HomeMy WebLinkAbout2018-04-12 HRA Regular Meeting Agenda Packet
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MINUTES
OF REGULAR MEETING
OF THE EDINA HOUSING AND REDEVELOPMENT AUTHORITY
MARCH 29, 2018
7:30 A.M.
I. CALL TO ORDER
Chair Hovland called the HRA meeting to order at 7:32 a.m.
II. ROLLCALL
Answering rollcall were Commissioners Brindle, Fischer, Chair Hovland, Stewart, and Staunton.
III. APPROVAL OF MEETING AGENDA
Motion made by Commissioner Brindle seconded by Commissioner Fischer amending the agenda
by removing Consent Agenda Items V.B. Permanent Easement for 4416 Valley View Road; V.C.
North Ramp Expansion Progress Update; and V.D. Legislative Update; and approving the Meeting
Agenda.
Ayes: Brindle, Fischer, Hovland, Staunton, Stewart
Motion carried.
IV. COMMUNITY COMMENT
No community comment was received.
V. CONSENT AGENDA ADOPTED
Motion made by Commissioner Stewart seconded by Commissioner Brindle approving the
consent agenda as revised to remove Items V.B. Permanent Easement for 4416 Valley View Road,
V.C. North Ramp Expansion Progress Update, and V.D. Legislative Update, as follows:
V. A. Approve minutes of March 15, 2018, Regular HRA Meeting.
Ayes: Brindle, Fischer, Hovland, Staunton, Stewart
Motion carried.
ITEMS REMOVED FROM THE CONSENT AGENDA
V.B. Permanent Easement: 4416 Valley View Road
City attorney advised staff that this item did not require commissioners’ approval.
V.C. North Ramp Expansion: Progress Update
Director Olson updated the commissioners on construction progress at the North Ramp:
• Ramp opened 14 days ahead of schedule.
• The contractor was eight days behind and this has decreased to four days.
• Potential to open more stalls in June/July on the upper level.
• Considering changing valet parking locations to increase usage.
• Making continuous improvements to ease burden for businesses.
• Staff to review claims to CenterPoint Energy related to gas line break.
V.D. Legislative Update
The following questions were asked:
• How they avoid getting locked into a timeline? Mr. Anhut said timelines are usually included but it is not
for the use of funds; it is for establishment of the district. Ms. Katy Sen, Messerli and Kramer, added it
is not uncommon to tweak timelines when financing options are known.
• Was it typical that only 40% of funds are allowed for affordable housing? Mr. Anhut explained that the
Southdale TIF district was originally approved to spur jobs and economic growth with a loan to Simon
Properties. Affordable housing was added later with an amendment and the legislators capped it at 40%
because this was the amount they were comfortable with.
Minutes/Housing and Redevelopment Authority/March 29, 2018
Page 2
VI. REPORTS/RECOMMENDATIONS – (Favorable vote of majority of HRA Board Members present to
approve except where noted).
VI.A. Proposal to Amend the Bylaws of the Housing and Redevelopment Authority of the City
of Edina, Minnesota
Commissioner Brindle made a motion seconded by Commissioner Fischer approving
Amendment to the Bylaws of the Housing and Redevelopment Authority of the City of Edina,
Minnesota.
Ayes: Brindle, Fischer, Hovland, Staunton, 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
Motion made by Commissioner Fischer seconded by Commissioner Stewart to close the 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.
Ayes: Brindle, Fischer, Hovland, Staunton, Stewart
Motion carried.
VI.D. CLOSED DISCUSSION OF POTENTIAL SALE OF REAL ESTATE – 5146 EDEN AVENUE
Economic Development Director Neuendorf along with consultants, Nick Anhut, Ehlers & Associates, and Katie
Clark Sieben, The Eden Company, presented an update of the proposed sale of 5146 Eden Avenue. The HRA
discussed the proposed redevelopment and gave staff direction.
VI.E. MOTION TO MOVE BACK INTO OPEN SESSION
Commissioner Stewart made a motion seconded by Commissioner Brindle to move back into
open session.
Ayes: Brindle, Fischer, Hovland, Staunton, Stewart
Motion carried.
VII. ADJOURNMENT
There being no further business on the HRA Agenda, Chair Hovland declared the meeting adjourned at 9:18
a.m.
Respectfully submitted,
Scott Neal, Executive Director
City of Edina • 4801 W. 50th St. • Edina, MN 55424
Request for Purchase
Date: April 12, 2018
To: Members of the Edina Housing & Redevelopment Authority
From: Bill Neuendorf, Economic Development Manager
Subject: Request for Purchase – Interstate Parking
Purchase
Subject to:
☒List Quote/Bid
☐State Contract
☐Service Contract
The
Recommended
Bid is:
☐Within Budget
☒Not Within Budget
Interstate Parking
Date Bid Opened or Quote Received: Bid or expiration Date:
April 9, 2018 NA
Company: Amount of Quote or Bid:
Interstate Parking
$8,000 per month; not to exceed $48,000 over
six months
Recommended Quote or Bid:
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City of Edina • 4801 W. 50th St. • Edina, MN 55424
Request for Purchase
Department Director Authorization: _____________________________
City Council Authorization Date: ______________________ (for purchases over $20,000 only)
Budget Impact
Funding for this professional service contract is from a combination of TIF funds and sales proceeds from
the sale of the Center Parking Ramp and the North Ramp retail space. This work was not originally
anticipated but is necessary to mitigate impacts to surrounding businesses and neighborhoods.
Environmental Impact
Not applicable.
Community Impact
The engagement of a professional parking management company is anticipated to deliver a better
customer experience and to enhance the business climate during the expansion of the North
Parking Ramp.
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PROFESSIONAL SERVICES AGREEMENT
AGREEMENT made this ________ day of ___________________, 2018, by and
between the EDINA HOUSING AND REDEVELOPMENT AUTHORITY, a public body
corporate and politic under the laws of the state of Minnesota ("HRA") and INTERSTATE
PARKING COMPANY OF MINNESOTA LLC, a limited liability company under the laws of
the State of Minnesota ("Manager").
IN CONSIDERATION OF THEIR MUTUAL COVENANTS, THE
PARTIES AGREE AS FOLLOWS:
1. SCOPE OF SERVICES. The HRA retains Manager to provide full-time on-site
parking management.
2. CONTRACT DOCUMENTS. The following documents shall be referred to as the
"Contract Documents," all of which shall be taken together as a whole as the contract between the
parties as if they were set verbatim and in full herein:
A. This Professional Services Agreement; and
B. Manager’s Proposal dated ____________ 2018 ______________________.
In the event of conflict among the provisions of the Contract Documents, the order in which they
are listed above shall control in resolving any such conflicts. Contract Document “A” has the first
priority and Contract Document “B” has the last priority.
3. COMPENSATION. The HRA shall pay the Manager and the Manager shall
accept as payment Eight Thousand Dollars ($8,000.00) per month, inclusive of reimbursables, taxes
and all other charges (the “fee”). This fee shall not be adjusted if the estimated hour to perform a
task, the number of required meetings, or any other estimate or assumption is exceeded. The
HRA shall make payments on the basis of work performed upon receipt of an invoice from the
Manager. Payment shall be made by the HRA within thirty (30) days of receipt of an invoice,
unless the invoice is disputed.
4. CHANGE ORDERS. All change orders, regardless of amount, must be
approved in advance and in writing by the HRA. No payment will be due or made for work done
in advance of such approval.
5. COMPLIANCE WITH LAWS AND REGULATIONS. In providing services
hereunder, Manager shall abide by all statutes, ordinances, rules and regulations pertaining to the
provisions of services to be provided.
197164v1 2
6. STANDARD OF CARE. Manager shall exercise the same degree of care, skill,
and diligence in the performance of the services as is ordinarily possessed and exercised by a
professional manager under similar circumstances. No other warranty, expressed or implied, is
included in this Agreement. HRA shall not be responsible for discovering deficiencies in the
accuracy of Manager’s services.
7. INDEMNIFICATION. Manager shall indemnify and hold harmless the HRA, its
officers, agents, and employees, of and from any and all claims, demands, actions, causes of action,
including costs and attorney's fees, arising out of or by reason of the execution or performance of
the services provided for herein and further agrees to defend, at its sole cost and expense, any action
or proceeding commenced for the purpose of asserting any claim of whatsoever character arising
hereunder.
8. INSURANCE. Manager shall secure and maintain such insurance as will protect
Manager from claims under the Worker’s Compensation Acts, and from claims for bodily injury,
death, or property damage which may arise from the performance of services under this Agreement.
Such insurance shall be written for amounts not less than:
A. Commercial General Liability on an occurrence basis with Contractual
Liability Coverage:
Limits:
General Aggregate $1,000,000
Personal and Advertising Injury $1,000,000
Each Occurrence (Combined Bodily Injury $1,000,000
and Property Damage)
B. Automobile Liability – Combined single limit $1,000,000
each occurrence for bodily injury and property
damage covering owned, non-owned and
hired automobiles
The HRA shall be named as an additional insured on the commercial general liability policy and the
automobile liability policy on a primary and noncontributory basis. Before commencing work, the
Manager shall provide the HRA a certificate of insurance evidencing the required insurance
coverage in a form acceptable to HRA.
9. INDEPENDENT CONTRACTOR. The HRA hereby retains Manager as an
independent contractor upon the terms and conditions set forth in this Agreement. Manager is not
an employee of the HRA and is free to contract with other entities as provided herein. Manager
shall be responsible for selecting the means and methods of performing the work. Manager shall
furnish any and all supplies, equipment, and incidentals necessary for Manager’s performance under
this Agreement. HRA and Manager agree that Manager shall not at any time or in any manner
represent that Manager or any of Manager's agents or employees are in any manner agents or
employees of the HRA. Manager shall be exclusively responsible under this Agreement for
197164v1 3
Manager’s own FICA payments, workers compensation payments, unemployment compensation
payments, withholding amounts, and/or self-employment taxes if any such payments, amounts, or
taxes are required to be paid by law or regulation.
10. SUBCONTRACTORS. Manager shall not enter into subcontracts for services
provided under this Agreement without the express written consent of the HRA. Manager shall
comply with Minnesota Statutes § 471.425. Manager must pay subcontractor for all undisputed
services provided by subcontractor within ten (10) days of Manager’s receipt of payment from
HRA. Manager must pay interest of one and five-tenths percent (1.5%) per month or any part of
a month to subcontractor on any undisputed amount not paid on time to subcontractor. The
minimum monthly interest penalty payment for an unpaid balance of One Hundred Dollars
($100.00) or more is Ten Dollars ($10.00).
11. CONTROLLING LAW/VENUE. This Agreement shall be governed by and
construed in accordance with the laws of the State of Minnesota. In the event of litigation, the
exclusive venue shall be in the District Court of the State of Minnesota for Hennepin County
12. MINNESOTA GOVERNMENT DATA PRACTICES ACT. Manager must
comply with the Minnesota Government Data Practices Act, Minnesota Statutes Chapter 13, as it
applies to (1) all data provided by the HRA pursuant to this Agreement, and (2) all data, created,
collected, received, stored, used, maintained, or disseminated by Manager pursuant to this
Agreement. Manager is subject to all the provisions of the Minnesota Government Data Practices
Act, including but not limited to the civil remedies of Minnesota Statutes § 13.08, as if it were a
government entity. In the event Manager receives a request to release data, Manager must
immediately notify. HRA will give Manager instructions concerning the release of the data to the
requesting party before the data is released. Manager agrees to defend, indemnify, and hold the
HRA, its officials, officers, agents, employees, and volunteers harmless from any claims resulting
from Manager’s officers’, agents’, city’s, partners’, employees’, volunteers’, assignees’ or
subcontractors’ unlawful disclosure and/or use of protected data. The terms of this paragraph shall
survive the cancellation or termination of this Agreement.
13. COPYRIGHT. Manager shall defend actions or claims charging infringement of
any copyright or software license by reason of the use or adoption of any software, designs,
drawings or specifications supplied by it, and it shall hold harmless the HRA from loss or
damage resulting therefrom.
14. PATENTED DEVICES, MATERIALS AND PROCESSES. If the Contract
requires, or the Manager desires, the use of any design, device, material or process covered by
letters, patent or copyright, trademark or trade name, the Manager shall provide for such use by
suitable legal agreement with the patentee or owner and a copy of said agreement shall be filed
with the HRA. If no such agreement is made or filed as noted, the Manager shall indemnify and
hold harmless the HRA from any and all claims for infringement by reason of the use of any
such patented design, device, material or process, or any trademark or trade name or copyright in
connection with the services agreed to be performed under the Contract, and shall indemnify and
defend the HRA for any costs, liability, expenses and attorney's fees that result from any such
infringement.
197164v1 4
15. ASSIGNMENT. Neither party shall assign this Agreement, or any interest arising
herein, without the written consent of the other party.
16. WAIVER. Any waiver by either party of a breach of any provisions of this
Agreement shall not affect, in any respect, the validity of the remainder of this Agreement.
17. ENTIRE AGREEMENT. The entire agreement of the parties is contained herein.
This Agreement supersedes all oral agreements and negotiations between the parties relating to the
subject matter hereof, as well as any previous agreements presently in effect between the parties
relating to the subject matter hereof. Any alterations, amendments, deletions, or waivers of the
provisions of this Agreement shall be valid only when expressed in writing and duly signed by the
parties, unless otherwise provided herein.
18. TERM. This Agreement is for a six (6) month term commencing on
_____________, 2018 and ending on ____________, 2018. This Agreement may be terminated
by the HRA for any reason or for convenience upon written notice to the Manager. In the event
of termination, the HRA shall pay the Manager for completed work.
Dated: __________________, 2018. EDINA HOUSING AND
REDEVELOPMENT AUTHORITY
BY: _______________________________
James Hovland, Its President
BY: ________________________________
Robert J. Stewart, Its Secretary
Dated: __________________, 2018. INTERSTATE PARKING COMPANY
OF MINNESOTA LLC
BY: _______________________________
Its: _______________________
196626v2 1
AMENDMENT TO
PRELIMINARY DEVELOPMENT AGREEMENT
THIS AMENDMENT TO PRELIMINARY DEVELOPMENT AGREEMENT
(“Amendment”) is dated as of _________________, 2018, by and between Edina Housing and
Redevelopment Authority, a public body corporate and politic under the laws of the State of
Minnesota (the “Authority”) and Frauenshuh, Inc., a Minnesota corporation (the “Developer”).
RECITALS
WHEREAS, the Authority and Developer entered into a Preliminary Development
Agreement dated _______________ (“Agreement”) for the preliminary work and review of
development issues in advance of development of the Property and potential sale of portions of
the Property identified in the Agreement;
WHEREAS, Developer has requested an amendment of certain time-frames identified in
the Agreement;
WHEREAS, the Authority is agreeable to the amendment to time-frames as provided in
this Amendment, provided certain payment terms are also modified;
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, Authority and Developer agree as follows:
1. AMENDMENT TO PARAGRAPH 1 OF THE AGREEMENT. Paragraph 1,
subsection (e) of the Agreement is amended to read as follows:
(e) Developer and Authority shall determine whether the Required Uses and
Preferred Uses can be accommodated on the Property in a manner that is consistent with
the Guiding Principles by April 30, 2018, or such later date as agreed to by the parties. If
the Required Uses cannot be accommodated as provided herein, no further work will be
done pursuant to this Agreement after the date of such determination and this Agreement
shall terminate, unless otherwise approved by the parties. Provided Developer has
complied with the timelines and deliverables for Phase I under the Schedule (unless any
failure to comply is due to circumstances beyond Developer’s control), the Authority will
reimburse Developer for only the actual costs incurred by Developer allocated to the
Authority reimbursement as identified in Exhibit C .
2. AMENDMENT TO PARAGRAPH I OF THE AGREEMENT. Paragraph I
is amended to add a new subsection (k) to read as follows:
196626v2 2
(k) On or before April 30, 2018, or such other date agreed to by the parties pursuant
to Paragraph I(e), the Parties shall amend Exhibit B of this Agreement to provide
appropriate dates for completion of the deliverables in Phase 2.
3. AMENDMENT TO EXHIBIT B OF THE AGREEMENT. Exhibit B of the
Agreement is amended as attached hereto.
4. AMENDMENT TO EXHIBIT C OF THE AGREEMENT. Exhibit C of the
Agreement is amended as attached hereto.
5. FULL FORCE AND EFFECT. Except as provided in this Amendment, all
terms and provisions of the Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the City and Authority have caused this Agreement to be duly
executed in their name and behalf and their seal to be duly affixed hereto and the Developer has
caused this Agreement to be duly executed as of the date and year first above written.
FRAUENSHUH, INC.:
By: ___________________________
Its: ___________________________
EDINA HOUSING AND
REDEVELOPMENT AUTHORITY:
By: ___________________________
James B. Hovland, Its Chair
And By:___________________________
Robert J. Stewart, Its Secretary
196626v2 3
Exhibit B
Grandview- Former Public Works Site
Preliminary Development Agreement
2017/2018 Schedule & Process
Edina Housing and Redevelopment Authority and Frauenshuh
Phase 1 – Sketch Plan
• December 11 (week of): Organizational Meeting/Workshop with City staff and Developer’s
team, including Developer’s architectural, civil and landscape consultants.
• December 11th or 18th (week of): Workshop with City Staff and Developer’s team.
• January 8th (week of): Developer presentation of first draft of Sketch Plan to Joint workshop
with Parks & Rec Board and Arts & Culture Commission representatives.
• January 10th : Developer submission of Sketch Plan Application.
Developer submission of preliminary market study concerning private development and the
Preferred Use
• January 24th: Planning Commission; Sketch Plan review.
• January 24th (week of): Developer schedule and participate in neighborhood meeting concerning
draft Sketch Plan.
• February 7th: City Council; Sketch Plan review.
Phase 2 – Contract for Private Redevelopment and Necessary Land Use Approval
• DATE TBD: Developer completion of traffic study
• DATE TBD: Developer application for Tax Increment Financing, Developer Submission of
Development Payment Agreement; Developer application for preliminary zoning approval and any
necessary comprehensive plan amendments required for development.
• DATE TBD: Developer, Authority and City negotiation of Contract for Private Redevelopment
and Tax Increment Financing Agreement.
• Date TBD: City to develop a business plan/strategy for the new finished building for the Edina
Art Center
• DATE TBD: HRA to consider sponsorship of a comprehensive plan amendment
196626v2 4
• DATE TBD: Planning Commission review of preliminary zoning and comprehensive plan
application.
• DATE TBD: Contract for Private Redevelopment and Tax Increment Financing Agreement
submitted to the Authority and City Council together with final approval of any. Comprehensive
Plan Approvals necessary for development and preliminary zoning approval.
Project Cost*
Frauenshuh Portion
Expense During
PDA
City Portion
Expense During
PDA
City to Reimburse -
PDA Termination or
Expiration
Sketch Plan - Architect 39,500$
Res. Tower 13,167$
District Parking/Community Space 13,167$ 13,167$
Art Center 13,167$ 13,167$
Alternate Design Option 12,500$ 12,500$ 12,500$
Sketch Plan - Civil/Landscape Consultants 17,500$
Res. Tower 5,833$
District Parking/Community Space 5,833$ 5,833$
Art Center 5,833$ 5,833$
Preliminary Soil & Environmental 30,000$ 30,000$
High level traffic 5,000$ 5,000$ 2,500$
Preferred Use Market Study 5,000$ 5,000$
Preliminary Res. Market Study 5,000$ 5,000$ 2,500$
TIF Analysis 2,500$ 2,500$
Legal - TIF 5,000$ 5,000$
Legal - Real Estate, General 7,500$ 7,500$
Authority - PDA 30,000$ 30,000$
Frauenshuh - PDA Development 60,000$ 60,000$ 30,000$
Legal 5,000$ 5,000$ 2,500$
224,500$ 152,000$ 72,500$ 88,000$
If the PDA is terminated by May 30th or at such a later date as agreed to by both parties, the Authority’s reimbursement obligation is detailed in the above column “City to Reimburse
PDA Termination or Expiration”. If the PDA is terminated after May 30th or at such a later date as agreed to by both parties, the Authority’s reimbursement obligation is detailed in
the above column “Frauenshuh Portion Expense During PDA”.
Cost Allocation
*If the Project proceeds with Frauenshuh as master developer, the costs above will be incorporated as project costs allocated to each phase on a prorated basis. Adjustments to be
made at closing.
Pre-Development Budget
Grandview
Project Activity
Civil/LA
Architectural
Site Evaluation
Financial and Legal
Preliminary Development Agreement
April 12, 2018
Board of the Edina Housing and Redevelopment Authority
Bill Neuendorf, Economic Development Manager
Request for Tax Increment Financing -
7250 France Avenue – Mixed Uses with Apartments and Commercial Space
Information / Background:
The building at 7250 France Avenue includes three stories of professional and medical office space with
three levels of parking below grade. While the building is occupied by several successful businesses, it also
has several vacancies. The structure was built in 1973. The below-grade parking structure is in poor
condition and requires extensive repairs to meet the needs of future tenants.
The owner prefers to redevelop the property with a new mixed-use building that contains apartments with
first floor commercial tenants. Most units would be priced at market rates but 20 percent of the units in the
building would be priced at affordable rates to satisfy Edina’s affordable housing policy. New parking would
be constructed below the building and on the street level.
A brief overview of the project is provided to begin a discussion regarding the potential involvement of the
Edina HRA in the financing of this redevelopment project. Basic information about the 1.68 acre site is
summarized below:
2017 Estimated Market Value: $8,198,500 2017 Property Taxes: $289,116
Fiscal Disparities: Yes, 40% of tax base is contributed to regional pool
The concept calls for about 135 apartments and 19,000 square feet of commercial space. The complete
redevelopment of the site is estimated to cost $51 million. The project budget includes several extraordinary
costs including: demolition, tenant relocation, structured parking and storm water detention. The project
revenue is limited by the reduced rent allowed to be charged on the affordably-priced units.
The developer requests the use of tax incremental financing (TIF) in order to fill the financial gap created by
the extraordinary costs and the restricted rental incomes. The use of incremental taxes will allow the
owner/developer to realize a market-rate return on investment and move forward with the project.
Staff has met with the owner’s representative to learn more about the potential project. Based on this
preliminary conversation, staff anticipates a traditional TIF project that would likely include the following:
• City review of project financials to confirm financial returns and need for assistance
STAFF REPORT Page 2
• Pay-as-you-go TIF Note issued upon project completion
• TIF Note repaid based from actual property taxes collected from the completed project
• “Look-back” provisions to verify that TIF monies were needed upon completion or sale of the project
• Compliance reporting on affordably-priced units
This project results in several positive outcomes that would be beneficial to the community. These include:
• Increase in property tax base based on the value of the completed project
• Additional increase in tax base since a lesser portion is distributed through the State’s Fiscal
Disparities program
• Creation of new affordably-priced housing units at a variety of unit sizes
• Removal of antiquated parking facility with new state-of-the-art facility
• Improved storm water handling
• Potential access to the Gallagher Street traffic signal if neighboring 7200 parcel is redeveloped
Potential public access through the western portion of the site in case a bike or pedestrian path is
created in the future
The project is located within the boundaries of the Southeast Edina Redevelopment Project Area and is
eligible to be considered for the use of Tax Increment Financing.
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.
As the HRA considers this request, please consider the following questions:
1) Is this a reasonable project to establish a new TIF District? Is there a preference for a
Redevelopment District or a Special Housing District?
2) 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?
3) Does the HRA have any preference regarding the unit size or pricing levels for the rental
apartments in this project?
4) 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 State-mandated
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 will be borne by the developer.
# # #
April 12, 2018
Board of the Edina Housing and Redevelopment Authority
Bill Neuendorf, Economic Development Manager
Request for Development Assistance -
4600-4660 West 77th Street – Pentagon Park North
Information / Background:
A Tax Increment Financing (TIF) District was established in 2014 in anticipation of the
redevelopment of the antiquated office buildings known as Pentagon Park. At that time, many of the
properties had been re-assembled by Hillcrest Properties after a previous redevelopment effort
failed during the Great Recession. Most parcels had fallen into foreclosure and were owned by
several different financing institutions. Occupancy plummeted during this time period as did the
assessed valuation of the properties.
Also in 2014, Edina HRA entered into a Master Redevelopment Agreement with Hillcrest
Properties (dba Pentagon Revival). This Agreement anticipated that some parcels might be
redeveloped by the property owner while others might be sold to third parties for redevelopment
purposes.
A portion of the North Parcel is now proposed to be sold to Chase Real Estate to be redeveloped
into two multi-family housing buildings. One building would be a traditional apartment complex
while the second building would be a senior living facility containing independent living, assisted
living and memory care wings. Both buildings would be located along the southern edge of Fred
Richards Park. The redevelopment of this portion of the site would also include new public access
routes to the Park so that other tenants and residents in the area can better enjoy the public park.
Basic information about the North Parcel site is summarized below:
Parcel size: 10.86 acres Building Age: 50 years (built 1967)
2017 Estimated Market Value: $5,825,600 2017 Property Taxes: $206,790
Fiscal Disparities: Yes – 40% is distributed to the regional pool
STAFF REPORT Page 2
The redevelopment of the site is estimated to cost $127 million. The project budget includes
several extraordinary costs including: building demolition, remediation, dewatering, soil
stabilization, site preparation, public access routes and storm water detention.
The developer requests the use of tax incremental financing in order to fill the financial gap created
by the extraordinary costs. The use of incremental taxes will allow the owner/developer to realize
a market-rate return on investment.
Staff has met with representatives from Chase Real Estate to learn more about the potential
project. Based on these preliminary conversations, staff anticipates a fairly traditional TIF project
that would likely include the following:
• City review of project financials to confirm financial returns and need for assistance
• Pay-as-you-go TIF Note issued upon project initiation with payments beginning only upon
completion
• “Look-back” provisions to verify that TIF monies were needed upon completion or sale of
the project
This project results in several positive outcomes that would be beneficial to the community. These
include:
• Increase in property tax base based on the value of the completed project
• Additional increase in tax base since a lesser portion is distributed through the State’s Fiscal
Disparities program
• Removal of antiquated and vacant buildings
• Improved storm water handling
• Potential to deliver additional affordable housing on an adjacent part of the property
Staff has also met with representatives of Hillcrest Properties. The property owner proposes to
engage a different developer to construct affordably-priced housing elsewhere on the site. This
would be a specialty developer with experience in building and managing affordably-priced housing.
This project would be permitted and constructed on a separate time line. Staff and Hillcrest have
identified that the Master Redevelopment Agreement would need to be modified to reflect the
revised land uses, scheduling, cash flow and deliverables. The amendments would isolate any TIF
Notes issued on the North and South Parcels so that each project could be financed on its own
merits.
This overview is provided to begin a discussion regarding the potential involvement of the Edina
HRA in the financing of this multi-family redevelopment project. As the HRA considers this
request, please consider the following questions:
1) Should the use of tax incremental financing be considered for this project?
a. High redevelopment costs hinder the success of this project without assistance.
b. Upon completion, the project satisfies several public goals.
STAFF REPORT Page 3
2) 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?
3) Does the HRA have any concerns about a different developer building affordably-priced
units elsewhere on the Pentagon site?
4) Are there any concerns with potential amendments to the Master TIF Agreement to reflect
a shift away from commercial office with structured parking to multi-family with enclosed
and surface parking?
If the HRA is generally supportive of this new concept, the developer and staff will continue the
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 will be borne by the developers.
# # #
Pentagon North - ChaseRE - Housing Development Proposal
Edina, MN | Sketch Plan Review
November 22, 2017
Site Plan -
ChaseRE Development
Dog Run
8’ SIDEWALK 10’ BLVD
Landscaped Stormwater Swales
*Entry**Entry*
Nine Mile Regional Trail
Apartments5-Story Senior Living5-Story