HRA 01/14/1988 - 29648i�
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(�TY OF FRIDLEY
HOUSIlVG & RIDEVII,OPMENT AU7�3�tITY MIIVITTES, ..�1[TARY 14, 198�
cAr•r, TO O�:
Chairpers�n Co�ers called the January 14, 198�, Housing & Reclevelopment
l�uuthority �eeti.ng to order at 7: 06 p. m
ROLL „��,A�;
Members Present: Larry Co�nmers, Virginia Schnabel, Walter Ra�nussen,.
John 1�eelrer
Members Absent: Duar� Prairie
Others Preserit: Jock Robertson, .E�cec�tive Director of ffi�A
Rick Pribyl, Finance Director
3u1 ie Burt, . Asst. Finance Off i�r
Dave Newman, . ffiZA Attorney
Lou & Jime Ltmdgren, . 343 Rellogg Blvd. , St. Paul
Mervin Mindess, . 6824 C�ndlew�cl Circle, Broolclyn Park
A1 an Rouse, 17 86 Henr�epin Ave. S. , Mpl s.
Pat Felstring, Busi.r�ess Develognerrt ServiQes
Q' '_�t� _� � �_�,��i�l: �_L � . • �. ���_�L�±_ ��' u� _�� � _i���� ;. ��_ �!� �l �� _�.
� by Mr. Nleyer, s�evonded by Mr. Rasmussen, . to approve the December 20,
1987, Housing & Redevelopnent Authority minutes as written.
UPON A VOICE VO.[E, .ALI, VOPIl�IG A7�, ,�RS�1 p���RS DECLARED THE MOTION
(�,RR]ED UIi�TIl�QITSLY.
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Mr. Robertson stated he woulcl 1 alse to give the HRA a stunmaary of his meno
to the HRA dated January 8, 1988. Essenti ally, what Staf f was say ing
was that the Develognent Contract with Lou L�clgren was terminatecl in
1986, and Mr. i.�mdgren has aclaiowledged that the contract was lawfully
terminated and he has sinc:e then consistently acknowledged that he is
operating without the protection of any devetognent oontract. 5taff was
reo�nunending that the HRA draw on the entire letter of credit uz the sum
of 5200,000 as partial liquicated damages and reimburs�merit of expenses, .
vuith the �m�rstancling that all or part of that stun wuld be reftmdeol to
1'4r. Ltmagren if he is successf ul in secvring f inancing for the proj ect.
Mr. Robertson stateal he could entunerate a ntunber of reasons why he f el t
the HRA should call the letter of credit, but he would wait tuitil the
a�propriate time when the HRA decided to call on him for tho� reasons.
Mr. Ltuidgren stated the status as of t,hat d
woulc] receive a letter of interit on Monday �
the Carnegie Ewans group. He statecl he
letter. 8e was hoping he would have cptten
1-
iy was he had been tola he
�r Tuesday of that week f rom
has not yet receiveol that
something before the meeting
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'`�` that would have ir�li.cated that the letter of intent was on its way. He
was� told yesterday that Carnegie Evans was
still working on the letter of crec7it and that he would have it very
shortly. He realized the HRA has heard all this before, . and he has
heard it before. He stated he haol no differenc�e of agreement with Mr.
Robertson's repor� Ae was hoping that possibly by Friday or Monday he
�vould have that letter af ir�tent, . in which case he would present it..
Mr. Limdgren statecl what the plan was �cier that operation was that if
they c�et the letter of intent, . it would give the conditions imder which
the eomanitment woula be made. At that particular point in time, . he
would go directly to meet with the lenaer and, .prestIInably, , also with the
ooritractor at the same time. �e oontractor was supposec7ly will ing to
isSUe three letters of credit: (1) one letter of creclit would be for
the �nstruction laan and/or any gap that appears between the wn¢nitment
amo�t and the total oonstruction amowlt; (2) a letter of �mnitment to
take plaoe to oover that gap between the construction period and the
rerital period; (3) a letter of credit to take up a guarantee perio� of
about four years on a c�iminishing scal�-4& guarariteed the f irst year,
goi.ng �own to 3� the follawing year,.etc.--to wver any possible qaps in
the early years of t,he project.
Mr. L�mdgren stated he did suggPest to Nir. Robertson the possibil ity that
if he was able to oome in within a few da.ys with a letter of intent, . if
tlie HRA wish�l, . he oould probabl.y supplant the letter of cre�it which
/'1 the HRA now has with � ideritical letter of creai.t with a date of 60 or
90 days after that poirrt. Zhis was an op�ion the HRA c�ulc� have if they
w�nted it.
Mr. R�bertson stated the HRA has tmtil February 1 to actually execute
the action on the letter of credit. �e was sympathetic with Mr.
Lundgren; and if the letter of intent �as arriving within a couple of
days, . the HRA would still have time to ack. If Staff was authorizec7 to
act u�der oertain conditions,.he woud ask that he and Mr. Newman be
authorized to r�egotiate such an extension.
Mr. Newman statec7 that fr�n what he was hearing, . even i.f Mr. Lundgren
c�ets this letter of interrt, .what the letter will do is represent the
oonditions that have to be met before the f inancing will be issued. He
suspecteol that at this point, . those are sic,�if icant. Sevondly, they do
not have a aevelopqnent contract, , and they are not going to have a
�velognent writract before this letter of credit expires, because the
HRA will not be meeting again and they are r„ot going to be able to draft
one within two weeks. If �khe HRA was inclir�ea to follaw Mr. Robertson's
suggestion, his initial c�om¢nents would be: (1) Before the �iRA agrees to
this extension, . that Mr. L�dgren be required to provide evidence of
100� of the f inancing. Ae bel ieved the HRA would want the ent i re
packac�e in plaoe before there were any extensions. (2) Mr. Robertson is
cJoing to have to be vested with the c]iscretion as to whether or not the
°la�dry list" of �nditions is so extensive, . it is just not feasible.
If the 13RA was inclinea to tollaw Nlr. Robertson'ss suggestion, he would
� suggest they set a deaolline of no later than 5:00 p.m. on Tuesday,
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January 26, 1988. That then gives Mr. Robertson three days in which to
take �khe rfecessary steps back on the latter.
Mr. Rasmussen stated the HRA would certainly warrt to have another letter
of credit replacing the current letter of creclit. Zt seemed
inconceivable to him, . knowing the history of the proj ect and the
intricacies of putting this kind of projec;k together, . that this coulcl be
ac�omplishe� in this period of time.
Mr. Newman statecl Staff was also very ske�ical, but they want to give
Mr. L�dgren the ber�efit of the doubt. He stated his comments were
ba.sed on the asstunption that there woulcl be a new letter of cre�it
iss�d for the additiona]. 60-day period.
Mr. C�aners stated if Mr. Ltuiclgren does not have that letter of i.ntent
and it c�s not look like it is realistic, . it wa� his wlderstancling that
the HRA would draw on Mr. Lt�dgren's letter of credit before February l.
Mr. Robertson stated the deadli.r� for Mr. Lundgren for fulfilling all
these conditions was January 26. fle stated he would negotiate an
extension only with the review and appraval of Mr. Newman.
Mr. Meyer stated he would vote acfain�t any mation to call Mr. Ltuidgren's
letter of credit, .beca�se he felt tliere was a legiti.mate question that
should be debated among th�nselves as to whether or not the letter of
credit should be callec7 at all. Any motion he was anticipating on this
sQOre would autanatically asstnae that the letter of creclit would be
revoked or calleol if certain oonditions were not fulfilled. His oo�nerit
would be to speak a�inst such a motion.
Mr. Newman stated that, . prooedurally, . if it was the HRA' s desi re f or
Staff to r�t act on l�ir. Lua�dgren's letter �f credit, , the 5taff needed a
mation to that effect. This was not a situation where the HRA could
table any action on the letter of credit as they have done in the past.
They neecl a mation to rel�se the letter of credit back to Mr. Ltuidgren.
It would be his interpretation that because of the contract they have
eritere� irito and the letter of credit that ha.s been provided, . the Staff
is obligated to collect that letter of credit unless they are
specif ically directed not to act on i�
,MOTION by Ms. Schnabel, , secondecl by Mr. Rasmussen, . to remove the
aonsideration of Mr. Lundgren's letter of crec7it fram the table and
bring it up for oonsi�ration.
UPON A VOI(E VOI�, . ALL VOTING AYE, .(�AIRPERSOI�T QOM[�RS DECLARED THE
N�TION CARRTED UI�tTIl�iJ�Y.
� by Ms. Schnabel, seconded by Nir. Rasmussen, . that: (1) on or
before 5:00 p.m. on Tuesday, January 26, 1988, Mr. Ltanclgren provide to
the Executive Director of the Fridley HRA a letter of intent for
financing with conditions which are satisfactory to the Executive
Director; (2) on or before 5: 00 p. m on Tuesday, . January 26, 1988, Mr.
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� L�dgren prwide to the Executive Director �videnoe of any or all other
financinq which might be necessary in order to finance 100� of the
anticipateal cost of the oonstruction of the project; (3) on or before
5:00 p. m� Tuesday, . January 26, 1988, Mr. L�dgren provic�e to the
ExeCUtive Director a substitute letter of credit which woulcl run for an
additionaa. period of between 6D anc7 90 days.
If these three items are accomplished on or before 5:00 g.m on Tuesday,
January 26, 1988, the Executive Director will be directed not to act
upon Mr. Ltandgren's letter of creait. If Mr. Ltandgren has not
acc�mplished these three items, . then the Executive Director will be
olirected to act upon Mr. L�dren's letter of credi�
Mt. Meyer statecl that at this time he woulc3 like Mr. Robertson to give
his reasons why Staff feels the letter of credit shoulcl be revoked
Nlr. Robertson stated the history of this project on this piece of
property c�oes back 4-5 years ago. At least two other developers have
wme to the City anc7 the HR� with a promiseed develo�ent, . and then dic7
not deliver. With one of those developers, . the HRA committecl to
purchase the building whicli was now the m�i.cip�l liqta�r store. Sri both
i.nstances, . the �RA got both the property owners, . the tenants, . and the
rieighbors particularly involved, . eitller positively or negatively, about
the project. In both cases, . the proj ects dia not happen. Based on
experienoe, . they all agree there is a need for a potential developer to
^ put some mo�ey up frorit to inalicate the developer's seriousness and to
avoicl taking property owners, , tenants, . anc7 neighbors through this
prooess r�eed].essly.
Mr. Robertson statecl Mr. Lundgren defataltea on the agreement with the
City in August � 1986. At that time, . the HRA could have called the
letter of credit; and if they haol, . the HRA would have accruecl
approximately 530, 000 in iriterest since then. In eff ect, . the HRA has
aleady given Mr. LLmrlgren anotYaer 530,000. Finally, he felt the 13RA's
andl the City's reputation was going to be scrutinized by other
developers to see if the HRt� is really serious about an indication of
commitment to the proj ec:t up f ront. He stated he would feel very
�aamfortahle if they aid not do this.
Mr. Meyer stated he was very skeptical of the possibil ity of Mr.
Ltmdgren being able to del iver a oo�mnitment of any kinc7 by late Jan�ary.
His oommaents were �i.rectec3 to what he c�onsc�ered to be the heart of the
matter, . ass�uning the clefault will take place in accordance with the
languages of the mation--that the � would then automaatically revoke
the letter of credi�
Mr. Meyer stated that in his opinion �khere was no question but that the
HRA haol a legal right to this money. He wantecl to talk about the
subjective or the intangible part of the proposal. He stated Mr.
Robertson ha� given an outline of the history of this particular site.
Mr. Ltmdgren has been a tr� friend of the purpo�es of the HRA regarding
� this property; far more so, . t-han anyone else who has ever attempted to
develop this property. Mr. Lundgren has pr�pare� plans and
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�'� specifications for c�onstruction for the specifics of this particular
property, . which probably woulcl easily be worth several hundreds of
thousands of olollars on the market, . not paid for by anyone but Mr.
Lu¢�clgren's group. He statecl they have rnot �en any "real" construction
plans or doc�mments frcan the Lake Pointe people. T�ey seldom, . if ever,
get any kinal of construction ciocuments f rom any of the other
d�evelapnerits they have had. No one has bothered to give the kind of
heavy financial commitment that Mr. Lundgren's group has given.
Therefore, .Mr. Ltmdgren has put his maney on the lirn in terms of being
a bonaf iole interested player � that property.
Mr. Meyer stated that, . in ac3dition, . in order to back up this heavy
inve�tment of hLmdrea� of thousands of d�llars in work�.ng drao�ings, . Mr.
Lu�olgren has gone to the point of establ ishing a 5200, 000 letter of
credit, ,which tells the world even more so that he is deadly serious
about the develognent of this property as he proposed it and as the HRA
wishecl it to be develaped. To h�m, . those were very strong indications
that N1r. Lt�clgren has not been using the HRA or the City as perhags
other c�evelopers have on the same site. In the interim, , Mr. Meyer
stated he realizecl that after Mr. LLmdgren c�faulted on the agreement, .
the HRA o�ulcl have pulle�i the letter of credi�
Mr. Meyer stated he realized Mr. Lua�dgren was protecting his own self
irYterest al�, . but at the same time, the fact that Mr. Lundgren has oome
before the HRA month after month and has spent imbelievable amounts of
^ time and money to try to get this project g�irag and the fack that he has
rigorotasly and faithfully pursuec7 trying to find someone in this very
poor market, , has all been of great berief it to the HRA. At least they
know ane person has been f ighting hard to get the area developed as the
HRA wishes it to be developed. Other major glayers in the alevelo�nent
c�ae have lookea at the property and have evidently been less than
impressed, . but Mr. Ltmdgren has stayecl the oourse.
Mr. Meyer statecl that for those reasons, . he felt it was inappropriate
for the HRA to clraw on this letter � crecli� Or� the other har�, he olic7
recognize the fact that they c% have a responsibil ity to the publ ic.
Here is $200,000 whi�h was legally theirs, .anc7 in a sense, .the public's.
&xt, .l�e would feel very o�nfident in explaining to any member of the
pv4].ic who q�estioned him that, . yes, . the HRA had the legal right to this
money, . but they did had done nothing to earn that money. They were
treatirag Mr. L�dgren ancl his grot� the same as any menber � the public
would w�nt to be trea..ted—that Mr. L�dgren was caught in a bind because
of the falling market, , he has put his money where his mouth was with
heavy d�llars, . anol he has been caught short by the exingencies of the
matner�t.
Mr. Meyer stated, . again, . Mr. Lundgren's concluct ancl his whole
develognent stood in shining oontrast to other developers.
Mr. Meyer statea it would be nice to grant Mtr. Lundgren a categorial
� letter of e�ctension for three months or six mor�hs, . but taz].ess new facts
�ome to light, . in all honesty, he woulcl still, . even at the end of the
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�� three morith or six m�th ti.me period, .vote against calling the letter of
credi� So,.he was not really suggesting they extend the letter of
crecli.t categorically.
N1r. Rasmussen statecl he tuicierstood exa.ctly tn�hat Mr. Meyer had saicl, . but
he worried about the credibility of a oontrar.t. To say the HRA or the
City has r�t put any mor�ey into this project would be to bely the fact
that they have been here oonsi�ering this letter ar�d this project for
quite awhil.e, . an� Staff has �ertainly s�ent a lot of time on it. The
HRA ana the City def initely do have an irrvestment in it, , along with Mr.
r�agren.
Mr. Rasnussen stated he felt if they are going to make contracts and
hire legal. staff anol pass resolutions that will be later voicl because of
hwnanitary reasons or whatever, .then he felt they lose their credi.bility
as a sitting bocly. Zlien, .what deal cannot be cancelled? Also, . other
developers will take this as a preoedent ancl use it, , very justif iab].y.
Ms. Schnabel stated she appreCiated Mr. Meyer's oomnents,.because he has
obviously spent a lot of time thinking about this. She stated Mr.
Robertson macle a comm�ent in his memo datea January 8th about the
possibil ity � ref �ding a portion of Mr. Ltmdgren's letter of credit if
he succeea� in securing f inancing f or the proj ect. She stated that if
the letter of crec�it was cashea as outlined in the motion, . and Mr.
Lundgren is able to secure the f inancing and get things together, . lut it
^ goes beyond the January 26th deadl ir�e, . and is, . say March l, was it
lec�al.ly possib�le to reftu►d a portion of that letter of cre�i.t back to
Mr. L�mdc,gen? What was Staff's position on this?
Mr. Ne�vman statecl that was something that would be up to the HRA's
discretion. It would depend a great deal upon what Mr. Lundgren
presented to the HRA 60 or 90 days �rn,m the road. To be very candid, .
the H1�A had to realize and reooc�ize that if they ca.11 Mr. Ltandgren's
letter of credit, . by doing so, . the impact may make it 1 iterally
impossihte for Nir. Ltmdgren to proceeal with the project. He c]id not
thi.nk the HRA should be misled that there was an easy way ouk.
Mr. Ras�nussen stated he jusst felt the HRt� hacl an obligation to honor a
coritract. He felt the �iRA has been very aonsiderate of Mr. ][,�dc,�en.
Mr. Meyer stated Mr. Rasmussen cited the fact that the staff has sperit a
great deal of time on this projec� an� that, . therefore, , was HRA money.
Mr. Meyer stated he respecteol that �pini.on, . and yet. . in principle, . they
have �ever bothered to "chalk up" the staff expenses on any of the other
projects. �erefore, . he dicl not think it was fair that they surcharge
staff's time to this �rticular proj�t wl�n they have not bothered to
cb it before. As far as staff time, , the Lake Pointe costs are just
beginning, , and there will be rbo oompensation for tha�
Mr. L�dgren statecl that Mr. Al.len Rouse was at the meeting, . and he hacl
�,.,� some more iraformation he would like to present to the HRA at this time.
I3e stated an individual fr� the Carnegie Et�ans group was supposed to be
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� getting in touch with hun by telephone the next day to arrange for
transportation in orc�r to set this proj ect up. Mr. Lundgren stateal
this was encouraging news, . lxat, , on the hana, . the time was very shor�
Mr. r�agr� �tea r�. Newman was prob�ab].y riot incsorrect in saying that
if the FiRA calls his letter af credit, .his ability to wntinue with the
proj ect woulcl probably be 1 imited or terminated.
P�r. Ltmdgren stated that if the HRA c�uld get a new letter of credit far
90 days, , it mic�it give the HRA time er�ugh to c�eet this particular deal
�quareol away �� closed, N1r. Newman had also Su��stea, .�a correctly
so, . that there are a nt�nber of elenents involvea in this. There were
all kinds of legal things that had to happen, . and these all ta.ke time.
Mr. Ltmdgren thanked Mr. Meyer for his good ooimnerits. I�e stated he dicl
not disagree with Mr. Ra�nussen's a�on¢nents either. He stateol the HRA
has been fair anc7 patierit vaith him through all this, . and the HRA hacl to
cb wha.t they felt was best.
N[r. Meyer stated Mr. R�smussen had a good point regarding the HRA's
credibility as an agency that means what it says when it has a contract, .
anol he agree� that woulcl be so if they hac7 exhibite� a rea.son to dr�a on
the $200,000, such as the ERA being hurt in some tashion. An example
would be if they had turnedl away prospective developer (s ) or if they had
incurre� some extraordinary expenses or something of that nature. That
^ would tip their hands to all other developers that the HRA was an easy
mark, . or wors9e. &at, . he did not �hink that was the case. In 1 ine with
his c�nnnerits reg�arding the staff time, . eta ,� reatly did not know and
dicl not Lmderstancl haw the HRA or the City has been hurt. The reason
for the letter of credit, . as he understood it, . ancl its issuance in the
first glaoe as a requireaer�t was to ensure that the HRA and the City
would not be hur� If they had been hurt, . and they still c]raw on the
letter of credit, , then he thought it was right for the HRA to ask
thenselves: By drawing on the letter of credit, . for which they have
clone nothing to earn that money,.were they not destroying their
credibility as a responsible Authority to ather developers, . when other
c�evelopers see the HRA using their power to dr�v on a letter of credit
wl�en there is no demonstrable way in which they have been hurt? That
was the way they csould lose credibility in the develoFment oa�ntimity.
Mr. Newman stated this was a very diffic�l.t decision to make. The HRA's
ir�voTvene� on this projec� probably be�n about a year before Mr. Meyer
c,a�ne on the oo�ission Z9nere had been a ntunloer of public hearings, .
soil borings were dor�e, . and zoning requests and setback requests were
pr�essec7 by the City. Before this, . another develo�nent contract was
eritered into with Mr. Ltmdgren. It was draftecl by Mr. 0'Meara. Miller
& Schroeder were irivolv�7. Boncls were sold. The point aE this was that
the HRA eritered into a co�nii�nent with Mr. Lundgren. Because of that, .
it was impossible for anyone on staff to say they haol given up certain
c3evelopner�t opporttmities, . beca�se of the commitment to Mr. Lundgren.
� They did not know what those opportunities were. They were under
ooritract with Mr. Ltmdgren; and because they were under contract, . they
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!�` diol not talk to any o�her developers. The property was pullea off the
market, . and it was olif f icul t to say ther e wer e no damage s suf f er ed, .
becatase they did not lu�ow.
Mr. Meyer statecl he reooc,�ized that was a possibility; but, . of course, .
there was no eviden� to prove that was the cas�.
Mr. Coimners statecl there were two sides to this, . as there were to any
question. He felt everyorie was sincere about how they looke� at this
anol the way they feel about it. Mr. Meyer had spoken very well on
behalf of Mr. L�dgren, . anal it was obvious this was a very c�liff icult
c�cision for all the F3RA menbers to make at this time. Ae �tatecl the
only thing he would disagree with was that he was not sure it was
appropriate to say that the F3RA has had to have suffered or been hurt in
order to aollect on the letter of cre�it. The letter of creclit was
requi.red by Mr. L�dgren to �haw his good faith that he was intending to
go forwar� with the project, . because they had defaults on prior
projects, . and they t�re taking the project off the market. Otherwise, .
Mr. Lt�dgren has faithfully come to every meeting and has kept the H1�Pi
ir�formecl as to the status of Yie projec�; but, . imfortt�ately, . he has not
been able to put t,he project toc�ether. On the other side, . the HRA has
refrainaeci frcm exercising its rights for quite some time. It was a
r�iff icult decision but one they have to make.
Ms. Schnabel stated Mr. Lundgren has been a businessznan for quite a
�"'� number of years, . and she was sure he was f ully aware of a11 the
raQnifications of the letter of credit when he signed it. It was a
standard business proceolure in many areas, . anol she olic7 think that
everyorie who sic�s oontracts and tmderstands thea realizes that at some
p�int that a�ntract might be c�.11ed or might cease for some reason or
another. Because the Hi�A has continually extendeal the time on the
letter �' credit, . she dic3 not feel that the HRA was acting harshly by
maki.ng the mation they had mac]e—giving Nir. Ltmdgren the additional tame
and the additional opportunity,.even to come up with an additional
letter aE credit, . if he chooses another extension. She thought they
have, . in effec�, . given N1r. L�dgren more time; they are j�t �ing it ira
a different method because they have a business contract which he
willingly sic�ed and the SRA willingly sic}�ed at orie time, but now that
writract is u�
Mr. L�dgren stated he did not disagree with either Mr. Commers or Ms.
Schnabel. He would certain].y expect the HRA to act in whatever way they
have to. � the other hand,.it was the HRA's self interest to get that
develo�nent done in the right way. It might be in the HRA's best
interest to go along with him for a crouple more months. That was the
decisi� the HR1� was �ing to have to make. If �khe letter of credit was
called, . anol he cannot make the January 26th deadlir�e, . then the �12A will
have to find someone else to do the projeet. There might be someone
more ca�able �han he or more willi.ng than he, . or there might not be
anyorie. �ey have been talking all along about a qual ity proj eat, . an
� upscal.e project frcaa what most people think belonc,� in Fric�ey. Ae felt
his project was what was wanted there and what should be there.
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��:� �, � �� �,1�!_!JJuia��i t_�9? � � 44 J���1 ��: l� �:�I; ��
�^ Mr. Meyer stated that as far as his view o� c�ntracts, , in the business
c�nnimity, .as many contracts are broken as are enforced down to the
letter. So, .he was not oonc�rr�ecl that they have an ironclad contract
that can never be c�iang�cl.
Mr. Rasnussen stated he felt t]ney have given Mr. L�dgren many, many
chanaes on this project, . and Mr. Lundgren has presented the HRA with
many, . many future deals; therefore, . the HRA has not acted arbitrarily
with him 7�ey have tolcl him many times that Ftebruary 1, 1988, was the
f inal deadl ine.
Mr. Pribyl stated that back when this proj ec� f irst came on 1 ine, . bonds
were sold (Dec. 28, 1985) in conjunction with this project and
capitalizeci interest was included in the bond prooeeds to carry it into
a point in time in which the taxes generated on that groperty woula
carry the debt serviee. Within the next year or two, , that val� must be
added to that groperty to carry the debt service, . otherwise it will
start oosting the ��RA moriey. That was something for the HRA to keep in
mirid as far as future oosts associated with the property.
UPON A VOI(E VOPE, . O�rM�RS, . S�NABEG, . RASN�JSSF�T VOrIl�TG AYE, . MEY�R VOr]NG
1�Y, . Q�P�RSCi�T Q�MNlERS DE(I,ARID THE NDTION CARRIED BY A VOl'E OF 3-1.
f� «� ��. n �� z • � • �►: �:h _ �,�� �.� �:� � � =i ;! _ {� ��!_ `_• �I�,�� �!��. ��.
^ Mr. Robertson stated that at the last HRA meeting, . the SRA instructea
Staff to meet with representatives f rom Subterranean Engineering to
disca�ss the questions raisecl at the November and December meetings.
Staff has done that, . ancl based on Mark Burch's discussion with l�tr.
Mindess, .the rec�omm�enc�ation was that those charg�s were legitimate and
shou].d be p�id. He stated he had asked Mr. Mir�ess to be at the meetng
in case the HRA had any questions.
Mr. Meyer stated his c�on�rn was satisfied by the fact that this had
heen discussed mutually between City Staff and a Subterranean
representative.
Nlr. Coimners statecl he hoped Mr. Mindess could understancl the HRA's
oonc�rn ab�ut these oosts and some a�f the things that took plaoe, .1out as
long as Staff and the Subterrar�ean representative have discussed it, . he
would entertain a motion to approve Change Order Na 2.
�,Q]� BY Ms. Schnabel, sewnded by Mr. Meyer, , to approve (�ange Order
No. 2 on Lake PoirYte soil engir�ering in the a�no�t of 53,202.59.
UPON A VOI� VOPE, . ALL V�ING AYE, .(�AIItPERSON �P�RS DEQ,ARID THE
NY3TION C�RR?ED UNANIl�Ot7�Y.
•�.. � ::_ �1. � _i.� ��_�_�. �� � �� _�_���. ..�' � y+. _�_ ��.
Ci:�� i.>_ ' �� � _ � t � _ �� ���
� Mr. Robertson stated this was for the wall blocks that were orc%re� by
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�` the oontrackor based on an estimate of how many blocks were needed.
When the oontractor was in the f ield and it bec�ne apparerit as the wall
was being constructe� that more blocks were neec�ed, .while the oontractor
was in �khe fielo�, .Mr. Robertson authorized those adc7itional v�al.l blocks
so the wal], oould be a�npleteal as specified. He statecl he had taken
that responsibil ity at the time in order to save some mor�ey.
�
�
� hy Ms. Schnabel, , seo�nd+ecl by Mr. Meyer, , to approve Change Order
Na 4 �n the aino�t of �880.
UPON A VOICE V�, . ALL VOTING AYE, . CBASRPERSON �NIl�RS DECLARED THE
N1�TION Cp,RR1ED U1V�TIl�JiJ�,Y.
� �e��.�na��s • • s,_:�_�!�-�� '-- ��'_-- �� • s__ � '• •_t. _ ��; .i
�+� n__� :i�i
Mr. Coffiners statecl that as has been custaanary for the gast few years, .
they have desic�atec7 Fric�.ey State �ank as the off icial depository for
the Fridley ffiZA. He �ontinuec7 to ask the same question: Why do they
continue to use Fridley State Bank all the time when the Bank has not
been woperative with the HRA or the City of Fridley?
Mr. Pribyl statec� the � has the option not to apprave this resolution,.
and they aoulc3 look for anottaer sourae of b�nking sereices. From his
perspective, . it has al.laved a sotarce aF oorivenienoe for the city staff
just for the process of checking, . and that was really the only
involvanerit they hacl with Fridley State Bank. As f ar as ineestment s, .
the HRA has nothing there. It was up to the HRA as to whether they
wanted to approve this resolution or not,.but it would pravi.de the staff
with a more oomplicated pr�ess for depositing the checks. A1so, , there
was not a lot � choic�es as far as banking services within the City.
TYaere were a n�maber o� banking facil ities j ust outside the city limits.
Mr. Pribyl statecl he was thinking about attempting to write an RFP
re�rding banking services to see what the market has out there for
other banking servioes. F� stated he woula have that report to the HRA
bef or e Jtuie 3 0, 1988.
Mr. Co�uaers stated a written f inancial pol icy woul d be in everyone' s
best interest. He stated they have discussed this before, . anc7 he would
like to see some priority given to it
Ms. Schnabel stated the HRA coulcl, . in addition to approving the
resolution, . pass another motion directing staff to provioe the HRA with
an analysi s of al ternate banking serv ices so that k�ef or e the ne xt year' s
resolution comes up, . they will have that informaton and can make a
decisi� at that time.
Mr. (bmmers statec� that was a�ood suggestion.
,� By Ms. Sahnabel, .�eoonc�ed by Mr. Meyer, . to approve Resolutian No.
1- 1988, a Resolution Desi�ating Official Depositories for the Fridley
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�'� Housing & Redevelognent Authority.
UPON A VOICE VOrE, . ALL VOTING AYE, .(�3AIRPERSOIV OOMA��RS DECGP,RED THE
N1�TION (��RRIED UN�TIl�U��
�Q,�.Q� By Ms. Schnabel, .�eoonded by Mr. Rasmussen, . that within and no
later than the third quarter of the comi.ng f iscal year, . the HRA be
provic�ed with an analysis of banking servi�ees and a financial ixivestment
policy so that the HRA is able to make a decision regarding bank
depositories before the resolution oomes up ac�-ain next year.
UPON A VOICE VOI�, . ALL VOTING AYE, .(�iAIRPERSON CONIlKERS DECLARED THE
N�TION (�iRRIED ONF�itTIl�iJS'L7�
M� � 1� �3s__ • • �—«�i'U��L�����r— � � �� + _��I� �I�i��(�i��l� {��l.l_�� ���. � M _ T _� t, a_ M
«�. �i �? s .�i� ._ �
Mr. Robertson stated the reason for the rec�nendation that the electric
util ities be tmdergroimdea was because the Rioe Creek Road pr oj ect was
being f ina]. izeol right now for bidding and spring construction When it
came to light that these util ities were there and coulcl be put
tmdergrotuzcl, . Staff felt now was the appropriate time to do it since the
area is going to be all dug ug.
MO ION by 1Kr. l�smussen, . seaonded by Mr. I�eyer, . to approve Resolution
� No. HIZA 7- 1987, a Resolution Authorizing Imprwenent Expenditures for
Projects within the Tax Incr�nerrt District for Construction in 1988.
UPON A VOICE VOJ�, . ALL V�TING F,YE, .�AIRPERSON �N�RS DECLARED THE
NY3TIOA1 CAItR7ED UNANIl�O[1SG�
6. �� (1701-17081:
�Q�T by Mr. Rasnussen, . seoonc�ed by Ms. Schnabel, . to a�rave the check
register as presentec�
UPON A V0I(E V�, . AZ,L VOTIIVG AYE, . Cl3AIRPERSON QOI+�RS DEGLARED THE
1�TION C�RR?ED U1�iNIl+�TSLY.
�=��-�� �' �!- �-
Mr. Robertson stated that in the audience was Mr. Pat Pelstring, . Vice
Presiderit of Btbsiness Develo�nent Services. . one of two organizations
that has sul�nittea proposals to the City to market the property
discussed in agenda iten rm. 1 on the southwest corner of Pti.ssissippi
and University.
Mr. Rasnussen asked Mr. �lstring if l�ee hacl any plans for this area.
Mr. Pelstring stated that at this sta�, . he naw rea�c,�izec7 where the HRA
�.,,, was as far as ne�tiations with Ntr. Ltmdgren, . and he felt it woulcl be
inappropriate at this ti.me to get into a lengthy discussion on how they
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: �;l �: _ � �!� �1�_!1au���a �4:,�_� 4_4'_ ����{►M �: l� �i�l: ;�.
�'` w�ulcl approach the proje�ct. His reason for aoming to the mee�irig was to
gain a better sense of the status of the current pr oj ect and the
relationshipe that exist there.
^
8.
�'`�,
Mr. P+elstring statec3 he was not trying to represent himself as the
developer. His finn was p�esently locateol in Fridley, . although they
would soon � moving their off ices to Coon Rapids. They were
specifically immicipal professional cnnsultants, . prieate business and
f inanee busine ss, . and wor k on a day-to-day 1�si s with maj or dev el ope r s.
At this stage, .they have had an opporttmity to review the property in a
develo�nent sense, . r� some of their own numbers, . anc7 make some
estimates on what they think can be c�orie. If the HRA had any interest
in pursuing this in the future, . he would be happy to share those ideas
with then.
Mr. Commers asked how old the company was and who were the other
principles or parties that are associated with him.
Mr. Peelstring statec� the oomnpany was five years old. Ai.s partners were
Ndi.c�ael Mulrooraey, . former Director of Business Develc�►ent for the State
of Minnesota, . and Ren Nielsen, .who was the Regional Manaqer for Glacier
Park CoQapany. Ae statea they have a five person staff. Ae stated his
backgrouncl was actually in banking, . and most recently Deaelopment
Director for the City of Coon Rapias prior to forming his own business
five years ago.
��.���'i� �u_i _ • � 4_4_�i�
a.
�
Lake Pointe Develo�ment
Nlr. Robertson stated that oonverning the Lake P+�irrte developnetrt, . it
�aas tax time; and he would remind the HRA that the DeveloFenent
Agre�ne.nt specifiecl that the developer would pay the taxes on the
property or make �y�nt in lieu of taxes if the HRA was holdirag
property. The City was naw reassessing the property based on the
in►provenents done. He was letting the HRA know that although the
projec� has been delayed, .they are proaeeding, , subject to approval
by 1�[r. Haik, . to to take the Johnson parcel off exemption status, .
treat it as �rt of the c�evelogiaerit, , and tax the entire parcel on
the same basis that is usecl for the rest of the City.
Mr. Newman stated the reason this was being brought to the HRA's
atterition was beeause the c3eveloper has paicl the taxes up to this
date. If for some reason he woula decide not to do so, , the HRA
woulci have to make those tax payments.
Mr. Commers stateol that if the develoger fails to pay the taxes, .
that would be another a�nditian of defa.ial�
Mr. Newman stated that was oorrect.
University Avenue Corri�r
-12-
: �.� �: 3 �� ?�I� ��J:Jui��a � ��+!1'•_ ��� 4tM Wi?�� ��� I� �':�1. ��,
�� N1r. Robertson stated that incluc�ed in the "Information Packet" was
some �ackground information on the University Avenue Corridor
prooess. He stated they expect to come to the HRA with a package
for reao�amendations for action at the February HI2A meeting. He
wanted to alert the HRA to one item the staff was proceeding with.
He haol includea some cross sections of lighting treatments. The
reason he was bringing th�n to the HRA's attention was because in
Nwaaber they talkecl about the globe-type li�t in wnjimction with
the deoorative li�iting for wimnercial frontage roads. 73iey want to
act�.�a].ly test this wnoept on Rioe Creek Roaa along the Moore Lake
Conamnons project. '�ey are comparing costs between the two globe
gooserbeck�type fixtures versus a three globe straight-arm type of
ligh� 7.he staff will pick one to try out on the Rice Creek Road
proje�ck c�uaercial frontage; anal depending on how they like the
looks of it, , they wi].1 adopt it for the University Avenue Corri�r.
�"1
�
Mr. Robertson also included was irrEormation on staff's analysis of
the prairie flowers and prairie grass recommenclations by
BartorrAschmann. Esseritially, .the staff's conclusion to date was
concerned with the fact that the prairie flower/prairie grass
alternative takes 2-3 years to establish itself before they can
really evaluate the resulting appearanc�e. Ai the other hand, . they
have all these other hard-type improvements they want to proceed
with as quickly as possible for those two test sections. Staff
recommends that the HRA then do a comparison on a signif icant
stretch of the Corridor with these prairie flowers and prairie
grass, . with the t,uiderstanaling that it is not going to look 1 ike its
final state for 2-3 years. They will not coffinit to the entire
Corridor t,uitil they evaluate the tesst segnents. 7"he rest of it they
will def er except to mav the existinq turf mpre f req�ntly, . but not
spencl money on sodding or necv seeding until they eva7. uate the
prairie grass sec�ne.nt.
Nis. Schnabel statecl
area were ma�ed and
or something to gre
it has been.
she felt everyone would
cleane�l up better, . mayloe
n it �. Anything is an
be happy if the gr ass
giv en some f er til iz er
impravement over what
Nls. Schnabel state� she haa read an article recently in the
Minneapolis/S�. Paul maqazinye whi�h featured Ms. Betty Mech from
Fri�.ey talking about winter plantings. Ms. Schnabel stated Ms.
Mech is very well known and well respected in the community and
mi�t be a g�cl resouroe person for the HRA reg�arcling what is being
pl anr�ed f or pl antings.
Mr. Co�aners stated that was a very gooc� suggestion. He agreeol that
P�s. Mech was very well known and wvuld be an excellent resource
person.
� � • .l��'UI �l
Chairperson Cono�ners declar� the January 14, 1988, Housing & Redevelo�ranent
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�!� �, s �+� �1,��� �)�vi�f�� _ �+4%_�a� �+M vi�al4� �, I; �.�1� ��
�` Authority meetng adjourned at 9: 05 p. m
Respectfully subnittecl, .
•,� ,��L�c�-�
Lynne. Sab�
Reoording Sec�eta�y
�
�
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