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HomeMy WebLinkAboutEDA AGN 07-25-06 CITY OF COLUMBIA HEIGHTS 590 40th Avenue N.E., Columbia Heights, MN 55421-3878 (763) 706-3600 TDD (763) 706-3692 Visit Our We/Niite at: IVww.ci.columbia-heights.llln.IlS AGENDA COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY July 25, 2006 7:00 p.m., Parkview Villa, 965 40th Avenue, Community Room B 1. Call to Order/Roll Call Don Murzyn Jr., President Patricia Jindra, Vice President Bruce Kelzenberg, SecretarylTreasurer Tammera Diehm Gary L. Peterson Bruce Nawrocki Bobby Williams 2. Pledge of Allegiance CONSENT AGENDA 3. Approve Minutes of May 23rd and July 10, 2006 4, Approve financial report and payment of bills for May and June 2006, Resolution 2006-06. Motion: Move to Approve the Consent Agenda Items #3 and #4, as listed. BUSINESS ITEMS 5. Approve Lease Agreement between the EDA and Michelle Bingham Motion: Move to approve the Lease Agreement between the Columbia Heights Economic Development Authority (EDA) and Michael Bingham. 6. Administrative Report 7. Other Business The next regular EDA meeting will be Tuesday, August 22, 2006 at City Hall. THE CITY OF COLUMBIA HEIGHTS DOES NOT DISCRIMINATE ON THE BASIS OF DISABILITY IN EMPLOYMENT OR THF PROVISION OF SERVICES EQUAL OPPORTUNITY EMPLOYER ECONOMIC DEVELOPMENT AUTHORITY (EDA) REGULAR MEETING MINUTES May 23, 2006 CALL TO ORDER/ROLL CALL President, Murzyn, Jr. called the meeting to order at 7:07 p.m. Present: Don Murzyn Jr., Patricia Jindra, Bobby Williams and Bruce Nawrocki, Tammera Diehm, Gary L. Peterson and Bruce Kelzenberg PLEDGE OF ALLEGIANCE CONSENT AGENDA Approve Minutes of March 26, 2006 regular meeting and the Financial Report and Payment of Bills for the months of March and April, on Resolution 2006-03. Nawrocki asked if there are two separate checking accounts, as in March staff only spent $1,600 dollars, which is hard to believe. Streetar stated payroll and any other deductions that finance would deduct automatically, without writing a check processed from our department aren't shown on the check history. Nawrocki stated in the April budget there is a check written to TR Computers, what is that for. Streetar stated the City bought a program called Cityview that should have worked for permits also, but later found out it did not. Staff researched other similar products and purchased the Permit Works Program and the amount listed is for the software, installation and training. MOTION by Diehm, second by Peterson, to approve the consent agenda Items #3 and #4 as listed. All ayes. Motion Carried. BUSINESS ITEMS Resolution 2006-04. Sarna Contract for Private Redevelopment Schumacher stated the EDA board authorized staff to work with Sarna Inc. in developing a contract for private development for construction of a restaurant on the corner of 40th and university. Due to some complexities with the property like: MNDOT, frontage road turn back, site easements, title issues, road vacations, access agreements, utility relocations, off site improvements for M.E. Global and associated costs sharing, and soil correction and contamination. This contract was delayed until now. To date the approved actions on this project are: 1) preliminary plat; 2) 1 sl reading for the vacation of lookout place by City Council; and 3) variance application. The next step would be for the final plat approval by Planning & Zoning and City Council and the 2nd reading of the vacation of lookout place. EDA board established a purchase price of $75,000, the developer requested a credit for environmental and geotechnical soil corrections in the amount of $120,350. The City obtained a CDBG grant for soil correction in the amount of $64,000 to offset a portion of these costs. The $56,000 balance would be deducted from the $75,000 sale price, leaving a development agreement final price of $18,650. This write down is consistent with the assistance given to the redevelopment of the Industrial Park. Nawrocki stated the price of $18,650 is ludicrous, we paid a consultant to do a financial review, who talked about $7.00/ square foot on the low range and asked who is Sarna Inc. and have we looked at their finances. Schumacher stated Mr. Sarna is one of the officers. Mr. Norton, Kennedy & Graven, stated the company is registered with the State, they are a viable corporation, Kennedy & Graven does not look into their finances and stated he did know the officers are listed with the Secretary of State. Economic Development Authority Meeting Minutes May 23,2006 Page 2 of8 Nawrocki stated on page 8, (v) the redeveloper paying fee in lieu of providing on-site storm water ponding, how is the storm water ponding, going to be handled on this site and will the $37,400 cover all of the costs. Schumacher stated they will be handled with an 18" storm sewer pipe, and that he got the $37,400 figure from the City Engineers and that Kevin Hansen would deal with it if it wasn't enough. . Nawrocki stated page 8, Section 3.4 Title, has all of the title issues been resolved. Norton stated they have been. Nawrocki asked on page 13.9 Administrative Costs, what are they. Schumacher stated they are primarily legal costs for Kennedy & Graven, not staff time. Nawrocki asked if that is the case, why are we charging the residents of Parkview Villa approximately $35,000 per year for staff time. Streetar stated that was a good question. Staff could always charge their time on a project, when in fact what that does is extends the Tax Increment District. To use Parkview Villa as a comparison is okay but there is a few hundred thousand dollars in debt service every year that they don't pay. In the City we charge based on what the project costs, we don't charge for this because it is in a TIF district, the decision is when we would get paid back. Nawrocki asked about the cost of the attorney. Schumacher stated his fees are a part of this agreement. Murzyn Jr. asked if the administrative fees aren't a part of the Parkview Villa budget, so that it is voted on yearly. Streetar stated yes it is. Nawrocki asked where is a picture of the property. Streetar stated there isn't a copy in the packet as that would come later with the final plat before the Planning Commission and City Council. They have already approved the preliminary plat. Nawrocki stated we have already approved the parking, and wondered what the width of the spaces would be. Streetar stated they are 9 feet. Murzyn Jr. asked, if that wasn't already agreed upon by Gondek and Sarna's. Schumacher stated it was. Nawrocki asked what the size of the alley would be. Schumacher stated he did not see it listed in the agreement, but Kevin Hansen put it in the development agreement that it is the responsibility of the developer to meet the City standards for sidewalks, alley construction, curb and gutter, that is why we have a $94,000 escrow to make sure it is done correctly. Fehst stated it is generally 12 feet. Schumacher stated Hansen has to base the figures on the size of snowplows, maintenance trucks, etc. Resident, Joyce Shellito stated she asked to be notified about meetings, this one she wasn't notified, she received a letter a while ago about a Planning & Zoning meeting and found out that day the meeting was cancelled by calling the City, she wanted to know who pays for this. Murzyn Jr. stated the City does, he did not know what this instance was, but things are dropped from meeting agendas periodically. Resident, Michael Gondek stated there are approximately 20 to 25 trees on the site that he would hope would get some of them replaced, not the same ones, but some new ones. Murzyn Jr. asked if this agreement shows trees. Schumacher stated on the final plat that goes to the Planning & Zoning commission it will show the landscaping. Diehm stated that repeatedly they have heard from Nawrocki that our own consultant valued this property at $7.00/square foot. It was her understanding there was one statement in the report we got, which said that restaurant property in the Twin Cities goes for an amount equal to $7.00/square foot, and wanted to be clear that wasn't making any representation about the value Economic Development Authority Meeting Minutes May 23, 2006 Page 3 of8 of this property and that she felt some of that value was impacted by some of the contamination found on the property. It was important to her to make sure that was clear. Nawrocki stated he disagreed because we hired a consultant to give us an estimate of the property, and that is what they said. Nawrocki asked where M.E. Global is on this and what happens to the highway property adjacent to their property. Schumacher stated M.E. Global is just to the south, the highway property will be removed all the way from 40th down to 3?,h, in front of the Schafer Richardson project and M.E. Global would receive a new driveway. Staff has a pretty good relationship with their staff and they are in the process of executing a deed that will come before City Council. Peterson stated most of the questions that have come up tonight, have been addressed with the satisfaction of the Sarna's and Mr. Gondek, we have the alley required, we have the landscape, utilities and other issues resolved, we need to stop wasting everyone's time and make a decision. Motion by Peterson, second by Kelzenberg, to Adopt Resolution 2006-04, a Resolution Approving a Contract for Private Redevelopment, including the sale of land, between the Columbia Heights Economic Development Authority and Sarna's Inc; and furthermore, to authorize the President and Executive Director to enter into an agreement for the same. Nawrocki stated he doesn't have the same relationship that the mayor has with the Sarna's. Shellito stated she doesn't have that relationship with them either, she was told they would be getting the trees and fencing along the property, and it doesn't look like that on here. Peterson stated we require an 80% opaque fence, which Mr. Gondek doesn't want, so that is something that will be addressed at the Planning Commission meeting. His relationship with the Sarna's is that he has met with them many times, and did go to school with the Soltz brothers, who represent the Sarna's. Nawrocki stated he begged to differ, you want to ask a question at a public meeting, Shellito was right, there were discussions in the past regarding fencing, screening and so forth, and now they are trying to change them. Streetar stated that we probably won't be able to solve all of Mrs. Shellito's problems tonight, but the planning commission meeting is a great place to be to solve the issues on trees, fencing, which is a public hearing and then you'll have another opportunity to speak on these issues at the City Council meeting. Nawrocki stated then we would hear the old story, that it was all resolved at a previous meeting held someplace else. Streetar stated our ordinances are very clear as to what landscaping developers can do. Upon Vote: Jindra-aye, Nawrocki-nay, Williams- aye, Diehm-aye, Kelzenberg-aye, Peterson- aye, Murzyn-aye. Motion Carried. Fehst said you can do these deals many ways, like we could have charged you $300,000 and you would not have done the project, this was a result of constant negotiating, the property is very difficult for a one patron piece of land and wanted to thank staff and the Sarna's for all their time spent on this. Nawrocki stated as long as he brought up the subject of values, what did Taco bell pay for the car wash property. Fehst stated $500,000, so what we aren't putting anything into the property, the property were talking about tonight has a lot of problems. Economic Development Authority Meeting Minutes May 23, 2006 Page 4 of8 Preliminary Development AClreement with Sherman and Associates Streetar stated the EDA directed staff to work with have Sherman and Associates Inc. to prepare a Preliminary Development Agreement for the 39th and Central project area. This area was cited for redevelopment in 2002. Since then, we have completed the following: 1) acquired and demolished the Burger King; 2) completed inspections of all three properties, which shows they are blighted, and would qualify for TIF funding; 3) completed a phase I environmental site assessment, indicating a high probability of contaminated soils; 4) completed phase II environmental site assessment, which the report is expected to be complete in August; 5) completed real estate and fixture appraisals; 6) toured six other infill redevelopment sites in other metro area cities; and 7) prepared four redevelopment concepts with assistance of DSU, Sherman must conform to the goals of the Design Guidelines, the Comprehensive Plan, and the feedback from community meetings, as well as the planning concepts and EDA feedback, Streetar stated he also talked to Becky Loader at the library, who said they would like you to consider putting the City Library on the main level, which he felt would add to the amenities of the City and of Central Avenue. If this is something the board is interested in, please let staff know tonight. Loren Bruggemann, Vice President of Sherman and Associates, stated they have been around since 1991, do about 1,000 units of housing per year, half for rent and half for sale, currently working in Des Moines, Duluth, St. Paul, Milwaukee, this project was exposed through DSU and the EDA. His feedback is that site has potential for senior housing, with some commercial, some retail that might be separate, some value in having a City entity in the building, and that they are willing to look into any ideas the board may have. Fehst said Bruggemann mentioned the retail part might be separate, and in talking to the City Manager of Little Canada they had built a unit with retail below, that does not work, what makes it work. Bruggemann stated it depends on your site, in Robbinsdale, that wasn't a good site, in Falcon Heights it is an excellent site, you have to think of the retail as an amenity to the residents. In both cases you are talking about the rental fees, it is an underwriting qualification. Nawrocki stated they did the Bottineau Project on University and 18th, which he didn't feel would be very desirable in our community, as they are mostly rental. They also did a project in Falcon Heights, which was very nice. He strongly felt we should go out for bids and had talked to Streetar about it, who told him to call Murzyn Jr. and didn't hear anything more. He called Streetar a week or so ago and asked if we were going out for bids and he said no. Murzyn Jr. stated the board said we are going to do this and just because you called me, does mean he can just go ahead and change the board's decision to entertain a proposal about doing the development. Nawrocki stated he didn't realize the board had made a decision to go ahead with this outfit and that means we can't talk to anyone else. Murzyn Jr. stated, no, it does not. Nawrocki stated he did some checking on the company and Sherman doesn't put very much of their money into a project, but uses others, Bruggemann stated that was a very unfair statement. Fehst stated there are two things he agreed with: 1) Sherman isn't going to be involved unless they are going to make a profit; and 2) we aren't going to get into an agreement that we aren't interested in. Streetar stated if you look in the agreement, the council isn't tied to this concept, the comprehensive plan goals and the feedback we had from the residents meetings, it provides a broad goal. Mr. Nawrocki as your always saying, the market will decide, there may be more than a few opportunities. What Sherman is saying is this is the broad picture. You have a choice of what goes there. Economic Development Authority Meeting Minutes May 23, 2006 Page 5 of8 Diehm asked if we are spending any money to get into this agreement? Streetar said no. Diehm asked are they covering our costs incurred from the investigation of the property? Streetar said yes. Diehm asked are we obligated to agree to anything that they bring back to us? Streetar said No. Bruggemann stated they use a lot of market tax credit, their most significant project where they used this is the Sears project, one that if you talked to the mayor and City Council of Minneapolis they would say in the beginning the project was a no go. Streetar stated a broker from United Properties contacted him about three weeks ago about an Old Chicago Restaurant possibiy locating on Central Avenue, which he directed him to Sherman and Associates. Bruggemann stated he did taik to them, and that certainiy is a possibility for the site. Streetar stated we are taiking about three parcels, Burger King, Mady's and White Rentai, if you want to include more of the housing area, let us know tonight. Murzyn Jr. stated personally, he would like to see housing off of Central Avenue. Kelzenberg agreed. Motion by Diehm, second by Peterson, to execute the Preliminary Development Agreement between the EDA and Sherman and Associates, Inc.; and furthermore, to authorize the President and Executive Director to enter into an agreement for the same. Kelzenberg told the board he is on the library board and at their recent meeting, they decided they would like to be somewhere else, they would prefer to be somewhere else in the City. Peterson stated when we first saw the development concepts we thought they were very interesting, residents have called him saying you brag about Columbia Heights, where is the shopping, he felt this was a good mix. Sitting in this meeting we look very anti-business, but we really aren't, we want to go into an agreement with a good reiationship, we want increased tax dollars in the City, and we want to work together as partners to accomplish both of our goals. Mr. Lentness, owner of the Heights Theater stated any kind of restaurant that isn't fast food would be great for his clients. It is a strong incentive with the new housing and shopping to draw people into the City, there is something exciting and inviting in the City. Upon Vote: Nawrocki-nay, Jindra-aye, Williams-aye, Kelzenberg-aye, Peterson-aye, Diehm-aye, Murzyn-aye. Motion Carried. Industrial Park Redevelopment Update Schumacher stated Stacie Kvilvang and Mark Ruff from Ehlers, Jim Crowl, from ProSource are here to answer questions. Phase is doing quite well, six models are available, 50% of the lighting is up along the parkway, focusing on finishing the round about by June 5, in time for the jamboree, landscape architect has a couple of ideas for the city council to look at, all curbing is in from Jefferson to 5th, all storm sewers are in, grading has been done, planting will be done around the base of the holding pond, packing trails. Phase II, where the foundry was, the City has completed with the contamination, some storm sewer replacement is done, Schafer Richardson and Ryland are removing the Linseed Oil on the southeast corner, which isn't considered a contaminant by the MPCA, but they are going to remove it by there own choice. Economic Development Authority Meeting Minutes May 23, 2006 Page 6 of8 Phase III is coming along and you should see some construction in the next week or so. They will be starting the bidding process to clean up the Grief Site contamination. Williams asked if Ryland has said where the people are coming from that are buying the units. Schumacher stated about a third are from the community, with the average sale price of $247,000, which is a little higher than the $230,000 we had anticipated. Stacie Kvilvang, Ehlers & Associates stated since the EDA and City signed the Development Agreement with Schafer Richardson back in 2004, they wanted to give the board an update on the TIF status. The budgets are based on estimates and tell you how the project will perform, we don't know what the actual costs will be until you get into the project. So far, the project has over projected. There are three costs: 1) property acquisition increased by $852,000. Grief property came in below estimate and Schafer Richardson property came in at $510,000; 2) Remediation not funded by grants which is currently at $1.4 million. She commended staff in getting so much funding from other sources, as usually cities don't work this hard; and 3) relocation not funded by grants- this is over budget by $1 ,065,000. There are several factors that go into that: a) until you actually get into the property to see what they have; b) understand what is considered fixtures; and c) look at the relocation areas that would work for them. Keep in mind these businesses are not getting rich from this, if they don't use the money, they don't get it. Nawrocki asked why Schafer Richardson's property remediation was higher when they are the developer and who makes up the difference. Ruff stated that in the beginning we set up a process where we would undertake an appraisal and if they didn't like that number they would get one themselves, we would discuss the appraisals, come up with a more reasonable price and the difference would come out of TIF. Their relocation process was lower as they kept their property rented until they actually needed to relocate. Kvilvang stated there are several factors which will determine the need for additional TIF and/or a longer term of TIF: 1) final costs are higher/lower than current projected estimates; 2) the reduction in overall tax rate will generate less TIF over time; 3) unsuccessful procurement of grants by the City to offset the increased costs associated with remediation; 4) unit sale prices that are higher than anticipated can potentially reduce the term of existing or additional TIF required; and 5) interest rates on final debt may be higher or lower than estimates. Nawrocki asked if Schafer Richardson is getting tax funds now. Ruff stated no. Nawrocki asked why are we looking at it now if they aren't getting any money. Ruff stated there are a couple of reasons: 1) It is much easier to remember if the numbers are fresh in your mind and 2) there was another TIF project that we didn't do this on and the numbers came up as a surprise, so we want to avoid that happening again. Stacie has four books full of invoices on her desk of expenses that she reviews and determines which are eligible. Nawrocki stated there should be a running total on what the costs are. Ruff stated we have been verifying costs, environmental costs have not been made, so he cannot tell you about that yet, but if you wanted to know what the City has been billed by Ehlers or anyone else, he has a spreadsheet that he could show him, and that all out of pocket expenses have been billed to the developer. Nawrocki said Streetar has showed him some costs on paper, maybe dumby me, but I still don't know what the running total is for the tax increment cost. He would think everybody would be interested in how we are doing on this project. It blows his mind that nobody seems worried about it. Ruff stated he would be more than willing to come in and explain it to the board. Economic Development Anthol'ity Meeting Minutes May 23, 2006 Page 7 of8 Stacie stated she only brought the larger costs. Streetar stated in the development agreement there is a schedule H, what they are saying today is this is the difference between that $7.9 million and what we know today. Nawrocki stated he still isn't satisfied that we've got a handle on where we are running on this project, it blows his mind, and would bet in a private enterprise people would be watching the books a hell of a lot closer. Streetar stated he had to disagree and doesn't think there is evidence to support that, you've got City staff, the developer, Ehlers staff, Met Council and the auditor checking these numbers, and they don't have a problem, they understand them. Nawrocki said, okay so I'm a dumby, if you are so God Damn smart, you ought to be able to show me. Murzyn Jr. stated we understand that you may need some kind of explanation to help you understand it, that is wonderful, but lets not do it on the board's time. Nawrocki stated he is saying this is a public meeting and that kind of information should be public, that's part of it. Murzyn Jr. stated maybe we should bring in those damn books and go over the expenses page by page so we can see what they are, because you don't think the people that are required to do that are doing a good job. Nawrocki stated well your entitled to your thoughts, I'm entitled to mine, and I need to feel comfortable when I talk to the good citizens of the community that I am giving them good information. Ruff stated what Stacie is trying to say is this is what we estimated before and this is where we are today. Nawrocki stated this is not the information he has been asking for at Council meetings. He has talked to Streetar, maybe he is so damn smart and I'm so damn dumb, he isn't understanding, but he needs someone to make it clear, whether if it's you or someone else, his looking for a better financial report on where we are. Ruff stated Stacie said the information you would like to know is: 1) the tax increment district will run three years long because of all these costs, and what Stacie went over was that we can't make that factual statement, because we don't know what interest rates are, we don't know tax rates are, we don't know what property values are, and we don't know who the tax rate will be built out, so make a public statement like that we would have to come back and retract it in a year or two is probably more harmful for the Cities reputation than updating you as we are tonight. Schumacher stated he asked Jim Crowl from ProSource to be here to answer any questions on clean up issues. So if you have anything, please ask him at this time. He had to say that ProSource has been the best company to work with on this project; they check figures, they do a very good job and should be commended for it. ADMINISTRATIVE REPORTS Activity Center Streetar stated on June 5 at the City Council work session, the Community Center Committee is going to present the communications plan to City Council for comment and review. The Communications Plan is the need statement and key messages to key stakeholder groups in the City. There are two members of the committee; Barbara Miller and Kathryn Vesley that advocated strongly for a Community Center to include a Library. He suggested they come to the June 5 work session to see what direction the City Council would like to go in considering a Library. The group has met twice. The first meeting was at Murzyn Hall. The second meeting was a bus tour to two other cities (Andover and New Brighton) to see what their Community Centers are like. Mr. Nawrocki attended and the third meeting to be held tomorrow night at 7 pm at Grand Central lofts to prepare for the work session. Economic Development Authority Meeting Minutes May 23, 2006 Page 8 of8 Heritaae Heiahts On June 5th, this group will be at the work session to update the city on what they have been working on. They have met and prepared five concepts for the area. The first four are a combination of commercial and residential and the fifth one incorporates a Community Center for the simple reason that under the new eminent domain law there will be no redevelopment in that area, unless you could acquire the buildings voluntarily. Nawrocki stated he heard the legislature passed the eminent domain bill. During its travel through the legislature, Barb Goodwin tried hard to get the Columbia Heights projects exempt from the legislation bill and was not successful. The final legislation that was passed, as he understands it, exempts all projects that are underway. He had two questions: 1) is that true and 2) what is the standard for projects to be considered exempt. Streetar stated if you certified a TIF district on or before February 1st of 2006 it would be exempt. If this were a year ago, our Industrial Park would not be considered blighted, the project would not have happened. In order to be considered blighted a parcel has to exceed 100% of the estimated market value, which we don't really have out here. Nawrocki asked if the Mady's site would be eligible. Streetar said no, but that property is so contaminated it might qualify, we just don't know at this time. Jim Crowl stated there was a dump on the site years ago, ProSource took a backhoe and found extensive contamination, which starts at the Burger King site and extends to both of the other properties, we would look at the cost of the clean up, and then you would get the answer that Bob was talking about. ADJOURNMENT Motion by Peterson, second by Diehm, to adjourn the meeting at 9:28pm. All ayes. Motion Carried. Respectfully submitted, Cheryl Bakken Community Development Secretary H :\EDAminutes2006\5-23-2006 ECONOMIC DEVELOPMENT AUTHORITY (EDA) SPECIAL MEETING MINUTES July 10, 2006 CALL TO ORDERIROLL CALL President, Murzyn, Jr. called the meeting to order at 6:00 p.m. Present: Don Murzyn Jr., Patricia Jindra, Bruce Nawrocki, Tammera Diehm, Gary L. Peterson and Bruce Kelzenberg Williams arrived at 6:23pm PLEDGE OF ALLEGIANCE BUSINESS ITEMS Grand Central Lofts Proposal Streetar passed out three additional pages of drawings to the board. Streetar stated back in 2004, the EDA entered into a development agreement to facilitate the redevelopment of the vacant, 15-acre Kmart property. This is a request by New Heights Development LLC, Bruce Nedegaard for T1F assistance to construct improvements related to the completion of the Grand Central Lofts redevelopment project. The developer is asking for TIF assistance for: 1) Sanitary Sewer Upsizing and Repair. The engineering feasibility study in June of 2003 estimated the cost to be $236,814, which is now estimated at $470,431 due to increased complexity of increasing the size of the gas line, large fiber optic lines, storm sewer that rest within the right-of-way surrounding the sanitary sewer line, increased cost of polyvinylchloride pipe, and increased cost of petroleum that is used to manufacture the pipe. T1F assistance to pay for the increased cost of up to $233,617, with the developer paying the initial $236,814, which brings the requested TIF assistance of up to $22,049. 2) Retaining Wall. The developer is requesting $200,000 TIF to construct a retaining wall in conjunction with the construction of the new commercial space, which would run east along 4ih avenue to grand avenue then north along the rear of the commercial parcel to the northerly end of the commercial property. 3) Structural Public Parking. Nedegaard is proposing to build two new buildings. The first building with 31,858 sq ft in size, Axel's Bonfire Grill Restaurant on the first floor and office and retail tenants on the second floor. The second building would be 15,480 sq ft in size and includes office and retail tenants on both floors. A public parking ramp with 230 stalls, that could be owned by the EDA, such as the agreement with the Columbia Park Medical Clinic where the City owns it, but the developer maintains the ramp. In Summary, the developer is asking for additional T1F funding of $255,666 for sanitary sewer improvements and repairs, $200,000 for construction of a retaining wall, and $1,460,631 for construction of a 230 stall, EDA owned public parking facility and recommend the City Council apply for the Metropolitan Council Livable Communities grant in the amount of $974,369. Nedegaard stated the biggest cost is the fiber optics in the piping. Economic Development Authority Meeting Minutes July 10, 2006 Page 2 of4 Nawrocki stated bob's comment on the agreement with the medical clinic, that ramp was for the clinic and the community. Streetar stated this parking ramp would a public ramp, not private. Nawrocki stated there was the possibility of some additional commercial along Central, but to his knowledge there hasn't been any talk about any parking ramp. Streetar stated in the development agreement, at that time, this commercial piece was considered out plot, as nobody really new market wise it was plotted as a possibility of redeveloping approx. 10,000 square feet of commercial property. Nawrocki asked when you talk about 15 years TIF, are you talking about the whole project going out 15 years. Streetar stated under this arrangement, it would take more along the lines of 11 to 13 years because we aren't using all of the TIF. It would generate $2.58 million over 15 years. This request is for up to $2.58 million. His guess would be that it would come a little lower than this. John Feges, Land Developer for Nedegaard stated: 1) if you look at the site currently, in regards to the grad that is there, they support the bank of the Grand Central Lofts road on top of the surface, that grade is put there to retain the bank and if they put only a 10,000 square foot building along that road front, they would only have enough for surface parking. It wasn't originally anticipated that the retaining wall be there with the initial 10,000 square feet of space, as well as picking up and redeveloping the other building along Central A venue with the original proposal. Now we are concentrating on going more vertical with more square footage to accommodate the 280 units of parking. We need to retain the bank to have enough surface parking as well as the structured parking; and 2) the question of 15 years of TIF, the market place would determine how many years would be needed. There is a little bit of a turn in the market right now in regards to higher interest rates and lower absorption, which will change. Realistically we are looking at 5 to 6 years to get the second building under construction and the third one ultimately absorbed with the units Nawrocki asked how it was anticipated in the beginning to support the property other than the 10,000 square foot building along 47th. Feges stated they were considering the retaining wall from the Aldi's store and the parking, but that business venture did not follow through. With the new configuration of the schematics that we have for discussion, they are going more vertical and using less retaining wall for the building, on surface parking as well as structure parking to get the units support and an adequate amount of parking for them. Murzyn Jr. stated the value of the property is the difference of T1F in that area and asked Nedegaard what part of the parking ramp would block the view of the residents in the area. Nedegaard stated the residents would see the top of the ramp and they would be providing some landscaping around it. Nawrocki asked how many floors would be in the ramp. Feges stated it would be two floors. Economic Development Authority Meeting Minutes July 10, 2006 Page 3 of4 Kelzenberg asked Streetar about applying to Met Council to receive funding. Streetar stated met council will not provide funding for public parking, but if we can show that the City is purchasing part of the ramp, he felt very strong that we would receive the funding. Kelzenberg ask Nedegaard what would be the ramifications if they did not approve the funding. Nedegaard stated they really need the parking, they have Axle's Restaurant, Caribou Coffee and other businesses that want to get in there. Murzyn Jr. asked what the pleasure of the board would be. Streetar stated he wanted to make it clear that staff would bring this back for approval. Nawrocki stated he would approve funding from Met Council but wasn't sure he would approve funding for this project. Streetar stated if we don't get the funding, the developer would have to come back with some other ideas for funding. Murzyn Jr. stated by looking at this, what he could see is that his property value that is going down in 2007 would be going up again. We would be authorizing staff to apply for the grant and come back to the board for approval. Motion by Diehm, Second by Kelzenberg, to authorize staff to proceed to apply for grant funding, proceed to negotiate with the developer and amendment to the Development Agreement in accordance with the terms of this memorandum. All ayes. Motion Carried. Subordination and Consent Agreement Approval Murzyn Jr. stated we have another item for the agenda, the subordination and consent agreement regarding Schafer Richardson, Huset Park Development. Nawrocki stated that item was not on the agenda and for a special meeting you can't add anything to it other than what it's called for. Streetar stated under the EDA by-laws, it states you can add an item to the agenda by requesting it, such as Fehst has done and with the board making a motion to approve the added agenda item. Motion by Diehm, second by Peterson, to amend the agenda to add the Subordination and consent Agreement. All ayes. Motion Carried. Bubul stated these agreements are fairly common with this kind of redevelopment transactions particularly with a pay-as-you-go context, where you have agreed in the original contract to give pay-as-you-go payments to Schafer Richardson. Now they are going out to get their own private financing and as part of that the lender is asking you to do two things: 1) to subordinate whatever interest the City and EDA have in the property; and 2) acknowledge that Schafer Richardson is assigning over to the bank the right to get tax increment notes. So the City does not have liability, the developer goes out to get the financing with the expectation the T1F will come in over time to help pay it back. The bank wants to know they would get the rights to the T1F payments in the Economic Development Authority Meeting Minutes July 10, 2006 Page 4 of4 future. As far as the subordination goes, the EDA doesn't really have anything to subordinate. The lender wants to have a first mortgage on the property, but the EDA doesn't have a mortgage, we don't have assessment agreements. Banks like to do that and to say that no matter what if there is any suggestion that they could interfere with the banks first position, we don't want that to happen. Motion by Diehm, Second by Peterson, to approve the Subordination and Consent Agreement between the Columbia Heights Economic Development Authority (EDA) and BNC National Bank; and furthermore, to authorize the President and Executive Director to enter into an agreement for the same. Streetar stated the developer goes to the bank, gets a loan for the development, then comes to the City for TIF funding support, and if the development fails, the City would not be responsible for the costs. Bubul stated if this developer fails, they go out and get a new developer, so essentially the City would still get the TIF funding returned. It always comes back, whether it's this developer or another one, you are always going to get your money back. Williams stated Schafer Richardson went $500,000 over their own property estimate. That doesn't make sense. Streetar explained when those estimates were granted they said here is what we think. After that, we went out and got an appraisal. The new estimate was based upon their appraisal and our appraisal. We didn't know at the time of the agreement what their building was worth. It was after the appraisals were performed. The City told them that under the Development agreement it states you will have an appraisal and the decision will be based upon that appraisal, so the City didn't give anything to Schafer Richardson. Upon Vote: Jindra-aye, Diehm-aye, Williams-aye, Kelzenberg-aye, Nawrocki- nay, Peterson-aye, Murzyn-aye. Motion Carried. Streetar stated the board may, want to think about another date for the regular July EDA meeting, as there is eleven items on the HRA meeting that is to be held the same night at Parkview Villa. The meeting wouldn't start until really late. Murzyn Jr. stated he would talk to Streetar in the next week about this matter. ADJOURNMENT President, Murzyn, Jr., adjourned the meeting at 6:58 p.m. Respectfully submitted, Cheryl Bakken Community Development Secretary H:\EDAminutes2006\7 -10-2006 special COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY (EDA) Meeting of: July 25, 2006 AGENDA SECTION: Consent Agenda ORIGINATING EXECUTIVE NO:~~ DEPARTMENT: EDA DIRECTOR APPROVAL ITEM: Financial Report and Payment of Bills BY: Cher Bakken BY: DATE: Julv 18,2006 BACKGROUND: The bound Financial Report for the months of May and June 2006 draft Resolution 2006-05 is attached for review. The enclosed Financial Report lists the Summary (white), the Check History (Green), the Expenditure Guideline with Detail (blue) and Revenue Guideline with detail (yellow) for each fund. The reports cover the activity in the calendar (fiscal) year from January 1 through June 30, 2006. RECOMMENDATION: Staff will be available to answer specific questions. If the report is satisfactorily complete, we recommend the Board take affirmative action to receive the Financial Report and approve the payment of bills. RECOMMENDED MOTION: Move to approve Resolution 2006-05, Resolution of the Columbia Heights Economic Development Authority (EDA) approving the Financial Statement and Payment of Bills for the months of May and June 2006. EDA ACTION: H:\EDAConsent2006\MayJuneFin Rep 2006 EDA RESOLUTION 2006-05 RESOLUTION OF THE COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY (EDA) APPROVING THE FINANCIAL STATEMENT FOR MAY AND JUNE 2006 AND PAYMENT OF BILLS FOR THE MONTHS OF MAY AND JUNE 2006. WHEREAS, the Columbia Heights Economic Development Authority (EDA) is required by Minnesota Statutes Section 469.096, Subd. 9, to prepare a detailed financial statement which shows all receipts and disbursements, their nature, the money on hand, the purposes to which the money on hand is to be applied, the EDA's credits and assets and its outstanding liabilities; and WHEREAS, said Statute also requires the EDA to examine the statement and treasurer's vouchers or bills and if correct, to approve them by resolution and enter the resolution in its records; and WHEREAS, the financial statement for the months of May and June 2006 and the list of bills for the months of May and June 2006 are attached hereto and made a part of this resolution; and WHEREAS, the EDA has examined the financial statement and the list of bills and finds them to be acceptable as to both form and accuracy. NOW, THEREFORE BE IT RESOLVED by the Board of Commissioners of the Columbia Heights Economic Development Authority that it has examined the attached financial statements and list of bills, which are attached hereto and made a part hereof, and they are found to be correct, as to form and content; and BE IT FURTHER RESOLVED the financial statements are acknowledged and received and the list of bills as presented in writing are approved for payment out of proper funds; and BE IT FURTHER RESOLVED this resoiution and attachments are to be made a part of the permanent records of the Coiumbia Heights Economic Development Authority. Passed this _ day of ,2006. MOTION BY: SECONDED BY: AYES: NAYS: President- Don Murzyn Jr. Attest by: Cheryl Bakken, Assistant Secretary H:\Resolulions2006\EDA2006-05 fin May June 2006 COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY Meetina of July 25, 2006 AGENDA SECTION: Business Items ORIGINATING EXECUTIVE NO: 5 DEPARTMENT: DIRECTOR Community Development APPROVAL ITEM: Approve Lease Agreement between BY: Kirsten Partenheimer BY: the EDA and Michelle Bingham. DATE: July 20, 2006 PURPOSE: The EDA Commissioners are being requested to enter into a lease agreement with Michelle Bingham to operate a one-chair hair salon in the Beecroft building, commencing on July 26, 2006. BACKGROUND: The City bought the Beecroft office building at 3710 Central Avenue in 2003 with Community Development Block Grant (CDBG) funds. The building lies in a designated redevelopment area, which includes Puerto del Sol Restaurant, two single-family residential properties, which the City acquired and demolished, and the Beecroft building. Michelle Bingham, a Columbia Heights resident and a hair salon owner in the City since 1980, would like to lease the north one half of the building. She has operated her business at 425 40th Avenue NE for the past seven years. Her landlord needs to expand his business in the building and notified Ms. Bingham that she would have to move by July 12, 2006. Ms. Bingham would like to stay in Columbia Heights and sought out the space at 3710 Central Avenue. In order to operate a hair salon, Ms. Bingham would need to install a shampoo sink, remove carpet, remove a portion of the suspended ceiling, paint and clean. She will bear the financial responsibility for all improvements. As the Beecroft building is in a redevelopment area, the City is pursuing redevelopment plans for the site. The lessee understand that her lease will be terminated with 30-day's notice upon agreement with a developer for the redevelopment of the site. Summary of lease terms: . Lease commences on July 26, 2006 . Lessee shall pay rent at the rate of $625.00 per month . Lessee shall pay for gas, electric and all city utilities . Lessee shall not make any additions or improvements in or to the leased premises without prior written consent from the Building Official . Lessee, at its sole cost, shall maintain and repair the entire leased premises. . Lessee shall not sublet all or a portion of the leased premises . Lessee shall use the leased premises for its general hair salon styling, product and accessories sales and related business purposes and for no other purpose. The lease has been reviewed and approved by Mike Norton, an attorney with Kennedy and Graven. The lessee, Michelle Bingham, has reviewed the terms of the lease with staff and 1 is prepared to sign the lease. SUMMARY The lessee, Michelle Bingham, understands the terms of the lease and is prepared to enter into a lease agreement with the EDA to operate a hair salon in the Beecroft building, commencing on July 26, 2006. She will pay a rent of $625.00 a month and is responsible for all utilities, improvements and repairs associated with the leased premises. RECOMMENDATION: Staff recommends the EDA approve the lease between the EDA and Michelle Bingham. RECOMMENDED MOTION: Move to approve the lease agreement between the EDA and Michelle Bingham. Attachments: Lease agreement EDAACTION: 2 LEASE THIS INDENTURE of lease, dated as of the , 2006 by and between COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY, hereinafter referred to as "Lessor", and MICHELLE BINGHAM, hereinafter referred to as "Lessee" . "Leased Premises" - A portion of the land, easements and improvements located at 3710 Central Avenue in the City of Columbia Heights, County of Anoka and State of Minnesota, commonly known as the "Beecroft Building", and legally described on Exhibit "A" attached hereto and made a part hereof. "Lease" - This Agreement. In consideration of Lessee's performance of Lessee's obligations under this Lease, Lessor hereby leases the Leased Premises to Lessee on a month-to-month basis, commencing on July 26, 2006 (the "Commencement Date"). b. Termination Notice. This Lease may be terminated by the Lessor upon thirty (30) days' written notice to the Lessee, given by the last day of the month preceding the month in which the Lessee wishes to vacate the Leased Premises, including for any Lessee "Events of Default" as described hereafter. 2. a. Rent. Lessee shall pay rent for the Initial Term at the rate of $625.00 per month ("Rent"). Rent may be modified by Lessor upon thirty (30) days notice. b. Securitv Deposit. Lessee shall be required to place a security deposit with the Lessor in the amount equal to one month's rent. 3. Lessee shall use the Leased Premises for its general hair salon styling, product and accessories sales, and related business purposes and for no other purpose. Lessee shall comply with all applicable laws, ordinances and governmental regulations, and all recorded covenants and restrictions affecting the Leased Premises and the use of the Leased Premises. Lessee shall not do anything in or about the Leased Premises which will in any way impair or invalidate the obligation of the insurer under any policy of insurance required by this Lease. Lessee shall not use the Leased Premises for the storage, handling, transportation or disposal of any Hazardous Substance, Hazardous Waste, pollutant or contaminant as those terms are defined in 42 D.S.C. S 9601 et. seq. (CERCLA) or Minn. Stat. Ch. 115B (MERLA) except for those commonly used in the routine course of business which shall be used and stored, in compliance with all applicable laws and regulations. Lessee shall hold Lessor harmless from and indemnify Lessor against any claim or liability arising in any manner out of Lessee's use of any hazardous substance, hazardous waste, pollutant, or contaminant as described in this paragraph. 4. Lessee shall pay its own charges for telecommunications services, cellular telephone service and all other charges for water and sewer, garbage and refuse removal, and any 292889v2 MTN CL20S.38 other utility services furnished to the Leased Premises, and all other costs associated with the use, operation and management of the Leased Premises during the term of the Lease, including snow removal. Lessor shall pay for gas and electric service and all city utilities. 5. Lessor shall, at its sole cost, maintain and repair the entire Leased Premises, and all associated equipment during the term of this Lease. 6. Lessee shall not make any additions or improvements in or to the Leased Premises without Lessor's prior written consent. Prior to its vacation of the Leased Premises pursuant to this Lease, Lessee may remove all installations, physical additions or improvements to fixtures, leasehold improvements, trade fixtures, equipment, inventory, and materials in the Leased Premises on the date of this Lease and which were used or produced by Lessee on the Leased Premises in connection with Lessee's use (collectively referred to herein as "Equipment"), so long as such removal shall cause no harm to the Building, all of which shall be considered to be Lessee's Leased Premises unless left on the Leased Premises at the time of Lessee's written notice to Lessor advising Lessor that Lessee has vacated the Leased Premises or when Lessee vacates the Leased Premises. 7. Lessee shall hold Lessor harmless from and indemnify and defend Lessor against any claim or liability arising in any marmer from Lessee's use, improvement or occupancy of the Leased Premises, or relating to the death or bodily injury to any person or damage to any Leased Premises present on or located in or upon the Leased Premises, including the person and Leased Premises of Lessee's employees and all persons in or upon the Leased Premises at Lessee's invitation or sufferance including any sub-Lessee of Lessee. All personal property kept, maintained or stored on the Leased Premises shall be kept, maintained or stored at the sole risk of Lessee. Lessee agrees to pay all sums of money in respect of any labor, service, materials, supplies or equipment furnished or alleged to have been furnished to Lessee in or about the Leased Premises, and not furnished on order of Lessor, which may be secured by any mechanic's, materialmen's or other lien. Lessee may contest such lien, on the condition that Lessee first provide to Lessor cash, bond, or other security against such lien which Lessor reasonably determines to be sufficient. Nothing in this Lease shall be deemed to limit Lessor's right to have access to the Leased Premises, or to exercise its remedies under the Lease, or to make applications to a governmental entity with respect to the Leased Premises, or to take other similar action with respect to the Leased Premises as a responsible Lessor would elect. 8. a. Insurance: (i) Lessor intends to insure the building against fire and such other risks as are from time to time included in standard extended coverage insurance; (ii) Lessee shall carry insurance for the full insurable value of Lessee's merchandise, trade fixtures, furnishings, wall covering, carpeting, drapes, equipment and all other items of personal property of Lessee located on or within the Leased Premises; (ili) Lessee shall maintain all existing policies of insurance on the Leased Premises, including existing standard "all risk" property liability insurance; and (iv) any insurance policies required to be carried pursuant to this paragraph shall name Lessor as an additional insured, and Lessee shall furnish Lessor evidence 292889v2 MTN CL205-38 2 of such insurance coverage prior to commencing occupancy. Such insurance policies may not be modified or terminated without thirty (30) days advance notice to Lessor. b. Waivers of Claims: Lessor hereby waives and releases all claims, liabilities and causes of action against Lessee and its agents, servants and employees for loss or damage to, or destruction of, the Leased Premises or any portion thereof, including the Building and other improvements situated thereon, resulting from fire, explosion or the other perils covered by standard "all risk" insurance, whether caused by the negligence of any of said persons or otherwise, so long as Lessee maintains the insurance required by paragraphs 9 and 10 of this Lease. Lessee hereby waives and releases all claims, liabilities and causes of action against Lessor and its agents, servants and employees for loss or damage to, or destruction of, trade fixtures or personal Leased Premises of Lessee, located in, upon or about the Leased Premises resulting from fire, explosion or the other perils covered by standard "all risk" insurance, whether caused by the negligence of any said persons or otherwise. 9. Lessee shall, at its expense during the term of this Lease, keep in full force and effect a policy or policies of "occurrence" based commercial general liability insurance, providing coverage for bodily injury, property damage, personal injury, and contractual liability, on terms and with companies acceptable to Lessor. Such Policy or Policies shall name both Lessee and Lessor as insured parties and shall have combined policy limits in amounts not less than $1,000,000. Such policy or policies shall provide that thirty (30) days' written notice must be given to Lessor prior to cancellation thereof. Lessee shall furnish evidence satisfactory to Lessor at the time this Lease is executed that such coverage is in full force and effect. 10. Lessee agrees not to sublet any portion of the Leased Premises or to transfer or assign this Lease without obtaining the prior written consent of Lessor, which consent Lessor may grant or deny at Lessor's sole discretion. Lessor's right to assign this Lease is and shall remain unqualified. Lessee's assignment of this Lease or subleasing of the Leased Premises shall not relieve Lessee from any of Lessee's obligations under this Lease. II. If Lessee remains in possession of the Leased Premises after the expiration or termination of this Lease, without the execution of a new Lease, and with the permission of Lessor, it shall be deemed to be occupying said Leased Premises as a Lessee at sufferance, subject to all the conditions, provisions and obligations of this Lease insofar as the same can be applicable to a tenancy at sufferance, including but not limited to the duty to pay Rent as established pursuant to section 2.9 ofthis Lease. 12. Upon expiration or termination of this Lease, Lessee shall peaceably surrender the Leased Premises, including that portion of the Leased Premises leased to Lessee. In the event of termination of this Lease by Lessor, Lessee may, at its expense, remove all trade fixtures and Equipment from the Leased Premises which were installed by Lessee, so long as such removal will cause no injury to the Building, and Lessee shall be conclusively deemed to have abandoned any personal property or equipment not removed prior to the effective date of Lessor's termination of this Lease or Lessee's surrender of the Leased Premises. 292889v2 MTN CL205-38 3 13. Lessee agrees to permit Lessor and the authorized representatives of Lessor to enter the Leased Premises at all times during usual business hours (upon 24 hours' notice to Lessee and without interrupting or interfering with Lessee's business activities) for the purpose of inspecting the same and conducting such investigations, measurements, and assessments as may be desired by Lessor. 14. Lessee agrees to bind any sub-Lessee of Lessee permitted by Lessor to all the terms and conditions ofthis Lease. DEFAULT OF LESSEE: IS. a. Events Of Default: The occurrence of anyone or more of the following events shall constitute an Event of Default: (I) Lessee's failure to pay rent when due; (2) Lessee's failure to maintain the insurance required pursuant to Sections 8 and 9 above, which failure remains uncured following Lessor's written notice to Lessee of Lessee's failure to perform such obligation; (3) Lessee's attempt to sublet any portion of the Leased Premises, or assign its interest under this Lease, without the prior written consent of Lessor; (4) Lessee's failure to fully perform any of Lessee's obligations, other than the obligations referenced in subsections (I), (2) 01' (3) above, which failure remains uncured following Lessor's written notice to Lessee of Lessee's failure to perform such obligation; 01' (5) Lessee's filing, or having filed against it, any bankruptcy 01' debtor proceedings 01' proceedings for the appointment of a receiver 01' trustee of all or any portion of Lessee's Leased Premises, 01' if Lessee makes an assignment for the benefit of creditors. b. Lessor's Remedies: If an Event of Default occurs, Lessor shall have the following remedies; (I) Lessor may, but shall not be obligated to, and without notice to or demand upon the Lessee and without waiving or releasing the Lessee from any obligations of the Lessee under this Lease, payor perform any obligations of Lessee; pay any cost or expense to be paid by Lessee; obtain any insurance coverage and pay premiums therefor; and make any other payment or perform any other act on the part of the Lessee to be made and performed as provided for in this Lease, in such manner and to such extent as the Lessor may deem desirable, and in exercising any such right, may also pay all necessary and incidental costs and expenses, employ counsel and incur and pay attorneys' fees. Lessee shall pay any and all such sum or sums to Lessor upon demand with interest at seven percent (7%) per annum. 292889v2 MTN CL205-38 4 (2) Lessor may terminate this Lease by written notice to Lessee in which case Lessee shall vacate the Leased Premises in accordance with Section 12. Neither the passage of time after the occurrence of an Event of Default nor Lessor's exercise of any other remedy with regard to such Event of Default shall limit Lessor's right to terminate the Lease by written notice to Lessee. (3) Lessor may, whether or not Lessor has elected to terminate this Lease, immediately commence summary proceedings in Unlawful Detainer to recover possession of the Leased Premises. In the event of the issuance of a Writ of Restitution in such proceeding, upon Lessor's reentry upon and repossession of the Leased Premises, Lessor may remove Lessee and all other persons from the Leased Premises (subject to Lessee's right to remove its Equipment pursuant to Section 12). In the event Lessor reenters the Leased Premises pursuant to this paragraph and Lessee fails to remove its Equipment within the time period provided in Section 12, all items of Equipment not removed by Lessee within said period shall be deemed abandoned, and title thereto shall transfer to Lessor at the expiration of such period or, upon Lessee's vacation of the Leased Premises. (4) In addition to all other remedies of Lessor, Lessor shall be entitled to reimbursement upon demand of all reasonable attorneys' fees which Lessor incurs in connection with any Event of Default. (5) Lessor may initiate legal proceedings to enforce the provisions of this Lease. No remedy provided for herein or elsewhere in this Lease or otherwise available to Lessor by law, statute or equity, shall be exclusive of any other remedy, but all such remedies shall be cumulative and may be exercised from time to time and as often as the occasion may arise. 16. If fire or other casualty damages or destroys the Leased Premises or the Leased Premises incur substantial damage due to vandalism, failure of building systems or other unforeseen cause during the term of this Lease, then Lessor shall have the option of terminating this Lease. 17. a. Lessor's Disclaimer of Warranty: Lessor disclaims any warranty that the Leased Premises is suitable for Lessee's use. b. Relationship of Lessor and Lessee: The Lease does not create the relationship of principal and agent or of partnership or of joint venture or of any association between Lessor and Lessee, the sole relationships between the parties hereto being that of Lessor and Lessee under this Lease. c. Waiver: No waiver of Lessor's remedies upon the occunence of an Event of Default shall be implied from any omission by Lessor to take any action on account of such Event of Default, and no express waiver shall affect any Event of Default other than the Event of 292889v2 MTN CL205-38 5 Default specified in the express waiver and such an express waiver shall be effective only for the time and to the extent expressly stated. One or more waivers by Lessor shall not then be construed as a waiver of a subsequent Event of Default. d. Choice of Law: The laws of the State of Minnesota shall govern the validity, performance and enforcement of this Lease. e. Time: Time is of the essence in the performance of all obligations under this Lease. f. Entire Agreement and Amendment: This Lease and the Exhibits, if any, attached hereto and forming a part hereof, constitute the entire agreement between Lessor and Lessee affecting the Leased Premises and there are no other agreements, either oral or written, between them other than said documents and as are herein set fOlih. No subsequent alteration, amendment, change or addition to this Lease shall be binding upon Lessor or Lessee unless reduced to writing and executed in the same form and manner in which this Lease is executed. g. Successors and Assigns: The terms, covenants and conditions of this Lease shall be binding upon and inure to the benefit of the successors and assigns of the parties hereto, if permitted pursuant to section 10 of this Lease. 292889v2 MTN CL20S-J8 6 IN WITNESS WHEREOF, the Lessor and the Lessee have caused these presents to be executed in form and manner sufficient to bind them at law, as of the day and year first above written. Dated: ,2006. LESSEE: MICHELLE BINGHAM By: STATE OF MINNESOTA ) ) ss. ) COUNTY OF ANOKA On this day of , 2006, before me, a Notary Public within for said County, personally appeared Michelle Bingham, to me personally known, an individual, and that she signed the foregoing document. Notary Public 292889v2 MTN CL205-38 7 Dated: ,2006. LESSOR: COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY By: Walter R. Fehst Its: Executive Director By: Don Murzyn Jr. Its: President STATE OF MINNESOTA ) ) ss. COUNTYOFANOKA ) , 2006, before me, a Notary Public within and , to me personally known, who being each by me duly sworn, each did say that they are respectively the President and Executive Director of the COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY, a public body corporate and politic under the laws of the State of Minnesota, on its behalf. On this day of for said County, personally appeared Notary Public 292889v2 MTN CL205-38 8 EXHIBIT A LEGAL DESCRIPTION 3710 Central Avenue PIN: 35-30-24-44-0119 COLUMBIA HEIGHTS ANNEX TO MINNEAPOLIS, ANOKA COUNTY, MINNESOTA LOT 16 BLK 87 COL HTS ANNEX 292889v2 MTN CL20S-38 TO: EDA FROM: Kirsten Parten heimer, Community Development Specialist DATE: July 21, 2006 SUBJECT: July Update of Community Development Activity The following is an update of Community Development activity through mid July of 2006. If you have any comments or questions you may contact Bob Streetar at 763-706-3672. ACTIVITY CENTER Dan Thompson, chair of the Activity Center Advisory Committee (ACAC) updated the City Council on the work to date by the ACAC at its June 5, 2006 work session. The meeting offered the Council an opportunity to review and comment on key documents. In mid July, every household in the Columbia Heights School District received a newsletter, which informed the community of the activity center study process and invited them to the first open house, to be held on July 26 from 7-9 p.m. in Murzyn Hall. The Council-appointed Activity Center Advisory Committee will be the host. Information from all meetings will be posted on the City's website at: http://www.cLcolumbia- heights.mn.us/departments/CommCenter.asp. Or, from the main page, click on "departments," "Community development" and then "Community Activities Center" under "Redevelopment Updates." SARNA's The EDA closed with Sarna Inc. on July 1ih for the property at 40th and University Avenues. The following site preparations have begun: . Removal of frontage road and Lookout Place . MGS building at 322 40th Ave. will be demolished next week . Gas and electric will be relocated next week Soil corrections on the property will start the first week of August and once completed, construction may begin, which is anticipated at the end of August. The owners anticipate the restaurant will be open for business in late fall. 37TH AND STINSON On March 28, 2006, Len Pratt of Pratt Ordway Homes entered into a preliminary development agreement with the EDA for the redevelopment of the old Apache Theater property. Pratt has teamed with Comforts of Home, a builder of senior residential communities, to build one building with 64 assisted living units and offer for sale one-acre of land for a new municipal liquor store. Over the next couple of weeks, the developer is preparing a redevelopment proposal with accompanying financial information and will report back to the EDA. 39th AND CENTRAL Staff is meeting with Loren Brueggemann on July 31, 2006 to review their development proposal. GRAND CENTRAL LOFTS On July 10, the EDA directed staff to apply for Livable Communities Demonstration Account (LCDA) funding for a parking ramp to serve 47,698 feet of proposed commercial development. PARK VIEW Work crews have finished cleaning up PCBs found in Phase II and all soil corrections are now complete. The utilities are being installed and construction on the first five building pads has begun. Staff anticipates completing the plans and speculations in August for the cleanup of Phase III. This would include the demolition of the Grief building. The parkway will be completed by the first week of August. Landscaping, sidewalks, pedestrian lighting and street lighting have already been installed. A total of 64 townhomes have been sold in Park View, including one in Phase II>