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HomeMy WebLinkAbout19890905_joint33 MINUTES OF THE JOINT MEETING OF THE EDINA HOUSING AND REDEVELOPMENT AUTHORITY/CITY COUNCIL HELD AT EDIHd CITY HIEc;L SEPTEHBER 5, 1989 A joint meeting of the Edina Housing and Redevelopment Authority and the City Council was convened to consider concurrently: 1) Edina Homestead Development/RPI Services, 3) Award of Bids - Centennial Lakes Phase I Residential Amenities, and 4) Centennial Lakes Phase IV. recorded. Action was taken by the HRA and Council as R0I;LCAI;L Answering rollcall were Commissioners/Members Kelly, Paulus, Rice, Smith and Richards. MINUTES of the €IRA of July 24, 1989 and the Joint €IRA/Council Meeting of August 7, 1989 were approved as submitted by motion of Commissionerflember Paulus, seconded by Commissionerflember Smith. Ayes: Kelly, Paulus, Rice, Smith, Richards Motion carried. PUBLIC HEBRING ON ED= HOMESTEBD DEVELOPMENT - RPI SERVICES CONTINUED INDEFINITELY Commissionerflember Smith to continue indefinitely the public hearing on the Edina Homestead Development. Motion of CommTssionerflember Rice was seconded by Ayes: Kelly, Paulus, Rice, Smith, Richards Motion carried. BID AWARDED FOR CENTENNIAL IAKES - PHASE I RESIDENTIAL AMENITIES Executive Director Gordon Hughes explained that the bids are for the construction of fountains in the common areas of Centennial Lakes Condominiums - Phase I and was bid separately from some of the other amenities. Rice for award of bid for construction of fountains in the common areas of Centennial Lakes Condominiums - Phase I to recommended low bidder, Monette Construction, at $15,600.00. Motion was seconded by Commissioner Smith. Motion was made by Commissioner Ayes: Kelly, Paulus, Rice, Smith, Richards Motion carried. CENTENNIAL LAKES - PHASE IV DISCUSSED asked Larry Laukka, the Centennial Lakes Condominium developer, to appear and discuss further his plans for the Phase IV Condominiums. He recalled that the HRA gave this concept approval at their July 10, 1989 meeting. make Phase IV a totally market rate building containing 30 units instead of the 46 units as in Phases I and 11. The HRA would make its normal contribution to Phase IV but none of the units would qualify for second mortgage assistance. . Instead the unused second mortgage potential would be transferred to other condominium phases that would be eligible for purchase by moderate income individuals. Executive Director Hughes said that he had This concept would After the meeting, staff was concerned that the HRA had not given approval for that unrecoverable subsidy portion of the HRA assistance. Director Hughes mentioned that in Phases I, I1 and 111, as well as in Edinborough, the HRA provided an unrecoverable subsidy of $650,000 per phase which was used to reduce the selling prices of the units. In Phase IV, Laukka Development is suggesting that the unrecoverable subsidy be reduced from $650,000 to $250,000. approximately to the land cost for the Phase IV site so in essence the HRA would be transferring the land at no cost to construct the project. Director Hughes said that the question for the HRA is: Should Phase IV, which is designed for more affluent purchases, be subsidized by the HkA so as to reduce the selling prices? He referred to his memorandum dated September 1, 1989, addressed to the HRA which listed several pros and cons for the proposed Phase IV. This equates 34 Commissioner Paulus 9/5/89 sked if this would affect future develoDments in that ther developers would be asking the HRA to underwrite other projeits. Director Hughes said possibly there could be others redeveloping in the City but that a more likely event would be if market rate housing was proposed for other phases within Centennial Lakes. Commissioner Paulus noted that future requests will have to be considered on their merits by the HRA. The same level of write down could be requested. Larry Laukka, Centennial Lakes condominium developer, informed the HRA that they have prepared a packet for the proposed Phase IV and have forwarded it to a number of people who have exhibited an interest. They are now in the process of contracting with those people, subject to a pre-sale requirement that, as developer, they have until October 1 to determine if the building is feasible. reiterated that the building design for the larger units would be within the existing footprint and that the exterior would look the same as those of the earlier phases. market rate units at that density (40 units per acre) to that community. He - He said the intent is to see if they can introduce the larger Mr. Laukka said that this would also provide an opportunity to construct one of the buildings without any of the second mortgage subsidy which can then be put back into the pool and be spread out over the balance of the development or be saved for subsequent phases of Centennial Lakes. the typical unrecoverable write down be reduced from $650,000 to $250,000 because he felt the cost per unit would exceed what most people would be willing to pay at that density and in that environment. $113/square foot in the market place. He said he had suggested that He said in projecting cost it is about In conclusion, Mr. Laukka said it is not certain that they will go forward with Phase IV as proposed. $250,000 write-down and that he wanted to be sure that was understood before getting further into the project. Chairman Richards said he was troubled by the $8,000 write-down per unit and the fact that someone may easily be able to afford to pay that. He asked for a feel of ranges of income and/or assets of individuals who had expressed interest. I Nevertheless, the formula has been structured with the In response, Mr. Laukka said that would be hard to even guess at but that the names would be recognized as pillars of the community. or people who are about to retire and want to sell or have sold their homes but wish to maintain residence in Edina. provide them that opportunity. majority of them are from Edina. product that, in trying to squeeze the design into the building, the question was whether or not it could provide a value. is that it has not. weeks and then make a decision. If it does not sell then they would revert back to a normal building for Phase IV wherein they would use the normal full subsidy and normal write-down. A good number are retirees They have indicated that this project would Mr. Laukka said when they finished up the Incomes and ages will range widely and the The early response in the past two weeks He said their plan is to offer the units for another three Mr. Laukka stated that he had felt that this was an opportunity to bring a new element into the development and preserve something in excess of $600-700,000 worth of write-down that could be put into the other units to deepen the subsidy in the other areas. He said there was no harm done at this point and it is a question of whether the HRA thinks it is a smart idea to try to do it and move some of the write-down money around and broaden the capital pool. Commissioner Rice asked what percentage of the buyers in Edinborough participated in the second mortgage money. Rice then asked, in his experience in building hundreds of units in various communities, if it was a positive or negative to have various income levels and Mr. Laukka said that the maximum was 60%. Member 9/5/89. .r- '3.. 5 sociological levels in a neighborhood. very positive. inception and in dealing with the homeowners' association they have found that the older and more experienced people bring a certain amount of sophistication and sobriety to the development. running that community. as experienced and they look and deal with their elder neighbors with a certain amount of satisfaction because of their wisdom. Mr. Laukka replied that he felt it was He said that after now managing the Edinborough project since its A lot of those were energetically involved in The younger people are first time homeowners and are not Commissioner Rice asked how the marketing of Phases I, I1 and I11 has gone in comparison with Edinborough. Mr. Laukka said it has gone fairly well. At this point with 134 homes there are 88 bonafide contracts that had people who were qualified to purchase which is about as good or better than this stage with Edinborough. October. the same mix - younger faces, incomes, working women and empty nesters. that there are some higher priced units in Centennial Lakes, up to $110,000, which have not sold as yet. He said they do not as yet have the models open but will have in The market is almost identical to that of Edinborough - they are seeing He noted Chairman Richards asked if the $400,000 write-down not used for Phase IV were put in Phase V, in addition to the normal $650,000, would that mean we could try to reach the lower end of the spectrum.. Mr. Laukka said they could deepen the second mortgage program which would provide some flexibility. would provide an opportunity to sell homes to people who earn less, possibly in the $25-26,000 income range. A larger second mortgage Chairman Richards asked Mr. Laukka what additional hard costs he would incur in the next three weeks. Mr. Laukka said that they have spent the money, designed the building and that is speculative - there would be no additional costs. He said he did not want to prolong the prospective project if it is not feasible. Rather they would want to get on with the regular market and get building IV started yet this year. the HRA said no to the project three weeks from now. would prefer the HRA to say no now. spending a lot of time and energy on this marketing. Chairman Richards then asked what the reaction would be if They do not wish to antagonize anyone and are Mr. Laukka replied that he Concerning marketing, Commissioner Smith asked if having a second mortgage available would help. Mr. Laukka said he did not think so. The decision people are making when they buy is if there is value - are they getting space for the dollar and can they live in that environment; the real question is the density. Chairman Richards then asked the Commissioners to express their feelings on the Phase IV as proposed. He said he would be inclined to allow the $250,000 write-down and that the other $400,000 be used in the other phases to try to attract the other end of the economic spectrum as a compensating balance. Commissioner Rice said he would concur with Chairman Richards. said that she would like to see this project happen and would like to see what would happen in the next three weeks. She said that one of her concerns would be the resale value for these units. Commissioner Smith said he would go along with the proposal as presented. Commissioner Paulus said that she, too, would concur. Commissioner Kelly Chairman Richards then made a motion to approve conceptually a market rate development for Phase IV centennial Lakes Condominiums consisting of 30 units for which the HRA would grant an unrecoverable subsidy not to exceed $250,000, with the remaining subsidy to be transferred to other phases. Commissioner Smith. Ayes: Kelly, Paulus,. Rice, Smith, Richards Motion carried. Motion was seconded by 36 9/5/89 Motion vas made by Commissioner Smith and adj'ournment of the HU. Motion carried unanimou