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HRA 06/26/1998 SPEC - 29827� CITY OF FRIDLEY EMERGENCY MEETING OF THE HOUSING & REDEVELOPMENT AUTHORITY JUNE 26, 1998 CALL TO ORDER: Chairperson Commers called the June 26, 1998, Emergency Meeting of the Housing 8� Redevelopment Authority to order at 5:00 p.m. ROLL CALL: Members Present: Larry Commers, John Meyer, Pat Gabel Members Absent: Virginia Schnabel and Jim McFarland Others Present:: Barbara Dacy, Community Development Director Jim Casserly, Financial Consultant William Bums, Executive Director of the HRA Mayor Nancy Jorgen.son Councilmember Ann Bolkcom ^ Councilmember Steve Billings Peter Kitchak, Keewaydin Group Mr. Casserly explained that the necessity of this emergency meeting was discussed on Thursday, June 25, 1998. . A public hearing notice was prepared and faxed, E-mailed, and telephoned to the Fridley Focus on June 25, 1998, so notice was provided as required. OM TION by Mr. Meyer, seconded by Ms. Gabel, to declare the HRA meeting an Emergency Meeting as per Minnesota Statutes 471.705. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. Chairman Commers explained that the purpose of the meeting is to consider the status of a proposal that has been received from Medtronic regarding the Lake Pointe property that is currently under a development agreement with MEPC and being negotiated with Duke Realty, its successor. Ms. Dacy explained that the City Manager received a telephone call from Medtronic on � Thursday, June 25 to schedule a meeting for Friday evening, June 26, 1998. Medtronic has informed the City that they have been in a strategic planning process and that they HOUSING & REDEVELOPMENT AUTHORITY MEETING, JUNE 26, 1998 PAGE 2 � had hired the Keewaydin Group to assist them in the process. The growth of the company is expected to continue at a strong pace and they expect the need for more ofFce space for their facilities. They would like to consider a dual campus approach with a new office campus in close proximity to their office at Central Avenue & Rice Creek. The Keewaydin Group has recommended three sites in the north metro area for this dual campus approach and their top choice would be the Fridley site (Lake Pointe). Medtronic is interested in acquiring the entire site of approximately 38-40 acres and they would be prepared to begin construction of a minimum 150,000 square foot building as early as this fall or no later than May of 1999. If construction was to commence by May of 1999, a completion date could be expected by the end of next year with occupancy the fourth quarter of 1999 or the first quarter of 2000. The building could be as large as 250,000 square feet and be a multi-story structure. Medtronic has requested both the land for the building and the site control for the entire site. They are prepared to negotiate terms of a development agreement that would address these requests. The City expects that they could enter into negotiations for a development contract for the first building and subsequent to that development rights for the remainder of the site. Medtronic would own the site and building as opposed to leasing from another user. They would expect the HRA to use the tax increment created from the constru�tion to support the construction of the parking ramps to serve the completed buildings. They are also prepared in the next 6 months to initiate the master planning process for the site as soon as control is establis.hed. /'� Ms. Dacy stated the proposed action is a resolution which would revoke the authorization for the Chairperson and the Executive Director to execute the development contract with Duke Realty. A resolution approving such action was approved by the HRA at its meeting on June 4, 1998. This resolution would also authorize the transmission of a letter from the Executive Director to the appropriate officials at Duke to withdraw the offer to sell the 10-acres for the tech building. Mr. Peter Kitchak of Keewaydin Group, representing Medtronic was present to discuss this proposal with the HRA. He explained that Medtronic has selected this as their top site. The key to finding a successful site is to make sure that the opportunity is very carefully thought out as to being suitable for them on a long term basis. They view this site as a 10-15 year solution to the rapid growth of the company. Their other Fridley facility is growing at a rate of 7-8% per year. The Columbia Heights facility expects to see a growth in the 10-20% range. This site could be an excellent site for a major office building now with the possibility of consolidating all of their research and development efforts and their educational trading efforts. Chairperson Commers asked if Medtronic is prepared at this time to sit down and negotiate a development agreement. � HOUSING & REDEVELOPMENT AUTHORITY MEETING, JUNE 26, 1998 PAGE 3 � Mr. Kitchak responded in the affirmative. Medtronic has given them the authority to begin this process. Senior Management at Medtronic has indicated that they are prepared to make the necessary decisions very rapidly. Councilmember Billings stated he is very enthusiastic about the potential development. He asked if the Keewaydin Group is in a position to negotiate the stage of construction for the entire site. Mr. Kitchak responded in the negative. They are not prepared to provide schedules for construction, size, or the sequence. Their organization has recommended that Medtronic consider acquisition of the entire site or acquire a second site in close proximity to their existing site. Again, they are prepared to negotiate a development agreement; one which would protect the City. Councilmember Billings stated that the subject property was established as a Tax Increment District, and they have a limited amount of time to recover the funds. The HRA needs to be able to determine whether the increase in the value of land will generate enough Tax Increment Financing to make this development work without some type of building schedules. Mr. Kitchak explained that he is confident that they can work out an acceptable ^ agreement with the City. They do not expect the City to expend funds without reimbursement. He understands that this is a development district with 10+ years left on it. Councilmember Billings stated his concem in them controlling the site is in the event that they have a change of plans later and decide they do not want to build an additional structure on the site. In an instance such as this, the City would have a much smaller "window of opportunity" to market the site. Mr. Commers agreed that there are some risks for the City. However, he feels overall that this would be a very good development for the site. Mr. Kitchak stated he feels safe in estimating that the increment derived from the construction of the first building will at least double, perhaps triple, the amount that would have been on the initial development proposal. Furthermore, the presence of the Medtronic facility would, in his opinion, only serve to make the site more appealing/ marketable and enhance the value of the land. Mayor Jorgenson asked if Medtronic was asking the City to hold the land, or is Medtronic asking for the entire piece? � HOUSING & REDEVELOPMENT AUTHORITY MEETING, JUNE 26, 1998 PAGE 4 n Mr. Kitchak responded that they understand that if Medtronic does not develop the land, the city has to have a right to it. Their desire is to have control of the land so that they can be sure that the development pattem is consistent with first class corporate centers. Councilmember Billings asked how soon the City could expect to have a negotiated development agreement prepared, assuming that it is a top priority issue. Could they a expect to have a development agreement negotiated by August 1. 1998? Mr. Kitchak explained that it is their full intention to move forward rapidly; however, he cannot guarantee that a development agreement would be fully negotiated by that date. This project will be a very high priority to them and they are committed to making it happen quickly. However, it is necessary to see that an agreement is reached carefully. Councilmember Billings asked what the status of the finro other sites would be should the HRA choose to revoke the current agreement and begin negotiating with them. He stated he would not want to jeopardize what the City has now only to find that Medtronic is continuing negotiations on the other sites. Mr. Kitchak stated he feels it is safe to say that they will be focusing their efforts on this site. Councilmember Bolkcom stated her concem in that all negotiations appears to be through a consulting firm and not directly with Medtronic. Mr. Bums stated he has been working with Roger McCombs from Medtronic for many years and feels he has a high level of trust through his long-term working relationship with him. Mr. Bums further stated that he had met with him and the Keewaydin group Friday moming regarding this matter and he very much endorsed what is going on and the company's commitment to this effort. Chairperson Commers explained that HRA Resolution No. 7-1998 would accomplish the following: 1. The authorization to execute and deliver the Contract with Duke is hereby in all respects revoked; 2. Any prior authorization to execute and deliver other contracts for Private Redevelopment of the same property is hereby in all respects revoked; 3. The Authority staff is directed to communicate this Resolution to Duke or any other entity for which an execution of a Contract for Private Redevelopment has been authorized immediately by facsimile and United States mail; � HOUSING & REDEVELOPMENT AUTHORITY MEETING, JUNE 26, 1998 PAGE 5 � 4. The Authority staff is authorized and directed to take all such further actions deemed necessary to effectuate the terms and intent of the Resolution. MOTION by Mr. Meyer, seconded by Ms. Gabel, to adopt Resolution No. 7-1998, a Resolution Revoking the Authorization for the Execution and Delivery of a Contract for Private Redevelopment by and between the Housing and Redevelopment Authority in and for the City of Fridley, Minnesota and Duke Realty Investments, Inc. UPON A VOICE VOTE, ALL MEMBERS VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. MOTION by Mr. Meyer, seconded by Ms. Gabel, to adjoum the June 26, 1998, Emergency Meeting of the Housing & Redevelopment Authority. UPON A VOICE VOTE, ALL MEMBERS VOTING AYE, CHAIRPERSON COMMERES DECLARED THE MOTION CARRIED UNANIMOUSLY AND THE JUNE 26, 1998, EMERGENCY MEETING OF THE HOUSING AND REDEVELOPMENT AUTHORITY BOARD ADJOURNED AT 5:55 P.M. RespectFully submitted, � . ���� Tamara D. Saeflce � Recording Secretary �