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HomeMy WebLinkAboutEDA AGN 05-10-04 SpecialCITY OF COLUMBIA HEIGHTS 590 40th Avenue N.E.. Columbia Heights, MN 55421-3878 (763) 706-3600 TDD (763) 706-3692 Visit Ottr Website at: www. ci. cohvnbia-heights, mn. us EDA COMMISSIONERS Don Murzyn Jr. Patricia Jindra Bruce Kelzenberg Julienne Wyckoff Bruce Nawrocki Bobby Williams Tammera Ericson ECONOMIC DEVELOPMENT AUTHORITY SPECIAL MEETING 7:00 P.M., MONDAY, MAY 10, 2004 CITY HALL, COUNCIL CHAMBERS AGENDA 1. CALL TO ORDER/ROLL CALL 2. PLEDGE OF ALLEGIANCE. 3. ITEMS FOR CONSIDERATION A. Approve Schafer-Richardson Preliminary Development Agreement MOTION: Move to Approve the Preliminary Development Agreement between the Columbia Heights Economic Development Authority and Schafer-Richardson, the developer of the Industrial Park Redevelopment Project; and furthermore, to authorize the President and Executive Director to enter into an agreement for the same. 4. ADJOURNMENT Walter R. Fehst, Executive Director H:\edaAgenda2004~5-10-2004 The EDA does not discriminate on the basis of disability in the admission or access to, or treatment or employment in, its accommodation will be provided to allow individuals with disabilities to participate in all EDA services, programs, and activities. Auxiliary aids for handicapped persons are available upon request when the request is made at least 96 hours in advance. Please call the EDA Secretary at 706-3669 to make arrangements (TDD 706-2806) for deaf or hearing impaired THE CiTY Of COLUMBIA HEIGHTS DOES NOT DISCRIMINATE ON THE BASIS Of DISABILITY IN EMPLOYMENT OR THE PROVISION OF SERVICES EQUAL OPPOrtUNiTY EMPLOYER COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY (EDA) Meeting of: May 10, 2004 AGENDA SECTION: Items for Consideration ORIGINATING EXECUTIVE NO: 3-A DEPARTMENT: EDA DIRECTOR APPROVAL ITEM: Approve Schafer-Richardson Preliminary BY: Randy Schumacher BY: Development Agreement DATE: May 5, 2004 BACKGROUND: The purpose of this Predevelopment Agreement is to assure the developer, Schafer-Richardson, that the City and the EDA will not negotiate with other parties for the redevelopment of the Industrial Park for the term of the PDA. In addition, it outlines the general terms, major issues, and obligations of the parties while negotiations for a final contract are taking place. The developer will be responsible for all out of pocket costs incurred by the City or EDA during these negotiations. As you are well aware, the City has designated the redevelopment of the Industrial Park as its number one priority. Over the past one and a half years, the City has been awarded one and a half million dollars in grant funds for the planning, contamination clean up, and redevelopment of the Industrial Park. Schafer-Richardson controls over 90 percent of the property located in Phase 1 of the proposed development plan and seeks the opportunity to obtain a contract with the City for redevelopment rights in the project area. Legal advisor, Steve Bubul, will be present to review the summary of the Preliminary Agreement and answer questions. RECOMMENDATION: Staff recommends approval of the Preliminary Development Agreement with Schafer-Richardson, the developer of the Industrial Park Redevelopment Project. RECOMMENDED MOTION: Move to Approve the Preliminary Development Agreement between the Columbia Heights Economic Development Authority and Schafer-Richardson, the developer of the Industrial Park Redevelopment Project; and furthermore, to authorize the President and Executive Director to enter into an agreement for the same. Attachments EDA ACTION: h:\consent Form2004\EDA Schafer Richardson Preliminary Der.Agree SUMMARY OF PRELIMINARY DEVELOPMENT AGREEMENT BETWEEN CITY, ECONOMIC DEVELOPMENT AUTHORITY AND SCHAFER RICHARDSON, INC. e e Parties. The Agreement is between the City, the Authority and Schafer Richardson, lnc (the "Developer"). The City has the primary role in land use regulation, and the EDA has the primary role in land acquisition (if needed) and financial assistance. Therefore, both bodies are included in the agreement. General Purpose. The PDA has four major purposes: · Describe the general terms that will be the basis for negotiation of a definitive Contract for Private Redevelopment ("Contract"). · Describe the obligations of the parties in the short term, while negotiations are underway. · Provide security for the City and Authority that the Developer will pay the City and Authority's costs. · Provide security for the Developer that the City and Authority will not negotiate with any other party regarding development of this property for the term of the PDA. City and Authority Undertakings: · City and Authority accept the preliminary site plan as the conceptual framework for the redevelopment. · During term of the PDA, City will initiate comprehensive plan amendment and rezoning of the entire property (but no approvals will occur until a Contract is executed). · After execution of a Contract, Authority will use eminent domain to acquire property if Developer fails to do so after exhausting reasonable efforts. · After execution of a Contract, Authority will provide tax increment assistance on a pay as you go basis (all under terms to be negotiated). · During term of PDA, City and Authority will start the process to create a redevelopment TIF district. · City will investigate other financial options to help finance public infi'astructure. · City and Authority will hold any public meetings/hearings they deem necessary. Developer undertakings: · Accept the preliminary site plan as conceptual fi'amework. · Use best efforts to acquire all property. · Submit detailed project schedule, updated site plan, financial pro forma. · Cooperate with the City and Authority in all activities related to land use and TIF. · Cooperate with the City and Authority in all public meetings. SJB-247441 vl CL205-23 City and Authority Costs: · Developer responsible for all out-of-pocket costs incurred by City or Authority since December 1, 2003. · On signing the PDA, developer deposits $25,000 and remains obligated to pay costs in excess of that up to $100,000. Any amounts over that are subject to Developer approval. · City and Authority will provide a budget of expected costs by June 1, 2004. Term of PDA. · Effective for 180 days. · Can be extended by City Manager for up to 90 additional days. · Any extension after that requires Authority and Council approval. · The parties will use their best efforts to enter into the final Contract by August 31, 2004. 2 Execution Copy PRELIMINARY DEVELOPMENT AGREEMENT THIS AGREEMENT is made and entered into this __ day of May, 2004, by and between the COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY, a public body politic and corporate (the "Authority"); the CITY OF COLUMBIA HEIGHTS, a municipal corporation under the laws of Minnesota (the "City") and SCHAFER RICHARDSON, INC., a Minnesota corporation (the "Developer"). WITNESSETH: WHEREAS, the Authority desires to promote redevelopment of certain property within the City, which property is legally described in Exhibit A attached hereto (the "Property"); and WHEREAS, the Authority has caused to be prepared a redevelopment analysis of an area that includes the Property, titled Industrial Area Redevelopment Plan (the "Redevelopment Study"); and WHEREAS, the Developer has proposed a multi-phase redevelopment project including housing and commercial uses (the "Redevelopment"), consistent with the Redevelopment Study, and which is depicted on the preliminary site plan attached hereto as Exhibit B. WHEREAS, the Developer has proposed that the first phase of the Redevelopment would consist of approximately 145 housing units (approximately 17 units per acre) and approximately 15,000 square feet of commercial (together, "Phase I") to be located on the portion of the site plan identified on Exhibit C, and legally described on Exhibit D (the "Phase I Property"), both attached hereto; WHEREAS, the Developer currently owns a substantial portion of the Property, in particular, most of Phase I, and expects to acquire the balance of the Property, either by voluntary purchase or from the Authority after acquisition by the Authority for redevelopment; and WHEREAS, the City has approved the Redevelopment Study and intends to commence various zoning and land use changes in the portion of the city that includes the Property, consistent with and necessary for the Redevelopment; and WHEREAS, the Authority has completed a substandard building analysis of the Phase I Property for the purposes of evaluating eligibility for a redevelopment tax increment financing district, and has also completed (as part of the Redevelopment Study) a preliminary blight analysis of the Property as a whole, and has determined preliminarily that the Property qualifies as a "redevelopment project" within the meaning of Minnesota Statutes, Sections 469.001 to 469.047 (the "HRA Act"); and SJB-245852v4 CL205-23 WHEREAS, the Developer has requested the Authority to explore the use of certain public assistance, financial and otherwise, to assist with the Redevelopment; and WHEREAS, the Developer has requested the City to explore the undertaking of various municipal capital investments in furtherance of the Redevelopment, as contemplated in the Redevelopment Study, including roadways, utility infrastructure and open space improvements (the "Public Infrastructure"); and WHEREAS, the Authority has received certain grants (the "Environmental Grants") from the Minnesota Department of Employment and Economic Development ("DEED") and the Metropolitan Council (the "Met Council'') to finance pollution remediation on the Phase I Property and the Developer has requested the City and Authority to explore the availability of other grants and assistance from third parties for the remainder of the Property in support of the Redevelopment; and WHEREAS, the Authority and City have determined that it is in the City and Authority's best interest that the Developer be designated sole developer of the Property during the term of this Agreement; and WHEREAS, the Authority, City and the Developer are willing and desirous to undertake the Redevelopment if (i) a satisfactory agreement can be reached regarding the Authority's commitment for public assistance necessary for the Redevelopment; (ii) satisfactory mortgage and equity financing, or adequate cash resources to undertake the Redevelopment can be secured by the Developer; and (iii) the economic feasibility and soundness of the Redevelopment is determined following appropriate financial analysis by the Authority; (iv) satisfactory resolution of zoning, land use, site design, and engineering issues, and other necessary preconditions have been determined to the satisfaction of the parties; (v) final analysis of the Property in phases subsequent to Phase I indicate the Property qualifies for area wide redevelopment and the use of tax increment financing; and (vi) the City determines to proceed with appropriate govemmental actions supportive of the Redevelopment related to zoning, land use and other approvals, determines to undertake the Public Infi'astmcture, and approves any other necessary, similar matters; and WHEREAS, the Authority is willing to evaluate the Redevelopment and work toward all necessary agreements with the Developer, if the Developer agrees to reimburse the Authority for certain outside consulting costs relating to the Redevelopment, even if the Redevelopment is abandoned or necessary agreements are not reached under the terms of this Agreement; and WHEREAS, the City is willing to proceed with land use, zoning and environmental actions related to the Property and the Redevelopment, that are necessary preconditions of the Redevelopment, and to evaluate and work toward all necessary agreements with the Developer, if the Developer agrees to reimburse the City for certain outside consulting costs related to the Redevelopment, even if the Redevelopment is abandoned or necessary agreements are not reached under the terms of this Agreement; SJB445852v4 2 CL205-23 NOW, THEREFORE, in consideration of the mutual covenants and obligations of the parties hereto, the Authority and the Developer hereby agree as follows: Section 1. Negotiation of Redevelopment Contract. The Authority, City and the Developer will proceed to negotiate in good faith regarding a definitive development contract regarding the Property and the Redevelopment (the "Contract"), based on the terms and conditions outlined in this Agreement. It is the intention of the parties that this Agreement documents their present understanding and commitments and that if the conditions described in this Agreement can be fulfilled to the satisfaction of the Authority, City and the Developer, the parties will enter into a Contract. The Contract (together with any other agreements entered into between the parties hereto contemporaneously therewith) when executed, will supersede all obligations of the parties hereunder. Notwithstanding anything to the contrary herein, the respective obligations of the Authority to make any final approvals, acquire any property or provide any financial assistance described in this Agreement, the City to undertake any final municipal approvals and any construction of Public Infi-astructure and the obligations of Developer to commence construction of the Redevelopment on the Property, are subject to execution of a Contract approved by, respectively, the goveming bodies of the City and Authority and by the Developer. All references in this Agreement to actions by any party after execution of a Contract represent statements of current intent for negotiation of the Contract. Section 2. Authority and City Agreements and Undertakings. (a) The City and Authority accept and approve the preliminary site plan attached at Exhibit B as the conceptual framework for the Redevelopment, subject to the following additional terms and conditions: approval of the required comprehensive plan amendments, rezonings, replatting, Environmental Assessment Worksheet (EAW), any other state or federal necessary permits, after the associated City and public/agency review process has been duly undertaken; inclusion of the following range of uses: approximately 15,000 sq. ft. of commercial uses within Phase I; approximately 450 for-sale residential units in several phases to be built in response to market demand >' new Public Infrastructure (b) Upon execution of the Contract, the Authority will commence the Phase I pollution remediation actions described in the Environmental Grants, in accordance with all the terms and conditions of the grant agreements with DEED and the Met Council, and will investigate and use its best efforts to obtain additional similar funding for the balance of the Property. (c) Upon execution of the Contract, the City will similarly seek appropriate funding for any Public Infrastructure for the Redevelopment to the extent reasonably available. SJB-245852v4 3 CL205-23 (d) During the term of this Agreement, (1) the City will initiate a comprehensive plan amendment for the Property, consistent with the site plan shown in Exhibit C; (2) the City will initiate rezoning of the Property consistent with the comprehensive plan amendment and Exhibit C; and (3) the Authority or City, as appropriate, will take lead responsibility in initiating an EAW for the Redevelopment and seeking any other approvals or grants, for Phase I or the balance of the Redevelopment where the City or Authority is the proper applicant for any state or federal governmental approvals or grants for the Redevelopment; provided that the City or Authority, as the case may be, will not consider final approval regarding any such matters until execution of a Contract; and further provided that nothing in this Agreement limits the authority of the City or Authority in making such final decisions as are required by law or City ordinances for the Redevelopment. (e) Upon execution of the Contract, and after Developer's exhaustion of reasonable efforts to acquire all portions of the Property that are not currently owned or controlled by Developer by private negotiations, the Authority will agree to acquire such property through negotiation or exercise of its powers of eminent domain, to the extent permitted by law and subject to all the terms and conditions of the Contract. (0 Upon execution of the Contract, the Authority expects to provide tax increment financing to pay public redevelopment costs associated with development of the Property, subject to all terms and conditions of the Contract. The parties currently anticipate that the public redevelopment costs may include one or more of the following items: · Costs of acquisition of the Property for the Redevelopment; and · Demolition and relocation of existing uses; and · Site clearing, grading, and environmental remediation not funded by the Environmental Grants; and · Construction of the Public Infrastructure, to the extent not otherwise funded by sources available to the City, and including certain Public Infrastructure that may be constructed by the City; and · Other costs for which tax increment or other available public funds may be legally spent, to the extent necessary to allow the Redevelopment to proceed. (g) Upon execution of the Contract, the Authority expects to provide tax increment financing through issuance to Developer of one or more taxable "pay as you go" tax SJB-245852v4 4 CL205-23 increment revenue notes, with the principal amounts and interest rate determined by the parties based on analysis of the financing gap necessary to make development of the Property financially feasible. If requested by Developer, upon completion of each phase of the redevelopment, the Authority expects to refinance the taxable notes associated with the relevant phase through issuance of one or more tax-exempt revenue notes, subject to market conditions, opinion of the Authority's bond counsel, and all other terms and conditions reasonably required by the Authority. The Authority and City may require such refinancing to be coordinated with other City financing undertaken during the same period, such that issuance of the tax-exempt revenue notes does not impair the ability of the City to designate its own bonds as "qualified tax-exempt obligations" within the meaning of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended. (h) Upon execution of the Contract, the City will consider appropriate other financial options in connection with the Public Infrastructure. (i) Upon execution of this Agreement the Authority will commence activities to establish a new redevelopment tax increment financing district encompassing the Property, and will initiate any additional studies necessary to qualify the Property as a "redevelopment project" for the purposes of the HRA Act. The Authority and City will schedule consideration of the tax increment financing district and any other necessary findings as soon as legally possible under Minnesota law, and will certify such tax increment financing district at such time as agreed by the parties in the Contract. 0) During the term of this Agreement, the Authority and City may hold any public hearings or meetings they deem necessary to obtain public feedback and input regarding the Redevelopment. (k) The Authority and City will use their best efforts to enter into a definitive Contract with the Developer by August 31, 2004. Section 3. Developer Agreements and Undertakings. (a) The Developer acknowledges and accepts the general terms and conditions for implementation of the master site plan as described in Section 2(a) hereof and to undertake a Redevelopment consistent with the adopted Redevelopment Study and Contract. (b) The Developer will use its best efforts to acquire all portions of the Property not currently owned or controlled by Developer by voluntary negotiation, prior to requesting any Authority acquisition. (c) During the term of this Agreement, the Developer will use its best efforts to complete the following tasks: SJB-245852v4 5 CL205-23 · submit to the Authority a project schedule that provides for commencement of construction of Phase I in the spring of 2005; · submit to the Authority an updated site plan of the Phase I area and subsequent Phases, including any requested flexibility in the scale, phasing and location of uses, and which indicates all major Public Infrastructure required for each phase of the Redevelopment; · submit to the Authority a detailed pro forma for at least the Phase I portion of the Redevelopment, describing all sources and use of funds and providing sufficient detail for the Authority to determine any financing gap and the need for tax increment assistance; · to the extent practicable, submit to the City applications for replatting of the Phase I Property to accommodate Phase I of the Redevelopment; cooperate with the City and Authority and their engineering, legal, environmental and planning and fiscal consultants, by providing all necessary information in a timely manner for completion of the EAW and all necessary engineering feasibility studies for the Public Infrastructure, all zoning and land use approvals, the project feasibility analysis and tax increment "but for" analysis and any and all other necessary governmental actions. (d) The Developer will cooperate with the Authority in all activities necessary to establish a redevelopment tax increment financing district encompassing the Property. (e) The Developer will cooperate with the City and Authority in planning for and participating in any meetings referenced in Section 2(j), all to the extent reasonably requested by the City or Authority. (f) The Developer will use its best efforts to enter into a definitive Contract with the Authority by August 31, 2004. Section 4. City and Authority Costs. (a) Upon execution of this Agreement, the Developer has deposited with the Authority funds in the amount of $25,000, receipt of which the Authority hereby acknowledges. The Authority may use such funds only to pay "Authority Costs," which term means out-of pocket-costs incurred by the City or Authority after December 1, 2003 for: (i) the Authority's financial advisor in connection with the Authority's financial participation in redevelopment of the Property, including without limitation all costs related to establishment of any development or tax increment financing districts, (ii) the City or Authority's legal counsel in connection with negotiation and drafting of this Agreement, the Contract and any related agreements or documents, and any legal services related to the Authority's financial participation in redevelopment of the Property; (iii) any consultants retained in connection with analysis of the Property for eligibility for designation as a redevelopment project or as a redevelopment tax increment financing district; (iv) any consultants retained in connection with the preparation and approval of an EAW and any other state or federal approval for the Redevelopment; and (v) consultants retained by the City and Authority SJB-245852v4 CL205-23 6 for planning, environmental review, and engineering for the Redevelopment, including the zoning and land use approvals and Public Infrastructure feasibility studies and approvals and applications for any additional grant funding. Costs in connection with the environmental remediation of Phase I shall not be Authority Costs and shall be funded by the grants obtained for such purpose. In addition City and Authority staff costs and costs and expenses shall not be Authority Costs. (b) At any time, but not more often than monthly, the City or Authority may request payment of Authority Costs, and the Developer agrees to pay all Authority Costs in excess of the initial deposit, within ten days of the City or Authority's written request, supported by suitable billings, receipts or other evidence of the amount and nature of Authority Costs incurred. The maximum amount the Redeveloper shall be obligated to pay for all Authority Costs before execution of the Contract shall not exceed $100,000, without a further approval by the Developer. The City and Authority shall provide a budget to the Developer not later than June 1, 2004 indicating the anticipated areas of City and Authority activity and anticipated cost estimates from the various consultants. Upon completion of the budget, the Authority, City and Developer will negotiate regarding any need to modify the above maximum expenditure limit. Thereafter, at Developer's request, but no more often than monthly, the Authority will provide Developer with a written report on current and anticipated expenditures for Authority Costs, including invoices or other comparable evidence of costs incurred for the Property. (c) Upon termination or expiration of this Agreement in accordance with its terms, the Authority will remm to the Developer any balance of funds deposited under this Section, after paying all Authority Costs incurred through the date of receipt of the termination notice or the date of expiration, as the case may be. If a Contract is executed, the parties agree to negotiate and include in the Contract terms regarding reimbursement for Authority Costs as eligible tax increment expenses to the extent permitted by law. Section 5. Exclusive Development Rights. During the term of this Agreement, the Authority agrees that it will not negotiate or contract with any other party concerning the redevelopment of the Property. The Developer shall not assign or transfer its rights under this Agreement in full or in part, or enter into any subcontracts to perform any of its obligations hereunder, without the prior written consent of the Authority, which consent will not be unreasonably withheld. Notwithstanding the foregoing, the Developer may transfer and assign its rights hereunder to an entity controlled by the same persons as the Developer without consent. Section 6. Effect of Approvals. No approval given by the Authority hereunder or in connection herewith shall be deemed to constitute an approval of the development of the Property for any purpose other than as stated herein and the process outlined in this Agreement shall not be deemed to supersede any concept review, conditional use permit, vacation, subdivision, rezoning or other zoning or planning approval process of the City or Authority relative to the development of real estate or condition of receiving grant funds. Section 7. Term of Agreement. (a) This Agreement shall be effective for a period of 180 days from the date hereof, with mutually approved extensions for a period of not more than an SJB-245852v4 7 CL205-23 additional 90 days (which extensions may be approved on behalf of the City and the Authority by the City Manager of the City). If for any reason a Contract has not been entered into by the parties within the term of this Agreement or any mutually approved extension thereof, this Agreement shall be null and void and neither party thereafter shall have any liability or obligations to the other except as otherwise provided in Section 4 hereof. (b) This Agreement may be terminated by either party upon 30 days' written notice to the other if a party fails to perform any of its obligations hereunder, and fails to cure the default within 30 days after receipt of written notice thereof. Upon termination under this Section 7(b), neither party thereafter shall have any liability or obligations to the other except as otherwise provided in Section 4 hereof. (c) Any extension or renewal beyond the term set forth in section (a) hereof requires approval by the Authority's board of commissioners and the City's city council. Section 8. Severability. If any portion of this Agreement is held invalid by a court of competent jurisdiction, such decision shall not affect the validity of any remaining portion of this Agreement. Section 9. Notices. Notice or demand or other communication between or among the parties shall be sufficiently given if sent by mail, postage prepaid, return receipt requested or delivered personally: (a) As to the Authority: Columbia Heights Economic Development Authority 590 40th Avenue NE Columbia Heights, MN 55421 Attn: Executive Director Co) As to the City: City of Columbia Heights 590 40th Avenue NE Columbia Heights, MN 55421 Attn: City Manager SJB-245852v4 CL205-23 (c) As to the Developer: Schafer Richardson, Inc. 500 First Avenue NE Minneapolis, MN 55413 Attention: Brad Schafer Section 10. Counterparts. This Agreement may be executed simultaneously in any number of counterparts, all of which shall constitute one and the same instrument. Section 11. Effective Laws. This Agreement shall be construed in accordance with the law of Minnesota. SJB-245852v4 9 CL205-23 IN WITNESS WHEREOF, the Authority, City and Developer have caused this Agreement to be duly executed in its name and behalf. SCHAFER RICHARDSON, INC. COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY By. By Its Presidem Its: President- Don Murzyn, Jr. By. Its: Executive Director- Walter R. Fehst CITY OF COLUMBIA HEIGHTS, MINNESOTA By Its Mayor- Julienne Wyckoff By Its City Manager-Walter R. Fehst H:Llndustfial Park2004\Schafer Richardson Preliminary Development Agree-EDA SJB-245852v4 10 CL205-23 EXHIBIT A Description of the Property SJB-245852v4 1 1 CL205-23 EXHIBIT B Preliminary Site Plan SJB-245852v4 1 2 CL205-23 EXHIBIT C Map of Phase I Property SJB-245852v4 1 3 CL205~23 EXHIBIT D Description of Phase I Property SJB-245852v4 14 CL205-23