HRA 03/01/2012 --� March 1, 2012
HRA Meeting
Regular Meeting Agenda
7:00 p.m.
City Hall, Council Chambers
Call to order
Roll call.
Action Items
1. Approval of expenditures
2. Approval of February 2, 2011 Meeting Minutes
Informational Items
1. UPDATE: RER Redevelopment Project
2. Housing Loan Program Update
Adjournment
HA—Paul's Documents\HRA\I-IRA Agenda Items\2012\March 1,2012\March-2012 Agenda Outline.docxH:\—Paul's
Documents\HRA\HRA Agenda Items\2012\March 1,2012\March-2012 Agenda Outline.docx
February V Fridley HP' i 'ecking Accour' ayable
J Acct#0. 117036 fiegister
Date Check# Vendor Invoice# Description Code Amount
2/6/2012 29351 Center of Energy&Environment 10808 Loan Origination Fees-Stoning 265-0000-430-4340 550.00
Remodeling Advisor Visit-Fannemel 265-0000-430-4340 130.00
680.00
2/6/2012 29353 Fridley HRA Housing Loan Program 158 Revolving Loan-Stoning-7331 Melody Dr 265-0000-127-0000 9,540.00
9,540.00
2/6/2012 29367 Xcel Energy 51-9894009-1 Electricity-4757 2nd St NE 265-0000-430-4338 64.03
64.03
2/7/2012 29368 CenterPoint Energy 8784216-7 Gas-4757 2nd St NE 265-0000-430-4338 75.26
75.26
2/6/2012 29371 Wilson Development Svc,LLC 22688 Relocation Analysis-BAE/RER 100-0000-430-4330,4606 1,055.73
(RER to fully reimburse) 1,055.73
2/9/2012 29363 County of Anoka N/A Record keeping and administrative functions 455-0000-430-4330 514.49
456-0000-430-4330 456.64
458-0000-430-4330 688.04
462-0000-430-4330 924.85
463-0000-430-4330 913.28
464-0000-430-4330 803.74
501-0000-430-4330 3,745.89
467-0000-430-4330 468.21
468-0000-430-4330 850.02
470-0000-430-4330 676.47
472-0000-430-4330 456.64
10,498.27
2/17/2012 29365 Monroe Moxness Berg 128486 Adminsitration Fees 100-0000-430-4330 860.90
100-0000-430-4330-4606 2,252.50
3,113.40
2/17/2012 29370 Signature Electric,Co. 14129 4757 2nd Street-Home Insp Correction 265-0000-430-4340 678.50
678.50
2/15/2012 29364 ECM Publishers IP 00810404 North Metro Home Show Ad 265-0000-430-4334 62.00
February V Fridley HP' ecking Accouro ayable
J Acct#0■ 17036 )egister
Date Check# Vendor Invoice# Description Code Amount
2/17/2012 10 01794828 265-0000-430-4334 157.50
219.50
2/10/2012 29366 LHB 110621.00-2 BAE Site Analysis 100-0000-430-4330-,4606 3,226.35
110621.00-1 100-0000-430-4330-,4606 4,179.41
7,405.76
1/31/2012 29369 Star Tribune 1009239907 Public Hearing Notice-4757 2nd St NE 501-0000-430-4334 209.00
209.00
2/23/2012 Sun Newspapers 1091946 Advertising Home&Garden Show 265-0000-430-4334 375.00
2/16/2012 1091946 265-0000-430-4334 375.00
750.00
2/22/2012 ECM Publishers,Inc 2913377 Advertising Home&Garden Show 265-0000-430-4334 62.00
2/24/2012 2913346 265-0000-430-4334 157.50
219.50
2/28/2012 CastleVisions 022812-5 2012 North Metro Home&Garden Show 265-0000-430-4330 4,978.97
4,978.97
2/29/2012 City of Fridley 167755-443930 Final Water Bill 265-0000-430-4338 32.25
32.25
2/29/2012 Medtronic Pay as you go-Medtronic(December Settlem 455-0000-430-4536 420,224.16
420,224.16
2/29/2012 Industrial Equities Pay as you go-Industrial Equities(December:472-0000-431-4510 53,307.75
53,307.75
2/29/2012 Land Title,Inc Title Search-8102 Fairmont Circle 265-0000-430-4340 75.00
75.00
February Invoices $ 513,127.07
CITY OF FRIDLEY
HOUSING AND REDEVELOPMENT AUTHORITY COMMISSION
February 2, 2012
CALL TO ORDER:
Chairperson Commers called the HRA Meeting to order at 7:05 p.m.
ROLL CALL:
MEMBERS PRESENT: Larry Commers
William Holm
John Meyer
MEMBERS ABSENT: Pat Gabel
Stephen Eggert
NONMEMBERS PRESENT: Paul Bolin,HRA Assistant Executive Director
Becky Kiernan, Accountant
William Bums, City Manager
Jim Casserly, Development Consultant
Eric Myers, St. Paul Area Association of Realtors
SPECIAL REPORT: REAL ESTATE YEAR END REVIEW
Eric J. Myers, Government Affairs Director, St. Paul Area Association of Realtors, presented
information on the trends in the real estate market in 2011 and reviewed expectations for 2012.
Mr. Myers said that Fridley's median home price is $120,000 compared to a median price of
$150,000 in the metro area. Overall the numbers of new listings and closed sales are moving
along well. Fridley has had strong home sales over this past year.
Mr. Myers said that in 2010 a home sold in 122 days after it was on the market; this number
rose 23%to 151 days in 2011. This is still a decent time frame to sell a home and when the
number gets into the 175-200 day range there is a concern. One of the reasons that this number
rose was because in 2010 there was still a tax credit on the books for buyers. Overall Fridley's
closed sales continue to be strong and the median sale price will eventually return and head back
into a positive direction.
Chairperson Commers asked if there was a break down report like this for every community in
the area.
Mr. Myers answered yes;just contact him and he can create a report for individual areas.
Information is also available online at www.spaar.com.
William Burns, City Manager, said that in terms of value Fridley's homes, for tax purposes, are
18 months behind in values. These values are used for legal reasons and distressed sales cannot
be included in the valuations. Please keep this in mind when looking at the website.
City of Fridley Housing and Redevelopment Meeting of February 2,2012 2
Commissioner Holm thought that the foreclosure rate seemed to be higher than what was
reported. He asked if there were properties that were in foreclosure that have not yet hit the
market.
Mr. Myers said that there is no simple way to track the foreclosure rate. There is no tracking of
foreclosures other than watching the delinquent numbers. Banks are holding on to properties and
releasing them in small chunks.
ACTION ITEMS
1. Approval of Expenditures
MOTION by Commissioner Holm to approve the expenditures as presented. Seconded by
Commissioner Meyer.
UPON VOICE VOTE,ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED •
THE MOTION CARRIED UNANIMOUSLY
2. Approval of January 5, 2012 Meeting Minutes
MOTION by Commissioner Holm to approve the minutes as presented. Seconded by
Commissioner Meyer.
Chairperson Commers noted on page four, first paragraph, second sentence to delete the
second "represents 46% of each tax dollar paid by this development."And on page seven,
seventh paragraph, to change "casing" to "taking".
UPON VOICE VOTE,ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED
THE MINUTES APPROVED AS AMENDED
3. Public Hearing and Consideration of Resolution Authorizing Sale of 4757 2"d Street NE
MOTION by Commissioner Holm to open the public hearing. Seconded by Commissioner
Meyer.
UPON VOICE VOTE,ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED
THE MOTION CARRIED UNANIMOUSLY AND THE PUBLIC HEARING OPENED
AT 7:55 P.M.
Paul Bolin,HRA Assistant Executive Director, said that the Authority purchased the home at
4757 2nd Street in November of 2010 for$80,000 and spent $60,000 to renovate the home. At
the time the project was started staff expected to list the home, last April, in the $140,000 to
$145,000 price range. After a number of delays the home was not able to go on the market until
October.
Mr. Bolin said that the home was listed for $139,900 and in the months that the Authority has
owned the property, median sale prices have decreased by 12.1%. Over the course of this past
year, the percent of the original asking price received has averaged 85.8% and homes have been
on the market for an average of 151 days before receiving an offer.
City of Fridley Housing and Redevelopment Meeting of February 2,2012 3
Mr. Bolin said that despite the barrage of dismal statistics, staff is happy to report that this home
has outperformed all of the statistics and a purchase offer has been made on the property. It took
119 days to get an offer worth 94% of the original asking price. The terms of the sale are as
follows: Home Sale Price: $137,000
Seller Concessions $ 5,891
Final Price: $131,109
Mr. Bolin said that staff is recommending an adoption of the resolution authorizing the sale of
the home located at 4757 2nd Street for the terms described above.
MOTION by Commissioner Holm to close the public hearing. Seconded by Commissioner
Meyer.
UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED
THE MOTION CARRIED UNANIMOUSLY AND THE PUBLIC HEARING CLOSED
AT 8:00 P.M.
MOTION by Commissioner Holm to adopt the resolution authorizing the sale of 4757 2nd Street
NE for the price of$131,109. Seconded by Commissioner Meyer.
UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED
THE MOTION CARRIED UNANIMOUSLY
n INFORMATIONAL ITEMS
1. Update on Potential Redevelopment of 4800 East River Road
Paul Bolin,HRA Assistant Executive Director, said that the Blight Analysis was done on the
property located at 4800 East River Road and LHB found the properties to be substandard. The
Building Code deficiencies totaled more than 15% of replacement cost and a substantial
renovation is required to correct conditions. The estimated replacement cost is $179,468,500 and
the cost to correct deficiencies is $40,475,000. This is 23% of the replacement cost.
Mr. Bolin said that the Authority is scheduled to consider approval at the April 5th meeting
followed by a hearing held by the City Council on April 9th. The Wilson Development Group
has been working with RER to identify potential relocation costs.
Chairperson Commers asked about the hazardous substance sub-district and if it required a
hearing by the Council.
Mr. Bolin answered yes and that hearing would also be on April 9th
Chairperson Commers asked if the Authority would need a joint meeting with Council to
discuss any of these proceedings.
n William Burns, City Manager, said that there is a joint meeting scheduled in May if that timing
would work.
Chairperson Commers noted that sometimes a joint meeting is scheduled for a big project. He
just wanted to make sure that Council understood the hazardous substance sub-district.
City of Fridley Housing and Redevelopment Meeting of February 2,2012 4
Jim Casserly said that the information that was provided to the Authority was very specific
about the hazardous material and there is a separate schedule that deals with the sub-district.
Chairperson Commers said he just wanted to make sure that the Council understands the
financial implications. He asked for an update on the relocation issues.
Mr. Casserly said that preliminary conversations have been held with Mr. Wilson; he has visited
the site and met with them and is starting to analyze the implications so any relocation costs can
be worked into the budget. He provided the following short statement for the term sheet with
RER.
Relocation Benefits:
The Redeveloper will provide relocation services and benefits for all eligible parties on
the Redevelopment Property. The Redeveloper may, in lieu of funding such services and
benefits for an eligible party,provide a written waiver by that party. Such waiver must
be in a form acceptable to the Authority. The Redeveloper will indemnify the Authority
and the City for any relocation liabilities arising under applicable law with respect to
any portion of the Redevelopment Property.
Chairperson Commers asked if the Authority had any liability as a consequence.
Mr. Casserly said that the Authority does have a liability even though they are not the acquirer.
The Authority is making an investment in the site and the project would not proceed without
investment in this site. Part of the site investment will be relocating some of the existing
facilities and that is not an issue that can be avoided. This issue has come up in Fridley before
and in a number of cities; it is clear that the Authority is financially liable.
Mr. Casserly said that this project is more complicated because people can probably stay there
until their leases expire. This is part of the negotiation process and it is not a typical relocation
effort.
Chairperson Commers asked if similar, reasonable locations could be found within the
community.
Mr. Casserly said that there are other tenants that will be there for quite some time. The
question is at the end of their normal lease period would they have any ability to receive
assistance. Those are the kinds of issues we will be looking at and we want to make it clear that
the most of the costs the Authority will not be responsible for.
Chairperson Commers asked how the relocation charge of$500,000 would be handled. He
asked if that was above the tax increments they would receive.
Mr. Casserly answered no.
Dr. Burns noted that BAE Systems announced moving to Kentucky long before this project
started. They also intend to move their equipment and we should not have to pay for that.
Mr. Casserly answered that is correct. The redeveloper must have that clearly stated in their
agreements.
A City of Fridley Housing and Redevelopment Meeting of February 2,2012 5
Dr. Burns said that should limit the relocation costs.
Mr. Casserly said that the only liability would be for small tenants. We plan to bring a draft
terms sheet back to the Authority in March. The other issue with the hazardous sub-district is
that it can't be certified until the paperwork is received from the MPCA. We will deal with
everything on a month to month basis for the next 5-6 months.
Chairperson Commers asked how long it would take to get certified.
Paul Hyde,Real Estate Recycling, said that they have been talking to the Navy and BAE
Systems and will work together on the cleanup plan. It is unknown what we will find and where
it will go. Nothing can be done until the phasing of the development is complete. Today a
meeting was held with engineers to submit the development plan. The project can be developed
in four phases. Once we get a sense of the phases, then we can work with Mr. Casserly in terms
of cash flow. Then we can go to the State and talk to the Pollution Control Agency.
Chairperson Commers clarified that this is a generic plan that would be amended as the project
goes along.
Mr. Hyde answered yes.
Chairperson Commers asked how the tax increment worked into that plan.
Mr. Casserly said it would be using existing tax capacity that would come into the Authority
like it normally does. The base would be reduced down to zero and the current market value
would be captured. A different kind of arrangement is used when a sub-district is created.
2. Housing Loan Program Update
Paul Bolin, HRA Assistant Executive Director, said that from December 15 through January 15
two RLF loans were closed and one other loan was closed making a total of three year to date.
There were two remodeling advisor visits during that time making a total of two year to date.
Mr. Bolin said that they are working with Mike Torkelson on the University Avenue Properties
and leads have been slow.
ADJOURNMENT
MOTION by Commissioner Holm to adjourn. Seconded by Chairperson Commers.
UPON VOICE VOTE, ALL VOTING AYE,MAYOR LUND DECLARED THE MOTION
CARRIED AND THE MEETING ADJOURNED AT 8:35 P.M.
Respectfully Submitted,
Krista Monsrud
Recording Secretary
INFORMATIONAL ITEM
HRA MEETING OF MARCH 1 , 2012
CITY OF
FRIDLEY
Date: February 23, 2012
To: William Burns, Executive Director,
From: Paul Bolin, Asst. Executive HRA Director
Subject: 4800 East River Road / RER Project Update
In the 3 very short weeks since the last meeting, Real Estate Recycling has continued
to move forward in its due diligence for the purchase of the former BAE Site. Next
Thursday night, RER will again present an update on their activities to the Authority.
Staff and Legal Counsel have also spent time working on the project over the past few
weeks. Staff and Attorney Casserly attended a City Council workshop on February
13th to provide them with an overview of the project and discuss the specifics of how a
Hazardous Substance TIF Subdistrict works. (I have attached a list of questions and
answers that were put together to help guide the City Council discussion). The Council
also adopted a resolution that same evening, setting Monday April 9th as the date for
the public hearing on the creation of TIF District #20 and the HSS.
HRA and City Staff met with RER on Tuesday February 14th to discuss the
development of site plans, zoning issues, project construction phasing, utilities, and
environmental cleanup. Paul Hyde from RER will provide an update at next week's
meeting.
Other tasks completed over the past few weeks included the creation of the documents
necessary to move the creation of the TIF District forward. Maps, draft TIF Plans, and
legal notices were a few of those documents created. Staff and legal counsel have
started work on the "terms sheet" that will outline many of the items that will eventually
be included in the redevelopment agreement. Additionally, the required documentation
and notifications were sent to Anoka County Commissioner Kordiak.
Next Thursday night provides an opportunity for staff, the developer, and legal counsel
to present the new information that has been compiled over the past few weeks. The
update will also provide the Authority with an opportunity to raise questions and issues
that may need to be addressed prior to the Authority taking action on this item at their
April 5th meeting.
Questions about BAE site redevelopment.
Question 1:
In our February newsletter we told our readers that the Fridley HRA
had adopted an interim development agreement with Real Estate
Recycling (RER). As part of that, we indicated that RER feasibility
study was scheduled to be completed by April 5, 2012. Has RER
completed this study?
Answer: Significant environmental contamination exists on this
federal and state Superfund site. RER who has specialized in
remediating contaminated sites, including the Boise Onan site in
Fridley, has studied this project and has concluded that it is feasible
with assistance from the HRA and grant funds.
Question 2:
What has RER found as a result of their feasibility study?
r.,
Answer: With TIF assistance and grants, the redevelopment of this
Superfund site is feasible.
Question 3:
Has RER purchased the property? If yes what did they pay for it?
Answer: A purchase agreement has been executed and the purchase
price is in excess of$13.0M. Actual costs will be disclosing at
closing.
Question 4:
What arrangements has RER made with BAE Systems to provide
housing for their research and development operations?
Answer: RER is currently negotiating with BAE to provide BAE with
a new facility.
Question 5:
To what extent has RER reached agreements with other current
tenants of the BAE complex?
Answer: No agreements with subtenants are necessary at this time.
Question 6:
To what extent has RER reached agreements with outside industries to
occupy space in the current BAE buildings?
Answer: RER is having preliminary discussions with several
potential users.
Question 7:
To what extent has RER planned the construction of new buildings on
the BAE site?
Answer: See proposed Phased Development Site Plan attached. On
February 14, 2012, the developer is meeting with the City's
Development Review Committee to start a review of site plans.
Question 8:
Where will these structures be built and how big will they be? Have
they identified particular tenants for these buildings?
Answer: See #6 and#7 above.
Question 9:
How does RER intend to phase the redevelopment of the BAE site?
When will the redevelopment of the entire site be completed?
Answer: This is a multi phase project which the developer intends to
start in late 2012 and intends to complete by 2020. (See attached
Phased Development Site Plan).
Question 10:
The Fridley City Council is scheduled to hold a hearing on the -
establishment of an HSS (Hazard Substance Sub District). Is the HSS
a TIF District per se or a sub district within a TIF District?
Answer: HSS is a subdistrict and is within a TIF District.
Question 11:
As I understand it an HSS allows the value of the BAE property to be
reduced to zero. This means that all taxes currently collected for the
BAE property will be dedicated to covering the costs of remediation.
What are the three largest components of remediation expenditures for
which the HHS revenue will be spent?
Answer: The school referendum levies will continue to be paid as
well as the state general property taxes. See attached pie chart which
shows a City contribution of$76,696 or 14% of the total property
taxes.
Remediation expenses, including investigation and implementation
are estimated to exceed $36M. HSS revenues will be spent only on
those actions outlined in the Response Action Plan and principally on
the remediation of ground water and soil.
Question 12:
How much tax revenue will be lost to each of the taxing jurisdictions
that are currently the beneficiaries of taxes on the BAE property?
Answer: See Pie Chart.
Question 13:
I understand that these current taxes and any new increment that will
be generated from the redevelopment of the site will be lost to these
taxing jurisdictions for twenty-five years. Is this correct?
Answer: Yes, if 25 years are necessary. The HSS may be decertified
earlier in the event of inflationary increases in market value or if the
completed values are higher or if construction occurs more quickly
than projected.
Question 14:
What is the HRA's justification for agreeing to do this on behalf of
RER? How will the public benefit from this sacrifice?
Answer: The site is the most contaminated site in the City of Fridley
and contains the largest building in the City and, as shown by the
LHB Blight report, one of the most blighted.
The current market value is artificially high and will decline if the
HRA does not intervene. The building has a marginal value and the
land is valued at $1.12 per square foot.
The completed project will provide a site that is remediated in
accordance with a MPCA Responses Action Plan and will have at
least a $72M increase in market value upon which all the taxing
jurisdictions will be able to levy after decertification of the TIF
District.
There is the potential for 3000 jobs on the completed site (1.5 million
square feet with 2 jobs per 1000 square feet).
Question 15:
The HSS will be the subject of a public hearing at the April 9th City
Council meeting. When will the Council be asked to vote on the
establishment of the HSS? Is there a separate action on a TIF district
for this project area?
Answer: Yes, the Council will be asked to approve the HSS and the
TIF District on April 9, 2012. The closing is scheduled for the end of
April and the approval of City/HRA assistance is one of the items to
be completed prior to closing.
Question 16:
If Council approves the HSS, when will the HSS officially begin to
exist?
Answer: The HSS will be certified only after the HRA submits an
MPCA approved RAP and a contract for removal actions. HSS
revenues may only be collected for as long as it is necessary to
recover the costs of the remedial actions.
Question 17:
How much money will RER be putting into this redevelopment
project?
Answer: RER will invest site acquisition costs in excess of$13.0M
along with a match for grants in excess of$2.5M. In addition RER
will incur construction and take out financing on buildings in excess
of$123M.
Question 18:
Will either the HRA or RER be seeking other grants or sources of
governmental funding for this redevelopment project? If yes, what
are they?
Answer: The HRA and RER will collaborate on seeking
approximately $33M in grants from the following agencies:
1. State of Minnesota (DEED)
2. Metro Council
3. EPA low interest loans
4. Anoka County
5. Department of Navy
Question 19:
What else should we report to our growing readership?
r-� Answer: The HRA and City have an unusual opportunity to clean up
and develop this Superfund site which may be the most difficult site in
the City. A blighted building will be removed and replaced with a
number of multi-tenant buildings that will substantially increase the
market value of the site.
Further there is the opportunity to keep 300 plus BAE jobs in the City
as well as provide space for new uses and potentially 2500 or more
new jobs in addition to those jobs involved with construction and
cleanup.
MMB:4840-0753-1022,v. 1
Real Estate Recycling Redevelopment Site
Distribution of Taxes on Original Market Value
Pay 2012 -Value$15 Million;Taxes $5,55,000
MSS Potential Tax Increment$340,000
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DRAFT: DISCUSSION PURPOSES ONLY (February 28, 2012)
TERM SHEET
RER PROJECT
This Term Sheet outlines the redevelopment and public finance terms of a
Redevelopment Agreement between the Housing and Redevelopment Authority in and
for the City of Fridley, Minnesota and Real Estate Recycling LLC.
Redeveloper: Real Estate Recycling LLC and its permitted successors and
assigns
City: City of Fridley, Minnesota
Authority: Housing and Redevelopment Authority in and for the City of
Fridley, Minnesota
Redevelopment Property: Parcels: 27-30-24-13-0002, 27-30-24-42-0002, 27-30-24-43-
0002
Creation of TIF District: The Authority shall create a redevelopment tax increment
financing district and any qualifying hazardous substance
subdistricts (the "HSS") for the Redevelopment Property (the
"TIF District") assuming the statutory tests for establishment
are met. The TIF District is expected to include all of the
Redevelopment Property. The Authority will properly
consider and, subject to a substantive factual basis, will
make all necessary findings and shall forward its findings to
the City Council.
Fiscal Disparities: The fiscal disparities contribution for the Project will be paid
outside the TIF District.
Eminent Domain: The Authority shall not use eminent domain to acquire the
Redevelopment Property
Financial Unfeasibility: The Redevelopment Agreement will set forth a definition of
financial "unfeasibility" which would apply in the following
circumstance:
If the cost of environmental remediation substantially
exceeds the parties' projections and renders the entire
Project financially unfeasible, the parties agree to
discuss whether changes can be made in a way which
will not substantially impair the integrity of the Project.
Such changes will be subject to the reasonable
approval of the City, the Authority and the Redeveloper.
The Redevelopment Agreement will specify the options or
recourse available to the Redeveloper and the Authority if
the Project cannot be made financially feasible.
Tax Increment Financing: The Authority will provide the following tax increment
financing to the Redeveloper, as set forth in greater detail
below:
1. The Authority will issue Tax Increment ("TI") Revenue
Bonds payable only from tax increment generated by
the HSS and may issue TI Revenue Bonds payable tax
increment generated by the TIF District for tax
increment-eligible costs ("Eligible Costs") incurred by
the Redeveloper. The Eligible Costs will include all
costs eligible for payment with tax increment under
applicable law.
2. The Authority will issue a pay-as-you-go TI Revenue
Note or Notes, payable solely from tax increment, to
reimburse the Redeveloper for Eligible Costs which ,..�
have not been reimbursed by TI Revenue Bonds.
3. The Redevelopment Agreement will contain a schedule
as to the timing of issuance by the Authority and the
amounts of TI Revenue Bonds and TI Revenue Notes.
Calculation of Assistance
Needed: 1. Every six months, the Redeveloper will submit an
itemization of Eligible Costs incurred to the Authority for
certification.
2. Annually, the Redeveloper will submit a cumulative-to-
date Sources and Uses and also a projected Sources
and Uses through completion of the Project so that,
prior to each issuance of TI Revenue Bonds, the City
can determine the level of assistance needed based on
an agreed-upon Redeveloper margin (see below).
3. By December 31 of the first full assessment year
following completion of the Project (the "Reconciliation
Date"), the Redeveloper will submit a Project Sources
and Uses for a final accounting by the City and the
Redeveloper of the level of assistance needed for the
2
entire Project, including the Redeveloper's margin
discussed further below.
TI Revenue Bonds: The Authority may issue TI Revenue Bonds as follows:
• Bonds will be either taxable or tax exempt as allowed by
law in amounts that meet reasonable underwriting
standards and upon terms then available in the public
marketplace.
• Bond proceeds may only be used to reimburse Eligible
Costs incurred by the Redeveloper and certified by the
City.
• Bonds may be issued without additional security in the
fourth quarter of each year (subject to underwriting
criteria) with respect to Minimum Improvements
completed by December 31 of the prior year and
assessed on January 2 of the current year. Issuance of
the TI Revenue Bonds earlier will require security as
determined by the underwriters of the Bonds.
• TI Revenue Bonds payable from tax increment generated
by the HSS will be issued as early as possible consistent
with underwriting standards.
• The TI Revenue Bonds will be issued on a parity basis,
will be payable only from tax increment and will not be a
general obligation of the City, County, State or any other
political subdivision.
TI Revenue Notes: The following terms will be applicable to the TI Revenue
Note(s):
• Principal amount will be determined and Notes issued
upon certification of Eligible Costs in accordance with a
schedule set forth in the Redevelopment Agreement to
reimburse Eligible Costs incurred by the Redeveloper.
• Term will be coterminous with duration of the TIF district.
• Interest rate initially set at %, except that on the
Reconciliation Date the rate shall be reset to the yield of
10-year Treasury Notes plus 2.8% (subject to a
maximum of %).
• 90% of available tax increment will be pledged.
• The pledge of tax increment for the TI Revenue Notes
will be subordinated to the pledge of tax increment for the
TI Revenue Bonds and the Authority's admin. fee.
• Any amounts unpaid at the maturity date of the TI
Revenue Notes will be deemed paid in full.
3
Priority of Application of
Tax Increment: Available tax increment will be applied in the following
priority:
1. TI Revenue Bonds
2. City's administrative fee of 10%
3. TI Revenue Notes
Calculation of Redeveloper
Margin and Limitation of
Assistance: The Redeveloper's net income from the Project shall be
determined by subtracting all costs incurred in building out
the Project from all Project Revenues. The total "margin"
shall be a percentage obtained from dividing this income by
the total of all proceeds from sales of land and commercial
and office property. The Redeveloper's share of the margin
shall not exceed the amount set forth below.
Total Redeveloper's City's
Margin (%) Share Share
Up to % 100% 0%
75 25
50 50
Over 25 75
Land acquisition prices: For purposes of determining the cost of land held by the
Redeveloper, the parties will use the value as determined by
actual purchase agreements, appraisal or other process
agreed to by the parties.
Land sales prices: For purposes of calculating revenues from sales of land:
• If land (improved or unimproved) is sold to an unrelated
party in an arm's length transaction, those prices will be
determinative. The Redeveloper will certify to the City
that such party would be considered unrelated under
applicable Internal Revenue Code regulations.
• If property is sold to a related party (as defined in Internal
Revenue Code regulations), the land sale price will be
determined by agreement between the City and
Redeveloper or, if agreement cannot be reached, the
land sale price will be the higher of an appraisal
conducted by an appraiser mutually agreeable to the
parties or the actual sale price.
4
• For improved property still owned by the Redeveloper on
the Reconciliation Date, an "imputed" sales price based
on an appraisal, or other method acceptable to both
parties for valuing the property or its rate of return, will be
used.
Construction Fund Admin-
istration and Accounting:The Redeveloper will administer Project revenues and
disbursements therefrom, subject to trust instruments, etc.
regarding the repayment of Bonds. The Redeveloper will
deliver to the City quarterly reports and also year-end
compilation reports which have been prepared by a CPA and
certified by the Redeveloper, tlhebeports which arerrequired
be more limited in scope t han
to be submitted to its investors or lenders.
Redeveloper Entity;
Reconveyance/Assignment: The Redeveloper anticipates "that it to will create a
Minnesota limited liability company
Redevelopment Agreement with the City.
the
Development Costs: Subject to reimbursement the Re gibleo Costs ithinor all
limitations set forth herein, preparation, public
environmental remediation, site p re p
improvement, plat, plat amendment, PUD and other
development costs.
Redeveloper Public
Subject to reimbursement Subs t as Eligible Costs within the
limitations set forth herein, the Redeveloper will construct
and pay for the following Public Improvements c the accordance
with City specifications and subject to approval the
engineer. The parties will e coordinate ccommodate installation
ble
Public Improvements in order
construction of the Minimum Improvements. Upon
completion of the Public Improvements ance by the Cityplthe Pub
c
City specifications and acceptance
will become public property.
• Utility relocation
• Burial of electricity, cable, telephone, natural gas
• Sanitary sewer
• Water mains and stubs
• City streets (the amount of City contribution to the extent
area-wide benefit is demonstrated will be set forth in the
n Redevelopment Agreement)
5
• Traffic lights and sidewalks
• Storm sewers and storm water system elements (ponds,
pipes, infiltration system) both on and off site
• Underground utilities
Site Improvements: Subject to reimbursement as Eligible Costs within the
limitations set forth herein, the Redeveloper will construct
and pay for all site improvements, including:
• Building demolition
• Environmental remediation
• Site clearance
• Landscaping and screening according to City-approved
landscape plans
• Trails and other pedestrian improvements pursuant to
City-approved site plans (if such improvements are
privately owned; if public, they will be treated as Public
Improvements)
• Grading and import/export of soil in accordance with City-
approved grading plans
• Retaining walls and fences
• Private streets, including curb and gutter
• Park improvements, according to any City requirements
Minimum Improvements: The Redeveloper will construct or cause to be constructed
the following Minimum Improvements to the Redevelopment
Property as shown on the Concept Plan:
The product mix and numbers of square feet shown above
are estimates and subject to change as necessary to comply
with City Council, Planning Commission requirements or the
approved Development Response Action Plan ("DRAP").
•
Phasing: Areas
6
r-� building, plumbing, electrical and mechanical permits prior to
construction. City fees (infrastructure, impact, permits,
other) are set forth on Exhibit C.
Zoning and Land Use
Approvals/Easements: Normal and customary site and building plan review
requirements will be followed. The Redeveloper will pay for
rezoning, subdivision, platting, plat amendment, PUD and
preparation of restrictive covenants, easements, reciprocal
easements, and any other documentation necessary for the
construction and sale of the Minimum Improvements. The
Redeveloper will be responsible for obtaining all land use
and zoning approvals.
Special Assessments: The Redevelopment Agreement will specify the amount and
purpose, if any, of special assessments to be levied against
the Redevelopment Property.
Park Dedication Fee/
Public Open Space
Contrib.: The level, amount and distribution of park dedication land or
fees or both associated with the Project will be substantially
e^N in conformance with the Fridley City Code and will be set
forth in the Redevelopment Agreement.
Business Subsidy Act: Except for reporting requirements, the Project is exempt
from the application of the Business Subsidy Act.
Relocation of Tenants: The Redeveloper will provide relocation services and
benefits for all eligible tenants of the Redevelopment
Property. The Redeveloper may, in lieu of funding such
services and benefits for a tenant, provide a written waiver
by that tenant. Such waiver must be in a form acceptable to
the Authority. The Redeveloper will indemnify the City and
the Authority for any relocation liabilities arising under
applicable law with respect to any portion of the
Redevelopment Property.
Prohibition on Tax
Exemption: Once acquired by the Redeveloper, the Redevelopment
Property and Minimum Improvements will not become
exempt from ad valorem property taxes until termination of
the TIF District. This covenant will be contained in a
declaration of restrictive covenants to be signed by the
Redeveloper and recorded against the Redevelopment
Property.
8
Quality of Minimum
Improvements: The Redeveloper will not be required to execute assessment
agreements. To ensure quality of the Minimum
Improvements, the Redeveloper will provide the City with a
description of the Minimum Improvements to be constructed
and specifications of construction materials and fixtures.
Both parties acknowledge that it is in their mutual interest to
maximize land sales proceeds and the value of the
completed Minimum Improvements.
The Authority will have the right to decline to approve the
Minimum Improvements if it appears to the Authority that the
total market value of the Minimum Improvements will not be
at least 90% of the total market value projected in the
Redeveloper's pro forma. The Authority will not reject the
Minimum Improvements if the Redeveloper demonstrates to rti
the Authority's reasonable satisfaction that the market will
not support the product set forth in the Redeveloper's pro
forma.
Capitalized Interest: Capitalized interest during the construction period and costs
of issuance of any Authority TI Revenue Bonds will be tax
increment eligible expenses.
Grants: The Redeveloper and Authority will cooperate and use their
best efforts to seek grants from the State of Minnesota,
Metropolitan Council, DEED, Anoka County, Department of
Navy, EPA or other available public funds. Subject to
reimbursement as Eligible Costs within the limitations set
forth herein, the Redeveloper will advance costs that were
expected to be defrayed by grants that are not received.
Government Approvals: The Redeveloper and Authority will cooperate and use their
best efforts to obtain all necessary government approvals.
Permits/Fees: The Redeveloper will comply with all applicable City building
codes and construction requirements. The Redeveloper will
pay normal permit, plan review, utility access and park ,-�
dedication fees and will be responsible for obtaining all
7
Effect of Term Sheet: This Term Sheet outlines the terms under which the parties
are willing to enter into a Redevelopment Agreement, but
does not constitute an offer or acceptance on either party's
part. All rights and obligations with respect to the
Redevelopment Property will only be as provided for in a
Redevelopment Agreement approved by the Authority and
the Redeveloper.
9
EXHIBIT A
Redevelopment Property- Parcel List
Owned by
Redevelo
per or
Par Under
cel Property Owner PIN Parcel Address Contract
10
rte, EXHIBIT B
Site Plan
11
EXHIBIT C --�
City Fees
MMB:4851-8987-3678,V. 1
12
Fridley HRA
Housing Program Summary
Cover Page
March 1, 2012 HRA Meeting
Report Description
Loan Application Summary Loan application activity (e.g. mailed
out, in process, closed loans) for
February and year-to-date.
Loan Origination Report Loan originations for February and year-
to-date.
Remodeling Advisor Shows the number of field appointments
scheduled and completed for the
Remodeling Advisor Services
administered by Center for Energy and
Environment.
•
HA—Paul's Documents\HRA\HRA Agenda Items\2012\March 1,2012\Housing Program CoverMarch.doc
Fridley HRA
February 15, 2012
Application Summary
1/15-2/15 Year-To-Date
New Applications Total
Applications Rec'd/ Loans Applications Applications Loans
Program Sent Out* in Process Closed Mailed Processed Closed
HRA Revolving Loan Fund 2 1 1 2 1 1
HRA- Fridley Last 0 0 0 0 0 0
MHFA Deferred Loan 0 0 0 0 0 0
MHFA Fix-Up Fund 0 0 0 0 0 0
MHFA Community Fix-Up Fund 0 0 0 0 0 0
MHFA Community Fix-Up w/Discount 0 0 0 0 0 0
CEE Home Energy Loan 0 0 0 0 0 0
Private Bank Loan (through CEE) 0 0 0 0 0 0
MHFA Rental Rehab Loan Fund 0 0 0 0 0 0
DOC Rental Energy Fund 0 0 0 0 0 0
Totals: 2 1 1 2 1 1
*Number of applications sent out does not take into account property owners downloading their application from the CEE website
Fridley HRA
2/15/2012
Loan Originations
Programs This Month Previous Months Since 1/1/2012
HRA Loans(incl.CFUF Discount loans) $ - $ 9,540.00 $ 9,540.00
Leveraged Loans $ - $ - $ -
Total $ - $ 9,540.00 $ 9,540.00
Funding Sources This Month Previous Months Since 1/1/2012
Fridley HRA inc Revolving&FRIDLAST $ - $ 9,540.00 $ 9,540.00
MHFA FUF/CFUF $ - $ - $ -
Fridley Discount portion for CFUF $ - $ - $ -
Met Council $ - $ - $ -
CDBG/HOME $ - $ - $ -
CEE Energy $ - $ - $ -
Other $ - $ - $ -
Total $ - $ 9,540.00 $ 9,540.00
Types of Units Improved*
`most HH do more than one improvement so the total#will be equal or greater to the number of loans originated
This Month Previous Months Since 1/1/2012
/1
Single Family - 1 1
Duplex - - -
Tri-Plex - - -
4 to 9 Units - - -
10 to 20 Units - - -
20+Units - - -
Total - 1 1
Types of Improvements
Interior #of Projects %of Total
Bathroom remodel - 0%
Kitchen remodel - 0%
General plumbing - 0%
Heating system - 0%
Electrical system 0%
Basement finish - 0%
Insulation - 0%
Room addition - 0%
Misc.interior projects - 0%
Foundation - 0%
Exterior
Siding/Fascia/Soffit - 0%
Roofing - 0%
Windows/Doors 1 100%
Garage - 0%
Driveway/sidewalk - 0%
Landscaping - 0%
P.'S Misc.exterior projects - 0%
Fridley HRA
Remodeling Advisor Service - 2012
February 15, 2012
Remodeling Advisor
Appointments Appointments
Month Scheduled Completed
Jan-12 0 0
Feb-12 0 0
Mar-12 0 0
Apr-12 0 0
May-12 0 0
Jun-12 0 0
Jul-12 0 0
Aug-12 0 0
Sep-12 0 0
Oct-12 0 0
Nov-12 0 0
Dec-12 0 0
Total 0 0
*Remodeling Advisor monthly amounts may change as paperwork from a visit may not come in until the next month for the previous month.
.