HRA 02/11/1988 - 29649�N�� � ��� 11� �1
� HU7SING & REDEVELOPMENT Atl7�i0RITY 1�1�1R�S, FEB1a1ARY 11, 198�
('AT,T, TO ORDER:
Chairperson Cwmners callecl the February 11, 1988, Housing & RedeveloFanent
Authority meeting to oro�er at 7: 06 p. m
ROLL C1�ii�i,:
Members Preserit: Larry Co�amers, Virginia Schnabel, John Meyer,
Members Absent: Duane Prairie, Walter Rasm�sen
Others Preserit : Jock Robert�on, E�Cecutive Director � HIZA
Jul ie Burt, Asst. Finance Off i�er
Virgil Herrick, City Attor�y
r�u & Jtme Ltnndgren, 3� xe�.io� si�a , st. ��.
A1 an Rouse, 17 86 Hennepin Ave. So.
Mike 1�lulrooney. Business Develogae,nt Services, Inc.
Pat Pelstring, Business Developnent Services, Inc.
Wally Wilber, Cololwell Banker
Jeff Naaamacdler, Col�well Barilcer
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� � by Mr. Meyer, seo�ndec7 by Ms. Schnabel, to approve the January 14,
1988, Housing & Redevelogaent Authority minutes as written.
IIPON A VOICE VOrE, ALL VOrIl� AYE, �AIl2PERSCiV �N�++IERS DECLARED THE MOTION
(�RRIED U1V1�NIl�TSLY.
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Mr. Robertson statecl that as stated in his memo to the HRA dated Feb. 5,
subsequent to initiating proceeolings to cash Mr. Ltandgren's letter of
credit, the City reoeived a proposal from lvm to revive the project. He ha�d
anticipated a letter of commitment f rom the J. M. Thompson Co. , but Mr.
Ltmdlgren had ir�formed him before this meeting that he has fo�al another
qeneral contractor Mr. Lunc�gren feels is more suitable. The general
oontractor was McDevitt & Street Co. ancl an outline on this a�mpany had been
set out for tlle ffiZA.
Mr. Robertson statecl staff ha� also re�ived materials on how this proj ect
would generally be structure�. He stated he felt the appropriate action
woulcl be for the HRA to receive more infor�nation fro�n Mr. Lundgren on some
estimated timetable for the project. The HRA would not be making a decision
on this project at this meeting.
Mr. Ltmclgren statecl the HRA had most of the information at this time. He
f e1t he had f inancing arranged so he can pr�eed with the proj ect. He ha�
�,.,� made a prop�sition to staff that he need.s $850,000 HIiA particigation, and he
had outli�c7 the oonditions for what would have to happen. He stated he
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� really needecl a response to this fran the HRA before he coulcl proceecl with
the Centennial Mortgage proposition.
1Kr. Lta�olgren stated he needecl 523,000 im�ediate].y to file the application.
He was prepared to clo that, but he was not prepared to do it im].ess the HRA
was willing to participate. He neec7e� some reaction from the HRA before
f il ing the appl ication.
Mr. Lundgren stated that as the HRA members knew, the money market was
changing quite rapidly. The prime wer� down a fea days ago, but most of the
predictions seemed to irmli.cate that they are g�ing to get s�me more c�ecrease
in the short term rates ancl probably a little lesser degree in the long term
rates. This was terribly important in terms of any mortgage because a
quarter of a point means about 1/4 of a million dollars in terms of the
mortgac�ee that can be sustairied in developing a project of this size.
Mr. Commers asked Mr. L�dgren to briefly explai.n what he was talking about
in terms of the werall proje�ct, the oommitment he was looking for, and the
difference between the mortgage and how he was going to come � with the
interim,
Mr. LLm�gren statecl Centennial Morgage Co. was the co-insurer. In the
f igures they put together, they ca�ne up with a mortgage of $7,252, 000. That
was based on 93� occupancy. They have the right to increase that up by
5200, 000 just by going up to 95� occupancy, but they are not 1 ikely to do
^ that. Centennial Mortgage has talkecl directly to Lee Maxfield, and Mr.
. Ma�fel� will be able to update the material they will need. This will take
about 2-3 weeks once he is notif ied.
Mr. �mners askeol about the di.fferenc:e between the equity and the mortgage.
As he �derstoo� it, the contractor was going to contribute a letter of
credit for Sl million, and Mr. Lu�dgren wantecl the HRA to do it in terms of
a sale and leaseback.
Mr. Limdgren stated that was vorrect. He wanted a leaseback in the amount
of $650,000 for the raanp. That would build the garking undergrotmd. He hacl
talkecl about it being interest-free on the front end for four years. His
figures indicatec7 that they can pay back at 8 L2� the e.ntire principle, pay
back the ir�erest at the end of that fourth year, an� pay back the entire
principle in 11 years.
Mr. Robertson stated as he tuiderstood it, Mr. Lt�dgren was asking for
forgiver�ess on the intere.�t for the first four years.
Mr. Limdgren stated that was oorrec�.
Mr. L�mdgren stated Centermial Mortg�age also has the abil ity to sell this
mortgage to a private ftmd. What they cb is buy down the interest rate in
effect; an�, according to the figures, that woulc7 increase the mortgage by
�1 million alone. So, there was ar�ther $1 mil.lion potential if they needec7
� to go that way.
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r"''� Mr. Ltimdgren stated he needeol to sit aown with staf f and work out the
specif ics. Mr. Robertson haol ir�di.cated to him that if the HRA has to buy
property for this project, the HRA might have to buy the entire
property--more than would be required for the first building. Mr. Ltanc7gren
stated he had told Mr. Robertson that Centennial. was willing and anxious to
finanoe the seoond phase, the seoonc7 �uilding, also, and he would ariticipate
that projec:t would follaw 60-70 days behinol the first phase. He said this
becat�se it influenced a little bit t,he HRA's situation in terms of what the
HRA has to do about the property.
Mr. Robertson statecl that regarding the Levy property wlmre the f irst phase
building would be located, even though Mr. Lt�dgren would not actually need
the frorit part of the property to proceed, the comment he hacl maae to Mr.
Lu�dgren was he did not believe it would be wise ior the HRA to buy just a
p�rtion of the property riow ancl then arlother gortion later. It c7id leave
the ather vommercial strip that fronts on University Ave. , and the g� aia
have writrol of the oorr�r lat (old servi� station).
Mr. Limdgren stated there were still four �ases, ancl he planned to do all
four phases. He wanted to prooeeol with the retail/c�nuaercial as rapidly as
possible. l�we�er, he dia not warit to promise more than he coulc� del iver.
The first two phases were the housing phases, ancl were the ones he wanteol to
get lat�ched f irst.
Mr. Robertson statecl staff estimated the acquisition cost for the entire
r-� quadrarrt at $3 million.
Mr. Meyer askec7 why it was important to bring in a wmpany like McDevitt &
5treet Co. to make the project go, rather than a loca]. c�ontractor.
Mr. Limdlgren statecl there are a lot of contractors who do not like to
publicly bia commercial work. These larger contractors with a lot of
resouroes and a lot of ability are able to qo in and do a projeck of this
size ancl scale with less money than a aontractor that acts tmder bidding.
When they have to put up letters of credit, they wi11 do the thinqs that are
rbeeQessary to make the project work, and tlaey do not want to be long term
owr�ers. They �rant to get into the project and, within a relatively short
perioc7 of years, get out. This garticular c�ntractor works in over 25
states anol has s�hstantial credi�
N1r. Meyer stated here was an organization neither the HRA or the City know
anything about that is going to be a key glayer in this whole proj ect. To
hua, this oompany was jt�t a btmch of mor�ey managers wlm have zero interest
i.n c:onstructi� except as a means to make money and then c�t out. What the
F�RA has to have is a writractor and an architect team that put up a qual ity
builc7ing, so the HRA or the City cloes not end up putting out money in
maintenanoe, dissatisfied clients, etc.
Mr. Ltmdgren stated that was his job. He woulcl be the awrier of the builclling
ancl the one wlm would be ensuring the quality.
^ NLs. Schnabel stated N1r. L�dgren was asking for 5�.50,000. Was the $850,000
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r� going exclt�sively for the cJOntruction of the parking raQap? How many stalls
would be in the ramp?
Mr. Ltm�gren stated there would be 145 stalls in the r�np. He stated he hacl
not sa.icl the $850,000 woulc7 pay for the raanp. What he has said is they have
the oost � the building including the r�np, ana they are 5850,000 short.
To build the raanp separately mi�t �st more or less than the $850,000, The
$�50,000 was arrivec7 at on the basis of need, r�ot on the basis of the actua].
a�st of the ram�
Mr. LLmdlgren statecl he would like to have some kind of commitment f rom the
HRA that they are willing to give him this assistance as of the closing
date.
Mr. Coamaers statec3 that o�her than saying they might be agreeable to the
ooncept, the HRA was riot in a position to make any orn�unitment tmtil they see
the n�abers an� haw it is going to work, in ternas of bonding and the HRA's
ab; � ity to aover it.
Mr. Ltmdgren statecl perhaps the appropriate action woula be to instruct
staff to work with him to come up with something that is satisfactory to
both parties.
Ms. Schnabel stated she would be agreeable to tha�
�, Mr. Meyer statecl he was very negative to this whole operation, because it
seemed to him they are slipping far back fraa the o�ntrol they should have
on this project. They are losing control of the contractor, and Mr.
LLmdgren was losing more ana more aontrol. Here was a contractor that was
not a oontractor, but a money broker.
Mr. LLm�gren stated he would not speak anymore in defense of this wntractor
�til he c�ould bring back more infornaation He understood what Mr. Meyer
was saying, but he hacl to make the project work, wYiether it was with a local
o�ntractor or anyone else. They have plans and specifications for what they
want. He was not interestecl in building anythir�g differe,nt fr�n what he has
always talked about.
Mr. Herrick stated that f r�n what he was hearing and f raa what he had r eac7,
Mr. Lum�gren's proposa7. was sukstantially di.fferent than the proposal the
HRA actecl on previously. This was really a new proposal. It was also his
imo�erstanding that there was arwther group of peogle wY� are also i.nterested
in making a proposal. There were also two groups of people who were
irYterested in representing the HRA on this site i.n an attempt to market the
site. He woulcl think what the 13RA should do is oonsider Mr. Ltmc7gren's new
proposal and determine whether or not that proposal was something they
wanted to go along with in concept; but before they could even make a
�ecisi�, they needeol more ir�formation. The letter from Mc�vitt & Street
Coffipany was hardly a aom4nitment letter. At best it was an expression of
interest. They vaould al� have to weigh the other proposal that will be
^ forthcoming and decide if ei.ther proposal was s�amething that was acceptable
to the HRA. If neither proposal Fras acce�able, theri the HRA mic,�t warit to
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� v�nsider getting an exclusive agent to represent them on this particular
paroel of lanc7.
Mr. Robertson stated he has c]iscussed this with Mr. Herrick, and they are in
agr�nent with this ger�ral oourse of ac�ion.
Mr. Comaners statecl that at this time, the HRA has not seen any other
proposals, ather than Mr. i�tandgren's. He did not see any harm in trying to
defir�e Mr. L�dgren's prop�sal a little bit better and see what it means i.n
ternns of dollars anc7 cents. If anyone elss c�omes in with a proposal, they
can look at it, too. In the meantime, since Mr. L�gren's grop�sal was the
only one before the HRA, staff shoula g� forwarcl and �e if it is fe�asihle.
Mr. Meyer statecl he agreed with Mr. Coimners. He c7id not see any harm i.n
going along with Mr. L�olgren's proposal in aonae�.
Ms. Schnabel statecl that was f i.ne, but she would 1 ike to see them have a
better tn�erstanding of what was being requestec7 of the HRA in terms of a
o�mnitment. Whet,her or not they acoept it was something else, l�ut it might
help than further to �c�r�and the entire project and everything that has
to be dor�e with that developaent, rio matter who the developer is. They have
clealt with Mr. Ltmclgren for such a long time that she did not see any harm
in spenc]ing ariother fcw weeks with Mr. Ltmclgren on this propasal.
Mr. Robertson stated staff woulc7 get together and try to do some
^ projections.
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Mr. Rnbertson stated both Colc�vell Banker and Business Developnent Services
have inai�t�a tn� ��.a i ike to attend and acldress the HRA briefly at this
meeting. Both fimis were fully a�vare of the process but wanted to make a
short prese�ation anol answer any questions the HRA meabers might have.
Mr. Robertson statecl Mr. Pat Pelstring anol Mr. Mike Mulrooney were
represeriting Btffiir�ss Develogaerit Serviaes.
Mr. P+elstring stated he hac7 had the opportt�ity to address the HRA for a fa�
minutes at their last meeting. He statecl Busi.ness Developnent Services was
not just a oanunercial real estate firm. Tl�ey ao a wicle variety of other
activities which woulc7 relate very well to this specific project. They are
directly irn�o].ved in assisting with economic develo�anent efforts in the
oo�ntmities of Woodbury, Vao�ais Hei.ghts, Little CanacZa, Marshall. Brainerd,
Montevideo. �ey work extensively with tax increnent fir�ncing. They have
been irivolvec] with a n�anber of tax incr�nent f inancing proj ects in Wooc�lbury
an� Vaa�ais Heights, Coon Rapids, Ibrest Lake, Montevic�o, and Marshall, ancl
feel they have a g000l working knowiedge and Lmderstanding of that process.
They get isnialved f ai rly extensively di rectly with devel ope r s i n a ssi st i ng
thea in their financing an� structure �' the projects. �ey do preliminary
� market analysis for developers and for busir�esses. They do have aff il iate
real estate serviaes which can be utilized in the ca�e wY�re broker servioes
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Mr. Pelstring stated they have hacl the opporttanity to review the proj ect
with Mr. Robertson on a n�unber of occasions, and Mr. Robertson has provide�
then with the basic materi�l.s of the site. It was their observation that:
(1) it does have excellent access; (2) recaent growth ancl redevelognent in
this area has been well reaeived ancl its reputation was very strong; (3) the
primary market that can be served in this area was a mix of housing and
retail/entertairaaent; (4) their ana].ysis based on square footage indicates
the site would probably support between S17-23 million.
Mr. Felstring statec7 their approach in taking a look at t�ie site was because
of representing the site initially as a real estate project with some
potential, they would rather look at it initially with the HRA f rom a
developer perspective. �ey thought that servecl a couple of advantages.
The key advaritage to the EFA was gaining an �derstanding f rom the �RA's
perspective o� exac�7.y what the utl imate benef it to the HRA and the City
mic,�t be. Innstead of going through a process which oould be quite lengthy
to selec,t a cleveloper anc] then begin a rather e�ensive negotiation on the
structure of that c'�evelopnent ancl City assistance, they �ould 1 ike to come
to some basic tuzderstanclings on the structure of that assistance on the
f rorit end so that taltimately when the HRA selecteci a developer, they can a�k
the questions an� make sure that developer is will ing to meet those
aoimaitaents.
^ Mr. P�e].string stated their prelimir�ary review of the project inali.cated that
fra�n the develognent stanolpoirYt, they think the site o�sts to the cleveloper
ultimately shoulcl be its fair market value. 7�iey looked at a n�aaber af ways
to ar�al.yze that fair market value. �.'t�ey w�uld �e the HRA's participation
substantially in the excess costs associatecl with the acquisition and
demolition of the site. That property as raw land hacl one value, and the
real value to the developer is as raw land. That should be the f irst
guicling princigle they look at.
Mr. P�lstring stated they woulcl estimate a 50/50 retail/residential mix.
Fbr valuation purp�ses, they shoulcl look at approximately S3, 000 per unit
developnent. Sec�ondly, within the area � the retail develoFanent, it was
qenerally decided on a square foat basis (again, talking only about the raw
land acreac�e) at a range, at least initially, a� 52.00-3.50 per square foot
or $�,000-150,000 per acre. That gave thea an immecliate basis to take a
look at what the value of that land really i.s ulti.mately to the developer.
Ol�viously, there were a nt8nber of variab].es in plac:e.
Mr. Pelstri.ng stated the relationship ultimately between the HRA and the
developer v�ill have a nimnber of key oomponents. The first was that the HRA
and the developer would sic� a complex c7eve7.oFxnent agreement. He was
suggesting that the basic concepts be agreed upon early in the process.
They were suggesting that the HRA would prwide three levels of assistance
to the develoger :
� 1. Frid].ey HI?A ini.tiates site assembly, redevelopnent, and clearing.
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r"'� 2. The Fridley HIZA and developer agree to
valuation This aanotmt woulcl be le�
suborc7inated basis with a t,hree to four
principa]. and irrterest def erral.
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an ultimate property
to the developer � a
year principa]. and
3. In v�nsideration for the Housing and Redevelognent �,uthority absorb-
ing the acl�.tional aaquisition and redevelopnerit oosts, the
�evelaper, in turn, woul� agree to prwi�e a 10 to 20 percerit equity
p�sition in the ultimate project. This woulci provide that the HRA
would at some p�irrt reaeive k�oth its pro rata share of cash fl�v
fra�► the proj ect and, ultimately, its pro rata share of the proj ect
appreciation upon sale.
Mr. Felstring stated ariother amp�rtant factor to consider was that based upon
their preliminary �alysis, it appeared very clear that the ulti.mate ber�efit
to the HRA could be pretty strong. They are looking for acquisition,
redevelopnent, �d public imprwenent. �ey �uld need approximately a S3
L2 million t� increnerrt financing bond. A�12 million project, which was
at the lav end of what they t�te sug�sting, woulcl generate approximately
$550,000 a year i.n increaerit. That increne.nt would fully �nortize all the
HRA's fror�t end wsts in the project.
Mr. Pelstri.ng stated the ultiniate ber�f it then to the HRA goes back in two
clifferent directions. 7.'t�e laan Fsyment, subordinated mortgage, asstuning a
$L 1 million value for 20 years at 8� wdul� gerierate 5112,000 a year to the
HRA. �Riat would be taienctunbered fro�n the tax increnent financing process.
The value of �he equity participation - 10-20�. This structure says that
the HRA f�r�an�s all af the a�sts of the tax increment financing process,
anol that asstnnes all the site assembly, demol ition can be accompl ished f or
S3 L2 million. Tlie developer signs the develognent agreement and retires
all that wst through the tax increment process. In turn, the HRA woula
reoeive the land value over a 20 year time perioci at 8�a and the equity
participation So, conceptually, this becomes the proposal they would
market direc;tly with the developers.
Mr. Felstring statecl they were suggesting not just to market the property,
but tb actually market a develogaent format so that when they are discussing
the proj ect with a developer, it was not an open-ended quest ion as f ar as
what the HRA will prwide an� haw much assistarice the HRA will give.
Mr. P+e].stri.ng sstatecl that as far as their participation, they feel they
woulcl need a six morith oo�aitment to market the projec� to the developers.
They vu�ulcl li.ke to assist the HRA on a fee basis for the acquisition of
existing sites and suggest this only from the stana'point of consistency
between the HRA and developer. Other than that, they were not suggesting
any other out-of- pocket expenses to the HRA. They were taking the
resp�nsibil ity to be reimbursed ultimately by the cleveloper of the proj ect.
Mr. P+elstring stateol their project sc,heclule was ambitious, lxit they cliol not
think it was �reasonable:
Feb./March - further developinq the o�ncept, ooming back to the
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�'"'� ffi2A with more specific� on the structure of the HRA's
assistance that the HRA woulc7 pravide or allaw to
marke� Qontinue discussions with developers to
determirie i.nterest.
April/May - Identify what they believe to be the 4-5 key clevelopers
within the area and reqt;�est then to subnit preliminary
information and qualifications for the HRA's initial
review.
Juu�e - Be in a position to bring to the HRA 2-4 developers
with their �nc�eptual plans; preserrtations by those
a�evelopers.
July - The HRA to select or�e of the c3evelopers.
August - Prepare draft of the wnunitmerrt anc7 riegotiate
ac�ree�ne�nt.
Mr. Robertson sstated Mr. Wally Wilber and Mr. Jeff Nammacher were
representing Coldwell Banker.
Mr. Wilber statecl they wncur with much �' what Mr. Pelstring had sai�. He
stated there were some things they would do a little differentl.y� kut all in
a11, they agrecl with the prooess Mr. P+elstring had outlined.
Mr. Wilber stated the one thing they would like to stress was that in trying
to get orbe of these proj ec;ts cbne with any developer was that s� many of the
c�evelopers are reluctant to make any major moves tuzless they have tenants
ready to mwe in and iu�le.�s they have a good li.ne on what the mix was �ing
to be.
Mr. Wilber statecl two developers he had talked to specif ically about this
project saicl they were i�erested but wlaat oould they do with the property?
Mr. Wilber stateal that was where the sQlling and marketing woula take plaoe.
2'liey axe going to have to lir� up a tenarrt mix that is g�ing to interest the
c�velopers to the p�int wlr�re they are going to g� on line for a project of
this size. He rather suspected this aould be done loca].ly. Coldwetl Banker
ha� 1 ines to �evelopers throuqhout the United States, but he olid not think
they wvulcl have to tap that resouroe. He felt there was enough interest in
this area in that particular block to c�et the job �ne, �t he rlic7 think a
worc�.inatecl effort in setting it up in the whole proQess will bring to the
takale soane �evelopers with some irrterest and participation in the project ira
orcler to sustain the interest of the developers.
Mr. Com¢ners aske� what kinol of tenants they would look for that woulcl take
10,000-20,000 sq. ft.
Mr. Jeff Narmiacher stated it was crucial, especially in today's market with
lending institutions that are r�ervot� about projects that are being built
^ ancl the aver�uilding, that the lender was privy to the marketplace. He
shawed a map that would give the eRA a little insight into the marketplace,
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Mr. Na�anacher stated he hacl workecl in the marketplaae for 2 1/2 years. He
was f anil iar with the market and hacZ a pretty good sense of the retail deman
on the market. Their major enphasis woulcl be on what kind of tenants they
wuld draw to this kind of c�velognent. They c�uld propose to oome up with
a strong marketing approach prospec�ing for tenants and, at the same time,
v�uld be ger�erating this tenant information in talking to clevelopers they
have relationships with and which are r�v in the marketplaoe.
Mr. N�mnacher statecl they have been working on a niunber of projects where
there are similar a�noerns. He ha,d put together a developer list of active
retail developers in the marketplace. There were over 60 of them. He
shawed this list as it was one o�' the tools Colwell Banker uses in their
prospecting. He stated they have all the terbant categ�ries of retail users.
They catec�rize tenants that are viable businesses that have more than one
location, because thosQ kusinesses might be expanaing. They also gather
information on all the shopping centers in this marketplaoe, a floor plan of
each, the tenant mix, eta �ais was all part of thei r j ob anol the val ue
they bring to developers ancl tenants by having this ir�formation.
Mr. Wilber statecl that getting a developer interested in this area was
totally depenaent upon being able to give that developer the type of
informtion he/she needs to think he/she can do a successf ul proj ect. If
they can do ttbat, . ttien there will be interest� developers.
Mr. Wil.ber stated that, in s�umnary, their first approach was to work with
the HRA in c�etting a forn►at they can present to a cleveloper. At the same
time, they are selecting a developer, they are acquiring the type of
informatin that c�eveloper mi�t need. The developer wants the a�surance of
what kinc7 of tenants tlney can bring into that location.
Ms. Schnabel stated, as she tnderstood it, Coldwell Banker's expertise was
in finding tenarrts for already developed centers.
Mr. N�nacher statecl they are always in front of tenants and understanc7ing
the tenants' needs anol requirenents. 7�ey take that ir�fanation and help the
tenant �t irYto the right spot. Whether that is in an existing center or
clevelopnent, or whether the ter�arYt's requirements, plus Colo�well Banker's
lmowleage of some other requi.renents put together, would create a need for
an adciitional shopping center. So, they do both. It was vital to their
business to work with existing landlords anc7 developers who want to build
new centers.
Ms. Schnabel askeol Mr. Nammacher or Mr. Wilber how they felt about the
resi�ritial proposal for this property as a mix.
Mr. Wilber statecl they v�xe in agre�e.nt with the residerYtial mix.
Mr. ��ners asked what the f inancial arrangements would be with Colwell
� Banker. Was their oo�uaission obtained f rcm the developer?
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/'"'� Mr. w9lber stated their fee will be built into the wY�ole thing. They will
ultimately get their commission from whoever buys the property. It was
thei r f eel ing that they would predeternair�e tlze f� basecl on the f ai r mar ket
value and base the �onanission on that through the I�RA. 7�ieir responsibility
was to the HRA to market that �operty. So, yes, . the o�eveloper will pay the
w�nission, kut their responsibility was to the HRA so if they agree on what
the oo�nission is going to be with what the �eveloper will bring in ternis of
t,he developer's financial position, it was better that way. That way they
are not aonstantly r�egotiating.
Mr. Naamnacher stated, yes, their responsibility was to the HRA to mai.ntain
value. Beca�e of that responsibil ity to the HRA, they feel if they are
going to take on the proj ect, they should be a�mpensatec] by the HRA.
Mr. Wilber stateol there were some semantics here, hut he did not want to get
iva the p�sition where they are trying to negotiate for the developer to qet
the best cleal fran the SRA. Zn a sens�e, both the FIRA and the o�eeveloper have
to be happy or they are not going to get the transaction done. He thought
their eaphasis ouqht to be on trying to represent the HRA's best ir�erest.
MIr. P�e].string asked what the HRA's relationship was with Nir. L��gren at
this time.
Mr. Coffir►ers statecl the HRA's �ntract and exclusive relationship with Mr.
Ltuiagren had terminatec7 in August 1986. At that time, Mr. Lundgren
^ c�efaulted on his written agreenents with the HRA, ancl since then, although
they hacl not ca11ea1 on his letter o� credit that was postecl, they had tried
to a�operate with him and ha� eno�urac�c7 hi.m. Hawever, any kind of formal,
legal relationship terminateal over a year and one-half ago.
r''�
Mr. Pelstring statecl their approach was quite different fro�n Colclwell
Banker. I3e did not anticipate talki.rbg to more than 10-15 aeve].opers. The
c�eveloper is responsible to make sure space is to be leased and Business
Developnent Serviaes will r�t accept the project �mtil the �eveloper has
oomgleted the greliminary market analysis they need. If the HRA was not
�der excl�ive relationship with anyorne ri�nt nAw anc� were basically open
to clevelognent proposa].s, and if his initial analysis was not something the
HRA was �aomfortable with, aould he pres�uae he wulc� pursue a proposal at
this stac�e?
Mr. do�aners statecl he saw rm reason Btisin,ess Developaent ServiQes coulcl not
do that.
Mr. Pelstring stated it would be obne �ntirely at t�eir aan risk. If he did
develop irYterest with a dzveloper, w�ould the HRA be open to hearing about
it?
Ms. Schnabel stated she felt the YlRA was always open to other prop�sa].a
Mr. Herrick stated that at this stage, he was sure the HRA would welcome
looking at any prop�sals.
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,� Mr. Mul rooney statecl Business Developaerit Serv ices was a 1 ittl e dif f er ent
than a typical real estate film in one major way. TY�e major clifference,
which has o�urred in Frio�.ey and which the HRF� should be ooimnenclecl for, .was
that objectives have been establishe� for any site the HRA wisheol to
develop. The samne thing had to be kept in mind for this property. 7�ey c�n
look at what the market mi�t offer, �hat developers might offer, but he
believed it was the position of the HRA and the City to establish some
objec�ives for that property and then a�raach the developers on that basis.
Too many oo�untmities offer a stratec� which was ao�nonly referred to as the
�!. B. G(Managemerit bg� CYisis) approach, take what is given to you, . and then
20 years fran n�r try to redevelop it becat�e it wasn't what you wanted in
the first glaoe. TJney tenc7 to l�k at the M. R Q. (Management by Objective)
a�roach, citing what the HRA wants developed on that property, look at the
ntaabers, and appraacll developers with those objectives in mind. Zf those
developers cannot meet those objectives, then they are not the developers
the HRA or the City wants for this projec�.
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3.
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Mr. Mulrooney stated they cb di.ffer in that regard with major developnent
proposals in that they try to operate in a direckion which establ ishes the
s�ne objective� for the project in the first plac�e, and then make attempts
to achieve those objec:tives over the long ranc,�ee.
Mr. Wilber stated he would stress that s�netunes they give the �veloper so
much credit that the asst�nption is that if they gut the right parcel
together with the right pric�s, they are going to have the vision to come
and get it all dorie. They feel it doesn't always work that way. Soanetimes
the developer rieeds to be aoaxed; and if the developer is interest�cl, he/she
will o�me to the tahl.e.
Mr. Commers thankec7 Mr. Mulrooney, Mr. Pelstring, Mr. Wilber and Mr.
N�anacher for wming to the meeting anc7 making their presentations. He
stated both firnns haol made their cases very well, and the olistinc,tion
between the two was very clear as to how each f irnn felt anol how each one
would approach the problen.. TY�e HRA would certainly give each firm its
wnsideration
(Mr. �ners �clared a 10 minute recess at 8: 40 p. m. )
� ��, �� a��,_ •!� • ��-t � � ._ H� �—����. ��� ��i l����__ 4_4_ z /?���1_ �_ ��_; � N� � �
Mr. Robertson statecl there has been qtaite a bit of �bate at staff level on
whether or not to use the State Highway Departanent's "off the-shelf" lights
for highway lighting. St woulcl not only o�st less, but the State Highway
Department would mai.ntain the lights. They are getting some numbers
toqether on what the costs would be versus what they want to invest in
initial. capital investments for a unique "Friol].ey look" just for highway
lighting. He wondered what perc:errt of the traveling public even look at the
overheaa lights, . fixtures, �lors, etc. , as opposed to the proj ectec�
oo�nercial li�ting an� some of the lanc�caping features.
Mr. Cono�aers btateci he c3id look at the lights, . anol when he sees something
cliffere.nt, he does notioe i� He was not sure whether the difference in
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�'�` wst was worth it, l�awever.
Mr. Rohertson statecl the real question was: What are they going to adopt
for the highway lighting? It was not only for the Uni.versity Avenue
Corric�or, but riow it was also for the Hi�iway 65 ca�seway across l�oore Lake.
A4r. Robertson statecl he would like the HRA to adopt the reoomanendations for
the University Avenue Corridor Phase I with the 73rd Avent�e to Osborne Roac7
section test, the alternative apprave� at the last meetinc� which was sirapl.y
increasing the mai.ntenance of the existing turf together with the
landscaping already approvecl by the HRA; testing the wildflower/prairie
treatment between 6gth Avenue ancl 71st Avenue; and the turf restoration
sec�nerit together with lanc�caping in the urban section between 57th Avenue
and 61st Avenue.
Mr. Robertson statecl the sewnd rectira�aenclation would be that the HRA adopt
the reaor�nendations in BartorrAschman's Dec. 9, 1987, m�no concerning what
the signal. anc� 1 ight standarcl maultenance sche�ul e and cost s woul d be f or
Pha�e I which was approximately 5109,000. �at was assuning the olecorative
lighting and the special overhead 1 ights. If they fina].ly decide on the
MnDO'P lighting, that ntm�ber will be lawer.
N1r. Co�ners �atecl there hacl been merrti� about �me kincl of agre�nent with
MnDO►� for mairitenanoe.
^ Mr. Robertson statecl that was correct. He referred to Nlr. Flora's memo
dated Feb. l, 1988, seoonci to last paragraph: '�n1e discussed the p�ssibility
of the District contributing a fixed amount of money to the Corridor
projec:t....If any oosts are to be shared by the DistriCt outsicle of normal
mairitenanve and re�ir, it will r�uire an agr�nent to be prooessecl through
the main off ic�. "
N[r. Robertson statecl his reooamaendation woulcl be for them to proceecl to do
this. Esseritially, the State will give the City a s�nn of money that will
represerit what MnDOT spends on maintenance. The City will inoorporate that
money into the City's mairitenanae bucige�
Ms. Schnabel statecl she hacz a problen with the glanting re�nendation. She
statecl it would have to be cl�rly Lm�erstoocl that these were test sites, .
that it was g�ing to take 2-3 years to get a good f eel for what these ar eas
will look like, at least for the prairie/wi1dE'lawer test site. Ser biggest
wncern regarding the prairie/wilc�tElawer test site was: Haw c�oes it appear
to the co�n�ity? Does it appear that the City and the HRA cannot get their
act together? It is not c�oing to look goo� for a couple of years; yet
people are going to hear that the HRA spent a lot of mor�ey on this area, and
what is the net result cping to look like? She ha�l a problem c3oing these
improv�nent pieoeneaa., and then in between the test sites is the old stuff
that has been an eyesore for years. She hacl a hara time justifying spending
money on something that is going to look pretty bad for the next c�uple of
years.
^ Mr. Crnmners stated the other alternative was to make a decision to do the
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�� whole thing at the same time. The �RA has been hesitant about doing that
becaibse they really did not laiow Y�ow it was going to turn out. Ae agreed
with Ms. Schr�abel's a�ncerns. At this rate, it was going to take 4-5 years
before there is anything to show for the money that is being spent.
Certainly, pub7.ic relations-wise, a lot of legitimate questions will be
raisecl about what is going on.
Mr. Schnabel statecl maybe they shoulcl qo with the increase� maintenance or
whatever is riec�essary--replacement of turf, . etc. , but then try the test
sites for the prairie/wilc�Elaver on another area in the City so they can get
a feel for what it will eventually look like, but where it would not be on a
raadway wliere everyo�e sees it. It has always been her choice to clo the
prairie/wildElawer treatme.nt all the way along the Corridor, lout she really
questionecl doing it piccemeal. She just felt they would get a lot of
critician fran the �¢ntmity.
Mr. Aerrick stated that as a property owner along University Avenue, the
thing he had not 1 ikecl was that the grass was too high, it was f ull of
dandelions, and with the ugly chain link fence, it looke� terrible. He
agree� with Ms. Schnabe7.. If there has to be olandelions, then let's cut
then, �d try to keep the area as cgeen as possible. '�lzat, . by itself, would
make a lat of clifferenoe, and it would i.m�rove the area if the chai.n link
fenoe was renwed. If the HRA decide� not to do anything, at least some
i��r��a m�;rn�� wom.a � a great improvenerrt.
n Nls. Schnabel �ateol she woulc7 like to see the increa.sea mairatenance all the
way up an� down the entire Corridor. She felt that was really what the
people wantec7 fran the beginni.ng—something visual that geople could see.
If people do rbot see something happening along there pretty soon, they will
lose their fai.th in the City in being able to produce.
Mr. Robertson �ateol that beca�e they were d�ferring maka.ng investments on
the new turf anol the prairie c�ass, the HRA woulcl have more money to spend
on other things. They would really lose very little by increasing the
mairitenanoe aver the e.ntire Corri�or or a larc�er test segment for a season
or two. He agreed with Ms. Schnabel's idea of having the prairie/wildElawer
test site off the Corric�or.
Mr. Co�¢ners statecl maybe they should table further discussion and ask staff
to aome ir� with a proposal for maintenance. Ae stated he was a little
concerned about the figures Mr. Flora was coming up with for annual
maintenance fees for Rice Creek Road, Highway 65, the Central Avenue
parkway, and the University Avenue �rri�r at $176,000—$33,000 r�ext s�mm�er
j�t to mairitain Lake Foi�rte. He woulol like to know how Mr. Flora arriver7
at those f igur�.
Mr. R+�bertson statecl he would be comfortable with having the discussion
tabled ana having staff v�me back with a fairly detailed break-out of wsts;
however, at this meeting, . he woulcl like the HRA to authorize staff to
proceeol with writing the plans and specs for the l�caping and hard paving
^ so they can get started on that at this time.
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%�'�� M�: ;?+� �iL���1'vi��� �!����� 4.� �r!?�� �:_ ��#���!1���
r"� Mr. Meyer stated he was sympathetic to the idea of improving what they
already have, . including aoritracting with someor�e to spray for c7andeli�s and
crab grass, to really dress up ana mow what they have. That is the way
l�vns look like anyway and it woulc7 look pretty nice to have a mowed and
manicurecl boul�vard systen alonq the Corridor.
�
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Mr. (bm¢aers asked if the mai.rntenanoe woulcl include watering.
Mr. Robert�on statec7 it would have to if they wante� the green look,
especial.l.y in the dry �nths of July and August. Hawever, it would clepencl
on the year.
� bY Ms. Schnabel, sewnded by Mr. Meyer, to authorize staff to proaeecl
with the landscaping ana the harcl surface areas, . including the traffic
sic�a].s anol li�t stanaards, in the test areas--57th Avenue to 61st Avenue
and 73rd AvenU+e to Osborne Road, to clefer the praire/wildflo�rer experiment _
taltil staff can reo�m¢aend an off-site plat, �ol to have staff bring back to
the r�e� meeting a detaileol review of ma,intenanoe wsts and an explanation
of mai.ntenanoe to incluc�e the University Avenue Corridor.
UP�T A VOICE VOt'E, ALL VU.�IlVG AYE, c�A��GCi� 4�I�M9ERS DECLARID THE MOTION
CARRIED UI�NIl�UST,Y.
� � �� a��_� � • n � �I � W � H• .
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H��.E � �• .��
Mr. C�ners statecal he would li.ke to have this iten aontinued also. He woulcl
1 ike to see a detailed review of the maintenance oosts f or the Lake Pointe
site also. r� wo�a �.so ii� to rai� the issue of why the City coulc3n't
ao tiie mai.ntenanoe rather than hiring a oontractor to do i�
5. I11�'ORMATI0�1 ON ST. WILLTAMS PROJEC,T:
Mr. Robertson s�atea he ha� askecl the people involv�l i.f there was anything
the HRA c�ould cb at this time, anc7 they have sai� "no". He told them the
HRA was eery interested in this project; and when there was a proposal or
any aclditional reqt�sts, . they should come to the HRA.
• ��4:I�i, I ,
a. Update on Ponding at Springbrook Nature Center:
Mr. Robertson stated they are now at the stage where the ponds cut the
walkways, and they have gotten the bias on the rustic bridges. They
will wst arotmcl �17,000-20,000. They are still within the total budget
of $350,000 which tlie H13A appraved in Nav�nber. He stated he would keep
the HRA inf ormed.
b. Midwest Van & Storac� :
Mr. Robertson statecl this was an early notioe eonoerning the I{'Lic7we� Van
& Storage building on the west siole of Central Avenue by Rice Creek
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Road. He ha� given the HRA members a copy of a meno to him f romn Jim
Robinson a�noerning a proposal for redeveloping that property by Mr.
Riclderman for multi-use retail. This property was in one of the tax
increnent financing clistricts, so the HRA mic�t receive a proposal for
the March meeting for assistance in upgrading the appearance of the
building. At this ti.me, they have not received any specif ic desic�.
This was strictly an information it�n at this time.
CLAIMS (1709-1720);
�Q�T by Mr. Meyer, seoonc�d t�y I�ds. Sahnabel, to approve the check register
as presented.
UPON A VOICE VU1'E, ALL VOl'ING AYE, �AIltpERSC�I Q�NIl'�RS DEC�ARID THE N�TION
(�RRIED U114f11TIlK0USGY.
P�DJOUR1�iNEla:
M�Q�T by Mr. Meyer, seo�nded by Ms. Schrlabel, to adjourn the meeting. Upon
a voice vote, all voting aye, Chairperson Commers declare� the motion
carried unanimously and the February 11, 1988, Housing & Redevelopnent
A�hority �eeting adjournecl at 10: 00 p. m.
Respectfully subnitteal,
,
�,� . i/L/,c _' �.�
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