HomeMy WebLinkAbout1982-09-08 HRA Regular Meeting • MINUTES
OF THE EDINA HOUSING AND REDEVELOPMENT AUTHORITY
SEPTEMBER 8, 1992
ROLLCALL Answering rollcall were Commissioners Kelly, Paulus, Rice and
Richards. Commissioner Smith entered the meeting at 7:03 P.M. after adoption
of the Consent Agenda.
CONSENT AGENDA ITEMS ADOPTED Motion vas made by Commissioner Kelly and vas
seconded by Commissioner Paulus to approve the HRA Consent Agenda items as
presented.
Motion carried on rollcall vote - four ayes.
*MINUTES OF THE MEETING OF AUGUST 17, 1992, APPROVED Motion was made by
Commissioner Kelly and was seconded by Commissioner Paulus to approve ERA
Minutes of August 17, 1992.
Motion carried on rollcall vote - four ayes.
REDEVELOPMENT AGREEMENT AND CONTRACT FOR DEED AMENDED - CENTENNIAL LAKES
Executive Director Hughes presented the following background information on
the Centennial Lakes development project:
Overview of Project
The Redevelopment Agreement and the Contract for Deed for the Centennial Lakes
development closed in October of 1988. The Redevelopment Agreement was
executed by the HRA and South Edina Development Corporation (SED) . A Contract
• for Deed was executed by the HRA and the estate of Fred W. Hedberg (Hedberg) .
The Redevelopment Agreement dealt primarily with Phase 1 of the Centennial
Lakes project which included a multi-screen movie theater, a medical building,
a retail plaza, an assisted condominium development, and a 250,000 square foot
multi-tenant office building. At this time, all Phase 1 private improvements
have been completed (or are nearly complete) with the exception of the 250,000
square foot office building. All Phase 1 public improvements (acquisition and
initial development of Central Park and North Park and abutting roadways) have
been completed.
In connection with Phase 1, the Redevelopment Agreement with SED required the
payment of City dedication fees of $3 million of which $1.6 million has been
paid. The remaining $1.4 million is due in one month. These payments were
guaranteed by Northland Land Company, an affiliate of SED. The Redevelopment
Agreement also provided for a payment of $1 million in 1995 and an additional
payment of $1 million in 1998. The 1995 and 1998 payments were not guaranteed
to the same extent as the initial $3 million payment.
SED and the HRA also executed a shortfall agreement whereby SED guaranteed a
minimum amount of taxes from the Phase 1 private improvements. The shortfall
agreement provided that if taxes are not generated in the minimum amount, SED
or its guarantor, Northland Land Company, would make up the difference.
The Contract for Deed between the Hedbergs and the HRA required the annual
payment of principal and interest commencing in 1988. The Redevelopment
Agreement with SED required that SED make all payments required by the
• Contract for Deed. A payment was made on the contract in 1989, however,
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Page 2
payments due in 1990 and in 1991 have not been made (the 1990 payment had been
deferred by Hedberg in consideration of the 1989 payment) .
Current Situation
- The final installment of the initial City dedication is due in
approximately one month. The amount of this installment is $1.4 million
0 000 in interest and payment of this installment
plus approximately 20 p yA►
P PP Y $
is guaranteed by Northland Land Company. The assets of Northland Land
Company are primarily real estate holdings in Mendota Heights and Eagan.
- SED, and therefore the HRA, are technically in default of the Contract
for Deed due to the non-payment of the installment due in 1991. It is
very doubtful that SED will pay the next installment due in
approximately one month. No notice of default has been issued by
Hedberg and, in staff's opinion, cancellation of the Contract for Deed
by Hedberg is not imminent.
- According to the approved development plan, the majority of Phase 2
Centennial Lakes developments are office uses. The office market
continues to be depressed and the realization of a major office
statement south of 76th Street is unlikely for the near term. Less
intensive office developments are much more likely.
- Based upon the market for high-density office development, the payment
of the additional City dedication fees due in 1995 and 1998 are not
feasible in SED's judgement. Therefore, in consideration of the payment
• of the $1.4 million plus interest which is due in October 1992, SED has
requested relief from the payments due in 1995 and 1998.
Proposed Amendments
Based upon the current situation, staff, SED and Hedberg have negotiated the
following amendments:
Amendment to Contract for Deed
The proposed amendment to the Contract for Deed contains the following major
elements:
1) The current interest rate on the unpaid principal balance is nine
percent. The amendment eliminates the interest provision and in its
place provides for a payment in lieu of interest whenever a principal
payment is made. The payment in lieu of interest is based upon the
increase in the Consumer Price Index. This change effectively reduces
the interest rate from nine percent to approximately three percent under
current conditions.
2) The amendment eliminates the requirement to purchase land intended for
residential purposes along with land intended for office purposes.
Given the current real estate environment, such a requirement is no
longer necessary.
3) Land which is subject to the Contract for Deed is currently exempt from
real estate taxes. The contract, however, provides that if such land
• becomes taxable, the HRA is liable for the payment of such taxes. The
HRA, in turn, has passed that obligation on to SED. The amended
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Page 3
• Contract for Deed provides that the HRA is not liable for the payment of
taxes which could result from a third party decision (the Court or the
County) that the property no longer qualifies for tax exempt status.
of for the Phase 1 office building.
4 SED currently wns fee title to the 1 g•
y
The amended Contract for Deed permits the swapping of land on a square
foot per square foot basis between the Phase 1 office lot and land
subject to the Contract for Deed.
5) The amended contract provides for the grant of a storm sewer easement
across the contract property which was inadvertently omitted from the
original contract.
Amendment to Redevelopment Agreement and Shortfall Agreement
The proposed amendment to the Redevelopment Agreement and Shortfall Agreement
contains the following major elements:
1) The amendment recognizes that the office development may utilize a less
intensive development than originally planned.
2) The existing Redevelopment Agreement gives the HRA absolute authority
over the transfer of the Phase 1 office parcel to any other developer.
The amended contract provides that the HRA still retains authority over
such transfers but must be reasonable in exercising its authority.
3) The $1 million payments due in 1995 and 1998 have been eliminated.
• Instead, City dedication fees would be required in connection with
developments on the following basis:
A. For residential developments: the greater of $.30 per square foot
of land area or $800 per dwelling unit.
B. For commercial developments: the greater of $.65 per square foot
of land area or $1.00 per square foot of net rentable floor area.
Based upon this formula, the City would receive a minimum dedication of
approximately $500,000. If the balance of Centennial Lakes were
completed as envisioned by the Master Plan, the City would receive
approximately the $2 million that was first envisioned. Such payments
would be made only in connection with development that actually occurs.
4) The Shortfall Agreement has been amended to provide that any
development, except assisted condominium units, undertaken by the
developer anywhere on the Phase 2 Centennial Lakes site, constitutes a
credit against the developer's shortfall liability. Under the present
agreement, only development which occurs on the Phase 1 office site acts
as a credit.
Reasons for Approval of Amendments
1) The prospects for the development of Phase 2 of Centennial Lakes are
significantly different than they were in October of 1988. The Contract
• for Deed and the Development Agreement must more accurately reflect
today's development environment. In this respect, the City contribution
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Page 4
requirements provide a method whereby the City will receive, at a
• minimum, a traditional parkland dedication and at a maximum the fees
that we bargained for in 1988.
2) The current developer is in the best position to accomplish the further
development of this property.
I
3) The prospects of collecting on the shortfall agreement (if required) is
much greater if the obligor on such payments remains the current
developer.
4) The HRA's position, with respect to the Contract for Deed and the future
acquisition of Phase 2 Centennial Lakes properties is improved.
5) The City is assured of receiving the $1.4 million plus interest payment
which is due in October.
Based on these reasons, staff would recommend that the HRA approve the
amendments to the Contract for Deed and the Redevelopment Agreement.
Following discussion and questions on the proposed amendments, Commissioner
Kelly moved adoption of the following resolutions:
RESOLUTION AMENDING REDEVELOPMENT AGREEMENT
AND SHORTFALL AGREEMENT - CENTENNIAL LAKES
BE IT RESOLVED, that the Edina Housing and Redevelopment Authority (HRA)
hereby approves the amendment, as presented, to the Redevelopment Agreement
• and the amendment as presented to the Shortfall Agreement for Phase 1
Centennial Lakes, dated September 30, 1998, and executed by the BRA and South
Edina Development Corporation (SED);
BE IT FURTHER RESOLVED, that the Chairman and Secretary of the Edina Housing
and Redevelopment Authority (HRA) be authorized and directed to execute the
amendment to the Redevelopment Agreement and the amendment to the Shortfall
Agreement.
RESOLUTION AMENDING CONTRACT FOR DEED
FOR CENTENNIAL LAKES
BE IT RESOLVED, that the Edina Housing and Redevelopment Authority (BRA)
hereby approves the amendment, as presented, to the Contract for Deed, dated
October 3, 1988, and executed by the HRA and the estate of Fred W. Hedberg
(Hedberg);
BE IT FURTHER RESOLVED, that the Chairman and Secretary of the Edina Housing
and Redevelopment Authority (HRA) be authorized and directed to execute the
amendment to the Contract for Deed.
Motion was seconded by Commissioner Paulus.
Rollcall:
Ayes: Kelly, Paulus, Rice, Smith, Richards
Resolutions adopted.
*CLAIMS PAID Motion was made by Commissioner Kelly and was seconded by
Commissioner Paulus to approve payment of the following HRA claims as shown in
detail on the Check Register dated September 3, 1992, and consisting of one
page totalling $53,720.23.
• Motion carried on rollcall vote - four ayes.
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Page 5
• There being no further business on the HRA Agenda, Chairman Richards declared
the meeting adjourned.
xec A t irector