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Home My WebLink About2017-04-18 City Council Work SessionAgenda H ousing and Redevelopment Authority Meeting City of Edina, Minnesota Edin a City Hall Cou n cil Cham be rs Immediately Following City Council Meeting Tuesday, April 18, 2017 7:00 PM I.Call to Order II.Roll Call III.Approva l of Meeting Agenda IV.Adoption of Consent Agenda All a genda items listed on the consent agenda are considered routine and will be ena cted by one motion. There will be no separate discussion of such items unless requested to be remov ed from the Consent Agenda by a Commissioner of the HRA. In such cases the item will be remov ed from the Consent Agenda and considered immediately following the a doption of the Consent Agenda. (Favorable rollcall v ote of majority of HRA Commissioners present to approve.) A.Approv al Minutes of April 4, 2017 HRA Regular Meeting V.West 49-1/2 Street Redevelopment - Proposed Term Sheet VI.Resolution 2017 -04: Requesting the City Council of the City of Edina call for a Public Hearing on the Proposed Modi4cation to the Redev elopment Plan for the Southea st Edina Redevelopment Project Area and the Proposed Establishment of the 50th a nd France 2 Tax Increment Financing District (a Redevelopment District) VII.Adjournment The Edina Housing a nd Redevelopment Authority wants all pa rticipants to be comforta ble being pa rt of the public process. If you need assistance in the way of hearing ampli4cation, an interpreter, large-print documents or something else, please call 952-927-8861 72 hours in advance of the meeting. Date: April 18, 2017 Agenda Item #: I V.A. To:C hair & C ommissioners of the Ed ina HR A Item Type: Minutes F rom:Jane M. Timm, Dep uty C ity C lerk Item Activity: Subject:Approval Minutes o f Ap ril 4, 2017 HR A R egular Meeting Edina Housing and Redevelopment Authority Established 1974 C ITY O F E D IN A HO US I NG & R EDEVELO P ME NT AUT H O R I T Y 4801 West 50th Street Edina, MN 55424 www.edinamn.gov A C TI O N R EQ U ES TED : Approve minutes as presented. I N TR O D U C TI O N : AT TAC HME N T S : Description Approval Minutes of April 4, 2017 HRA Regular Meeting Page 1 MINUTES OF THE EDINA HOUSING AND REDEVELOPMENT AUTHORITY APRIL 4, 2107 8:36 P.M. I. CALL TO ORDER Chair Hovland called the HRA meeting to order at 8:36 P.M. II. ROLLCALL Answering rollcall were Commissioners, Fischer, Staunton, Stewart, and Chair Hovland. Commissioner Brindle was absent. III. APPROVAL OF MEETING AGENDA Motion made by Commissioner Staunton seconded by Commissioner Stewart approving the Meeting Agenda. Ayes: Fischer, Staunton, Stewart, Hovland Motion carried. IV. CONSENT AGENDA ADOPTED Motion made by Commissioner Staunton, seconded by Commissioner Stewart approving the consent agenda as follows: IV. A. Approve minutes of February 22, 2017 HRA Work Session; February 22, 2017 Regular HRA Meeting and March 21, 2017 HRA Work Session V. ADOPT RESOLUTION 2017-03: AUTHORIZING AN INTERFUND LOAN FOR ADVANCE OF CERTAIN COSTS IN CONNECTION WITH THE 66 WEST TAX INCREMENT FINANCING DISTRICT Economic Development Manager Neuendorf updated the HRA on the status of the 66 West Apartment building. In accordance with the April 5, 2016 Redevelopment Agreement, the HRA committed to a $550,000 contribution to the project, payable in two installments. The first payment was made in 2016. This Resolution authorizes an interfund loan to allow the final payment to be made upon completion. Motion made by Commissioner Staunton, seconded by Commissioner Fischer adopting Resolution 2017-03 Authorizing An Interfund Loan For Advance Of Certain Costs In Connection With The 66 West Tax Increment Financing District. Ayes: Fischer, Staunton, Stewart, Hovland Motion carried. VI. WEST 49-1/2 STREET REDEVELOPMENT – PROJECT UPDATE Economic Development Manager Neuendorf provided an update of the West 49 ½ Street Development. Mr. Neuendorf noted the retail businesses still told him they required adequate parking at 50th & France to satisfy the expectations of the employees and customers. Mr. Neuendorf explained that a traffic & parking impact report was completed and would be presented to the Planning Commission on April 5, 2017. The Council asked questions regarding proposed parking levels on the Northside, the valuation of the properties, and the public investment amount. No action, Information only Minutes/HRA/April 4, 2017 Page 2 VII. ADJOURNMENT Chair Hovland declared the meeting adjourned at 8:57 p.m. Respectfully submitted, Scott Neal, Executive Director Date: April 18, 2017 Agenda Item #: V. To:C hair & C ommissioners of the Ed ina HR A Item Type: R ep o rt / R ecommend atio n F rom:Bill Neuendorf, Ec o nomic Development Manager Item Activity: Subject:Wes t 49-1/2 S treet R edevelo p ment - P roposed Term S heet Ac tio n Edina Housing and Redevelopment Authority Established 1974 C ITY O F E D IN A HO US I NG & R EDEVELO P ME NT AUT H O R I T Y 4801 West 50th Street Edina, MN 55424 www.edinamn.gov A C TI O N R EQ U ES TED : Approve the Term S heet and authorize staff to prepare a full P urchase Agreement and R edevelopment Agreement. I N TR O D U C TI O N : T his item pertains to the potential sale of real estate for redevelopment purposes. T he intended outcome is additional public parking and a new mixed-use building centered upon a new civic plaza. AT TAC HME N T S : Description Staff memo Summary Pres entation Term Sheet - draft for HRA review City of Edina • 4801 W. 50th St. • Edina, MN 55424 Economic Development / HRA Phone 952-826-0407 • Fax 952-826-0390 • www.EdinaMN.gov Date: April 18, 2017 To: Chair and Commissioners of the Edina Housing and Redevelopment Authority cc: Scott Neal, Executive Director From: Bill Neuendorf Economic Development Manager Re: West 49-1/2 Street Redevelopment – Proposed Term Sheet For the last four months, staff has been meeting with Buhl Investors/Saturday Properties to refine the redevelopment concept for City-owned parcels on West 49-1/2 Street. Staff has been assisted by special legal counsel (Dorsey and Whitney) and public finance advisors (Ehlers Associates) in these negotiations. Buhl Investors/Saturday Properties is the Preferred Development Partner that was selected after interviewing three different teams who had responded to a Request for Proposal (RFP) that was issued for the site in mid-2016. The fundamental redevelopment goals are to improve public parking conditions while enhancing street life and adding vitality of the business district. This proposal achieves those goals by replacing an unfriendly 1970’s-era parking structure with below-grade parking and an expanded North Ramp that includes new commercial space on the street level. The proposal also adds round-the-clock vitality by including approximately 110 new apartment units and new commercial space centered upon a new public plaza. After working collaboratively with the developer and their team, we have reached agreement on the preliminary terms of the real estate transaction and anticipated redevelopment agreement. The attached term sheet is attached for the full consideration of the Housing and Redevelopment Authority. A summary of key issues is also attached. Housing and Redevelopment Authority Established 1974 49-1/2 Street Redevelopment Update April 4, 2017 Page 2 Staff recommends the approval of the Term Sheet and authorization to continue negotiations with the Buhl/Saturday team. These negotiations will culminate in a full Purchase Contract and Redevelopment Agreement for consideration in late June 2017. # # # Edina Collaborative Proposed Redevelopment of 3925 and 3930-3944 W. 49-1/2 Street Term Sheet Summary April 18, 2017 Term Sheet Summary •History and Context •Project Overview •South Side Improvements •North Side Improvements •Next Steps Term Sheet Summary - April 18, 2017 2 History and Context Term Sheet Summary - April 18, 2017 3 1930s to 1950s -Streetcar lines -Two -story buildings -Undeveloped suburban lots History and Context Term Sheet Summary - April 18, 2017 4 Upper Left: 3906 W. 50th(now Steel Fitness), 1959 Lower Left: 5030 France Ave. (now Salut), 1959 Upper Right: Edina Theater, 1941 All images from Edina Historical Society 1940s to 1950s -Growing retail district History and Context Term Sheet Summary - April 18, 2017 5 1969-1970 -New bypass roads constructed (49-1/2th and 51st) -South Ramp constructed History and Context Term Sheet Summary - April 18, 2017 6 1974 -HRA Established -New strategy for growth -Long-term plan established History and Context Term Sheet Summary - April 18, 2017 7 1976 -Center Ramp opens -$3.5 M public investment -$15.2 M in 2017 (x4.35 inflator) -New “european” style walkways -TIF was used to finance History and Context Term Sheet Summary - April 18, 2017 8 1980 -2 parking garages -Many small shops -Gas stations at each corner Shell Skelly Standard Mobil History and Context Term Sheet Summary - April 18, 2017 9 2000-2007 -5000 France condominiums -Adds new retail and restaurants -Multi-screen movie theater -Replaced small shops and restaurant History and Context Term Sheet Summary - April 18, 2017 10 2013-2016 -Acquired properties for parking expansion -Clarified goal of creating vibrant streetlife -not just more parking lots -Began site clearance -Issued RFP for development partner 3930 parcel, 0.37 acres $2.6 million 3944 parcel, 0.24 acres $1.55 million + approx. $250k in clean up Seeking Infrastructure, Streetlife & Vitality •Partnership sought to achieve public-sector goals with private-sector expertise •Issued Request for Proposal in August 2016 •Three teams interviewed in November 2016 •Buhl Investors / Saturday Properties selected in December 2016 •Staff and Developer met weekly to refine concept •Developer held several Open Houses and neighbor meetings to identify and address concerns Term Sheet Summary - April 18, 2017 11 Desirable Outcomes are Achievable 1)Add productive use on vacant and under-utilized parcels on W. 49-1/2 Street 2)Return tax-exempt parcels to the tax rolls 3)Improve public parking conditions 4)Create new business opportunities 5)Create new housing options 6)Create new public gathering space 7)Create an attractive and vibrant “place” that lives up to customer expectations at 50th & France 8)Retain 50th & France as a premier community destination for the next generation Term Sheet Summary - April 18, 2017 12 Challenges •2 of 3 buildings deemed “sub-standard” per MN TIF Statute •High land value and high construction costs •Environmental contamination •Sensitive construction conditions with many close neighbors •Interim parking challenge for customers and employees •Construction disruption to business district •Several different funding sources required Term Sheet Summary - April 18, 2017 13 Preliminary Construction Phasing Term Sheet Summary - April 18, 2017 14 2018 2017 2019 2020 Construction approvals; securing financing Complete mixed- use building (summer) Build temp. surface parking Demo Center Ramp and build new mixed -use building (18 mos) Expand North Ramp (9-12 mos) Complete North Ramp (late spring) NOTE – this appears to be the best approach to minimize disruption; Developer and Contractor will refine before final approvals are issued. Tax Increment Financing Recommended •Stantec consultant evaluation indicates that the Hooten Site and the Center Ramp qualify as “sub - standard” and warrant a “Redevelopment District” •First step towards returning most of these parcels back to the property tax rolls •26-year term, subject to MN TIF Statutes •Developer incurs risk and construction responsibility •TIF Note to reimburse developer for eligible costs •TIF payments made from NEW taxes generated Term Sheet Summary - April 18, 2017 15 South Side Transaction •Sell 1.53 acres for redevelopment by Developer •$5.1 million purchase price •5-6 story mixed-use apartment building •Large public plaza and circulation walkways •Private and public underground parking •Permanent Public Easements from Developer at no cost –one level of underground parking (approx 128 stalls) –Public plaza, sidewalks and pedestrian walkways (approx 0.7 acres) Term Sheet Summary - April 18, 2017 16 Private Parking – P2 Easement for Public Parking – P1 Retail – 1B Retail – 1C Street Level South Side Overview Long Term Outcome 1)Edina HRA sells land and retains public easement over Level P1 and street level plaza 2)Developer purchases the site and owns new commercial/residential building Residential – 2 thru 6 Retail – 1A 9 W 49-1/2 St Hali fax Ave. W. 50 th St. At Home, etc Spalon, etc Mozza Mia, etc D’Amicos, etc Retail A Retail B Retail C Private property with public easement Public right-of-way Private property South Side Overview, continued Long Term Outcome: Same as previous page 10 South Side Financing Total Construction Cost = $72.2 million $60+ Million in Developer Equity and Debt 1)Propose use of future “new” taxes from project $10.1 million Pay-as-you-go TIF Note (14% of total cost) Reimbursement for actual costs incurred by Developer Reimbursement only upon project completion Typical “clawbacks” and default provisions 2)Propose Approx $700,000 to $900,000 HRA loan HRA Affordable Housing Fund 15 years, at preferred interest rate 3)Grants from Met. Council and DEED $1.3 million sought Term Sheet Summary - April 18, 2017 19 North Side Transaction •HRA to expand North Parking Ramp –Bid and built by HRA as regular “public project” •Developer to serve as Construction Manager •Sell Approx. 10,000 Square Feet of “gray box” retail space to Developer upon completion •$1.0 million purchase price •Add approx. 311 new public parking stalls –Total of approx 573 stalls in North Ramp Term Sheet Summary - April 18, 2017 20 Parking – 3944 Parking – P4 Retail 3944 Existing North Ramp Parking – 3930 Retail 3930 North Ramp Overview Long Term Outcome 1)Edina HRA retains ownership of land and parking ramp 2)Developer purchases two commercial parcels on street level 8 North Side Construction Budget Term Sheet Summary - April 18, 2017 22 Approx $33,000 per stall (construction cost only) Approx $47,000 per stall (if real estate and construction costs included) Next Steps Upon approval of this preliminary Tem Sheet, the following actions will occur: 1)Develop and HRA to negotiate final terms of Redevelopment Agreement and Real Estate Transaction (completion in late June) 2)City and HRA to pursue creation of new TIF District (June) 3)Developer to prepare complete plans for final approvals 4)Developer & HRA to establish firm construction schedule 5)Developer and HRA to refine budget 6)Developer to secure matching funds for affordable housing units through Edina Housing Foundation (May-June) 7)Developer and HRA to pursue grant funds (May and June) Term Sheet Summary - April 18, 2017 23 49 1/2 Street Redevelopment Term Sheet between The City of Edina/Edina Housing and Redevelopment Authority (the “City”) and Edina Market Street LLC (the “Developer”) Draft: April 11, 2017 A. The Project 1) Purpose and Scope a. This term sheet outlines the City’s and the Developer’s general expectations for the redevelopment and improvement of four parcels of real estate located on the north side 49 1/2 Street (the “North Site”) and five parcels of real estate located on the south side of 49 1/2 Street (the “South Site”), described on Exhibit 1 (collectively, the “Site”). The South Site will be redeveloped with an approximately 110 unit apartment building together with integrated retail elements, two levels of underground parking, and a public plaza. Additionally, the existing North Site parking ramp will be expanded to add additional parking and retail space (the redevelopment of the South Site and the expansion of the parking ramp on the North Site, as generally described in Section 2(a) below), is collectively referred to as the “Project”). A preliminary site plan for the Project is attached as Exhibit 2 hereto. The general terms agreed upon in this Term Sheet will be expanded in a formal Redevelopment Agreement between the City and the Developer. b. Certain public improvements within the Project necessary to support the redevelopment will be installed by the Developer, subject to reimbursement of eligible costs from the following public fund sources: (i) a new redevelopment tax increment financing (“TIF”) district; (ii) investment of existing TIF proceeds generated through the Centennial Lakes TIF district; (iii) reinvestment of proceeds from the sale of certain land within the Site to the Developer; and (iv) a fifteen (15) year loan from the City’s affordable housing fund. The expansion of and improvements to the existing North Site parking ramp will be managed by the Developer, but contracted for and paid for by the City with certain portions of the foregoing sources of public funds. c. The Developer will seek development plan approval for the Project (including the North Site Improvements) and, if necessary, amendments to the City’s zoning ordinance and comprehensive plan, all through the City’s standard plan review and approval processes (“Plan Approvals”). The City and Developer will negotiate a separate Development Contract memorializing the City’s and Developer’s land use rights and obligations. 2) Description of the Project a. A detailed description of the proposed land uses and densities and projected Project schedule is included in the Preliminary Rezoning Narrative dated March 3, 2017 (the 49 1/2 Street Term Sheet April 11, 2017 D R A F T Page 1 “Narrative”) submitted with the Developer’s land use application. The development objectives summarized in the Narrative (as the same may be modified by the Developer and the City) will be included in final development plan approval and reflected in the Redevelopment Agreement and Development Contract to be executed by the parties, including, without limitation, land use and the proposed densities on each parcel. In general, the Project will include the following improvements: i. North Site (“North Site Improvements”): 1. Demolition of the building located at 3944 49 1/2 Street (“Hooten Site”) and related site environmental remediation (the “Hooten Work”) 2. Expansion of the existing North Site parking ramp (the “North Ramp”) to include approximately 311 additional structured parking stalls to be included in the following: (i) a new fourth parking deck and related structural improvements; (ii) new stairway and elevator to service all four parking levels, to be located at 3930 49 1/2 Street (“Vacant Site”); and (iii) additional structured parking on the Hooten Site and Vacant Site, integrated with and accessible through the North Ramp (collectively the “North Ramp Improvements”). The North Ramp upon completion will collectively contain approximately 573 parking stalls. 3. Construction of two retail spaces, together containing approximately 9,084 square feet of retail space (“Retail Boxes”) to be located on portions of the Hooten Site and Vacant Site, as such sites are replatted as described in Section 3(b)(iii) below (the “Retail Land”), all as more particularly described in the Narrative and depicted on the Site Plan (collectively the “North Site Retail”). 4. Improvements to the public sidewalk and plaza along 49 1/2 Street. ii. South Site (“South Site Improvements”): 1. Demolition of the existing parking ramp (the “Center Ramp”). 2. Relocation of existing utilities. 3. Construction of an approximately 110 unit apartment building and approximately 24,448 square feet of retail space (“South Site Retail”), as more particularly described in the Narrative and depicted on the Site Plan (the “South Site Vertical Improvements”). 4. Construction of two levels of underground parking, containing approximately 270 parking stalls (the “UG Parking”). Approximately 128 parking stalls of the UG Parking will be available to the general public and located on the first level below grade (“City UG Parking”). 49 1/2 Street Term Sheet April 11, 2017 D R A F T Page 2 5. Construction of an outdoor plaza (approximately 34,000 square feet in area) open and accessible to the public (subject to reasonable rules and regulations governing use of the plaza that are adopted by Developer and the City), as more particularly described in the Narrative and depicted on Exhibit 3 (the “Plaza”). 6. Construction of a trash facility to be incorporated into the South Site Vertical Improvements (“Shared Trash Facility”) and available for use by the North Site Retail, South Site Retail, and the existing buildings located on the city block bordered by 50th Street, Halifax Avenue, 49th 1/2 Street, and France Avenue (collectively the “Serviced Buildings”). The Shared Trash Facility will be located in the South Site Vertical Improvements in one or more areas determined by the Developer (subject to the reasonable approval of the City) and will be sized to accommodate the trash, recycling, and organic disposal needs of the Serviced Buildings. The Shared Trash Facility will be subject to an easement in favor of the City and reasonable rules and regulations governing use of the Shared Trash Facility that are adopted by Developer and the City. b. The total cost of the Project is estimated to be at least $82.3 million. 3) Project Ownership; Project Delivery; Purchase and Sale Project Real Estate a. South Site. i. Purchase Price. Subject to reasonable contingencies in favor of Developer including environmental and title review, the City will sell to Developer, and Developer will purchase from the City, fee title to the South Site for $5.1 million (“South Site Purchase Price”), subject to encumbrances permitted by Developer and the Right of Reverter (defined below). ii. Sale Proceeds. The net amount of the South Site Purchase Price will be placed in escrow with an escrow agent mutually agreeable to the City and Developer (“Escrow Agent”) to be used first for construction costs for the North Site Improvements. iii. Permanent Easement. Prior to the date the first temporary certificate of occupancy is granted for any of the South Site Vertical Improvements, Developer will grant the City a permanent easement (the “City Easement”) for access and use of the Plaza and access, use and control of the top level below grade of the UG Parking (“City UG Parking”). The City will not pay an acquisition cost to Developer for the City Easement. The terms of the City Easement will include: 1. City obligation to maintain the Plaza to the operation and maintenance standards as reasonably determined by City and 49 1/2 Street Term Sheet April 11, 2017 D R A F T Page 3 Developer (subject to cost recovery under the existing 50th and France Commercial Area Maintenance Assessment program); 2. City obligation to contribute its pro rata share of all costs to operate the UG Parking and an amount for the maintenance of the UG Parking, both of which will be reasonably determined by City and Developer and subject to cost recovery under the 50th and France Commercial Area Maintenance Assessments; 3. Maintenance guidelines for the City UG Parking; 4. City shall have the right to regulate parking and issue permits for the City UG Parking as reasonably deemed appropriate by the City (including the provision of any overnight parking permits). The quantity of City UG Parking for use by apartment residents and the price of per stall will be updated on an annual basis; and 5. Standard indemnification and insurance provisions. b. North Site. i. Developer as Construction Manager. Subject to the provisions of subsection (iv) below regarding the North Site Retail, the City will retain ownership of the North Site and Developer will act as the City’s construction manager for the North Site Improvements. Developer and City will memorialize their respective rights and obligations with respect to the construction of the North Site Improvements in a mutually acceptable construction management (agency) agreement. The construction management agreement will obligate Developer, as City’s construction manager (“Construction Manager”), to procure bids for the construction of the North Site Improvements in conformance with public bidding requirements. Construction Manager will require that the bids separately identify the cost related the Retail Boxes in order to establish the anticipated construction cost to construct the Retail Boxes to “gray box condition” (as such term is defined in subsection iv below) (the “Retail Construction Cost”). The construction management contract will obligate the City to select and enter into a contract with the lowest responsible bidders procured by Construction Manager for each element of construction of the North Ramp Improvements that is subject to public bidding requirements. The City will be entitled to hire an independent third party to oversee and inspect the North Ramp Improvements at the City’s sole cost and expense. The City will pay Construction Manager a management fee of four (4) percent of the actual hard costs of construction of the North Site Improvements, payable as follows: pro-rata based on the ratio of such construction costs completed compared to such total construction costs of the North Site Improvements to be paid commencing with the first construction draw payable to the contractor under the construction contract for the North Site Improvements and the final installment payable at final completion of the North Site Improvements. 49 1/2 Street Term Sheet April 11, 2017 D R A F T Page 4 ii. Budget, Design, and Construction. 1. Cost. The anticipated cost of the North Site Improvements is approximately $10.8 million (“North Site Budget”), as more particularly set forth in Exhibit 4. The North Site Budget includes an estimated amount of $621,120 for the Retail Construction Cost which will be paid by the Developer. The anticipated cost of the North Ramp Improvements is approximately $10.17 million. 2. Budget Overruns. The Developer will accept City’s necessary decisions to value engineer the North Ramp in order to not exceed the North Site Budget while maintaining all necessary requirements of the Plan Approvals. 3. Design. The concept design of the North Site Improvements is as set forth in this term sheet and the final Plan Approvals. As early as possible following execution of the Redevelopment Agreement, but no later than the commencement of the South Site Vertical Improvements, Construction Manager will cause the architect (and other design professionals) selected to design the North Site to finalize the construction plans for the bidding of the North Site Improvements (“North Site Design Commencement Date”), and the City will not be required to incur any third party, out-of-pocket expenses in connection with the design and construction of the North Site Improvements until the North Site Design Commencement Date. The final design of the North Ramp Improvements will (A) be subject to the City’s typical regulatory approvals; (B) subject to the City’s prior approval as owner of the North Ramp; (C) conform to the North Site Budget as the North Site Budget may be amended from time to time; and (D) including, but not limited to: - Snow dump chute; - Open parking structures to avoid sprinkler requirements; and - “Live wall” Screening materials as generally shown in Developer’s renderings of the North Ramp Improvements. 4. City reserves the right to seek an amendment to the Plan Approvals with respect to the North Site Improvements to accommodate adjacent development needs; provided such amendment will not adversely affect Developer’s operation or parking of the South Site Improvements and North Site Retail. iii. Subdivision. Prior to commencing construction of the North Site Improvements (other than the Hooten Work), Developer and City will cause the North Site to be subdivided so that the North Site Retail and the other North Ramp Improvements are located on separately platted lots. 49 1/2 Street Term Sheet April 11, 2017 D R A F T Page 5 iv. North Site Retail. City will construct the Retail Boxes to “gray box condition”. As used in this term sheet “gray box condition” means completion of a water-tight structure with structural roof and walls, roughed-in access to utilities and temporary doors and glazing, and excluding slab on grade floor, utility services or connections, and interior and exterior finishes. Subject to reasonable contingencies in favor of Developer including environmental and title review, the City will sell to Developer, and Developer will purchase from City, fee title to the Retail Land for $1 million (the “Retail Purchase Price”), subject to encumbrances permitted by Developer. Prior to commencement of the North Ramp Improvements, Developer will deposit in escrow with Escrow Agent the Retail Purchase Price, to be used for construction costs for the North Ramp Improvements. Upon receipt of the final bids for the North Site Improvements and determination of Retail Construction Cost, Developer will deposit in escrow with the Escrow Agent 110% of the Retail Construction Cost (“Retail Construction Deposit”) as security for the City’s obligation to construct the Retail Boxes. Upon substantial completion of the North Site Improvements and payment in full of the Retail Construction Cost by the Developer, the City will convey the North Site Retail to Developer and refund to Developer any and all monies remaining from the Retail Construction Deposit in the control of Escrow Agent for the Project. v. Conditions to Construction Commencement. The City must construct the North Site Improvements, but the City’s will have no obligation to commence construction of the North Ramp Improvements until (A) Developer substantially completes the South Site Vertical Improvements; (B) Developer deposits the South Site Purchase Price, Retail Purchase Price, and Retail Construction Deposit with Escrow Agent; and (C) Developer has granted the City Easement to City. vi. Hooten Work. The City will complete the Hooten Work at its sole cost and expense (subject to reimbursement from any available grant sources). The City anticipates that it will complete the Hooten Work no later than October 30, 2017. vii. Temporary Parking/Construction Staging. The City will grant Developer and Developer’s contractor a license to use certain vacant portions of the North Site for temporary parking and construction staging during construction of the South Site Improvements to be defined in the Redevelopment Agreement. Prior to Developer’s demolition of the Center Ramp, the Developer will construct temporary, paved surface parking lots on the Hooten Site (provided that the City has completed the Hooten Work) and the Vacant Site collectively containing approximately eighty (80) parking spaces (“Temporary Parking”) and maintain such Temporary Parking until the same is required to be closed or disturbed in connection with the completion of the North Site Improvements. The Temporary Parking will be at Developer’s sole cost and expense (subject to reimbursement through the TIF Note as a Qualified Cost). viii. Reciprocal Operating Agreement/Encroachment Easement/Party Wall Agreement. Developer and City will enter into a reciprocal operating 49 1/2 Street Term Sheet April 11, 2017 D R A F T Page 6 agreement/encroachment easement/party wall agreement in connection with the integrated construction the North Ramp Improvements and the North Site Retail, containing usual and customary terms and conditions. c. Reverter. i. Developer’s interest in the South Site will be subject to a right of reverter in favor of the City (the “Right of Reverter”). The Right of Reverter will be triggered upon Developer’s failure to commence actual physical construction of the South Site Vertical Improvements (including pouring footings, foundation, and the permanent UG Parking improvements) on the South Site by December 31, 2018 (“Reverter Condition”). If Developer satisfies, or City waives, the Reverter Condition, the City will execute any and all documents reasonably necessary to release the Right of Reverter of record. 4) Project Timeline and Construction Phasing The chart below is the current anticipated timeline for the Project. The Developer will notify the City of material changes to the following estimated construction dates. The Developer will periodically provide the City with written notification related to meeting proposed construction benchmarks, which obligations will be described in the Redevelopment Agreement. A timeline for completion of improvements will be included in the final development plan approval and Redevelopment Agreement, subject to force majeure. The South Site Vertical Improvements will be substantially complete prior to commencement of construction on the North Ramp Improvements and North Site Retail. Description of Work Estimated Commencement Date Estimated Completion Date Closing on the purchase and sale of the South Site Q1 2018 South Site Improvements Demolition and Grading Q1 2018 Q2 2018 Environmental Remediation Q1 2018 Q3 2018 Foundation and UG Parking Q2 2018 Q3 2018 South Site Vertical improvements Q3 2018 Q2 2019 Demolition and remediation of Hooten Site Q2 2017 Q4 2017 Construction of the North Site Improvements Q2 2019 Q1 2020 49 1/2 Street Term Sheet April 11, 2017 D R A F T Page 7 Closing on the purchase and sale of the North Side Retail Q1 2020 5) Project Budget The sources and uses for all private development and public infrastructure elements, as combined, is as set forth on the attached Exhibit 5 (the “Project Sources and Uses”). B. Sources of Public Funds 1) Reinvestment of Project Site Sale Proceeds. a. The City will reinvest the net proceeds (to be defined in the Redevelopment Agreement) of the South Site Purchase Price and Retail Purchase Price (collectively the “Sale Proceeds”) into the Project to pay for the City’s obligation to construct the North Ramp Improvements. 2) Existing TIF Revenues from Centennial Lakes TIF District. a. The City will expend approximately $4 million of existing TIF revenue from the Centennial Lakes TIF District (“Centennial Lakes Funds”) to pay for the City’s obligation to construct the North Ramp Improvements. 3) New Tax Increment Financing Redevelopment District. a. Creation of TIF District i. The City will, subject to all applicable legal requirements, establish a Redevelopment TIF District in 2017 that will include the entire Site (the “TIF District”) prior to or simultaneously with entering into the Redevelopment Agreement. The City will request certification of the TIF District upon request of the Developer. b. Evaluation Process for TIF Assistance i. As part of the TIF assistance process, the Project as a whole must be evaluated and the “but for” must be demonstrated. The Developer will provide all required information to the City to demonstrate that Developer is able to meet the “but for” test for TIF assistance. ii. Any TIF assistance will be in accordance with the City’s Tax Increment Finance Policy, dated April 19, 2011. c. Compliance with TIF Act i. Costs eligible for TIF reimbursement must comply with applicable Minnesota state statutes. 49 1/2 Street Term Sheet April 11, 2017 D R A F T Page 8 ii. Pursuant to Minnesota law, eligible costs for TIF assistance must be incurred within five (5) years after the date of certification of the TIF district. d. TIF Note; Reimbursement of Qualified Costs; i. The City will reimburse the Developer on a pay-as-you-go basis to the maximum principal amount specified in the Redevelopment Agreement (which is currently estimated to be $10.1 million) only for Qualified Costs (as such term is defined in subsection iv below), plus interest at a rate of six percent (6%) annually in accordance with a TIF note (“TIF Note”). The terms of the TIF Note will be included in the Redevelopment Agreement and issued pursuant to the terms thereof. The current estimate of the principal amount of the TIF Note is based on an assumed annual two percent (2%) inflationary increase of the assessed valuation of the property within the TIF District; however, the City does not guarantee that such amount will be available. ii. The Developer will prepare a current annual revenue and expenditure pro forma for the Project and a current Project Sources and Uses prior to execution of the Redevelopment Agreement, prior the issuance of the TIF Note, and such other time reasonably requested by the City. The pro forma must show a demonstrated need for TIF assistance. The Project Sources and Uses must show an amount of Qualified Costs equal to or greater than the principal amount of the TIF Note. iii. Costs incurred by the Developer which are subject to reimbursement through the TIF Note (as may be authorized under State Law) (“Qualified Costs”) are identified in Exhibit 6. iv. The City will make one payment of principal and interest to the Developer each six months on the TIF Note, anticipated to commence in August, 2021 based on available tax increment from the TIF District. The Developer may participate out the TIF Note but the City is not responsible for calculations or payments for the TIF Note. v. The term of the TIF Note will be twenty-five (25) years from first receipt of increment, including partial year payments. vi. The TIF Note will not be issued until final completion of the South Site Improvements and the Developer has demonstrated to the City’s reasonable satisfaction that Qualified Costs have been expended by the Developer in amounts at least equal to the principal amount of the TIF Note. e. Look Back Provisions i. The Redevelopment Agreement will include “look back” provisions to ensure that any TIF assistance was actually needed. Upon the 15th anniversary of the issuance of the TIF Note, and upon the sale of any portion of the Project to a third party to occur earlier, then the City will be entitled to information 49 1/2 Street Term Sheet April 11, 2017 D R A F T Page 9 sufficient to determine the Developer’s Internal Rate of Return (to be defined in the Redevelopment Agreement). If Developer’s Internal Rate of Return exceeds 22%, Developer will reimburse City 50% of the amount of TIF assistance that exceeds said 22%. The City will have the right to audit the Developer’s cost to construct the Project and Developer’s Project returns as reasonably necessary to determine the Internal Rate of Return, in a manner to be defined in the Redevelopment Agreement. f. City Administrative Costs i. Ten percent (10%) of tax increment generated by the TIF District is anticipated to be retained by the City for administrative costs related to the planning, management and oversight of the TIF District. g. Fiscal Disparities i. Developer acknowledges that any of the City’s obligations with respect to “Fiscal Disparities” under Minnesota law that are applicable to the Project will be considered in calculating available tax increment within the TIF District. C. Additional Terms and Conditions 1) Affordable Housing a. At least ten percent (10%) of the residential units must be leased at rates that are considered affordable to individuals or households earning less than 60% of the U.S. Department of Housing and Urban Development’s (“HUD”) Area Median Income for the Minneapolis-Saint Paul-Bloomington Metropolitan Statistical. The base level of finish and amenities of the affordable units must be the same in all material respects as that of the market-rate units. The lease rates of affordable units will be based on the most current housing affordability data published by HUD. Additional affordable housing provisions concerning buyer qualifications, length of time for affordability restrictions, buyer leasing, etc. will be outlined in an exhibit to the Redevelopment Agreement. b. Developer has represented that there is a financing gap for the Project related to affordable housing. If the Project is built with eleven (11) one-bedroom affordable housing units the gap is estimated to be $1.4 million. If the Project is built with nine (9) one-bedroom and two (2) two-bedroom housing units the gap is estimated to be $1.87 million (the “Affordable Housing Gap”). The City will fund up to 50% of the Affordable Housing Gap (but not to exceed $700,000) with a fifteen (15) year loan to Developer from the City’s affordable housing fund with deferred interest at a rate to be determined by the City and on other terms to be agreed upon in the Redevelopment Agreement. Developer is seeking to fund the remainder of the Affordable Housing Gap with a 15 year loan from the Edina Housing Foundation. 2) Grants a. The City and Developer will cooperate in applications for eligible grants listed below. 49 1/2 Street Term Sheet April 11, 2017 D R A F T Page 10 b. The anticipated timing of such grant application are as follows: Grant Application Date Transit Oriented Development (TOD) (Met Council) Q2 2017 Tax Base Revitalization Account (TBRA) (Met Council) Q1 2017 Livable Communities Demonstration Account (LCDA) (Met Council) Q2 2017 Environmental Response Fund (ERF)(Hennepin County) Q2 2017 DEED Redevelopment Grant Program Q2 2017 c. The anticipated grant funds and uses thereof are set forth in the Project Sources and Uses attached as Exhibit 5. 3) Wayfinding; Signage. a. City and Developer will establish a mutually agreeable wayfinding and naming scheme for the Project (subject to approval by the City fire marshal), including maintaining temporary access and signage during construction of the South Site Improvements to direct pedestrian traffic from the North Ramp to the existing 50th and France retail. City and Developer will cooperate in attempting to secure a temporary signage variance during construction of the South Site Improvements to permit current 50th and France retailers to incorporate temporary advertising signage into such temporary access routes to the 50th and France retail. 4) 50th and France Commercial Area Maintenance Assessments. a. Each parcel in the South Site and Retail Site Retail will be assessed its respective share of the 50th and France Commercial Area Maintenance Assessments in accordance with current City policy. 5) Pay Parking. a. City reserves the right to determine hours and set rates for the City UG Parking. 6) Notice of Commencement; Certificate of Completion. a. Prior to commencing any development activities, Developer will demonstrate to City that Developer has secured adequate financing to complete the Project and will notify City in writing when Developer is ready to proceed with construction of the Project. The Redevelopment Agreement will define substantial completion of the City’s Project requirements. 7) City Approval of Significant Changes. 49 1/2 Street Term Sheet April 11, 2017 D R A F T Page 11 a. Changes to the Project scope and design that are materially inconsistent with the final development plan will be subject to City review in accordance with typical City procedure. 8) Performance Bonds. a. Performance bonds (or other security reasonably acceptable to City) are required for all work in the public way. 9) Default by Developer or City. a. Standard default provisions will be applicable. The Redevelopment Agreement will include remedies to be determined by the Developer and the City, and will include, without limitation, the right of City to terminate the Redevelopment Agreement or the right to deny issuance of the TIF Note for material defaults by Developer, subject to force majeure. 10) Preparation of Redevelopment Agreement. a. The City and Developer will work diligently to prepare a Redevelopment Agreement for City Council consideration. b. The Redevelopment Agreement presented to the City Council must be pre-signed by the Developer. 11) City Out-of Pocket Costs. a. The Developer will reimburse the City for its direct cost of legal and financial consultants as well as special consultants for TIF inspections, traffic and utility studies (“Consultant Costs”). The Consultant Costs will be Qualified Costs, and are estimated to be between $100,000 and $200,000. Reimbursement will be made within 30 days after invoicing. Except for a separate non-refundable application fee of $2,000 to reimburse staff costs and cover all other City-related costs associated the Project, costs of City staff will not be reimbursable. 49 1/2 Street Term Sheet April 11, 2017 D R A F T Page 12 EXHIBIT 1 PROJECT SITE PARCELS PID Address 1802824140035 3944 49 1/2 St W (Hooten) 1802824140034 3940 49 1/2 St W 1802824140030 3936 49 1/2 St W 1802824140026 3930 49 1/2 St W (Vacant) 1802824140036 3925 49th 1/2 St. W. 1802824140032 3925 49th 1/2 St. W. 1802824140120 3925 49th 1/2 St. W. 1802824140123 3925 49th 1/2 St. W. 1802824140023 3925 49th 1/2 St. W. 49 1/2 Street Term Sheet April 11, 2017 D R A F T Page 13 EXHIBIT 2 PRELIMINARY PROJECT SITE PLAN 49 1/2 Street Term Sheet April 11, 2017 D R A F T Page 14 EXHIBIT 3 DEPICTION OF THE PLAZA 49 1/2 Street Term Sheet April 11, 2017 D R A F T Page 15 EXHIBIT 4 NORTH SITE BUDGET 49 1/2 Street Term Sheet April 11, 2017 D R A F T Page 16 EXHIBIT 5 PROJECT SOURCES AND USES 49 1/2 Street Term Sheet April 11, 2017 D R A F T Page 17 EXHIBIT 6 QUALIFIED COSTS Land Acquisition Costs – South Site Architecture & Engineering Design Fees – South Site Environmental (Soft Costs) – South Site Environmental (Hard Costs) – South Site City Fees- SAC – South Site City Fees- WAC – South Site Met Council Fees – SAC – South Site Demolition of Center Ramp Sidewalk Costs – South Site (not Plaza related) Utility Relocates & Updates - South Site UG Parking - Level P2 Temporary Parking on Hooten Site & Vacant Site 49 1/2 Street Term Sheet April 11, 2017 D R A F T Page 18 Date: April 18, 2017 Agenda Item #: VI . To:C hair & C ommissioners of the Ed ina HR A Item Type: R ep o rt / R ecommend atio n F rom:Bill Neuendorf, Ec o nomic Development Manager Item Activity: Subject:R es olution 2017 -04: R eques ting the C ity C ounc il of the C ity of Ed ina call fo r a P ublic Hearing on the P ropos ed Modific ation to the R edevelo p ment P lan for the S outheas t Ed ina R ed evelo p ment P rojec t Area and the P ro p o s ed Estab lis hment of the 50th and F ranc e 2 Tax Inc rement F inanc ing Dis tric t (a R edevelo p ment District) Ac tio n Edina Housing and Redevelopment Authority Established 1974 C ITY O F E D IN A HO US I NG & R EDEVELO P ME NT AUT H O R I T Y 4801 West 50th Street Edina, MN 55424 www.edinamn.gov A C TI O N R EQ U ES TED : Approve R esolution 2017-04. I N TR O D U C TI O N : T his item relates to redevelopment finance at portions of the 50th and F rance C ommercial D istrict. T he H ousing and Redevelopment Authority requests that the C ity C ouncil schedule a P ublic H earing to consider the possible creation of a new Tax I ncrement F inancing D istrict. N ew taxes generated from this D istrict are intended to support construction of a new mixed-use project that includes a large public plaza and over 100 stalls of public parking. AT TAC HME N T S : Description Res olution 2017-04: : Reques ting the City Council of the City of Edina call for a Public Hearing on the Propos ed Modification to the Redevelopment Plan for the Southeast Edina Redevelopment Project Area and the Propos ed Es tablis hment of the 50th and Franc EDINA HOUSING AND REDEVELOPMENT AUTHORITY CITY OF EDINA COUNTY OF HENNEPIN STATE OF MINNESOTA RESOLUTION NO. 2017-04 REQUESTING THE CITY COUNCIL OF THE CITY OF EDINA CALL FOR A PUBLIC HEARING ON THE PROPOSED MODIFICATION TO THE REDEVELOPMENT PLAN FOR THE SOUTHEAST EDINA REDEVELOPMENT PROJECT AREA AND THE PROPOSED ESTABLISHMENT OF THE 50th AND FRANCE 2 TAX INCREMENT FINANCING DISTRICT (A REDEVELOPMENT DISTRICT). BE IT RESOLVED, by the Board of Commissioners (the "Board") of the Edina Housing and Redevelopment Authority (the "HRA") as follows: WHEREAS, the HRA and City Council ("Council") of the City of Edina, Minnesota ("City") previously established the Southeast Edina Redevelopment Project Area pursuant to Minnesota Statutes, Sections 469.001 through 469.047, inclusive, as amended, in an effort to encourage the development and redevelopment of certain designated areas within the City; and WHEREAS, the HRA is proposing the modification to the Redevelopment Plan for the Southeast Edina Redevelopment Project Area and the establishment of the 50th and France 2 Tax Increment Financing District, all pursuant to and in accordance with Minnesota Statutes, Sections 469.174 through 469.1794 and Sections 469.001 to 469.047, inclusive, as amended; and NOW, THEREFORE BE IT RESOLVED by the Board as follows: 1. The HRA hereby requests that the Council call for a public hearing on June 20, 2017, to consider the proposed Modification to the Redevelopment Plan (the “Redevelopment Plan Modification”) for the Southeast Edina Redevelopment Project Area, the proposed establishment of the 50th and France 2 Tax Increment Financing District (a redevelopment district), and adoption of a Tax Increment Financing Plan ("TIF Plan") therefor, (the Redevelopment Plan Modification and the TIF Plan are referred to collectively herein as the "Plans"), and cause notice of said public hearing to be given as required by law. 2. The HRA directs the Executive Director to transmit copies of the Plans to the Planning Commission of the City and requests the Planning Commission's written opinion indicating whether the proposed Plans are in accordance with the Comprehensive Plan of the City, prior to the date of the public hearing. 3. The Executive Director of the HRA is hereby directed to submit a copy of the Plans to the Council for its approval. 4. The HRA affirms the transmission of the Plans to Hennepin County and Independent School District No. 273 in which the 50th and France 2 Tax Increment Financing District is located no later than May 19, 2017. 5. Staff and consultants are authorized and directed to take all steps necessary to prepare the Plans and related documents and to undertake other actions necessary to bring the Plans before the Council. Approved by the Board on April 18, 2017. ATTEST: _______________________________ James B. Hovland, Chair _______________________________ Bob Stewart, Secretary STATE OF MINNESOTA) COUNTY OF HENNEPIN) SS CITY OF EDINA ) CERTIFICATE OF EXECUTIVE DIRECTOR I, the undersigned duly appointed and acting Executive Director for the Edina Housing and Redevelopment Authority do hereby certify that the attached and foregoing Resolution is a true and correct copy of the Resolution duly adopted by the Edina Housing and Redevelopment Authority at its Regular Meeting of April 18, 2017, and as recorded in the Minutes of said Regular Meeting. WITNESS my hand and seal of said City this ______________ day of ___________________, 2017. Executive Director