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HRA 09/07/2000 - 6325,P"61 141 CITY OF FRIDLEY HOUSING & REDEVELOPMENT AUTHORITY MEETING SEPTEMBER 7, 2000, MEETING, 7:30 P.M. AGENDA LOCATION: City Council Chambers CALL TO ORDER: ROLL CALL: APPROVAL OF MINUTES: August 17, 2000 CONSENT AGENDA: Contract with CEE for Revolving Loan Program ...................... ............................... 1 Resolution Authorizing HRA Tax Levy for year 2000 Payable 2001 ............................ 2 Claimsand Expenses ........................................................ ............................... 3 ACTION ITEMS: Contract with Hoisington Koegler /Bonz/REA/Ehlers and Associates ........................... 4 Consider Term Sheet with Real Estate Equities for Gateway East Redevelopment Project ..................... ............................... 5 Consider Req -west to Install Community Signage at the southwest comer of University Avenue and Mississippi Street .......................... 6 Conduct Public Hearing Regarding Sale of 530 Hugo St and Consider Development Contract with Scott Olmstead Builders for 530 Hugo St ................. 7 OTHER BUSINESS ADJOURNMENT CITY OF FRIDLEY HOUSING & REDEVELOPMENT AUTHORITY MEETING, AUGUST 17, 2000 CALL TO ORDER: Chairperson Commers called the August 17, 2000, Housing and Redevelopment Authority meeting to order at 7:30 p.m. ROLL CALL: Members Present: Larry Commers, Virginia Schnabel, John Meyer, Jim McFarland Members Absent: Pat Ga4el Others Present: William Bums, Executive Director of HRA Barbara Dacy, Community Development Director Grant Fernelius, Housing Coordinator Julie Vogel, Accountant Jim Casserly, Development Consultant Jay Roos, Hokanson Development APPROVAL OF THE JULY 13.2000, HOUSING AND REDEVELOPMENT AUTHORITY MEETING MINUTES:. -, MOTION by Ms. Schnabel, seconded by Mr. McFarland, to approve the July 13, 2000, Housing and Redevelopment Authority meeting minutes. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. CONSENT AGENDA: 1. REQUEST TO SUPPORT ADDITIONAL LANE PROJECT: 2. CLAIMS AND EXPENSES: MOTION by Mr. Meyer, seconded by Ms. Schnabel, to approve the consent agenda with the additional expenses presented by Ms. Vogel. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. Mr. Commers asked Ms. Vogel what bond they are paying back. HOUSING & REDEVELOPMENT AUTHORITY MEETING, AUGUST 17, 2000 PAGE 2 Ms. Vogel stated that there are two bonds that the City has to pay and HRA reimburses the City because they are HRA bonds. Mr. Commers asked which ones they were. Ms. Vogel stated that it is 1997A and 19986. ACTION ITEMS: 3. CONSIDER RESOLUTION AMENDING DEVELOPMENT CONTRACT WITH FRIDLEY MAIN L.L.C: Ms. Dacy stated that in October 1999, the HRA approved the development contract with Fridley Main L.L.C. providing up to $250,000 of soil correction assistance for the project. The HRA approved entering into an escrow agreement for these funds. The funds are coming from the TIF #3 which is one of the "gap year" districts. The project is a 6 acre parcel on the west side of Main Street. The proposed size of the office /warehouse building is 50,000 square feet. A significant amount of poor soil and material needs to be removed from this site. The HRA has considered a couple of requests for this property, but. it has not been developed yet. Ms. Dacy stated that the original contract terms require the developer to complete the project by the end of this year. The assistance was to be provided in both grant and loan up to a maximum amount of $250,000 or two- thirds of the soil cost. The assistance was to be provided at the certificate of completion. Ms. Dacy stated the property owners are requesting the HRA to initiate the soil correction now. The owners are attempting to market the site even with the development contact in hand. What would change in the contract is how the assistance would be delivered, not the amount. The contract could be revised so the mortgage and the loan up to a maximum of $250,000 would be provided. The mortgage and the note require a personal guarantee on the part of the owners so that amount is secured. The contract would be revised so the completion dates would be extended to the year 2002. The original contract had an assessment agreement and that would still be maintained and kept in place. There is no change in the amount of assistance. Ms. Dacy staff is recommending that the HRA approve the resolution. This is a difficult site to develop, and the soil correction problem is well known. The approval is conditioned on the fact that the petitioner should reimburse the HRA for its expenses to draft the modified agreement and the appropriate documents for the escrow agreement. Mr. Commers asked what the timing would be amended to for the construction. Ms. Dacy stated that they will have until the end of 2002. Mr. Commers asked if any soil testing was done for some idea of the cost. Will Penk, property owner, stated that over the last couple of years, they have discovered approximately 50,000 yards of peat that had to be removed. The peat was removed by a landscaping business. Once you remove it you still have to replace it with suitable soils. HOUSING & REDEVELOPMENT AUTHORITY MEETING, AUGUST 17, 2000 PAGE 3 The problem is that you do not have to correct the entire parcel to an absolutely perfect parcel. This depends on the use. If you have a ponding area that would be different. They would like to correct the most likely area for a building. They would do that with the supervision of a soils engineer and with a reputable soils contractor. They have one potential purchaser looking at the property right now. Mr. Commers asked how this worked with the two - thirds cap. Ms. Dacy stated they have to provide documentation with their invoices, lien waivers, and all the costs. They will have to pay for the remaining third. Mr. Commers asked how they would do that as the invoices come in. Mr. Casserly stated that the HRA reimburses initially when they have incurred the cost. They pay one -third of the cost, and the HRA will reimburse them for two- thirds at the end. The money is currently in escrow. The escrow agreement provides for a single payout at the end after the appropriate documentation is received. Mr. Commers asked why they wanted their cost up front. Mr. Casserly stated it means prior to the time that the building is constructed. Ms. Dacy stated that it also means the completion of the soil work. Mr. Casserly stated that the reimbursement would not occur until the improvements have been made. Mr. Commers stated that it means a little bit of exposure and that postpones the real estate taxes on the loan. Mr. Casserly stated that is correct, but the property owners have a lot of motivation to construct because they are personally liable on that. Mr. Peterson stated that they have a lot of motivation even before that. Mr. Commers stated that he understood that. Mr. Meyer asked why they would make the soil correction before having a finite exact plan? Mr. Peterson stated that they have never been able to get a prospective buyer interested enough to go through and make their decisions to where the building should do. They have had estimates to $900,000 to correct the soil. Developers usually say they can probably do it for $375,000 if they know where they are going to put the building. He stated If he takes the north side of the property and uses some fill for the south side of the property, that gives people something to work with. Mr. Meyer stated that he is used to having correction work done and it has always been done with a building in mind and where the drives are going to be, the parking, footings, HOUSING & REDEVELOPMENT AUTHORITY MEETING, AUGUST 17, 2000 PAGE 4 and all the things that go with it. Otherwise the money is poured down the drain if you develop an area of the site that has no merit for some unknown developer. The HRA has had an experience with the Lake Pointe development in which they thought the developer knew exactly where he was going to improve the site and now with Medtronic on board, they are disregarding anything that was conceived years before. A site improvement usually does not take more than a couple of months to do once you have a developer or client. Mr. Peterson stated that they would have a purchaser or a developer who is ready to go. If that could happen, it would be wonderful. They are working with a potential developer right now. They would like to bring that contract forward, but their experience with this property has been that they never quite get to the end point. They think they can make it a much better piece of property and take out a lot of the unknowns so the correction will be done in an area of the property that almost certainly would be used by anyone who would build on that. Mr. Bill Penk, property owner, stated that a 50,000 - 60,000 square foot building would need about 1 1/2 acres improved. They have a pretty good idea of where that has to be. The north end of the site is in good condition and the south end is not. They think the middle third of the site is where the building has to fit. If they can clean up that part of the site, it will be much more inviting than it is now. Mr. Meyer stated that if the property owners have best intentions in spending many dollars in improving the land for a subsequent buyer; but then the buyer comes in with different plans for the land, where is the HRA's risk in this? Ms. Dacy stated that the contract is being amended to provide the assistance in its entirety in the loan. When the building is completed, half is converted to a grant. The mortgage is guaranteed and it is a lien against the property so the HRA has the ability to foreclose on land. Those are the HRA's options. You could keep the contract in its current form. It would expire and then the funds in escrow would have to be returned. If there would be any new development proposed, a new tax increment district would have to be created. The proposed revision would be the most expedient way to use the resources already available to the HRA. Mr. Penk stated that they do take into account what Mr. Meyer said, and they do not want to make that mistake. If they can find a user, the time extension gives them some help there. That property now scares people so they need to do something to make it more presentable. Towle has exposed this to hundreds of actual users and buyers, but they have not had a great response. People drive by and keep on going. They will be very careful who they choose as a user. Mr. Meyer asked what happens to all the money if they go ahead with the soil correction and there is still no building in site. Ms. Dacy stated they have a note and the property owners are obligated to repay the loan. If they do not make the payments on the loan, the HRA can foreclose the amount. HOUSING & REDEVELOPMENT AUTHORITY MEETING, AUGUST 17, 2000 PAGE 5 Mr. Meyer asked Mr. Penk if he was willing to face that. Mr. Penk stated, yes. They will do everything in their power to make sure that the money spent is going to increase the value of that property. This is a pretty nice location and actually used to have buildable soils. Mr. Meyer stated that if the HRA is protected and the property owners know the risk, he has no further objection. MOTION by Mr. Meyer, seconded by Mr. McFarland, to approve Resolution No. HRA 8- 2000, "Resolution Determining the Necessity for Modifications to the Contract for Private Development and the Escrow Agreement, Both Relating to Lot 2, Block 1,Mar Len Addition, City of Fridley, Minnesota, and Authorizing Execution and Delivery of Amendments to Said Agreements ". UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. 4. REQUEST AUTHORIZATION TO NEGOTIATION WITH REAL ESTATE EQUITIES FOR GATEWAY EAST PROJECT: Mr. Fernelius stated that they received two proposals for the Gateway East project. Hokanson Development of Blaine and Real Estate Equities of St. Paul were the two developers. Staff spent a considerable amount of time looking at these proposals and analyzing them. Staff also spent time interviewing the developers and believe they have a lot of the information necessary to make a solid recommendation to the HRA. Mr. Fernelius stated that Real Estate Equities was identified as the developer of choice, but he still wanted to review the Hokanson proposal. Hokanson proposed a forty unit project, 16 units per acre, with a projected sales price of $99,000 - $128,500. Hokanson would have a two- story design which would be a double loaded unit. The square footage would average from 1,400 -1,725 square feet with attached one and two car garages. Hokanson is proposing a ten -unit cluster, two 12 -unit clusters, and a six -unit building at the corner of 57th and 4th Street. Mr. Femelius stated that both developers utilized the desired site plan referenced in the RFP which involves closing off the frontage road and rerouting 4th Street. Mr. Femelius stated the Hokanson site plan provides for little guest parking. Any parking would have to occur in the front of the unit. It does not provide much for landscaping and open space. The units would be marketed to young couples without children and working singles. The unit would not be attractive to seniors because of the multiple levels. The in- house review team felt that the types of materials were fairly typical for a townhome development. Buyers have very few options in terms of upgrades. The density on this size parcel does not fit very well in the project area. The total sales revenues are projected at $4,453,600 equating to about an average price of $111,340. The development costs are $4,815,000. They are willing to pay something for the land s HOUSING & REDEVELOPMENT AUTHORITY MEETING, AUGUST 17, 2000 PAGE 6 equating to about $1.00 per square foot. They would request additional public assistance of about $275,000. Mr. Femelius stated that the Real Estate Equities proposal is significantly smaller. It is a 28 -unit project with a slightly higher sales price of $126,000 - $142,000. It would be a three story single unit design with two car garages for all the units. There would be five three -unit buildings with a street servicing the southern part and a private drive serving the north side. There is a significant amount of landscaping materials as well as some guest parking. Staff would like to see more brick and a provision for a porch. Staff will discuss the windows with them, because the end units do not include them. It is marketed toward young couples and professional individuals. It is a good value for the price and they are using a little higher end materials particularly on the finishes, flooring, carpets, and interior products. They do offer the buyers more options in terms of upgrades. Mr. Femelius stated that total sales revenues are $3,678,100. Their development costs would be $4,326,000. They are not willing to pay anything for the land. They have a project shortfall of about $545,000. The value of these units on average is ten to twenty thousand dollars higher than what Hokanson is proposing. These are still considered affordable units. Twelve of these units would sell for $129,000 or less. Fridley's average sales price in 2000 for an existing single family home is $140,000. Eighteen of these units would sell for $137,000 which would be less than the average sales price. The other issue is design. Staff likes the single loaded design, the traditional front entry, and that the garage doors do not dominate the fagade of the buildings. There is a significant amount of open space and landscaping that is also provided. The density is less with 11.2 units per acre as opposed to 16 units per acre for the Hokanson development. It is more compatible with the neighborhood—,because there are a number of apartments as well as some commercial businesses. Mr. Femelius stated staff acknowledges that the Hokanson development is a good development and they are good and successful at what they do, but they do not think that it is the right product for this location. What happens in the future if they look at redevelopment on the west side of University Avenue? They have done some very preliminary analysis that this would fit much better on the west side to have a cohesive development along that stretch of University Avenue. Mr. Fernelius stated that the HRA has to question whether this is the vision for University Avenue, whether moderate priced housing is appropriate for this location, and whether the HRA's financial contribution is worth the product they are going to get in the end. Staff feels that the proposal is consistent with the redevelopment vision identified in the comprehensive plan. They think there is a strong demand for this type of product which is similar to the Christianson Crossing development. They are already hearing the impact of the Medtronic project with people wanting to move into Fridley. They feel that the HRA is going to have to make a contribution to this project whether or not they select this developer or a different proposal. There is a fairly substantial amount of funding that needs to go into making this site ready for development. Whatever they do, it will cost additional money to the HRA. Staff recommends pursuit of the Real Estate Equities proposal. Staff would like to proceed with negotiations on the terms for a redevelopment contract and come back to the HRA in October. HOUSING & REDEVELOPMENT AUTHORITY MEETING, AUGUST 17, 2000 PAGE 7 Mr. Meyer stated that he liked the latter proposal also, but the three story units bother him. There is less density and higher stacked units which seems to be different in the planning. How can they stack units up three stories high and have less units on the land? Is there more green space? Mr. Femelius stated that it is based on the square footage and you do not have units back to back. Ms. Dacy stated that with the Hokanson development, there is a ten -story unit, and in this proposal there is a six -story unit. Mr. Meyer asked how the three -story units are being received at Christenson Crossing. Ms. Dacy stated that they are all sold. The three story will dictate a certain type of buyer and some buyers will not buy that for a variety of reasons. Christenson Crossing has 64 three -story units, and this proposal is for 28 three -story units. Ms. Schnabel asked how the people will get to the front by University Avenue. Ms. Dacy stated that there will be an entry from the garage into the back of the unit. They are proposing sidewalk connections from the front and then a continuation of the sidewalk that exists along the frontage road right now. It is going to look like a sidewalk up to the front of a single family home, only they are attached to three in front. Ms. Schnabel asked if visitors will be allowed to park on University Avenue Service Road. Ms. Dacy stated that she does not believe that it is signed "no parking" at this time. It is true that a guest could park there. There are guest spaces in the back and, in addition to the garage, there are driveways that would hold two additional cars. Mr. Femelius suggested a front porch may be possible to be carried across the front to take away that blind space. The other option is to add additional landscaping in the area or wainscot brick or banding around the building. Those are issues to pursue with the developer as well as some of the other issues with windows and interior trim. Ms. Schnabel stated that she would agree that the Real Estate Equities proposal is perhaps a higher quality that they would like to see. Have there been any neighborhood meetings? Mr. Femelius stated there has not been any neighborhood meetings. The developer would meet with the neighborhood sometime this fall to talk about the proposal. Ms. Dacy stated they did have a neighborhood meeting a few months ago to talk about the traffic issues. Mr. Commers stated that they wanted to get a pro forma showing what they have got into this project. They still have one parcel up in the air, but they would like to know all the possible costs. HOUSING & REDEVELOPMENT AUTHORITY MEETING, AUGUST 17, 2000 PAGE 8 Ms. Dacy stated that staff is also investigating the Department of Trade and Economic Development redevelopment grant fund. They made an application for that about a year ago, and it may be worthwhile to reapply by October 2 for an additional source of funding. Ms. Schnabel asked what the sales figures were on some of the other developments that started in 1993. Mr. Femelius stated that was the Hokanson proposal, and a representative from Hokanson who is at the meeting could answer that. He talked with Roger Hokanson and some of the figures they had in their proposal that needed to be updated. All their projects have been completed, and it was not an issue that they had trouble selling units. Ms. Schnabel stated that it was her understanding that the projects had been completed, but the units were not all sold. We wondered if there was something in the market that precluded the sales. Mr. Femelius stated that it is his understanding that all the units have been sold. Ms. Schnabel asked if Staff was satisfied with their sales performance record in terms of how many units have been developed and what the sales figures are. Mr. Femelius stated that the Lake Phalen project has all sold out according to the build out scheduled that they had estimated. Ms. Schnabel asked if-those were also three story units. Mr. Femelius stated that was correct. Mr. Jay Roos, Hokanson Development, stated that there was some confusion in the start of the project. The original submittal had two projects and there was also a single family development. For some reason, the start dates were noted as 1993. The purchase agreements were signed in 1997 with construction starting in 1998. They started with the platting and zoning process in early 1998. The site plan did not show individual separate parking locations other than the locations in front of the garage, and there are spots for that. Mr. Casserly stated that both presentations were excellent and very thorough. The HRA is looking at a different type of project. It is not a commentary on the ability of one developer over the other. Clearly they can both do the project. It is a question of the type of product that the HRA is looking for. Mr. Commers asked the reason for the comparison to apartments. Mr. Casserly stated that apartments frequently generate more taxes. The issue became what would happen if they put out a rental project instead of owner - occupied. It shows that in this instance, there was very little difference in the amount of taxes generated. Regardless of what is put on this site, you just do not generate a lot of tax. It is the way HOUSING & REDEVELOPMENT AUTHORITY MEETING, AUGUST 17, 2000 PAGE 9 the class rates work. Office /commercial would generate substantially more, but the site is not suitable for that. The funds are already mostly spent, and the HRA would have to advance funds from the general fund to this district to be repaid over a period of time. The acquisitions have been made from other funds available. This project already has $6,000 - $7,000 invested and the issue is whether they can break even on what future investment is needed to make it work. Mr. Commers stated that with what they have put into this project and what they would have in the future adds considerably to the cost. Mr. Casserly stated that the HRA already has incurred approximately $600,000 plus to make the site available. It will take all of the future increment to get they product they want on the site, and the goal is to break even. Mr. Meyer asked what is meant by prevailing wage experience. Mr. Femelius stated that Real Estate Equities has worked on projects in the past where the City had a prevailing wage ordinance similar to what Fridley has. This means that workers have to be paid a minimum amount in wages. There is a financial implication but also the process to comply with the various wage scales. There is a substantial amount of work involved and they are trying to find out if the developer has experience doing that. Real Estate Equities does and Hokanson development acknowledged that they did not have any experience with that. Mr. Meyer asked if they.both would be obligated to do that. Mr. Femelius stated that is correct. MOTION by Mr. McFarland, seconded by Ms. Schanbel, to accept the proposal submitted by Real Estate Equities and to authorize staff to begin negotiations with Real Estate Equities for the Gateway East Project. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. INFORMATION ITEM: 5. SALVAGE YARD UPDATE: Ms. Dacy stated that Paul Hyde and Scott Hickok have met with the salvage yard owners. They are beginning to arrange for appraisals and environmental testing and what the potential costs could be. Staff will be meeting with the Department of Trade and Economic Development, and she will have a better update at the October meeting. Mr. Commers stated that they need to compare where we are with the financial projections given before. HOUSING & REDEVELOPMENT AUTHORITY MEETING, AUGUST 17, 2000 PAGE 10 6. JOINT TASK FORCE FUNDING UPDATE: Ms. Dacy stated that Mr. Meyer attended the Task Force meeting on August 10. The HRA approved the consultant contract with Demographic Technologies, Inc., for the GIS analysis. Since the last meeting, the Task Force received one proposal for the land use and the marketing work. The responder was Hoisington Koegler Group, Inc. and Bonz/REA The Staff committee interviewed them and made a positive recommendation to the Task Force. The proposal amount was $54,500. The Task Force suggested that the original budget amount was approximately $45,000. They contacted Medtronic to see if they are willing to contribute to the project, but they do not yet have an answer. The County is about to take official action on a contribution of $20,000. The school districts each contributed. The remaining amount is to be contributed by Fridley and Columbia Heights. The Fridley HRA would be the contract holder with the land use and the marketing consultant and would collect the funds from the other jurisdictions. That will be an action item on the September agenda. Mr. Commers stated that he has raised the issue of the appropriateness of the HRA paying the money and why is that not more appropriate for the City? Mr. Bums stated that a lot of the reason for doing the studies has to do with capitalizing on development and redevelopment opportunities presented by the Medtronic project which tends to put it more in the HRA's camp than the City's. Mr. Commers stated that when they start talking about mapping and other things, he is not sure that it has much to do with Medtronic's development. 14 Mr. Bums stated it has a lot to do with attracting development related to Medtronic. They are also talking about population projections and showing potential developers the market available. Ms. Schnabel asked who is paying Columbia Heights portion. Ms. Dacy stated that they have identified a funding source from the City. Mr. Commers asked if they were doing the mapping too. Ms. Dacy stated that Columbia Heights is also doing the mapping. OTHER BUSINESS Mr. Femelius stated that he distributed a memo with the subject of Change Order to Demolition Projects. He would ask the HRA to approve that. Five properties were included in the demolition contract with Kevitt. One scattered site project was messed up on Lafayette Street. The crew was out there and indicated that it would be easiest for them to proceed with the demolition. Staff instructed them to do that, and it is an additional expense to be added to the contract. The Change Order is for $7,650. HOUSING & REDEVELOPMENT AUTHORITY MEETING, AUGUST 17, 2000 PAGE 11 MOTION by Ms. Schnabel, seconded by Mr. Meyer, to approve Change Order to Demolition Projects. Seconded by Mr. Meyer. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. Mr. Commers asked if the house was down at 5297 Lincoln. Mr. Fernelius stated it was. ADJOURNMENT MOTION by Ms. Schnabel, seconded by Mr. McFarland, to adjourn the meeting. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED AND THE AUGUST 17, 2000, MEETING OF THE HOUSING AND REDEVELOPMENT AUTHORITY WAS ADJOURNED AT 8:55 P.M. Respectfully submitted, Signe L. John on aZ� Recording Secretary -4 HOUSING AND REDEVELOPMENT AUTHORITY Memorandum DATE: September 1, 2000 TO: William W. Bums, Executive Director of HRA FROM: Barbara Dacy, Community Development Director Grant Femelius, Housing Coordinator SUBJECT: Consider Contract with Center for Energy and Environment (CEE) for HRA's Revolving Loan Program CEE has administered the HRA's Revolving Loan Program since it began in 1996. During that time, CEE has processed a total of 272 loans worth $3,381,492. The program has been extremely successful in helping to improve the City's housing stock and has served as a model for other metro communities. CEE's Loan Origination Agreement expired in February and a new contract is required. Staff has met with CEE and has been informed that several changes are needed in order to continue administering the loan.program_on behalf of the HRA. A draft of the new agreement will be presented to the Authority on Thursday evening. Below is a summary of the major changes. Old Fee Structure Under the old administrative contract, CEE was compensated $350 for each Revolving Loan that was made. This figure was based on the same rate paid by MHFA for its loan program. CEE was responsible for all facets of program administration, from marketing to application in- take, income verification, underwriting, and closing. Once a loan was closed, CEE was also responsible for inspecting the work and acting as the escrow agent to release payment to the contractors. CEE was also paid $50 per inspection to cover staff time to and from the project site. New Fee Structure In the new agreement, CEE is requesting $550 per revolving loan originated. The increased origination fee is due to higher staff and overhead costs (old fees were negotiated in 1997) and the fact that CEE has discovered it takes considerably more time to manage the escrow account. This task involves coordinating the payments to the contractors as the work is completed. The new fee would include both the loan origination cost and the escrow management cost. CEE would be paid a flat fee per loan regardless of the number of construction draws made. This format seems more practical than billing the HRA separately per draw. They would continue to be paid $50 for each inspection made. 1 CEE Loan Qrigination Memo September 1, 2000 Page 2 CEE has calculated that their cost to process a loan from start to finish, exclusive of the inspections) is roughly $540. At their current rate, they need to find other internal funding sources to make up this shortfall. As a non - profit agency, they simply cannot afford to absorb these additional costs. The new rate will also be consistent with the rates charged to other communities (cities of Anoka and Blaine) who have similar programs. In addition, MHFA is also raising their origination fees to $500, although they do not require their loans to be escrowed. Dave King, Program Manager for CEE, has prepared a letter outlining their new contract request. Mr. King will also be at the meeting to answer questions from the Authority. Impact of Higher Fees Although the new fee increase seems significant, it should be emphasized that CEE has not increased their rates in three years. The new agreement would be effective through the end of 2003. Secondly, CEE's cost to administer the program is still substantially less than what it cost the HRA to administer the program internally, since additional staffing would be required. The advantage of working with CEE is that they are only. paid for loans made. Unlike the CDBG and HOME programs which pay a flat percentage of the budget for administrative costs, the CEE contract is structured on fee - per -loan basis. The obvious incentive for CEE is to try and as many loans as possible. In terms of the budget, staff has determined that the potential impact will be approximately $3,700 more than anticipated, assuming we meet our goal of CEE making 50 loans this year. This year we budgeted $17,500 for Revolving Loan origination fees and have spent $11,300 (32 loans). If we make 18jmore loans through the end of the year we will spend $9,900 on fees or $3,700 more than $6,200 remaining in the budget. We believe there is room within the overall housing budget to accommodate this amount, since we have spent considerably less in other program areas (i.e. Scattered Site, Last Resort Loans, etc.). Recommendation Staff recommends that the Authority approve the Loan Origination Agreement with CEE for the Revolving Loan Program. A copy of the agreement will be presented to the Authority on September 7t'. M -00 -147 - ,09 /01 /00 15:53 FAX 612 335 2650 CENTER FOR ENERGY & ENVI wool Community Revitalization Resources www.mncee.org 211 North 1" Street, Suite 455 . Minneapolis, Minnesota 55401 A Phone. (612) 335 -5880 . Fad: (612) 335 -2650 September 1, 2000 Mr. Chant Fernelius Housing Coordinator Fridley Municipal Center 6431 University Avenue NE Fridley, MN 55432 Dear Grant: Per our conversation, I am writing you regarding CEE's request to the HRA regarding the need to increase fees for the 2000 -2003 contract period. As an independent non profit organization, CEE's primary goal is simply to provide valuable services in the public interest while recovering our costs. The current loan origination fee of $350 was agreed upon in March of 1997. Since then, CEE's cost to deliver the Fridley Home Improvement program has increased and as such CEE is requesting an increase in the loan origination fee to assist in covering these expenses. The Center for Energy ancTEnvironment is proposing to increase the loan origination fee to $550 per loan closed. As you may recall, when the March 1997 contract was executed, a major change in the scope of delivering the program was the addition of escrow management responsibilities. These additional duties were implemented to increase internal controls and to help reduce the risk to the HRA. Ori&ally,-CEE anticipated one disbursement per loan which was to be paid upon - completion of the project. Due in part to the large loan amounts and the scope of the improvements that are being completed, CEE has identified that the typical Fridley home improvement loan requires 3 draws or disbursements to zero out the escrow account. This activity has resulted in increased expense to administer the program. For your review, I have attached a listing of the activities CEE performs in originating a Fridley Home Improvement Loan It has been five years now that the Center for Energy and Environment has been working with the HRA. CEE has very much enjoyed and appreciated our relationship with the HRA. If you have any questions or comments regarding this request, please contact me at 335 -5889. Sincerely, David King 1 Q EQUAL MOUSING LENDER Director A division of the Center for Energy and Environment A Equal Opportunity Employer HOUSING AND REDEVELOPMENT AUTHORITY Memorandum DATE: September 1, 2000 TO: William W. Burns, Executive Director of HRA FROM: Barbara Dacy, Community Development Director Grant Fernelius, Housing Coordinator SUBJECT: HRA Tax Levy for 2001 At their September 7t�' meeting, the HRA will be asked to approve a resolution authorizing a general tax levy for taxes payable in 2001. The City Council will consider a similar resolution, consenting to the HRA levy, at their September 11th meeting. The HRA tax levy is equal to .0144% of the taxable market value of all real property located in the City. The HRA has imposed a levy since 1996 and has used the revenue source to help support the HRA's housing rehab program. The bulk of the funds have been used to repay the $1.5 million loan from the City which was issued in 1997. The loan was used to capitalize the Revolving Loan Program. In 1999, the HRA received $185,961 in tax levy revenue. For the first half of 2000, the has received $96,980. The balance on the City loan is currently $757,662. Recommendation Staff recommends that the HRA adopt the attached resolution approving a 2000 tax levy for taxes payable in 2001. M -00 -146 2 HRA RESOLUTION NO. 2000 A RESOLUTION ADOPTING A 2000 TAX LEVY COLLECTIBLE IN 2001 BE IT RESOLVED by the Board of Commissioners (the "Commissioners ") of the Housing and Redevelopment Authority in and for the City of Fridley, Minnesota (the "Authority "), as follows: Section 1. Recitals. 1.01. The Authority is authorized by Minnesota Statutes Section 469.033 to adopt a levy on all taxable property within its area of operation, which is the City of Fridley, Minnesota (the "City "). 1.02. The Authority is authorized to use the amounts collected by the levy for the purposes of Minnesota Statutes Sections 469.001 to 469.047 (the "General Levy "). Section 2. Findings. 2.01. The Authority - Hereby finds that it is necessary and in the best interests of the City and the Authority to adopt the General Levy to provide funds necessary to accomplish the goals of the Authority and in furtherance of its Modified Redevelopment Plan. Section 3. Adoption of General Levy. 3.01. The following sums of money are hereby levied for the current year, collectible in 2001, upon the taxable property of the City for the purposes of the General Levy described in Section 1.02 above: Total General Levy: .0144% of Taxable Market Value Amount: Maximum Allowed by Law e Page 2 — Resolution No. Section 4. Report to City and Filing of Levies. 4.01. The Executive Director of the Authority is hereby instructed to transmit a certified copy of this Resolution to the City Council for its consent to the General Levy. 4.02. After the City Council has consented by resolution to the General Levy, the Executive Director of the Authority is hereby instructed to transmit a certified copy of this Resolution to the County Auditor of Anoka County, Minnesota. PASSED AND ADOPTF{D BY THE FRIDLEY HOUSING AND REDEVELOPMENT AUTHORITY OF THE CITY OF FRIDLEY THIS DAY OF SEPTEMBER, 2000. ATTEST: LAWRENCE R. COMMERS - CHAIRPERSON WILLIAM W. 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Burns, Executive Director From: Barbara Dacy, Community Development Director Subject: Authorize Execution of Contract with Hoisington Koegler Group Inc. BACKGROUND At the July meeting, the Authority approved the contract with Demographic Technologies Inc. for the demographic and forecasting work needed for the Joint Community Task Force, subject to receiving the applicable amount from Columbia Heights for their portion of the work. Columbia Heights has since authorized its portion. In addition to the GIS work, the Joint Task Force recommended on August 10, 2000 that the cities pursue the consultant contract with Hoisington Koegler Group Inc. to complete the land use and marketing analysis outlined in the Task Force request for proposal. I am happy to report that all three school districts have approved their corresponding $2500 share, Anoka County has approved its $20,000 share on August 22, 2000, and the City of Columbia Heights has approved its share. The City of Hilltop will also consider contributing its share (an unexpected $517!) on September 5, 2000, which reduces the Fridley and the Columbia Heights contribution. PROPOSED WORK PROGRAM The consultant proposed to complete the work in four tasks (see pages 7 through 15 of the proposal): 1. Understanding Existing Conditions 2. DetermineNerify City Directions 3. Analyze what it Means 4. Establish Priorities and Define an Implementations Framework Task 1 in general involves completing the market research, interviews, Medtronic work force analysis, existing infrastructure analysis etc. Task 2 involves working with the Task Force and the public on finding out desired future directions. Interviews with up to 12 key stakeholders are proposed as well as conducting a public workshop. HKGI would facilitate this effort. Task 3 involves analyzing the results of 1 and 2 and presenting the results. It involves the guts of the work to be completed. The last task includes recommendations from the consultant for redevelopment priorities (not site specific, but in general) categorized into five -year segments with implementation strategies. A second public workshop is proposed to review the results and the Task Force can �1 Execution of Contract with Hoisington Koegler Group Inc. September 1, 2000 Page 2 then review and revise the recommendations as they see fit. The final item to be completed is the written report summarizing the work and the presentation to both Councils. The Task Force agree with the staff recommendation to pursue a contract with the consultant team based on these findings: 1. The proposed marketing firm has relevant experience, and demonstrated a thorough understanding of the requested work. 2. The land use consultant, HKGI, is well qualified to complete the land use analysis of the study, and is well qualified to facilitate the work of the Task Force. 3. The consultant team has anticipated the need for some type of fiscal impact analysis, even if its broad brush in nature, on how the Medtronic project and any spin off development might impact both cities in terms of public services, infrastructure, programs, and other public investments. 4. The proposed research not only includes extensive analysis of Medtronic's operation but also includes regional research and analysis. In addition, a public workshop component has been proposed to solicit the input of the two communities. 5. Fridley has had direct experience with HKGI. Mark Koegler excels at public speaking and handles difficult situations in public well. He also listens to the client and is very responsive. The other staff person from HKGI that will be the project manager will be Michael Schroeder. While Fridley staff has not worked directly with Mr. Schroeder, he has had extensive experience at the City of Richfield. .e. RECOMMENDATION Staff recommends the Authority approve execution of the contract with Hoisington Koegler Inc. The other jurisdictions are now being invoiced for their share. The Fridley share for this contract is approximately $21,122. The Fridley share for the GIS contract already approved is $25,875 for a total of $46,997. M -00 -144 1. GIS Phase I socio- economic data (input, one annual update, plus some amount of forecasting work) Columbia Heights $18,055 Fridley $25,875 2. Land Use and Market Consultant (proposal cost pending from a consultant) $54,500 3. GIS mapping of "physical' characteristics $ 3,000 Total: $101,430 The potential funding scenario discussed by the staff and Task Force is as follows: Anoka County School Districts ($2,500 each District) Fridley Columbia Heights W/z,1.7-OP $20,000 $7,500 Opt 9176�,ARX per acreage c st + 25,875) 01.3 nw , Art 3 r z 4 0 0 acreage cost+ $18,055) dad Aeon* Creative Solutions for Land Planning and Design Hoisington Koegler Group Inc. Sample Contract July 20, 2000 Mr. Kenneth Anderson Ms. Barbara Dacy Community Development Department City of Columbia Heights 590 40th Avenue Northeast Columbia Heights, Mn 55421 Re: Contract Proposal for Medtronic Analysis Attention: Mr. Anderson and Ms. Dacy This letter outlines a Scope of Services, Fee Schedule and other elements which together constitute an agreement between the Cities of Columbia Heights and Fridley, hereinafter referred to as the CITY, and Hoisington Koegler Group Inc., hereinafter referred to as the CONSULTANT for professional planning services authorized to assist the Cities in analyzing the impacts and opportunities resulting from the construction of Medtronic's new corporate headquarters, hereinafter referred to as the PROJECT. The CITY and CONSULTANT agree as set forth below: A. Work Program — Basic Services (Insert Proposal Work Program) B. SCOPE OF ADDITIONAL SERVICES The following services have not been requested by the CITY but are available, upon authorization, from the CONSULTANT. 1. Meetings in addition to those specified in Basic Services. 2. Additional services not specified herein. C. FEES FOR PROFESSIONAL SERVICES The CITY agrees to pay the CONSULTANT for services rendered as follows: 1. For the CONSULTANT'S Basic Services described in Paragraph A above, a fee based on the CONSLUTANT'S current hourly rate schedule (see Attachment A) not to exceed Fifty -Four Thousand, Five Hundred Dollars ($54,500.00). 123 North Third Street, Suite 100, Minneapolis. MN 55401 -1659 Ph (612) 338 -0800 Fx (612) 338 -6838 2. For the CONSULTANT'S Additional Services described in Paragraph B, a fee based on the CONSULTANT'S current hourly rate schedule plus incidental expenses or a negotiated fee. 3. Statements will be submitted to the City on a monthly basis as work is completed and shall be payable within 30 days in accordance with this Agreement. 4. The CONSULTANT reserves the right to suspend services if the CITY is delinquent in making payments in accordance with this Agreement. D. CITY'S RESPONSIBILITY The CITY shall be responsible for the following: 1. The assembly of background information including, but not limited to: A. GIS information available from PlanSight and Demographic Technologies, Inc. B. Other available base map and inventory data. C. Aerial Photography D. Utility Information 2. Mailing lists, printing, postage and the mailing of invitations for public meetings. 3. Arrangements for public meetings. 4. Reproduction of all interim reports for distribution to the Task Force and TAC. E. COMPLETION SCHEDULE The services of the CONSULTANT will begin upon City Council approval and will, absent of causes beyond the control of the CONSULTANT, be completed by February 2, 2001. F. NONDISCRIMINATION The CONSULTANT agrees not to discriminate by reason of age, race, religion, color, sex, national origin, or handicap unrelated to the duties of a position, of applicants for employment or employees as to terms of employment, promotion, demotion or transfer, recruitment, layoff or termination, compensation, selection for training, or participation in recreational and educational activities. G. EQUAL OPPORTUNITY During the performance of this Contract, the CONSULTANT, in compliance with Executive Order 11246, as amended by Executive Order 11375 and Department of Labor regulations 41 CFR Part 60, shall not discriminate against any employee or applicant for employment because of race, color, religion, sex or national origin. The CONSULTANT shall take affirmative action to insure that applicants for employment are employed, and that employees are treated during employment, without regard to their race, color, religion, sex or national origin. Such action shall include, but not be limited to, the following: employment, upgrading, demotion, transfer; recruitment or recruitment Medtronic Analysis Proposal Cities of Columbia Heights and Fridley Page 2 advertising; layoff or termination, rates of pay or other forms of compensation; and selection for training, including apprenticeship. The CONSULTANT shall post in conspicuous places available to employees and applicants for employment notices to be provided by the Government setting forth the provisions of this nondiscrimination clause. The CONSULTANT shall state that all qualified applicants will receive consideration for employment without regard to race, color, religion, sex, or national origin. The CONSULTANT shall incorporate the foregoing requirements of this paragraph in all of its subcontracts for program work, and will require all of its subcontractors for such work to incorporate such requirements in all subcontracts for program work. H. TERM, TERMINATION, SUCCESSORS AND /OR ASSIGNS 1. The Term of this Agreement shall be concurrent with the work authorized and shall be in accordance with the schedule to be established between the CITY and the CONSULTANT. 2. Either party may terminate this Agreement by written notice to the other party at its address by certified mail at least ten (10) days prior to the date of termination. 3. Neither the CITY nor the CONSULTANT shall assign, sublet or transfer its interest in this Agreement without the written consent of the other. 4. The time schedule shall not apply and/or time extensions will be allowed for any circumstances beyond the control of the CONSULTANT. 5. This Agreement shall be governed by all applicable laws. 6. Upon termination, Consultant shall be entitled to fees earned through the effective date of termination. I. DISPUTES In the event the CITY and CONSULTANT are unable to reach agreement under the terms of this contract, disputes shall be resolved using alternative dispute resolution (ADR). J. REVOCATION If this agreement is not signed and accepted by both parties within 90 days of the contract date, it shall become null and void. K. AUTHORIZATION IN WITNESS WHEREOF, The CITIES OF COLUMBIA HEIGHTS AND FRIDLEY and the CONSULTANT have made and executed this Agreement for Professional Services, Medtronic Analysis Proposal Cities of Columbia Heights and Fridley Page 3 This day of , 2000. CITIES OF COLUMBIA HEIGHTS AND FRIDLEY Name Attest: Name Title Title HOISINGTON KOEGLER GROUP INC. R. Mark Koegler, President Michael Schroeder, Vice President Medtronic Analysis Proposal Cities of Columbia Heights and Fridley Page 4 The construction of the new Medtronic Corporate Headquarters presents an unprecedented opportunity for the cities of Fridley and Columbia Heights. The HKGi Project Team's work program has been designed to analyze and provide recommendations on the land use, market and financial implications of this major new development. Beyond simply understanding the likely impacts of this project, this work program is focused on providing both communities with tools that can be used to plan for change. The construction of Medtronic will facilitate change. How can Columbia Heights and Fridley, both individually and cooperatively, use this opportunity for change to advance identified goals? Advancing community goals assumes that some direction has been or will be established. Both Columbia Heights and Fridley have recently updated their comprehensive plans. Both plans focus on community improvement and contain a variety of goal- oriented elements that can be used as a partial basis for the Medtronic analysis. This information needs to be supplemented by direct community input that specifically considers and reacts to the opportunities that Medtronic presents. Therefore, the work program includes public participation elements to gain an understanding of community interest and priorities and to help establish future directions. The work program is based on our understanding of the project to date. It includes four major components that are intended to build a level of common understandtt g, examine existing and future directions, analyze what it all means and then establish priorities and create an implementation framework. While our current understanding is the basis for this proposal, it can be modified through input from the Task Force and TAC as the process unfolds to ensure that we address the needs and interests of both communities. 1.0 Understand existing conditions... During this initial part of the process, the HKGi team will begin to understand the project area and the details of the new Medtronic facility. We will work with the identified GIS consultants to assemble the appropriate base maps and materials including both demographic and land use information. The team will review development plans as well as other plans, demographic studies, market studies and other sources of information that may be of value in a background assessment. This portion of the work will include the following tasks: 1.1 Investigate the forces that influence the planning area including natural forces (topography); man -made Work Program Hoisington Koegler Group Inc. ©IN Page 7 forces (traffic patterns, utilities, other exiting and planned developments); community forces (history, elements of local culture, general safety concerns, relationship with other community features); market forces (conditions of housing and commercial uses); financial forces (the resources that ultimately might be used for implementation) and other influences (views, special features, etc.) 1.2 Assess the project area in terms of image and identity, seeking opportunities to capitalize on elements that are meaningful to both communities and noting areas that currently detract from positive images. 1.3 Obtain information related to utilities and other infrastructure to determine constraints posed by those facilities. 1.4 Collect and review information to build an understanding of the Medtronic business structure. This task set is intended to provide an understanding of Medtronic's business practices and patterns. In gaining the necessary understanding, the HKGi Team will interview Medtronic officials and employees, tour Medtronic facilities and the expansrdh site, and review relevant corporate literature. Key issues for investigation will involve Medtronic's: Clientele Suppliers Service providers Employees— compensation, profiles, etc. Operations and requirements at existing locations Problems and needed improvements Operations and requirements at proposed expansions The team will investigate the existing linkages between i4ledtronic and their major existing supplier and support service providers in terms of the types of fir-ms and services provided, the scale of services and supplies provided, their geographic distribution, and any requirements for proximity to existing facilities. We will also analyze the Medtronic workforce by type of employment, demographic Hoisington Koegler Group Inc. ©® page 8 characteristics and geographic distribution within the region. This analysis will involve collection of information from the company, as well as surveys and interviews with Medtronic representatives and officials. Through interviews and data collection, we will also seek to understand anticipated future employment requirements by types of jobs, as well as the anticipated off -site supply and support service requirements that are likely generated by the projected expansion and the proximity requirements and geographic linkages, if any. For example, will additional or new suppliers be required to service the headquarters needs and are there specific site location requirements? Will. off -site hotel accommodations be required to accommodate the anticipated visitor population and if so, what would be the likely demand for room nights? 1.5 Present the results of the understanding of existing conditions at a Task Force meeting in the form of text and graphics. The presentation will include information on existing demographics and future demographic trends for both communities with specific correlation to their relationship to the Medtronic development and opportunities that it may pose. Deliverables: • Base maps of the project area compiled by GIS consultant • Summary of existing conditions and project influences 2.0 Determine /verify city directions... At this stage in the process, HKGi will begin to involve the communities in determining or verifying desired community directions. We will work with the TAC and Task Force to create an appropriate process for participation in workshops, a process likely to be structured in a manner that presents "break out" sessions for each community and a general session with combined representation. Workshop One will allow participants direct input. The workshop will use a variety of techniques to discuss issues and desires for the character and direction appropriate for each community. It will be used as a forum to critique existing goals, policies, directions and identity Hoisington Koegler Group Inc. ©® page 9 elements found in existing comprehensive plans and other statements of public policy. At this stage, participants will be providing a foundation that will help shape eventual priorities and implementation recommendations. Participants will also gain insight into the issues and opportunities that the communities will face as a result of the Medtronic expansion. Ultimately, this part of the process will result in a statement of direction and identity for both communities. These will be used as tools to direct the analysis and recommendations process. Specific tasks include: 2.1 Work with the TAC to advertise the workshop and to invite participants. 2.2 Conduct Workshop One with interested business interests and residents and summarize the results. 2.3 Meet individually with key stakeholders to gain confidential insight into plans and concerns. Key stakeholders will be identified with the assistance of the TAC and are likely to include property owners, business owners, neighborhood activists, civic leaders and others.'teetings with up to 12 key stakeholders are included in this task. 2.4 Meet with the TAC to review input and clarify issues. 2.5 Draft a statement of direction and desired image for review by the TAC and Task Force. Deliverables: • Summary of Workshop One, including statements of community direction and desired image • Summary of meetings with key stakeholders 3.0 Analyze what it means... Analyzing the impacts of Medtronic will require a thorough understanding of Columbia Heights and Fridley's economic profiles, recent trends, development potential, infrastructure and potential future land use patterns. The land use and infrastructure components of the analysis will need to focus on possible future uses and their specific physical site requirements and required regulatory frameworks. Hoisington Koegler Group Inc. ©® page 10 The economic and development components of the analysis will require an understanding of the underlying market conditions that drive, constrain or otherwise shape the rate and character of community economic growth. The foundations of this analysis involve: (1) the community's demographic trends and characteristics, which define the community's labor force and its market for goods and services; (2) the community's economic base, which influences its growth prospects and its demand for commercial goods and services; and (3) the community's quality of life amenities and overall character, which influence its ability to attract new residents and businesses. 3.1 Assess economic conditions including market trends and demographic analysis. Initial steps in this task will involve reviews of existing literature and interviews with key figures such as public officials, real estate brokers, developers, property managers, etc. Bonz/REA will then focus on demographic data provided through the communities by Demographic Technologies, Inc., employment and industry data, and other data relating to real estate market conditions. Specific areas for examination include without limitation: • Population and population growth/change • Work force profiles • Employment tr =ds and projections, by industry sector • Historical niches in Twin Cities metropolitan area • Fiscal /tax structures • Infrastructure and amenities • Other business advantages and disadvantages • Perceptions and images • Real estate development trends • Real estate market conditions (lease rates, tenant profiles, vacancy rates, etc.) • Key differences between Fridley and Columbia Heights These analyses will provide a basis for evaluating the potential impact and opportunities likely to arise from Medtronic's ex- pansion. 3.2 Conduct case studies. The purpose of this task is to gain insight from the experiences of other major developments, expansions, or relocations involving 3,000 or more new employees in comparable industry groups. Bonz/REA will identify communities similar to Fridley and/or Columbia Heights that have faced comparable situations. Such case studies Hoisington Koegler Group Inc. ©® page ! ! will be drawn from metropolitan areas throughout the nation as well as from the Twin Cities. After selecting communities with relevant comparable experiences, Bonz(REA will conduct research and analysis to identify the key direct and indirect impacts, issues, and public measures that contributed to subsequent economic development successes or failures. 3.3 Assess development impacts and areas of economic potential. Based on the analyses identified in tasks 3.1 and 3.2, Bonz/ REA will set forth the likely direct and indirect impacts of the Medtronic expansion. Many of these impacts will be potential impacts, contingent upon anticipated events and/or public measures. Accordingly, the impact analysis will not seek to forecast precise impacts;.but will identify areas of potential and the likely contingencies associated with each. Specific types of impacts and potential will involve new busi- nesses and employment, new commercial development poten- tial, new residential development patterns and potential, fiscal issues, etc. Among its specific tasks, Bonz/REA will: • Forecast growth trends with and without Medtronic expansion; • Identify key. influences (commuter rail, new improvement - amenities) affecting various growth scenarios; • Identify opportunities for new businesses involved linked with Medtronic (suppliers, service providers, clientele), and the preferred site characteristics for these types of businesses; • Forecast opportunities for various types of residential development, and identify likely home buyer profiles and targeted forms and locations for development; • Forecast likely opportunities for new commercial and industrial development opportunities. Such opportunities may involve lodging facilities and new types retail and office tenants. The BonzIREA forecasts will identify likely tenant profiles, preferred site characteristics and other key issues; • Identify likely constraints to various types of desirable growth. 3.4 Assemble future use profiles. Task 3.3 will result in the identification of a number of new businesses and housing types that may result from the construction of the new Hoisington Koegler Group Inc. ©B page 1 2 Medtronic facility. This task will define a "profile" for each of these uses identifying required site characteristics such as site size, appropriate access, visibility, etc. The profiles will also examine the physical characteristics of such uses and determine their compatibility with existing zoning and land use regulations for both communities. Where potential uses do not fit within existing regulatory frameworks, required modifications will be noted. Additionally, strategies and standards to prevent incompatible or undesirable land uses will be identified. 3.5 Assess transportation impacts of future development potentials. Examine transportation issues resulting from possible future development with a focus on roadways, walkways, bikeways and transit. Transit impact.will include both bus transit and the proposed Northstar Commuter Rail Line that has a station stop in the city of Fridley. 3.6 Analyze potential image enhancements. Based on the direction established in work task 2, assess future potential uses in terms of their ability to support desired community directions and images. 3.7 Analyze the general fiscal impacts of the Medtronic facility and potential "spin -off' developments. Examine the relationship between the development of Medtronic and related facilities and general impacts on community services. Impacts will focus on maintenance and public safety costs including law enforcement and fire protection services. 3.8 Present the project analysis results at a Task Force meeting in the form of text and graphics. Deliverables: • A "synopsis" report containing documentation of the analysis component of the project 4.0 Establish priorities and define an implementation framework... Columbia Heights and Fridley have stated that the recommendations that are derived from this effort should be general in nature and not site - specific land use recommendations. General recommendations, however, will need to be prioritized. Furthermore, if both communities are going to gain a working tool from this effort, an implementation framework needs to be defined to provide direction for follow -up activities. This element of the work will clearly identify the opportunities, ©© priorities and goals that will drive the implementation strategy. Hoisington Koegler Group Inc. ©® Page /3 Recommendations will be stipulated in five -year increments over a 20. year planning horizon. This task will also include public Workshop Two, which will be used as a forum to present the findings of the effort to the general public and to solicit their ideas and input. Information to be presented will include the results of the established direction, the analysis phase, and preliminary implementation strategies. Tasks associated with priorities and implementation include: 4.1 Establish recommended redevelopment priorities. Based on the outcome of the market analysis, the determined direction and desired images, the HKGi team will formulate recommended redevelopment priorities. Priorities will be categorized into five - year segments for implementation. 4.2 Formulate an implementation strategy. This task sets forth the basic plan for Fridley and Columbia Heights in seeking to maximize the opportunities arising from the Medtronic expansion. Our analysis will focus on development assets and constraints and the necessary measures required to optimize the communities' respective — and joint — positions. Strategic measures may include recommendations for: • New infrastructure and public improvements; • Regulatory changes; • Tax provisions; • New or revised organizational structures; • Marketing initiatives; • Intergovernmental agreements, public /private ventures; and • Other such measures. 4.3 Meet with the Task Force and TAC to review recommended priorities and implementation strategies. Revise based upon input received. 4.4 Conduct public Workshop Two to present information to the general public and to solicit further input. 4.5 Meet with the Task Force and TAC to review the results of Workshop Two and Tasks 3 and 4. 4.6 Prepare 50 bound, color copies of the final report. Deliverables: Summary of Workshop Two Final Report Hoisington Koegler Group Inc. ©IN page 1 4 Staff Involvement HKGi is aware of the current workloads of both Fridley and Columbia Heights' staff members. Accordingly, the work program identified in this proposal does not assume any major staff involvement. Required staff participation will focus on assembly and coordination of information to be supplied by the GIS consultants. With the approval of city staff, HKGi can also work directly with both PlanSight and Digital Technologies, Inc. to coordinate required data. Value Added Services The basic work program included in this proposal is focused on using a set of specific assumptions and sound methodologies to create an analysis for the cities of Columbia Heights and Fridley that can be used for future redevelopment planning. The outcome of this process may also serve as a foundation for more detailed future efforts that may follow. Accordingly, this proposal is comprehensive and does not contain a long list of value added services. The one area where value added services may be warranted involves the fiscal impact analysis. Fiscal impact analyses can involve a wide range of assumptions and efforts. The basic services portion of this work program is focused on providing the cities with a general assessment of fiscal impacts of various redevelopment scenarios. 'As the project progresses, it may be appropriate to examine whether an additional assessment of fiscal impacts is warranted. If it is determined to be appropriate, the HKGi team will work with both communities to define a scope for such an effort and to determine resultins costs. Hoisington Koegler Group Inc. ©B Page 1 5 v Basic Services Fee Based on the work program contained in this proposal, the Hoisington Koegler Group Project Team will complete the basic services portion of the Medtronic analysis for a total fee not to exceed $54,500.00. A breakdown of fee by major work category follows: Task 1.0 Understanding Existing Conditions $14,000.00 Task 2.0 DetermineNerify City Directions 6,000.00 Task 3.0 Analyze What it Means 19,500.00 Task 4.0 Establish Priorities and Define an Implementation Framework 15.000.00 TOTAL $54,500.00 Note: Fees for tasks identified above include all relevant expenses. Value Added Services Should the need for value added services occur during the project, a scope of work will be defined and a fee proposal will be assembled and submitted to the cities of Columbia Heights and Fridley ti Project Rnandals Hoisington Koegler Group Inc. ©® PQSe /6 Hoisington Koegler Group, Inc. 2000 Hourly Rates Senior Professional $90- 135/hr Principal $80 -95/hr Professional II $60 -75/hr Professional I $45 -55/hr Technical $35 -50/hr Secretarial $401hr Testimony $150/hr Reimbursable Expenses Mileage $0.32/mile Photocopying $0.15 /pg Outside Printing Actual Cost Diazo Printing Actual Cost Draft Plots $5.00 /ea Vellum Plots $10.00 /ea Color Plots $20.00 /ea Bonz / REA, Inc. Billing Rates Richard E. Bonz, CRE $200/hr Richard A. Paik, Senior Associate $100/hr Associates $60 -85/hr Research Staff $30 -50/hr Average blended billing rate for typical consulting assignments $100 to $125 per hour Ehlers & Associates Rusty Fifield $125/hr Hoisington Koegler Group Inc. Hourly Rates n K page 7 HOUSING AND REDEVELOPMENT AUTHORITY Memorandum DATE: September 1, 2000 TO: William W. Burns, Executive Director of HRA FROM: Barbara Dacy, Community Development Director Grant Fernelius, Housing Coordinator SUBJECT: Consider Term Sheet for Development Agreement with Real Estate Equities for Gateway East Redevelopment Project. On August 24th staff met with Keith Jans and Terry Troy from Real Estate Equities regarding the business terms for a development contract for the Gateway East project. Based on those discussions, Jim Casserly's office has prepared a term sheet which outlines the significant issues. The goal for Thursday evening is to review the terms with the HRA and get their feedback. We are not asking the HRA to approve a development contract; instead we are simply asking for concurrence on the major issues which will shape the agreement. We also need to get the developer's feedback on the term sheet, which we should have by September 7th . Ideally, we would like to finalize the terms in the next few weeks and then come back to the October HRA meeting with a development contract. The term sheet is fairly self - explanatory, however there are a couple of issues worth noting: Authority Assistance The developer has made it clear that $545,000 of additional assistance is required from the Authority. The term sheet stipulates that the HRA's assistance would be used to cover the public /site improvements (or at least a large percentage). The funds would be placed in escrow and disbursed as the work is completed. 2. Revenue Participation At our meeting with the developer, staff emphasized the importance of trying to re -coup a portion of the HRH's investment. In concept, the developer agreed to share in the "up- side" should they be able to sell the units for more than the projected sales price. The term sheet specifies that the Authority would receive 70% of the first $140,000 in revenues above the base sales price; 60% of the next $140,000 and 50% of any amounts over the above threshold. 5 Memo Regarding Gateway East Term Sheet September 1, 2000 Page 2 Jim Casserly has prepared a cover memo which provides more background information on the revenue sharing proposal. Recommendation Staff recommends that the Authority approve the term sheet which outlines the major provisions of development contract with Real Estate Equities. A draft development contract will be prepared for the October meeting. M -00 -145 .09/01/00 FRI 09:48 FAX 812 885 5889 HRASS MONROE 0002 a KRASS MONROE, P.A. ATTORNEYS AT LAW ■ James R Casserly EmaB j coin wwwjOassmameacom DftaDbf (612) 8851296 MEMORANDUM To: City of Fridley Attn: Barbara Dacy, Community Development Director Attn: Grant Femelius, Housing Coordinator From: James R. Casserly, Esq. Clarissa M. Klug, Esq. Date: September 1, 2000 Re: Term Sheet for Contract for Private Redevelopment - Fridley HRA and Real Estate Equities Our File No. 9571 -30 The attached Term Sheet is reasonably straight forward: The HRA will provide a clean buildable site to the Redeveloper who will construct twenty -eight (28) for sale townhome units. There are two issues that are in the process of being resolved: 1. The Redeveloper has provided an approximate cost for each unit which assumes a quality of materials. If those qualities are upgraded, then the costs will increase. The Authority wants the highest possible quality at a minimum cost. Because of the location of these units, their density, style, quality and the necessary infrastructure and landscaping improvements, the Authority is being asked to invest approximately $545,000.00 (approximately $19,500.00 per unit). Again, the Authority's goal is to secure as high a quality unit as possible with a level of assistance no greater than already anticipated, that is, $545,000.00; 2. Assuming there is an agreed upon quality for the units, is there an opportunity for the Authority to recover some of its investment? The Term Sheet suggests a formula in which the Authority would recover a percentage of the sales price over and above actual costs which, in the formula, cannot exceed $3,781,000.00. SUITE 1100 SOUTHPOWT OFFICE CENTER • 1650 WEST 82ND STREET • BLOOMINGTON, MINNESOTA 55431 -1447 TELEPHONE 6120"999 • FACSIMILE 61M W5969 08/01/00. FRI 08:47 FAX 812 $85 5988 K ASS MONROE 0 003 The suggestion is to have the Authority share in seventy percent (70 %) of the first $140,000.00 in excess of that amount, sixty percent (60 %) of the next $140,000.00 and filly percent (50 %) of any amount thereafter. Efforts are ongoing to resolve these issues, and we anticipate a satisfactory resolution within a matter of days so that a Redevelopment Contract can be prepared for the Authority's review. J RC /CMKftrg Attachment G- MMATA1F NDLEYI'i0WROAV FERNELUJS 7DM .,. e Page 2 KRASS MONROE, P.A. ATTORNEYS AT LAW 0 James R Casserly Ematijarnesc@krassmonroe.com www.hraswnonroe.com Direct Dial (952) 885.1296 MEMORANDUM To: City of Fridley Attn: Grant Femelius, Housing Director Attn: Barbara Dacy, Community Development Director Real Estate Equities Development Company Attn: Keith Jans, Vice President Attn: Terrence Troy, Chairman From: James R. Casserly, Esq. Clarissa M. Klug, Esq. Date: September 1, 2000 Re: Business Terms for a Contract for Private Redevelopment Between the Housing and Redevelopment Authority in and for the City of Fridley, Minnesota and Real Estate Equities Development Company Our File No. 9571 -30 Representatives of the Housing and Redevelopment Authority in and for the City of Fridley (the "Authority") and Real Estate Equities Development Company (the "Redeveloper") and ourselves have been reviewing business terms for a Contract for Private Redevelopment between the Redeveloper and the Authority. (the "Agreement"). The business terms under discussion include the following: 1. MINIMUM IMPROVEMENTS. The Redeveloper is to construct 28 for - sale townhome units (the "Minimum Improvements ") on property located near the comer of 57th Avenue, NE and University Avenue, NE, Fridley, Minnesota (the "Property "). A Site Plan for these improvements is attached as Exhibit A. Construction will be according to plans approved by the Authority. The units will have tuck under garages and decks. Each unit's private entry will have a porch and landscaping. Additional details of construction materials SUITE 1100 SOUTHPOINT OFFICE CENTER • 1650 WEST 82ND STREET • BLOOMINGTON, MINNESOTA 55431.1447 TELEPHONE 61ZB85 -5999 . FACSIMILE 6121885.5969 and fixtures are outlined in the attached Exhibit B. Subject to further review and cost analysis by the parties are the upgrades listed on the attached Exhibit C. 2. TIMING. The construction of the Minimum Improvements will begin on or before April 1, 2001 and will conclude no later than December 31, 2002. 3. PURCHASE PRICE and CLOSING. The Authority will sell the Property to the Redeveloper for one dollar. Closing will take place on or before April 1, 2001. Before closing, the Authority will remove all buildings from the Property and provide the environmental remediation necessary for the construction of the Minimum Improvements. The Redeveloper will thereafter accept the Property in an "as is" condition. Title will transfer by quit claim deed. 4. PUBLIC IMPROVEMENTS and SITE IMPROVEMENTS. The Redeveloper will pay for and construct the public improvements and site improvements listed on the attached Exhibit D. 5. TITLE. The Authority will pay for a title commitment. Any title insurance and /or endorsements requested by the Redeveloper will be paid for by the Redeveloper. At closing the Authority will provide the Redeveloper with evidence of marketable title. 6. SURVEY. The Authority will provide the Redeveloper with a boundary line survey of the Property. 7. TAXES and SPECIAL ASSESSMENTS. The Authority will pay all special assessments pending or levied at closing. Taxes will be prorated between the parties at closing. 8. AUTHORITY ASSISTANCE. The Authority will assist with site preparation and public improvements by depositing $545,000 into an escrow account to be held for disbursement according to an escrow agreement between the parties. The escrow agreement will at a minimum provide: (A) That the Redeveloper will be entitled to draws from the account for reimbursement for the costs of specified site improvements and public improvements; (B) That the Redeveloper will support each draw request with at least a sworn construction statement and lien waivers; (C) That no funds can be disbursed unless the draw request is approved in writing by a designated representative of the Authority; • Page 2 (D) That any undisbursed funds and all accrued interest will be returned to the Authority at the termination of the escrow account. 9. REVENUE PARTICIPATION. The Authority will share in the amount of the collective sale price of the Minimum Improvements which exceeds the actual end costs of the Redeveloper, including the cost of a reasonable development fee as outlined in the Redeveloper's pro forma attached as Exhibit E, after adjusting for all disbursements to the Redeveloper from the escrow account. The adjusted amount shall not exceed $3,780,000 (the 'Base Revenues "). The Authority's participation shall be determined as follows: (A) 70% of the first $140,000 in excess of the Base Revenues; plus (B) 60% of the next $140,000; plus (C) 50% thereafter. The Redeveloper will deposit into a separate escrow account the Authority's estimated share, if any, of the revenues of the sale of each individual unit comprising the Minimum Improvements. The funds in this account will be disbursed according to the terms of this escrow agreement which will provide at a minimum: (i) that an accounting of actual end costs and profits will be conducted after the sale of 24 of the 28 units on the Property; (ii) that the Authority will receive a disbursement based upon this accounting; (iii) that the Authority will receive a final disbursement based upon a second accounting after the sale of the last unit on the Property; and (iv) for the return of any undisbursed funds and all accrued interest to the Redeveloper at the termination of the account. 10. MISCELLANEOUS ISSUES. The Redeveloper will pay for all plats, replats, lot splits, subdivisions, preparation of restrictive covenants, easements, reciprocal easements, and any other documentation necessary for the acquisition, construction, leasing and sale of the Minimum Improvements. Please contact us as soon as possible and let us know if the terms outlined above are acceptable so we can start the preparation of the Contract. JMC /CMK/trg Encl. \ NPDCkWPDATAT+- MDLEY\30%COR'DACY FERNEWS CMK ZDOC • Page 3 F 13 M A ", j 09/01/00 FRI 09:48 FAX 812 885 5989 BRASS MONROE X008 EXHIBIT B :(S `''9" ' .:ri' al�`W._: ! y:: {Frd"^,"' �n+''f• i 4�t:;�_ ,.:h � .L S..`�' w5. 1v: 4• • �• z- ;LLQr�strEictron�Wla elata @'.y+ ••f• Z.•. ��? 91: w' it;. !.rtA'c.'t "_af3+.:Yiq.{'v.4.`.. MANUFACTURER PRODUCT STYLE 1 NAME Plumbing fixtures -Facets • Delta #400 - Water Heater A.O Smith FSGH -40 Appliances Frigidaire Floor covering - Carpet Shaw SP129 - Vinyl- Armstrong Initiator Paint Sherwin- Williams Latex semi -gloss Kitchen cabinetry Mid Continent Box frame Interior doors DoorCraft Oak flush panel Light fixtures Progress Furnace Carrier 58MXA- 080 -12 Millwork Metro Millwork Oak RI Ol''FEAU RES''�„�: Windows Cullar Silvedine Roofing Materials Certain Teed XT25 Siding Certain Teed Triple 3 (044"thick) Exterior doors Crawford Foamcore II Garage doors Overhead Door Co. Flush Steal 1. Exterior brick banding on lower level of unit 2. Concrete driveway 3. Pella windows 4. High efficiency furnace G:\ WPDATA\F\FRIDLEY\30\DOC\EXHIBIT C TO 9-1- MEMO.DOC I Exhibit D Gateway East Redevelopment Project Tree Removal $ 3,750.00 Grading /Excavation $ 60,000.00 Class 5 Agg. Base $ 21,000.00 Curb & Gutter $ 26,100.00 Sidewalk $ 29,800.00 Bituminous $ 36,400.00 Storm Sewer Pipe $ 24,000.00 Storm Sewer Structures $ 14,400.00 Watermain $ 23,750.00 Water Services $ 17,500.00 Hydrants $ 13,200.00 Fittings and Gate Valves $ 5,000.00 Sanitary Sewer $ 24,000.00 Sanitary Sewer Services $ 26,430.00 Sanitary Sewer Manhole $ 17,500.00 Lights, Conduit, Wiring $ 16,000.00 Transformer $ 8,000.00 Striping $ 1,000.00 Traffic Control Signage $ 4,000.00 Utility Relocation n/a Sub -Total $ 371,830.00 Contigency $ 55,774.50 Sub -Total $ 427,604.50 Landscaping Improvements Sod $ 12,000.00 Shrubs $ 9,030.00 Overstory Trees $ 17,750.00 Evergreen Trees $ 9,900.00 Ornamental Trees $ 6,125.00 Ornamental Railing $ 83,400.00 Mulch $ 6,000.00 Irrigation $ 15,000.00 Edging, Fertilizer, Peat Moss $ 5,000.00 Sub -Total $164,205.00 Contigency $ 24,630.75 Sub -Total $188,835.75 Total $ 616,440.25 09/01/00 FRI 09:49 FAX 812 885 5969 HRASS MONROE E3aMIT L GATEWAY EAST Pro Forma Analysis For Sale Units NPV of Tax Increment - 25 Years 487,339 Gateway East Pro Forma 21ds Prepared by Kress Monroe, PA On REAL ESTATE EQUITIES UNITS Average Units Per Unit Revenues - For Sale Units A Product A 3 125,000 $378,000 10.0% B Product 13 9 129,000 1,161,000 30.71/6 C Product C 6 137,000 822,000 21.7% D Product D 10 142,000 1,420,000 37.6°A Total Revenues 28 135,036 3.781,000 100.0% Hard Costs GMP Contract (Construction Cost) 90,984 2,547,560 57.4% Architectural 4,643 130,000 3.4% Surrey & Engineering 1,293 36,200 1.0°% Land (purchase from City) 0 0 0.0% Land Costs (taxes. Ins, soils, mtg tax, eta) 1,233 34,524 0.9% Contingency (pub. Imp & landscaping) 2,872 80,405 2.1% City Subsidies / Reimbursements 0 0.0% Tree Removal 134 3,750 0.1% Site Grading 2,143 60,000 1.6% Public improvements 11.003 308,080 8.1% Fencing (adj. to Valvoline & Townhomes) 2,979 • 83,400 2.2 °A Additional Landscaping /screening 2,888 80,805 2.1% Total Hard Costs 120,169 3,364,724 89.0°% Gross Margin 14,867 416,278 11.0% Expenses Soft Costs Financing & Legal 2,170 60,750 1.6% Contingency 2,071 58,000 1.5% Advertising & Marketing 4,071 114,000 3.0°% Other carrying costs 1,130 31,632 0.8% Title & pro-rated taxes 1.189 33,300 0.9% Interest expense 4,264 119,398 3.2% Project Overhead 5,000 140,000 3.7% Developer Fee 51000 140,000 3.7% Brokerage 9,460, 264,500 7.0% Total Expenses 34,346 961.680 25.4% Additional Public Assistance Needed (19,479) (545,404) - 14.4°% 0 Amount paid for Land from City 0 Net Public Assistance Needed NPV of Tax Increment - 25 Years 487,339 Gateway East Pro Forma 21ds Prepared by Kress Monroe, PA On .r.aT HOUSING AND REDEVELOPMENT AUTHORITY Memorandum Date: September 1, 2000 To: William W. Bums, Executive Director From: Barbara Dacy, Community Development Director Subject: Authorize Construction of "Welcome to Fridley" Sign BACKGROUND The City formed a 50th Anniversary Committee the latter part of 1998 to coordinate several City activities through 1999 to celebrate the city's heritage. One of the recommendations of the committee was to create "community identification signs" at each of the major entrances of the City on TH 65, TH 47, and East River Road. In general, there has been community wide concern about the image and appearance of major thoroughfares. A fund raising campaign was completed and 8 service organizations have contributed a total of $48,000 toward the signs. Property locations have been secured; the signs are now under construction and should be installed yet this fall. Proposal During the year 2000 HRA budget discussion staff included a $4,000 expenditure for a "Welcome to Fridley" sign similar to the signs proposed for construction by the 50th Anniversary Committee. The budget amount was a rough estimate. Since that time, the sign contractor who was awarded the job has provided a quote for the exact costs. The sign would be located at the intersection of Mississippi Street and University Avenue, just behind the limestone wall in the out lot still owned by the HRA in Christenson Crossing. The sign would not have the additional "badges" of the community organizations, but would merely state Welcome to Fridley. Two wood posts would support the sign. Electrical service would be routed to the area to back light the sign and to illuminate it from the front. The estimate from the sign contractor is $5,730. The estimate on the electrical work and electricity is currently underway, and an update will be provided at the meeting. Expenditures would be charged to TIF #1. The out lot area will eventually be conveyed to the homeowner's association. An easement will need to be retained by the City to complete future maintenance work on the sign. This would be retained at the time the out lot is conveyed. RECOMMENDATION Staff recommends the Authority approve the construction of the Welcome to Fridley sign for the amount quoted by Redwood Signs, and follow through with the necessary arrangements for the installation at the southwest comer of University Avenue and Mississippi Street. M -00 -143 4 Rug 21 00 11:04a I Quote RYAN COMPRNY 7634241135 p.l �- S I G N S To: Barbara Dacy Company: City of Fridley Dade: 8/18/00 Re: Welcome Sign From: Tony Melton Tele: 763.424.7887 Pax: 763.424.1135 Pages: 1 Barbara, Thanks for the opportunity to submit this quote. Please feel free to call me with any questions or concerns regarding this quote. Description: QtY (1) - Welcome To The City Of Fridley- entrance sign, located on the SW comer of University and Mississippi. Approximately 2- thick x 60- tall x 120` wide, single sided, sandcarved, clear vertical grain, kiln -dried, cedar or redwood. Designs to duplicate final approved artwork, for signs currently being produced by Redwood Signs for the City of Fridley. Includes qty (2) 6- 4-xe' posts painted to match and prepared to accept sign. QtY (1) Signs & (2) Posts (price includes installation delivery and tau) $5,730.00 Tens: 12 down with order; balance due an cornpletion, no re Production: Our ccurent production schedule is approximately three weeks of acoeplance of artwork However wre will make Pricing; effort to woe yam schedule, Sales Subjed to w�tlidrawal or change 60 days from date of proposal. Installation: Ap �W slide sales tatt aPP�; esa�ides local taxes. assumes uniform so0, d ftkM will, power equipnwk posts set irdo compacted soa. Additional charges may incur for hand digging, removal of hidden obstrucftm, Exclusions: No deductions for 6tscaance, �. rods or other unforeseen cand�lons. Unless deductions for s bonding, taxes, etc., allowed unless agreed to In writing prior to award of contract. specified. price does not include delivery, installation, or nwessery permits. R Sign Accepted by: City of Fridley Q • L I -�t; Ton ton Barbara Dacy 108 WEST BROADWAY, OSSEO, MN 55369 (763) 424.7887 FAX (763) 424 -1135 1- 800 - 274.7446 FRIDLEY HRA 2000 BUDGET 1999 BUDGET 2000 BUDGET 4330 Leisch soc. uad Testing 2,000 4350 ISD Payments ,0 4530 Plaza Tree Replacement pp Welcome to Fridley Sign at Christianson Crossing 4,000 tal 14,500 TIF 2 - MOORE LAKE DETAILED TIF INFO 10,500 4 ments 78,000 78,000 4rrection- Penk 8 Peterson 250,000 - y East Acquisitions alvoline lot 65,000 - forfeit lot 35,000 - total \Paw 350,0 - 4 Paw ,000 's Fumi a 00,000 amily A isition 200,000 y E ast Dupl 120,000 - total 745,000 - TIF 3 - NORTH AREA 452 452 4350 ISD Payments "` 25,000 25,000 4330 Casserly -Krass Monroe 7,000 7,000 Brigg & Morgan 3,000 3,000 tot 10,000 10,000 4510 Pay Go - Paschke 6,242 12,500 Onan/Murphy Warehou 870,000 - Maynard Nielsen 350,000 - total 1,226,242 12,500 4520 Single Family uisitions 00,000 - 4725 Debt Tran rs To City 73 00 736,000 TIF 6 -JFAKE POINTE 45k 455 4330 C edy (Krass Monroe) 60,000 10,000 433 lectricity for Irrigation 500 - Water Usage 1,000 - total 1,500 - 4340 Lawn Maintenance 15,000 5,000 10 (4,:r � HOUSING AND REDEVELOPMENT AUTHORITY Memorandum DATE: September 1, 2000 TO: William W. Bums, Executive Director of HRA FROM: Barbara Dacy, Community Development Director Grant Femelius, Housing Coordinator SUBJECT: Conduct Public Hearing and Consider Development Contract with Scott Olmstead Builders for 530 Hugo Street Staff has received a proposal from Scott Olmstead to build a home on the vacant lot at 530 Hugo Street. This site was acquired by the HRA in 1995 and has remained vacant since that time. In the last two years we have received two proposals to construct homes on the site, but unfortunately both of those deals have failed for reasons that will be discussed in this memo. On Thursday evening the HRA will need to take three separate actions. First, it will need to conduct a public hearing to review the proposed sale to Mr. Olmstead. Second, after the public hearing is closed, the HRA will then need to award the sale of the property to Olmstead, subject to the terms of a redevelopment agreement. Third, the development agreement will also need to be approved that same evening. The purpose of this memo to describe the project and outline the approvals that will be required by the HRA. Action #1: Conduct Public Public Hearing Staff recommends that the HRA take following steps with regard to the public hearing: 1. Chair entertains motion to open public hearing. 2. Motion and second to open public hearing. 3. Chair opens public hearing. 4. Staff presentation. 5. Chair entertains questions from HRA and public. 6. Chair entertains motion to close public hearing. 7. Motion and second to close public hearing. 8. Chair closes public hearing. Builder's Proposal Scott Olmstead Builders of Coon Rapids is proposing to construct a 1,265 square foot home. The house will be a split entry design and have a two car attached garage. The main level will have 3 bedrooms, 2 bathrooms, a living room, a dining room and a kitchen. The lower level will be unfinished, but could be converted into two additional bedrooms, plus a family room. The estimated sales price of the home is $152,930 (including the price of the lot $31,000). Staff has indicated to the builder that several changes are recommended for the house in order to make it more compatible with the surrounding neighborhood and meet the design guidelines of the program. In essence, the changes involve 1) moving the garage back to help minimize '7 530 Hugo Sheet Memo September 1, 2000 Page 2 the garage door dominance 2) adding a small porch detail to the front entry and 3) adding several windows to the side elevation to help minimize the blank wall mass. In terms of the split entry design, staff believes that it is acceptable given the fact that our geo- technical analysis as indicated that a high water table will limit the ability to build a basement. The only option would be a split -entry design with daylight windows or slab -on -grade construction with two stories. Given the limited options, a split entry design is appropriate in this situation. The builder does have a purchase agreement with a buyer who still needs to approve the changes recommended by staff. We are still negotiating with the builder and the buyer on the changes and will update the Authority at the meeting on September 7th Action #2: Award Sale of Property Assuming that the house plans are acceptable, the HRA will need to award the sale of the property to the builder. This action can be done by simple motion. Recommendation: Staff recommends that the Authority award the sale of 530 Hugo St. to Scott Olmstead Builders, subject to execution of a Contract for Private Redevelopment. Action #3: Authorize Execution of Development Contract Attached is a draft of the Contract for Private Redevelopment by and between. the Authority and Scott Olmstead Builders. This agreement is identical to the other contracts the Authority executed on sites such as 5857 Main Street (Alliance Home Builders) and 1545 75th Avenue (Sussel Corp.). Terms of Aareement The builder will pay $31,000 in cash for the property at closing. The HRA will not carry any financing on the land. The builder will construct a home with a minimum value of $125,000 (the price includes both the building and land). As a practical matter, this should not be a problem since the home will have a sales price of $152,000. The developer must construct the home according to the plan approved by the HRA, which will be attached as an exhibit to the final development agreement. The date of closing, start of construction, and completion dates have been left blank in the draft agreement and still have to be negotiated. Generally, our practice has been to convey title within 60 days of execution of the development contract. The construction usually must be started within 30 days of closing and the builder has 120 days to complete the home. The agreement also contains standard language with regard to insurance requirements and an indemnification clause protecting the Authority damage, misconduct or negligence during the project. The agreement does have a right of reverter clause which allows the Authority to revest title in the property should the developer default and be unable to complete the project. Recommendation: Staff recommends that the Authority authorize execution of a Contract for Private Redevelopment with Scott Olmstead Builders for construction of a home at 530 Hugo St. M -00 -148 4 Ar I r A /OF, It IHK AMA: ;;:=I a,'.. --- --------- 5Sa i•{�go 44 clw�ell u N `Zic-jtT E�--Lev,,fl-.TlO 7f - - -�-�o ye � r�' � v1c�7a� cuJE SSG ". %S"44- ctwft4� EXECUTION: SEPTEMBER—, 2000 CONTRACT FOR PRIVATE REDEVELOPMENT By and Between HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF FRIDLEY, MINNESOTA And SCOTT OLMSTEAD BUILDERS, INC. This document was drafted by: Krass Monroe, P.A. Suite 1100 Southpoint Office Center 1650 West 82nd Street Minneapolis, MN 55431 Clarissa M. Klug, Esq. N CONTRACT FOR PRIVATE REDEVELOPMENT THIS AGREEMENT, made as of the day of by and between the Housing and Redevelopment Authority in and for the City of Fridley, Minnesota (the "Authority "), a public body corporate and politic organized under the laws of the State of Minnesota and Scott Olmstead Builders, Inc., a corporation organized under the laws of the State of Minnesota (the "Redeveloper "). WITNESSETH: WHEREAS, the Board of Commissioners (the "Board ") of the Authority has determined that there is a need for development and redevelopment within the corporate limits of the City to provide employment opportunities, to provide adequate housing in the City, including low and moderate income housing and housing for the elderly, to improve the tax base and to improve the general economy of the City and the State of Minnesota; WHEREAS, in furtherance of these objectives, the Authority has established, pursuant to Minnesota Statutes, Sections 469.001 et seq. (the "Act "), the redevelopment plan known as the Modified Redevelopment Plan for its Redevelopment Project No. 1 (the "Project Area ") which plan, as amended, and as it may be amended, is hereinafter referred to as the "Redevelopment Plan" in the City to encourage and provide maximum opportunity for private development and redevelopment of certain property in the City which is not now in its highest and best use; WHEREAS, in order to achieve the objectives of the Redevelopment Plan and particularly to make specified land in the Project Area and in the Authority's area of operation available for development by private enterprise for and in accordance with the Redevelopment Plan, the Authority has determined to provide substantial aid and assistance to finance public development costs in the Project Area and in the Authority's area of operation; and WHEREAS, the Authority believes that the development and redevelopment of the Project Area pursuant to this Agreement, and fulfillment generally of the terms of this Agreement, are in the vital and best interests of the Authority and the health, safety, morals and welfare of its residents, and in accord with the public purposes and provisions of applicable federal, state and local laws under which the development and redevelopment are being undertaken and assisted; NOW, THEREFORE, in consideration of the premises and the mutual obligations of the parties hereto, each of them does hereby covenant and agree with the other as follows: 3 ARTICLE I Definitions Section 1.1. Definitions. In this Agreement, unless a different meaning clearly appears from the context: "Act" means Minnesota Statutes, Sections 469.001, et seq. "Agreement" means this Agreement, as the same may be from time to time modified, amended, or supplemented. "Authority" means the Housing and Redevelopment Authority in and for the City of Fridley, Minnesota. "Certificate of Completion" means the certification, in the form of the certificate contained in Schedule C attached to and made a part of this Agreement, provided to the Redeveloper, pursuant to Section 4.3 of this Agreement. "City" means the City of Fridley, Minnesota, or its successors or assigns. "Construction Plans" means the plans, specifications, drawings and related documents for the construction of the Minimum Improvements which are required by the City for the issuance of its buildin4 permit and conform to the Housing Design and Site Development Criteria. "County" means the County of Anoka, Minnesota. "Date of Closing" means the date or dates set forth in Section 3.1(b). "Event of Default" means an action by the Redeveloper described in Section 7.1 of this Agreement. "Homeowner" means a person(s) who purchases the Project from the Redeveloper. "Housing Design and Site Development Criteria" mean the criteria and standards described in the Authority's publication titled "Fridley Housing Replacement Program: A Pattern Book for New Homes." "Minimum Improvements" means the improvements to be constructed by the Redeveloper on the Redevelopment Property as specified in the Construction Plans approved by the Authority. 2 "Mortgage" means any mortgage or security agreement in which the Redeveloper has granted a security interest in the Redevelopment Property, or any portion thereof, or any improvements constructed thereon, and which is a permitted encumbrance pursuant to the provisions of Article VIII. "Party" means a party to this Agreement. "Permitted Encumbrances" means those encumbrances as defined in Section 8.7 of this Agreement. "Project" means the Redevelopment Property and the Minimum Improvements. "Purchase Price" means the sum of $31,000.00. "Redeveloper" means Scott Olmstead Builders, Inc. "Redevelopment Plan" means the Modified Redevelopment Plan adopted by the Authority in connection with its Redevelopment Project No. 1. "Redevelopment Property" means the real property upon which the Minimum Improvements are to be constructed, which real property is described on Schedule A of this Agreement. "Redevelopment Property Deed" means a quit claim deed, substantially in the form of the deed in Schedule B of this Agreement, used to convey the Redevelopment Property from the Authority to the Redeveloper. "Sales Price" means an amount equal to or greater than $125,000.00 and which is to be used on the certificate of real estate value when the Project is conveyed to the Homeowner. "State" means the State of Minnesota. "Unavoidable Delays" means delays which are the direct result of strikes or shortages of material; delays which are the direct result of casualties to the Minimum Improvements, the Redevelopment Property or the equipment used to construct the Minimum Improvements or; delays which are the direct result of governmental actions (except that the City may not create an Unavoidable Delay by virtue of its own action); delays which are the direct result of judicial action commenced by third parties; delays which are the direct result of citizen opposition or action affecting this Agreement or adverse weather conditions or acts of God. 3 ARTICLE II Representations and Warranties Section 2.1. Representations by the Authority. The Authority represents and warrants that: (a) The Authority is a public body duly organized and existing under the laws of the State. Under the provisions of the Act, the Authority has the power to enter into this Agreement and carry out its obligations hereunder. (b) The Authority will, in a timely manner, subject to all notification requirements, review and act upon all submittals and applications of the Redeveloper and will cooperate with the efforts of the Redeveloper to secure the granting of any permit, license, or other approval required to allow the construction of the Minimum Improvements; provided, however, that nothing contained in this Section 2.1(b) shall be construed to limit in any way the reasonable and legitimate exercise of the Authority's discretion considering any submittal or application. (c) The Authority makes no representation, guarantee, or warranty, either express or implied, and hereby assumes no responsibility or liability as to the Redevelopment Property or its condition (regarding soils, pollutants, hazardous wastes or otherwise). Section 2.2. Representations and Warranties by the Redeveloper. The Redeveloper represents and warrants that: (a) The Redeveloper will purchase the Redevelopment Property from the Authority pursuant to Article III hereof and in the event the Redevelopment Property is conveyed to the Redeveloper, then the Redeveloper will construct the Minimum Improvements in accordance with the terms of this Agreement, the Redevelopment Program and all local, state and federal laws and regulations (including, but not limited to, environmental, zoning, building code and public health laws and regulations). (b) The Redeveloper is Scott Olmstead Builders, Inc., a corporation organized under the laws of the State of Minnesota, is authorized to transact business in the State, has duly authorized the execution of this Agreement and the performance of its obligations hereunder. (c) The financing arrangements which the Redeveloper has obtained or will obtain to finance construction of the Minimum Improvements will be sufficient to enable the Redeveloper to successfully complete the Minimum Improvements as contemplated in this Agreement. 4 (d) The Redeveloper shall prepare the Construction Plans and construct the Minimum Improvements in accordance with the Housing Design and Site Development Criteria. (e) The Redeveloper shall have the Construction Plans prepared by an architectural designer or an architect. (f) The Redeveloper shall sell the Project to the Homeowner for the Sales Price. ARTICLE III Conveyance of Property Section 3.1. Conveyance of the Redevelopment Property. (a) Title. The Authority shall, subject to the Permitted Encumbrances, convey marketable title to and possession of the Redevelopment Property to the Redeveloper under a quit claim deed in the form of the Redevelopment Property Deed contained in Schedule B of this Agreement. The conveyance of title to the Redevelopment Property pursuant to the Redevelopment Property Deed and the Redeveloper's use of the Redevelopment Property shall be subject to all of the conditions, covenants, restrictions and limitations imposed by this Agreement and the Redevelopment Property Deed. The Authority agrees to obtain and shall deliver to the Redeveloper a commitment for an owner's title insurance policy (ALTA Form 1992 Rev.) issued by a title insurance company acceptable to the Authority and the Redeveloper, naming the Redeveloper as the proposed owner- insured of the Redevelopment Property in the amount of the Purchase Price (the "Commitment "). The Commitment shall have a current date as its effective date and shall, subject to the Permitted Encumbrances, commit to insure marketable title in the Redeveloper, free and clear of all mechanics' lien claims, questions of survey, unrecorded interests, rights of parties in possession or other general exceptions. The Commitment shall set forth all levied real estate and special assessments. Said commitment shall have attached copies of all instruments of record which create any easements or restrictions which are referred to in its schedule B. The Redeveloper will be allowed 20 days after receipt of the Commitment to make an examination thereof and to make any objections to the marketability of the title to Redevelopment Property, said objections to be made by written notice or to be deemed waived. No objection shall be made to the Permitted Encumbrances. If the title to the Redevelopment Property, as evidenced by the Commitment, together with any appropriate endorsements, is not good and marketable of record in the City and is not made so by the Date of Closing, Redeveloper may either: 9 0 (i) Terminate this Agreement by giving written notice to the Authority in which event this Agreement shall become null and void and neither party shall have any further rights or obligations hereunder; or (ii) Elect to accept the title in its marketable condition by giving written notice to the Authority, in which event the Redeveloper may hold back adequate funds from the portion of the Purchase Price payable at the closing to cure the defects and apply said holdback funds of the cost of curing such defects, including attorneys' fees, and pay the unexpended balance to the Authority. (If the amount of said holdback cannot be mutually agreed to by the Authority and the Redeveloper, the issuer of the Commitment shall determine the amount of said holdback.) (b) Time of Conveyance. The Authority shall execute and deliver to the Redeveloper the Redevelopment Property Deed for the Redevelopment Property on , 20 — or on such date as the Authority and the Redeveloper shall mutually agree in writing (the "Date of Closing "). The Redeveloper shall take possession of the Redevelopment Property on the Date of Closing. (c) Price and Payment. The Authority agrees to sell and the Redeveloper agrees to purchase the Redevelopment Property for the Purchase Price. Unless otherwise mutually agreed by the Authority and the Redeveloper, the execution and delivery of all closing documents and the payment of the Purchase Price shall be made at the principal offices of the Authority. The Purchase Price to be paid by the Redeveloper for the conveyance of the Redevelopment Property from the Authority to the Redeveloper shall be paid in cleared funds. The Redevelopment Property Deed shall be in recordable form and shall be promptly recorded. The Redeveloper shallVay all costs for such recording. (d) Taxes and Special Assessments. Real estate taxes due and payable prior to the year of closing shall be paid by the Authority. Real estate taxes due and payable in the year of closing shall be prorated as of the Date of Closing based upon the parties' respective period of ownership in the year of closing. Real estate taxes due and payable in the years subsequent to the closing shall be paid by the Redeveloper. On or prior to the Date of Closing, the Authority shall pay all pending or levied special assessments. (e) Survev. The Authority will not provide a survey. (f) Inspection. At the Redeveloper's expense, the Redeveloper, its agents and designees, are hereby granted the right at any time or times after the date hereof to inspect, analyze, and test the Redevelopment Property. The Redeveloper shall hold the Authority and the City harmless from any liability resulting solely from the entering upon the Redevelopment Property or the performing of any of the tests or inspections referred to in this Section by the Redeveloper, its agents or designees. N a Section 3.2. Conditions Precedent to Conveyance. The obligations of the Authority to convey the Redevelopment Property to the Redeveloper shall be subject to the following conditions precedent: (a) On the Date of Closing, the Redeveloper shall be in material compliance with all of the terms and provisions of this Agreement; (b) The Redeveloper shall have provided evidence satisfactory to the Authority that the Redeveloper is capable of financing or has obtained financing or a commitment for financing sufficient to finance the construction of the Minimum Improvements for the Redevelopment Property. The Redeveloper will be deemed to have provided adequate evidence of such financial commitment and ability if the Redeveloper provides evidence satisfactory to the Authority of a mortgage commitment; (c) The Authority and the City shall have approved the Construction Plans. (d) The Redeveloper shall have received the appropriate permits for the construction of the Minimum Improvements; (e) The Redeveloper shall have paid the Purchase Price. (f) The Redeveloper shall provide documents showing that it has a binding legal commitment for the resale of the Project to the Homeowner for the Sales Price. ARTICLE IV Construction of Minimum Improvements Section 4.1. Construction of Minimum Improvements. The Redeveloper agrees that it will construct the Minimum Improvements on the Redevelopment Property in accordance with this Agreement, the Housing Design and Site Development Criteria and the Construction Plans approved by the City and the Authority and will maintain, preserve and keep the Minimum Improvements or cause the Minimum Improvements to remain in good repair and condition until sale of the Project to the Homeowner. Subject to Unavoidable Delays, the Redeveloper shall commence construction of the Minimum Improvements on or before ,20 Section 4.2. Completion of Construction. (a) Subject to Unavoidable Delays, the Redeveloper shall have substantially completed the construction of the Minimum Improvements by , 20 . All work with respect to the Minimum Improvements to be constructed or provided by the Redeveloper on the 7 e Redevelopment Property shall be in conformity with the Construction Plans as submitted by the Redeveloper and approved by the City and the Authority. (b) The Redeveloper agrees for itself, its successors and assigns, and every successor in interest to the Redevelopment Property, or any part thereof, and the Redevelopment Property Deed shall reference the covenants contained in this Section 4.2 and in Section 7.3 of this Agreement, that the Redeveloper, and its successors and assigns, shall promptly begin and diligently prosecute to completion the redevelopment of the Redevelopment Property through the construction of the Minimum Improvements thereon, and that such construction shall in any event be completed within the period specified in this Section 4.2. Section 4.3. Certificate of Completion. (a) Promptly after completion of the Minimum Improvements in accordance with the provisions of this Agreement relating to the obligations of the Redeveloper to construct such improvements (including the date for completion thereof), the Authority will furnish the Redeveloper with a Certificate of Completion. The Certificate of Completion shall be a conclusive determination and conclusive evidence of the satisfaction and termination of the agreements and covenants in this Agreement and in the Redevelopment Property Deed with respect to the obligations of the Redeveloper, and its successors and assigns, to construct the Minimum Improvements and the date for the completion thereof. (b) If the Authority shall refuse or fail to provide the Certificate of Completion in accordance with the provisions of this Section 4.3 the Authority shall, within twenty (20) days after written request by the Redeveloper, provide the Redeveloper with a written statement, indicating in adequate detail in what respects the Redeveloper has failed to complete the Minimum Improvements in accordance with the provisions of this Agreement, or is otherwise in default, and what measures or acts will be necessary, in the opinion of the Authority, for the Redeveloper to take or perform in order to obtain a Certificate of Completion. (c) The construction of the Minimum Improvements shall be deemed to be completed when the City has issued its Certificate of Completion. ARTICLE V Real Pro ee!U Taxes and Insurance Section 5.1. Real Property Taxes. Prior to the Authority issuing its Certificate of Completion, the Redeveloper shall pay when due, prior to the attachment of penalty, all real property taxes payable with respect to the Redevelopment Property in the years subsequent to the delivery of the Redevelopment Property Deed. D3 N Section 5.2. Insurance. (a) The Redeveloper will provide and maintain at all times during the process of constructing the Minimum Improvements and, from time to time at the request of the Authority, furnish the Authority with proof of payment of premiums on: (i) builder's risk insurance, written on the so- called "Builder's Risk -- Completed Value Basis," in an amount equal to one hundred percent (100 %) of the insurable value of the Minimum Improvements at the date of completion, and with coverage available in nonreporting form on the so- called "all risk" form of policy. The interest of the Authority shall be protected in accordance with a clause in form and content reasonably satisfactory to the Authority; (ii) comprehensive general liability insurance together with an Owner's Contractor's Policy with limits against bodily injury and property damage of not less than $2,000,000 for each occurrence (to accomplish the above - required limits, an umbrella excess liability policy may be used); and (iii) workers' compensation insurance, with statutory coverage. (b) All insurance required in this Article V shall be taken out and maintained in responsible insurance companies selected by the Redeveloper which are authorized under the laws of the State to assume the risks covered thereby. The Redeveloper will deposit annually with the Authority policies evidencing all such insurance, or a certificate or certificates or binders of the respect vie insurers stating that such insurance is in force and effect. Unless otherwise provided in this Article V each policy shall contain a provision that the insurer shall not cancel nor modify it without giving written notice to the Redeveloper and the Authority at least thirty (30) days before the cancellation or modification becomes effective. ARTICLE VI Prohibitions Against Assignment and Transfer; Indemnification Section 6.1. Representation as to Redevelopment. The Redeveloper represents and agrees that its purchase of the Redevelopment Property, and its other undertakings pursuant to this Agreement, are, and will be used, for the purpose of redevelopment of the Redevelopment Property and not for speculation in land holding. The Redeveloper further recognizes that, in view of (a) the importance of the redevelopment of the Redevelopment Property to the general welfare of the Authority; (b) the substantial financing and other public aids that have been made available by the Authority for the purpose of making such redevelopment possible; and (c) the fact that any act or transaction involving or resulting in a significant change in the identity of the parties in control of the Redeveloper or the degree of their control is for practical purposes a transfer or disposition of the property then owned by the Redeveloper, the qualifications and identity of the Redeveloper are 9 N of particular concern to the Authority. The Redeveloper further recognizes that it is because of such qualifications and identity that the Authority is entering into this Agreement with the Redeveloper, and, in so doing, is further willing to accept and rely on the obligations of the Redeveloper for the faithful performance of all undertakings and covenants hereby by it to be performed. Section 6.2. Prohibition Against Transfer of Property and Assignment of Agreement. Also, for the foregoing reasons the Redeveloper represents and agrees that prior to the earlier of the issuance of the Certificate of Completion or the termination of this Agreement, the Redeveloper shall comply with the following: Except for the purpose of obtaining financing necessary to enable the Redeveloper or any successor in interest to the Redevelopment Property, or any part thereof, to perform its obligations with respect to constructing the Minimum Improvements under this Agreement, and any other purpose authorized by this Agreement, the Redeveloper has not made or created and will not make or create or suffer to be made or created any total or partial sale, assignment, conveyance, lease, or any trust or power, or transfer in any other mode or form of or with respect to this Agreement or the Redevelopment Property or any part thereof or any interest therein, or any contract or agreement to do any of the same, without the prior written approval of the Authority. Notwithstanding the foregoing, the Redeveloper may transfer the Redevelopment Property to the Homeowner. Section 6.3. Release and Indemnification Covenants. (a) The Redeveloper covenants and agrees that the City and the Authority and the governing body members, officers, agents, servants and employees thereof shall not be liable for and agrees to indemnify and hold harmless the City and the Authority and the governing body members, officers, agents, servants and employees thereof against any loss or damage to property or any injury to or death of any person occurring at or about or resulting from any defect in the Minimum Improvements, except for any loss resulting from negligent, willful or wanton misconduct of any such parties, and provided that the claim therefore is based upon the acts of the Redeveloper or of others acting on the behalf or under the direction or control of the Redeveloper. (b) Except for any negligent or willful misrepresentation or any negligent, willful or wanton misconduct of the following named parties, the Redeveloper agrees to protect and defend the City, the Authority and the governing body members, officers, agents, servants and employees thereof, now and forever, and further agrees to hold the aforesaid harmless from any claim, demand, suit, action or other proceeding whatsoever by any person or entity whatsoever arising or purportedly arising from this Agreement or the transactions contemplated hereby or the acquisition, construction, installation, ownership, and operation of the Minimum Improvements, except for the use of eminent domain if exercised by the Authority to acquire the Redevelopment Property, and provided that the claim therefore is based upon the acts of the Redeveloper or of others acting on the behalf or under the direction or control of the Redeveloper. 10 (c) The City and the Authority and the governing body members, officers, agents, servants and employees thereof shall not be liable for any damage or injury to the persons or property of the Redeveloper or its officers, agents, servants or employees or any other person who may be about the Redevelopment Property or the Minimum Improvements due to any act of negligence of any person, other than the negligence and misconduct of the City or the Authority employees or those employed or engaged by the City or the Authority. (d) All covenants, stipulations, promises, agreements and obligations of the Authority contained herein shall be deemed to be the covenants, stipulations, promises, agreements and obligations of the Authority and not of any governing body member, officer, agent, servant or employee of the Authority in the individual capacity thereof. (e) Nothing in this Section or this Agreement is intended to waive any municipal liability limitations contained in Minnesota Statutes, particularly Chapter 466. ARTICLE VII Events of Default Section 7.1. Events of Default Defined. Subject to Unavoidable Delays, the following shall be 'Events of Default" under this Agreement and the term "Event of Default" shall mean, whenever it is used in this Agreement (unless the context otherwise provides), any one or more of the following events: (a) Failure by the Redeveloper to pay when due all real property taxes assessed against the Redevelopment Property. (b) Failure by the Redeveloper to commence or complete construction of the Minimum Improvements pursuant to the terms, conditions and limitations of Article IV of this Agreement. (c) Failure by the Redeveloper to substantially observe or perform any covenant, condition, obligation or agreement on its part to be observed or performed hereunder. (d) The Redeveloper shall: (i) file any petition in bankruptcy or for any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under the United States Bankruptcy Code or under any similar federal or state law; or (ii) make an assignment for the benefit of its creditors; or 11 due; or (iii) admit in writing its inability to pay its debts generally as they become (iv) be adjudicated as. bankrupt or insolvent; or if a petition or answer proposing the adjudication of the Redeveloper as a bankrupt or its reorganization under any present or future federal bankruptcy act or any similar federal or state law shall be filed in any court and such petition or answer shall not be discharged or denied within ninety (90) days after the filing thereof; or a receiver, trustee or liquidator of the Redeveloper or of the Redevelopment Property, or part thereof, shall be appointed in any proceeding brought against the Redeveloper and shall not be discharged within ninety (90) days after such appointment, or if the Redeveloper shall consent to or acquiesce in such appointment. Section 7.2. Remedies on Default. Whenever any Event of Default referred to in Section 7.1 of this Agreement occurs, the Authority may take any one or more of the following actions after providing thirty days' written notice to the Redeveloper of the Event of Default, but only if the Event of Default has not been cured within said thirty days, or if the Event of Default is by its nature incurable within said thirty day period, and the Redeveloper fails to provide the Authority with written assurances, deemed satisfactory in the reasonable discretion of the Authority, that the Event of Default will be cured as soon as reasonably possible: (a) Suspend its performance under this Agreement until it receives assurances from the Redeveloper, deemed adequate by the Authority, that the Redeveloper will cure its default and continue its performance under this Agreement. (b) Terminate this Agreement. (c) Withhold the Certificate of Completion. (d) Take whatever action, including legal, equitable or administrative action, which may appear necessary or desirable to the Authority, including any actions to collect any payments due under this Agreement, or to enforce performance and observance of any obligation, agreement, or covenant of the Redeveloper under this Agreement. Section 7.3. Revesting Title in the Authority Upon Happening of Event Subsequent to Conveyance to the Redeveloper. In the event that subsequent to conveyance of the Redevelopment Property to the Redeveloper and prior to the receipt by the Redeveloper of the Certificate of Completion: (a) subject to Unavoidable Delays, the Redeveloper fails to carry out its obligations with respect to the construction of the Minimum Improvements (including the nature and the date for the commencement and completion thereof), or abandons or substantially suspends construction work, and any such failure, abandonment, or suspension shall not be cured, ended, remedied or 12 assurances reasonably satisfactory to the Authority made within thirty (30) days after written demand from the Authority to the Redeveloper to do so; or (b) the Redeveloper fails to pay real estate taxes or assessments on the Redevelopment Property or any part thereof when due, or creates, suffers, assumes, or agrees to any encumbrance or lien on the Redevelopment Property which is unauthorized by this Agreement or shall suffer any levy or attachment to be made, or any materialmen's or mechanic's lien, or any other unauthorized encumbrance or lien to attach, and such taxes or assessments shall not have been paid, or the encumbrance or lien removed or discharged or provision reasonably satisfactory to the Authority made for such payment, removal, or discharge, within thirty (30) days after written demand by the Authority to do so; provided, that if the Redeveloper shall first notify the Authority of its intention to do so, it may in good faith contest any mechanic's or other lien filed or established and in such event the Authority shall permit such mechanic's or other lien to remain undischarged and unsatisfied during the period of such contest and any appeal, but only if the Redeveloper provides the Authority with a bank letter of credit or other security in the amount of the lien, in a form satisfactory to the Authority pursuant to which the bank or other obligor will pay to the Authority the amount of any lien in the event that the lien is finally determined to be valid. During the course of such contest the Redeveloper shall keep the Authority informed respecting the status of such defense; or (c) there is, in violation of this Agreement, any transfer of the Redevelopment Property or any part thereof, or any change in the ownership or distribution thereof of the Redeveloper, or with respect to the identity of the parties in control of the Redeveloper or the degree thereof, and such violation shall not be cured within thirty (30) days after written demand by the Authority to the Redeveloper; Then the Authority shall have the right to re -enter and take possession of the Redevelopment Property and to terminate (and revest in the Authority) the estate conveyed by the Redevelopment Property Deed to the Redeveloper, it being the intent of this provision, together with other provisions of the Agreement, that the conveyance of the Redevelopment Property to the Redeveloper shall be made upon, and that the Redevelopment Property Deed shall contain a condition subsequent to the effect that in the event of any default on the part of the Redeveloper and failure on the part of the Redeveloper to remedy, end, or abrogate such default within the period and in the manner stated in such subdivisions, the Authority at its option may declare a termination in favor of the Authority of the title, and of all the rights and interests in and to the Redevelopment Property conveyed to the Redeveloper, and that such title and all rights and interests of the Redeveloper, and any assigns or successors in interest to and in the Redevelopment Property, shall revert to the Authority, but only if the events stated in Section 7.3(a) -(c) have not been cured within the time periods provided above. Notwithstanding anything to the contrary contained in this Section 7.3, the Authority shall have no right to re -enter or retake title to and possession of any part of the Redevelopment Property for which a Certificate of Completion has been issued. 13 I Section 7.4. Resale of Reacquired Property; Disposition of Proceeds. Upon the revesting in the Authority of title to any parcel of the Redevelopment Property or any part thereof as provided in Section 7.3, the Authority shall have no further responsibility to the Redeveloper hereunder with respect to that or any subsequent parcel and may sell or otherwise devote said parcels to such other uses as the Authority shall in its sole discretion determine, without reimbursement of any sums paid by the Redeveloper to the Authority under this Agreement. Section 7.5. No Remedy Exclusive. No remedy herein conferred upon or reserved to the Authority or, the Redeveloper is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement or now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. In order to entitle the Authority or the Redeveloper to exercise any remedy reserved to it, it shall not be necessary to give notice, other than such notice as may be required in this Article VII. Section 7.6. No Additional Waiver Implied by One Waiver. In the event any agreement contained in this Agreement should be breached by either party and thereafter waived by the other party, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other concurrent, previous or subsequent breach hereunder. Section 7.7. Agreement to Pay Attorney's Fees and Expenses. Whenever any Event of Default occurs and the City or the Authority shall employ attorneys or incur other expenses for the collection of payments due or to become due or for the enforcement or performance or observance of any obligation or agreement on the part of the Redeveloper under this Agreement, the Redeveloper agrees that it shall, within ten (10) days of written demand by the Authority, pay to the Authority the reasonable fees of such attorneys and such other expenses so incurred by the Authority. ARTICLE VIII Mortgage Financing Section 8.1. Limitation Upon Encumbrances of Property. Prior to the substantial completion of the Minimum Improvements, as certified by the Authority, neither the Redeveloper nor any successor in interest to the Redevelopment Property or any part thereof shall engage in any financing or any other transaction creating any mortgage or other encumbrance or lien upon the Redevelopment Property, other than the Permitted Encumbrances, whether by express agreement or operation of law, or suffer any encumbrance or lien to be made on or attach to the Redevelopment Property, other than Permitted Encumbrances, except: 14 (a) For the purposes of obtaining funds only to the extent necessary for financing of the Minimum Improvements including, but not limited to, labor and materials, equipment, professional fees, real estate taxes, construction interest, organizational and other indirect costs of development, costs of constructing the Minimum Improvements, an allowance for contingencies, acquisition cost of the Redevelopment Property, costs of originating the Mortgage and customary financing costs. (b) Only upon the prior written approval of the Authority in accordance with Sections 8.1 and 8.2. The Authority shall not approve any Mortgage which does not contain terms that conform to the terms of Section 8.5, except as provided in Section 8.6 of this Agreement. Section 8.2 Approval of Mortgage. The Authority shall approve a Mortgage if: (a) The Authority first receives a copy of all Mortgage documents. (b) The Mortgage loans, together with other funds available to the Redeveloper, will, in the reasonable judgment of the Authority, be sufficient to acquire the Redevelopment Property, to pay for the Site Improvements and to construct the Minimum Improvements. (c) The Authority is not entitled under Section 7.2 to exercise any of the remedies set forth therein as a result of an Event of Default. (d) The Autliority determines that the terms of the Mortgage conform to the terms of Section 8.5. However, the approval of a Mortgage by the Authority shall not be unreasonably withheld. Any Mortgage which is subordinated to the rights of the Authority under this Agreement may be granted in all or any part of the Redevelopment Property without the approval of the Authority. Section 8.3 Notice of Default; Copy to Mortgagee. Whenever the Authority shall deliver any notice or demand to the Redeveloper with respect to any breach or default by the Redeveloper in its obligations or covenants under this Agreement, the Authority shall at the same time forward a copy of such notice or demand to each holder of any Mortgage authorized by this Agreement at the last address of such holder shown in the records of the Authority. Section 8.4 Mortgagee's Option to Cure Defaults. After any breach or default referred to in Section 8.3, each such holder of a Mortgage shall (insofar as the rights of the Authority are concerned) have the right, at its option, to cure or remedy such breach or default (or such breach or default to the extent that it relates to the part of the Redevelopment Property covered by its Mortgage) and to add the cost thereof to the Mortgage debt and the lien of its Mortgage; provided, however, that if the breach or default is with respect to construction of the 15 N Minimum Improvements, nothing contained in this Section or any other Section of this Agreement shall be deemed to require such holder, either before or after foreclosure or action in lieu thereof, to undertake or continue the construction or completion of the Minimum Improvements, provided that any such holder of the Mortgage shall not devote the Redevelopment Property to a use inconsistent with the Redevelopment Plan or this Agreement without the written consent of the Authority. Section 8.5 Authority's Option to Cure Default on Mortgage. Any Mortgage, unless such requirement is waived by the Authority, executed by the Redeveloper with respect to the Redevelopment Property or any improvements thereon shall provide that, in the event that the Redeveloper is in default under any Mortgage authorized pursuant to this Article VIII, the holder of the mortgage shall notify the Authority in writing of: (a) The fact of the default. (b) The elements of the default. (c) The actions required to cure the default. If the default is an "Event of Default" under such Mortgage, which shall entitle such holder to foreclose upon the Redevelopment Property, the Minimum Improvements or any portion thereof, and any applicable grace periods have expired, the Authority shall have, and each Mortgage executed by the Redeveloper with respect to the Redevelopment Property or any improvements thereon shall provide that the Authority shall have such an opportunity to cure the "Event of Default" within such reasonable time period as such holder shall deem appropriate. Section 8.6 Subordination and Modification for the Benefit of Mortgagees. In order to facilitate the obtaining of financing for the construction of the Minimum Improvements, the Authority agrees that it shall agree to any reasonable modification of this Article VIII or waiver of its rights hereunder to accommodate the- interests of a holder of a Mortgage, provided, however, that the Authority determines, in its reasonable judgment, that any such modification(s) will adequately protect the legitimate interest and security of the Authority with respect to the Redevelopment Property. Section 8.7 Permitted Encumbrances. The following shall be permitted encumbrances on the title to the Redevelopment Property: (a) Such encumbrances as are mutually agreed to in writing by the Authority and the Redeveloper. (b) Governmental regulations, if any, affecting the use and occupancy of the Redevelopment Property and the Minimum Improvements. It (c) Zoning laws of the City, County and State. (d) All rights in public highways upon the land. (e) Reservations to the State, in trust for the tax districts concerned, of minerals and mineral rights in those portions of the Redevelopment Property the title to which may have at any time heretofore been forfeited to the State for nonpayment of real estate taxes. (f) The lien of unpaid special assessments, if any, not presently payable but to be paid as a part of the annual taxes to become due. (g) The lien of unpaid real estate taxes, if any, not presently payable but to be paid as a part of the annual taxes to become due. (h) A Mortgage q permitted under Section 8.2 ARTICLE IX Additional Provisions Section 9.1. Conflict of Interest: Authority Representatives Not Individually Liable. No member, official, or employee of the Authority shall have any personal interest, direct or indirect, in this Agreement, nor shall any such member, official, or employee participate in any decision relating to this Agreement which affects his or her personal interests or the interests of any corporation, partnership, or association in which he or she is, directly or indirectly, interested. No member, official, or employee of the Authority shall be personally liable to the Redeveloper, or any successor in interest, in the event of any default or breach by the Authority or for any amount which may become due to the Redeveloper or successor or on any obligations under the terms of this Agreement, except in the case of willful misconduct. Section 9.2. Equal Employment Opportunity. The Redeveloper, for itself and its successors and assigns, agrees that during the construction of the Minimum Improvements provided for in this Agreement that it will comply with all applicable equal employment opportunity and non - discrimination laws, ordinances and regulations. Section 9.3. Provisions Not Merged With Deed. None of the provisions of this Agreement are intended to or shall be merged by reason of any deed transferring any interest in the Redevelopment Property and any such deed shall not be deemed to affect or impair the provisions and covenants of this Agreement. Section 9.4. Titles of Articles and Sections. Any titles of the several parts, articles, and sections of this Agreement are inserted for convenience of reference only and shall be disregarded in construing or interpreting any of its provisions. 17 I Section 9.5. Notices and Demands. Except as otherwise expressly provided in this Agreement, a notice, demand, or other communication under this Agreement by either party to the other shall be sufficiently given or delivered if it is (1) dispatched by registered or certified mail, postage prepaid, return receipt requested, (2) transmitted by facsimile, (3) delivered by a recognized overnight courier or (4) delivered personally; and (a) in the case of the Redeveloper, is addressed to or delivered personally to the Redeveloper at 10734 Hanson Blvd., NW, Coon Rapids, Minnesota 55433, Attention: Scott Olmstead; (b) in the case of the Authority, is addressed to or delivered personally to the Housing and Redevelopment Authority in and for the City of Fridley at 6431 University Avenue N.E., Fridley, Minnesota, 55432, Attention: City M 18