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HRA 06/11/1987 - 29641CITY OF FRIDLEY HOUSING AND REDEVELOPMENT AUTHORITY MEETING, JUNE 11, 1987 CALL TO ORDER: Chairperson Commers called the June 11, 1987, Housing & Redevelopment Authority meeting to -order at 7:06 p.m. ROLL CALL: Members Present: Larry Commers, Virginia Schnabel, John Meyer Members Absent: Walter Rasmussen, Duane Prairie Others Present: Jock Robertson, HRA Director Nasim Qureshi, City Manager Dave Newman, HRA Attorney Rick Pri byl , Finance. Director June & Louis Lundgren, 1140 Minnesota Bldg., St. Paul Gerald Sunde, Sunde Engineering APPROVAL OF MAY 14, 1987, HOUSING & REDEVELOPMENT AUTHORITY MINUTES: MOTION BY MR. MEYER, SECONDED BY MS. SCHNABEL, TO APPROVE THE MAY 141f 1987, HOUSING & REDEVELOPMENT AUTHORITY MINUTES AS WRITTEN. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON CONNERS DECLARED THE MOTION CARRIED UNANIMOUSLY. 1. CONSIDERATION OF LOU LUNDGREN'S LETTER OF CREDIT: Mr. Robertson stated -that in the agenda packet handed out at the meeting was a letter from Mr. Lundgren stating he would be present at this meeting and would give the HRA a progress report on the financing of the Fridley Plaza Project. Mr. Lundgren stated the bad news was that he has not been able to bring a firm commitment for financing, but the good news was that he was in the process of hopefully finalizing arrangements for financing through a tax exempt bond for both the first and second phases simultaneously. He stated since he did not have a deal committed at this time, he could not divulge the names, but would tell Staff as soon as it was possible, hopefully by the following week. Mr. Lundgren stated that regarding the situation with Winfield Development, he had made an offer and had tried to get in touch with them several times, but they have not returned his telephone calls. He had no idea at this time the status of this situation. W HOUSING & REDEVELOPMENT AUTHORITY MEETING, JUNE 11, 1987 PAGE e Mr. Lundgren stated he also still had the two previous offers in terms of the financing on a conventional basis. One was through Steinberg Financial Co., and one was through Rothschild Financial Corp. Both are dependent upon some additional credit on the firmness of the project. Mr. Meyer stated that at the last meeting, Mr. Lundgren had given the HRA the changes recommended by the Maxfield Research.gr-oup in terms of the numbers of units, rearranging the mix, etc. Were these changes incorporated in the preliminary plans that are presented to new potential mortgagers? Mr. Lundgren stated, yes, all the numbers and figures recommended by the Maxfield Research group were in the preliminary plans presented to all potential mortgagers. Mr. Commers stated that at the last meeting, Mr. Lundgren had suggested a July 1 date for starting construction. Mr. Lundgren stated that starting construction on July 1 was virtually impos- sible at this time, but starting construction in July was not impossible. Ms. Schnabel stated that while the money market was very positive right now, the rental market was very soft, and there did not seem to be a lot of incentives for the renter. Mr. Lundgren stated there were a lot of things coming on the market this year, and it was true that in terms of trying to get the renter, there was a war on incentives, etc. But, there were still areas where buildings were being constructed and buildings were being rented. He stated the lenders were going to be looking for a study such as the Maxfield Research group study or some- thing like that, and the Maxfield study was a very positive study. He thought that when Mr. Maxfield was at the meeting, he had said if this building was in some other location, he might not be so positive, because there is over- building in other locations in the metropolitan area. Ms. Schnabel stated she found herself wearing down a little bit. They have been going on for almost a year now with no firm financial person in the picture. Mr. Lundgren stated it was not an easy job, and it was a time - consuming job. He stated that in this kind of business, you just have to keep going and continue to have some optimism. Mr. Commers asked if Staff's recommendation was still the same as that expressed at the last meeting. Mr. Qureshi stated he did want to alert Mr. Lundgren that there are conta -et*ybeing made by other parties interested in this site. and City Staff was pursuing all possible contacts. Whoever comes first, either Mr. Lundgren or another developer, with a reasonable financially backed development agreement will develop the property. HOUSING & REDEVELOPMENT AUTHORITY MEETING, JUNE 11, 1987 PAGE 3 Mr. Commers asked Mr. Lundgren if he understood what Mr. Qureshi had said. Mr. Lundgren stated he has always understood that. Mr. Commers stated that, hearing no motions, the item would remain on the table. He would continue to caution Mr. Lundgren that the end was inevitable, and he hoped Mr. Lundgren would be able to do something before that happened. 2. LAKE POINTE STATUS REPORT: a. Consideration of Sunde Engineer°iag°Staking and Inspection Change Orders Mr. Robertson stated that in the agenda was a memo dated April 24, 1987, from Mark Burch to himself regarding Change Order No. 1 to Sunde Engineering Contract for Engineering Services on Lake Pointe Development. Attached to the memo was Mr. Sunde's break -outs and estimates. Mr. Flora had spoken to Mr. Sunde earlier that day and had asked him to attend the meeting to answer any questions the HRA might have. Mr. Commers asked if there were other charges being made by Sunde Engi- neering as a result of appearances by Sunde Engineering at the Enebak Arbitration matter. Mr. Sunde stated, yes, those charges were billed separately. Mr. Commers asked at what capacity did people from Sunde Engineering appear at the arbitration. Did the City retain them to appear as wit- nesses or experts on behalf of the HRA? Mr. Newman stated Sunde Engineering had worked very closely with Mr. Herrick in preparing the HRA's presentation and also testified on behalf of the HRA. Mr. Commers stated that regarding Change Order No. 1, they were talking about another $2,300 for the inspection part of the contract and $5,200 for the staking part of the contract.- He asked if Mr. Flora and Mr. Burch had reviewed this and approved it? Mr. Robertson stated that was correct. Mr. Meyer stated that, as he understood it, the original contract was based on an estimate and was not intended as a lump sum. Mr. Sunde stated that was correct. They normally try to estimate before construction. In the spring, they tried to estimate again what it would cost to finish the project. MOTION BY MR. MEYER, SECONDED BY MS. SCHNABEL, TO APPROVE CHANGE ORDER NO. 1 TO SUNDE ENGINEERING CONTRACT FOR ENGINEERING SERVICES ON LAKE POINTE DEVELOPMENT, IN THE AMOUNT OF $7,500. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON CONNERS DECLARED THE MOTION CARRIED UNANIMOUSLY. HOUSING & REDEVELOPMENT AUTHORITY MEETING, JUNE 11, 1987 PAGE 4 b. Consideration of Lot Combination for Hathaway Lane Realignment Mr. Robertson stated this was in connection with the redesign of the intersection at T.H. 65 /Lake Pointe Drive /Old Central /Hathaway. He stated the corner lot has been acquired, and they are now at the point where they are finalizing the transactions. Memo PW87 -172 from Mr. Flora dated June 5, 1987, referred to 2,938 sq. ft. from Lot 4 that is attached to Lot 3 and 154 sq. ft. also from Lot 6 that is going to be attached to Lot 3 in order that the existing driveway to Old Central is closed and the now driveway will be built off Hackmann. It was Staff's recommenda- tion that the HRA approve the lot split and combination action and the property p.urchases so it can be executed and processed through the City Council. Mr. Robertson stated that at the last meeting, he had informed the HRA the Staff had made an offer to UNOCAL for the road easement, and the HRA authorized Staff to proceed. He stated two days ago, they received the agreement from UNOCAL and a copy had been given to the HRA members at this meeting. MOTION BY MS. SCHNABEL, SECONDED BY MR. MEYER, TO RECOMMEND TO PLANNING COMMISSION AND CITY COUNCIL THE APPROVAL OF THE LOT.SPLIT AND COMBINATION ACTION AND THE PROPERTY PURCHASES WITH REGARD TO THE HATHAWAY LANE REALIGNMENT. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. c. Receive Summary of Enebak Arbitration Mr. Comme rs asked if an award had been made. Mr. Newman stated no award has been made at this time. Mr. Robertson stated that in the agenda packet handed out at the meeting was a memo from Mr. Herrick dated June 11, 1987, which gave a more detailed report of the arbitration between the City of Fridley and Enebak Construc- tion Co. Mr. Robertson stated that also received at the meeting,iffere two memos from John Flora dated June 10, 1987. One was to Mr. Herrick on the subject of a " Sunde Meeting - Enebak Construction ". As a result of a meeting with Mr. Herrick on the previous Friday, Mr. Herrick directed Staff to meet with Mr. Sunde to consider any ways that the contract or changes by Enebak could be modified to reduce any costs at this point. Mr. Herrick had directed Staff to consider Items 1 - 7 in Mr. Flora's memo. Mr. Robertson stated that as outlined in the se _cond paragraph of the June 10th memo from Mr. Flora to Mr. Herrick, Staff had 10oKed at various alternatives for the earthwork in the area known as Pad A, in the north- HOUSING & REDEVELOPMENT AUTHORITY MEETING, JUNE 11, 1987 PAGE 5 eastern -most corner of the site. That was the :part that has not been started that was the most ambiguous in terms of the original document, and the recommendation from Public Works after meeting with Mr. Sunde was to go ahead and construct Pad A to a revised equalized area. A revision was necessary to conform to the final alignment of the access road and the area and location of the turnback property from T.H. 65. Mr. Commers asked what was meant by "revised equalized area. Mr. Sunde stated they tried to look at a similar shape of building pad as was in the original contract that would accommodate more of a general bui.lding shape than the unique shape that Woodbridge had in their original layout, but it was also the type of layout that would require the same work effort for the contractor. Ms. Schnabel stated that she knew the attorneys were trying to protect the City's interest and the_HRA's interest, but if they are also into the contracting business, that was where she got a little nervous. Who was really in control? Mr. Newman stated City Staff and HRA Staff were in control. In a letter from Mr. O'Keefe to Mr. Haik dated June 5, 1987, Mr. O'Keefe was objecting that the contractors on site have been instructed not to communicate with Mr. Weir and to receive direction only from City Staff or representa- tives of City Staff. Ms. Schnabel stated that if Woodbridge should pull out of the project and a new developer came in, by putting in the pads, was the City committed to these buildings in these locations? Mr. Qureshi stated there was some commitment to the locations, however, plans for the buildings and locations could always be modified somewhat. Ms. Schnabel asked if the layout of these particular buildings in these particular areas was laid out in positions that were most satisfactory from a planning standpoint. Mr. Qureshi stated this was the logical layout as anticipated by Wood- bridge. However, even though they are spending money for soil correction, there was still the possibility of some modifications to the layout in the future. Mr. Meyer stated they have to face the fact that if the Woodbridge deal falls through and they get another developer, it would be highly coincidental if these pads could be used fully. The work was not necessarily wasted or negated completely, but a new developer would have to have new pads or extensions of pads. Mr. Newman stated another thing to keep in mind was that most of the work on the building pads was completed-before this impasse occurred. It was his understanding that the only building pad they have any flexibility on is Building Pad A. HOUSING & REDEVELOPMENT AUTHORITY MEETING, JUNE 11, 1987 PAGE 6 d. Change Order No. 2 to the Enebak Construction Contract Mr. Robertson stated in Mr. Flora's letter dated June 10, 1987 (PW87 -184), Mr. Flora had stated that with the excavation of the Woodbridge Drive right -of -way, it became known that there was a section within the road between stations 1500 and 2200 that there were poor soils to support.:the roadway design. Enebak Construction had indicated it would cost $12,000 to correct the soil in that area. Mr. Meyer asked if this poor soil was found during the course of the preliminary excavation. Mr. Sunde stated the poor soil was found during the course of cutting into the north road - -in the northeast corner of the road. Mr. Meyer stated that if a boring had -been done in this area, wouldn't that potentially have identified the poor soil? If that was true, was this an area that Enebak should have been aware of in their original contract? Mr. Sunde stated that had been discussed. It had also been discussed whether or not a change order should be drafted, but it was the general feeling that this was a condition that was not anticipated at that time. Borings were spread out about every 100 -150 ft. on center over the site. Mr. Meyer stated it seemed there might have been a boring or two in this road area. Whatever the HRA decided to do with the change order was secondary, but he would like to know if there were any borings done in this particular area. There was a potential $200,000 suit against the City, and now Enebak was asking for an additional $12,000.change order in a 700 ft. stretch of land with borings 100 -150 ft. on center each way, and -poor soil wasn't found and bid with the original contract? He felt $12,000 was quite a high sum of money, and he felt it was something that should be looked into. MOTION BY MS. SCHNABEL, SECONDED BY MR. MEYER, TO APPROVE STAFFS RECOM- MENDATION TO APPROVE CHANGE ORDER NO. 2, DEMOLITION AND SITE GRADING PROJECT #163, IN THE AMOUNT OF $12,000, TO ENEBAK CONSTRUCTION CO. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. 3. CLAIMS (1605 -1614) MOTION BY MR. MEYER, SECONDED BY MS. SCHNABEL, TO APPROVE THE CHECK REGISTER AS PRESENTED. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON CONNERS DECLARED THE MOTION CARRIED UNANIMOUSLY. HOUSING & REDEVELOPMENT AUTHORITY MEETING, JUNE 11, 1957 PAGE 7 4. ANNUAL FINANCIAL STATEMENT: Mr. Commers stated that since the annual financial statement was just handed out at the meeting, he would like time for the Commissioners to review the report and then discuss it at the next meeting. ADJOURNMENT: MOTION BY MS.- SCHNABEL, SECONBED -BY MR. MEYER, TO ADJOURN THE MEETING. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE JUNE 11, 1987, HOUSING & REDEVELOPMENT AUTHORITY MEETING ADJOURNED AT 8:35 P.M. Respectfully sub fitted, y as Recording Secretary a i WO - -- -- -- - - - - --