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HRA 08/14/1986 - 29338CITY OF FRIDLEY 0 HOUSING & REDEVELOPMENT AUTHORITY MEETING, AUGUST 14, 1986 CALL TO ORDER: Chairperson Commers called the August 14, 1986, Housing & Redevelopment Authority meeting to order at 7:25 p.m. ROLL CALL: Members Present: Larry Commers, John Meyer, and Virginia Schnabel Members Absent: Duane Prairie and Walter Rasmussen Others Present: Nasim Qureshi, HRA Director Dave Newman, HRA Attorney Jock Robertson, Community Development Director John Flora, Public Works Director Samantha Orduno, Management Asst. Rick Pribyl, Finance Director Julie Burt, Asst. Finance Officer Mayor William Nee Councilman Brian Goodspeed Councilman Edward Fitzpatrick Councilman Robert Barnette See attached list APPROVAL OF MINUTES OF JULY 10, 1986: MOTION BY MR. MYER, SECONDED BY MS. SCHNABEL, TO APPROVE THE JULY 10, 1986, HOUSING AND REDEVELOPMENT AUTHORITY MINUTES AS WRITTEN. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. 1. RECEIVING EXECUTED COPY OF LEASE AGREEMENT WITH COLUMBIA PARK PROPERTIES FOR THE EASTERLY 89 FEET OF LOT 2, BLOCK 2. FRIDLEY PLAZA CENTER: Mr. Qureshi stated the lease has been fully executed and gives Columbia Park Properties another two year option. He stated after this period, their option to the land ceases. Mr. Qureshi stated Columbia Park Properties would blacktop the parking area and provide restoration of the other area. Mr. Qureshi stated no official action needed to be taken by the HRA and this information is provided as an update. Ms. Schnabel asked if the blacktopping would be completed by September 1. Mr. Qureshi stated this was what was agreed upon and he believed they are working towards this goal. HOUSING & REDEVELOPMENT AUTHORITY MEETING, AUGUST 14, 1986 PAGE 2 0 2. UPDATE ON LUNDGREN'S FRIDLEY PLAZA APARTMENT PROJECT: Mr. Qureshi stated in the HRA's agreement with Mr. Lundgren, it provides that Mr. Lundgren's right to develop this property ends on August 1, if he didn't have the financing in order. He stated, in addition, the agreement also provides that the HRA could draw on Mr. Lundgren's letter of credit and give him another 60 days to correct this situation. Mr. Qureshi stated Mr. Lundgren has been given the additional 60 days, but during this period, the HRA could also talk to other developers. He stated Mr. Lundgren agrees to these terms and no official action is needed by the HRA. The HRA received the Letter from Dave Newman to Mr. Lundgren dated August 4, 1986 and Mr. Lundgren's concurrence with these terms. Mr. Commers asked Mr. Qureshi if he knew if W. Lundgren had obtained the financing. Mr. Qureshi stated he spoke with Mr. Lundgren today and he seemed fairly certain that this would be accomplished. 3. RECEIVING LETTER FROM ROBERT LEVY REGARDING THE RICE PLAZA SHOPPING CENTER: Mr. Levy stated he is here this evening to reiterate his statements made at the June and July meetings of the HRA. He stated the owner of Rice Plaza Shopping Center would like to know what action the HRA is going to take and whether or not they will be acquiring this property. Mr. Levy stated they cannot keep space leased under a cloud of condem- nation. He stated they have recently leased additional space to an existing tenant, but it is only short term. He stated they have another situation where a tenant had an opportunity to sell his business, but was unable to do so because of the pending possibility of condemnation. Mr. Levy stated, basically, they are requesting the HRA to do one of two things, eliminate their property from the redevelopment district or else acquire the property. He stated the HRA has a legitimate purpose in wanting to maximize the use of the property, but for them to suffer the consequences while the HRA lures developers is a financial risk and motive of the public and not a private property owner. Mr. Levy stated the County is planning to acquire part of their property for additional right -of -way. He felt if only small portions of the property are taken, they wouldn't be treated fairly. He stated the BRA has the opportunity to work with the County to acquire the entire parcel. He stated he understood at the July meeting, there was no philosophical objection to proceeding to acquire the property, but no figures were available. He stated these appraisals figures are now available from the County. Mr. Levy stated he is requesting a formal action by the HRA to authorize staff to negotiate an acquisition of the entire parcel or remove it from the redevelopment district. He stated if they cannot negotiate on a friendly basis, they would have to do it on an unfriendly basis and this they did not want. HOUSING & REDEVELOPMENT AUTHORITY MEETING. AUGUST 14, 1986 PAGE 3 Mr. Commers asked if the County had made their appraisal available to Mr. Levy for his review. Mr. Newman stated it is the County's practice not to make the appraisal available because of the condemnation hearings. Mr. Meyer felt the alternatives to either remove the property from the redevelopment district or to acquire the property were avenues which should be explored. He stated he didn't know the implications if they were to remove the property from the redevelopment district. Mr. Commers stated this was an important parcel within the redevelopment district and the long range plans are such that he didn't think it would be practical to remove the property from the district. He stated if this is the case, the HRA can take no action or consider the acquisition of the property at this time. Mr. Commers stated the question that arises if it is an appropriate function of the HRA to acquire property when they don't have a parti- cular contract for development of the property. Ms. Schnabel stated she didn't feel the property should be removed from the redevelopment district, but didn't know if they are in a position to start negotiations for purchase of the property. . Mr. Commers stated it becomes an issue if the acquisition of this pro- perty should be tied into Mr. Lundgren's development or to proceed on the basis of future development. Mr. Levy stated he understands the HRA's dilemna, but felt the issues have to be considered separately. He stated there is a fairly lengthy list of developerswho have worked with the HRA in attempting to develop this area. He stated he realizes the HRA's motive in trying to maximize the use of the property, but those are public purposes. He stated to expect private property owners to take the economic risks and burdens until the HRA completes a development just doesn't belong in the private sector. Mr. Levy stated they have tried to be patient and have finally reached a point of no return. He stated if the HRA doesn't enter into negoti- ations,,they are left with no choice but to take legal action. Mr. Commers stated throughout the metropolitan area, there are numerous cases of redevelopment properties where the threat of condemnation hangs over the property owner. Mr. Levy stated what is unique in this situation is the number of potential developers and public hearings held for development of this area. He stated the type of history they have dealt with is not common place. He felt if the HRA wanted the property for redevelopment, it should be held by them and not a private property owner. Mr. Qureshi stated whether or not the HRA wishes to acquire the property is a policy decision. He stated another important consideration would be the cost for acquisition. s HOUSING & REDEVELOPMENT AUTHORITY MEETING, AUGUST 14, 1986 PAGE 4 Mr. Meyer stated he didn't believe Mr. Levy was making an idle threat of a lawsuit. He asked if Mr: Newman has examined their Legal exposure. Mr. Newman stated he can understand Mr. Levy's argument, but hasn't reviewed this question recently. He stated several years ago, it was his opinion the HRA was on fairly strong ground and felt a valid defense could be made, however, changes in the law may have occurred. Mr. Levy felt the law is fairly clear and cases are decided on a factual basis. He stated by the HRA's actions, they have created a cloud of condemnation over their property and that would be a factual-,question. Mr. Levy stated the County has advised them they are prepared to participate in a joint taking of the parcel, if the HRA so desires. He stated he didn't know, at this time, what would be a fair acquisition price. He felt perhaps the County's appraisal could be made available, if the HRA enters into negotiations for acquisition. Mr. Newman stated he didn't believe the appraisal would be released until the condemnation hearing. Mr. Commers stated he believed the HRA would have to put their own figures together and couldn't rely solely on the County's appraisal figures. Ms. Schnabel stated if the HRA does enter into negotiations and.purchases the property, the HRA will be facing some of the same issues Mr. Levy now faces such as possible vacancies and relocation costs. She felt it should be considered if this is something the HRA wishes to go through or take the chance on what would develop, if no action is taken. MOTION BY MR. NEYER, SECONDED BY IS. SCHNABEL, TO REQUEST STAFF TO ENTER INTO NEGOTIATIONS WITH MR. LEVY FOR POSSIBLE ACQUISITION OF THE RICE PLAZA SHOPPING CENTER PROPERTY. Mr. Commers stated this is not an absolute commitment that the HRA would be acquiring the property, but an opportunity to evaluate the costs. Ms. Schnabel stated she didn't see any harm in negotiating for the possible acquisition, but didn't like to see the HRA put in a position of being a landlord. Mr. Meyer stated he also shares Ms. Schnabel's concern, but felt there are two elements and one is fairness which has to be considered. He stated, however, if this went to litigation, it would be up to Mr. Levy to prove his client has been harmed. He felt an effort should be made to reach an agreement, before resorting to litigation. HOUSING & REDEVELOPMENT AUTHORITY MEETING, AUGUST 14, 1986 PAGE 5 Mr. Robert Smith, Attorney representing the owner of Ronnie's Pub, Mr. Hennessey, stated his client is a tenant in the Rice Plaza Shopping Center. He stated Mr. Hennessey has tried, because of ill health, to sell his business over two years ago and it is impossible because of pending actions of the HRA. Mr. Smith stated Mr. Hennessey's situation is one in which he is held captive by the HRA plans as they have to advise potential buyers that they are in this redevelopment district. Mr. Smith stated he supports Mr. Levy's position and is prepared to enter into any suit that may be commenced. Mr. Hennessey stated he had several prospective buyers for his business, but as soon as they were told of the possibility of redevelopment, they never returned. He stated he must sell his business due to health reasons, but has been unable to do so. Mr. Newman stated as he understands the motion, it was to commence negotiations for possible acquisition of the property and not to acquire the businesses. Ms. Schnabel stated all that would change hands, basically, is the landlord until such time as the HRA had an actual development. She stated her understanding of the motion is to enter into negotiations for possible acquisition of the Rice Plaza property. Mr. Meyer stated the intent of his motion wasn't to include the purchase of any businesses. Mr. Smith stated Mr. Hennessey really has no options and doesn't know where he stands in terms of being a victim of the redevelopment district. Mr. Commers suggested Mr. Hennessey meet with staff to address his concerns, but he is not sure there is a way to resolve them at this time. UPON A VOICE VOTE TAKEN ON THE ABOVE MOTION, ALL VOTED AYE, AND CHAIR- PERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. Councilman Barnette asked if the motion included only the shopping center per se or also the land surrounding it which Mr. Levy owns. Mr. Commers stated it would include the Rice Plaza Shopping Center and all vacant land around it owned by Mr. Levy. 4. CONSIDERATION OF A RESOLUTION RELATING TO REDEVELOPMENT PROJECT NO. I AND AMENDING THE MODIFIED REDEVELOPMENT PLAN AMENDING THE TAX INCREMENT FINANCING PLANS RELATING TO TAX INCREMENT DISTRICTS N0, 2 THROUGH NO. 6 WITHIN THE PROJECT AREA AND ESTABLISHING TAX INCREMENT DISTRICTS NO. 7 . AND NO. 8 WITHIN THE PROJECT AREA AND ADOPTING THE TAX INCREMENT FINANC- ING PLANS RELATING THERETO: HOUSING & REDEVELOPMENT AUTHORITY MEETING, AUGUST 14, 1986 PAGE 6 • Mr. Qureshi stated the HRA, at the last meeting, had given conceptual approval to assist Winfield Development in the amount of $30,000 for soil corrections. He stated there is a sizeable cost of approxi- mately $120,000 for soil corrections in order for Winfield to develop this property. Mr. Qureshi stated another parcel to be included in the tax increment district is the Shorewood Inn property in order for them to expand and upgrade the property. He stated the assistance provided to Shorewood would amount to $70,000. Mr. Qureshi stated the purpose of the resolution is to add these two parcels of property in the tax increment districts by establishing Tax Increment District No. 7 and Tax Increment District No. 8. MOTION BY MS. SCHNABEL, SECONDED BY MR. MEYER, TO APPROVE RESOLUTION NO. HRA 12 -1986 RELATING TO REDEVELOPMENT PROJECT NO. 1 AND AMENDING THE MODIFIED REDEVELOPMENT PLAN, AMENDING THE TAX INCREMENT FINANCING PLANS RELATING TO TAX INCREMENT DISTRICTS NO. 2 THROUGH NO. 6 WITHIN THE PROJECT AREA AND ESTABLISHING TAX INCREMENT DISTRICTS NO. 7 AND NO. 8 WITHIN THE PROJECT AREA AND ADOPTING THE TAX INCREMENT FINANCING PLANS RELATING THERETO. Mr. Meyer stated apparently there is a different rati6na1e,f6r'Dst rict No. 8 as compared with District No. 7. iMr. Qureshi stated the Shorewood property would be in an economic development district, rather than a redevelopment district. He stated this district has a shorter time period to recapture the tax increment. UPON A VOICE VOTE TAKEN ON THE ABOVE MOTION, ALL VOTED AYE, AND:CHAIR- PERSON CONNERS DECLARED THE MOTION CARRIED UNANIMOUSLY. 5. CONSIDERATION OF A RESOLUTION APPROVING AND AUTHORIZING THE EXECUTION OF A CONTRACT FOR PRIVATE REDEVELOPMENT WITH WINFIELD DEVELOPMENT, INC.: Mr. Qureshi stated this resolution would authorize the execution of a contract for private development with Winfield Development, Inc. He stated the contract provides the HRA would assist Winfield Development with soil correction costs not to exceed $30,000 once improvements are completed and a Certificate of Occupancy has been issued. Mr. Winkels, representing Winfield Development, stated this contract shows soil correction costs to be $120,000 and their documentation was for $116,000. Mr. Qureshi stated it would be appropriate to adjust this figure to $116,000. MOTION BY M. MEYER, SECONDED BY MS. SCHNABEL, TO APPROVE RESOLUTION NO. 13 -1986 AUTHORIZING THE EXECUTION OF A CONTRACT FOR PRIVATE RE- DEVELOPMENT WITH WINFIELD DEVELOPMENT, INC., WITH THE $120,000 FIGURE AMENDED TO $116,000. HOUSING & REDEVELOPMENT AUTHORITY MEETING, AUGUST 14, 1986 PAGE 7 . UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. 6. CONSIDERATION OF A RESOLUTION APPROVING AND AUTHORIZING THE EXECUTION OF A CONTRACT FOR PRIVATE DEVELOPMENT WITH SHOREWOOD, INC.: Mr. Qureshi stated the property owner, Mr. Nicklow, is proposing to renovate his existing structure in order to expand and provide addi- tional parking and landscaping. Mr. Qureshi stated some property to the east of the Shorewood property is already in the tax increment district. Mr. Qureshi stated the total cost of the improvement is about $750,000 and the HRA would provide assistance of $70,000 payable after all construction plans have been approved, improvements completed, and a Certificate of Occupancy has been issued. Mr. Qureshi stated these funds are paid back with no interest for three years, interest only for two years and the last ten years, the whole principal and interest is paid back as a second mortgage to the property. Mr. Nicklow stated they wished to proceed with the parking lot improve- ment as soon as possible and asked when payment would be received. Mr. Qureshi stated no payment would be received until all improvements have been completed and the Certificate of Occupancy has been issued. He stated the $70,000 in assistance from the HRA is contingent upon completion of all the improvements. Councilman Boods.peed stated $70,000 upfront would be worth more than after the improvements are completed. Mr. Newman stated he understands they cannot receive the funds until completion of the improvements, but felt it is an incentive for them to make all the improvements. MOTION BY MS. SCHNABEL, SECONDED BY MR. MEYER, TO APPROVE RESOLUTION NO. 14 -1986 AUTHORIZING THE EXECUTION OF A CONTRACT FOR PRIVATE DEVELOPMENT WITH SHOREWOOD, INC. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. 7. REQUEST FOR ASSISTANCE FROM KENNETH BELGARDE AND HARRY YAFFEE TO BUILD A 358 UNIT APARTMENT COMPLEX NORTH OF 83RD AVENUE: Mr. Qureshi stated a request has been received from Kenneth Belgarde and Harry Yaffee for the HRA to provide assistance in the development of a 358 unit apartment complex north df 83rd Avenue. HOUSING & REDEVELOPMENT AUTHORITY MEETING, AUGUST 14, 1986 PAGE 8 • Mr. Qureshi stated these developers were also involved in the East River Road project south of I -694. Mr. Qureshi stated staff has met with the developers and have indicated to them the willingness to make recommendations to the BERA for assistance with this project, if it is a high quality development. He stated there is documentation that soil corrections in this area would be about $1,200,000.. Mr. Qureshi felt if the HRA approved of the concept for this develop- ment, staff would work with the developer on the basis that it would be (1) a high quality development; (2) land write down provided as a second mortgage or other such instrument; (3) taxable increment bonding be used or existing unrestricted cash; (4) housing revenue bonds would be requested; (5) the project is under one ownership; and (6) a good north /south connector street be required between the nature center and University Avenue. Mr. Qureshi stated in the Comprehensive Plan, this is one location the City Council indicated may be a good potential use for residential development. W. Qureshi stated the developers have a similar project in Minnetonka called Cliff and indicated they would like to use it as a model for this development. Mr. Qureshi stated the project would cost between $17 and $18 million and generate about $268,000 in taxes per year. Ms. Linda Fisher, legal counsel for the developers, introduced the developers Mr. Belgarde and Mr. Yaffee and another member of their staff, Sherrill Kuretich. Ms. Fisher stated what is proposed is a 358 unit apartment complex generally located south of 85th Avenue, east of University Avenue, north of 83rd Avenue and west of Springbrook Nature Center. She stated the site is in a redevelopment district and designated in the Comprehensive Plan as an area that is appropriate for residential use. Ms. Fisher stated they wish to proceed to obtain their zoning approvals and respond to questions and concerns regarding access. She stated they have been in contact with the Director of the Nature Center and obtained comments from him regarding buffers. She stated they have retained the traffic engineering firm of Barton - Aschman to conduct a traffic study. Ms. Fisher stated the developers have a similar development in Minne- tonka and some members of the staff have toured this complex. She stated they wish to use this as a benchmark for the type of development proposed in Fridley. HOUSING & REDEVELOPMENT AUTHORITY MEETING, AUGUST 14, 198-6 PAGE 9 • Ms. Fisher stated the 358 units would be in nine three -story buildings. She stated the exteriors would be earth -tone brick and there would be large court yards, picnic and barbeque areas, jogging paths, and tennis courts. She stated there would be extensive landscaping with the use of rock retaining walls as an ornamental feature. Ms. Fisher stated there would also be a skating pond serving a dual purpose as a retention pond. Ms. Fisher stated some of the interior amenities include a recreation building housing a party room, social room, indoor (as well as an out- door) swimming pool. She stated the units will have walk -in closets, balconies, skylights, indented entryways, and European style built cab- inets. Ms. Fisher stated about 50% of the units will contain dishwashers and microwaves. Ms. Fisher stated they understand the City staff's position in regard to the amount of assistance. She stated they would like to continue to work with staff regarding the payback and to address the concerns in regard to reasonable security to their Lenders. Ms. Fisher stated they hope to obtain the necessary rezoning and financial approvals and close on the property by December 1. She stated construction would begin in 1987, with the first occupancy in October of 1987. • Ms. Fisher stated these apartments are designed for families, as well as younger persons. She stated there would be a mix of 17 %, one bedroom units; 67 %, two bedroom units; and 15 %, three bedroom units. She stated the average rents would be $585 per month. Mr. Meyer asked how they determined that this area would be a good location for their development. Ms. Fisher stated there are a number of factors including the visibility of the site and they would be close to University and Northtown, a major shopping center, as well as near the nature center and commercial develop- ment. She stated they also considered the need for additional housing in this area. Mr. Belgarde stated he has been in the business of developing housing for many years and one of the basic components is traffic. He stated there are between 35,000- 37,000 cars on University Avenue per day and an abundance of services at Northtown, as well as restaurants and other commercial development. He stated from their rental survey, he believed the rental figures proposed would work for this area and to assure it, they are offering a huge amenity package. Mr. Commers asked how this project compares to Mr. Lundgren's project. Mr. Qureshi stated Mr. Lundgren's project has 119 units renting between $700 -$800 per month and a total construction cost of about $8,400,000. He stated the financing approach would be the same with no interest for three years, interest only for two years, and the last ten years, all the principal paid back to the HRA with interest. HOUSING & REDEVELOPMENT AUTHORITY MEETING, AUGUST 14, 1986 PAGE 10 Mr. Meyer stated it seemed to him the Lundgren project would have to attract people with higher incomes since the rents would be higher. Mr. Meyer stated it seems that the $1,200,000 for soil correction would be taken into account when the land is purchased. He stated he assumes the value of the land would be down because of the soil problems. Mr. Qureshi stated the problems with the soil are a valid point and that is why staff is not recommending assistance in this area, as it probably will be taken into account with the purchase price. Ms. Schnabel felt this development would provide a mix in housing that would be good for the City and she would support the concept. MOTION BY MS. SCHNABEL, SECONDED BY MR. MEYER, TO FURTHER EXPLORE THE CONCEPT FOR THE DEVELOPMENT OF THIS 358 UNIT APARTMENT COMPLEX BASED ON A HIGH QUALITY DEVELOPMENT, LAND WRITE DOWN PROVIDED AS A SECOND MORTGAGE OR OTHER SUCH INSTRUMENT, TAXABLE INCREMENT BONDING BE USED OR EXISTING UNRESTRICTED CASH, HOUSING REVENUE BONDS WOULD BE REQUESTED, THE PROJECT IS UNDER ONE OWNERSHIP, AND A GOOD NORTH/ SOUTH CONNECTOR STREET BE REQUIRED BETWEEN THE NATURE CENTER AND UNIVERSITY AVENUE. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE • MOTION CARRIED UNANIMOUSLY. 8. STATUS REPORT ON PARKING FOR THE FRIDLEY PLAZA OFFICE BUILDING: Mr. Qureshi stated there is a plan to restripe the parking lot in order to provide for 166 nine foot stalls and the work should begin sometime this month. Mr. Robertson stated Mr. Doty was satisfied with the 166 spaces, however, still wants to discuss the location for short term parking. Mr. Qureshi stated this is an informational item only and requires no action by the HRA. RECESS: A recess was called at 9:35 p.m. by Chairperson Commers. RECONVENED: Chairperson Commers reconvened the meeting at 9:47 p.m. Those present were Mr. Commers, Mr. Meyer and Ms. Schnabel. 9. STATUS REPORT ON THE UNIVERSITY AVENUE CORRIDOR TECHNICAL ADVISORY COMMITTEE: HOUSING & REDEVELOPMENT AUTHORITY MEETING. AUGUST 14. 1986 PAGE 11 . Ms. Schnabel, Chairperson of the University Avenue Corridor Technical Advisory Committee, presented an,update to the HRA members. Ms. Schnabel stated they have had four meetings with another meeting scheduled for this Wednesday. She stated they have reviewed and assessed the traffic ideas presented by Barton - Aschman. She stated in regard to improvements along University Avenue, they are thinking in terms of mini, midi, or maxi as solutions to some of the problems. Ms. Schnabel stated as you travel north on University Avenue, it appears you are in a tunnel and part of this affect is because of the fence. She stated the fence was installed by the State as a safety barrier for children. Ms. Schnabel stated business people would like the fence removed and residents are split on whether or not they want it to remain. Ms. Schnabel stated if a recommendation was made to remove the fence at certain points, there may be the question of liability which would have to be addressed. She also stated it was felt a lot could be-- done in terms of landscaping. Ms. Schnabel stated they hope to have cost figures on what mini,, midi, or maxi intersections would cost and what intersections should receive which treatment. Ms. Schnabel stated the cities of Columbia Heights and Spring Lake Park will also be contacted to get them involved. She stated some interest- ing ideas have emerged from their meetings. Drawings were presented of the mini, midi, and maxi intersections and what design features could be incorporated into these intersections. Ms. Schnabel stated it would be helpful if they had some indication of how much could be spent on the improvement. Mr. Qureshi stated he felt the recommendations of the Committee should be prioritized and their options based on what is available for the improvement. He stated he would like to talk to the HRA and Council regarding funding. Mayor Nee stated he felt the Committee should be sensitive to the issue of the fence and pointed out the fence was installed because of a petition. Ms. Schnabel stated Larry Kuechle, a member of the Committee, had polled residents living along University and they indicated they did not care one way or the other if the fence was there or not. She thought perhaps the neighborhood had changed where that isn't a con- cern now. Mr. Commers thanked Ms. Schnabel for her report and update to the HRA itmembers. HOUSING & REDEVELOPMENT AUTHORITY MEETING, AUGUST 14, 1986 PAGE 12 • 10. UPDATE ON THE LAKE POINTE DEVELOPMENT: Mr. Qureshi stated since the HRA approved the addendum to the Develop- ment Agreement, there have been some minor adjustments which he asked Mr. Newman to explain. Mr. Newman stated the Indirect Source Permit has been issued which involved some minor changes. He stated because of technical diffi- culties, an escrow will be established for the conveyance of the land. Mr. Newman also stated certain engineering costs relating to soil conditions, landscaping, streets and the design of the inter- section will be paid in accordance with the public improvements the HRA will be performing. Mr. Newman stated as far as dates for completing the actual construction, it is on a 12 month schedule, except the planting season for large trees has been extended. He stated the final benchmakk of 749,000 square feet has been modified to 746,000 square feet. Mr. Newman stated one of the significant changes is in Paragraph 9. He stated when the addendum was first presented, it was the desire of the developer that the limited revenue note be tax exempt. He stated staff has discussed this issue and it appears a note cannot be obtained that is tax exempt. He stated the provision agreed to for arrearages under the limited revenue note to survive without interest if the benchmarks were met would now be included in the limited revenue note rather than in the addendum. Mr. Commers stated the changes then are that Mr. Weir has dropped his request for an opinion of bond counsel that the amendments to the agreement did not affect the tax exempt status of the limited revenue note and the amended terms are to be included in the note rather than in the Development Agreement. Mr. Newman stated under the terms of the Redevelopment Contract, the HRA is obligated to provide title for Phase 1 for the first building upon closing and receipt of the $1,000,000. He stated after January 1, 1987 if the developer shows a need to receive the balance of the Land for financing reasons, the HRA is obligated to deliver this land. Mr. Newman stated Mr. Weir has made a request for the balance of this land as his lenders want some assurances that the rest of the land will be developed. Mr. Newman stated he felt if the developer could obtain his financing at a lower interest rate, he could accomplish his goal. Mr. Newman stated if it is agreeable with the HRA, deeds could be executed for the balance of the property and placed, in trust, with an escrow agent with the understanding they would not be released until January 1, 1987. He stated in the interim, the HRA would con- sent to the filing of a mortgage against the balance of the redevelop - ment property, with no personal liability of the HRA. HOUSING & REDEVELOPMENT AUTHORITY MEETING. AUGUST 14, 1986 PAGE 13 • Mr. Newman stated he didn't feel Mr. Weir's request to execute the deeds for the balance of the land and place them in escrow was a major change in the agreement. He stated if this request is granted, there are some documents for reciprocal easements to be considered so it would be possible for both the HRA and developer to have access to make certain improvements. Mr. Newman stated another reciprocal easement would eliminate any possibility of buildings and parking lots being sold off separately. Mr. Weir stated because there are implications they may loose the tax exempt status on the limited revenue note, they want to be able to take advantage of the lower interest rates. Mr. Commers asked if the tax exempt status of the note was lost. Mr. Weir stated that is what they have been advised. He stated payments under the amended note will be fully subjected to income tax and, under the limited revenue note, they would not have been. Mr. O'Meara stated he is not willing to give a tax exempt opinion on the amended note. Mr. Deike, attorney representing Woodbridge, stated it is very essential to the financing to have the land available. Mr. Newman stated both he and Mr. Pribyl, the Finance Director, met with Mr. Weir's staff to review the financial arrangements for this development. He stated they feel reasonably satisifed the financial strength exists for the development. He stated Mr. Weir has made a substantial investment already in the land. Mayor Nee stated he felt this was a reasonable request in order that the developer may take advantage of lower interest rates. Councilman Barnette stated he would rely on staff's recommendation and, apparently, they are satisfied that this is reasonable. Councilman Fitzpatrick stated he was comfortable with the recommendation of Mr. Newman. MOTION BY MS. SCHNABEL, SECONDED BY MR. MEYER, TO APPROVE THE ADDENDUM TO THE CONTRACT FOR PRIVATE DEVELOPMENT, THE ESCROW AGREEMENTS AND THE RECIPROCAL GRANT OF EASEMENT. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON CONKERS DECLARED THE MOTION CARRIED UNANIMOUSLY. Mr. Commers asked when the closing would take place and Mr. Newman stated it is tentatively scheduled for 9 a.m, tomorrow morning. HOUSING & REDEVELOPMENT_ AUTHORITY MEETING, AUGUST 14, 1986 PAGE 14 f11. RECEIVING STATUS REPORTS ON BIDS FOR CONSTRUCTION PHASES OF THE LAKE POINTE CORPORATE CENTER REDEVELOPMENT PROJECT: Mr. Qureshi stated although there haw been delays in awarding the contracts, the cost differences have been very minimal. He stated bids were received this week for the demolition and site grading, the landscaping, irrigation and lighting, and the water and sanitary sewer. He stated the bid for the street improvement had been extended, with permission of the low bidder, pending finalization of the agreements with Woodbridge. Mr. Qureshi stated it was anticipated the improvements would cost $2.2 million and-the bids are under this figure. He stated, however, with the engineering costs added, it may be a little over the estimated amount. Mr. Qureshi stated the HRA should receive the bids and recommend to the City Council the contracts be awarded to the low bidders. Mr. Newman stated there is a clause in the Construction Agreement which states construction wouldn't begin until August 19. He stated he would suggest the contracts be awarded subject to the closing tomorrow and with the understanding the contractor wouldn't physically be on the site until August 19. MOTION BY MS. SCHNABEL, SECONDED BY MR. MEYER, TO RECOMMEND TO THE CITY COUNCIL THAT THEY AWARD THE FOUR BIDS TO THE LOW BIDDERS FOR DEVELOPMENT OF THE WOODBRIDGE PROPERTIES LAKE PO.INTE CORPORATE CENTER, SUBJECT TO THE CLOSING TOMORROW WITH WOODBRIDGE PROPERTIES. THESE BIDS ARE AS FOLLOWS: WATER & SANITARY SEWER PROJECT #162 PARK CONSTRUCTION $188,100.00 DEMOLITION & SITE GRADING PROJ. #163 ENEBAK CONSTRUCTION $978,000.00 LANDSCAPING, IRRIGATION & LIGHTING, #168 MINN. VALLEY LANDSCAP. $481,413.00 ST. IMPROV. PROJ.ND.ST- 1986= 1 &2;PHASE:II'H & S ASPHALT $368,054.10 UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. 12. CONSIDERATION OF A RESOLUTION APPROVING AND AUTHORIZING THE EXECUTION OF AN AMENDED TAX INCREMENT PLEDGE AGREEMENT: Mr. Pribyl stated it is requested the HRA consider this resolution requesting the City to issue its $10,045,000 General Obligation Tax Increment Refunding Bonds, Series 1986, for the purpose of Crossover Refunding the City's $11,550,000 Variable Rate Demand General Obligation Tax Increment Bonds. Mr. Pribyl stated a crossover bond is nothing more than a fixed rate general obligation bond. He stated he would recommend the sale of the crossover bonds because it places a cap on the debt service in the future. He stated it also provides the flexibility and advantages of having both the variable rate issue and lower interest rate and security of a fixed rate issue at a lower interest rate. HOUSING & REDEVELOPMENT AUTHORITY MEETING, AUGUST 14, 1986 PAGE 15 SMr. Casserly, bond counsel, stated the City has variable rate bonds out now. He stated what is suggested is a way to cap the interest rate on the variable rate bonds. He stated a crossover bond is a refunding bond and you place the proceeds in an investment account and invest them in government securities. He stated the principal of the refunding bonds are matched to the principal of the variable rate bonds. Mr. Casserly stated the interest in the escrow accounts just about pays itself. He stated what happens in the end is the City is only paying one principal of the refunding bonds and one interest on the variable rate bond. Mr. Pribyl stated the transfer 6f the bonds amounts to about 1 /4 % and even with this figured in the cost, it is still under the 6.5% set up as a debt service within the bonds. He felt the savings and safety it provides necessitates the bond issue. Mr. Casserly stated the refunding bond rate is 7.3 or 7.4 %. He stated what you are paying for is protection that if the interest rate rises toward 7 %, there is the option of crossing over. He stated as long as the interest rate stays low, you would come out ahead. He stated if the interest rate rises, you are already locked in at a low interest rate. He stated at some time in the future, a maximum of seven years, it is necessary to crossover. He stated the refunding bonds wipe out the variable rate bond and the principal and interest is paid. Mr. Pribyl stated what concerned him was the difference in the interest rates and feels assured the difference is small enough in relation to the amount of the issue that it still provides a very low interest rate. He stated if interest rates remain low for seven years, there is the possibility of incurring a higher debt service. He stated if interest rates increase, the vehicle is in place to lock in the costs. He stated in reviewing interest rates on the debt service, this is one of the lower rates they have had for a fixed rate. Mr. Casserly stated on a trended basis, taking the worse five years, the variable rate would have averaged out 6.5 %, but has gone as high as 9 %. Mr. Commers stated the issue before the HRA is whether they wish to proceed with the crossover bonding by adoption of the resolution. Mr. Qureshi stated the concept is buying some insurance and clearly paying some cost for it. He felt it was a judgment question, depending on the interest rates. He stated 7 or 7.4% seems a very attractive number for the last ten years. Mr. Pribyl stated Miller and Schroeder have been very accommodating in educating them in these type of issues. He felt, at this point of time, it seems very beneficial to proceed. HOUSING & REDEVELOPMENT AUTHORITY MEETING. AUGUST 14, 1986 PAGE 16 Mr. Casserly stated there is protection against some interest rate fluctuations and it works so well it is being specifically prohibited in the tax bill. He stated, therefore, most of the bond issues around the State have been moved up to this week. MOTION BY MR. MEYER, SECONDED BY MS. SCHNABEL, TO APPROVE RESOLUTION NO. LI -1986 REQUESTING THE CITY OF FRIDLEY TO ISSUE ITS $10,045,000 GENERAL OBLIGATION TAX INCREMENT REFUNDING BONDS, SERIES 1986, FOR THE PURPOSE OF CROSSOVER REFUNDING THE CITY'S $11,550,000 VARIABLE RATE DEMAND GENERAL OBLIGATION TAX INCREMENT BONDS AND APPROVING AND AUTHOR- IZING THE EXECUTION OF AN AMENDED TAX INCREMENT PLEDGE AGREEMENT. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMERS DECLARED THE NOTION CARRIED UNANIMOUSLY. 13. APPOINTMENT OF A VICE -CHAIR OF THE FRIDLEY HOUSING & REDEVELOPMENT AUTH- ORITY: MOTION BY MS. SCHNABEL, SECONDED BY MR. MEYER, TO TABLE THIS APPOINTMENT TO THE NEXT MEETING. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. 0 14. CONSIDERATION OF THE APPROVAL OF JOHN " DIRECTOR OF THE FRIDLEY HOUSING & REDEV Mr. Commers stated the HRA members have been provided with materials relating to this appointment along with a copy of the contract for staff services. MOTION BY MS. SCHNABEL, SECONDED BY MR. MEYER, TO APPROVE THE APPOINTMENT OF JOHN "JOCK" ROBERTSON AS EXECUTIVE DIRECTOR OF THE HOUSING & REDEVELOP- MENT AUTHORITY. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON CONKERS DECLARED THE MOTION CARRIED UNANIMOUSLY. 15. ESTIMATES: MOTION BY MS. SCHNABEL, SECONDED BY MR. MEYER, TO APPROVE THE INVOICE FROM BARTON- ASCHMAN ASSOCIATES, INC. FOR SERVICES IN CONNECTION WITH THE UNIVERSITY AVENUE CORRIDOR STUDY IN THE AMOUNT OF $3,879. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. 16. CLA INS • MOTION BY MS. SCHNABEL, SECONDED BY MR. MEYER, TO APPROVE THE CHECK REGISTER AS SUBMITTED (CLAIM NOS. 1488 - 1497) AND THE FOLLOWING COSTS ASSOCIATED WITH THE FIXED RATE CROSSOVER BONDS: HOUSING & REDEVELOPMENT AUTHORITY MEETING, AUGUST 14, 1986 PAGE 17 ' KUTAK, ROCK & CAMPBELL - UNDWTR. COUNSEL KUTAK, ROCK & CAMPBELL - BANK COUNSEL O'CONN0R & HANNAN - BOND COUNSEL FEE O'CONN0R & HANNAN - COSTS FIRST TRUST, INC. - TRUSTEE FEE FIRST TRUST, INC. - ESCROW AGENT FEE GRANT THORNTON - VERIFICATION $17,500 1,500 17,000 1,500 500 16,185 3,500 UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. OTHER BUSINESS• Ms. Schnabel requested that water be provided for their future meetings. ADJOURNMENT MOTION BY MS. SCHNABEL, SECONDED BY MR. MEYER, TO ADJOURN THE MEETING. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY AND THE AUGUST 14, 1986, HOUSING & REDEVELOPMENT AUTHORITY MEETING ADJOURNED AT 11:40 p.m. Respectfully submitted, Carole Haddad Recording Secretary PAGE 18 I• A l � L�