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HomeMy WebLinkAbout1996-12-09 HRA Special Meeitng MINUTES OF THE SPECIAL MEETING OF THE • EDINA HOUSING AND REDEVELOPMENT AUTHORITY DECEMBER 9, 1996 5:00 P.M. ROLLCALL Answering rollcall were Commissioners Kelly, Maetzold, Paulus, Smith and Chairman Richards. Pursuant to posted notice, the Edina Housing and Redevelopment Authority conducted a public hearing on terms for the tentative agreement for United Properties/Hedberg and the HRA. Executive Director Hughes explained he had been meeting for a couple months with representatives of United Property and the Hedbergs, regarding potential amendments to the tentative agreement regarding Centennial Lakes. The driving force behind these meetings is the Legislature will likely impose additional restrictions on tax increment financing during the coming session because of the Auditor's Report issued in March 1996. A comprehensive study of TIF was done concluding that most abuses were remedied during the 1990 legislation except one, which involving districts formed prior to 1990. The original Edinborough district was formed in 1977-78 and Centennial Lakes in 1988. The legislative auditor has four options to modify the existing law; two we can live with, two would effectively prohibit us from utilizing tax increments from the districts for • future projects. We would be able to continue using those increments to repay prior bonds that were issued for prior costs but future costs would be prohibited if the legislature followed the recommendations. A couple years ago, a bill was introduced by Representative Rest similar to the Auditor's recommendation, which did not pass. Had the bill been approved, the effective date would have been the date the bill was introduced. Language in the bill stated any new tax increments could only be used for debt outstanding, prior to introduction of the bill. Staff is concerned that the bill could be re-introduced, especially with the Legislative Auditor making recommendations creating an adverse situation in order to complete the project. It was the attempt of United Properties, the Hedbergs and staff to create amendments to the redevelopment districts and Contract for Deed that could be signed prior to the close of 1996, if the HRA approves. The attempt would be to create obligations to meet any legislative test occurring after the obligations were entered into but would allow refinancing through the issuance of bonds or other traditional methods in the future. SUMMARY OF TERMS FOR UNITED PROPERTIES/HEDBERG/HRA TENTATIVE AGREEMENT • TIF ASSISTANCE FOR REMAINING OFFICE BUILDINGS • The HRA would provide 25% TIF assistance to remaining.offices provided that the following schedule is met for each phase and further provided that Phase 2 and 3 are not less than $130,000 sq. ft. each in gross floor area. PHASE: COMMENCEMENT DATE: Phase 2 December 31, 1997 • Phase 3 December 31, 1999 Phase 4 December 31, 2001 Phase 5 December 31, 2003 Provided, however, that United Properties could miss a phase provided that that phase and the subsequent phase commence before the subsequent phase's due date. • EXTENSION OF DEVELOPMENT RIGHTS United Property's development rights would be extended from October 15, 2000 until October 15, 2003 provided that Phase 2 commences by June 30, 1998. • RELEASE FROM SHORTFALL OBLIGATION United Property released from shortfall obligation upon the completion of Phase 2 office. • RELEASE OF REVERTER United Property may acquire remaining vacant land on speculative basis without risk of recapture by the HRA. • ACQUISITION OF SOUTH PARK PROPERTY Hedbergs convey south park property to City now. Hedbergs accepted limited revenue note from HRA which is junior to: - Debt service on existing and refunded bonds - EPP IRRP payments - Legal and administrative expenses of HRA - Special assessments levied against HRA - Costs of golf course and amphitheatre - Phase 1 office TIF assistance Note is payable at the earlier of: 1. Conclusion of all senior obligations; or 2. Acquisition and commencement of construction of the Phase 2 office. No interest on note until January 1, 1998. • DEVELOPMENT OF SOUTH PARK United Property agrees to fund and undertake construction of initial south park improvements in connection with Phase 2 office up to a maximum of$1.6 million. • ("Initial park improvements include the west side wall, pond excavation, liner, perimeter trail and some landscaping".) United Property agrees to fund and undertake construction of subsequent park improvements in connection with Phase 3 office up to a maximum of $1.5 million. ("Subsequent park improvements" include the rest of the wall and landscaping".) In consideration of its commitment to fund and undertake the initial park improvements, United Properties would receive up to an additional 75% of the tax increments from the Phase 2 office. In consideration of its commitment to undertake and fund the subsequent park improvements, United Properties would receive up to an additional 75% of the tax increments from the Phase 3 office. The maximum tax increments payable to United Property for each phase would be the less of $3.00 per sq. ft. or $400,000 per year adjusted by the CPI. United Property would also receive a note from the HRA payable from excess tax increments in the event that the 75% tax increment rebate is not sufficient to repay the park development costs. The HRA would retain a one time option to sell bonds to fund the initial park improvements and thereby relieve United Property of its obligation to undertake the improvements. The HRA must make this election prior to commencement of construction on the Phase 2 office. If this option is elected, the tax increment assistance for the Phase 2 office would be reduced back to 25%. The same situation would apply to the subsequent park improvements and Phase 3 office. United Property would be relieved of all subsequent park improvements obligations if the Phase 3 office does not commence by December 31, 2001. • CONTRACT FOR DEED AMENDMENTS Contract for Deed extended from October 15, 2001 to October 15, 2003 United Property/HRA would enjoy a one time right to defer one annual installment by one year. This would not extend the term of the Contract for Deed. United Properties/HRA has the right to acquire additional six acres of office land by June 1, 1998 for $6.80 per sq. ft. (adjusted by the CPI from January 1. 1997). Director Hughes responded to Council questions and concerns. Chairman Richards inquired whether the proposed amendments would be before the HRA at the regular Council meeting December 16, 1996. Director Hughes stated the issue would be on the agenda December 16, 1996. There being no further business to be conducted, Chairman Richards declared e meeting adjourned at 5:35 P.M. I e 1 ` I�Aecutive Director hr961209.spc