HomeMy WebLinkAbout1990-02-05 HRA Regular Meeting MINUTES
EDINA HOUSING AND REDEVELOPMENT AUTHORITY
FEBRUARY 5, 1990
Answering rollcall were Commissioners Kelly, Paulus, Rice, Smith and Chairman
Richards.
MINUTES of the HRA Meeting of January 22, 1990, were approved as submitted by
motion of Commissioner Smith seconded by Commissioner Rice.
Ayes: Kelly, Paulus, Rice, Smith, Richards
Motion carried.
ESTABLISHMENT OF T.I.F. DISTRICTS FOR RETAIL AREAS PROCEEDING. Executive Director
Gordon Hughes reported that work is progressing on establishment of Tax Increment
Financing Districts. A preliminary review of the plans by Council will be held on
March 19, 1990, then will proceed to the Planning Commission on March 28, 1990, and
to Council on April 2, 1990, for a public hearing.
Chairman Richards opened up the meeting for discussion to the audience. The
Council has felt that exploration should be done regarding establishing the tax
increment financing districts in the City where there are none now. Three areas
were focused on:
1. Valley View and Wooddale
2. 70th and Cahill
3. 44th and France
. The City has hired a consultant for the purpose of laying out a schedule/framework
to consider the issue of whether or not to establish tax increment financing
districts in these areas. Chairman Richards stated that on March 19, 1990, the HRA
will look at the proposed plan,
1) to see if there is any reason to establish these districts,
2) to solicit input from residents, property owners, or business people in
these areas.
One hearing is before the Planning Commission on March 28, 1990, held at City Hall
in the Manager's Conference Room. The second public hearing will be April 2, 1990,
in the Council Chambers to hear discussion on these proposals. After these
meetings the Council will make a decision. Input will be welcomed from the public.
Chairman Richards encouraged the audience to mark their calendars with these dates.
A brief discussion followed. Executive Director Hughes commented that property
owners in the three districts will be getting a notice of a February 27, 1990,
informal review. Tenants are welcome but will not receive individual notices.
The owner/manager of the Edina Baskin & Robbins questioned whether businesses would
have to move, would businesses have to improve the area or what the Commissioners
have in mind. Also, if this is for only the property owners or tenants also. He
questioned the time frame - would it be 5 - 10 years?
Chairman Richards answered that nothing has been decided. Whether the districts
will even be established is up for conjecture. We have been able to see how these
tax increments have allowed the City and HRA to do projects such as at 50th &
France, at Vernon and at Southdale/Edinborough/Centennial Lakes. This tool allows
the public sector to get involved and work with the private property owners to see
• what options may exist. Chairman Richards commented that the time could be 5 - 15
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years depending on the laws, which are always subject to change by the legislature.
If nothing is done, the City may be missing an opportunity.
Executive Director Hughes stated that experience has shown that these commercial
redevelopment projects go in stages; for instance 50th & France where the initial
project was done in 1974, followed-up in 1979, and another project in 1990 is being
considered.
Chairman Richards again mentioned the dates when establishment of the tax increment
districts would be considered as February 20, 1990, March 28, 1990, April 2, 1990.
Questions are to be directed to Director Hughes at City Hall.
BID AWARDED FOR GRADING - CENTENNIAL LAKES CONDOMINIUMS Motion was made by
Commissioner Smith for award of bid for Centennial Lakes Residential Amenities to
recommended low bidder, Steinninger Construction, at $9,600.00. Motion was
seconded by Commissioner Rice.
Ayes: Kelly, Paulus, Rice, Smith, Richards.
Motion carried.
BOND ISSUES FOR TAX INCRENENT DISTRICTS - EDINBOROUGH AND 50TH & FRANCE DISCUSSED
Jerry Gilligan, City Bond Counsel, referred to his memorandum of February 2, 1990,
in which he stated that the Edina HRA has two tax increment financing districts
created prior to August 1, 1979, 50th & France and Edinborough. The Edinborough
district includes a portion of the Centennial Lakes project. Under the Tax
Increment Financing Act, increment from pre-August 1, 1979 districts have an
outside termination date of August 1, 2009. After April 1, 2001, increment from
pre-August 1, 1979, districts may only be used to pay bonds which were outstanding
on April 1, 1990. Although the 50th & France district is technically affected by
this restriction, the Edinborough district is more greatly affected in that
significant future phases of the Centennial Lakes development may occur.
Centennial Lakes is composed of two tax increment financing districts, Edinborough
and Centennial Lakes. Bonds issued since the establishment of the Centennial Lakes
district (Bonds issued in 1988 and 1989) are payable from tax increment from both
districts. If additional tax increment bonds are issued for Centennial Lakes after
April 1, 1990, tax increment from the Edinborough district may only be used to pay
such bonds until April 1, 2001. The loss of the ability to use increment from the
Edinborough district after April 1, 2001, to pay debt service on bonds issued after
April 1, 1990, could limit the ability of the HRA to finance additional public
costs for the Centennial Lakes development.
The HRA may consider two options in an attempt to more fully utilize tax increment
from the Edinborough district after April 1, 2001. Both involve issuance and
closing of bonds by the City prior to April 1, 1990.
1. Issue refunding bonds to refund the bonds issued in 1981 and 1986, payable
from tax increment from the Edinborough district, and push out the final
maturity of these bonds until after April 1, 2001. The result is more debt
service payable from the district, but frees up increment prior to
April 1, 2001, that would otherwise have been used to pay the principal of the
refunded bonds. This freed up increment is then available to pay for
Centennial Lakes project costs. This is a technique recently used by
• Minneapolis. This may be an option to consider independent of financing
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additional public costs for Centennial Lakes, because it may serve to
alleviate tight cash flow resulting from the loss of homestead tax credit.
2. Issue bonds prior to April 1, to finance additional Centennial Lakes public
improvements or land costs, such as acquisition of South Park and/or Parcel A.
By issuing the bonds prior to April 1, increment from the Edinborough district
may be used after April 1, 2001, to pay these bonds. If interest on the bonds
is to be tax exempt, the City and HRA would have to be able to represent that
they reasonably expect to spend the proceeds of the bonds within 3 years from
the date of issuance of the bonds. Without some commitment from United
Properties that the office portion of the Centennial Lakes development is to
proceed in the near future, this may be a difficult representation for the
City and HRA to make.
i
Issuance of bonds under the second option presents certain risks. If proceeds of
the bond issue are expended and little or no additional development occurs in the
districts for some period of time, the increment will likely not be sufficient to
pay the additional debt service. Second, if the bond proceeds are not expended,
additional costs will have been incurred by the HRA for bond issuance costs and
negative arbitrage on the bonds which will need to be paid from the tax increment
from the districts and further exacerbate cash flow problems caused by the loss of
the homestead credit.
If additional bonds are not issued prior to April 1, it may be possible because of
the dual pledge of both the Edinborough and Centennial Lakes tax increment for the
bonds to still maximize all or substantially all of the increment from the
Edinborough district until the ultimate August 1, 2009, termination date. One
possible scenario would be that the City issues bonds after April 1, 1990, for
Centennial Lakes public costs payable from tax increment from both the Edinborough
and Centennial Lakes districts. After April 1, 2001, debt service on the post
April 1, 1990, bonds tax increment form the Edinborough district could not be used
to pay these bonds. Tax increment from the Centennial Lakes district, used to pay
debt service on the pre-April 1, 1990, bonds, could be used to pay the
post-April 1, 1990 bonds, resulting in a greater amount of pre-April 1, 1990 bonds
being paid from tax increment from the Edinborough district. The risk with this
allocation approach is that the tax increment statute does not envision a situation
where bonds are payable form both a pre and post April 1, 1979, district and
someone (Hennepin County, Richfield School District or the State) could challenge
this allocation of tax increment, or additional legislation could be enacted which
deals with this situation which has a negative impact. A third alternative could
be for the HRA to do nothing.
For the meeting of February 20, 1990, a pre-sale report will include a resolution
calling for the sale of the bonds on March 19, 1990, with the closing scheduled on
or before April 1, 1990. Mr. Gilligan concluded his presentation by noting that
the Council would not be committed to issue bonds until the actual bond sale (March
19, 1990) and closing (April 1, 1990) .
Chairman Richards inquired whether, if staff is authorized to proceed, we incur no
obligation until March 19, 1990, and we have the option of looking at all the
variables. Mr. Gilligan explained that the important thing is that if the process
is not begun now, it will be extremely difficult to do anything at a later date.
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Commissioner Smith asked if this is a unique situation to the
Edinborough/Centennial Lakes Area. Mr. Gilligan stated that this also applies to
the 50th & France area but there are no future projects there. Commissioner Smith
also asked if the three proposed tax increment areas mentioned earlier can stand on
their own merits? Mr. Gilligan stated that the April 1, 1990, provision only
applies to the pre-1979 districts and would not apply to the new tax increment
districts.
Chairman Richards asked what would happen if between now and April 1, 1990, the HRA
would decide to undertake major projects that are not now authorized at 50th &
France; would a refunding issue be needed to deal with these options? Mr. Gilligan
stated it would depend on how large those major projects would be. Mr. Gilligan
said that if no bonds were issued by April 1, bonds could still be issued after
April 1, 1990, but the bonds would have to mature before April 1, 2001. This would
limit the period in which tax increments could be collected and we would lose 8
years. If bonds were issued to finance the projects, they would Have to be paid
back in that period of time. He noted that currently there are not many
outstanding bonds for the 50th and France District.
Chairman Richards asked Executive Director Hughes whether the scope of this is what
has been envisioned and would include the broader perspective so that we have the
option to chose? Director Hughes responded that the 50th & France district is
generating substantially more increments than it takes to service the debt. About
$800,000/year are being generated now and even if we were cut off at year 2001
there would be sufficient increments left to do the projects that are envisioned
for the summers of 1990 and 1991. Selling additional bonds at 50th & France would
build in a protective measure that would gain another 8 years but would not be
necessary for the projects we have in mind today.
Chairman Richards asked the Council if they had further questions or concerns about
the proposed bond issue. Hearing none, Chairman Richards said staff and legal
counsel should proceed.
Director Hughes asked for clarification as to procedure. He said he understood the
directive was to: 1) Bring back on February 20 the pre-sale report and resolution
calling for sale of the bonds, and 2) Include documents for both Edinborough and
50th and France T.I.F. Districts. Chairman Richards said that was the consensus of
the Council.
There being no further business on the HRA Agenda, the meeting was adjourned by
motion of Commissioner Paulus, seconded by Commissioner Rice. Motion rr' d.
Exe�cut�iv6 birf tor