HomeMy WebLinkAbout1996-11-18 HRA Regular Meeting MINUTES
OF THE HOUSING AND REDEVELOPMENT AUTHORITY
HELD AT CITY HALL
NOVEMBER 18, 1996
ROLLCALL Answering rollcall were Commissioners Maetzold, Paulus, Smith and
Chairman Richards.
CONSENT AGENDA ITEMS APPROVED Motion of Commissioner Maetzold and
seconded by Commissioner Smith approving the HRA Consent Agenda as
presented.
Rollcall:
Ayes: Maetzold, Paulus, Smith, Richards
Motion carried.
*MINUTES OF HRA MEETING OF NOVEMBER 4. 1996, APPROVED Motion of
Commissioner Maetzold and seconded by Commissioner Smith approving the
Minutes of the HRA Meeting of November 4, 1996.
Motion carried on rollcall vote - four ayes.
AMENDMENT TO INTEREST RATE REDUCTION AGREEMENT FOR EDINA PARK
PLAZA APPROVED Executive Director Hughes explained in 1985 the HRA entered into
an Elderly Housing Interest Reduction Agreement with the Edina Park Plaza Associates
• Limited Partnership (the `owner"). The purpose of this agreement was to facilitate the
construction of the Edina Park Plaza, the 202 unit senior apartment building at
Edinborough. Under the terms of the agreement, the HRA agreed to lend a total of$3.4
million for interest rate reduction purposes to the owner over the course of 20 years, i.e.
$14,167 per month for 240 months. Likewise under the terms of the agreement, the owner
agreed to repay this loan over the subsequent 20 year period together with 12.5% simple,
non-compounded interest. This obligation was secured with a soft second mortgage. The
HRA commenced making monthly advances of the loan in June 1987 and has to date
advanced approximately $1.6 million of the $3.4 million loan. The source of funds for this
loan is tax increments received from the Southeast Edina Tax Increment Financing District.
The owner has requested on several past occasions that the HRA consider reducing or
eliminating the interest charges which are accumulating on the loan. The owner has noted
that the 12.5% interest rate no longer represents market conditions for this type of
financing. The owner also noted that changes to income tax laws in 1986 (one year
following commencement of construction) seriously affected the financial position of the
project. Staff and the owner were unable to resolve these issues on past occasions.
Recently, the owner approached us with a new proposal. Apparently, the owner is
considering selling the property. Although the purchaser of the property may be entitled
to a continuation of the loan advances, the owner is nevertheless proposing that the
• advances terminate with the sale. Upon sale, the owner proposes to repay to the HRA the
principal advanced up to the sale date. He also proposes that repayment of interest be
waived. Staff estimates that interest owing to date is approximately $915,000.
Staff recommends that the HRA accept the owner's proposal for the following reasons:
• The HRA will benefit significantly from the termination of the loan advances to this
project. This termination will permit the HRA to redirect the remaining $1.8 million
owed the owner 1) to repay existing Centennial Lakes/Edinborough debt or 2) to
finance the cost of additional Centennial Lakes public improvements such as the
park south of W. 76th Street.
• Repayment of the loan principal will provide a source of capital to undertake
additional Centennial Lakes public projects.
• If the loan goes full term, repayments of the soft second mortgage are scheduled
to be received by the HRA starting in 2007 and will continue for the next 20 years.
Payments received then are much less beneficial than payments received now with
respect to our ability to complete additional public improvements at Centennial
Lakes.
• Waiver of the accumulated interest is offset by the more immediate repayment of
principal and the termination of further advances.
If the HRA wishes to accept the recommended proposal, staff recommends that it be
contingent upon the owner terminating the advances and repaying the principal amount
of the outstanding loan no later than December 31, 1997. In the event that this sale does
not occur by this date, we anticipate that the owner may present an alternative proposal
at that time.
Director Hughes introduced Henry Hyatt with the Edina Park Plaza Associates Limited
Partnership to answer concerns or questions.
Motion made by Commissioner Maetzold authorizing the Chairman and Secretary to
execute the Amendment to Interest Rate Reduction Agreement for Edina Park Plaza
as presented. Commissioner Smith seconded the motion.
Ayes: Maetzold, Paulus, Smith, Richards
Motion carried.
CLAIMS PAID Commissioner Smith made a motion to approve payment of the HRA
clairns as shown in detail on the Check Register dated November 13, 1996, and
consisting of one page totaling $6,093.25. Commissioner Maetzold seconded the
motion.
Rollcall:
Ayes: Maetzold, Paulus, Smith, Richards
Motion carried.
There being no further business on the HRA Agenda, Ch�ir7an Richards declared the
meeting adjourned.
Executive Director