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HRA 10/25/2007 - 6212October 25, 2007 HRA Meeting Regular Meeting'Agenda 7.30 p.m. City Hall, Council Chambers Call to order ' - 3 --poWrc Roll call (J 6- LC S C3 � � � �� � v-� s e- Action Items l'� S 1. Approval of expenditures A,-D 2. Approval of Commitment to Fund Portion of Northstar Project P 6 3. Approval of Resolution to seek reimbursement for Northstar expenditures (will e- mail next week) Informational Items z ,-T. City Comprehensive Plan Update Adjournment q-, C) P�I:YNIAsA- HAMy Documents\HRA\2007 HRA Agendas\10- 25 -07 -hra agenda.docHAMy Documents\HRA\2007 HRA Agendas \10- 25 -07 -hra agenda.doc ri ACTION ITEM HRA MEETING OF OCTOBER 25, 2007 CITY OF FRIDLEY Date: October 17, 2007 To: William Burns, City Manager From: Paul Bolin, Asst. Executive HRA Director Scott Hickok, Community Development Director Subject: Northstar Rail Tunnel Fundinq Update For the past several months City Staff, HRA Staff, Anoka County Staff, NCDA Staff, Met Council Staff and the HRA Attorneys have worked to answer the many questions regarding the funding of Fridley's Northstar Station. While much progress has been made, there are still many questions to be answered. The collective group, mentioned above, has pursued a number of potential scenarios to fund the Fridley Station. Each new scenario generates more questions to be answered and puts us ever closer to the November 1, 2007 deadline for making a funding commitment to BNSF Railway Company ( "BNSF „) for the installation of the tunnel. Because the group is examining a scenario proposed just yesterday by the Anoka County Rail Authority staff, this memo will not end in a recommendation. The collective group has conference calls scheduled over the next few days to work out details and be able to bring forward a recommendation at the HRA's meeting next Thursday. A recommendation on how to proceed, along with additional information, will be e- mailed to all Commissioners and made available to the public no later than next Tuesday. The purpose of this memo is to summarize the most recent scenarios and discussions that have taken place on this issue. Much of the information below is taken directly from a draft memo crafted by Krass & Monroe and provides background on how the HRA has arrived to this point. Rather than refer you to other memos, I will simply cut and paste when appropriate and try to provide proper credit to the author. Agreements Executed to Date The following three "umbrella agreements” have been executed, which set the stage for creation of Northstar: (1) Purchase and Sale of Easement Agreement — executed in March 2007 between BNSF and the State of Minnesota. This provides for the acquisition by the State from BNSF of easements for Northstar in a series of five (5) closings, the first of which occurred in May 2007. The agreement provides for stations in Minneapolis, Fridley, Coon Rapids, Anoka, Elk River and Big Lake. (2) Joint Use Agreement (JUA) — executed in May 2007 between BNSF and the Metropolitan Council ( "Met Council "). The JUA governs train schedules, permitted use of tracks and insurance and indemnity. requirements. Northstar service is expected to commence on November 1, 2009. (3) Commuter Service Agreement (CSA) — executed in May 2007 between BNSF and Met Council. It has a 10 -year term and provides that MNSF will operate and crew the trains. The "umbrella agreements" contemplate that the following agreements will be executed for each Northstar Station: (a) Platform Agreements for each station between BNSF and MetCouncil. They will provide for 100 -year long -term leases allowing cities to build stations. MetCouncil has executed all of them except Fridley's. (b) Overpass Construction and Easement Agreements between BNSF and the State or its designee for stations requiring access over the railroad (Minneapolis and Coon Rapids only). Provide for a long -term easement and allow construction and operations over the railroad. (c) Underpass (Tunnel) Construction and Easement Agreements between BNSF and the State or its designee for stations requiring access under the railroad (Fridley only). Provide for a long -term easement and allow construction and operations under the railroad. (d) Track Agreements — allow tracks to be built over the railroad where necessary (not applicable for Fridley). Thus, for Fridley, the agreements referred to in subparagraphs (a) and (c) above (the "Fridley Agreements ") will need to be executed. Agreements for the other Northstar cities have already been executed. The Fridley Master Agreement was executed on May 31, 2007 between BNSF and the State because the "Fridley Agreements" could not be executed within the time parameters that the other cities' agreements were. The Fridley Master Agreement provides for a timetable and preconditions for the Fridley Agreements to be executed which will be discussed below. The State is seeking to get the Full Funding Grant Agreement ( "FFGA ") executed, which will provide the federal funding dollars for Northstar. It does not include Fridley at this time. It is expected to be executed in mid - December 2007. As will be discussed further below, while the "umbrella agreements" contemplate the addition of a Fridley station, there are certain actions Fridley may take prior to execution of the FFGA — and some actions (according to Met Council Staff) it probably cannot until the FFGA is signed — without endangering execution of the FFGA and thus funding of the Northstar line in general. Importance of November 1, 2007 Fridley is the only station which requires construction of a tunnel below the tracks. In order to keep the tunnel construction from disrupting rail operations, the Fridley Master Agreement requires either that (1) The Underpass (Tunnel) Construction Agreement ( "UCK) be executed by November 1, 2007, or (2) Met Council or other designee of the State must contract with BNSF to ensure that tunnel and station construction will not interfere with rail service. Option (2) would allow construction of the tunnel at a later date but would be at a substantially higher cost and on a timetable that would be dictated by BNSF. Consequently, the first option, namely, execution of the UCA by November 1, 2007, is desirable. The Fridley Master Agreement does allow for completion of the Fridley station in two phases: (1) construction of the tunnel "shell ", which is a basic tunnel structure of a 1 0x1 0 box culvert under 5 tracks, and (2) finishing of the tunnel and construction of the platform, elevators, station, access, parking and amenities. Scenarios to Fund and Complete Fridley Station Most of the scenarios reviewed reflect the reality that, while the HRA will own no interest in the station, it will need to take a leading role in initially financing the project. While there is of course the option to not commit any funding, to not have the tunnel installed and to wait for NCDA to find other funding sources for the station, it is likely that Fridley will not get a station unless a commitment is made at this time. The City of Coon Rapids is already looking for funding to construct a 2nd station (Foley) and the City of Ramsey is pressuring to become a station after investing millions in a parking structure near their desired location. If Fridley chooses to not move forward and make an investment, it is highly likely that the City would also lose out in future rounds of funding. Scenario I — Bond Issue /MetCouncil Lease This scenario came to the forefront just a few short weeks ago after learning of a similar scenario to increase parking at the light rail transit station in Bloomington. In a meeting with Met Council's Mark Fuhrmann, he explained how the Met Council worked with Bloomington's Port Authority (BPA) to triple the size of the Hiawatha Line's 28th Street parking ramp, a $21M project. The BPA issued lease revenue bonds and the Met Council dedicated a portion of their Federal Transit money to cover a lease payment of $5M / year. The bonds will be paid off within 5 years and Met Council will then buy the ramp for $1. A leaseback option would be ideal in Fridley. NCDA staff are very supportive of the idea, and initially Met Council Staff was supportive. The "higher -ups" within the Met Council ARE NOT supportive of this idea. The Met Council does not want to set a precedent for funding transit through such an arrangement. Additionally, the Met Council & NCDA won't begin any formal discussions with the HRA until they get the federal Full Funding Grant Agreement (FFGA) in place. Until the FFGA is fully in place (early December) neither the Met Council nor NCDA can engage in formal talks to make Fridley part of the 1St round of construction, as it may further delay the FFGA. According to Mark Fuhrmann, Met Council's transit specialist, `In short, the FTA grant is firmly based on an arcane calculation called the Cost Effective Index which is largely driven by travel time saved by Northstar passengers vis -a -vis if they were driving a 'car. The inclusion of Fridley Station in this federal calculation adversely impacts the cost effectiveness because the trains must stop at Fridley, thus adding travel time for the thousands of Northstar passengers going through Fridley every AM and PM. We cannot give the feds at this 11th hour of securing the FFGA ANY reason for them to delay execution of the Northstar FFGA with any inkling of Fridley becoming a reality concurrent with the rest of Northstar." Early on Tuesday morning, I was sent a press release from the NCDA office stating that "The Northstar Commuter Rail Project's application for a Full Funding Grant Agreement (FFGA) has entered the last stretch of the federal approval process in Washington. The FFGA package has received approval from the U.S. Department of Transportation and the Office of Management and Budget, and it will now begin a 60 -day review with Congress. The agreement will secure approximately $156.8 million of federal funding for construction and trains." The following steps describe how the shell tunnel construction could be completed ( "Phase I "): • Obtain an "understanding in principle" from Met Council staff that the Met Council supports the overall financing structure for Phase I and Phase II (completion of the tunnel, station platform, access and other amenities), since definitive agreements must wait until the FFGA is signed. • HRA passes a resolution authorizing the expenditure of approximately $1.5 to 2.0 million to construct the tunnel shell and acquire construction easements and which also would express the HRA's intent to reimburse itself through a future bond issue. • Verify execution of Underpass (Tunnel) Construction Agreement ( "UCA ") by BNSF and Met Council (or other designee of the State). This needs to occur by November 1, 2007 and this gives BNSF the sole right to construct the tunnel. • HRA enters into a Loan Agreement with the Met Council, pursuant to which the HRA would lend to the Met Council the cost of constructing the tunnel shell (since Met Council is the party to the UCA). This loan would be forgiven if the parties -do not, for whatever reason, proceed to Phase Il. HRA obtains a temporary construction access and staging easement with respect to the Nelson property east of the tracks (would require approximately 4 of his total 10.7 acres) — or — City may be able to close portions of 61St and Main Street to use as staging area. • Met Council pays BNSF to construct the tunnel pursuant to the UCA. BNSF constructs the tunnel over a long holiday weekend in 2008. At this point, BNSF would own the tunnel and no easements would be in place regarding use of the tunnel. If the parties do not proceed to Phase Il, BNSF can remove the tunnel or leave it in place unless BNSF and Met Council agree otherwise. The City /HRA do not have an automatic right to use it for other purposes. At this point the following two agreements would need to be signed to move forward with the rest of the construction (Phase II). The steps following suggest the same sort of lease revenue bond financing which was used in Bloomington: • Underpass Easement Agreement ( "UEA ") is executed between BNSF and Met Council (as the State's designee). This agreement grants to Met Council an easement for use of the tunnel and sets forth the obligations of Met Council to complete the tunnel so that it becomes operational. The Fridley Master Agreement allows Met Council four (4) years after BNSF completes the tunnel shell to execute this .UEA and deliver it to BNSF, but there is nothing preventing the UEA from being signed earlier. The four years was intended to allow sufficient time to obtain financing. Platform Agreement is executed between BNSF and Met Council. This grants a 100 -year lease by BNSF to Met Council so that the station can be constructed and operated. Met Council will own the station during the term of the lease. The Met Council cannot execute the Platform Agreement unless either (1) both the Underpass Construction Agreement and the Underpass Easement Agreement have been executed, or (2) Met Council or other State designee has entered into other contractual arrangements satisfactory to BNSF for construction of the tunnel in a way that will not interfere with rail service. HRA acquires all or a portion, as necessary, of the Nelson property (voluntarily or by eminent domain) for station access and parking. • Met Council leases the station to the HRA for $1. This gives the HRA the ownership interest it needs to issue lease revenue bonds. Memorandum Planning Division DATE: October 18, 2007 TO: William Burns, HRA Executive Director FROM: Scott Hickok, Community Development Director Julie Jones, Planning Manager SUBJECT: Draft 2030 Comprehensive Plan Chapters for HRA Review Background At your last meeting, staff requested that the Fridley HRA review draft copies of the first five chapters of Fridley's 2030 Comprehensive Plan. The full draft plan is now scheduled to be heard by the Fridley Planning Commission on December 19, 2007. You received a large volume of material to read through at the end of August. Staff is primarily looking for the HRA's feedback on the Housing Plan and the Economic and Redevelopment Plan. The other chapters provided were included as background material. Recommendation Staff recommends that the HRA complete their review and provide staff feedback on any recommendations for changes to the 2030 Comprehensive Plan chapters by mid- November, which will provide staff adequate time for changes prior to the December 19 public hearing. 10/25/07 Draft 2 MEMORANDUM OF UNDERSTANDING BETWEEN THE HOUS- ING AND-REDEVELOPMENT AUTHORITY IN AND FOR THE- CITY OF FRIDLEY,_11nMQTTA AND ANOKA COUNTY REGIONAL RAILROAD AUTHORITY WHEREAS, The Anoka County Regional Railroad Authority (the "ACRRA "), is an incorporated regional railroad authority as defined in Minn. Statutes § Section 398A.01 and following: and has the powers enumerated therein including the power to enter into and perform the obligations in this Memorandum of Understanding (the "MOU "); and WHEREAS, ACRRA intends to execute a memorandum of understanding with the Minnesota Department of Transportation (the "MN /DOT ") in which ACRRA will be MN /DOT's designee to enter into the Underpass Construction Agreement as provided for in Minn. Statutes § Section 174.82 (the ACRRA/MN /DOT memorandum of understanding is attached as an exhibit to the MOU); and WHEREAS, the Housing and Redevelopment Authority in and for the City of Fridley, Minnesota (the "HRA ") is a. duly constituted housing and redevelopment authority as defined in Minn. Statutes § 469.001 and following and has the powers enumerated therein including the power to enter into and perform the obligations in the MOU; and WHEREAS, the HRA has adopted a Redevelopment Plan for Redevelopment Project No. 1 and has included the area for Fridley Station in its Redevelopment Project No. 1. THEREFORE, pursuant to the MOU: I. ACRRA will: A. Execute the Underpass Construction Agreement, substantially in the form attached as Exhibit A to the ACRRA MN /DOT memorandum of understanding and deliver it to BNSF on or before November 13, 2007; B. Provide periodic progress reports to the HRA; C. Pay for the costs of constructing the tunnel in accordance with the Underpass Construction Agreement; � � 1 A. Provide, if possible, a construction easement to allow BNSF to construct the tunnel in accordance with the Underpass Construction Agreement or, if not possible, the funding for such an easement; B. Provide funding for the acquisition of property described in paragraph III, B. III. ACRRA and HRA will: A. Work jointly to seek MetCouncil, State or Federal funding or reimbursement of funds to design and construct the platform, the tunnel, park and ride and other public improvements and to acquire the site; B. Work jointly with the City, MetCouncil and MN /DOT to determine the appropriate entity to acquire any property not currently owned by ACRRA which is necessary and convenient for the construction, development and maximum utilization of the Fridley Station. This MOU is not a binding contract between HRA and the ACRRA. Either HRA or the ACRRA may, upon written notice to the party, amend or discontinue its role, as outlined in this MOU. IN WITNESS WHEREOF, the parties have caused this MOU to be duly executed intending to be bound thereby. Anoka County Regional Railroad Authority By: _ Dated: Attest: Dan Erhard, Chair Tim Yantos, Executive Director Dated: Housing and Redevelopment Authority in and for the City of Fridley, Minnesota By: Title: Chairman By: Title: Executive Director Dated: GAWPDATATTRIDLEYWI DOMMEMO OF UNDERSTANDING.DOC 2 MEMORANDUM OF UNDERSTANDING BETWEEN THE STATE OF MINNESOTA AND THE ANOKA COUNTY REGIONAL RAILROAD AUTHORITY WHEREAS, Minnesota Statutes, Section 174.82 provides that the Commissioner of the Minnesota Department of Transportation (hereinafter "Mn /DOT ") is responsible for all aspects of commuter rail in Minnesota; and WHEREAS, Minnesota Statutes, Section 174.82 authorizes the Commissioner to enter into a memorandum of understanding with a regional railroad authority to cant' out Mn /DOT's responsibility for commuter rail; and WHEREAS, Mn /DOT has entered into the Fridley Master Agreement dated May 31, 2007, that sets forth the conditions pursuant to which BNSF Railway Company (hereinafter "BNSF ") will construct a tunnel to serve the Fridley commuter rail station and further provides that Mn /DOT or Mn /DOT's designee must exercise its option to enter into the Underpass Construction Agreement no later than November 1, 2007; and WHEREAS, BNSF has agreed to extend the date for Mn /DOT to exercise the option to enter into the Underpass Construction Agreement to November 13, 2007; and WHEREAS, Mn /DOT wishes to enter into a memorandum of understanding with the Anoka County Regional Railroad Authority (hereinafter "ACRRA ") to act as Mn /DOT's designee and enter into the Underpass Construction Agreement with BNSF on behalf of Mn /DOT; and WHEREAS, it is in the best interest of the State of Minnesota that the Fridley tunnel be constructed as soon as possible in order to avoid the costs of delay. THEREFORE, pursuant to this memorandum of understanding, ACRRA will: 1. execute the Underpass Construction Agreement, substantially in the form attached as Exhibit A to this memorandum of understanding and incorporated herein, and deliver it to BNSF on or before November 13, 2007; and 2. provide periodic progress reports to Mn /DOT. Pursuant to this memorandum of understanding, Mn /DOT will: 1. designate the ACRRA as its "Designee" as defined in Section 7.1 of the Fridley Master Agreement and delegate to the ACRRA the necessary authority to fulfill its obligations under the Underpass Construction Agreement; 2. notify BNSF that the ACCRA authorized to act Mn /DOT's Designee pursuant to the Fridley Master Agreement for the purposes of entering into the Underpass Construction Agreement; and 3. acknowledge that the financial contribution made by the ACRRA pursuant to the Underpass Construction Agreement will be reimbursed or considered part of ACRRA's local contribution for the completion of the Fridley commuter rail station or for future rail projects. This memorandum of understanding is not a binding contract between Mn /DOT and the ACRRA. Either Mn /DOT or the ACRRA may, upon written notice to the party, amend or discontinue its role, as outlined in this memorandum of understanding. IN WITNESS WHEREOF, the parties have caused this memorandum of understanding to be duly executed intending to be bound thereby. Anoka County Regional Railroad Authority By: Dan Erhart, Chair Dated: Attest: Tim Yantos, Executive Director Dated: Minnesota Department of Transportation By: Title: Commissioner Dated: RPA