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HRA 05/14/1987 - 29328CITY OF FRIDLEY HOUSING & REDEVELOPMENT AUTHORITY MEETING, MAY 14, 1987 CALL TO ORDER: Chairperson Commers called the May 14, 1987, Housing & Redevelopment Authority meeting to order at 7:10 p.m. ROLL CALL: Members Present: Larry Comers, Duane Prairie, John Meyer Members Absent: Virginia Schnabel, Walter Rasmussen Others Present: Jock Robertson, HRA Director Nasi.m Qureshi, City Manager Dave Newman, HRA Attorney Rick Pribyl, Finance Director June & Louis Lundgren, 1140 Minnesota Bldg., St. Paul APPROVAL OF APRIL 9, 1987, HOUSING & REDEVELOPMENT AUTHORITY MINUTES: MOTION by Mr. Meyer, seconded by Mr. Prairie, to approve the April 9, 1987, Housing & Redevelopment Authority minutes as written. Upon a voice vote,all voting aye, Chairperson Comers declared the motion carried unanimously. 1. C014SIDERATION OF LOU LUNDGREN'S LETTER OF CREDIT: Mr. Lundgren said that approximately 60 days ago, he had presented the HRA with a market feasbility study for the project done by Maxfield Research group. Mr. Lee Maxfield had attended the HRA meeting to make the presentation. At that time, Mr. Lundgren stated he had also told the HRA that they were having Mr.Maxfield do the study on the seniov bai`lding.at the'sarre time. He stated that as the HRA members might know, the market for senior buildings in the metropolitan area in general was felt to be overbuilt. There was no question of the need, but there was a question of the timing and the exact quantity. He stated he now had a rough draft of the senior building study and he would give some highlights of that report. He stated he hoped this information would give the HRA, as it did him, a feeling of some assurance for that phase of the project. Mr. Lundgren stated the report gave the demographic data and indicated the numbers of seniors that need housing in this study area and gave some indica- tion of the units that are ready to be started and the units that are on somewhat of a hold situation. Mr. Lundgren stated the study indicated that their market interviews of demographic research indicated that the younger seniors would be the primary HOUSING & REDEVELOPMENT AUTHORITY MEETING, MAY 14, 1987 PAGE 2 market for this development, especially in the absence of a health care sponsor for the developer of the project. They recommend that the building be positioned for a "young" senior project with no services intially planned for persons age 55 -75 years old. The building should have less common space than is typical in a building marketed for older seniors, but yet allow for the space to provide those services in the future as the residents age. Unit rents should be similer to the general ,market rents with slightly smaller unit size compensating for the extra common areas not found in the genearl market building. Mr. Lundgren stated he had met with Mr. Maxfield on Tuesday to go over the final points of the draft. He stated they were proposing to leave in most of the large common areas, but in the economic income study they would not count on the extra services that would be there. The possible future resi- dent in touring the building would see all the facilities shown in the sketch plan. According to Mr. Maxfield, it would make quite a marketing difference. Mr. Lundgren said the study stated that rents ranging from 75� per sq. ft. were recommended in 1987 for units of 650 -750 sq. ft. for one bedroom units, and 825 -1,000 sq. ft. for one bedroom /den and two bedroom units. He stated they have always been at the two bedroom and one bedroom /den size. Mr. Maxfield's recommendation was for about 10% larger and they intend to modify their plans according to those recommendations. Mr. Lundgren stated the study stated that based on the market demand, location, demographic trends, and the recommended development concept, they estimate an absorption time of approximately 15 -18 months once the building was availa- ble for occupancy. This assumed a strong marketing effort beginning at the time of the ground breaking and an aggressive leasing agent to meet this market. Mr. Lundgren stated Mr. Maxfield had also suggested that, based on his experience, this building should be about 25 -33% leased at the time the construction was completed. Mr. Lundgren stated this report should be available within a week, and he would get that to Staff. Mr. Lundgren stated Mr. Maxfield had recommended that between 100 -120 units be built. That was a little less than he had talked about, but he was pleased about that range in terms of financing. When projects are below 100 units, then they have to go with a different kind of lender. So, he thought this would be compatible, and in dollars and cents, it would be about the same dollars as the other building which, including all the soft costs, would be about $10 million. Mr. Lundgren stated it might be desirable to pursue the senior building very rapidly after the first building. They are looking hopefully at starting the second phase yet in 1987. They would be pursuing the third phase as soon �- as all conditions have been met. HOUSING & REDEVELOPMENT AUTHORITY MEETING, MAY 14 1987 PAGE 3 Mr. Comers asked Mr. Lundgren how he was progressing with the funding for Phase I. Mr. Lundgren stated he had had two meetings with Winfield Development Co. Winfield was quite interested in the commercial aspects "of the total project, but was not too interested in the residential portion. As a result of these meetings with Winfield, he has written them that he would be willing to enter into a joint venture, and he had laid out some broad terms. Generally speaking Winfield was still pursuing this joint venture. He should know within a week if there was going to be any kind of joint venture. Mr. Lundgren stated they are still pursuing the possibility of using tax exempt bonds for both phases which would mean the pricing of the units have to be different. Mr. Comers asked about the other lending groups that had expressed an interest in the development. Mr. Lundgren stated he was still working with Steinberg Financial Co. and Rothschild Financial Corp. He stated Murray Savings & Loan in Dallas, Texas, was going ahead with a project in Bloomington and was not going to make any more investment in the metropolitan area, so that was a "no" from Murray Savings & Loan. Mr. Lundgren stated they still have three alternative financing plans. The are pursuing Winfield, not exclusively, but concurrently with the other two• He stated he was not coming to the HRA with a story of success or a story of failure but was giving a report of what was happening and what they -think is going to happen. Mr. Comers stated that at the last meeting, Ms. Cherry Lundgren had said that within two weeks, they hoped to be back with an actual development agreement with a lender and a financing package already in place. She had also talked about a construction date of July 1, 1987. Mr. Lundgren stated that was an accurate statement and reflected their particular feelings at that time. He stated he was still talking about a July 1 construction date. Mr. Commers stated that at the last meeting, Mr. Qureshi had said the project looked better than it had for the last couple of months, and had thought there was no harm in delaying the drawing of the letter of credit for another month or two. Mr. Qureshi stated that for a number of months, Mr. Lundgren had basically made no progress. Then, last month, at least, he came with a different set of options that he was pursuing. There was a general feeling at that time by the HRA that it was the most optimistic report they had received. He stated he was kind of disappointed about Lundgren not fulfilling the state- `- ment made last month that they would HOUSING & REDEVELOPMENT AUTHORITY MEETING, MAY 14 1987 PAGE 4 actually have a development agreement and would be submitting that to the HRA for approval at this meeting. It looked like none of the 5 -6 options had panned out at this time. He stated his level of optimism was much lower now than it was one month ago. Mr. Commers stated the HRA had three alternatives at this meeting: (1) call the letter of credit; (2) leave the item on the table and do nothing; and (3) set a deadline for calling the letter of credit which was suggested at the last meeting. Mr. Meyer stated he felt that Mr. Lundgren was working hard to put the project together. He was actually working for the HRA because he was the only developer at this time. If they draw on the letter of credit, from a practical standpoint, then it was the end of the project. He thought the HRA should continue to encourage Mr. Lundgren in his efforts. Mr. Commers stated there have been a lot of inquiries but not a lot of other interest as far as another developer for this area. Mr. Commers stated that since there was no action taken by the HRA, this item would remain on the table for another month. Mr. Commers cautioned Mr. Lundgren that Mr. Lundgren should not continue to re.ly ppon the fact that the HRA has not taken any action on the letter of credit. He explained to Mr. Lundgren that the HRA might at any time call the letter of credit. Mr. Lundgren stated he fully understood that. 2. CONSIDERATION OF BARTON - ASCHMAN AGREEMENT "FOR UNIVERSITY AVENUE PLAN: Mr. Robertson stated that at the last meeting, the HRA had approved a budget with Barton - Aschman for an amount not to exceed $23,300 to,--.cover the University Avenue Corridor detail design. Mr. Meyer had brought up the concern that Barton - Aschman had no provisions for field observation for the work done by them. Mr. Robertson stated that in his memo dated May 8, he had concluded that Mr. Meyer had correctly identified the problems inherent in "design by committee" and had diagnosed a need for one prime consultant to be directed by one accountable staff project engineer. After thinking about that, he thought there might be some problems, so he went back to Barton- Aschman to tell them the City needed one new set of working drawings. In the HRH's packet was a revision of that and the basic budget went from $23,300 to $28,800. He also asked Barton- Aschman to add some options, and these options totalled $15,800. The breakdown of those options are as follows: $3,600 - proposed intersection improvements 4,200 - different treatments of the median 8,000 - field observation • HOUSING & REDEVELOPMENT AUTHORITY MEETING, MAY 14 1987 PAGE 5 Mr. Robertson stated that if they added the $15,800 to the $28,800, it gave them a total potential budget of $44,600. Mr. Robertson stated Barton - Aschman was recommending supplemental field observation by city staff under their supervision. This would increase actual field supervision effectiveness and would reduce the City's cost by an estimated $2- 3,000. Barton - Aschman estimates' that if they do the field observation alone, it would cost $7- 8,000. He stated he would recommend that the HRA go along with Barton - Aschman's recommendation for supplemental field observation by city staff. If the HRA was in agreement with that, a supple- mental agreement would be drawn up. Mr. Meyer stated the principle he saw in this situation was that they want Barton - Aschman to be able to tell them under the usual understanding of this type of work that the work has been properly done. The HRA does not want Barton - Aschman to say if something happens that it was because the city staff were messing around with Barton - Aschman's responsibility and they cannot take the "usual" responsibility entailed in field observation. However, the City is not demanding a higher standard of field observation than is usual, and that should be made clear to Barton - Aschman. If Barton- Aschman can guarantee that they will take total responsibility even with city staff under their supervision, then it was o.k. If not, then his vote would be to give Barton - Aschman the total contract. Mr. Prairie stated he would not be too concerned either way. Two thousand dollars did not seem to be a very big savings to the city. Mr. Commers stated maybe it was better for the city to stay out of it, so Barton - Aschman was accountable. It was the concensus of the HRA to let Mr. Robertson work out an agreement with Barton - Aschman, keeping in mind that they want to be sure that if city staff is working with Barton - Aschman that Barton - Aschman clearly is assuming the supervisory responsibility for the staff person(s). 3. LAKE POINTE STATUS REPORT: a. Consideration of Street Easement for Union 76 at TH 65 Mr. Robertson stated Mr. Flora had gotten a preliminary telephone agreement from the local representative for UNOCAL that $5,000 for the street easement and relocation of the sign would be acceptable. This now has to go on for final approval by UNOCAL personnel. He stated he needed approval from the HRA that if they reach a final agreement with UNOCAL for $5,000 that City Staff can go ahead and complete and expedite this right -of -way agreement. MOTION by Mr. Meyer, seconded by Mr. Prairie, to authorize Staff to negotiate with UNOCAL Service Stations for the acquiring of 1,253 sq. ft. of easement area for a price not to exceed $5,000. Upon .a voice vote, all voting aye, Chairperson Commers declared the motion carried unanimously. HOUSING & REDEVELOPMENT AUTHORITY MEETING, MAY 14, 1987 PAGE 6 b. Consideration of S.E.N. Amendments Mr. Robertson stated they of work that has actually of the contract. S.E.H. month the HRA approved an Highway 65, and there was HRA had never received an have asked S.E.H. to give a detailed accounting been done before the HRA authorizes payment ias done that and it was in the agenda. Last additional $8,270 toward the design of another $20,000 previously authorized that the accounting for. Mr. Commers asked what the total cost of the contract was with the amendments. Mr. Robertson stated the total contract was $83,822 (including $8,270, $20,052.15, and $5,500). MOTION by Mr. Prairie, seconded by Mr. Robertson, to approve the authori- zation of the increased expenditures in the S.E.H. contract including the $8,270, $20,052.15, and $5,500. Upon a voice vote, all voting aye, Chairperson Commers declared the motion carried unanimously. c. Consideration of Earthwork Change Orders Mr. Newman stated they do want to make an attempt to settle the claim made by Enebek. He had hoped to have some numbers for the HRA at this meeting, but had not yet received them. Once he had those numbers, he would like to poll the HRA by telephone and get a concensus of what kind of range they should settle with Enebek. Mr. Robertson stated that as stated in Mr. Flora's letter of May 7, there might be a need for the City to initiate some change orders in order to allow the construction to proceed without delay, and Mr. Flora would like the HRA to authorize the City to execute any change orders to the contract that are deemed necessary by the City and the City's consulting engineers. Mr. Newman stated what Mr. Flora was talking about was all the contractors with the Lake Pointe project. Staff had some concern that if the City had to wait a month to get authority from the HRA for a change order, it could cause some difficult delays. The contracts were actually entered into between the City and the contractors and because of Staff's desire for a quicker process to review these change orders, he would recommend that perhaps the best way would be to have the City Council approve the change orders since they meet twice as often as the HRA. Mr. Prairie stated that if Staff brings the change orders to the City Council fully researched and the City Council does meet more often than the HRA, he had no problem with Mr. Newman's suggestion. HOUSING & REDEVELOPMENT AUTHORITY MEETING, MAY 14, 1987 PAGE 7 t4OTION by Mr. Meyer, seconded by Mr. Prairie, to authorize the City Council to approve any change orders for all four basic contractors for the demolition and site grading of the Lake Pointe project as deemed necessary by Staff and the consulting engineers. The aggregate of said change orders shall not exceed $50,000 without further approval by the HRA. Upon a voice vote, all voting aye, Chairperson Commers declared the motion carried unanimously. Mr. Robertson stated the procedure for any work concerning Lake Pointe goes to the attorney before it is distributed. After the agenda went out, he had received a change order from Sunde Engineering for additional staking and inspection. Staff and the attorney have reviewed it. The amount was for $7,500 for additional staking and inspection which repre- sented about a 5% change out of the $150,000 contract with Sunde Engineer- ing. It was up to the HRA whether they wanted to approve that change order at this meeting or review and discuss it at the next meeting. Mr. Commers asked Staff to give the HRA a report on why this was done and who authorized the additional work for their next meeting. 4. CLAIMS'(1595- 1604): MOTION by Mr. Prairie, seconded by Mr. Meyer, to approve the check register as presented. Upon a voice vote, all voting aye, Chairperson Commers declared the motion carried unanimously. ADJOURNMENT: MOTION by Mr. Prairie, seconded by Mr. Meyer, to adjourn the meeting. Upon a voice vote, all voting aye, Chairperson Commers declared the May 14, 1987, Housing & Redevelopment Authority meeting adjourned at 8:55 p.m. Respectfully subm'tted, Lynn Sa a Recording Secretary 7 u� K �� CJ 1 ��G� � � Q� ,ate > /tfD ,�in,� ���� �t.���.s�io