HomeMy WebLinkAbout1989-03-06 HRA Regular Meeting MINUTES
EDINA HOUSING AND REDEVELOPMENT AUTHORITY
MARCH 6, 1989
Answering rollcall were Commissioners Kelly, Paulus, Rice, Smith and Richards.
MINUTES of the Joint HRA/Council Meeting of February 21, 1989 were approved as
submitted by motion of Commissioner Smith, seconded by Commissioner Kelly.
Ayes: Kelly, Paulus, Rice, Smith, Richards
Motion carried.
CONVEYANCE OF PHASE I CENTENNIAL LAKES CONDOMINIUMS AUTHORIZED. Executive
Director Hughes recalled that at the last meeting the Council had asked for
additional details concerning the Centennial Lakes Condominiums project prior to
authorizing the conveyance of the Phase I condominium site. Specifically, the HRA
requested details concerning the second mortgage program and sales policies. He
ve
summarized the requirements that have been imposed through the redevelopment
agreements executed in October, 1988, as foll ows: HRA Requirements - 80% of the
condominium units must be sold to low and moderate income persons. Low and
moderate income presently defined as household income of $40,700 annually or less.
East Edina Housing Foundation Requirements - Sales Terms: Principal amount of
second mortgage cannot exceed 40% of sale price; Minimum down payment of 5% (may
be less if approved by VA or FHA) ; Second mortgage amount is determined as if
buyer first qualified for maximum first mortgage; Owner occupancy is required;
Only units selling for $90,000 or less qualify for second mortgages; Edina
preference (all things being equal, a buyer who lives, works or originally came
from Edina is favored over another buyer) . Second Mortgage Terms: Interest rate
is 5% simple, non-compounded; Term of the second mortgage is equal to the term of
the first mortgage; The second mortgage is assumable for the first five years of
the mortgage; Monthly payments are not required but the principal amount and
accrued interest are due on sale of the unit. Special Foundation Policies:
Co-signers or guarantors of the first mortgage are permitted, however, second
mortgages are limited to $5,000 in such cases; Assets are limited to $25,000
excluding an automobile and down payment in order to qualify for a second
mortgage; First mortgage refinancing is permitted without repayment of the second
mortgage provided that no cash is realized from the refinancing. Director Hughes
explained that within those broad parameters the housing developer then has the
latitude to market the units and specifically design the mortgage program to fit
certain buyers. Also presented were: 1) a pre-construction price list for the
condominiums showing the array of units, unit types and floor areas; 2) the second
mortgage matrix showing the various units matched up with the income
characteristics of the buyers, and further matched up with the second mortgages
proposed; and 3) the profile of individuals who have reserved units at Centennial
Lakes to date. Member Kelly expressed the following concerns: 1) How do we know
the second owner is a low/moderate income person on assumption of the mortgage, 2)
Is an inspection made on a roll-over to insure that the property has been well
maintained, 3) That the established 5% interest on the second mortgage is tracking
with inflation, 4) That this was done to encourage young people to come back to
Edina and that, philosophically, the second mortgage should be paid off before the
owner goes on to something else, and 5) That the second mortgage money pool
continues to build so that it could be used for an owner wanting to buy a single
family home in Edina. In response, Director Hughes explained that on an
assumption the buyer is required to complete an income certification worksheet
that is presented to the Foundation based on the same qualifying characteristics
as the original buyer had to furnish. The Foundation then has to sign an
assumption agreement that allows the mortgage to be rolled over to the new buyer.
If the new buyer does not qualify the second mortgage loan would have to be
repaid. No inspection is made on an assumption of the mortgage. As to the 5%
interest rate, the intent was to permit the assumption for the first five years
from the date of the original second mortgage. After that the Foundation would
want to review the terms again to see if new mortgages to be issued should have a
higher interest rate. Member Smith asked Larry Laukka, the developer, if any
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March 6, 1989
Page Two
special planning has been done to provide for recycling by owners of the
condominiums. Mr. Laukka said that they started the recycling program at
Edinborough and that they plan to carry that into the Centennial Lakes development
by locating trash areas in the garages in each of the buildings. Although it
takes some educating, experience at Edinborough shows that recycling does work.
Member Smith then asked Mr. Laukka if, as the developer, he could continue to
watch to be sure that the units are maintained in good condition. Mr. Laukka
explained that there are no provisions for inspection but that the market rate
tends to take care of that. If, in fact, someone abuses their property it
typically does not sell or would sell for something considerably less. There is
no good answer except to franchise or license someone to come in prior to an
assumption and do an inspection. Member Smith said he was concerned about two
things, that there be earnings and not losses and that the moneys come back in to
repay the debt initially and then the proceeds can be used to do other
enhancements within Edina through the East Edina Housing Foundation. Mr. Laukka
said there were two philosophical questions a few years ago, one of which was
regarding the money coming back into the pool and was that good business. He said
it was concluded that it was because it would create a mortgage pool for
subsequent users whether they were in this development or some other one. The
second question was should the City be in the posture of trying to make money on
the second mortgages, e.g. should it be charging a market rate and have that pool
grow. It was concluded that we should see that the integrity of the principal was
retained but not be in the business to make money. Mr. Laukka said that could
change if the Council so wished. Member Rice asked 1) Who looks at the second
mortgage application on a re-sale, 2) Do the requirements imposed by the HRA and
the East Edina Foundation parallel those of the Edinborough project, and 3) What
servicing problems have experienced. Director Hughes replied that there is a
servicing agreement with United Mortgage. They review the income certification
worksheet and give an opinion as to whether the applicant qualifies or not. As to
the requirements, they are identical to those of Edinborough. Servicing has been
time consuming for staff in keeping up with questions that are asked, but in terms
of technical problems with assumptions they have gone well. He added that with
Centennial Lakes as units come on line the Foundation probably would be wise to
look at hiring a parttime individual, e.g. a retired real estate broker, who would
be familiar with the project and who could handle ombudsman type duties. Mayor
Richards then asked for any comments or questions from the public. None being
heard, Commissioner Smith introduced the following resolution and moved adoption:
RESOLUTION RATIFYING AND AUTHORIZING THE
EXECUTION AND DELIVERY OF VARIOUS DOCUMENTS
BE IT RESOLVED by the Board of Commissioners of the Housing and Redevelopment
Authority of Edina, Minnesota (the "HRA"), as follows:
1. Recitals. The HRA and the Edina City Council have previously approved a
redevelopment plan, as defined in Minnesota Statutes, Section 462.421, subdivision
15, designated as the Southeast Edina Redevelopment Plan, and have approved
various amendments thereto (as so amended, the "Redevelopment Plan"). Acting
pursuant to the Redevelopment Plan, the HRA has acquired certain land in the area
included in the Redevelopment Plan and it has been proposed that the HRA sell and
transfer a portion of such land to the East Edina Housing Foundation (the
"Foundation"), pursuant to a Land Sale Agreement by and between the HRA and the
Foundation (the "Agreement"). By a resolution adopted March 7, 1988, the HRA
approved the form of the Agreement and authorized any two officers of the HRA to
execute and deliver the Agreement on behalf of the HRA with such modifications as
were deemed appropriate and approved by the Chairman and the Executive Director of
the HRA. Pursuant to such authorization the Chairman and Vice Chairman of the HRA
executed and delivered the Agreement dated on or as of March 14, 1988.
Subsequently, by resolution dated September 12, 1988, the HRA approved execution
and delivery by any two officers of the HRA, on behalf of the HRA, of an Amended
and Restated Land Sale Agreement and Contract for Private Redevelopment between
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March 6, 1989
Page Three
the HRA and Foundation with such modifications as the attorney for the HRA and
Executive Director of the HRA should approve (the "Amended Agreement") . Pursuant
to such authorization the Chairman and Secretary of the HRA executed and delivered
the Amended Agreement dated on or as of September 30, 1988. In connection with
the transactions contemplated by the Amended Agreement, it is now proposed that
Phase I of the Condominium Development be commenced on the property described on
Exhibit A hereto (the "Phase I Condominium Property") and that the Phase I
Condominium Property be conveyed pursuant to the Amended Agreement.
2. Ratification. The execution and delivery of the Amended Agreement dated on or
as of September 30, 1988, by the Chairman and Secretary is hereby affirmed.
3. Authorization for Execution and Delivery of Documents. Any two officers of
the HRA are authorized and directed to execute such instruments and agreements as
may be required or be desirable to accomplish the conveyance of the Phase I
Condominium Property pursuant to the Amended Agreement. The execution of such
instruments and agreements by any two officers of the HRA shall be conclusive
evidence of the approval of such documents by the HRA in accordance with this
Resolution.
EXHIBIT A
THE HOMES AT CENTENNIAL LAKES
PHASE I CONDOMINIUM LAND DESCRIPTION
All that part of LOT 1, BLOCK 2, SOUTH EDINA DEVELOPMENT ADDITION, according to
the recorded plat thereof, Hennepin County, Minnesota, described as follows:
Beginning at the southeast corner of said LOT 1, thence on an assumed
bearing of North 00 degrees 14 minutes 09 seconds West, along the easterly
line of said LOT 1 for 100.00 feet; thence North 18 degrees 11 minutes 57
seconds East, along said easterly line for 47.23 feet; thence South 89
degrees 45 minutes 51 seconds West for 148.64 feet; thence North 45 degrees
14 minutes 09 seconds West for 35.67 feet; thence North 00 degrees 14 minutes
09 seconds West for 37.79 feet; thence South 89 degrees 45 minutes 51 seconds
West for 143.93 feet to the westerly line of said LOT 1; thence South
00 degrees 14 minutes 09 seconds East, along said westerly line for
146.64 feet; thence South 35 degrees 08 minutes 34 seconds East for 154.42
feet to the southerly line of said LOT 1; thence North 56 degrees 15 minutes
46 seconds East, along said southerly line for 5.00 feet; thence easterly
for 222.69 feet along said southerly line on a tangential curve concave to
the south, radius 377.50 feet and central angle 33 degrees 47 minutes 55
seconds, to the point of beginning.
Dated as of the 6th day of March, 1989.
ATTES � Chairman
�—t
Executive biie c or
Motion for adoption of the resolution was duly seconded by Commissioner Rice.
Discussion followed on the issue of whether or not the Council should recommend
that there be an inspection of the property on a mortgage assumption or roll-over.
It was concluded that the majority of the Commissioners did not support any type
of inspection. It was agreed also that staff should bring back to the Council a
recommendation if it felt there was a need for some type of administrative help
with regard to assumptions. Chairman Richards then called for rollcall vote on
the motion.
Rollcall:
Ayes: Kelly, Paulus, Rice, Smith, Richards
Resolution adopted.
H.R.A. Minutes
March 6, 1989
Page Four
EXTENSION OF OPTION FOR EDINBOROUGH OFFICE PHASE II APPROVED. Executive Director
Hughes referred to a letter from Thomas W. LaSalle on behalf of the Edina
Partnership (the Edina Partnership was the original development entity for
Edinborough) . Mr. LaSalle's letter requested an extension to the partnership's
development rights for the Edinborough Phase II Office Site until at least
December 31, 1989 and more practically until March 31, 1990. He explained that
until quite recently, the Partnership believed that their development rights were
in effect until March 31, 1992. Therefore, the Partnership has not appeared
earlier to request the extension. The Partnership is presently working with
Hawthorne Suites for the purpose of presenting to th e City a proposal for an
extended stay hotel on the site. It is expected that Hawthorne Suites will submit
preliminary plans for Planning Commission review sometime in April. Staff agrees
that the termination date as provided for in our redevelopment agreements is
somewhat ambiguous. It is understandable that the Partnership could have
concluded that their option did extend until March of 1992. Staff believes that
the requested extension until December 31, 1989 is reasonable and should be
approved by the HRA. Commissioner Kelly said she would be concerned that, if in
passing the land to Hawthorne Suites, the City would not be the benefactor; also
that what the HRA had approved for the site was the office building. Director
Hughes said that the transfer could not happen without a separate action by the
HRA. Commissioner Smith asked if the hotel would be a use that is approved for
the site. Director Hughes explained that two things would have to happen to
permit that use: 1) Amendment of the Zoning Ordinance to permit the hotel use in
the Mixed Development District, and 2) Approval of the Final Development Plan by
the Planning Commission and the Council whereby the change for the site would be
approved. Commissioner Rice said it was his understanding that there is no
bargain here for the Edina Partnership because of the extension and that they are
pursuing a development that many think would be beneficial. No further comment
being heard, Commissioner Smith introduced the following resolution and moved
adoption:
RESOLUTION EXTENDING OPTION FOR EDINBOROUGH OFFICE PHASE II
BE IT RESOLVED by the the Board of Commissioners of the Housing and Redevelopment
Authority of Edina, Minnesota that it hereby approves extension of the option to
March 31, 1989, for Edinborough Office Phase II;
BE IT FURTHER RESOLVED that the Chairman and Secretary of the HRA be authorized
and directed to execute such instruments and agreements as may be required to
accomplish the extension.
Motion for adoption of the resolution was seconded by Commissioner Rice.
Rollcall:
Ayes: Kelly, Paulus, Rice, Smith, Richards
Resolution adopted.
There being no further business on the HRA Agenda, motion was made Commissioner
Kelly and was seconded by Commissioner Paulus for adjournment otion carried.
Exec t' e Director