HomeMy WebLinkAbout2018-02-15 HRA Regular Meeting Agenda Packet
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MINUTES
OF REGULAR MEETING
OF THE EDINA HOUSING AND REDEVELOPMENT AUTHORITY
FEBRUARY 1, 2018
7:30 A.M.
I. CALL TO ORDER
Chair Hovland called the HRA meeting to order at 7:37 A.M.
II. ROLLCALL
Answering rollcall were Commissioners, Brindle, Fischer, Staunton, and Chair Hovland. Absent was
Commissioner Stewart.
III. APPROVAL OF MEETING AGENDA
Motion made by Commissioner Staunton seconded by Commissioner Brindle amending the
agenda by removing Consent Agenda Items V.C. Authorize Chair and Secretary to execute a
temporary construction easement for 3918 Market Street and V.D. Authorize Chair and
Secretary to execute a temporary construction easement for 3948 Market Street and approving
the Meeting Agenda.
Ayes: Brindle, Fischer, Staunton, Hovland
Absent: Stewart
Motion carried.
IV. COMMUNITY COMMENT
No Community Comment was received.
V. CONSENT AGENDA ADOPTED
Motion made by Commissioner Staunton seconded by Commissioner Fischer approving the
consent agenda as follows:
V. A. Approve minutes of January 17, 2018 Regular HRA Meeting.
V.B 4416 Valley View Road – real estate update received
Ayes: Brindle, Fischer, Staunton, Hovland
Absent: Stewart
Motion carried.
VI. REPORTS/RECOMMENDATIONS – (Favorable vote of majority of HRA Board Members
present to approve except where noted).
VI.A. REQUEST FOR PURCHASE – NORTH RAMP EXPANSION PW 2018-001 CHANGE
ORDER #1
Public Works Director Olson explained contract for construction of the North Ramp Expansion project
located on Market Street to Adolfson & Peterson Construction (A&P) and the Center Ramp redevelopment
project will be administered and constructed by Frana Construction. Mr. Olson informed the HRA the project
was approximately eight days behind schedule for a variety of reasons including weather, Excel Energy timing,
and issues discovered during demolition.
Mr. Olson noted before the award of the contract to A&P that allowed the construction to commence on
January 2, a 12-month long public engagement period with the 50th and France business district has been held.
Constituents had identified the most important concern was the ability to travel the district using Market
Street, that would allow the north parking ramp to remain open during both construction projects.
Additionally, business desired to continue operations of pickups, deliveries, and services rendered to the
physical locations immediately impacted along the Market Street/Halifax corridor between 50th and France Ave.
City staff committed to coordinating with the contractors how to facilitate the continuation of service in the
District.
Minutes/HRA/February 1, 2018
Page 2
Mr. Olson stated City staff and its construction management company, SRF Consulting, met with Frana and the
development team of the Center redevelopment project on January 9 and discussed our options to mitigate
the issues due to the increased construction traffic. He reported that after reviewing four options the best
option appeared to be the use of a tower crane to construct the east and west ramp expansions increasing the
cost by $396,215.
The HRA noted the project was within the approved budget and contingency. Commissioners expressed a
desire to get the project back onto the original timeframe. They also complimented staff on their facilitation
of such a large project with the large number of constituents of varying interests.
Motion of Commissioner Staunton seconded by Commissioner Fischer approving Change Order #1 authoring
Option 4 that allowing for a tower crane for the North Ramp Expansion Project PW 2018-001
Ayes: Brindle, Fischer, Staunton, Hovland
Absent: Stewart
Motion carried.
VI.B. MOTION TO CLOSE MEETING OF THE EDINA HRA AS PERMITTED BY MS. 13D.05
SUBDIVISION 3 TO DICUSS THE POTENTIAL SALE OF REAL PROPERTY LOCATED AT
5146 EDEN AVENUE
Commissioner Staunton made a motion close meeting of the Edina HRA as permitted by MS.
13d.05 Subdivision 3 to discuss the potential sale of real property located at 5146 Eden Avenue.
Commissioner Brindle seconded the motion.
Ayes: Brindle, Fischer, Staunton, Hovland
Absent: Stewart
Motion carried.
VI.C CLOSED DISCUSSION OF POTENTIAL SALE OF REAL ESTATE – 5146 EDEN AVENUE
Economic Development Director Neuendorf along with consultants, Jay Lindgren, Dorsey & Whitney and Nick
Anhut Ehlers & Associates presented an update of the proposed use of 5146 Eden Avenue along with associated
costs of the redevelopment. The HRA gave staff direction regarding the property.
VI.D MOTION TO MOVE BACK INTO OPEN SESSION
Commissioner Fischer made a motion seconded by Commissioner Brindle to move back into
open session.
Ayes: Brindle, Fischer, Staunton, Hovland
Absent: Stewart
Motion carried.
VII. CORRESPONDENCE
VII.A. CORRESPONDENCE
Chair Hovland acknowledged the Board’s receipt of various correspondence.
IX. MAYOR AND COUNCIL COMMENTS – Received
X. MANAGER’S COMMENTS – Received
XII. ADJOURNMENT
There being no further business on the HRA Agenda, Chair Hovland declared the meeting adjourned at 9:11
a.m.
Respectfully submitted,
Scott Neal, Executive Director
1
196404v2
(reserved for recording information)
AMENDMENT
TO
CONTRACT FOR PRIVATE DEVELOPMENT
THIS AMENDMENT TO CONTRACT FOR PRIVATE DEVELOPMENT
(“AMENDMENT”), made on or as of the _____day of _____________________ , 2018, by
and between the HOUSING AND REDEVELOPMENT AUTHORITY, a public body
corporate and politic under the laws of the State of Minnesota (the "HRA") and EDINA FLATS
L.L.C., a Minnesota limited liability company (“Developer”).
WITNESSETH:
WHEREAS, the HRA and Developer entered into a Contract for Private Development
dated November 8, 2017 (“Agreement”) concerning the real property located in the City of Edina
and legally described in Exhibit A attached hereto and incorporated herein; and
WHEREAS, the parties desire to amend the Agreement concerning the time frame for
closing to allow Developer additional time to obtain necessary development approvals and to
secure assembly of other real estate parcels;
NOW, THEREFORE, in consideration of the premises and the mutual obligations of the
parties hereto, each of them does hereby covenant and agree with the other as follows:
1. AMENDMENT TO SECTION 3.4. Subsection (a) of Section 3.4 of the
Agreement is amended to read as follows:
(a) Within ten (10) days after the satisfaction and/or waiver of all of the conditions
contained in Section 3.2 of this Agreement, and in any event no later than March
2
196404v2
30, 2018 ("Closing Date"), unless otherwise extended by approval of the Parties,
provided all conditions precedent for the HRA and Developer to close have either
been met or waived, and the Developer pays the HRA the Purchase Price, the
HRA shall convey the Property to the Developer through the execution and
delivery of the Deed and all other documents reasonably required by Developer
and the Title Company (as hereinafter defined). This closing shall be at a location
mutually agreed upon by the parties.
2. EFFECT OF AGREEMENT. The Agreement shall remain in full force and
effect except as specifically amended herein.
IN WITNESS WHEREOF, the HRA and Developer have caused this Amendment to be
duly executed on or as of the date first above written.
[Remainder of page intentionally left blank.]
[Signature pages to follow.]
3
196404v2
EDINA HOUSING AND REDEVELOPMENT
AUTHORITY
By: ____________________________________
James B. Hovland
Its President
By: ____________________________________
Robert J. Stewart
Its Secretary
Attested By:_______________________
Scott Neal
Its Executive Director
STATE OF MINNESOTA )
)ss.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this _____ day of
________________________, 2018, by James B. Hovland and Robert J. Stewart, respectively,
the President and Secretary, of the Edina Housing and Redevelopment Authority, a public body
corporate and politic under the laws of the State of Minnesota, on behalf of the public body
corporate and politic.
______________________________________
Notary Public
4
196404v2
EDINA FLATS L.L.C.
By: McGlynn Partners LLC, a Minnesota limited
liability company, Its Manager
_________________________________
By: Patrick McGlynn
Its: Manager
STATE OF MINNESOTA )
)ss.
COUNTY OF ___________ )
The foregoing instrument was acknowledged before me this _____ day of
________________________, 2018, by Patrick McGlynn, the Manager of McGlynn Partners
LLC, a Minnesota limited liability company, the Manager of Edina Flats L.L.C., a Minnesota
limited liability company, on its behalf.
______________________________________
Notary Public
DRAFTED BY:
Campbell Knutson
Professional Association
Grand Oak Office Center I
860 Blue Gentian Road, Suite 290
Eagan, Minnesota 55121
Telephone: (651) 452-5000
5
196404v2
EXHIBIT “A”
LEGAL DESCRIPTION OF THE PROPERTY
Parcel 1
Lots 8 and 9, Block 21, Fairfax, Hennepin County, Minnesota, according to the recorded
plat thereof.
Parcel 2
Lot 6, Block 21, Fairfax, Hennepin County, Minnesota, according to the recorded plat
thereof.
196438v1 1
(reserved for recording information)
GRANT OF TEMPORARY EASEMENT
THIS EASEMENT AGREEMENT (“Agreement”) is made and entered as of the ____
day of __________________, 2018, by and between the HOUSING AND REDEVELOPMENT
AUTHORITY OF THE CITY OF EDINA, a public body corporate and politic of the State of
Minnesota (“HRA”), and LB 49TH 1/2 STREET, LLC, a Minnesota limited liability company
(“Grantor”).
RECITALS
A. HRA is the fee owner of the real property at 3930, 3936, 3940 and 3944 Market
Street, which property is legally described on Exhibit A (“HRA Property”);
B. Grantor is the owner of the property abutting the HRA Property at 3948 Market
Street, which property is legally described on Exhibit B (“Grantor Property”);
C. In connection with improvements located on the HRA Property, including
construction of additional public parking as part of City Public Works Project 18-001, the HRA
requires a temporary construction easement over a portion of the Grantor Property.
196438v1 2
NOW, THEREFORE, in consideration of the sum of One and No/100 Dollars ($1.00) and
other good and valuable consideration to it in hand paid by the HRA, the receipt and sufficiency of
which is hereby acknowledged by Grantor:
1. Easement. Grantor does hereby grant unto the HRA, its successors and assigns, a
temporary easement for utility service, including but not limited to a pole, transformer and meters,
across, on, under, over and through land situated within the County of Hennepin, State of
Minnesota, legally described on the attached Exhibit "C" (“Easement Premises”) including access
over the parking / loading area of the Grantor Property. To have and to hold the same, unto the
HRA, its contractors, agents, and servants, together with the right of ingress to and egress from the
Easement Premises, for the purpose of constructing, reconstructing, inspecting, repairing, and
maintaining the utility service systems, at the will of the HRA, its successors and assigns. Use of
the Easement Premises during the term of this Agreement shall be at the will of the HRA, its
successors and assigns; it being the intention of the parties hereto that the Grantor hereby grants the
uses herein specified without divesting itself of the right to use and enjoy the Easement Premises,
subject only to the HRA’s right to use the same for the purposes herein expressed.
2. Scope of Easement. The term of this Agreement shall commence upon execution
of this Agreement and expire upon the earlier of: (i) completion of the improvements on the HRA
Property or (ii) October 31, 2018
3. Repair and Restoration. The HRA shall be responsible for the repair and
restoration of any damage done by the HRA, its employees, agents or contractors during the
installation, servicing or removal of the utility service on the Easement Premises. As a condition
of this temporary construction easement grant, the HRA shall, upon relocation of the utility service
system and prior to termination of this temporary easement, restore the ground surface of the
196438v1 3
Easement Premises to its original condition so far as is reasonably practicable with the exception of
any trees and other vegetation.
4. Indemnification.
A. Subject to the statutory limits under Minnesota Statutes chapter 466, the HRA will
indemnify and hold Grantor harmless from any and all claims, liabilities or causes of action,
including attorneys’ fees and costs, arising out of the use of the easements by the HRA, except to
the extent caused by the negligence or willful misconduct of Grantor or its successors or assigns.
Nothing herein shall be deemed a waiver by the HRA of the limits of liability set forth in
Minnesota Statutes, Chapter 466 and the HRA shall not be obligated to indemnify the Grantor for
any amounts in excess of the limits set forth therein, less any amounts that the City is required to
pay on behalf of itself, its officers, agents and employees for claims arising out of the same
occurrence.
B. Grantor will indemnify and hold the HRA harmless from any and all claims,
liabilities or causes of action, including attorneys’ fees and costs, arising out of the use of the
easements by the Grantee, except to the extent caused by the negligence or willful misconduct of
HRA or its successors or assigns.
5. Grantor’s Covenant. The above named Grantor, for itself, its successors and assigns,
does covenant with the HRA, its successors and assigns, that it is well seized in fee title of the above
described Grantor Property; that it has the sole right to grant and convey the easement to the HRA;
that there are no unrecorded interests in the Grantor Property; and that it will indemnify and hold the
HRA harmless for any breach of the foregoing covenants.
[signature pages to follow]
196438v1 4
IN TESTIMONY WHEREOF, the Grantor hereto has signed this document this _______
day of ____________________________, 2018.
GRANTOR:
LB 49TH ½ STREET, LLC
By:
________________
Its:__________________________________
STATE OF _____________ )
)ss.
COUNTY OF ___________ )
The foregoing instrument was acknowledged before me this _______ day of
________________, 2018, by ________________________, the _________________________ of
LB 49th ½ Street, LLC, a limited liability company, on behalf of said corporation.
___________________________________
NOTARY PUBLIC
196438v1 5
IN TESTIMONY WHEREOF, the HRA hereto has signed this document this _______
day of _________________________, 2018.
HRA:
HOUSING AND REDEVELOPMENT
AUTHORITY OF THE CITY OF EDINA
By:_________________________________
James B. Hovland, Its Chair
And:________________________________
Robert Stewart, Secretary
Attested By:______________________________
Scott Neal, Executive Director
STATE OF MINNESOTA )
)ss.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this _______ day of
________________, 2018, by James B. Hovland, Robert Stewart, and Scott Neal, the Chair,
Secretary and Executive Director of the HOUSING AND REDEVELOPMENT AUTHORITY OF
THE CITY OF EDINA, a public body corporate and politic of the State of Minnesota, on its behalf.
___________________________________
NOTARY PUBLIC
DRAFTED BY:
CAMPBELL KNUTSON
Professional Association
Grand Oak Office Center I
860 Blue Gentian Road, Suite 290
Eagan, Minnesota 55121
Telephone: 651-452-5000
196438v1 6
EXHIBIT “A”
TO
GRANT OF TEMPORARY EASEMENT
Legal Description of HRA Property (3930 to 3944 Market Street):
Edina Market Street, Lot 1, Block 1, Hennepin County, Minnesota
196438v1 7
EXHIBIT “B”
TO
GRANT OF TEMPORARY EASEMENT
Legal Description of Grantor Property (3948 Market Street):
Lot 1, Block 1, Replat of Lot 6, Block 1, Lund Kruse Addition, and the West 35 feet of the
East 172 feet of the South 125 feet of the North 272.5 feet of Lot 36, Auditors Subdivision
Number 172; together with that portion of West 49 ½ Street now vacated described as
follows:
The North 1.25 feet of the East 68.76 feet of that part of West 49 ½ Street abutting
the south boundary of the tract of land described as “Lot 1, Block 1, Replat of Lot
6, Block 1, Lund Kruse Addition, and the West 35 feet of the East 172 feet of the
South 125 feet of the North 272.5 feet of Lot 36, Auditors Subdivision Number
172”,
according to the plat thereof on file and of record in the office of the Register of Deeds in
and for Hennepin County, Minnesota.
196438v1 8
EXHIBIT “C”
TO
GRANT OF TEMPORARY EASEMENT
Description of Temporary Easement Premises
A temporary easement for utility service purposes over, across, on and through the northerly
seventeen feet of the easterly fifteen feet of the following described property:
Lot 1, Block 1, Replat of Lot 6, Block 1, Lund Kruse Addition, and the West 35 feet of the
East 172 feet of the South 125 feet of the North 272.5 feet of Lot 36, Auditors Subdivision
Number 172; together with that portion of West 49 ½ Street now vacated described as
follows:
The North 1.25 feet of the East 68.76 feet of that part of West 49 ½ Street abutting
the south boundary of the tract of land described as “Lot 1, Block 1, Replat of Lot
6, Block 1, Lund Kruse Addition, and the West 35 feet of the East 172 feet of the
South 125 feet of the North 272.5 feet of Lot 36, Auditors Subdivision Number
172”,
according to the plat thereof on file and of record in the office of the Register of Deeds in
and for Hennepin County, Minnesota.
1
AMENDMENT TO
REAL ESTATE PURCHASE AGREEMENT
THIS AMENDMENT TO REAL ESTATE PURCHASE AGREEMENT
(“Amendment”) is dated as of _________________, 2018, by and between the HOUSING AND
REDEVELOPMENT AUTHORITY OF EDINA, MINNESOTA, a body politic and
corporate under the laws of the State of Minnesota (“Purchaser”) and EAST EDINA
HOUSING FOUNDATION, a Minnesota non-profit corporation (“Seller”).
RECITALS
WHEREAS, Seller and Purchaser entered into a Real Estate Purchase Agreement dated
November 8, 2017 (“Purchase Agreement”) for the conveyance of real property located in the
City of Edina;
WHEREAS, the closing of the Purchase Agreement is contingent upon a simultaneous
closing of Purchaser’s sale of the property under a separate agreement which closing has been
delayed;
WHEREAS, the parties desire to extend the closing date of the Purchase Agreement
accordingly;
NOW, THEREFORE, in consideration of the covenants and undertakings contained
herein and for other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, Purchaser and Seller agree as follows:
1. AMENDMENT TO PARAGRAPH 8. Paragraph 8 of the Purchase Agreement
is hereby amended to read as follows:
8. CLOSING. The closing hereof shall take place on or before March 30, 2018 and
simultaneously with the Closing on the Contract for Private Development, except as
otherwise extended or terminated as provided under this Agreement (the “Closing” or
“Date of Closing”). The Closing shall take place at the offices of the Title Company.
Unless otherwise agreed by the parties in writing, in the event that any of the
contingencies provided for in this Purchase Agreement are not satisfied prior to the Date
of Closing, this Purchase Agreement shall be null and void and of no further force and
effect. At Closing, Seller and Purchaser shall disclose their Social Security Numbers or
Federal Tax Identification Numbers for the purpose of completing state and federal tax
forms.
2. FULL FORCE AND EFFECT. Except as provided in this Amendment, all
terms and provisions of the Purchase Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the
date first written above, in multiple counterparts, each of which shall be deemed an original and
all of which shall evidence but one agreement.
SELLER:
EAST EDINA HOUSING FOUNDATION
By:__________________________________
Its ____________________
PURCHASER:
HOUSING AND REDEVELOPMENT
AUTHORITY OF EDINA, MINNESOTA
By:__________________________________
James B. Hovland, Its Chair
And:_________________________________
Robert J. Stewart, Its Secretary
Attest: _________________________
Scott Neal, Executive Director
chestnut cambronne
ATTORNEYS AT LAW
Chestnut Cambronne PA
17 Washington Avenue North
Suite 300
Minneapolis, MN 55401-2048
T: 612.339.7300
F: 612.336.2940
Gretchen S. Schellhas
gschellhas@chestnutcambronne.com www.chestnutcambronne.com
November 10, 2017
Mr. Don Uram
Finance Director, City of Edina
4801 West 50th Street
Edina, MN 55124
Re: The Village Homes at Centennial Lakes Association
Public Maintenance Fee
Our File No. 20140952.000
Dear Mr. Uram
Thank you for your letter of September 26, 2017. Our office received in on or about
October 29, 2017, but I was out of the office part of last week which prevented my being
able to respond sooner.
After careful consideration and only preliminary investigation, the Association
cannot agree to pay the requested sum. The City is the party who was to make the
calculations and bill for these amounts and failed to do so. That it failed to do so since
1989 or 1992, whenever adjustments might have been made is not the Association's fault.
However, trying to collect said adjustment even for the last 6 years will be a
hardship on the Owners who it claims are personally liable for said payment and/or the
Association. Based upon verbal and written representations of the City, the Association
budgeted for these amounts and collected the same. It also represented to prospective
purchasers amounts past due and owing and represented ongoing assessment levels,
thereby inducing them to purchase Units in the Association. Per the Agreement, the
Public Maintenance Charge is included in the common expenses, and, based upon the
City's representations, the amounts were represented to prospective purchasers for
ongoing assessments in the Resale Disclosure Certificates issued for each purchase. The
Owners who have purchased their units during the past 6 years did so in reliance upon
the City's verbal and written representations as to amounts owed. They, in turn, like the
Don Uram
November10, 2017
Page 2
Association made representations to their purchasers about amounts owed in reliance
upon the City's actions. Per Section 515B.4-17 (d), "A unit owner providing a certificate
pursuant to subsection (a) is not liable to the purchaser for any erroneous information
provided by the association and included in the certificate." Thus, there is no way for the
current Owners to pursue claims against their Sellers, even if they just purchased in
October 2017.
Additionally, pursuant to Section 515B.4-107 (e), "A purchaser is not liable for any
unpaid common expense assessments, including special assessments, if any, not set forth
in the certificate required in subsection (a). A purchaser is not liable for the amount by
which the annual or special assessments exceed the amount of annual or special
assessments stated in the certificate for assessments payable in the year in which the
certificate was given, except to the extent of any increases subsequently approved in
accordance with the declaration or bylaws." So, other than trying to pass a special
assessment in the future, there is no way for the association to retroactively assess its
members in the manner the City is attempting to retroactively adjust the Public
Maintenance Charge.
The Association understands it will be responsible for prospectively increasing the
common expenses to pay for the increased Public Maintenance Charge, which, for the
purpose of settlement only, it is willing to assume is accurate for amounts owed in 2018
forward. However, it does not have the resources to pay for past adjustments never
disclosed by or City caused by the City's Staff's errors.
The May 1, 2015 billing statement supports the Association's position it was being
billed by the City at the level it had been paying through at least May 1, 2015. It is in the
process of obtaining copies of the other invoices it sent/received/paid for the public
maintenance charges for the period in question. As you know, Laukka Management,
which managed the Association through December 2014 was sold and FirstService
Residential Management started management in January 2015. Therefore, obtaining the
copies is taking longer than expected. Additionally, there is the written admission made
to the Chair and Commissioners of the Housing and Redevelopment Authority that it
was and is the City Staff's responsibility to have made and billed for the adjusted
amounts. It is attempting to benefit from its wrongdoing, and its failure to make the
Don Uram
November10, 2017
Page 2
adjustments and bill for the same is prejudicial to the Association and its Owners who
acted in reliance upon the representations of the City.
For these reasons, but especially the facts that the Association and its Owners
relied upon the City's representations as to Public Maintenance Charges owed
throughout this period, and budgeted accordingly and collected accordingly, the
Association will vehemently fight the attempt to be retroactively billed for the public
maintenance charge adjustment. Hopefully, this will not be necessary.
Very truly yours,
Chestnut Cambronne, P.A.
Gretchen S. Schellhas
February 15, 2018
Board of the Edina Housing and Redevelopment Authority
Bill Neuendorf, Economic Development Manager
Request for Tax Increment Financing -
Aeon 4040 Affordable Apartments
Information / Background:
Aeon, a not-for-profit developer of affordable housing is interested in creating new housing
options in Edina. The developer has approached the Edina Housing and Redevelopment Authority
(HRA) with a request to consider establishing a new Housing TIF District to provide financial
support for a new multi-family housing project located at 4040 West 70th Street.
The project would include approximately 90 units, most of which would be subsidized to be
affordable to residents who are of moderate and limited incomes. Unit sizes would include studios,
1-bedroom, 2-bedroom and 3-bedroom.
The project is located within the boundaries of the Southeast Edina Redevelopment Project Area
and is eligible to be defined as a new Tax Increment Financing (TIF) District.
TIF is a public finance mechanism enabled by Minnesota Statute to help provide funding for
redevelopment and housing projects. Simply put, new property taxes generated from this new real
estate investment will remain within the TIF District to help fund the improvements. The existing
property tax base from this site will continue to be available to the taxing agencies like Hennepin
County, Edina School District 273 and City of Edina. At the expiration of the District, the full
property tax base of the parcels in the TIF District will be available to the taxing agencies.
Recognizing that new affordably priced housing is in short supply in Edina, staff recommends that
this request be fully explored. As the HRA considers this request, please consider the following
questions:
1) Is this a reasonable project to establish a new TIF District? Are there any preferred
boundaries for the District?
2) As a stand-alone Housing District, incremental taxes generated will likely be fully directed
to support this project with little chance of being repaid. This would look more like a TIF
grant than a TIF loan. Does the HRA have any concern for a project if this type?
STAFF REPORT Page 2
3) Edina's Affordable Housing Policy requires that the level of affordability be retained for at
least 15-years. Does the HRA contemplate a longer term as a condition of a significant TIF
contribution?
4) This project will also require the financial support of several other resources. Does the
HRA contemplate any level of matching grant or philanthropic/private sources as a
condition of a TIF contribution?
5) The Southdale 2 District will soon have nearly $5 million that can be used to support a
variety of affordable housing projects. Is this a good project to use some of the existing
monies from the Southdale 2 TIF District?
6) The HRA's Affordable Housing Fund has an uncommitted balance of approximately $1.2
million. Would the HRA consider using monies from this fund to further support this
project?
7) Does the HRA have any preference regarding the unit size or pricing levels for the rental
apartments in this project?
8) Setting aside the requirements of the City's zoning and building requirements, does the
HRA contemplate any additional provisions that would impact the design of construction of
this project? For example, would the HRA expect to see a higher degree of sustainability for
a higher level of financial support?
If the HRA is generally supportive of this concept, the developer and staff will begin the lengthy
process involved with tax increment financing. The financial and legal advisors from Ehlers
Associates and Dorsey & Whitney will assist the City and HRA with this work. In accordance with
Edina's TIF policy, the cost of these advisors would be borne by the developer.
# # #
901 No 3rd Street, #150, Minneapolis, MN 55401 612-341-3148 Main 612-341-4208 Fax www.aeonmn.org
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1625 Park Avenue, Minneapolis, MN 55404 612-341-3148 612-341-4208 F www.aeonmn.org
1625 Park Avenue, Minneapolis, MN 55404 612-341-3148 612-341-4208 F www.aeonmn.org
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Aeon Edina
December 15, 2017
Current Massing and Unit Matrix
Edina MN
December 15, 2017
Concept Ske
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Edina HRA
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Aeon Edina
December 15, 2017Plan | Existing Site
Kinderberry Hill
ACA Office
Aeon Edina
December 15, 2017Concept Plan | Overall
Kinderberry Hill
no change
Proposed AEON Housing
Aeon Edina
December 15, 2017Metric Comparison
Aeon Edina
December 15, 2017Concept Plan | Level P1
Aeon Edina
December 15, 2017Concept Plan | Level 1
Community
Space
Kinderberry Hill
no change
Aeon Edina
December 15, 2017Concept Plan | Level 2
Kinderberry Hill
no change
Aeon Edina
December 15, 2017Concept Plan | Level 3
Kinderberry Hill
no change
Aeon Edina
December 15, 2017Concept Plan | Level 4
Kinderberry Hill
no change
roof
Aeon Edina
December 15, 2017Concept Plan | Aerial View
AEON
AEON
Kinderberry Hil
Salon Concepts
Memo
To: Bill Neuendorf, Edina Economic Development Manager
From: Nick Anhut, Ehlers & Associates
Date: February 9, 2018
Subject: 70th & France Affordable Housing Assistance
The City of Edina requested that Ehlers review an initial development pro forma from Aeon (the
“Developer”) from a proposal to construct a $24.8 million project consisting of 90 units of Mixed-
Income multifamily housing. The Developer intends to make an application to Minnesota
Housing to seek Low Income Housing Tax Credits (LIHTC) and primary financing this Spring, as
well as its zoning application to the City. The Developer has identified a gap in financing of $6.8
million and is seeking financial assistance the Edina Housing and Redevelopment Authority and
Edina Housing Foundation for the affordable project.
We have reviewed the preliminary project financing and two scenarios of proforma assumptions
provided by the Developer, and prepared an estimate of the potential Tax Increment the 90-unit
project may generate. Both scenarios’ development pro forma assumptions were generally
reasonable and within industry standards expected for LIHTC projects. This memo focuses on
the 9% Tax Credit project which contains greater variety of mixed income units. Below are
initial thoughts as the entities consider the request:
1. Acquisition Costs: The acquisition and demolition costs of over $37,000 per unit are
high as compared to similar residential projects. High acquisition costs are expected in
Edina and have been demonstrated within the immediate area, but are difficult for
affordable project rent levels to overcome.
2. Mixed-Income Rents: The apartment building includes a mix of studio, one-bedroom,
two-bedroom, and three-bedroom units. The market rate rents range from $1,066/month
($2.13/sf) for a studio to $2,125/month ($1.74/sf) for a three bedroom. The estimates are
slightly below recent new apartment developments in the vicinity but appear within
market expectations.
The Developer has elected to provide 90% of the apartments (81 units) with rents that
are affordable to households at various levels: 30%, 50% and 60% of the area median
income (AMI). The income and rent limits along with the proposed distribution are as
follows:
City of Edina
70th & France Affordable Housing Assistance
February 9, 2018
Page 2
Type Units Units Units Units
0 BR / SRO 3 2 1 1
1 Bedroom 2 3 4 7
2 Bedroom 2 3 5 24
3 Bedroom 2 2 5 24
Total:9 10 15 56
Rents by Unit Type
Market Rate 30% AMI 50% AMI 60% AMI
Unit Type # of Units
Average Unit
Market Rate Rent
Difference
Per Unit Annual
Revenue
Difference
Total Annual
Revenue
Difference
30% AMI 10 (640)(7,680)(76,800)
50% AMI 15 (657)(7,882)(118,224)
60% AMI 56 (510)(6,115)(342,432)
Market Rate 9 0 0 0
Totals:90 (498)(5,972)(537,456)
Rent Comparison versus 100% Market Rate
Per City of Edina’s Affordable Housing Policy, new multi-family developments of 20 or
more units must provide a minimum of 10% rentable area at 50% affordable rents or
20% at 60% affordable rents. The annual “cost” of a 50% affordable unit is $7,882 and
that of a 60% affordable unit is $6,115.
The annual revenue difference of $537,456 reduces the amount of a first mortgage the
project can support and contributes to the gap in financing after LIHTC equity and other
sources. The supportable mortgage is estimated to be $8.2 Million with net revenue
providing debt service coverage of 115% at MN Housing minimum standards based on a
40-year level amortization at 4.75% interest.
3. Tax Increment: Currently, the property is valued at approximately $2.7 million and the
City’s portion of the existing taxes is $10,308 (assuming preliminary pay 2018 property
tax rates). The expected taxable value of the affordable project at completion is $16.1
million. Minnesota allows a special classification (4d) for qualifying affordable housing
units which lowers its tax capacity compared to market rate units. Assuming 90% of
units qualify, we estimate that the project could generate $102,570 of incremental taxes
annually which can help offset the gap. TIF assistance is typically provided on a “pay-
as-you-go” basis after property taxes are paid by the property. A maximum 21-year TIF
cashflow could support up to $1.3 million in additional mortgage proceeds, reducing the
remaining gap to $5.5 million.
4. Other Private Gap Sources: The project may also fill a portion of the financing gap by
deferring a portion of the Developer’s Fee (total Fee presented as $2.0 million or 8.8% of
development costs) or by securing a subordinated note payable from any free cashflow
after annual operating and financing expenses.
5. Other Public Gap Sources: The HRA’s Southdale 2 TIF District has received special
legislative authority to pool its TIF funds towards affordable housing. We estimate
Southdale 2 TIF Funds could provide up to $3.54 million in remaining authority to grant
City of Edina
70th & France Affordable Housing Assistance
February 9, 2018
Page 3
or loan to qualifying projects like the Aeon project. Historically, the HRA has also
partnered with the Edina Housing Foundation to provide low interest loans on a case-by-
case basis. The project will also seek additional funding this Spring from Hennepin
County and/or Metropolitan Council grants.
If the City’s HRA and Foundation choose to partner and provide assistance for this project, we
recommend further understanding of potential public and private partner contributions toward
the affordable project. The HRA’s commitment should require revisiting an updated review of
the updated project proforma based on general industry standards for development costs;
market rate and affordable rents; operating expenses; developer fees; financing criteria; and
resulting project cash flow. The detailed analysis will help policy-makers understand to what
extent the apartment project demonstrates financial feasibility.
Please contact Nick at 651-697-8507 with any questions.
AMOUNT ($)% of TDC Per Unit
TOTAL Project Costs $24,823,548 100%275,817
Less:First Mortgage -8,204,000 33.0%91,156
Less:Tax Credit Equity -9,399,060 37.9%104,434
Less:Misc. Rebates -357,448 1.4%3,972
Gap:$6,863,040 27.6%76,256
Potential:Deferred Developer Fee ??
Potential:Cash Flow Note ??
Potential:Public Grants ??
Potential:TIF Mortgage 1,300,000 5.2%14,444
Potential:Southdale 2 Pooling ??
February 15, 2018
Board of the Edina Housing and Redevelopment Authority
Bill Neuendorf, Economic Development Manager
Closed Session - Potential Sale and Lease of Real Estate - 5146 Eden Avenue
Information / Background:
In December 2017, the Edina HRA entered into a Preliminary Development Agreement with Frauenshuh
Inc. to explore a mixed-use redevelopment of the City’s former Public Works site located at 5146 Eden
Avenue. Frauenshuh was engaged after the Edina HRA conducted a competitive selection process in 2014.
Since that time, the developer and architecture team have meet with Edina staff members on several
occasions to explore concepts responsive to the future needs of the City and the current market place.
Comments and suggestions have been collected at two public open houses, Planning Commission (January
24) and City Council (February 7).
Since December, Edina staff along with advisors from Dorsey & Whitney and Ehlers Associates have met
with the developers to discuss various strategies to deliver and finance an ambitious mixed-use project of
this caliber. Edina’s current TIF policy served as the basis for these financial discussions.
Each of the five unique project elements requires a different financial strategy. For the residential element, a
property sale is suggested. For the Civic Art/Adult Center, a land lease is suggested.
If this mixed-use public-private concept is to be further pursued, the developer and HRA need to commit to
finding the best strategies to deliver the individual elements. Per the terms of the Preliminary Development
Agreement, a decision to proceed should be reached by February 28th. If necessary, that deadline can be
extended to a mutually agreeable date in early March.
Based on discussions to date, significant equity investments and debt obligations would need to be incurred
by both the developer and HRA to proceed. Total project costs could also be reduced if the scope or
quality of the project is reduced. Alternative financial sources could also be explored such as grants and
philanthropic donations.
Potential terms of a real estate transaction will be presented for discussion purposes. A follow up meeting
with the developer is likely needed to fully understand the obligations and expectations required to advance
this concept.
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