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2000-04-254MIi SPECIAL MEETING OF THE MOUND HOUSING AND REDEVELOPMENT AUTHORITY 2020 COMMERCE BOULEVARD MOUND, MINNESOTA 55364 DATE: APRIL 25, 2000, 7:00 P.M. LOCATION: COUNCIL CHAMBERS, MOUND CITY HALL ROLL CALL: TAX INCREMENT FINANCING AGENDA: 1. MOTION TO APPROVE MINUTES OF APRII. 11, 2000. 2. POST OFFICE RELOCATION UPDATE. 3. LETTER FROM JIM PROSSER ON THE FOLLOWING: A. AUTHORIZATION TO PROCEED WITH EMINENT DOMAIN ACTION ON PROPERTIES IlWOLVED WITH POST OFFICE RELOCATION. 4. LETTER FROM JIM PROSSER ON THE FOLLOWING: A. CONSIDERATION OF CONTRACT FOR PRIVATE DEVELOPMENT -MOUND FAMII.Y HARDWARE. THIS CONTRACT WILL BE MESSENGERED TO YOU FROM TORN DEANS' OFFICE THIS WEEKEND. ADJOURNMENT. .~ HRA b~INUTES -SPECIAL MEETING -APRIL 11, 2000 The Housing and Redevelopment Authority of the City of Mound, Hennepin County, Minnesota, met in a special session on Tuesday, April 11, 2000, at 6:30 p.m., in the Council Chambers at 5341 Maywood Road, in said City. Those present: Chairperson Pat Meisel; HRA Board Members: Andrea Ahrens, Bob Brown (arrived 7:00), Mark Hanus and Leah Weycker. Also in attendance were Acting City Manager Fran Clark, City Attorney John Dean, City Planner Loren Gordon, Mound Visions Coordinator Bruce Chamberlain, James D. Prosser of Ehlers & Associates, Inc., Bill Beard and Paul Ganst of Beard Group, and Secretary Sue McCulloch. Others present: Jim Albrecht, Kim Anderson, John Beise, Kristin Beise, Orv Burma, Jane Carlsen, Martin Carlsen, Ken Custer, Sally Custer, Patti Dodds, Micheal Darrell, Wayne Ehlebracht, Lorrie Ham, Kandis Hanson, Bob Johnson, Vem Hanson, Irene Harrison, Pat Harrison, Colleen Hendricks, Ann I-iiltsley, Jo Longpre, Peter Meyer, Bill Netka, Dorothy Netka, Larry Olson, Todd Rask, Linda Skorseth, Maylene Stociley, Stan Stociley, Stan Stanley, Dean Sulander, Craig Watson, Elsa Watson, Betty Weiland, Frank Weiland, Tim Williams. Consera Agenda: All items listed under this Consent Agenda are considered to be routine by the Housing and Redevelopmera Authority. There will be no separate discussion of these items unless a Councilmember or citizen so request, in which everu the item will be removed from the Consent Agenda and considered in normal sequence. Chairperson Meisel called the meeting to order at 6:35 p. m. TAR INCREMENT FINANCING. 1.0 APPROVE MINUTES OF MARCH 28. 2000. MOTION by Weycker, seconded by Ahrens, to approve the minutes of March 28, 2000. The vote was unanimously in favor. Motion carried. 5-0. 1.1 REVIEW OF POLICY ISSUES RELATED TO TAE LAKE LANGDON AREA DEVELOPMENT AGREEMENT. Chairperson Meisel announced prior to any discussions of this matter, she would read the following statement that has been dated and signed by her, Pat Meisel: On May 11, 1999, I made written disclosure to the Board that Paul Meisel and myself were the owners of real property within the Lake Langdon district; and that we were considering a possible affiliation with Mound Mainstreet, Inc. in connection with redevelopment in the Lake Langdon district in the event Mound Mainstreet, Inc. was selected as developer by the HRA. MOUND HRA MINUTES -APRIL. 11. 2000 That disclosure should be treated as continuing; and accordingly, I will not participate in the HRA discussions regarding entering into an agreement with Mound Mainstceet, Inc. for the development of the Lake Langdon District, nor will I participate in any vote on that matter. I ask that the clerk enter this statement in the records of the April 11, 2000, 13RA Board meeting. Chairperson Meisel stepped down as acting Chairperson and HRA Board Director Hanus assumed the responsibilities as Acting Chairperson. Acting Chairperson Hams stated the City Attorney would present this matter in a broad sense and then have it detailed by James Prosser of Ehlers & Associates. The City Attorney stated the City of Mound has been negotiating the terms of the redevelopment agreement with Mound Mainstreet, Inc. for the passed two months and approximately one year ago the City entered into an exclusive rights agreement that selected Mainstreet, Inc. as the potential developer for Lake Langdon. Now that final negotiations are being actively pursued, there has been two fundamental policy issues the developer would like to renegotiate and would like direction from the HRA Board. These two areas are (1) timing of HRA economic participation and (2) relationship of Lake Langdon and Auditor's Road. The City Attorney stated both of these are risk assignment issues. The City Attorney explained the timing of HRA economic participation area the developer would like to renegotiate involves the "pay-as-you-go" financing, which is recommended by the HRA and this causes the developer to receive economic assistance from the tax increment generated by its development. He stated under a pure "pay-as-you-go" scenario, the developer is required to bear the initial cost of development activities such as site assembly and preparation. The Preliminary Agreement with Mound Mainstreet, Inc., which predates the guidelines, contains an expression of willingness to consider other options. The City Attorney stated departure from the pure "pay-as-you-go" format means that the HRA puts money into the development, such as from bonds, in the expectation that it will be reimbursed from the tax increment generated. Consequently, the HRA assumes the risk that the development will be constructed and will generate tax increment through tax payments. If sufficient tax increment is not available, the HRA either loses its investment, or in the case of bonds, may need to levy. Ordinarily, when HRA's do advance money to a development, the agreement contains various provisions that are designed to provide security in the event of a tax increment shortfall. The City Attorney stated before we are able to conclude an agreement with Mound Mainstreet, Inc. it could be necessary to advance money, but limit the advance and the form of security that would be required. 2 The City Attorney stated the developer receives some financing from the HRA earlier than what is the norm. He suggested the possibility of the HRA advancing the funds, through bonds to relocate the people that are there, cover all of costs with some sort of mechanism, then turn in over to the developer and then the developer would construct the project and after the project is done, the tax increment would be paid. Basically, the City would pay a portion up front of the development. Acting Chairperson Hanus asked about the time period from when a possible bond generates money and sold to the time the increment money is generated. The City Attorney stated the time period would be handled by capitalized interest. The City Attorney further stated obtaining securities from the developer could reduce the risk for the City. These securities could include guarantees from individuals, mortgages on the properties, guarantees of the cash flow, and letters of credit. A letter of credit would be the most efficient. James Prosser of Ehlers & Associates, Inc. appreciated the City Attorney's summary. He further stated we could summarize by looking as if the HRA would essentially provide tax increment financing funds up front. These would be secured on the basis of the tax increment revenue to be generated from the project. The risk is the project fails and does not yield what is expected. The second option is pay-as-you-go approach. In this approach the developer would take the note and sell the note to different financial institutions and the risk is taken at that level. They would like to encourage developers to pay-as-you-go approach. Mr. Prosser stated the risk issue could be resolved by providing funds up front but not distribute them until a portion of the project has been completed. He continued to say there would be a pledge of less than 100 percent and this would be secured by appropriate means. He stated the preferred way is pay-as-you-go, but this way of not pledging the full amount, only a portion, might be the appropriate way to resolve these policy issues with the developer. The City Attorney suggested having to put up bonds for a portion of the redevelopment until the project is completed. Mr. Prosser agreed with the City Attorney. Acting Chairperson Hanus asked if as a matter of policy the pay-as-you-go was adopted, with other conditions attached to it. He would suggest a condition would be having an audit done to determine what the middle ground number would be calculated at that point in time. Mr. Prosser agreed with Acting Chairperson Hanus and stated this would be an appropriate idea. Acting Chairperson Hanus suggested then the only way the HRA would contribute would be to have an audit performed on the developer. Mr. Prosser stated there would be a maximum number that could be identified at some later point. Acting Chairperson Hanus asked Mr. Prosser what action he would like the HRA Board to take tonight. 3 aiivVl~Y [li~lf l~aii~lN+~.S ~ /~Pllli. 11. G~ qs._ HRA Board Member Brown stated he does agree with Acting Chairperson Hams, but he is concerned about legal issues that may arise when these two projects are linked. The City Attorney stated it would be worded in the agreement properly to alleviate legal concerns. Mr. Beard stated he does not see a problem at this point with finishing both projects. He further stated he would like to live up to what the customers want, as well as what the City would like, regarding the I,angdon and Auditor's Road project. HRA Board Member Weycker asked why is the City separating the two projects. The City Attorney stated Auditor's Road would not be available for construction for a couple of years. He further stated there needs to be a commitment to Langdon now, but needs to protect the time gap as present regarding Auditor's Road. Acting Chairperson Hanus asked why it is not possible to attach at least half of the Auditor's Road section and complete both Langdon and this portion at the same time. Mr. Beard stated there are a whole lot of infrastructures that cause this problem, although, there may be a building that could overlap this development and cause a portion of Auditor's to be developed at the same time. Acting Chairperson Hanus stated if it is possible to create this situation, he would like to have this happen with the project. The City Attorney represented this agreement might be finalized within one month if all other contingencies have been agreed upon. Pat Meisel returned as Chairperson of the HRA at 7:14 p. m. 1.2 REVIEW OF MOUND FAMII,Y HARDWARE DEVELOPMENT AGREEMENT. The City Attorney stated the City has visited with the Dodd's and reached an agreement of a specific contract. He further stated the contract. would be presented to the HRA within two weeks and is hopeful it would be approved. HRA Board Member Brown asked with all of the swapping of land going on, when would this be presented to the Planning Commission. Mound's Vision Coordinator stated it would be presented to the Planning Commission on May 8, 2000. James Prosser stated specifically the zoning is the development agreement would provide a period of time during which certain things are done, and they are not assuming this is rezoned and are not taking the Planning Commission for granted. He stated there needs to be a starting point in all projects. 5 Mound's Vision Coordinator stated the project to his knowledge does not require a rezoning and does not require a variance. He stated the only issue is a major subdivision for the Planning Commission to review. 1.3 I?ISCUSSION -POST OFFICE RELOCATION. Mr. Prosser stated the HRA has provided a number of acceptable parcels for the post office and those were presented to the post office with a broker who was assisting the post office at the time. He stated the post office appears to be in a position to indicate its favorite site. He would like to the HRA's authorization to take the necessary steps to secure this position and have the property acquired. Mr. Prosser proposed this action would be completed in the next week. Mr. Prosser received from the HRA the authorization to go ahead and complete this project. INFORMATION/11~IISCELLANEOUS. 1. Letter dated April 4, 2000, from the Netka's. HRA Board Member Weycker suggested checking into relocation specialties and would like this investigated by staff. Mr. Prosser stated it would be appropriate to identify relocation specialists, so a meeting could be planned as soon as the redevelopment agreement has been signed. Prosser stated this would be a major impact on businesses and he would like to assist when this happens as much as possible. HRA Board Member Weycker suggested notifying the business owners this step would be coming shortly. Sally Custer/Glass Plus, 5310 Bartlett/5533 Shoreline. Ms. Custer asked the HRA if a business owner has the right to keep the property in the redevelopment area as long as they conform to the image of the proposed downtown. Ms. Custer presented her drawing to the HRA and the public of what she would like her business to represent. Mr. Prosser stated there are certain goals attempting to be achieved by the developer. He stated the developer has been assigned exclusive rights, but this includes working with existing businesses to include projects that are presented to the developer. He stated it would be appropriate to direct owners to work with he developer. He suggested he not independently assist with this project, but would if there is disagreement between the business owner and the developer. Ken Custer/Glass Plus/5310 Bartlett/5533 Shoreline. Mr. Custer stated it seemed logical to split the two projects (meaning Langdon and Auditor's Road) in half to have a less financial 6 MOUND HRA MINUTES -APRIL 11 2000 -~ risk for the City of Mound. He further stated any left over funds could be written into the agreement and stated they would be used for the Auditor's Road project. He would suggest the pay-as-you-go method to minimize more risk to the City. He does not want to see taxes increased to an extreme amount. He would like an open forum before the contract has been finalized to discuss with the business owners what they would feel would be best for the City of Mound. The City Attorney stated he appreciated the suggestion. He stated the pay-as-you-go method is a good choice because they can take a note and get the loan from the bank. He further stated a problem that arises is the cost of site assembly in such large amounts that the revenue that would be generated from the development would not be sufficient. Mr. Custer suggested that there must be a formula for allocating a certain amount of dollars per square foot, knowing the Auditor's Road project will be more expensive than the Lake Langdon project. The City Attorney wanted to clarify this statement. When referring to "more expensive" it refers to one having a better rate of return on the Langdon versus the Auditor's Road. Dorothy Netka, 2360 Commerce Boulevard. Ms. Netka is not comfortable with having an agreement signed that specifies how her property should be situated without a consultation with her first. She strongly suggested conferring with the business owners to see what their prospective of what could be happening to the property versus having the developer tell the City what would be happening to the property. She would like the business names made public that are going to be affected by this redevelopment project. The City Attorney strongly suggested that Ms. Netka have conversations with the developer about her concerns. Ms. Custer is confused on the role and who is the actual "boss" of the project. She stressed that she felt the City Council should be approaching the developer and saying how they would like their City to be built, and not the reverse. Chairperson Meisel stated this has been a vision for 9 years and the business have been aware of this process for that long of timer period. She stated there is a concept or preliminary agreement with the developer and she would encourage the people to work with the developer rather than the City at this point. Mr. Prosser stated this is a difficult issue when looking at a redevelopment project. He stated there are major issues and it is clearly the responsibility to look at the long-term liability and have the commercial areas in a position for a good future. He stated for redevelopment to occur in this area, essentially there has to be a large enough area be redevelopment at one time in order to change that momentum and get banks willing to invest money at a much higher level. He further stated he does realize this would provide 7 r MOUND HRA MINUTES -APRIL 11. 2000 hardships to some business owners and that is where the City Council needs to step in and say something. Ms. Custer asked if we would have been in the same position two years ago. Chairperson Meisel stated this project has been going on for the past two years, although, the TIF situation is new to the project. Michael Darrell, representing Mrs. Moy at 5555 Shoreline Boulevard. He stated Mrs. Moy could not be present tonight so he is attending on her behalf. He stated one item that has not been addressed is the consideration of the businesses that have been keeping the City of Mound a functioning city. He strongly stated the City needs to acknowledge all businesses in Mound and allow the people to be heard regarding the redevelopment project and what they would like to see done with their business. HRA Board Member Brown stated the F.DC is made up of business district members and the businesses have been aware of this project for some time. He further stated the EDC meetings are open to the public. HRA Board Member Brown stated surveys were sent out and opinions were brought back to the F.DC from business owners in the past. HRA Board Member Weycker suggested having a meeting the first week in May, 2000. Mr. Darrell would appreciate a poll taken from the business owners to see what they would like to have done with their town. Chairperson Meisel will take Mr. Durrell's suggestion under advisement and discussions could be further advanced at a possible COW meeting. MOTION by Ahrens, seconded by Brown, to adjourn the meeting at 7:55 p.m. The vote was unanimously in favor. Motion carried. 5-0. Fran Clark, Acting City Manager Attest: Chairperson Meisel 8 r City Of Mound Housing and Redevelopment Authority Letter 4/21/00 Issue Statement: Consideration of a resolution authorizing eminent domain proceedings related to acquisition of relocation site for the Mound Post Office. Background: The Mound United States Post Office (USPO) currently leases a building owned by the Mound HRA. The property had been previously acquired by Mound in order to construct a greenway project. The lease with the USPO expires in October of 2002. Construction of the greenway project is expected to begin in the summer of 2001. In order for this to occur it is necessary for the USPO to relocate by summer of 2001, prior to the expiration of their lease. The City of Mound has identified several potential relocation sites for consideration by the USPO. The USPO has indicated their conditional acceptance of one site. That site is located between the Commerce Place Shopping Center and Belmont Ave. The site is divided into two parcels. The western portion of the site is owned by United Properties, the eastern portion is owned by Mr. Willette. Both sites are currently vacant. Areal estate broker, acting on behalf of the city, has discussed the potential of acquisition with both owners, however no agreement has been reached regarding the terms of a sale. Recommended Motion: Approve a resolution authorizing eminent domain proceedings to acquire parcels Numbers 13-117-24-33-0084 and 13-117-24-33-0085. Basis of Recommendation: 1. Initiation of proceedings at this time will help assure the timely relocation of the USPO. 2. Filing of eminent domain proceedings will not preclude further discussions with owners for voluntary acquisition. 3. The HRA's action would permit the acquisition of property, which would be later sold to a developer selected by the USPO to construct the new Post Office. Alternative Recommendations: 1. The HRA may decide to defer discussion to a later date. 2. The HRA may decide to defer action pending further negotiations with the property owners. This may delay the relocation of the Post Office. Decision Mode: This matter will be presented at the HRA meeting of April 25, 2000. Jim Prosser Redevelopment Coordinator N : \Minnsota\Mou~\hraltr4.21.00. doc ROBERT d. LIrIDALL Attonuy at Law •Certified Real Property Law Spocialist (612)337-9219 Apri120, 2000 VIA FACSIlVIII..E & E-MAIL ONLY (651) 697-8555 Mr. Tim Prosser Ehlers & Associates, Inc. 3060 Centre Pointe Drive Roseville, MN 5 S 11 Re: Mound HRA Eminent Domain Resolution for Post Office Project Dear Jim: At John Dean's request, I have revised the above proposed eminent domain resolution. Please confirm that it is in acceptable form. Particularly, please confirm that the legal description of the properties to be condemned are accurate. It is my understanding that you propose that all of Willette's property be acquired, but not all of the "United Properties" parcel. I tried to reach Bruce Chamberlain but he was out for the day. I will be gone for the week after 4:00 p.m. today. At John Dean's suggestion, I am requesting my secretary, Jean Short, to a-mail the resolution to you as well, so that you may forward it to the City when you are comfortable with its form. Please call or fax me if you have any questions or comments. Very truly yours, Robert J. Lindall RJL:jms Enclosure cc: John Dean (with enclosure) Bruce Chamberlain (with enclosure) Sherman Malkerson (with enclosure) 12JI.-1793%vl MU195-2 'Certified by Minnesota State Bar Association HRA RESOLUTION NO. RESOLUTION AUTHORIZING E;NIINENT DOMAIN PROCEEDINGS TO ACQUIRE CERTAIN REAL PROPERTY WHEREAS, the Housing and Redevelopment Authority in and for the City of Mound, Minnesota (the "HRA") is a housing and redevelopment authority duly constituted and organized under law, with all of the powers enumerated in Minnesota Statutes, Sections 469.001 to 469.090 (the "HRA Act"); and WHEREAS, the HRA is authorized to develop and carry out redevelopment plans and redevelopment projects, as those terms are respectively defined in Mulnesota Statutes, Section 469.002, subdivisions 16 and 14; and WHEREAS, the HRA adopted a Development Program (the "Dev. Program") for the HRA's Development District No. 1 on July 15, 1985, and said plan was subsequently modified on December 14, 1999; and WHEREAS, the HRA has adopted the Tax Increment Financing Plan ("'TIF Plan") for the Tax Increment Financing District No. 1-2 (a redevelopment district) ("TIF District") within Developmei District No. 1 pursuant to law on December 14, 1999, and the Mound City Council approved the TIF Plan on the same date; and WHEREAS, pursuant to the Act, the HRA is authorized to undertake certain activities to prepare such real property for development and redevelopment; and WHEREAS, the United States Postal Service ("Postal Service's has proposed to redevelop certain property in the City (the "Redevelopment Property") for use as a post office (the "Project"); and iUi.-178s99v1 MLJ193-2 1 WI~REAS, the Redevelopment Property is located within the T1F District described in the TIF Plan and is located within Development District No. 1 and is subject to the Redevelopment Plan; and WI-~REAS, in order to assist in assembly of the site for the Project, the HRA proposes to acquire the Redevelopment Property for development of the Project; and WHEREAS, the HRA believes that the development of the Frojed is in the vital and best interests of the City and HRA and the health, safety, morals, and welfare of its residents, and in accord with the public purposes and provisions of the applicable State and local laws and requirements under which the Project has been undertaken and is being assisted; and WHEREAS, in order to meet anticipated constnlction deadlines for the Project, it is necessary for the HRA to acquire title to and possession of the Property by the earliest date permitted in accordance with 11~nn. Stat. § 117.042. NOW, THEREFORE, BE IT RESOLVED by the Board of Commissioners of the Housing and Redevelopment Authority in and for the City of Mound, Minnesota as follows: 1. It is necessary to acquire the real estate which is described in Exhibit A to this resolution ("Property") in order for the HRA to carry out the purposes of the Redevelopment Plan, as modified, and the Act, to eliminate and prevent the development or spread of conditions of blight found to exist by the City and the HRA and to assure full utilization of property which is vacant, unused, underused, and inappropriately used. 2. Acquisition of the Property by eminent domain, in the manner provided by Minnesota Statutes, Chapter 117, is deemed to be necessary and for a public purpose and is hereby authorized. xn.,-17ss99v1 MU195-2 2 s 3. The HRA deems it necessary for the reasons set forth in the Redevelopment Plan, as modified, and in order to meet anticipated construction schedules, to proceed without delay under Mlrlnesota Statutes, Section 117.042, to acquire title to and possession of the Property prior to the filing of a final report of commissioners. 4. The HRA's attorney and staff are authorized and directed to commence eminent domain proceedings to acquire the Property, to utilize the authority to cause early transfer of title and possession of the Property pursuant to Mnnesota Statutes, Section 117.042, and to pay to the owner(s) or into court, a sum of money to secure compensation to the owners of the Property, which amount shall be equal to petitioner's approved appraisal of value for the Property, as determined by staff. 5. The Property to be acquired is described on the attached Exhibit A 6. All parties displaced from said Property who qualify for relocation assistance under applicable federal regulations shall be provided with such assistance. Adopted by the Board of Commissioners of the Housing and Redevelopment Authority in and for the City of Mound, Minnesota this day of , 2000. ,Chair ATTEST: Executive Director RJI.178399v1 MU19S-2 3 ~1~:11: DESCRIPTION OF PROPERTIES TO BE ACQUIRED: Parcel l (PID No. 13-117-2433-0084) (United Properties) Street Address: Pending Lots 6, 7 and 8 and the west 40 feet of Lot 9, excerpt road, Kcehlers Addition to Mound, MN. Parcel 2 (PID No. 13-117-2433-0085) (Willette) Street Address: Pending Lots 10 and 11 and that part of Lot 9 lying easterly of the west 40 feet thereof except road, Kcehlers Addition to Mound, MN. l~n.l~as99V1 MU193-2 A-1 City Of Mound Housing and Redevelopment Authority Letter 4/21/00 Issue Statement: Consideration of a Development Agreement with Ray Mar Properties (Mound Family Hardware/Coast-TaCoast Hardware). Background: The HRA has previously approved a redevelopment plan for downtown Mound. Part of that plan includes an expanded public parking area as well as a general upgrade of the retail area. In the spring of 1999 Bruce and Patti Dodds approached the City with a plan to redevelop their site. Their plans were consistent with the design guidelines and general redevelopment plans of the City. In addition it provided an opportunity for an expanded public parking area which would be accomplished through a land exchange. In this land exchange Ray Mar Properties will be receiving less land than the City will receive. Additional costs will be incurred by R in order to permit the construction of an adjoining building and to meet city design criteria. A review of the project pro forma that includes these costs indicates that the project will not be financially feasible without assistance. The development agreement will provide a basis of loaning the funds required to make the project feasible. The funds will be provided from the additional tax increment created by the new development. In order to receive the assistance the R will be required to provide assurances that the project will meet city planning, zoning and building regulations and will agree to a minimum assessment agreement to support the tax increment payment. The land exchange will also be part of the agreement. Recommended Motion: Approve a development agreement with Ray Mar Properties. Basis of Recommendation: 1. The agreement supports development consistent with Mound Visions redevelopment plans. 2. The agreement defines expectations between the city and Ray Mar Properties for this development. 3. The agreement is contingent upon Ray Mar Properties obtaining the necessary project approvals. Alternative Recommendations: 1. The HRA may decide to defer discussion to a later date. 2. The HRA may decide to change terms of the development agreement. Decision Mode: This matter will be presented at the HRA meeting of Apri125, 2000. Jim Prosser Redevelopment Coordinator