Loading...
HomeMy WebLinkAbout1989-10-02 HRA Regular Meeting I MINUTES EDINA HOUSING AND REDEVELOPMENT AUTHORITY OCTOBER 2, 1989 Answering rollcall were Commissioners Kelly, Paulus, Rice, Smith and Richards. MINUTES of the HRA Meeting of September 18, 1989 were approved as submitted by motion of Commissioner Smith, seconded by Commissioner Paulus. Ayes: Kelly, Paulus, Rice, Smith, Richards Motion carried. ACQUISITION OF KUNZ OIL COMPANY AND LEWIS ENGINEERING COMPANY PROPERTIES CONSIDERED: RESOLUTION ADOPTED INITIATING REDEVELOPMENT PROCESS Executive Director Hughes stated that the subject for consideration is adoption of a resolution to acquire, by eminent domain if necessary, the property owned by Lewis Engineering Company and Kunz Oil Company in the Grandview Redevelopment Area. The subject property is located south of Eden Avenue and west of the Soo Line Railroad tracks. Since 1984, Lewis Engineering has acquired the Soo Line Railroad property. The property is part of the Grandview Area Redevelopment Plan and Tax Increment District established in 1984. The District can exist for a period of 25 years for the repayment of any public debt that is incurred. The Plan was preceded by the Grandview Traffic Plan adopted early in 1984 and was prompted by a proposal for the redevelopment of the Biltmore Motel site. The Grandview Traffic Plan recommended a number of improvements in the Grandview Area which have been or are being completed: 1) Link Road reconstruction and signalization, 2) Closure of Vernon/Eden/Sherwood intersection, 3) Consolidation of Jerry's/Norwest Bank/Union Oil access, 4) Vacation of Summit Avenue, and 5) Demolition of the Public Works garage and reconstruction of public parking ramp/Public Works facility. In addition, several private developments envisioned by the Plan have occurred, e.g. Jerry's shopping center and office expansion, Vernon Terrace Apartments and Summit Place Apartments. The Redevelopment Plan also included a Land Use Plan which was adopted and as related to the subject property it indicated a medium density residential re-use of the site with approximately 200 units. The southern portion of the railroad property was shown as office and showroom use. Director Hughes recalled that since adoption of the Plan, several proposals were conceptually reviewed for the subject property but were eventually dropped. In 1988 Jerry's Enterprises held options on the Lewis Engineering and Kunz Oil sites and proposed a retail office complex of approximately 160,000 square feet. The proposal also incorporated the School District property and proposed moving the school bus garage to the southern end of the Kunz Oil site. For a variety of reasons the options expired and were not renewed. During the past several months, staff has discussed redevelopment alternatives for the properties with the owners as well as several developers. Most prospective developers were interested in exclusive retail uses for the site; a couple had interest in a housing use for the site. One of the prospective developers is again Jerry's Enterprises who is working with Opus Corporation to pursue development of the property. All developers who approached staff envisioned a tax increment assistance package associated with the redevelopment, although specifics were not discussed. Director Hughes explained that the owners of the property, Lewis and Kunz, have by letters indicated that private sale of the property is not possible at this time and have advised that the HRA should consider using its right of eminent domain to pursue acquisition and redevelopment of the property. To that end a draft resolution has been prepared that would affect the action of the HRA to direct its staff and attorneys to pursue acquisition of the site for redevelopment. Staff would suggest that is such a resolution is adopted, it should be conditional upon the execution of a redevelopment agreement with a redeveloper. H.R.A. Minutes - 10/2/89 Page 2 Further, that the HRA formally direct staff to pursue a redevelopment agreement • with Jerry's Enterprises/Opus. Director Hughes pointed out that at this point the resolution does not include the School District site. Although the Board of Education has not formally considered this project, School District staff has again confirmed their interest in the concept and their willingness to consider relocation alternatives. The HRA/Council would have to take several additional actions prior to actual acquisition and development of the property including: - Approval of a redevelopment agreement - Rezoning and plan approval of the proposed project - Public hearing to amend the Tax Increment Financing Plan - Public hearing to re-sell the properties if purchased by the HRA. As to alternatives, Director Hughes said the HRA could: 1) Reject the resolution and involvement in the project and suggest that any redevelopment be accomplished on a private basis, 2) Reject the resolution but direct staff to negotiate with a prospective redeveloper; the resolution could be reconsidered later if a redevelopment contract were achieved, or 3) Adopt the resolution and then solicit Requests for Proposals (RFP) for development of the site thereby allowing formal comparison of development proposals. He explained that this is a relatively complicated process which may require a greater commitment to redevelop the site than the HRA wishes to offer at this point. If the HRA chose to pursue the RFP option, it may want to develop some criteria for the development and elements of the financial package that proposers could relate to in making their proposals. Director Hughes concluded his presentation by noting that Robert Shattuck, representing Jerry's Enterprises, was present. • Commissioner Paulus asked what kind of cost recovery the HRA would realize from buying the property from the present owners and then re-selling it to a developer. Director Hughes said it probably would be sold at a substantial reduction in cost in that the HRA would be purchasing a developed and improved property with an active tenant or business and then re-selling it essentially as vacant land for redevelopment. If the HRA were involved in the acquisition it could expect to recover its public cost from the tax increments generated from the new development on the site. Commissioner Paulus also asked if the HRA were to adopt the resolution and the redevelopment never was firmed up would the HRA end up acquiring the land. Director Hughes explained that the land would not be acquired until the HRA would take further steps. At any point in the process the HRA could elect to proceed with acquisition, proceed with condemnation, or decline to acquire. Commissioner Kelly raised the following issues of concern: 1) Whether a soil test has been done on the land and, if not, that the owners should have that testing done to ensure that the land is environmentally sound, 2) That the School property be included in any redevelopment, 3) What the Tax Increment District is producing now, 4) Industrial appraisal of the property versus a commercial/retail appraisal, 5) How this plays into fiscal disparities, 6) That the public benefit be documented, and 7) If the HRA agrees to the condemnation it should have the option to go with another developer if this project does commence. Director Hughes responded that he is unaware of any soil test that has been made of the land. The HRA has elected throughout this district that it not contribute to the fiscal disparities distribution of the City and that none of the City's tax increment districts are contributing. However, under recent law that election can be • changed. The proposed resolution is that the acquisition of the property is conditioned upon an approved redevelopment agreement but does not specify with whom. A second part of the recommendation was that staff be authorized to negotiate with one particular developer. If a draft agreement cannot be reached, or the HRA would elect to reject the agreement, the HRA could authorize staff to H.R.A. Minutes - 10/2/89 Page 3 seek other redevelopers or rescind the resolution. Commissioner Smith asked questions concerning private sale of the property, relocations costs, development/acquisition costs, the effect of removing the property from the tax roles, and security for the development. Director Hughes said that it was his understanding that the property was currently off the market. Attorney Erickson explained that under the state laws, if the property is acquired by condemnation, there are relocation expenses that must be paid. Those are waiveable by the owner on very strict terms and are not waiveable by such persons as tenants. In this case, the Lewis Engineering property is owned by Gordon Lewis and his wife and is leased to Lewis Engineering. Staff has asked for waivers from all owners and tenants and has also told Jerry's Enterprises/Opus, and will tell any subsequent developer, that they must give us an indemnity if those waivers are, in fact, not good. To the extend the HRA ends up paying relocation benefits, they will have to pay the HRA. Regarding development and acquisition costs, Director Hughes explained that those costs would be determined in connection with the redevelopment agreement. It is estimated that acquisition costs would be III approximately $2.5 million. As to the effect of removing the property from the tax roles, Director Hughes said that this property as part of the Tax Increment District is off the tax roles. If public money is spent on this project it will, in effect, lengthen the duration of the District. When the acquisition costs have been determined, it will be possible to do an analysis which will show impacts on jurisdictions and the average homeowner in Edina. Regarding security, Director Hughes said that would be part of the redevelopment agreement. A comparison would be the agreement that the HRA has with Jerry's Enterprises on the parking ramp whereby Jerry's has signed an assessment agreement which imposes a minimum valuation on the private improvements thereby generating a certain minimum tax. There are also other guarantees built in such as a shortfall agreement. Robert Balch, 4721 Wilford Way, stated that he had a definite interest in the subject property only over the last month. He said he was told by the owners of the properties as of Saturday that they were on the market for approximately $3.5 million. He asked how much the tax increment write-down would be. Director Hughes said that is not known as this time and would be part of the redevelopment agreement to be negotiated. Mr. Balch asked if the resolution were passed would that preclude the land being purchased by private individuals. Attorney Erickson replied that it would not. Mr. Balch then commented that it seemed to him that a developer is being chosen before the proposal has been heard by the Planning Commission who may not like the plan. Mayor Richards commented that the final decision rests with the HRA and that what the staff has proposed will in no way curtail the normal process. Mr. Balch said that, as a real estate broker, he would ask the HRA to set this matter aside for 30 days. He said he felt there was a large feeling in western Edina that another supermarket might be needed and would be a possibility. He indicated that one developer has a scheme for the School District bus garage property which would be proposed shortly. Commissioner Rice asked if adoption of the resolution would obligate the HRA to anything and if it would preclude the owners of the property or the HRA from negotiating from anyone else, also if there was some period of time for this to take place. Director Hughes stated that adoption of the resolution in itself would not, but that if the HRA were to adopt the second part of the recommendation it would be staff's sense to negotiate with only the named redevelopers. He suggested that this be done in a six-months timeframe. Commissioner Rice asked if the proposed developers were knowledgeable and experienced and if they understood the risks involved, taking into account the comments that have been made at this hearing, and that they understand the normal process for redevelopment. Director Hughes said he believed that they certainly are knowledgeable and understand the risks involved. Chairman Richards commented that he would support the resolution with some H.R.A. Minutes - 10/2/89 Page 4 modifications. If the redevelopment is to happen with the proposed developers that negotiations be concluded within three months. Further, that staff be instructed to negotiate with Jerry's Enterprises/Opus with the understanding that due and proper consideration be given by the staff to any other developer who may submit a proposal for redevelopment of the subject property. Commissioner Smith said he agreed with the shorter timeframe for negotiations on a redevelopment agreement with Jerry's Enterprises/Opus, that he did not favor condemnation and would like to keep it open for other proposals. He suggested that a discussion on the issue of land use might be appropriate at this time. Chairman Richards responded that the time to consider land use is when a specific proposal is brought back for redevelopment of the property at which time all the costs and other factors would be taken into consideration. The HRA/Council will then either approve it or vote it down. Commissioner Kelly reiterated that nothing be done until a soil test has been made of the property. Attorney Erickson said that the redevelopment agreement would be a three-party document between the owners, the developers and the HRA and that a soil test could be a condition of the agreement. Commissioner Rice commented that the HRA should not assume the function of the developers which is to work these things out, take risks, make assumptions, put the numbers together, present a proposal and then convince the HRA that this is a good deal and of benefit to the public. Chairman Richards moved the following actions: 1) To adopt the resolution as follows, 2) To instruct staff to pursue and negotiate a redevelopment agreement with Jerry's Enterprises/Opus for the subject property, and 3) To direct staff to give due consideration to any written proposal that may be submitted by other developers for redevelopment of the subject property: RESOLUTION WHEREAS, it is necessary, advisable, and in the public interest that the Housing and Redevelopment Authority of Edina, Minnesota (the "HRA"), a body politic and corporate under the laws of the State of Minnesota, acquire for redevelopment purposes, and pursuant to the redevelopment plan entitled "Grandview Area Redevelopment Plan" dated May 30, 1984, adopted by the HRA on June 18, 1984, and approved by the City Council of the City of Edina on June 18, 1984, property within the Grandview redevelopment area; and WHEREAS, in order to accomplish the purposes set out in said Plan, it is necessary that the properties described on Exhibit A attached hereto and hereby made a pat be redeveloped; and WHEREAS, the HRA has been advised that said property will not be made available for redevelopment unless it is acquired by eminent domain; and WHEREAS, by reason of the inability of any private party to purchase said property for redevelopment, it will be necessary to procure the same by the right of eminent domain. NOW, THEREFORE, BE IT RESOLVED, that the HRA proceed to procure the property described on Exhibit A hereto under its right of eminent domain if it is not made available for redevelopment by sale to a private party or parties; and that the attorneys for the HRA be instructed and directed to file the necessary petition therefor and to prosecute such action to a successful conclusion, or until it is abandoned, dismissed or terminated by the HRA or by the Court; and that the attorneys for the HRA, the Director and Executive Director of the HRA and the Chairman and Secretary of the HRA do all things necessary to be done in the commencement, prosecution and successful termination of such eminent domain proceeding. BE IT FURTHER RESOLVED, that none of the foregoing actions to acquire the property described on Exhibit A hereto be started or undertaken until the HRA has signed and delivered a contract for redevelopment of said property, and the School District Property north of Eden Avenue, with a redeveloper, and on terms and H.R.A. Minutes - 10/2/89 Page 5 conditions, acceptable to the HRA, and until the Tag Increment Financing Plan is amended in accordance with Minnesota Statute 469.175, subd. (4) . BE IT FURTHER RESOLVED, that none of the foregoing resolutions shall be effective or valid after December 31, 1989. EXHIBIT A Lot 1, Block 1, Wanner Addition, EXCEPT that part described as follows: Beginning at the Southeast corner of said Lot 1; thence North along the East line of said Lot 1, a distance of 23.4 feet; thence West parallel with the South line of said Lot 1 a distance of 101 feet; thence South parallel with the East line of said Lot 1, a distance of 22.4 feet; thence West parallel with the South line of said Lot 1 to the West line of said Lot 1; thence South along the West line of said Lot 1 a distance of 1 foot to the Southwest corner of said Lot 1; thence East along the South line of said Lot 1 to the point of beginning. and Lot 1, Block 1, "Edenmoor, Hennepin County, Minnesota", EXCEPT the South six (6) feet thereof. and That part of Government Lot 8, Section 28, Township 117 North, Range 21 West of the 5th Principal Meridian, lying Southerly of the South line of Eden Avenue, Westerly of the West right of way line of the Minneapolis Northfield and Southern Railway and Easterly of Block 1, Wanner Addition, EXCEPT that part described as follows: Commencing at the Northeast corner of Lot 2, Block 1, Wanner Addition; thence North a distance of 25 feet; thence West a distance of 90 feet to the East line of Lot 1, Block 1, Wanner Addition; thence South a distance of 25 feet to the Southeast corner of said Lot 1; thence East a distance of 90 feet to the point of beginning. Also, Lot 2, Block 1, Wanner Addition, according to the map or plat thereof on file and of record in the office of the Register of Deeds in and for said Hennepin County, subject to an easement for roadway purposes over and across the South 25 feet of said Lot 2, and together with an easement for roadway purposes over and across the North 25 feet of Lot 3, Block 1 of said Wanner Addition; also together with an easement for road purposes over a strip of land 16 feet in width being 8 feet on each side of the following described line: Commencing at a point on the south line of Eden Prairie Road 358 feet due East from the West line of said Government Lot 8; thence South and parallel with the west line of said Government Lot 8 to a point which is 612.9 feet North of the South line of said Lot 8; thence west at right angles to east line of premises first above described. That part of Lot 1, Block 1 of said Wanner Addition described as follows: Beginning at the Southeast corner of said Lot 1; thence North along the East line of said Lot 1, a distance of 23.4 feet; thence West parallel with the South line of said Lot 1 a distance of 101 feet; thence South parallel with the East line of said Lot 1, a distance of 22.4 feet; thence West parallel with the South line of said Lot 1 to the West line of said Lot 1; thence South along the West line of said Lot 1 a distance of 1 foot to the Southwest corner of said Lot 1; thence East along the South line of said Lot 1 to the point of beginning. That part of Government Lot 8, Section 28, Township 117 North, Range 21 West, Hennepin County, Minnesota, described as follows: Beginning at a point located on a line drawn between the following described points; Point 1 located on a line parallel with and distant 221.8 feet East of the West line of said Government Lot 8, which point is distant South 259.4 feet from the Intersection of the center line of Eden Prairie Road and said line; and Point 2 located on the South line of said Government Lot 8, 246.8 feet East of the Southwest corner of said Government Lot 8; said point of beginning being 647.9 feet from the South line of said Government Lot 8; thence Northerly along said drawn line 25 feet; thence Easterly and at right angles a distance of 90 feet; thence Southerly and parallel with said drawn line 25 feet; thence Westerly and at right angles to point of beginning. H.R.A. Minutes - 10/2/89 Page 6 ATTEST: Chairman j ;' i E cutive Di ec Kor Motion for the above actions was seconded by Commissioner Kelly. Rollcall: Ayes: Kelly, Paulus, Rice, Smith, Richards Motion carried. There being no further business on the HRA Agenda, motion of Commissioner Kelly was seconded by Commissioner Rice for adjournment. Motion carried unanimously. iJ 1 Execu iv q irector