HomeMy WebLinkAbout2022-02-10 HRA Regular Meeting PacketAgenda
Edina Housing and Redevelopment Authority
City of Edina, Minnesota
VIRTUAL MEETING
Thursday, February 10, 2022
7:30 AM
Watch the meeting on cable TV or at EdinaMN.gov/LiveMeetings or
Facebook.com/EdinaMN.
To participate in Community Comment:
Call 800-374-0221.
Enter Conference ID 7829186.
Give the operator your name, street address and telephone number.
Press *1 on your telephone keypad when you would like to get in the queue to speak.
A City sta9 member will introduce you when it is your turn.
I.Call to Order
II.Roll Call
III.Pledge of Allegiance
IV.Approval of Meeting Agenda
V.Community Comment
During "Community Comment," the Edina Housing and Redevelopment
Authority (HRA) will invite residents to share new issues or concerns that
haven't been considered in the past 30 days by the HRA or which aren't
slated for future consideration. Individuals must limit their comments to
three minutes. The Chair may limit the number of speakers on the same
issue in the interest of time and topic. Generally speaking, items that are
elsewhere on today's agenda may not be addressed during Community
Comment. Individuals should not expect the Chair or Commissioners to
respond to their comments today. Instead the Commissioners might refer the
matter to sta. for consideration at a future meeting.
VI.Adoption of Consent Agenda
All agenda items listed on the consent agenda are considered routine and
will be enacted by one motion. There will be no separate discussion of such
items unless requested to be removed from the Consent Agenda by a
Commissioner of the HRA. In such cases the item will be removed from the
Consent Agenda and considered immediately following the adoption of the
Consent Agenda. (Favorable rollcall vote of majority of Commissioners
present to approve.)
A.Approve Draft Minutes of Regular Meeting January 6, 2022
B.Approve Payment of Claims
C.Edina Housing Foundation Appointments
VII.Reports/Recommendations: (Favorable vote of majority of Commissioners
present to approve except where noted)
A.Approve Loan for the Development of 4040 West 70th Street
B.7001 France Ave - Recommended Terms for Tax Increment Financing
VIII.HRA Commissioners' Comments
IX.Executive Director's Comments
X.Adjournment
The Edina Housing and Redevelopment Authority wants all participants to be
comfortable being part of the public process. If you need assistance in the way of
hearing ampli@cation, an interpreter, large-print documents or something else,
please call 952-927-8861 72 hours in advance of the meeting.
Date: February 10, 2022 Agenda Item #: VI.A.
To:Chair & Commissioners of the Edina HRA Item Type:
Minutes
From:Liz Olson, Administrative Support Specialist
Item Activity:
Subject:Approve Draft Minutes of Regular Meeting January 6,
2022
Action
Edina Housing and Redevelopment
Authority
Established 1974
CITY OF EDINA
HOUSING & REDEVELOPMENT
AUTHORITY
4801 West 50th Street
Edina, MN 55424
www.edinamn.gov
ACTION REQUESTED:
Approve the regular minutes of January 6, 2022.
INTRODUCTION:
See attached meeting minutes of January 6, 2022.
ATTACHMENTS:
Description
01-06-22 Draft Regular Minutes
Page 1
MINUTES
OF THE REGULAR MEETING OF THE
EDINA HOUSING AND REDEVELOPMENT AUTHORITY
JANUARY 6, 2022
8:15 A.M.
I. CALL TO ORDER
Chair Hovland called the meeting to order at 8:22 a.m. then explained the processes created for
public comment.
II. ROLLCALL
Answering rollcall were Commissioners Anderson, Jackson, Pierce, Staunton, and Chair Hovland.
Absent: None.
III. PLEDGE OF ALLEGIANCE
IV. MEETING AGENDA APPROVED - AS PRESENTED
Motion by Commissioner Jackson, seconded by Commissioner Pierce, approving the
meeting agenda as presented.
Roll call:
Ayes: Commissioners Anderson, Jackson, Pierce, Staunton, and Chair Hovland
Motion carried.
V. COMMUNITY COMMENT
No one appeared.
VI. CONSENT AGENDA ADOPTED - AS PRESENTED
Member Jackson made a motion, seconded by Member Pierce, approving the consent
agenda as presented:
VI.A. Approve minutes of the Special Meeting December 7, 2021
VI.B. Approve minutes of the Regular Meeting December 9, 2021
VI.C. Election of Officers
VI.D. Appointment of the Executive Director of the HRA
VI.E. HRA 2022 Meeting Dates and Location
VI.F. Adopt Resolution No. 2022-01; Designating Official Newspaper
VI.G. Adopt Resolution No. 2022-02; Designating Official Depositories
Rollcall:
Ayes: Commissioners Anderson, Jackson, Pierce, Staunton, and Chair Hovland
Motion carried.
VII. REPORTS/RECOMMENDATIONS
VII.A. RESOLUTION 2022-03; FINDING THAT A PARCEL IS OCCUPIED BY
SUBSTANDARD BUILDING AND REQUESTING THE CITY COUNCIL OF THE CITY
OF EDINA TO CALL A PUBLIC HEARING ON THE PROPOSED ESTABLISHMENT
OF THE 70TH AND FRANCE TAX INCREMENT FINANCING DISTRICT – ADOPTED
Economic Development Manager Neuendorf said this item pertained to the potential use of Tax
Increment Financing (TIF) to support full redevelopment of property located at 7001-7025 France
Avenue. The site had been inspected by Braun Intertec and found to meet the thresholds established
in Minnesota TIF statutes to be considered a Renewal and Renovation TIF District. The developer
had secured preliminary zoning approval to redevelop the commercial site with a combination of
commercial and residential uses. He shared that one of the buildings met the TIF-eligible site
conditions but the other did not then outlined the public process required for TIF district
establishment. This proposal included a private investment of approximately $249 million and would
Minutes/HRA/January 6, 2022
Page 2
include the 5.5-acre site into four building pads that would include the existing bank, new office,
residential, and parking. He outlined the goal of the project that would subdivide a superblock and
result in a walkable street grid, public easements, street furniture, art, and landscaping, and abide by
the new sustainability policy. He further outlined the proposed public realm of the project and said
this would be the first new office building constructed in over 20 years in the City. He outlined the
proposed parking of district and public parking then outlined the anticipated financing strategy of
approximately $22 million in TIF. The developer had requested that the City consider issuing TIF
Note(s) in order to make this project financially viable. Staff was currently negotiating the general
terms by which TIF could be considered for this project. Mr. Neuendorf said the Term Sheet would
be presented before a final decision was made regarding the establishment of a new TIF District and
the HRA legal advisors had prepared this resolution to recognize that the parcel was eligible for
inclusion in a new TIF District. HE said this Resolution also recommended that the City Council
schedule a future Public Hearing to consider the new TIF District.
The Board asked questions and provided feedback.
Member Jackson introduced and moved adoption of Resolution 2022-03 finding that
parcel is occupied by substandard building and requesting the City Council of the City
of Edina call for a Public Hearing on the proposed establishment of the 70th and France
Tax Increment Financing District (a Renewal and Renovation District). Member Pierce
seconded the motion.
Roll call:
Ayes: Commissioners Anderson, Jackson, Pierce, Staunton, and Chair Hovland
Motion carried.
VIII. HRA COMMISSIONERS’ COMMENTS – Received
IX. EXECUTIVE DIRECTOR’S COMMENTS – Received
IX.A. YEAR IN REVIEW – 2021
IX.B. BY-LAW REVIEW
X. ADJOURNMENT
Motion made by Commissioner Jackson, seconded by Commissioner Pierce, to adjourn
the meeting at 8:59 a.m.
Roll call:
Ayes: Commissioners Anderson, Jackson, Pierce, Staunton, and Chair Hovland
Motion carried.
Respectfully submitted,
Scott Neal, Executive Director
Date: February 10, 2022 Agenda Item #: VI.B.
To:Chair & Commissioners of the Edina HRA Item Type:
Claims
From:Alisha McAndrews, Finance Director
Item Activity:
Subject:Approve Payment of Claims Action
Edina Housing and Redevelopment
Authority
Established 1974
CITY OF EDINA
HOUSING & REDEVELOPMENT
AUTHORITY
4801 West 50th Street
Edina, MN 55424
www.edinamn.gov
ACTION REQUESTED:
Motion to approve payment of claims for HRA Check Register 12.2021 TOTAL $1,024,696.23
INTRODUCTION:
Payment of claims are attached.
ATTACHMENTS:
Description
HRA Check Register 12.2021 TOTAL $1,024,696.23
City of Edina, MN
INVOICE LIST BY GL ACCOUNT
Report generated: 02/01/2022 13:42User: STanGeilProgram ID: apinvgla
Page 1
YEAR/PERIOD: 2021/12 TO 2021/12 ACCOUNT/VENDOR INVOICE PO YEAR/PR TYP S CHECK RUN CHECK DESCRIPTION
26026000 HRA Administration
26026000 2066 HRA Admin - OthrEscrow
100049 EHLERS AND ASSOCIATE 89095 0 2021 12 INV P 1,530.00 20220107 468204
100049 EHLERS AND ASSOCIATE 89098 0 2021 12 INV P 375.00 20220107 468204
1,905.00
100730 DORSEY & WHITNEY LLP 3711263 0 2021 12 INV P 210.00 20211230 468005
100730 DORSEY & WHITNEY LLP 3718888 0 2021 12 INV A 24,810.00 7001 France TIF leg
25,020.00
ACCOUNT TOTAL 26,925.00
26026000 6102 HRA Admin - Contr Svrs
160257 FRESH PAINT INC. 12680 0 2021 12 INV P 1,600.00 20211210 467408
ACCOUNT TOTAL 1,600.00
26026000 6103 HRA Admin - Prof Svrs
100438 STANTEC CONSULTING S 1860572 0 2021 12 INV P 1,975.12 20211230 468115 Grandview Parking R
135711 CONFLUENCE INC 22525 0 2021 12 INV A 6,484.65 5146 Eden - redev c
135711 CONFLUENCE INC 22662 0 2021 12 INV A 9,826.30 5146 Eden site conc
16,310.95
160265 FRAUENSHUH INC 402528 0 2021 12 INV P 6,850.00 20211230 468018 5146 Eden - redev p
160292 FORECAST PUBLIC ART 1978 0 2021 12 INV P 800.00 20220121 468588
160292 FORECAST PUBLIC ART 2005 0 2021 12 INV P 1,000.00 20220128 468864
1,800.00 ACCOUNT TOTAL 26,936.07 26026000 6136 HRA Admin - PrfSvOther 123129 TIMESAVER OFF SITE S M26907 0 2021 12 INV P 187.00 20211230 468126 Nov 18 HRA Minutes 123129 TIMESAVER OFF SITE S M26978 0 2021 12 INV P 151.00 20220128 468986 Dec 9 HRA Minutes
338.00
ACCOUNT TOTAL 338.00
ORG 26026000 TOTAL 55,799.07
26026001 HRA Affordable Housing
26026001 6102 HRA Aff Hs - Contr Svrs
103300 CENTER FOR ENERGY AN 20443 0 2021 12 INV P 130,638.50 20220114 468342 Edina HRA - Home Re
103300 CENTER FOR ENERGY AN 20552 0 2021 12 INV A 192,992.19 Home Rehab Program
323,630.69
City of Edina, MN
INVOICE LIST BY GL ACCOUNT
Report generated: 02/01/2022 13:42User: STanGeilProgram ID: apinvgla
Page 2
YEAR/PERIOD: 2021/12 TO 2021/12 ACCOUNT/VENDOR INVOICE PO YEAR/PR TYP S CHECK RUN CHECK DESCRIPTION
ACCOUNT TOTAL 323,630.69
26026001 6103 HRA Aff Hs - Prof Svrs
100049 EHLERS AND ASSOCIATE 89097 0 2021 12 INV P 446.25 20220107 468204 Ehlers from 4040 Es
100730 DORSEY & WHITNEY LLP 3718887 0 2021 12 INV A 105.00 4040 Apartments - E
ACCOUNT TOTAL 551.25
ORG 26026001 TOTAL 324,181.94
26126103 Southdale 2 TIF
26126103 6103 SoDa 2 TIF - Prof Svrs
101503 HENNEPIN COUNTY 24-2021-AC 0 2021 12 INV P 13,251.81 20220121 468593 Hennepin County TIF
ACCOUNT TOTAL 13,251.81
26126103 6131 SoDa 2 TIF - PrfSvLegal
100730 DORSEY & WHITNEY LLP 3711261 0 2021 12 INV P 495.00 20211230 468005
ACCOUNT TOTAL 495.00
26126103 6136 SoDa 2 TIF - PrfSvOther
100049 EHLERS AND ASSOCIATE 89096 0 2021 12 INV P 573.75 20220107 468204
100049 EHLERS AND ASSOCIATE 89099 0 2021 12 INV P 2,996.25 20220107 468204
3,570.00
ACCOUNT TOTAL 3,570.00
ORG 26126103 TOTAL 17,316.81
26126104 Pentagon Park TIF
26126104 6103 Pentgn TIF - Prof Svrs
101503 HENNEPIN COUNTY 24-2021-AC 0 2021 12 INV P 1,464.28 20220121 468593
ACCOUNT TOTAL 1,464.28
26126104 6131 Pentgn TIF - PrfSvLegal
100730 DORSEY & WHITNEY LLP 3711262 0 2021 12 INV P 30.00 20211230 468005
ACCOUNT TOTAL 30.00
ORG 26126104 TOTAL 1,494.28
26126105 66th West TIF
26126105 6103 66th W TIF - Prof Svrs
101503 HENNEPIN COUNTY 24-2021-AC 0 2021 12 INV P 553.83 20220121 468593 Hennepin County TIF
ACCOUNT TOTAL 553.83
City of Edina, MN
INVOICE LIST BY GL ACCOUNT
Report generated: 02/01/2022 13:42User: STanGeilProgram ID: apinvgla
Page 3
YEAR/PERIOD: 2021/12 TO 2021/12 ACCOUNT/VENDOR INVOICE PO YEAR/PR TYP S CHECK RUN CHECK DESCRIPTION
ORG 26126105 TOTAL 553.83
26126106 Grandview 2 TIF
26126106 6103 Grnd 2 TIF - Prof Svrs
101503 HENNEPIN COUNTY 24-2021-AC 0 2021 12 INV P 1,598.53 20220121 468593 Hennepin County TIF
ACCOUNT TOTAL 1,598.53
26126106 6713 Grnd 2 TIF - CapBldStrc
160106 RESTORATION & CONSTR ENG 21-6 #4 0 2021 12 INV P 155,435.27 20220128 468966 ENG 21-6 Ramp Wayfi
ACCOUNT TOTAL 155,435.27
26126106 6715 Grnd 2 TIF - CapInfrast
100643 BARR ENGINEERING CO 23271827.01-11 0 2021 12 INV P 132.50 20220114 468331
100664 BRAUN INTERTEC CORPO B276495 0 2021 12 INV P 226.75 20220107 468175 ENG 21-6 Eden Ave/B
100664 BRAUN INTERTEC CORPO B278970 0 2021 12 INV P 6,735.50 20220114 468337 ENG 21-6 Grandview
100664 BRAUN INTERTEC CORPO B280862-1 0 2021 12 INV A 3,689.00 ENG 21-6 Grandview
10,651.25
100932 XCEL ENERGY 760606462 0 2021 12 INV P 294.00 20220114 468529
100995 SHORT-ELLIOT-HENDRIC 416758 0 2021 12 INV P 2,608.18 20211230 468109 ENG 21-6 Eden Ave/B
100995 SHORT-ELLIOT-HENDRIC 418103 0 2021 12 INV A 10,251.63 ENG 21-6 Eden Ave/B
12,859.81
124002 KIMLEY-HORN AND ASSO 160603028-1121 0 2021 12 INV P 31,857.50 20220114 468400 ENG 21-6 Grandview
124002 KIMLEY-HORN AND ASSO 160603028-1221 0 2021 12 INV A 15,573.00 ENG 21-6 Grandview
124002 KIMLEY-HORN AND ASSO 20127553 0 2021 12 INV P 13,349.08 20220114 468400 Engineering Service
124002 KIMLEY-HORN AND ASSO 20434293 0 2021 12 INV A 10,274.56 Engineering Service
71,054.14
140989 S M HENTGES & SONS I 05 0 2021 12 INV P 151,585.27 20220114 468489 ENG 21-6 Eden Avenu
141258 PEMBER COMPANIES INC ENG 21-26 #1 0 2021 12 INV A 215,391.43 ENG 21-6 Grandview
ACCOUNT TOTAL 461,968.40
ORG 26126106 TOTAL 619,002.20
26126107 50th and France 2 TIF
26126107 6103 50 & F TIF - Prof Svrs
101503 HENNEPIN COUNTY 24-2021-AC 0 2021 12 INV P 1,298.82 20220121 468593 Hennepin County TIF
102420 RETROFIT COMPANIES I 0114518-IN 0 2021 12 INV P 216.66 20220128 468967 Light Bulb Recyclin
102774 ASPEN WASTE SYSTEMS S1405453-120121 0 2021 12 INV P 2,678.71 20211223 467760 Nolan Mains Trash S
City of Edina, MN
INVOICE LIST BY GL ACCOUNT
Report generated: 02/01/2022 13:42User: STanGeilProgram ID: apinvgla
Page 4
YEAR/PERIOD: 2021/12 TO 2021/12 ACCOUNT/VENDOR INVOICE PO YEAR/PR TYP S CHECK RUN CHECK DESCRIPTION
ACCOUNT TOTAL 4,194.19
26126107 6406 50 & F TIF - SupOther
100828 JERRY'S ENTERPRISES FACILITIES-12/21 0 2021 12 INV P 219.06 20220121 468601 8/24/21-12/25/21
141960 AMAZON CAPITAL SERVI 1TQT-7XV3-NWG3 0 2021 12 INV P 76.79 20220128 468797 Graffiti Supplies
ACCOUNT TOTAL 295.85
ORG 26126107 TOTAL 4,490.04
26126109 44th and France 2 TIF
26126109 6103 44 & F TIF - Prof Svrs
101503 HENNEPIN COUNTY 24-2021-AC 0 2021 12 INV P 604.29 20220121 468593 Hennepin County TIF
ACCOUNT TOTAL 604.29
26126109 6136 44 & F TIF - PrfSvOther
100049 EHLERS AND ASSOCIATE 89094 0 2021 12 INV P 191.25 20220107 468204
ACCOUNT TOTAL 191.25
ORG 26126109 TOTAL 795.54
26126111 70th and Amundson TIF
26126111 6103 70 & A TIF - Prof Svrs
101503 HENNEPIN COUNTY 24-2021-AC 0 2021 12 INV P 534.09 20220121 468593 Hennepin County TIF
ACCOUNT TOTAL 534.09
ORG 26126111 TOTAL 534.09
26126112 W 76th Street TIF
26126112 6103 W 76th TIF - Prof Svrs
101503 HENNEPIN COUNTY 24-2021-AC 0 2021 12 INV P 528.43 20220121 468593 Hennepin County TIF
ACCOUNT TOTAL 528.43
ORG 26126112 TOTAL 528.43
FUND 2600 Housing & Redvlpmt Authority TOTAL: 1,024,696.23
** END OF REPORT - Generated by Shirleng Tan Geil **
Date: February 10, 2022 Agenda Item #: VI.C.
To:Chair & Commissioners of the Edina HRA Item Type:
Report / Recommendation
From:MJ Lamon, Community Engagement Manager
Item Activity:
Subject:Edina Housing Foundation Appointments Action
Edina Housing and Redevelopment
Authority
Established 1974
CITY OF EDINA
HOUSING & REDEVELOPMENT
AUTHORITY
4801 West 50th Street
Edina, MN 55424
www.edinamn.gov
ACTION REQUESTED:
Appoint Bernadette Hornig, Mary Kay McNee, and Ann Swenson to the Edina Housing Foundation with a term
ending 3/1/23.
INTRODUCTION:
The Edina Housing Foundation consists of five members. Per the Foundations by-laws, members shall be
appointed each year. Two members are appointed by City Council and three are appointed by HRA. T he HRA is
being asked to appoint Bernadette Hornig, Mary Kay McNee, and Ann Swenson.
Date: February 10, 2022 Agenda Item #: VII.A.
To:Chair & Commissioners of the Edina HRA Item Type:
Report / Recommendation
From:Stephanie Hawkinson, Affordable Housing
Development Manager Item Activity:
Subject:Approve Loan for the Development of 4040 West
70th Street
Action
Edina Housing and Redevelopment
Authority
Established 1974
CITY OF EDINA
HOUSING & REDEVELOPMENT
AUTHORITY
4801 West 50th Street
Edina, MN 55424
www.edinamn.gov
ACTION REQUESTED:
Approve a loan for the affordable housing development at 4040 West 70th Street and authorize staff to work with
council on finalizing loan documents.
INTRODUCTION:
Due to rent restrictions affordable housing cannot be financed through debt financing alone. The Developers of
4040 West 70th Street, a 118-unit age restricted affordable housing development, are seeking up to $2,000,000 in
gap financing from the HRA. They have secured Housing Revenue Bonds from Minnesota Management and
Budget (MMB), and gap financing from Hennepin County and the Metropolitan Council. They need an award
of this remaining gap to assure a June closing as required by MMB. The Developer will continue seeking other
sources which, if awarded, will be used to reduced the loan amount from the HRA.
ATTACHMENTS:
Description
Staff Report
February 10, 2022
Chair and Commissioners of the Edina HRA
Stephanie Hawkinson, Affordable Housing Development Manager
Approve Gap Financing for the Affordable Housing Development at 4040 West 70th Street
Information / Background:
In order to control the land and therefore control the development process and outcomes, on June 1, 2020
the Edina Housing Foundation (“EHF”) acquired 4040 West 70th Street (“parcel”) using a $3.65M forgivable
loan from the Edina Housing and Redevelopment Authority (“HRA”). EHF selected a developer through a
competitive Request for Qualification process that comprises of a partnership between Ecumen and Lupe
Development Partners, working together as Cornelia View, LLC (“Developer”). The Developer will build a
118-unit age-restricted 100% affordable apartment building called Cornelia View Apartments. EHF will
maintain ownership of the parcel and contribute it to the development through a ground lease to assure a
99-year affordability period.
The Developer successfully secured financing through competitive application processes:
Sources
Uses
Debt Financing $ 16,600,000 X Construction $ 25,363,495
TIF Pay-Go Note $ 1,503,000
Environmental Abatement $ 140,000
Tax Credit Equity $ 10,430,182
Professional Fees $ 1,480,200
Sales Tax Rebate $ 436,380 X Developer Fee $ 3,200,000
Energy Rebate $ 30,000 X Investor Fee $ 45,000
Metropolitan Council $ 661,500 X Financing Fees $ 1,864,643
Hennepin County $ 665,000 X Reserves $ 1,065,724
Deferred Developer Fee $ 510,263 X Total $ 32,939,062
GAP* $ 2,000,000
Total $ 32,939,062
The total Development cost per unit is $279,145, which is significantly lower than market rate
developments, even with the increased construction and material costs seen during the pandemic. With the
land cost included, the Total Development cost is $318,226 per unit.
STAFF REPORT Page 2
The development was awarded $16,700,000 in tax exempt bonds from Minnesota Management and Budget
through a highly competitive process. The Housing Revenue Bonds have 4% Low Income Housing Tax
Credits tied to them, so the Developer is in the process of securing a Tax Credit investor. The Developer
has a $2,000,000 financing gap that they are seeking from the HRA to proceed with a June 2022 financial
closing as required by the bonds.
City Support
% of TDC including Land
TIF Pay-Go Note $ 1,503,000 4.56%
Land Acquisition Loan to EHF $ 3,650,000 9.98%
GAP Financing* $ 2,000,000 6.07%
$ 7,166,000 19.55%
City Support of 19.55% of the total development cost (“TDC”), or $60,619/unit, is recognizably high. For
comparison, the City supported 14.03% of the TDC, or $47,500/unit, for the Sound on 76th. However, the
Sound on 76th is a 9% tax credit deal which requires less gap financing then a 4% tax credit deal, the latter of
which provide less tax credit equity. In addition, it is important to reiterate that the Edina Housing
Foundation will maintain ownership of the land in order to keep the development affordable for 99-years, so
this remains their asset, and not the Developer’s. If we subtract the land cost, City sources account for
9.57% of TDC, or $29,686/unit.
The Developer recently applied to Hennepin County and DEED to secure additional funds in order to
reduce the amount needed from the HRA. Any future funding awards, a reduction in interest rates, or an
increase in tax credit pricing will be used to reduce the HRA loan. For every additional dollar awarded, the
City’s gap award will be reduced by a like amount:
Tax Credit Equity: The proforma shows tax credit pricing of $0.90. For every penny more, the gap
is reduced by about $100,000. The market is volatile right now.
DEED: The developer submitted a grant request for $445,000.
Hennepin County: The County has a larger than typical pool of funds this year. The Developer is
applying a second time for an additional $733,014.
Funding awards from DEED and Hennepin County will not be announced until after a full funding package
needs to be presented to a tax credit investor and lender in order to meet the June closing deadline, thus
the need to secure the full $2,000,000 at this time.
Budget Implications
Special Legislation – Expired 12/31/21 Estimated Balance Requests Repayments
Starting Pooling Capacity $7,932,980
The Sound on 76th ($2,900,000) $500,000
Amundson Flats ($1,300,000) $600,000
4040 W. 70th Street – Loan to Edina Hsg Fndt ($3,650,000)
4040 W. 70th Street – Loan to Cornelia View
LLC ($1,182,980)
STAFF REPORT Page 3
Ending Balance $0
Regular Pooled Funds Estimated Balance Requests Repayment
Starting Pooling Capacity $8,708,862
66 West ($275,000)
7008 Sandell ($350,000)
Metro HRA ($2,000,000)
4040 W. 70th Street – Loan to Cornelia View
LLC ($817,020)
Future Funding Capacity $5,266,842
Total Request = up to $2,000,000
Loan Structure
Deferred loan
2% simple interest
Repayment of the principal and accrued interest loan be deferred for 40-years or earlier repayment
of refinancing of the Project’s first mortgage loan.
Cornelia View Fulfills a Need
According to a comprehensive housing market analysis done for Edina by Maxfield Consulting in 2020,
Cornelia View Senior Living will be in an area with a high percentage of senior households. The report
suggests demand for 4,648 new housing units by 2025; of which 75% is needed for age-restricted housing.
There are nearly 6,000 seniors over 55+ who live within a mile of the project.
Additionally, 3.7% of households ages 65 to 74 have incomes below $15,000, as do 9.1% of households age
75 and over. There are few affordable apartment building options in Edina. The project addresses the City of
Edina’s priority of addressing both senior and affordable housing needs. This new housing will allow for
residents to age in place without remaining cost burdened in their existing homes. The partnership between
Ecumen and Hennepin County will help to also provide an opportunity for seniors outside of Edina to move
to this amenity-rich community with ready access to services.
The development goals include:
Create a housing type that is not well represented in the area but is needed: This project will bring
high quality affordable senior housing in an "Area of Concentrated Affluence" as defined by the
Metropolitan Council. Cornelia View will provide financially accessible senior housing in Edina; giving
seniors an opportunity to age in place in near transit, amenities, and near parks/open space.
Provide deeply affordable units: The project will set aside 12 units to serve households with
extremely low incomes. Six of these units will serve high priority homeless households who will
receive housing support from Simpson Housing; Simpson will bring full-service case management for
these residents. The development also commits to set aside six units to serve Hennepin County
Human Service and Public Health clients. This development is adjacent to multiple transit lines, with
STAFF REPORT Page 4
easy access to local amenities, it is an ideal location for residents who may have physical or cognitive
special needs.
Compliance with Greater Southdale District Plan
The Greater Southdale District Plan supports the development of affordable age-restricted housing at 4040
W. 70th Street. In addition to the site being zoned appropriately, the plan states the following:
The Greater Southdale District has an important role to play in accommodating expected housing
growth. Already an area characterized by high density residential and mixed-use development, it is
guided for additional infill development of a similar or higher intensity. The presence of jobs, retail
and services, transit, and public amenities means this area contains the elements for a complete
community, which can leverage these advantages for a convenient and accessible lifestyle for a range
of household types.
Affordable housing is a necessary component of the housing mix. This is especially true given the
demographic future of Greater Southdale. The expected growth in the senior population and the
desire to attract young workers and families both point to the need to have more affordable
housing, including options for those that might choose to move here from other parts of the
community. (pg 85)
Equity and Inclusion
Cornelia View is helping to further racial equity outcomes through access to construction jobs and housing
underrepresented populations.
Project Labor– Frana Companies will work with the subcontractors or within its own labor force to
achieve the female, minority skilled and minority unskilled labor.
Small and Underutilized Business Program (SUBP) – Frana Companies has established relationships
in the multi-family housing industry with Women Business Enterprise (WBE), Minority Business
Enterprise (MBE) and Section 3 Subcontractors and material suppliers.
The Developer/owner will accept tenants with Housing Choice Vouchers.
The Developer/owner will commit to six units having tenants who receive Housing Support rental
assistance administered by Simpson Housing.
The Developer/owners will complete and implement an Affirmative Fair Housing Marketing Plan.
Ecumen Housing Managers, HUD Service Coordinators, Marketing staff and Administrative
Assistants are trained through Ross Business Development (RBD) annually, and through sessions at
each annual Working Together Conference, which focuses on HUD and Fair Housing topics.
Lupe Development Partners is a Woman Owned Enterprise.
Sustainability Review
The project will utilize a creative mix of surface and underground stormwater Best Management
Practices (BMPs) which will be integrated with the site landscape design to meet the stormwater
rate, volume, and quality regulations of these agencies.
Panelized Assembly to reduce waste caused by traditional on-site framing.
STAFF REPORT Page 5
The project will meet the Minnesota overlay for Green Communities standards and have multiple
demonstration features for green/sustainable building practices, including storm water infiltration,
rain gardens, green roofs and energy efficient design.
Will contract with Xcel Energy’s Energy Design Assistance (EDA) program. Using the services of
Willdan — a regionally respected energy consultive practice – to minimize electrical and fuel
consumption and conserve resources.
It is the intent of the Developer to incorporate a 40Kw Photovoltaic Solar system on the building
rooftop.
Prior City Approval
December 12, 2019 the HRA approved Resolution No. 2019-12 modifying the Southdale 2 TIF
district in order to use $3.65M in pooled TIF funds to acquire 4040 W. 70th Street.
February 13, 2020 the HRA approved a $3.65M loan to the EHF to acquire 4040 W. 70th Street.
November 12, 2020 the HRA approved the First Amendment to the Loan Agreement allowing the
$3.65 loan to the EHF to be forgiven if certain conditions are met.
June 24, 2021 the HRA approved Resolution No. 2021-05 supporting senior affordable housing at
4040 W. 70th Street using TIF.
July 29, 2021 the HRA approved Resolution 2021-06 establishing the 4040 West 70th Street Tax
Increment Financing district and approving a TIF plan.
August 17, 2021 the City Council approved Resolution No. 2021-60 establishing the 4040 West 70th
Street TIF district.
October 19, 2021 the City Council approved the Site Improvement Plan Agreement.
Staff Request
Staff is seeking approval of gap financing up to $2,000,000 and authorization to work with the attorney and
the Ehlers financial advisor to finalize loan terms and disbursement schedule. Staff will return to the HRA at
a future date for approval of a TIF Tern Sheet and Redevelopment Agreement.
Date: February 10, 2022 Agenda Item #: VII.B.
To:Chair & Commissioners of the Edina HRA Item Type:
Report / Recommendation
From:Bill Neuendorf, Economic Development Manager
Item Activity:
Subject:7001 France Ave - Recommended Terms for Tax
Increment Financing
Action
Edina Housing and Redevelopment
Authority
Established 1974
CITY OF EDINA
HOUSING & REDEVELOPMENT
AUTHORITY
4801 West 50th Street
Edina, MN 55424
www.edinamn.gov
ACTION REQUESTED:
Approve the Term Sheet and authorize staff to engage legal and financial advisors to prepare a binding TIF
Redevelopment Agreement based on the approved terms.
INTRODUCTION:
This item pertains to the potential use of T IF to support redevelopment of commercial property located at 7001-
7025 France Avenue.
The developer has secured preliminary zoning approvals and requested that the City and HRA participate in the
financing of the redevelopment project.
Staff has engaged legal and financial experts to review the developers request. A Term Sheet has been prepared to
identify the key terms and conditions by which Tax Increment Financing could be used to make this project
financially viable.
Staff recommends that the Term Sheet be approved.
ATTACHMENTS:
Description
Staff Report
7001 France - Term Sheet
Staff Presentation
February 10, 2022
Chair and Commissioners of Edina Housing & Redevelopment Authority
Bill Neuendorf, Economic Development Manager
7001 France Avenue – Recommended Terms of Tax Increment Financing
Information / Background:
Mortenson Development and Orion Investments are the developers for the 5.7-acre commercial
site located at 7001-7025 France Avenue. The site is currently occupied by a US Bank branch and a
vacant office building.
The developers secured preliminary approval to rezone the property to allow four separate
buildings to be constructed on the site. This new plan will subdivide the “super block” into four
parcels that are rescaled to create a more traditional layout that encourages walkability and a more
connected sense of community.
US Bank intends to construct a new branch on Site D. The remainder of the property (Sites A, B &
C) is intended to be redeveloped with new Class A office space, new retail space, new luxury
residential apartments and new parking structures to serve the site. The developers intend to
invest approximately $251 million into the site (not including the new bank). Upon completion, this
degree of redevelopment will transform the aging 1960’s suburban-style commercial site into a
modern mixed use site that sets a new tone for redevelopment in the Greater Southdale District
The developers requested that Tax Increment Financing be provided to help defray the high cost of
redevelopment.
Staff has met with the developer for more than one year to understand the financial conditions that
require public financing. Staff has engaged legal and financial advisors at Ehlers Associates and
Dorsey & Whitney to scrutinize the financial pro forma and prepare terms and conditions by which
TIF could be used to support the redevelopment of this site. While these advisors work for the
City / HRA, the cost of this work has been borne by the developers.
Housing and Redevelopment Authority
Established 1974
STAFF REPORT – 7001 France - Recommended TIF Term Sheet Page 2
The negotiation of this Term Sheet has been particularly challenging in an environment that is
influenced and constrained by the ongoing pandemic and uncertainty in the market place. While
this ambitious multi-phase project is located in a desirable location, the developer faces many
challenges:
The construction industry is hindered by ongoing supply chain issues and rapid
unpredictable escalation of commodity and material prices.
The continued labor shortage also tends to drive up costs and extend schedules.
The need to maintain continuous bank operations delays the start of the office and
residential buildings. This schedule adds additional uncertainty regarding pricing, availability
and demand.
While residential demand continues to be high, the demand and lease-up pace for new
office space is unpredictable. This unpredictability applies even to an established commercial
site on France Avenue which is traditionally in high demand. The continued delay of “return
to office” plans by large employers interject another degree of uncertainty regarding the
office revenue.
The final unusual challenge is the wide variety of options available to large investors who
finance ambitious projects across the United States. The reputation and image of the Twin
Cities has been damaged by the murder of George Floyd and the subsequent civic unrest.
Some investors are hesitant to make long term commitments in this environment.
Despite these significant challenges, the developer is prepared to proceed. From the developer’s
perspective, the potential opportunity outweighs the challenges. City staff is supportive of this new
investment as it will reinvigorate this portion of the Greater Southdale District and set a new
direction that should inspire future redevelopment sites. Staff is especially supportive of the new
commercial space as it will provide a modern Class A office space that is built from the ground up
to embrace changes to the office environment due to pandemic conditions. Edina has not seen new
Class A office space of this scale for more than 20 years.
Ehlers has scrutinized the financial pro formas for each Phase and the total project. Ehlers has
determined that the financial gap is approximately $22.0 million. Ehlers also confirmed that “but
for” the use of TIF, a project of this scale, caliber and quality will be unable to secure private
financing.
Dorsey has prepared a Term Sheet that abides by applicable Minnesota Statutes that govern Tax
Increment Financing. These terms also follow the spirit of Edina’s TIF policy and practice which is
typically more limited than allowed by Minnesota Statute.
STAFF REPORT – 7001 France - Recommended TIF Term Sheet Page 3
Summary
A Term Sheet has been prepared to articulate the fundamental structure of public financing for this
redevelopment site. The developers and City staff are mutually supportive of the terms and
conditions expressed in this Term Sheet.
The Term Sheet follows the general format and strategic approach typically used by Edina for
redevelopment projects that include a mixture of uses and a wide variety of public benefits. While
some of the terms are different than recommended in the past, staff believes these terms follow
the spirit of Edina’s TIF policy.
The structure of the terms maintain all financial risk with the developer. The developer will provide
up front financing. TIF will only be used to reimburse the project for pre-determined eligible costs
after each phase of the project is successfully completed.
The recommended terms reflect the highly unusual reputational, economic, and public health
conditions that exist today. These terms should not be considered as setting a different precedent
for TIF application in Edina. Each request for Tax Increment Financing evaluates a project on its
unique merits and the unique environmental conditions.
Staff recommends that the Term Sheet be approved. Staff also seeks authorization to continue to
work with Ehlers Associates and Dorsey & Whitney to prepare a binding Redevelopment
Agreement based on the approved terms for formal consideration in the future.
Recommended Action:
Approve the Term Sheet and authorize staff to work with legal and financial advisors to prepare a
binding TIF Redevelopment Agreement based on the approved terms.
# # #
4889-4275-9436\1
70th and France Redevelopment
Proposed Term Sheet – Tax Increment Financing
FINAL DRAFT FOR HRA BOARD REVIEW 2.10.22
1) Purpose and Scope
a. This Term Sheet identifies basic business points that establish the framework of the
potential use of tax increment financing (“TIF”) to support the private redevelopment of
underutilized property (as shown on the attached site plan, the “Project”) within the City
of Edina (the “City”) and to provide certain public benefits. This document is intended to
serve as the general framework for one or more definitive redevelopment agreements
(each a “Redevelopment Agreement”) to be executed by Developer (or Developer’s
approved assignees, which may include Orion Investments or its subsidiary), the City and
the Edina Housing and Redevelopment Authority (the “HRA”).
b. This document is intended for discussion purposes with the Board of the HRA. Based on
the response and direction provided by the HRA Board, the City staff is prepared to
engage third-party legal and finance professionals to assist with preparation and creation
of the TIF districts, the drafting and negotiation of the Redevelopment Agreement(s), and
related assistance for the Project.
c. City and HRA Out of Pocket Costs – Developer has completed the City’s TIF Policy Form
and agreed to pay for the City’s staff and out-of-pocket costs in evaluating this request
for Tax Increment Financing. The City has engaged Dorsey & Whitney, Ehlers Associates,
Stantec and Braun Intertec (collectively, “Third Party Consultants”) to provide assistance
in preparing the necessary studies and evaluations. Developer has submitted $40,000 in
advance to be held in escrow by the City. Developer shall provide additional funds as
necessary. These funds will be used to pay the Third Party Consultants. Any excess / un-
used funds will be returned to Developer. City agrees to provide copies of expenses paid
from the escrowed funds upon request by Developer.
2) Developer; Project Ownership
a. The lead Developer for Sites A, B and C in the Project is Mortenson Development, Inc.,
700 Meadow Lane North, Minneapolis, MN 55422 (“MDI”). As used in this Term Sheet
“Developer” includes MDI and its affiliates (including Orion Investments or its subsidiary).
U.S. Bank will retain ownership of Site D on which U.S. Bank will develop its new bank
branch building. MDI will form a separate joint venture entity or entities for development
of Sites A, B and C. The City and HRA agree that the Redevelopment Agreement(s) will
be entered into by such joint venture affiliated entity/entities and not MDI or may be
assigned by MDI to such affiliated joint venture entity/entities with MDI being released
after assignment and assumption of the Redevelopment Agreement(s) by such joint
venture entity/entities.
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b. Final ownership and capital structure for Sites A, B and C to be determined by MDI and
provided to the City and HRA.
3) Project Description
a. Location – The Project site is located at the southeast corner of the France Avenue and
70th Street intersection with the historic associated addresses of 7001 France and 7025
France. The Project site is approximately 5.7 acres in area and will be re-platted into four
(4) new separate legal parcels as part of the Project (referred to below as Sites A through
D) as shown on the attached Project Site Plan and legal description.
b. Existing Conditions – The Project site is currently improved with a two-story, 66,200
square foot office building with an operating U.S. Bank branch (with drive-through), other
offices, and associated surface parking. The structure is considered to be two adjacent
buildings connected via party wall. The Project site has been inspected by Braun Intertec
and found to be in a condition that potentially qualifies it as a “Renewal and Renovation”
TIF District as defined under Minnesota Statutes.
c. Project – The overall Project is described in the planning documents submitted to the
City and approved through a zoning ordinance amendment to PUD-20 Zoning District
and an Overall Development Plan on November 16, 2021. The Project is generally
depicted on the attached site plan, and consists of the following elements (each an
“Element”):
i. Site A: A high-rise residential element containing at least 24 stories,
approximately 267 market-rate residential units with approximately 1,500 square
feet of retail, and approximately 118 public parking stalls (as described further
herein) (the “High-Rise Residential Element”). Site A will be developed by
Developer.
ii. Site B: A commercial element containing 6-7 stories and approximately 235,025
rentable square feet of office/retail building and a 7,500 square foot public plaza
(the “Commercial Element”). Site B will be developed by Developer.
iii. Site C: An 8 level approximately 170,357 gross square feet district parking facility
with approximately 540 parking stalls (including public and district parking stalls
as described herein) and an approximately 1,300 square foot bicycle facility (the
“District Parking”). Site C will be developed by Developer.
iv. Site D: A one-story, 24-foot tall approximately 6,500 square foot US Bank branch
with drive-through (the “Bank Element”). Site D will be developed by US Bank.
d. Phased Minimum Improvements – The following portions of the Project (referred to
herein collectively (excluding the Bank Element) as the “Minimum Improvements”) may
be eligible for TIF assistance in accordance with this Term Sheet and the Redevelopment
Agreement(s). Any TIF assistance is conditioned on Developer’s completion of the
portion of the following Minimum Improvements by Phase as specified elsewhere in this
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Term Sheet, and associated with the applicable Redevelopment Agreement and TIF Note.
Phase I and Phase II are depicted on the Project map attached hereto:
i. “Phase I Minimum Improvements:”
1. The High-Rise Residential Element on Site A, with public parking.
2. Public improvements related to the Project and required as part of the
City approvals given on November 16, 2021 (“Approved Plans”) and the
Redevelopment Agreement, including the following consistent with the
Approved Plans:
a. interior access routes designated as Ewing Avenue, Drew
Avenue and 71st Street and streetscape improvements,
b. 70th Street sidewalks and landscaping (between France and Drew
Avenues),
c. France Avenue sidewalk and landscaping between 70th and 71st
Streets,
3. Public parking on Site A, and
4. Site D will be included within the TIF District. The Bank Element
(including associated site work, sidewalks, landscaping and streetscaping)
will not be constructed by the Developer but is part of the Minimum
Improvements to be constructed within the TIF District as part of, or
prior to, Phase I. The Bank Element is not eligible for TIF assistance, but
is required to be completed, consistent with PUD-20 Zoning District and
an Overall Development Plan, as a condition to the TIF assistance to the
Developer.
ii. “Phase II Minimum Improvements:”
1. The Commercial Element on Site B, with public plaza.
2. Public improvements related to Site B and required as part of the
Approved Plans and the Redevelopment Agreement, including the
following consistent with the Approved Plans:
3. France Avenue & 70th Street permanent sidewalks and landscaping
adjacent to Site B.
4. Public plaza on Site B, and
5. District Parking on Site C.
6. Public art valued at $300,000 or greater (exclusive of art consultant costs,
costs related to the public engagement process and improvements), with
a minimum of two sculptures along France Avenue and two sculptures in
the Site B public plaza (with commercially reasonable efforts by the
Developer to add additional sculptures).
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e. Public Benefits – This Project addresses several of the goals identified in the Southdale
Experience Guidelines including:
i. Remove obsolete buildings from a prominent corner.
ii. Subdivision of the existing large parcel into four street grid blocks with private
roads subject to perpetual public access rights.
iii. Construct a mixed-use development whose scale and mass is consistent with the
Southdale Experience Guidelines.
iv. Improve the sidewalk and streetscape along portions of France Avenue and W.
70th Street.
v. Improve storm water conditions on the site.
vi. Provide public parking, as more particularly described below.
vii. Provide an outdoor public plaza for use by the community, as more particularly
described below.
viii. Provide public art, as more particularly described below.
ix. Comply with City sustainability features, including (but not limited to) on-site
solar, EV chargers and LEED/Park Smart certification.
4) Minimum Improvements Timeline
a. This timeline identifies the general time frame envisioned for the Minimum Improvements.
Deadlines will be included in the Redevelopment Agreement(s), subject to extension for
force majeure events including, without limitation, reasonable delays due to unavailability
of or delays in procuring materials or labor. Failure to meet the ‘no later than’ deadlines
will be considered a default of the applicable Redevelopment Agreement(s), subject to
notice and cure rights of the Developer set forth in the Redevelopment Agreement(s).
Completion will be evidenced by the HRA issuing a “Certificate of Completion” to
Developer for the applicable Phase.
Phase I -- Site A
Description of Work Commencement Date Completion Date
Anticipated No Later Than Anticipated No Later Than
Final Zoning Approvals NA NA 6/13/2022 3/31/2023
Real Estate Land Closing NA NA 4/1/2022 12/31/2022
Demolition (South Bldg) 3/16/2022 9/16/2022 4/8/2022 10/30/2022
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Phase I -- Site A
Description of Work Commencement Date Completion Date
Anticipated No Later Than Anticipated No Later Than
Demolition (North Bldg) 12/13/2022 6/5/2023 1/26/2023 7/26/2023
Site Remediation 1/27/2023 7/27/2023 4/6/2023 10/27/2023
Specified Site Preparation 1/27/2023 7/12/2023 4/6/2023 10/27/2023
Foundation 3/3/2023 9/25/2023 5/23/2023 11/13/2023
Residential Construction
(including public parking)* 5/12/2023 11/3/2023 12/6/2024 6/26/2025
Certificate of Occupancy* NA NA 12/6/2024 8/26/2025
Phase II -- Sites B/C
Description of Work Commencement Date Completion Date
Anticipated No Later Than Anticipated No Later Than
Foundation 3/24/2023 12/15/2023 6/30/2023 3/20/2024
Shell Construction (including
public plaza)* 7/3/2023 3/23/2024 10/4/2024 6/24/2025
Site preparation (including
permanent streetscaping) (Sites B
& C)
7/3/2023 3/23/2024 10/4/2024 6/24/2025
Core Construction/Tenant
Improvements (Site B) TBD TBD TBD TBD
Certificate of Occupancy* NA NA 10/4/2024 6/24/2025
*While the final certificate of occupancy is preferred, temporary TCO’s will be acceptable provided that
all of the residential floors are capable of being occupied and that all of the commercial areas are capable
of being occupied, subject to the completion of tenant build-out and leasing.
5) Minimum Improvements Budget
a. The Minimum Improvements are currently estimated to cost $251 million, including land
assembly, soft costs and hard costs. The Developer Fee will not exceed 3.5%.
b. Preliminary estimates of sources and uses for the Minimum Improvements are attached.
c. Developer must provide access to the HRA to a complete (line item) Minimum
Improvements budget prior to the preparation of the Redevelopment Agreement, upon
the completion of each Phase and at other times upon request by the HRA. To the extent
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allowed under the Minnesota Government Data Practices Act, “trade secret” information
will not be publicly available.
d. Developer shall provide to the HRA a complete accounting of the use of all contingency
funds. Anticipated uses to be identified simultaneously with delivery of the “Go Ahead
Letter” (as described below). An updated accounting of actual contingency uses will be
provided to the HRA prior to issuance of a Certificate of Completion for each Phase.
Contingency funds shall be used only for costs related to increased material and labor
costs and other costs that contribute to the public benefit items.
6) Minimum Improvements Financing
a. A firm commitment from equity partner(s) are pending. Information will be provided to
the HRA when available (and in any event prior to execution of the Redevelopment
Agreement) and a financing Go Ahead Letter will be provided as will be required under
the Redevelopment Agreement.
b. Firm commitments for construction loans are pending. Information will be provided to
the HRA when available, and in any event prior to the issuance of the Go Ahead Letter.
c. Prior to delivery of information regarding firm financing commitment or delivery of a Go
Ahead Letter, Developer will provide additional financing updates as requested by the
HRA, whether by oral or written request, within two business days of the request.
d. Developer has the option to arrange financing for the Project in its entirety (Phases I and
II combined) or to arrange financing separately for Phase I and Phase II. The Developer
shall use its best judgement to establish project financing using a combination of debt and
equity partners that delivers the entire Project when appropriate market conditions exist.
The Developer shall inform the HRA whether joint financing or separate financing by
Phase will be utilized as soon as that decision is made by Developer. Completion of the
Redevelopment Agreement is contingent upon such a determination being made.
e. Multiple grants will be pursued by Developer jointly with the City.
f. TIF assistance for the Minimum Improvements is being considered as described in this
Term Sheet.
g. TIF assistance is not intended to be used for or to encourage the Developer to make
speculative investments with undue risk.
7) TIF Assistance
a. Generally
i. TIF assistance is conditioned upon the Minimum Improvements as a whole
demonstrating satisfaction of the “but for” TIF test. Developer will provide all
required information necessary to demonstrate that the Minimum Improvements
satisfies the “but for” test in Minnesota Statutes.
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ii. Any TIF assistance issued will be in accordance with the City’s TIF policy as
reflected in the definitive Redevelopment Agreement(s).
iii. Creation of any TIF district and any TIF assistance provided shall comply with all
applicable Minnesota Statutes.
b. TIF Districts
i. For the Minimum Improvements, the City and HRA will consider the creation of
a new 15-year Renewal & Renovation TIF district (the “TIF District”) covering
Sites A, B, C, and D (the parcels for the High-Rise Residential Element,
Commercial Element, District Parking Element, and Bank Element).
ii. The TIF District may be expanded or modified at the discretion of the City and
HRA to achieve additional community goals provided that any TIF Note awarded
to the Minimum Improvements can be satisfied per the terms of the applicable
Redevelopment Agreement.
c. Reimbursable Costs
i. Based on the initial pro forma for the Minimum Improvements, the following
approximate costs associated with the Minimum Improvements are intended to
be reimbursable from TIF.
Total Project Reimbursable Costs for
Phase I and Phase II
Approx.
Cost
1 Demolition of existing obsolete structures / Remediation of
environmental contamination $800,000
2
Site improvements to achieve the desired four parcel arrangement,
including site preparation, utilities, dewatering, France & 70th street
improvements, internal roads, surface parking, driveways, sidewalks,
landscaping, streetscaping, stormwater management, green roof
$7,817,000
3 Public plaza, including public art $1,233,000
4 Public parking $11,950,000
5
Professional costs to prepare TIF study, plan and agreements and
Developer legal costs related to preparation of the Redevelopment
Agreement(s).
$200,000
6 Total = $22,000,000
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Phase I Reimbursable Costs
(Site A)
Approx.
Cost
1 Demolition of existing obsolete structures / Remediation of
environmental contamination TBD
2
Site improvements to achieve the four parcel arrangement, including
site preparation, utilities, Phase I-related France & 70th street
improvements, internal roads, surface parking, driveways, sidewalks,
landscaping, streetscaping, on-site stormwater management
TBD
4 Public parking on Site A TBD
5
Professional costs to prepare TIF study, plan and agreements and
Developer legal costs related to preparation of the Redevelopment
Agreement(s).
TBD
6 Total = $5 million
Phase II Reimbursable Costs (Sites B/C)
1 Phase II-related site improvements, including Phase II-related
dewatering TBD
2 Public plaza on Site B TBD
3 District Parking on Parcel C TBD
4 Total = $17 million
d. TIF Notes
i. Up to two TIF notes will be issued (subject to statutory procedural requirements)
up to a maximum principal amount of $22 million (and not to exceed 10 percent of the
costs of the Project). The TIF Notes will be limited obligations of the HRA issued solely
to aid in financing certain capital costs incurred to redevelop property within the TIF
District and in conformity with the laws of the State of Minnesota, including the TIF
Act. Each TIF Note shall not be assignable or transferable without the signed consent of
the HRA, which will not be reasonably withheld as long as the Developer certifies that no
market for the TIF Note is intended to be developed and it is not being assigned or
transferred with a view for resale or granting participation in the TIF Note. Further the
assignee or transferee must certify acknowledgement of the limits and terms imposed on
the TIF Note payments by the Redevelopment Agreement. Notwithstanding the
foregoing, the Developer may assign and pledge a TIF Note to secure a mortgage
permissible for the Project, and may transfer to any entity under common control with
the Developer or any entity which the majority equity interest is owned by the parties
that have a majority equity interest in the Developer.
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iii. The TIF Notes will be issued only when Developer demonstrates that (1) all
Phase-related Minimum Improvements related to the applicable TIF Note have been made
and (2) sufficient reimbursable costs have been expended. The following terms and
conditions apply:
a. Up to two TIF Notes in the aggregate principal amount of up to $22 million will
be issued by the HRA. A Phase I TIF Note in the principal amount of up to $5
million (amount corresponding to the Phase I Reimbursable Amounts) upon
issuance of a Certificate of Completion for the Phase I Minimum Improvements.
A Phase II TIF Note in the aggregate principal amount of up to $17 million
(amount corresponding to the Phase II Reimbursable Amounts) will be issued by
the HRA upon issuance of a Certificate of Completion for the Phase II Minimum
Improvements. The sizing of each TIF Note is also subject to the return on cost
limitations described below. Each TIF Note will be subject to an Initial Lookback
and a future lookback/clawback described below. If both Phase I and II are
financed and constructed simultaneously, the TIF Notes may be re-sized between
the two Phases so long as the aggregate principal amount of the two TIF Notes
does not exceed $22 million and both Phase I and Phase II are financed and
constructed in a simultaneous manner to be detailed in the Redevelopment
Agreement.
b. In addition to the Initial Lookback (defined below), each TIF Note shall be subject
to a future lookback/clawback based on Developer achieving a surplus IRR in
excess of acceptable market returns based upon the Elements within each
respective Phase based on a sliding scale as follows:
1. For Phase I, upon a return in excess of percentages shown in the years
immediately below, the Phase I TIF Note payments shall be deemed
satisfied and the HRA’s obligations to make future TIF payments shall
cease. A clawback shall apply for a return in excess of the following IRRs:
Years 1-4: 20%
Years 4-7: 18%
Years 8+: 16%
The Phase I future lookback/clawback will occur upon the earlier of (A)
10 years after the earliest TIF Note issuance or (B) a sale of all or a
portion of the applicable Phase prior to the termination of the
corresponding TIF Note. If a lookback determines a clawback is
warranted, it will be funded/paid based on 50% of Project excess
percentage by a payment to the HRA made by Developer for only the
amount of return in excess its clawback IRR percentage and not to
exceed the cumulative payments made for the Phase I TIF Note to the
date of the lookback. The Redevelopment Agreement will contain
additional details on the lookback process and a detailed example of
calculation of the Phase I lookback.
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2. For Phase II, a clawback shall apply for a return in excess of the following
IRRs:
Years 1-4: 22%
Years 4-7: 19%
Years 8+: 16%
The Phase II TIF Note lookback/clawback will occur upon the earlier of
(A) 10 years after the earliest TIF Note issuance or (B) a sale of all or a
portion of the applicable Phase prior to the termination of the
corresponding TIF Note. If a lookback determines a clawback is
warranted, it will be funded/paid first by a reduction of the outstanding
principal balance of the TIF Note corresponding to the amount of return
in excess of the applicable Phase II IRR percentage. If the clawback
amount exceeds the TIF Note balance, TIF Note payments will cease and
the Phase II TIF Note will have been satisfied and any remaining excess
percentage will be due by a payment to the HRA made by Developer
based on 50% of the Project excess percentage remaining and not to
exceed the cumulative payments made for the Phase II TIF Note to the
date of the lookback. The Redevelopment Agreement will contain
additional details on the lookback process and a detailed example of
calculation of the Phase II lookback.
c. For either lookback described above, “Year I” is the first anniversary of the date
of closing on the Project land. A TIF Note will be issued upon the satisfaction of
the following conditions:
1. A Certificate of Completion has been issued for the Minimum
Improvements within the relevant Phase.
2. Developer demonstrating to the HRA, by updated pro forma(s) for the
Minimum Improvements (consistent with the attached form of pro
forma), that the return on cost for the Phase I Minimum Improvements
does not exceed 6.00 % and the return on cost for the Phase II Minimum
Improvements does not exceed 8.00 % (each, a respective “Market
Return”). The respective Market Return will reflect the total costs of the
Minimum Improvements, less any grant received or ineligible uses of
contingency funds. If any such updated pro forma(s) demonstrates a
return on cost in excess of the Market Return, then the HRA shall reduce
the principal amount of such TIF Note being issued to only the amount
necessary to assist the Minimum Improvements to achieve a Market
Return (the “Initial Lookback”). The Redevelopment Agreement will
contain a detailed example of calculation of the Initial Lookback.
3. A certificate of occupancy is issued by the City for Bank Element.
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4. Developer has provided the HRA with access sufficient for HRA staff to
confirm the actual Project (by Phase) costs and returns and confirm
satisfaction of the “but for” test.
5. Developer has executed and delivered all public easements and the
acceptance of all public improvements (by City or County engineers, as
appropriate) required for the relevant Phase by the City approvals and
the Redevelopment Agreement(s).
6. Developer has delivered to the HRA a final report and certificate detailing
and certifying as to the Developer’s activities and final outcomes of
Developer’s efforts to achieve the Equity and Inclusion goals under the
Redevelopment Agreement(s) for the Phase.
7. Developer has satisfied all terms and conditions of the Redevelopment
Agreement(s) and is not in default under the Redevelopment
Agreement(s), the City approvals, or any other agreement pertaining to
the Project beyond any applicable notice and cure periods.
8. No TIF Note will be issued if any modified Minimum Improvement on
Site B does not include at least 150,000 gross square feet of grade-level
and higher commercial space such as professional office, medical, retail,
or restaurant tenants. At no time shall Site B include a drive-thru facility.
9. Developer has met all requirements of the City’s corresponding site
improvement agreement for the Project, including no waiver or reduction
of required park dedication fees.
d. The TIF Notes shall bear interest at the demonstrated rate of debt financing
obtained at the time of completion on the applicable Minimum Improvements,
not to exceed 4.25%.
e. Payments on the TIF notes will be made using standard procedures: two annual
payments based on actual incremental property taxes generated from the site,
paid and received by the City. The earliest that first TIF Note payments would
occur is in 2026.
f. Any estimate of TIF cash flow projected by the City or HRA is hypothetical and
there are no guarantees that such TIF proceeds will be available.
8) Other Terms and Conditions
a. Public Parking
i. The proposed public parking areas are attached and generally depicted on the
attached Project Site Plan. All public parking areas will comply with LEED
Certification or “Parksmart” certified (as defined in the environmental
sustainability section below) or equivalent as determined by the City). Parking on
Site A will be included in the sustainability certification of the building on Site A,
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and not separately certified. Approximately 118 parking stalls incorporated into
Phase I on Site A will be perpetually available for public parking (through an
easement in favor of the City or HRA); provided, however, that the HRA or City
will agree to reduce the actual amount of public parking stalls by a maximum of
20% if parking on the street level along Drew Avenue or Ewing Avenue is
converted to street level retail. Approximately 540 parking stalls within the
District Parking Ramp on Site C will be perpetually available for public parking,
subject to the limitations shown below. Developer will be fully responsible for
the maintenance and operational costs of all public parking. All public parking will
be available for no charge, unless an exception is approved by the City Manager.
In addition, approximately 26 free surface parking stalls will be available on Drew
Avenue, Ewing Avenue and 71st Street 24/7/365, subject to reasonable time limits
and rules for public safety (as approved by the City Manager). Examples of
reasonable limitations and rules to be approved by the City Manager include;
1. 1 hour, 2 hour, 3 hour, and 4 hour time limitations;
2. longer time limits to allow for employee or special event parking;
3. limitations on overnight parking or multi-day parking;
4. limitations on nighttime parking use;
5. limitations on vehicle repair; and
6. limitations on noises and nuisances.
ii. All public parking facilities shall be designed to incorporate a high level of public
safety features. The HRA shall be given the opportunity to review and confirm
these safety features prior to submission by the Developer to the City of plans
for final City approval. Public safety features could include items such as:
1. At least 2 walls of stair and elevator towers to be substantially visible
from the exterior on each level;
2. entry doors, doorways or walls shall be visually open from the interior
on each level
3. security cameras in strategic locations; and
4. blue light phones or panic buttons in strategic locations.
iii. Developer will grant a permanent, public easement for access and use of the all
public parking areas by the general public, subject to reasonable,
nondiscriminatory limitations, rules and regulations governing their use adopted
by Developer and approved by City Manager or designee. Specifically, the
easement will include specified hours and rules (subject to revision in the future
by mutual agreement) for public parking availability as follows:
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1. Site A – approximately 118 stalls available for public use 24/7/365 with
appropriate signage indicating public parking. A minimum of 5% of both
public and private stalls within Site A stalls must have EV chargers, with a
minimum of another 10% provided conduit for EV chargers.
2. Site C – approximately 43 stalls on level 1 available for public use
24/7/365with appropriate signage indicating public parking. Developer
may place reasonable morning and afternoon time limits to allow
adequate parking for commercial tenants and may place overnight
restrictions (all subject to City Manager consent) in the interest of public
safety and to prevent abuse of public parking. A minimum of 5% of these
43 stalls must have EV chargers, with a minimum of another 10% provided
conduit for EV chargers.
3. Site C – an additional approximately 497 stalls on upper levels for public
use M – F from 4 PM to 7 AM, and on weekends. During weekdays such
spaces will be for the exclusive use of office and retail employees on Site
B from 7 AM to 4 PM. Such sites will have appropriate signage indicating
public parking. During the exclusive use periods required for office
tenants, the parking above level 1 will be controlled by a gated access
system as reasonably determined by Developer. Developer may place
reasonable hour time restrictions, including overnight restrictions (with
City Manager consent) in the interest of public safety and to prevent
abuse of public parking. The public use hours will be mutually reviewed
and reconsidered by Developer and the City approximately every 10
years or as determined by termination date of existing commercial leases.
If less office business parking is required in the Project, then additional
spaces may be added to the 43 stalls available for 24/7/365 public usage
under 2 above. Approximately 5% of these 497 stalls must have EV
chargers, with approximately another 10% provided conduit for EV
chargers.
4. Site C – Developer will install, in manner readily visible to before vehicles
enter, a car counting system on the upper levels to measure usage. In
addition, a mural or similar public art in interior of stairwell and elevator
lobby serving upper floors of District Parking and the vertical panels at
the NW and SE corners that enclose a portion of the stair/elevator lobby
shall be designed as public art. The panels shall be designed with patterns,
etchings or other designs that are informed by the community
engagement process for the public art sculptures elsewhere on the site.
These panels shall also be illuminated (back lit, down lit, or similar) so
that the stair towers are easily recognizable from a distance. Signage on
these panels shall be limited to the name of the development or
designation of the public parking facility. Signage shall not include names
of tenants, investors or people. The HRA shall be given the opportunity to
review these items prior to submission by the Developer to the City of plans for
final City approval.
5. Site C – bike storage and repair facility on the first level with public access
24/7/365 (subject to reasonable rules approved by the City Manager).
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iv. The Redevelopment Agreement will include a form of a document to be recorded
against Site C that creates a perpetual right in favor of the HRA that, upon the
earliest to occur of: (1) the owner of Site C determines to no longer provide
parking to benefit Parcel B on Site C at the levels described herein, or (2) the
owner of Site C fails to maintain the District Parking in a manner that allows safe
public parking in accordance with the terms of the Redevelopment Agreement
and all applicable owner notice and cure periods have expired, then the HRA may
choose to exercise a right of first offer to acquire Parcel C for the minimum
consideration required at the time (e.g $1). Uses of both the Site A and Site C
parking areas must comply with the restrictions in the Easement and Restriction
Agreement recorded against the Project.
v. Must include typical signage above or adjacent to main garage entrances that
identify the “public parking”. Additionally, public parking wayfinding signage must
be provided at strategic locations on the site. Within the High-Rise Residential
Element, signage must be provided to clearly delineate “private” stalls so that the
general public can readily understand which portions of the parking structures are
available for public use.
vi. Developer will be responsible for all maintenance of the public parking.
vii. All public parking and related elements will be subject to the terms and conditions
of the recorded Easement and Restriction Agreement governing the Project.
b. Public Plaza
i. Developer to provide public plaza as part of the Commercial Element, as generally
depicted on the attached Project Site Plan.
ii. The plaza will consist of an approximately 7,500 square foot outdoor space with
landscaping, hardscaping, public art, and other pedestrian amenities consistent
with the City approvals. Plaza will include:
1. At least 2 medium-to-large scale sculptures as public art
2. placemaking process through a professional firm to enliven the plaza on
a day-to-day basis (after occupancy)
3. Security cameras and other public safety precautions in strategic
locations
iii. Developer will grant a permanent, public easement for access and use of the plaza
by the public, subject to reasonable, nondiscriminatory limitations, rules and
regulations governing its use adopted by Developer and subject to the approval
of the City Manager or its designee.
iv. Developer will be responsible for all maintenance of the plaza.
v. The public plaza will be subject to the terms and conditions of the recorded
Easement and Restriction Agreement governing the Project.
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c. Public Art
i. The Project shall include at least five public art features in the locations generally
shown on the Approved Plans (as further described in the public realm section
below, including two along France Avenue, two within the public plaza and one
along 70th Street.) Public art shall be permanent sculpture or similar art
installations.
ii. Developer shall engage a professional art consultant to establish and implement a
vision for public art and interpretation, subject to a public engagement process
approved by the City within 30 days after identification of the art consultant.
Within such 30 day period, the City Manager may also designate up to three
people to provide input and guidance to the art consultant. Developer will
reasonably consider the recommendations of the consultant and the public
engagement process in its final selection of art for the Project. Costs associated
with the art consultant will be paid by Developer and will be an eligible TIF
expense.
iii. The installation of the public art (sculptures) shall have a value of no less than
$300,000 paid in artist commissions (including artist creative, materials, labor, and
installation charges, but excluding fees paid to a professional art consultant, costs
related to the public engagement process and improvement costs).
iv. Developer will be responsible for all maintenance of the public art in a first-class
manner.
d. Environmental sustainability
i. Every building on Sites A, B and C must be designed and certified with
appropriate standards that provide a greater degree of sustainability than MN
Building Code, as generally described below. All sustainability features are also
subject to the final conditions of rezoning and applicable codes.
1. LEED Certified, Energy Star, Minnesota B3, Parksmart, Energy Star or
equivalent meeting these standards:
a. Site A: LEED certification (most recent edition for new
construction) as prepared by United States Green Building
Council (USGBC) https://www.usgbc.org/leed
b. Site C: Park Smart certification (most recent edition for new
construction) as prepared by Green Business Certification Inc.
(GBCI) https://parksmart.gbci.org/certification
c. Sites A/C: Commitment to agreed upon energy reduction
within end use categories of control around SB 2030 - B3
Sustainable Building standards (most recent edition for new
construction) as sponsored by MN Dept of Commerce and MN
Dept of Administration, as appropriately adjusted to account for
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the current market and type of Project
https://www.b3mn.org/2030energystandard/
d. Site B will be Energy Star certified and will provide tenant
guidelines for energy conservation.
ii. On-site solar array provided on at least one Site. The HRA shall be given the
opportunity to review solar array prior to submission by the Developer to the
City of plans for final City approval.
e. Public Realm spaces
i. Public realm along France Ave.
i. Sculptures as public art along France Ave
ii. Include seating areas
iii. Include location for bus stop (if desired by Metro Transit)
b. Public realm along 70th St
i. Mural, sculpture or similar public art along 70th St
ii. Mural or sculpture in lobby of apartment and office buildings – available for
public viewing and enjoyment
iii. Include location for bus stop (if desired by Metro Transit)
f. Equity and Inclusion – Developer shall use good faith efforts as defined by Minnesota
Department of Human Rights to include businesses that are majority owned by under-
represented groups including minorities, women, veterans and people with disabilities in
the development and construction of the Project. Developer shall also cause its general
contractor to use, good faith efforts to employ under-represented people on the
construction site. The definition of “good faith efforts” will be specified in the
Redevelopment Agreement to include details on (1) posting of opportunities, (2)
recruiting efforts, (3) selection, hiring and termination procedures, (4) employee files and
record keeping, and (5) reporting mechanisms. The Developer has prepared a
“Community Participation Plan” for this Project which is attached hereto and, through
which, the Developer is committed to ensuring the community participates in the
Project’s construction through meaningful employment opportunities. The Developer will
commit to the following workforce goals to maximize participation opportunities for the
local workforce, including women and minorities:
i. Minority – 32%
ii. Female – 10%
iii. 25% of the total subcontracted work will be awarded to businesses that qualify as
minority and women owned business enterprises.
These goals are expressed as a percentage of the total craft hours on the project.
Minorities includes African American (not of Hispanic origin), Hispanics, Asians, Pacific
Islanders, Native Americans and Alaskan Natives.
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g. Other Easements.
i. In addition to other easements specified herein, Developer has or will grant a
permanent, public easement for access and use of the perimeter and internal
roadways, sidewalks, streetscape areas, and seating areas by the public, subject to
reasonable, nondiscriminatory limitations, rules and regulations governing its use
adopted by Developer and subject to the approval of the City Manager or its
designee.
ii. Developer agrees to grant specific easements, if necessary, within public easement
areas for future mass transit stops along portions of France Ave and/or 70th St.
at no cost to City or transit operator (land only – cost to build is not Developer’s
responsibility), subject to the responsible transit agency being responsible for
maintenance of the surface improvements in these future easement areas. Public
transit may include regional operators such as Metro Transit or local operators
like City of Edina.
iii. Developer will agree to reasonably modify Drew Ave. easements and further
agrees not to protest future reconstruction of a Drew Ave. extension for the
creation of a wider access road that connects adjacent properties or extends
from Hazelton to 70th St., provided such reconstruction does not have a negative
material impact on the Project after construction (agreeing specifically that
normal disruption during the construction process is not a material impact on the
Project).
9) Grants – Developer must make good faith effort to pursue grants for the Project as selected by
Developer and the City. The City/HRA agrees to sponsor grant applications that provide financial
support for the Projects. Costs of preparing the grant applications shall be borne by Developer.
City staff shall have the final authority to review and submit the grant applications to Metropolitan
Council, Minnesota Department of Employment and Economic Development and Hennepin
County per the terms of the grant programs. Any grants received for the Project will be included
in the Project pro forma for determining the Project’s return on cost and the Initial Lookback
and future lookback/clawback and determining satisfaction of the “but for” TIF test. Following is
the list of grants which may be applied for by City or Developer (as required by the particular
grant program):
a. Met Council Livable Communities Demonstration Account (LCDA);
b. DEED Redevelopment Grant.
10) City Administrative Costs – The City to retain standard 10% of TIF proceeds per Minnesota
statute.
11) Fiscal Disparities – The City’s ‘fiscal disparity’ obligation for the redevelopment site will be paid
for from property taxes generated from the Project. This will be included in the calculation of
available TIF to pay off the TIF notes.
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12) City and HRA Approval of Significant Changes – Changes to the Project that impact scope or
design are subject to City review using the typical City procedure.
13) Performance Bonds – Bonds or other security will be required for work in public rights of way
and for the elements with a public easement.
14) Default and Cure – Standard default provisions will apply. Each default will have a notice and cure
period, subject to extension for force majeure delays.
15) Anticipated Redevelopment Agreement Exhibits:
Exhibit A Legal Description of the Project Area
Exhibit B Phase I and Phase II Map
Exhibit C Project Plans
Exhibit D TIF Pro Forma
Exhibit E Form of Go-Ahead Letter
Exhibit F Form of Certificate of Completion with Completion Checklist
Exhibit G Memorandum of Redevelopment Agreement
Exhibit H Form of TIF Note
Exhibit I Sample IRR Calculations and Project TIF Adjustment Calculation
Exhibit J Form of Right of First Offer Purchase Option Agreement
Exhibit K Form of Parking Easement Agreement
Exhibit L Equity and Inclusion Outreach Plan
Exhibit M Form of Equity and Inclusion Report
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Project Legal Description
Lot 1, Block 1, except that part thereof which lies Northwesterly of a line drawn from a point on the
North line of Section 32, Township 28, Range 24 distant 110 feet Easterly of the Northwest corner of
said section to a point on the West line thereof distant 110 feet Southerly of said Northwest corner; Lot
2, Block 1, except the Easterly 70 feet thereof; YORKTOWN.
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Phase I and Phase II Maps
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Project Site Plan
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Project Sources and Uses
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Operating Pro Forma
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Public Parking
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Community Participation Plan
,
Community Participation Plan
The major features of Mortenson’s Community Participation Program include the following:
• Maximizing Local and MWBE Contracting
• Community Outreach
• Workforce Diversity
• Technical Assistance
• Internship Program
Maximizing Local and MWBE Contracting
Strengthening the minority and female business community economically contributes to the overall
economic growth and expansion of our markets. Mortenson’s program is designed to achieve meaningful
and lasting benefits to the community through business opportunity that enable local, female and
minority businesses to enhance and further develop and grow their businesses.
Initiatives for maximizing local, women and minority business participation include:
A. Structuring bid packages to allow for maximum participation by local women and minority
owned businesses, including targeting specific scopes of work for MWBE firms.
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B. Collaborating with local, women and minority business organizations to identify firms for
participation on the project.
National Association of Minority Contractors
Hispanic Contractor Association
Association of Women Contractors
Ethnic Chambers of Commerce
Economic Development Associations
C. Establishing aggressive goals consistent with the availability of MWBE firms in the
marketplace.
D. Facilitating majority and MWBE partnerships.
E. Developing an accelerated payment process for small, minority and women owned
businesses to ease the cash flow difficulties such firms may experience.
F. Developing a retention reduction plan.
Community Engagement
Mortenson believes in focused relationship-building and active, visible and sustained outreach to
the community. Mortenson’s outreach approach is aimed at identifying, attracting, qualifying
and building interest and enthusiasm for the project to the local and MWBE contracting
community. We accomplish this through the following strategies:
A. Contractor open houses to explain the bid packages, procurement schedule and process
to interested bidders.
B. Conduct pre-bid informational meetings to inform and advise local and MWBE contractors
of the potential opportunities on the project.
C. Communication via Internet, Radio, Newspaper, Plan Rooms.
D. Liaison with community organizations, Neighborhood Groups, Elected Officials, Community
Leaders, and Agencies.
Workforce Diversity
Mortenson is committed to ensuring that the community participates in the construction through
meaningful employment opportunities. We have created initiatives that have led to an infusion of women
and people of color into the construction trades. Maximizing participation opportunities for the local
workforce, including women and minorities, includes:
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A. Collaborating with community based organizations to assist with the recruitment and
referral of workers.
a. Urban League
b. NAACP
c. American Indian OIC
d. Goodwill Industries Construction Program
e. Etc.
B. Implementing the Community Workforce Program which provides construction entry-level
employment opportunities for motivated unemployed and under-employed residents through
short-term “hands on” industry experience from which participants can learn and identify a
career path should they desire to pursue opportunities within the construction industry.
Mentoring/Technical Assistance
To address capacity building of small, women and minority businesses, Mortenson developed a
MWBE Resource Center as a tool to strengthen and expand small, women and minority
businesses in the community. The resource center provides a knowledge base and technical
assistance in all facets of the construction business, with Mortenson personnel and consultants
utilized as construction experts providing guidance and support. The services of the resource
center are concentrated around business development, business administration, project
management and technical services for MWBE firms to develop and enhance their capabilities
and competencies for future growth.
Internship Program
Mortenson’s internship program offers high school and college students the opportunity to
participate in paid summer internships that will expose them to the construction industry and
give students the opportunity to gain experience in varied aspects of the construction business.
Program Administration
Lynn Littlejohn, Vice President of Community Affairs, provides leadership in the
implementation and monitoring of the Community Participation Plan.
END
The CITY ofEDINA
7001 France Avenue
Recommended Terms for Tax Increment Financing
Report to:
Edina Housing & Redevelopment Authority
February 10, 2022
www.EdinaMN.gov
The CITY ofEDINA
2
Request for TIF
-Summary
Developer requested $22 to $25 million over 15
years to make redevelopment project of this scale
and quality financially viable.
This request has been analyzed and evaluated.
•A budget gap of $22 million has been confirmed.
•Gap can be resolved through the combination of:
--Tax Increment Financing
--DEED or Met. Council grants
gap
TIF
The CITY ofEDINAProject Location
3
The CITY ofEDINAExisting Conditions
4
Commercial site qualifies as 15 yearRenewal TIF District
The CITY ofEDINADevelopers
5
Brent Webb, Development Executive Ted Carlson, Founder, CIO
The CITY ofEDINA
6
Site BOffice Site AResidential
Site CParking
Preliminary Site Plan
Preliminary Zoning Approved November 16, 2021
The CITY ofEDINAPreliminary Renderings
7
The CITY ofEDINAPreliminary Renderings
8
The CITY ofEDINAPreliminary Renderings
9
The CITY ofEDINAPreliminary Renderings
10
The CITY ofEDINAPreliminary Plan and Renderings
-Many Public Benefits Possible
11
•NEW structured parking for shared use
•-public easement (limited)
•-Conversion to fee title ownership if
parking no longer needed
•Other Contributions
•-property tax base
•-park dedication fees
•-SAC/WAC
•-housing trust fund
•FIRST project to apply
Southdale Design Guidelines
•FIRST to comply with
Sustainability Policy
•FIRST new Class A office
building in 20+ years
•-post-pandemic design
•-attract new tenants and
new employees
The CITY ofEDINA
•Economic development financing
tool used throughout the U.S.
•Governed by Minnesota Statute
•Enabled by City Council
•“Tax Increment” Financing - uses
growth in property tax base to
fund private investment and public
infrastructure
12
What is TIF?
Growth of Property Tax Base
“Incremental Taxes” remain in TIF District
Original + Market Value Taxes available to all agencies
Original + Incremental Taxes available to all agencies
Year 1 Year 15 Year 26 Year 40+
$14.9M
$184.8 M
The CITY ofEDINA
13
Staff Evaluation –Tax Base Growth
Current conditions (2022)
Estimate after redevelopment(2026)
Estimated Growth
Estimated Market Value $14.9 M $184.8 M 12x
Annual
Property Taxes Paid $484,579 $2,467,494 5x
•This degree of growth would
not happen if the site was
remodeled or rebuilt as a
simple commercial structure
•Redevelopment projects of
this scale and caliber deliver
a tremendous boost to the
tax base
•Without TIF, the proposed
project does not appear to
be viable
The CITY ofEDINA
14
Staff Evaluation –Sources and Uses
Phase I –Site Work and Site A (housing)
Uses of Funds Amount
Land acquisition $ 7.3 M 5.3%
Hard Costs / Construction *$103.1 M 75.7%
Permits/fees $ 7.5 M 5.5%
Soft Costs $ 2.3 M 1.7%
Financing Costs $ 3.9 M 2.9%
Developer Fee $ 4.8 M 3.5% cap
Escrow / Reserves*$ 7.2 M 5.3%
Total $136.1 M
Source of Funds Amount
First mortgage $ 88.5 M
Other loan $ 4.5 M
Total Debt $ 93.0 M 68.3%
Developer $ 4.3 M
Capital Partner $ 38.8 M
Total Equity $ 43.1 M 31.7%
Total $136.1 M
* Includes $3.0 M construction contingency and $5.4 M development contingency
The CITY ofEDINA
15
Staff Evaluation –Sources and Uses
Phase 2 –Site B/C (office and parking)
Uses of Funds Amount
Land acquisition $ 6.7 M 5.8%
Hard Costs / Construction *$ 83.6 M 72.4%
Permits/fees $ 1.3 M 1.1%
Soft Costs $ 5.4 M 4.7%
Financing Costs $ 3.8 M 3.3%
Developer Fee $ 4.0 M 3.5% cap
Escrow / Reserves*$ 10.6 M 9.2%
Total $115.5 M
Source of Funds Amount
First mortgage $ 75.1 M
Other loan $ 15.3 M
Total Debt $ 90.4 M 78.2%
Developer $ 2.5 M
Capital Partner $ 22.6 M
Total Equity $ 25.1 M 21.8%
Total $115.5 M
* Includes $1.9 M construction contingency and $4.6 M development contingency
The CITY ofEDINA
16
Staff Evaluation –Eligible TIF Costs
•Follow Minnesota
statutes regarding
eligible expenses
•Follow Edina policy
regarding TIF
reimbursement
Statutory Eligible Expenses Estimated Cost
Land Acquisition $12,000,000
Parking (structured)$15,494,364 (Ph I)
$16,207,091 (Ph II)
Site prep, storm water $3,283,200 (Ph I)$1,927,841 (Ph 2)
Storm water management $716,800 (Ph 1)$709,325 (Ph 2)
Demolition and remediation $800,000
Public plaza with streetscape and art $1,133,005$ 300,000
City TIF advisors $ 175,000
TOTAL = $52.4+ million
The CITY ofEDINA
17
Staff Evaluation
–Phase I Operating Pro Forma
Phase I (site prep & apartment)Upon Stabilization
Residential Income (267 units)Commercial Income Effective Gross Income =
$10,842,371$ 26,068$10,868,439
Operating CostsManagement Costs Total Expenses =
$1,762,389$ 1,982477$3,744,866
Net Operating Income (NOI)+ TIF Note Payment NOI (with TIF Assistance) =
$7,123,573$ 474,451$7,598,024
Total Development Cost = $136,097,379
Cash on Cost Annual Return (without TIF) = 5.23% BELOW MARKET
Cash on Cost Annual Return (with TIF) = 5.58% (NTE 6.00%)
The CITY ofEDINA
18
Staff Evaluation
– Phase II Operating Pro Forma
Phase II (office and parking)Upon Stabilization
Office & Retail Income (232,700 Sq Ft)Vacancy LossExpense on Vacancy Effective Gross Income =
$8,150,550-$ 407,528-$188,682$7,554,341
Management Costs Total Expenses = $11,635$11,635
Net Operating Income (NOI)+ TIF Note Payment NOI (with TIF Assistance) =
$7,542,706$ 1,684,223$9,226,929
Total Development Cost = $115,481,417
Cash on Cost Annual Return (without TIF) = 6.53% BELOW MARKET
Cash on Cost Annual Return (with TIF) = 7.99%(NTE 8.00%)
The CITY ofEDINA
19
Recommended Terms
-Private Investment
1.Developer secures debt and equity
1.-Phase I = $136.1 million
2.-Phase II = $115.5 million
2.Developer to pursue grants from DEED and Met. Council
3.Developer bears all financial risk
4.Finance and build in two phases, if necessary (6d)
1.-Phase I begins in 2023
2.-Phase II start date TBD “Five year rule” applies
The CITY ofEDINA
20
Phase 1Residential and site work
-Demo: March ‘22 to July ’23-Site prep: Jan ‘23 to Oct ’23-Construction March ‘23 to June ‘25-Occupancy: Dec ‘24 to Aug ‘25
Recommended Terms
- Development Phasing
The CITY ofEDINA
21
Phase 2Office, parking and plaza
-Site Prep: July ‘23 to June ‘25-Construction: March ‘23 to June ‘25-Occupancy:Oct ‘24 to June ’25-Full tenant buildout TBD
Recommended Terms
- Development Phasing
The CITY ofEDINA
22
Recommended Terms
-Public Financing Participation (7d)
1.Create a 15-year Renewal TIF District
2.Pledge adequate package to secure financing without over-subsidizing
3.City & HRA to pledge up to $22.0 million via Pay-Go TIF Notes (8.7%)
1.-NTE $5.0 million for Phase1 site prep (3.7% of TDC)
2.-NTE $17.0 million for Phase II site prep and parking (14.7% of TDC)
4.City & HRA bear NO financial risk
1.-Notes payable AFTER completion of each phase
2.-Notes payable only from incremental property taxes collected from site
The CITY ofEDINA
23
Recommended Terms
-Pay Go TIF Notes (7d)
•Issued after each Phase completed and
documented
•Notes may be down-sized based on “return
on cost”after actual costs incurred
•- 6.00%ROC for Phase I
•-8.00% ROC for Phase 2
•Interest bearing at 4.25% (to match debt)
Least Risk to City Most Risk to City
The CITY ofEDINA
24
Recommended Terms
-TIF Notes “Lookback” and “Clawback” (7d)
•Phase I Note:
•-Lookback upon sale or 10 years
after issuance earliest
•-Note terminates and clawback
applied if excess returns realized:
20% IRR in years 1 - 4
18% IRR in years 4 - 7
16%IRR in year 8 plus
-Clawback is 50% of excess profit,
not to exceed value of TIF Note
•Phase II Note:
•-Lookback upon sale or 10 years after
issuance (earliest)
•-Clawback applied if excess returns
realized:
22% IRR in years 1 - 4
19% IRR in years 4 - 7
16% IRR in year 8 plus
-Clawback is 50% of excess profit, not
to exceed value of TIF Note
-Note survives if clawback is less than
balance due
The CITY ofEDINA
25
Recommended Terms
-TIF Reimbursable Expenses
Total Reimbursable Costs(Phase I and II combined)Approx. Cost
1)Demolition, remediation $ 800,000
2)Site improvements including site prep, utilities, dewatering, internal roadways, surface parking, sidewalks, landscaping, streetscaping, stormwater
$ 7,817,000
3)Public plaza with art $ 1,233,000
4)Public parking $11,950,000
5)City’s expenses for TIF study $ 200,000
Total = $22,000,000
Only a portion of
the $54.2 million
in statutory costs
will be
considered
“reimbursable”
The CITY ofEDINARecommended Terms
-Expenses NOT eligible for TIF reimbursement
26
Description of In-eligible Work
A Private (executive) parking for office building
B Private (residential) parking for residential high rise
C Construction costs of office building
D Construction costs of residential high rise
E Design & other soft costs of private buildings
F Any costs of the single-story bank
no
T I F
used for
these items
The CITY ofEDINA
27
Recommended Terms
-Miscellaneous Conditions
Public Parking Facilities (8a)
•Identified as “public parking”
•Vehicle counting system
•Enhanced design features such as
decorative wall panels and murals
•Incorporate safety & security
features such as visible stair lobbies,
cameras, and blue light phones
•Include bike storage &repair facility
Public Plaza (8b)
•Approx 7,500 Sq Ft
•At least 2 public sculptures
•Security cameras
•Engage professional firm to program
events and activities for the plaza
The CITY ofEDINAPublic Benefits
-Subdivision of “Super Block”
28
•Site plan creates four separate building pads
•Permanent easements for new private roads and sidewalks
•- 71
st Street
•-Ewing Avenue
•-Drew Avenue
•Increases level of connectivity
•Distributes traffic among multiple routes
•Provides access within the site
•Creates future access routes for adjacent parcels
The CITY ofEDINA
29
•Streetscape, sidewalks, landscaping along 70th St and France Ave
•Streetscape, sidewalks, landscaping and on-street parking along interior roadways
•Public plaza at 71st and Ewing
•Permanent public easements
•Privately owned, privately maintained
•Allow Metro Transit bus stops
Public Benefits – Public Realm, Streetscapes
and Public Plaza
The CITY ofEDINAPublic Benefits – Public Art (8c)
30
•Two public art sculptures along France Ave.
•Two public art sculptures in interior plaza
•At least 1 additional sculpture encouraged
•Public easement to remain on site
•Privately owned
•Privately maintained
•Selected with community input
•$300,000+ budget
The CITY ofEDINAPublic Benefits
- Sustainability Features (8d)
31
•Compliance with Edina’s new Sustainability Policy
•LEED, SB2030, EnergyStar, ParkSmart or similar
•Solar Panels and solar-ready rooftops
•Electric Vehicle chargers
•Stormwater Management
The CITY ofEDINA
32
Public Benefits
-District & Public Parking
The CITY ofEDINAPublic Benefits –Site A District Parking
33
Available: 24 / 7 / 365
Reasonable time limits and restrictions
118DistrictParking
The CITY ofEDINAPublic Benefits –Site C District Parking
34
43District Parking
Available: 24 / 7 / 365
Reasonable time limits and restrictions
The CITY ofEDINAPublic Benefits –Site C Public Parking
35
497
Public Parking
Available: M-F late afternoon, evenings & nightsSat, Sun all dayHolidays all day
Reasonable time limits and restrictions
East-West Cross Section
The CITY ofEDINA
36
Public Benefits
-Public Parking: Right of First Purchase Offer
Due to the reduced availability of public
parking during business hours, the HRA has
secured the alternative benefit:
-First right to purchase the Site C land for
nominal amount ($1)
-If owner determines that 540 parking stalls
are no longer needed on the site or
-If owner is unable to fulfill the easement
obligation to provided public parking or
-If owner allows Site C to fall into disrepair
and has not cured the default
The CITY ofEDINA
37
Public Benefits
-Advancing Diversity and Equity Goals (8f)
•Goals identified
•-Portion of work awarded to qualified MBE
and WBE companies
•-Portion of total job hours filled by BIPOC
•-Portion of total job hours filled by women
•Good faith efforts required
•-Developer must follow “community
participation plan”, monitor progress and
report results
•-Penalty only if no effort made Image Source: Commercial Construction and Renovation
The CITY ofEDINA
38
Recommended Actions
In summary, staff recommends:
1)Creation of a 15-year Renewal TIF District
(not 25-year)
2)Approval of Term Sheet to include two TIF
Notes not to exceed $22.0 million (8.7%)
based on completion of phases and delivery of
public benefits
3)Authorization to prepare binding legal
agreement based on these terms
The CITY ofEDINA
39
Questions / Discussion