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Home My WebLink About1996-12-16 HRA Regular Meeting II MINUTES OF THE EDINA HOUSING AND REDEVELOPMENT AUTHORITY HELD AT CITY HALL • DECEMBER 16, 1996 ROLLCALL Answering rollcall were Commissioners Kelly, Maetzold, Paulus, Smith, and Chairman Richards. CONSENT AGENDA ITEMS APPROVED Motion of Commissioner Smith and seconded by Commissioner Kelly approving the HRA Consent Agenda as presented. Rollcall: Ayes: Kelly, Maetzold, Paulus, Smith, Richards Motion carried. *MINUTES OF REGULAR HRA MEETING OF DECEMBER 2. 1996,AND SPECIAL HRA MEETING OF DECEMBER 9. 1996 Motion of Commissioner Smith and seconded by Commissioner Kelly approving the Minutes of the Regular HRA Meeting of December 2, 1996, and Special HRA Meeting of December 9, 1996. Motion carried on rollcall vote - five ayes. AMENDMENT TO REDEVELOPMENT CONTRACT AND CONTRACT FOR DEED APPROVED FOR CENTENNIAL LAKES DEVELOPMENT (UNITED PROPERTIES) Executive Director Hughes explained the HRA would need to consider a number of • amendments to the Redevelopment Contract and the Contract for Deed with respect to Centennial Lakes. These amendments will provide the framework for the development of the remaining public and private improvements at Centennial Lakes, specifically, the vacant land located south of West 76th Street. Of particular interest to the City is completion of the park and ponding system for Centennial Lakes. The completion of the stormwater ponding system is essential for the proper management of stormwater draining from a large portion of southeast Edina and parts of Richfield. Completion of this system will likewise provide a significant recreational amenity for this part of the City and the region. In staffs view, the time is right to negotiate amendments to the redevelopment agreement with respect to the remaining elements of the project. In our view, the development potential for the site has never been stronger and we believe there is a high probability that the Phase 2 Office Development will commence in 1997. OVERVIEW OF CENTENNIAL LAKES The Redevelopment Agreement and Contract for Deed for the Centennial Lakes project closed in October 1988. The Redevelopment Agreement was executed by the HRA and South Edina Development Corporation. The Contract for Deed was executed by the HRA and the estate of Fred W. Hedberg. In 1995, the vendor's interest in the Contract for Deed was transferred to the Centennial Lakes Limited Partnership. The Board of Governors of this partnership are the grandchildren of the decedent. John W. and Jean Hedberg, the • decedent's son and daughter-in-law continue to retain a separate interest in the property. The initial Redevelopment Agreement dealt primarily with Phase I of the Centennial Lakes project. This included the multi-screen movie theater, the medical office building, retail plaza, a 250 unit condominium development, a 250,000 multi-tenant office building and a public park and roadway improvements. All of the Phase I improvements except the multi- tenant office building were constructed immediately after closing. . I.n 1994, the HRA approved plan amendments and redevelopment contract amendments to permit the construction of the Coventry Townhouse project in the northeasterly portion of Centennial Lakes. This development is scheduled to comprise 98 townhouse units. Forty-six of these units have now been completed or are under construction. During the summer of 1996, United Properties began construction on the Phase I office building comprising 140,000 square feet. Occupancy of this building is anticipated in the spring of 1997. In connection with this office building, the HRA previously agreed to rebate to the developer 25% of the tax increment collected from this building. TAX INCREMENT FINANCING DISTRICT STATUS Centennial Lakes is located within two tax increment financing districts. In addition, tax increments received from the Southdale/Galleria Economic Development District as well as the 50th & France tax increment financing district may be pooled with the Centennial Lakes district to honor debt service on Centennial Lakes and Edinborough obligations. Based upon our analysis of the cash flows of these tax increment financing district, adequate increments are available to finance the acquisition and the development of the South Park property provided that the Phase II and Phase III office buildings proceed and are of a size at least equal to the Phase I office building. Our cash flow projections, • however, have several limitations, including: 1) future changes to the current property tax system, 2)future changes to tax increment financing laws and 3) inflation/market valuation changes, especially for commercial/industrial property. Changes to any of these variables affect the cash flows of these districts. PROPOSED TERMS FOR UNITED PROPERTIES/HEDBERG/HRA AMENDMENTS Staff recommends that the Redevelopment Agreement and the Contract for Deed be amended in accordance with the following terms. Staff recommends that the HRA approve these terms and authorize the Chairman and Secretary to enter in to the appropriate agreements based upon these terms: ■ TIF ASSISTANCE FOR REMAINING OFFICE BUILDINGS 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 On or before 12/31/97 Phase 3 On or before 12/31/99 Phase 4 On or before 12/31/01 Phase 5 On or before 12/31/03 Provided, however, that United Properties could miss a phase provided that the missed • phase and the subsequent phase commence before the subsequent phase's due date f ■ EXTENSION OF DEVELOPMENT RIGHTS United Properties' development rights would be extended from 10/15/00 until 10/15/03 • provided that Phase 2 commences by June 30, 1998. ■ RELEASE FROM SHORTFALL OBLIGATION United Properties would be released from the existing shortfall agreement upon completion of the phase 2 office. ■ RELEASE OF REVERSIONARY RIGHTS United Properties may acquire remaining vacant land south of W.76th Street without requirement for immediate construction. ■ ACQUISITION OF SOUTH PARK PROPERTY Hedbergs convey South Park property to City before year end. Hedbergs accept as payment a limited revenue note from HRA which is junior to: - Debt service on existing and refunded bonds - Edina Park Plaza interest rate reduction loan advances - Legal and administrative expenses of HRA - Special assessments levied against HRA - Costs of golf course and amphitheatre construction - Phase 1 office TIF assistance Note is payable at the earlier of 1) The termination of the TIF district but after payment of all senior obligations, acquisition and commencement of construction of the Phase 2 office. No interest on note until 1/1/98 ■ DEVELOPMENT OF SOUTH PARK United Properties 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 Properties 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 increment 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 increment from the Phase 3 office. The maximum tax increment payable to United Properties for each phase would be the lesser of $3.00 per sq.ft. or $400,000 per year adjusted by the CPI. United Properties 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. Notwithstanding the foregoing, the HRA would retain a one time option to sell bonds to fund the initial park improvements and thereby relieve United Properties 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 TIF 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 Properties would be relieved of all subsequent park improvements obligations if the Phase 3 office does not commence by 12/31/01. ■ CONTRACT FOR DEED AMENDMENTS The contract for deed would be extended from 10/15/01 to 10/15/03. United Properties/HRA would enjoy a one time right to defer one annual installment by one year. This, however, would not extend the term of the contract for deed. United Properties/HRA has a right to acquire an additional six acres of office land by 6/1/98 for$6.80 per sq. ft. (Adjusted by the CPI from 1/1/97) No public comments or concerns were expressed. Commissioner Smith made a motion to authorize amendments to the HRA Redevelopment Contract and Contract for Deed as outlined and presented. Commissioner Kelly seconded the motion. Rollcall: Ayes: Kelly, Maetzold, Paulus, Smith, Richards • Motion carried. CLAIMS PAID Commissioner Kelly made a motion to approve payment of the HRA claims as shown in detail on the Check Register dated December 11, 1996, and consisting of one page totaling $2,756.74. Commissioner Maetzold seconded the motion. Rollcall: Ayes: Kelly, Maetzold, Paulus, Smith, Richards Motion carried. There being no further business on the HRA Agenda, Chairman Richards declared the meeting adjourned. xecutive Director MINUTES OF THE EDINA HOUSING AND REDEVELOPMENT AUTHORITY WARREN HYDE CLUBHOUSE, BRAEMAR GOLF COURSE ON DECEMBER 26, 1996 AT 5:00 P.M. ROLLCALL Answering rollcall were Commissioners Kelly, Maetzold, Smith and Chairman Richards. CLAIMS PAID Commissioner Smith made a motion approving payment of the following claims as shown in detail on the Check Register dated December 19, 1996, and consisting of one page totaling $14,652.80. Commissioner Maetzold seconded the motion. Rollcall: Ayes: Kelly, Maetzold, Smith, Richards Motion carried. There being no further business on the HRA Agenda, Chairman Richards declared the meeting 'ourned. E cutive Director