or third building and submit that to the PCA for review; and if it shows the standards will be met, it was possible the PCA would agree that they could proceed with the undefined phases for buildings. She stated they have not conducted those analyses and they do not know what the analyses would show nor do they know what the PCA's reaction would be. The PCA has indicated a willingness to look at it. There was some concern about timing and some danger in a 30- day period of submitting new information and "upsetting the apple cart ". It has been their experience that it is best to proceed with th a permit and get under construction and to later possibly look at the question of modi- fication. Mr. Weir stated this was an awkward spot for all of them to be in. They all had a dream; it was very carefully structured with a lot of different assump- tions. The proposal to repay a portion of Woodbridge's costs was set up in a very unusual, but beneficial, way, to the City- -that if, and only if, Woodbridge performs do they get a repayment. If there is no money there on a particular year, they lose in perpetuity that right to ever be repaid, so the speed with which they can develop to generate "x" amount of tax dollars and the priority which they have over those tax dollars as the increment dollars was absolutely critical to them in being able to deliver and be in a HOUSING & REDEVELOPMENT AUTHORITY MEETING, JUNE 12, 1986 PAGE 11 • position to make the kind of commitment the y bargained ained for in November and December. As a result of things that none of them wanted to see, they are being faced with substantial costs as a result of this delay. Mr. Weir stated the Staff has done a terrific job with the guidelines they have had. The real issue at this meeting was whether the HRA interested in mak-ing an additional investment and certainly a sizeable one to put them collectively in a position to be able to go forward to the level the City would like to see. Woodbridge has no control over that at all, but they would like to see that happen. They also undersand it is really a value judgement that needs to be made. Mr. Comers stated that any additional funding would have to be taken from another project. Mr. Weir stated that was a value judgement. He would ask that the HRA look at the level of development. If they can make it as successful as they all think it can be, there is the potential for substantial increment in the future that can be a resource to repay the investment if the HRA feels it is a worthwhile investment. Mr. Qureshi stated that in his 22 years with the City, he has never put so much time and effort into a project as he has on this one. He has tried to evaluate as a staff representative to the HRA what he would be willing to recommend to the HRA. They have already negotiated that if Woodbridge performs, they get the land and all the utilities up to $2.1 million. They are also saying they will provide a certain level of intersection improvement as originally agreed, and because of the special problem of the ISP, he would recommend that the HRA provide additional money to the cost of whatever the Highway Dept. should have paid for the Highway 65 /West Moore Lake Drive intersection. He stated he felt this project was one of the best things as it is envisioned that could happen to Fridley. He would recommend that the HRA accept the agreement prepared by Mr. Newman as Staff's recommendation. They would be giving Woodbridge Properties some additional help to help preserve a very good project in the City of Fridley. Mr. Newman stated he would like to make the comment that Mr. Weir has not agreed to the terms of the proposed agreement. Councilman Schneider stated he was enthused about the project; but he was also concerned that the HRA as a governmental agency was not in the business of taking the risk as opposed to being the enabler or facilitator to make the project happen. He stated if Mr. QUreshi was comfortable with his recommendation, he would support that recommendation. Mr. Weir stated that while they were not able to deliver with the level of obligations put upon them as a result of the agreement, he wanted to make it very clear that they are not contemplating that the City's general obligation bonds would be at risk. They are contemplating that the level of tax incre- ment necessary to meet those payments would be guaranteed; but that is not addressed in the agreement. He stated there needed to be some significant modifications incorporated in the agreement. For example, a one year delay rolls up an additional $1 million that could be lost forever. They will make HOUSING & REDEVELOPMENT AUTHORITY MEETING, JUNE 12, 1986 PAGE 12 sure the general obligation bonds are not put at risk, notwithstanding the fact that they may not be able to build to that level. In exchange for that, they are asking for significant relief as a result of additional costs incurred as a result of delays that are known and potential delays that are undetermined. at this time for reasons such as the ISP and higher costs that might be incurred as a result of not being able to put improvements on the site. He did not want to just take exception to the sincerity of the Staff's proposal, hat he had to say that they could not uphold their end of the bargain based on that kind of proposal. Mr. Qureshi stated Staff's prpposal has not been accepted by the HRA, and the Staff needs some direction from the HRA as to what direction the Staff can take. Can they go beyond this proposal? Ms. Schnabel stated that the HRA already has a commitment of approx. $9 -10 million, even before this proposal was agreed upon, for a project that is valued at $80 million. In addition to that $9 -10 million, they could potentially have an additional financial responsibility if certain agreements are not fulfilled within certain dates according to the proposal they have before them. Her over- all Question for the HRA and perhaps the City to decide was: Was there a point where they reach a limit on a percent of a development they want to commit to? She stated she has supported the project as much as anyone else, but she still thought they had to decide how much more they are going to commit. • Mr. Qureshi stated it was definitely a value judgement. Mr. Commers stated he was not convinced the HRA should have to run any additional risks,whether remote or realistic. They are helping the project by putting in another million dollars. They might have to pick up additional costs on public improvements if the contracts that are let have to be renego- tiated, and he felt they were getting pretty close to the line they were going to have to draw. He questioned whether paragraphs E and F, as summarized by David Newman, should even be in the negotiations. Mr. Weir stated this was all very complex, but as it related to the HRH's commitment, everything was very contingent and their concern about delay was not only time is money; it may be money lost forever. Ms. Schnabel stated the highway has to be improved because of the development; but that was not to say that the Highway Dept. itself could not step in had the City done nothing with Highway 65, causing problems and affecting the development. She felt in some ways the HRA was being asked to take more risk than they should and they are being affected by another governmental body and the material frustration that Woodbridge is suffering because of that was being placed on the HRA's shoulders. Maybe the HRA had material frustrations, too, that had to be considered at some point. She was concerned about how much of a dollar commitment the HRA can put into this development overall. She under- stood that the Staff has some real problems in trying to negotiate and come HOUSING & REDEVELOPMENT AUTHORITY MEETING; JUNE 12; 1986 PAGE 13 • to some understandings, and it was frustrating for Staff to not know how far they can go. But, she did feel that somewhere along the line they need to get a handle on how much of a dollar responsibilityy they are willinq to risk. She was concerned by the penalty clause on the HRA's behalf as item F of Mr. Newman's summary. Mr. John Meyer stated that, being a new member of the HRA and unfamiliar with the background on this project, he would have to strongly rely on the HRA staff who have studied this project in great detail. Mr. Weir stated he wanted to make it clear that as they originally contem- plated this structure, it was contemplated that they would, through their obligations, be contributing $250,000 from their project to the interchange; and in addition to that, it was contemplated there would be proceeds that would be available for a variety of other costs in the approximate amount of $500,000, so collectively through their various payments, there would already have been a direct investment on their behalf to the interchange of approx. $3/4 million of the total interchange budget. Mr. Weir stated that in response to Ms. Schnabel's concerns, they would be much more comfortable and be able to address some of the HRA's concerns if, in fact, their $5.6 million was guaranteed to some form to be repaid to them as opposed to being totally contingent. If the development was unable to occur, regardless of whose fault it was, they would lose that money forever and could not guarantee they could ever give the HRA and the City what they would like to see on this property. It was a totally different kind of obli- gation than the HRA has ever encountered before. Ms. Schnabel stated she had not had any indication from Mr. Weir as to whether or not they contemplate proceeding with Phase 2 after they receive the ISP. Mr. Weir stated they do intend to proceed with Phase 2. They want to be able to proceed, and as soon as it is safe to do so, they intend to get permission to do more. It all gets back to the $5.6 million. If there is not any cash flow to get it, they don't get the $5.6 pillion, and yet their taxes continue to be paid as a result of their obligations on holding the property. Mr, Newman stated there was a 90 -day negotiation period provided in the Material frustration clause which started May 1st. He thought this exchange at this meeting was beneficial to both parties and he hoped that within the next few days they can get together with Mr. Weir and Mr. Deike and resolve these issues. Mr. Commers stated the HRA and the City want to maintain a good relationship with Woodbridge Properties. Mr. Weir thanked the HRA. He stated they are happy to be in Fridley. The reactions they have gotten in the marketplace have been extremely favorable. • HOUSING & REDEVELOPMENT AUTHORITY MEETING, JUNE 12, 1986 1 1 1 1 PAGE14__ Mr. Qureshi stated he would like some direction from the HRA as to whether the HRA should be providing more assistance to Woodbridge Properties than what Staff was recommending. Mr. Commers stated it was his opinion that the HRA has given too much assistance already. Mr. Prairie stated he felt that maybe the HRA should provide a little more assistance. Ms. Schnabel stated she felt the HRA has given as much assistance as they should give at this point, taking into consideration what has been proposed by Staff. Beyond that, she would not be in favor of more assistance. She was concerned about how much they are putting into this project and the risks that are being presented to them versus the total dollar value of the develop- ment in proportion to other commitments they have made to other projects, realizing the more they put into this project, the more they are taking away from some other projects. Mr. Commers stated that paragraphs 7 and 8 in the Staff's proposal have gone too far. He did not necessarily see a problem with putting the assessment off for a year, but he was concerned about going beyond that. Mr. Commers stated Staff has heard the opinions of the HRA and there was nothing • further they could do to direct Staff at this point. 4. RECOMMENDATION TO CITY COUNCIL TO AWARD CONTRACT FOR DEMOLITION AND SITE GRADING PROJECT N . 163 AND WATER AND SANIT RY SEWER PROJECT NO. 62: Mr. Qureshi stated the HRA had the following choices regarding the awarding of the contracts: 1. If legally possible, the HRA could recommend to the City Council that the City Council award the contracts if there was no increase in cost, there was an approval of extension of time, and subject to the Indirect Source Permit. 2. If the above was not legally possible, then the HRA could recommend to the City Council that the City Council reject the bids and readvertise. It was the concensus of the HRA to recommend to the City Council that the City Council award the contract for demolition and site grading Project No. 163 and water and sanitary sewer Project No. 162, subject to the following conditions: (1) there is no increase in cost; (2) there is approval of the extension of time; and (3) subject to the ISP. Chairperson Commers declared a recess at 10:00 p.m. Chairperson Commers reconvened the meeting at 10:30 p.m. HOUSING & REDEVELOPMENT AUTHORITY MEETING, JUNE 129 1986 PAGE15 0 6. APPROVAL OF S.E.H. CONTRACT FOR 100 TWIN AREA DESIGN: Mr. Qureshi stated it was their hope that if there had been an amended agree- ment between Woodbridge Properties and the HRA that was approved by the HRA, then Staff would have recommended to the HRA that they go ahead with the contract with the consultant to proceed with the plans. Since the amended agreement has not been agreed upon by the HRA, he did not think it could recommend that the HRA proceed with the contract with the consultant. Mr. Qureshi stated Staff would like the HRA to at least authorize Staff to expend some additional funds to keep the project moving until the next meeting. He was sure it was the desire of all concerned that they keep the project moving until it is either approved or not approved. The Commissioners agreed it was best to keep the project moving ahead. Hope- fully, things would be resolved by the next meeting. MOTION BY MR. PRAIRIE, SECONDED BY MS. SCHNABEL, TO AUTHORIZE STAFF TO EXPEND ADDITIONAL MONIES TO THE S.E.H. CONTRACT FOR THE 100 TWIN AREA DESIGN UNTIL THE NEXT MEETING. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. • 7. APPOINTMENT OF TECHNICAL ADVISORY COMMITTEE FOR THE UNIVERSITY AVENUE CORRIDOR STUDY: Mr. Robertson stated that on page 7 of the agenda, eight of the twelve individuals had been appointed to the Technical Advisory Committee. They have polled most of the businesses in Moon Plaza and Holly Center for individuals interested in serving on the Committee. Mr. Commers stated there were people representing the Sylvan Hills area and the Hyde Park area, but what about the residential neighborhood going north along University? Shouldn't there be input from people on the north end? Mr. Robertson stated it was the consultant's recommendation that the TAC membership be kept at a manageable size. This was discussed at the Staff level and it was Staff's recommendation that all of the property owners on the corridor be on the mailing list and be invited to all the TAC meetings, but in terms of size, they felt they should keep with the consultant's recommenda- tion of 12 -13 members. Mr. Prairie stated that if one of the businesspeople did not accept the membership, maybe a homeowner from the northern residential area along University be added. Mr. Robertson stated that was at the discretion of the HRA. n n HOUSING & REDEVELOPMENT AUTHORITY MEETING, JUNE 12, 1986 PAGE16 MOTION BY MR. MEYER, SECONDED BY MR. PRAIRIE, TO APPOINT THE FOLLOWING PEOPLE TO THE TECHNICAL ADVISORY COMMITTEE FOR THE UNIVERSITY AVENUE CORRIDOR STUDY: Virginia Schnabel - Chair Richard Harris Joy Otten Gerald Paschke Gloria Lund (alternate) David Harris Teresa Ledwein Robert Schroer (alternate) Carmel Sheridan (alternate) Pat Gabel (Sylvan Hills rep. to be named) UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON DECLARED THE MOTION CARRIED UNANIMOUSLY. 8. APPROVAL OF BID TO MOVE HOUSE AT 5747 CENTRAL AVENUE N.E.: MOTION BY MR. PRAIRIE, SECONDED BY MS. SCHNABEL, TO AWARD THE BID TO MOVE THE HOUSE AT 5747 CENTRAL AVENUE TO SAFEWAY MOVERS IN THE AMOUNT OF $257.00. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. S 9. PROPERTY ACQUISITION REQUEST FROM MR. GARY PIERCE, 6132 CENTRAL AVENUE N.E.: Mr. Qureshi stated the HRA had received a copy of a memo to Mr. Robertson and himself from Jim Robinson dated May 30 stating that Mr. & Mrs. Gary Pierce have requested that the HRA purchase their property at 6132 Central Ave. Mr. Qureshi stated it has been the general policy of the HRA not to acquire property when there are no plans for that property. However, if the HRA wished to acquire the property, it was a reasonable price and there was a willing seller. MOTION BY MR. MEYER, SECONDED BY MS. SCHNABEL, TO REJECT THE PROPOSED OFFER FOR THE HRA TO ACQUIRE THE PIERCE PROPERTY AT 6312 CENTRAL AVENUE N.E. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. 10. RECEIVING COMMUNICATION FOR WINFIELD: Mr. Qureshi stated Winfield Development was requesting that the HRA recommend to the City Council that the property just south of the U. S. Swim & Fitness club be declared as having the potential for redevelopment property because of the soil correction costs which make the total land costs higher than the market costs for that area. The City Council has already authorized by preliminary resolution $3 million in IRB. �71 HOUSING & REDEVELOPMENT AUTHORITY MEETING; JUNE 12, 1986 PAGE 17 Mr. Qureshi stated that because of the type of development Winfield is proposing for this property, they cannot compete in the State IRB pool until Sept. 30, 1986. If it is declared as a potential redevelopment property, then they can be eligible for the pool right away. If that was agreeable to the HRA, then they should adopt the resolution which requests the City Council to assist Winfield Development in obtaining the State IRB allocation. Mr. Commers asked if it was the intention of Winfield Development to also come to the HRA for assistance in soil correction. Mr. Jim Winkels, Winfield Development, stated, yes, they have done that in their letter to Mr. Qureshi dated June 5, 1986. He stated they are prohibited right now from asking the State for the IRB allocation and they are asking the City to give them the opportunity to go to the State to get those funds. There is still no guarantee, but it is their feeling that this point in time is a good opportunity to receive the allocation. By Sept. 30, the allocation might be gone. Mr. Winkels stated they have an identifiable cost of $116,000 plus for soil correction. They have requested approximately 3% or $90,000 in soil correc- tion from the HRA. They are not asking for this assistance at this time, but, if possible, they would like to come back and request assistance for soil correction costs. MOTION BY MS. SCHNABEL, SECONDED BY MR. PRAIRIE, TO APPROVE RESOLUTION NO. HRA 8 -1986 TO ASSIST WINFIELD DEVELOPMENT IN OBTAINING STATE INDUSTRIAL REVENUE BOND ALLOCATION. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. 11. CLAIMS: MOTION BY MR. PRAIRIE, SECONDED BY MS. SCHNABEL, TO APPROVE THE CHECK REGISTERED DATED JUNE 12, 1986, IN THE AMOUNT OF $238.30. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. ADJOURNMENT: Chairperson Comers declared the June 12, 1986, Housing & Redevelopment Authority meeting adjourned at 11:30 p.m. Respectfully submitted, yn a a Recording Secretary i o )-> oi> x--Q 1(4-0 11410 rvl� rIAA <. r 7y, � ss / k2/ &4�� 5Vi Zu axa i 5l - � 55 � 762 cJ/4 6LV n� t2z� 8 A S . b�u�-,SV -3 � � a