2000-05-23B
e
MEETING OF THE MOUND
HOUSING AND REDEVELOPMENT AUTHORITY
2020 COMMERCE BOULEVARD
MOUND, MINNESOTA 55364
DATE: MAY 23, 2000, 7:00 P.M.
LOCATION: COUNCIL CHAMBERS, MOUND CITY HALL
ROLL CALL:
TAX INCREMENT FINANCING AGENDA:
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1. APPROVE MINUTES OF MAY 9, 2000, HRA MEETING.
2. PUBLIC HEARINGS:
A. PUBLIC HEARING TO CONSIDER THE
ESTABLISHMENT OF BUSINESS SUBSIDIES
CRITERIA, PURSUANT TO MINNESOTA STATUTES
116J.993 THROUGH 116J.995
B. PUBLIC HEARING TO CONSIDER A PROPOSED
BUSINESS SUBSIDY TO BE GRANTED BY THE HRA
TO RAY MAR PROPERTIES, INC. a.k.a. MOUND
FAMILY HARDWARE STORE, ("THE RECIPIENT")
UNDER MINNESOTA STATUTES SECTIONS
116J.993 THROUGH 116J.994. THE PROPOSED
SUBSIDY INVOLVES TAX INCREMENT FINANCING
ASSISTANCE TO FACILITATE DEVELOPMENT BY
THE RECIPIENT OF A RETAIL CENTER INCLUDING
A HARDWARE STORE IN THE CITY OF MOUND.
3. EVALUATION OF MAXWELL PROPERTY.
4. ADJOURN
MOUND HRA MEETING -MAY 9, 2000
HRA MINUTES -REGULAR MEETING -MAY 9, 2000
The Housing and Redevelopment Authority of the City of Mound, Hennepin County,
Minnesota, met in a regular session on Tuesday, May 9, 2000, at 7:00 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, Mark Hanus and Leah Weycker. Also in attendance were City Manager Kandis
Hanson, City Clerk Fran Clark, City Attorney John Dean, Mound Visions Coordinator Bruce
Chamberlain, James D. Prosser of Ehlers & Associates, Inc., Bill Beard from Mainstreet,
Inc., City Engineer John Cameron and Secretary Sue McCulloch and Diana Mestad. Others
present: Jorj Ayaz, Kristen & John Beise, Jane Carlsen, Martin Cowder, Ken Custer, Lori
Ham, Duane Leisinger, Dorothy Netka, Bill Netka, Peter Meyer, Linda Skorseth, Ani
Tasciyan.
Consent Agenda: All items listed under this Consent Agenda are considered to be routine by
the Housing and Redevelopment Authority. There will be no separate discussion of these
items unless a Councilmember or citizen so request, in which event the item will be removed
from the Consent Agenda and considered in normal sequence.
Chairperson Meisel called the meeting to order at 7:08 p. m.
TAX INCREMENT FINANCING.
1.0 APPROVE MINUTES OF APRIL 25. 2000.
MOTION by Hanus, seconded by Ahrens, to approve the minutes of April 25,
2000. The vote was unanimously in favor. Motion carried. 5-0.
1.1 DISCUSSION: MAXWELL PROPERTY VACANT LAND NEXT TO SUPER
AMERICA.
Bruce Chamberlain stated the Maxwell property is the property adjacent to Super America.
He stated there were a couple of reasons why the acquisition was not being pursued. Mr.
Maxwell and Mr. Chamberlain have had conversations recently that have been documented in
a recent a-mail. Mr. Maxwell is willing to negotiate the price of the property, but he is
quite firm on between the $350,000-$400,000 range. The City previously offered $250,000.
Mound Visions Coordinator stated Mr. Maxwell would like a closing date and a resolution
regarding the cleanup on the site with a possible no association letter attached. The bottom
line is that Mr. Maxwell is looking for a higher number the City will pay for this property.
Mound Visions Coordinator stated the City was willing to offer $500,000, but that got
reduced because of the geotechnical and environmental issues on the property.
HRA Board Member Ahrens asked if Mr. Maxwell was asking for additional items. Mound
Visions Coordinator stated he is asking for cash at the closing and a few other terms in the
agreement that are not substantial.
MOUND HRA MINUTES -MAY 9, 2000
,-
opinion of what the tangible liabilities actually are with this acquisition. He was not able to
state what this type of service would cost the HRA.
The City Attorney further added the amount of corrective soils work with would vary
depending on what is built on the site.
HRA Board Member Hanus stated it is possible that this site could house nothing more than
the farmers market or a parking lot. He asked the City Attorney if this would change the
factors. The City Attorney stated this would entail less corrective work but some would still
need to the done.
Chairperson Meisel asked if it would be possible reimbursement through the Super Fund.
James Prosser, Ehlers & Associates, Inc. stated the City needs to find out what the purpose
of the acquisition really is for the HRA. He indicated that the City could keep the control of
this property even if it does not buy it, because if other possible buyers came in and wanted
to develop it, the City still has to approved the development.
Chairperson Meisel stated she does not appreciate having to start at $350,000 for this
property knowing all the corrections involved. HRA Board Member Hanus agreed.
HRA Board Member Ahrens asked if condemnation was used to obtain the property are the
soil conditions and contamination considered in determining the price. The City Attorney
stated this probably would be taken into account if there is back-up to prove it.
HRA Board Member Weycker felt this piece of property is needed for the downtown
redevelopment and does not want to see the City lose it.
The City Attorney suggested coming back at another meeting with quotes to provide that
information and then have the HRA make the decision whether to proceed with more soil
analysis, contamination investigation or structural and engineering work.
HRA Board Member Hanus mentioned the HRA has already paid $17,000 investigating this
property. He does not want to see the HRA lose this property because of the TIF factor.
Mound Visions Coordinator stated a challenge to keep in mind is that in order to gain full
access based on current roadway plans; the City needs this specific piece of property.
MOTION by Brown, seconded by Weycker, to direct staff to obtain structural
and cleanup quotes from an engineering firm, as well as a concept plan for this
property from the appropriate individuals. The vote was unanimously in favor.
Motion carried. 5-0.
MOUND HRA MINUTES -MAY 9 2000
1.2 POST OFFICE RELOCATION UPDATE.
James Prosser, Ehlers & Associates, stated he been working with the real estate br
the post office and is continuing follow the progress of this project through the a oker on
stage. At this point, the Phase II stage cannot be cquisition
true control of the site. The Phase II is neces paid for by the post office until they have
$4,ppp_$6~~ nary at this point and would be in the range of
The City Attorney asked if this is reimbursable. Mr. Prosser stated he would ex t '
be reimbursable, but is not sure and could not guarantee it, but he would ~ this to
into the agreement. Mr. Prosser did say it would be TIF reimbursable. ~ to get that part
MOTION by Weycker, seconded by Ahrens, to complete Phase II of the ost
office relocation project. The vote was unanimousl p
5-0. yin favor. Motion carried.
Mr. Prosser further stated an offer has been made to the owner of the United Pro rti
parcel and we are waiting for a counter. There is still title work and surveyin t be ds
and once that information is prepared, there will be a determination of whetheg to file one,
eminent domain. Filing eminent domain does not mean it will truly happen.
1.3 BEARD GROUP UPDATE.
Mr. Prosser stated the Beard Grou Prelimin
15, 2000, and the Bear Group would like to have it extended t Mr pmos~rxpires on May
Purpose for the extension is to allow time for the developer to gather informal on sufdfichentl
to determine whether it is financially suitable for them to enter into the Final Develo me Y
Agreement. Mr. Prosser stated this is clearly a most complicated redevelopment r P nt
because of issues regarding land ownership, change of roadway and other ublic p sect
improvements. He further explained most of these issues are nearing reso ution. Mr.
Prosser stated there would be an additional 55 days to work out more specific infor
which would allow a firmer estimate of the cost of the project. mation
Mayor Meisel stepped down as Chairperson and HRA Board Member Hams became
Chairperson. .
Bill Beard and Paul Gambst of Mainstreet, Inc. Mr.
should be two things that come out of the project afterBthe preliminary Develor menthere
Agreement. The first is a concept plan and the second is a development bud et. He
this has been the most complicated project they have worked on. To date, the conce stated
presented back in November could not be built today because of high-pressure sewerli es n
under parts of the property, along with storm water ponding issues. If there are m '
changes that need to be made, they may need to do a new plan, but if not the ho a~or
moving forward, y pe to keep
Acting Chairperson Hanus asked when would the City receive final survey documents
storm water calculations because this is when the 55 day extension would start. The Cit d
Y
MAY 09 '00 01~04PM El-rLERS 8 ASSOCIATES
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NOTICE OF PUBLIC HEARING
MOUND HOUSING AND REDEVELOPMENT AUTFIORiTY
CITY OF MOUND
COUNTY OF HENNEPIN
STATE OF MINNESOTA
P.2i3
NOTICE IS HEREBY GIVEN that the Housing and Redevelopment Authority for the City of
Mound (the "HRA"),County of Hennepin, State of Minnesota, will hold a public hearing on May 23, 2000,
at approximately 7:00 p.m. at the Mound City Council Chambers in the Mound City Hall, 5341 Maywood
Road, Mound, Minnesota, relating to the establ'uhment of business subsidies criteria, pursuant to Minnesota
Statutes, Sections 116J.993 through 116J.995. Copies of the business subsidies criteria are on file and
available for public inspection at the office of the City Clerk at City Hall
All interested persons may appear at the hearing and present their views orally or prior to the meeting in
writing.
BY ORDER OF THE BOARD OF COMMISSIONERS OF
THE MOUND HOUSING AND REDEVELOPMENT AUTHORITY, MINNESOTA
!sl ~ /V~~
City Clerk
~tc.P~~,t.~~ l~7~E ~~ K~ ~?-tl'1~~ /3~ ~a~a
1 f.
HRA RESOLUTION NO.00-
RESOLUTION ADOPTING BUSINESS
SUBSIDY CRITERIA
WHEREAS, Minnesota Statutes Sections 116J.993 through 116J.994 (the "Act") requires
that economic assistance that meets the definition of "business subsidy" under the Act may not be
paid until the grantor adopts business subsidy criteria; and
WHEREAS, pursuant to notice as is required by the Act, the Housing and Redevelopment
Authority in and for the City of Mound has held its hearing on the adoption of such criteria which
are attached hereto as Exhibit A.
NOW THEREFORE, BE IT RESOLVED by the Housing and Redevelopment Authority
in and for the City of Mound that the business subsidy criteria contained in the attached Exhibit A
are hereby adopted.
Dated:
Pat Meisel, Board Chair
Attest:
Executive Director
!BD-180676v t
MU 195-2
Exhibit A
CITY COUDTCIL
CZTY OF l[OUND
Business Subsidy Criteria
1. PURPOSE
1.01 The purpose of this document is to establish the City Council's
(hereinafter refereed to as CC) criteria for granting of business
subsidies, as defined in Minnesota Statutes 116J.993, Subdivision
3, for private development. This criteria shall be used as a
guide in processing and reviewing applications requesting business
subsidies.
1.02 The criteria set forth in this document are guidelines only. The
CC reserves the right in its discretion to approve business
subsidies that vary from the criteria stated herein if the CC
determines that the subsidy nevertheless serves a public purpose.
1.03 The CC may amend this document at any time. Amendments to these
criteria are subject to public hearing requirements pursuant to
Minnesota Statutes, Sections 116J.993 through I 1 6J. 994.
2. STATUTORY LAMATIONS
2.01 In accordance with the Business Subsidy Criteria, Business Subsidy
requests must comply with applicable State Statutes. The CC of
Mound's ability to grant business subsidies is governed by the
limitations established in Minnesota Statutes 116J.993 through
116J.994.
3. PUBLIC POLICY REDUIREMENT
3.01 All business subsidies must meet a public purpose other than
increasing the tax base. Job retention may only be used as a
public purpose in cases where job loss is i~ninent and
demonstrable
4. BUSINESS SUBSIDY APPROVAL CRITERIA
4.01 All new projects approved by the CC of Mound should meet the
following minimum approval criteria. However, it should not be
presumed that a project meeting these criteria will automatically
be approved. Meeting these criteria creates no contractual rights
on the part of any potential developer.
4.02 The business subsidy shall be provided within applicable state
legislative restrictions, debt limit guidelines, and other
appropriate financial requirements and policies.
4.03 The project must be in accord with the Comprehensive Plan and
Zoning Ordinances, or required changes to the plan and Ordinances
must be under active consideration by the CC at the time of
approval.
4.04 Business subsidies will not be provided to projects that have the
financial feasibility to proceed without the benefit of the
subsidy. In effect, business subsidies will not be provided
solely to broaden a developer's profit margins on a project.
Prior to consideration of a business subsidy request, the CC may
1
Exhibit A
undertake an independent underwriting of the project to help
ensure that the request for assistance is valid.
4.05 Prior to approval of a business subsidies financing plan, the
developer shall provide any required market and financial
feasibility studies, appraisals, soil boring, information provided
to private lenders for the project, and other information or data
that the CC or its financial consultants may require in order to
proceed with an independent underwriting.
4.06 Any developer requesting a business subsidy should able to
demonstrate past successful general development capability as well
as specific capability in the type and size of development
proposed.
4.07 The developer must retain ownership of the project at least long
enough to complete it, to stabilize its occupancy, to establish
the project management, and to initiate repayment of the business
subsidy, if applicable.
4.08 A recipient of a business subsidy must make a commitment to
continue operations at the site where the subsidy is used for at
least five years after the benefit date.
4.09 Any business subsidy will be the lowest possible level and least
amount of time necessary, after the recipient maximizes the use of
private debt and equity financing first.
4.10 Recipients of any business subsidy will be required to meet wage
and job goals determined by the CC on a case-by-case basis, giving
consideration to the nature of the development, the purpose of the
subsidy, local economic conditions and similar factors.
5. TA% INCREMENT PROJECT EVALUATION CRITERIA
5.01 All tax increment requests will be evaluated under the general
criteria in Section I to 4 and the specific criteria in this
Section.. Changes in local markets, costs of construction, and
interest rates may cause changes in the amounts of Tax Increment
subsidies that a given project may require at any given time.
5.02 Some criteria, by their very nature, must remain subjective.
However, wherever possible "benchmark" criteria have been
established for review purposes. The fact that a given proposal
meets one or more "benchmark" criteria does not mean that it is
entitled to funding under this policy, but rather that the CC is
in a position to proceed with evaluations of (and comparisons
between) various business subsidy requests, using uniform
standards whenever possible.
5.03 Following are the evaluation criteria that will be used by the CC
of Mound
A. All business subsidy requests should optimize the private
development potential of a site.
B. All business subsidy requests should obtain the highest
possible private to public financial investment ratio. The CC
establishes a benchmark ratio of 3 parts private to I part
public funding for manufacturing/warehouse projects. Housing
and retail/commercial projects shall be reviewed on an
2
Exhibit A
individual basis.
C. All business subsidy requests should create or retain the
highest feasible number of jobs on the site at the highest
feasible wages.
D. All business subsidy requests should create the highest
possible ratio of property taxes paid before and after
redevelopment. Given the different assessment circumstances
in the City, this ratio will vary widely. However, under
normal circumstances, the CC will expect at least a 1:2 ratio
of taxes paid before and after redevelopment.
E. Business subsidy requests should normally not be used to
support speculative industrial, commercial, and office
projects. In general, speculative projects are defined as
those projects which have letters of intent or pre-leasing for
less than 50$ of the available leasable space.
F. All business subsidy requests will be reviewed to determine
the feasibility to provide the CC with equity participation
in new developments (through a share of the profits), or to
treat the business subsidy as a second mortgage with fixed
payments.
G. All business subsidy requests involving displacement of low
and moderate income residents should give specific attention
to the re-housing needs of those residents. Normally, this
should be done as a part of the business subsidy. Adequate
solutions to these re-housing needs will be required as a
matter of public policy.
H. All business subsidy requests will need to meet the "but for"
test. Business subsidies will not be granted unless the need
for the CC's economic participation is sufficient that,
without that assistance the project could not proceed in the
manner as proposed.
I. Business subsidies will not be used when the developer's
credentials, in the sole judgement of the CC, are inadequate
due to past track record relating to: completion of projects,
general reputation and/or bankruptcy, or other problems or
issues considered relevant by the CC.
J. Business subsidies will not be used to support projects that
place demands on City services, or other capital or operating
expenditures, that exceed the average City expenditures for
similar facilities. Consideration will be given to the total
public costs that are required to support the project,
including offsite facilities costs that are required.
K. Business subsidies will not normally be used for projects that
would generate significant environmental problems in the
opinion of the local, state, or federal governments.
3
MAY 09 '00 01~04PM EHLERS & ASSOCIATES
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~~ Q -o,v
NOTICE OF PUBLIC HEARING
MOUND HOUSING AND REDEVELOPMENT AUTHORITY
CITY OF MOUND
COUNTY OF I~NNF.pIN
STATE OF MNNESOTA
P.3i3
tt R ~t
NOTICE IS HEREBY GIVEN that the Housing and Redevelopment Authority for the City of
Mound (the "HRA"}, County of Hennepin, State of Minnesota, wilt hold a public hearing on May 23, 2000,
at approximately 7:00 p.m. at the City Council Chambers in the Mound City Hall, 5341 Maywood Road,
Mound, Minnesota. regarding a proposed business subsidy to be granted by the HRA to Ray Mar Properties
Inc. a.k.a Mound Famiiy Hardware Store, (the °Recipient") under Minnesota Statutes, Sections 1161.993
through 1161.994. The proposed subsidy involves tax increment financing assistance to facilitate
developenent by the Recipient of a retail center including a hardware store in the City of Mound.
Information about the proposed business subsidy and a copy of the draft business subsidy agreement are
available for inspection at City Hall during regular business hours.
All interested persons may appear at the hearing and present their views orally or prior to the meeting in
writing.
Dated' ,~~ ~ ~ ~
BY ORDER OF THE BOARD OF COMMISSIONERS OF
THE MOUND HOUSING AND REDEVELOPMENT AUTHORITY, MINNESOTA
/s/
City Clerk
HRA RESOLUTION NO.00-
RESOLUTION ADOPTING BUSINESS SUBSIDY AGREEMENT
WHEREAS, the Housing and Redevelopment Authority in and for the City of Mound has
entered into a Contract for Private Redevelopment with Ray Mar Properties, Inc., calling for the
redevelopment of certain lands within the City of Mound; and
WHEREAS, the Contract calls for the providing of economic assistance by the HRA to the
Redeveloper which meets the definition of "business subsidy" as that term is used in Minnesota
Statutes, Sections 116J.993 through 116J.994 (the "Act"); and
WHEREAS, THE Act requires the adoption of a business subsidy agreement as a
precondition to the making of a business subsidy; and
WHEREAS, pursuant to notice as required by the Act, the HRA has held its public hearing
on the adoption of a business subsidy agreement with the Redeveloper.
NOW THEREFORE, BE IT RESOLVED BY the Housing and Redevelopment
Authority in and for the City of Mound that the business subsidy agreement found in Article X of
the Contract and attached hereto as Exhibit A is hereby adopted.
Dated:
Pat Meisel, Board Chair
Attest:
Executive Director
JBD-180644v I
MU 195-7
(g) The Redeveloper does not have a parent corporation.
(h) The Redeveloper has not received, and does not expect to receive financial
assistance from any other grantor as defined in the Business Subsidy Act in connection with
purchase of the Redevelopment Property or construction of the Minimum Improvements.
Section 10.2. Job and Wage Goals. Within two years after the earlier of the date of
issuance of the Certificate of Completion or the date a business occupies the Redevelopment
Property (the "Compliance Date"), the Developer shall cause to be created at least 0.5 new full-time
equivalent job on the Redevelopment Property, including jobs retained where the loss was imminent
and demonstrable, and shall cause the wages for the 0.5 employee to be no less than 100 % of the
federal minimum wage, exclusive of benefits. Notwithstanding anything to the contrary herein, if
the wage and job goals described in this Section 10.2 are met by the Compliance Date, those goals
are deemed satisfied despite the Redeveloper's continuing obligations under Sections 10.1(f) and
10.4. The HRA may, after a public hearing, extend the Compliance Date by up to one year,
provided that nothing in this Section 10.2 will be construed to limit the HRA's legislative discretion
regarding this matter. If the Compliance Date is measured from the date of occupancy of a portion
of the Minimum Improvements by a business and the HRA expects other businesses to occupy
portions of the Minimum Improvements, the HRA may assign other Compliance Dates to such
other businesses.
Section 10.3. Remedies. If the Developer fails to meet the goals described in Section
10.1(c), the Developer shall repay the HRA within one year upon written demand from the HRA a
pro rata share of the amount of the subsidy granted by this Agreement and interest on said amount at
the implicit price deflator as defined in Minnesota Statutes, Section 275.50, subd. 2, accrued from
the date of issuance of the Certificate of Completion to the date of payment. For purposes of this
Section 10.3, the amount which the Redeveloper must repay within one year to the HRA, is the
present value of the unpaid balance of the Loan. The term pro rata share means percentages
calculated as follows:
(i) if the failure relates to the number of jobs, the jobs required less the jobs
created, divided by the jobs required;
(ii) if the failure relates to wages, the number of jobs required less the number of
jobs that meet the required wages, divided by the number of jobs required;
(iii) if the failure relates to maintenance of the office, service and retail facility in
accordance with Section 10.1(f), 60 less the number of months of operation
as an office, service and retail facility (where any month in which the facility
is in operation for at least 15 days constitutes a month of operation),
commencing on the date of the Certificate of Completion and ending with
the date the facility ceases operation as determined by the HRA, divided by
60; and
(iv) if more than one of clauses (i) through (iii) apply, the sum of the applicable
percentages, not to exceed 100%.
JBD-180279v1
MU 195-7
Nothing in this Section 10.3 shall be construed to limit the HRA's remedies under Article
IX hereof. In addition to the remedy described in this Section 10.3 and any other remedy available
to the HRA for failure to meet the goals stated in Section 10.1(c), the Redeveloper agrees and
understands that it may not a receive a business subsidy from the HRA or any grantor as defined in
the Business Subsidy Act for a period of five yeazs from the date of the failure or until the
Redeveloper satisfies its repayment obligation under this Section 10.3, whichever occurs first.
Section 10.4. Reports. The Redeveloper must submit to the HRA a written report regarding
business subsidy goals and results by no later than Mazch 1 of each year, commencing March 1,
2001 and continuing until the later of (i) the date the goals stated Section 10.1(c) are met; (ii) 30
days after expiration of the five-yeaz period described in Section 10.1(f); or (iii) if the goals aze not
met, the date the subsidy is repaid in accordance with Section 10.3. The report must comply with
Section 116J.994, subdivision 7 of the Business Subsidy Act. The HRA will provide information to
the Redeveloper regarding the required forms. If the Redeveloper fails to timely file any report
required under this Section 10.4, the HRA will mail the Redeveloper a warning within one week
after the required filing date. If, after 14 days of the postmarked date of the warning, the
Redeveloper fails to provide a report, the Redeveloper must pay to the HRA a penalty of $100 for
each subsequent day until the report is filed. The maximum aggregate penalty payable under this
Section 10.4 is $1,000.
Section 10.5. Hearin . Payment of the business subsidies is contingent upon approval
following the hearings provided for in the Business Subsidy Act.
16D-180279v I
MU 195-7
.., ,. .,.... 1
612-3386838 HOISINGTON KOEGLER 321 P05 MAY 19 '00 12:10
. Cyeative Solutions for Land Planning and Design
Hoisiagtoa Koegler Group Inc.
MEMO
May 19, 2000
To: Kandis Hanson, City Manager
City of Mound
From: Bruce Chamberlain
Mound elisions Coordinator
Re: Evaluation of Maxwell property.
At the direction of the HRA at the last meeting, Staff has attempted to collect professional service
quotes from structural and geotechnical engineers for evaluation of the Maxwell property.
To date, we have attempted but have been unable to gather the seeded information to provide the
HRA with an adequate representation of cost. I apologize for the delay. We will have the
information to the HRA at the June meeting.
123 Noah Third Screen, Suice 100, Mirmeapolis.llZN 55401-1659
Ph (612) 338-0800 Fx (612) 338.6838