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HomeMy WebLinkAboutEDA MIN 02-09-09 Special ECONOMIC DEVELOPMENT AUTHORITY (EDA) SPECIAL MEETING MINUTES February 9, 2009 CALL TO ORDERIROLL CALL Even though there wasn't enough members in attendance for a quorum, President, Gary L. Peterson called the meeting to order at 6:05 p.m. to start discussing the items due to the City Council meeting at 7:00 p.m. Present: Gary L. Peterson, Bruce Nawrocki, and Bruce Kelzenberg. Bobby Williams arrived at 6:35 p.m. Absent: Marlaine Szurek, Tammera Diehm and Gerry Herringer PLEDGE OF ALLEGIANCE BUSINESS ITEMS Adopt Resolution 2009-07. Second Amendment to Amended and Restated Contract for Private Redevelopment-Huset Park Development Cartney stated due to the housing market and economic conditions, Schafer has requested the contract completion dates be amended. Under Section 4.3(c) it states "if the Redeveloper is making substantial progress with respect to the redevelopment project, and is unable to meet one or more of the above referenced deadlines, the Authority and Redeveloper shall negotiate in good faith for a reasonable period to extend the time in which necessary action(s) must be taken or occur, the lapse of which time would otherwise constitute a default of this Agreement." The changes to the contract dates would be: 1) 1B completion date from 12/31/08 to 4/30/2011; 2) IIA completion date from 4-30-2009 to 6-1-2010; 3) iliA Housing and Commercial commence dated from 12-31-08 to 4-1-2010 and completion date from 12-31-2010 to 4- 1-2012; 4) IIIB housing commence from 12-31-2010 to 12-31-2012 and completion date from 12-31-2012 to 12-31-2014; and 5) IIIC housing commence from 12-31-2012 to 12- 31-2014 and completion date from 12-31-2014 to 12-31-2016. Also in the packet you received Schafer Richardson has provided a status report as requested at the last EDA meeting. Fehst stated he talked with Diehm about this item. She asked him to bring up her concerns at the meeting, as she couldn't be there. One concern was that usually a principal owner would come to the City with this type of amendment. Brad Schafer was not present. Maureen Mitchalski, from Schafer Richardson said she was representing Schafer Richardson as Brad Schafer had a commitment, but he did say he would be willing to attend another meeting. Essentially, they based the dates on their agreement with Ryland, giving them enough time to build on the lots. They did tell Ryland the extension dates they are asking for tonight would be final dates, with no exceptions. Fehst stated Diehm also asked if the City decides not to approve the extension what is the downfall. Bubul stated the contract says some of these phases would be in default. Economic Development Authority Special Meeting Minutes Febl'UalY 9, 2009 Page 2 of8 What that means is that we have two different Tax Increment Bonds that are outstanding: 1) there are T1F revenue bonds that were sold in 2007 to third party investors, which we don't have the ability to stop making payments on those and 2) there is a Pay As You Go Note for $6.5 million that is held by Schafer Richardson and our contract says we can withhold payment for any phases that are in default, but not any that are not. For example if Phase I was completed, the increment goes first to pay those bonds and second if there is left over money, it would go to pay the second note. If Phase liB was only partially complete, even though it's not completed you would have the right to stop payment on the agreement that is default. You don't have the option to terminate the note, but you certainly can withhold payments. Nawrocki asked how many years was the TIF bond for and how many payments have been made. Bubul stated the Pay-As- You-Go note goes to the year 2032 and that the bonds were sold for the first phases and were depending on the build out of the other phases. The T1F bond was sold to third parties for $2, 890, 000 and was sold in 2008, with very little interest made. The money reimbursed to Schafer Richardson was mostly for land acquisition. Peterson stated this wasn't Ryland or Schafer Richardson's fault it's the market. They build a good product. Fehst updated Williams on the discussion of this item prior to his arrival. Matian by Kelzenberg, secand by Williams, ta waive the reading .of Resalutian 2009-07, there being an ample amaunt .of capies available ta the public. All ayes. Matian Carried. Matian by Kelzenberg, secand by Williams, ta Adapt Resalutian 2009-07, a Resalutian Appraving a Secand Amendment ta Amended and Restated Cantract far Private Redevelapment between the Calumbia Heights Ecanamic Develapment Autharity, the City .of Calumbia Heights and Huset Park Develapment Carparatian; and furthermare, ta autharize the President and Executive Directar ta enter into an agreement for the same. All ayes. Mation Carried. RES.oLUTl.oN N.o. 2009-07 RESOLUTl.oN APPR.oVING A SEC.oND AMENDMENT TO AMENDED AND RESTA TED C.oNTRACT FOR PRIVATE REDEVELOPMENT BETWEEN THE COLUMBIA HEIGHTS EC.oN.oMIC DEVELOPMENT AUTH.oRITY, THE CITY .oF C.oLUMBIA HEIGHTS AND HUSET PARK DEVEL.oPMENTC.oRP.oRATl.oN BE IT RES.oL VED By the Board of Commissioners ("Board') ofthe Columbia Heights Economic Development Authority ("Authority') as follows: Section 1. Recitals. 1.01. The Authority has determined a need to exercise the powers of a housing and redevelopment authority, pursuant to Minnesota Statutes, Sections. 469.090 to 469.108 ("EDA Act'J, and is currentfy administering the Downtown CBD Redevelopment Project ("Redevelopment Project') pursuant to Minnesota Statutes, Sections 469.001 to 469.047 ("HRA Act'J, Economic Development Authority Special Meeting Minutes F ebrumy 9, 2009 Page 3 of8 1.02. The Authority, the City of Columbia Heights ("City') and Huset Park Development Corporation (the "Redeveloper') entered into a into a Contract for Private Redevelopment dated as of October 25, 2004, as amended by a First Amendment thereto dated June 16, 2008 (the "Contract'J, selting forth the terms and conditions of redevelopment of certain property within the Redevelopment Project, generally located east of University A venue and south and west of Huset Pari,. 1.03. The parties have determined a need to modify the Contract in certain respects, and have caused to be prepared a Second Amendment to Amended and Restated Contract for Private Redevelopment (the "Amended Contract'J. 1.04. The Board has reviewed the Amended Contract and finds thalthe execution thereof and performance of the Authority's obligations thereunder are in the best interest of the City and its residents. Section 2. Authoritv Aooroval: Further Proceedinos. 2.01. The Amended Contract as presented to the Board is hereby in all respects approved, subject to modifications that do not alter the substance of the transaction and that are approved by the President and Executive Director, provided that execution of the documents by such officials shall be conclusive evidence of approval. 2.02. The President and Executive Director are hereby authorized to execute on behalf of the Authority the Amended Contract and any documents referenced therein requiting execution by the Authority, and to canyout, on behalfof the Authority its obligations thereunder. Approved by the Board of Commissioners of the Columbia Heights Economic Development Authority this 9'h day of February 2009. Adopt Resolution 2009-08. Contract for Private Redevelopment-4707 Central Ave. Clark stated on January 27, 2009, the EDA reviewed the proposed changes to the Development Agreement originally approved in September of 2008 with Grand Central Commons LLC for construction of a retail and office facility at 4ih and Central, The major amendments are: 1) minimum improvements redefined as a 35,000 sq. ft. commercial/office complex with 180 stall parking ramp, which originally was 52,000 sq ft. with 210 stalls, 2) reduction of T1F from $440,000 to $300,000,3) additional language clarifying the existing five-year rule, 4) adding language stating the intention of the EDA is to attempt expanding the five-year rule to ten years, 5) the minimum assessment amount changed to 4,375,000, which will be fully assed to the properly on January 1, 2010 regardless of the level of construction completion at that time, 6) acknowledgement language that if Met Council's grant is not fully received for whatever reason, the EDA has no obligation to make up the difference, 7) elimination of phasing language as the project will be built as one project, and 8) a June 1, 2009 construction start date. In January, the EDA asked staff to look into potentially demanding additional surety to ensure that once the building has started construction, it will be completed. Staff checked with the City Attorney and is recommending no additional surety since the provisions of the agreement should provide reasonable assurance that once starled, the project will be completed. Bubul stated the key point is the grant extension and the time frame to spend the money on the development of the ramp. Fehst stated the following: 1) we have heard Aldi's really wants to come to this City, 2) we are asking the developer to starl June 1, 2009, and 3)he owns the land and is a motivated developer. So we should let Khoyratty work with Aldi's and we can work on the ramp funds. Economic Development Authority Special Meeting Minutes February 9, 2009 Page 4 of8 Motion by Kelzenberg, second by Williams, to waive the reading of Resolution 2009-08, there being an ample amount of copies available to the public. All ayes. Motion Carried. Motion by Kelzenberg, second by Williams, to Adopt Resolution 2009-08, a Resolution Approving Contract for Private Redevelopment and Resolution Awarding the sale of, and providing the form, terms, covenants and directions for the issuance of its Taxable Tax Increment Revenue Note in the maximum principal amount of $300,000; and furthermore, to authorize the President and Executive Director to enter into an agreement for the same. Nawrocki asked if staff has talked to Met Council about the funding. Clark stated staff would be meeting with a committee from Met Council next week. With this amendment to the contract, if we don't get the funding the developer would be responsible for the entire cost of the ramp. Upon Vote: All ayes. Motion Carried. RESOLUTION NO. 2009-08 RESOLUTION APPROVING CONTRACT FOR PRIVA TE REDEVELOPMENT AND RESOLUTION AWARDING THE SALE OF, AND PROVIDING THE FORM, TERMS, COVENANTS AND DIRECTIONS FOR THE ISSUANCE OF ITS TAXABLE TAX INCREMENT REVENUE NOTE IN THE MAXIMUM PRINCIPAL AMOUNT OF $300,000 BE IT RESOL VED BY the Board of Commissioners ("Board') of the Coiumbia Heights Economic Development Authority, Columbia Heights, Minnesota (the "Authority') as follows: Section 1. Authorization. 1.01. Authorization. The Authority and the City of Coiumbia Heights have heretofore approved the establishment of the Kmarl/Central Avenue Tax Increment Financing District (the "TlF Distdct') the Downtown CBD Redevelopment Project (the "Project'), and have adopted a tax increment financing plan for the purpose of financing cerlain improvements within the Project. Pursuant to Minnesota Statutes, Section 469.178, the Authority is authorized to issue and sell its bonds for the purpose of financing a porlion of the public deveiopment costs of the Project. Such bonds are payable from all or any porlion of revenues derived from the TlF District and pledged to the payment of the bonds. The Authority hereby finds and determines that it is in the best interests of the Authority that it issue and sell its Taxable Tax Increment Revenue Note in the maximum principal amount of $300,000 (the "Note ') for the purpose of financing cerlaln public redevelopment costs of the Project. 1.02. Aooroval of Aareement. The Contract for Private Redevelopment (the "Agreement') between the Authority Grand Central Commons, LLC ("Grand Central Properlies') is approved in substantially the form on file in City Hall, subject to modilicatlons that do not alter the substance of the transaction that are approved by the President and Executive Director, provided that execution of the amendment by such officials is conclusive evidence of and their approval. 1.03. Issuance. Sale. and Terms of the Note. The Authority hereby delegates to the Executive Director the determination of the date on which the Note Is to be delivered, in accordance with the Agreement. The Note shall be issued to Grand Central Commons LLC ("Owner'). The Note shall be dated as of the date of delivery, shall mature no later than February 1, 2021 and shall bear Interest at the rate of 7.0% per annum from the date of original issue of the Note. The Note is issued in consideration of payment by Owner of cerlain Public Redevelopment Costs in at least the principal amount of the Note, in accordance with the Agreement. Economic Development Authority Special Meeting Minutes February 9, 2009 Page 5 of8 Section 2. Fonn of Note. The Note shall be in substantially the following fonn, with the blanks to be properly filled in and the principal amount and payment schedule adjusted as of the date of issue: UNITED STA TE OF AMERICA STATE OF MINNESOTA COUNTY OF ANOKA COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY No. R-1 $ TAXABLE TAX INCREMENT REVENUE NOTE SERIES 20_ Rate Date of Oriainallssue 7.0% ,20_ The Columbia Heights Economic Development Authority ("Authority') for value received, certifies that it is indebted and hereby promises to pay to Grand Central Commons LLC or registered assigns (the "Owner), the principal sum of $ or so much thereof as has been from time to time advanced (the "Principal Amounl'), as provided in Ihe Agreement defined hereafter, togelher with interest on the unpaid balance thereof accrued from the date of original issue hereof at Ihe rate of _ percent per annum (the "Stated Rate"). This Note is given in accordance with that certain Contract for Private Redevelopment between the Issuer and the Owner dated as of , 2009 (the "Agreement') and the authorizing resolution (the "Resolution') duly adopted by the Authority on , 2009. Capitalized tenns used and not otherwise defined herein have the meaning provided for such terms in the Agreement unless the context clearly requires otherwise. 1. Pavments. Principal and interest ("Payments') shall be paid on August 1, 2011 and each February 1 and August 1 thereafter to and including February 1,2021 ("Payment Dates') in the amounts and from the sources set forth in Section 3 herein. Payments shall be applied first to accrued interest, and then to unpaid principal. Payments are payable by mail to the address of the Owner or such other address as the Owner may designate upon 30 days written notice to the Authority. Payments on this Note are payable in any coin or currency of the United States of America which, on the Payment Date, is legal tender for the payment of public and pl/vate debts. 2. Interest. Interest accruing from the date of original issue through and including February 1, 2011 (and not otherwise paid from Available Tax Increment) will be compounded semiannually on February 1 and August 1 of each year and added to principal. Interest shall be computed on the basis of a year of 360 days and charged for actual days principal is unpaid. 3. Available Tax Increment. All payments on this Note are payable on each Payment Date solely from and in the amount of the ''Available Tax Increment," which means, on each Payment Date, 90 percent of the Tax Increment attributable to the Commercial Properly as defined in the Agreement that is paid to the Authority by Anoka County in the six months preceding the Payment Date. The Authorily shall have no obligation 10 pay principal of and interest on this Note on each Payment Date from any source other than Available Tax Increment and the failure of the Authority to pay the entire amount of principal or interest on this Note on any Payment Date shall not constitute a default hereunder as long as the Authority pays principal and interest hereon to the extent of such pledged revenues. The Authority shall have no obligation to pay unpaid balance of principal or accrued interest that may remain after the final Payment on February 1, 2021. 4. Default. Upon an Event of Default by the Redeveloper under the Agreement, the Authority may exercise the remedies with respect to this Note described in Section 9.2 of the Agreement, the terms of which are incOlporated herein by reference. 5. Ootional Preoavment. (a) The principal sum and all accrued interest payable under this Note is pre- payable in whole or in part at any time by the Authority without premium or penalty. No partial prepayment shall affect the amount or timing of any other regular payment otherwise required to be made under this Note. (b) Upon receipt by Redeveloper of the Authority's written statement of the Excess Amount as defined in Section 3.4(e) of the Agreement, one-half of such Excess Amount will be deemed to constitute, and will be applied to, Economic Development Authority Special Meeting Minutes February 9, 2009 Page 6 of8 prepayment of the principal amount of this Note. Such deemed prepayment is effective as of the Caiculation Date as defined In Section 3.4(e) of the Agreement, and will be recorded by the Registrar in its records for the Note. Upon request ofthe Owner, the Authority will deliver to the Owner a statement of the outstanding principai balance of the Note after application of the deemed prepayment under this paragraph. 6. Nature of Obliaation. This Note is one of an issue in the total principal amount of $ issued to aid in financing certain public redevelopment costs and administrative costs of a Project undertaken by the AUt/lOrily pursuant to Minnesota Statutes, Sections 469.001 througlJ 469.047, and is issued pursuant to the Resolution, and pursuant to and in full conformity with the Constitution and laws of the State of Minnesota, including Minnesota Statutes, Sections 469. 174 to 469. 179. This Note is a limited obligation of the AuthOlity which is payable solely from the revenues pledged to the payment hereof under the Resolution. This Note and the interest hereon shall not be deemed to constitute a general obligation of the State of Minnesota or any political subdivision thereof, including, without limitation, the Authority. Neitherthe State of Minnesota, nor any political subdivisionlhereof shall be obligated to pay the principal of or interest on this Note or other costs incident hereto except from and to the extent of the revenues pledged hereto, and neither the full faith and credit nor the taxing power of the Stale of Minnesota or any political subdivision thereof is pledged to the payment of the principal of or interest on this Nole or other costs incident hereto. 7. Reaistration and Transfer. This Nole is issuable only as a fully registered note without coupons. As provided in the Resolution, and subject to ceriain limitations set forth therein, this Note is transferable upon the books of the Authority kept for that purpose at the principal office of the City Chief Financiat Officer, by the Owner hereotin person or by such Owner's attomey duly authorized in writing, upon surrender of this Note together with a written instrument of transfersatisfactory to the Authority, duly executed by the Owner. Upon such transferor exchange and the payment by the Owner of any tax, fee, or govemmental charge required to be paid by the Authority with respect to such transfer or exchange, there will be issued in the name of the transferee a new Note ofthe same aggregate principal amount, bearing interest at the same rate and maturing on the same dates. This Note shall not be transferred to any person unless the Authority has been provided with an opinion of counselor a certificate of the transferor, in a form satisfactory to the Authority, that such transfer is exempt from registration and prospectus delivery requirements of federal and applicable state securilies laws. IT IS HEREBY CERTIFIED AND RECITED that all acts, conditions, and things required by the Constitution and laws of the State of Minnesota to be done, to exist, to happen, and to be perfonned in order to make this Note a valid and binding limited obligation of the Authority according to its tenns, have been done, do exist, have happened, and have been performed in due fonn, time and manner as so required. iN WiTNESS WHEREOF, the Board of Commissioners of the Columbia Heights Economic Deveiopment Authority have caused this Note to be executed with the manual signatures of its President and Executive Direclor, all as of the Date of Original Issue specified above. COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY President-Gary L. Peterson Executive Director-Walter R. Fehst REGISTRA TlON PROVISIONS The ownership of the unpaid balance of the within Note is registered in the bond register of the City Chief Financial Officer, in the name of the person last listed below. Dale of Registration Registered Owner Signature of City Chief Financial Officer Grand Central Commons LLC Federal Tax I.D. No. Seclion 3. Tenns. Execulion and Deliverv. 3.01. Denomination. Pavment. The Note shall be issued as a single typewritlen note numbered R-1. Economic Development Authority Special Meeting Minutes FebrualY 9, 2009 Page 7 of8 The Note shall be issuable only in fully regislered form. Principal of and inlerest on the Nole shall be payable by check or draft issued by the Registrar described herein. 3.02. Dates: Interest Pavmenl Dates. Principal of and interest on Ihe Nole shall be payable by mail to the owner of record thereof as of the close of business on the fifteenth day of the month preceding the Payment Date, whether or not such day is a business day. 3.03. Reaistration. The Authority hereby appoints the City Chief Financial Officer to perform the functions of registrar, transfer agent and paying agent (the "Registrar). The effect of registration and the rights and duties of the Authority and the Registrar with respect thereto shall be as follows: (a) Reaister. The Registrar shall keep atits office a bond register in which the Registrar shall provide for the registration of ownership of the Note and the registration of transfers and exchanges of the Note. (b) Transfer of Note. Upon surrender for transfer of the Note duly endorsed by the registered owner thereof or accompanied by a written instrument oftransfel; in form reasonably satisfactory to the Registrar, duly executed by the registered owner thereof or by an attorney duly authorized by the registered owner in writing, the Registrar shall authenticate and deliver, in the name of the designated transferee or transferees, a new Note of a like aggregate principal amount and maturity, as requested by the transferor. Notwithstanding the foregoing, the Note shall not be transferred to any person unless the Authority has been provided with an opinion of counselor a certificate of the transferor, in a form satisfactory to the Authority, that such transfer is exempt from registration and prospectus delivery requirements of federal and applicable state securities laws. The Registrar may close the books for registration of any transfer after the fifteenth day of the month preceding each Payment Date and until such Payment Date. (c) Cancellation. The Note surrendered upon any transfer shall be promptly cancelled by the Registrar and thereafter disposed of as directed by the AuthoJity. (d) Irnorooer or Unauthorized Transfer. When the Note is presented to the RegIstrar for transfer, the Registrar may refuse to transfer the same until it is satisfied that the endorsement on such Note or separate instmment of transfer is legally authorized. The Registrar shall incur no liability for its refusal, in good faith, to make transfers, which it, in its judgment, deems improper or unauthoJized. (e) Persons Deemed Owners. The AuthoJity and the Registrar may treat the person in whose name the Note is at any time registered in the bond register as the absolute owner of the Note, whether the Note shall be overdue or not, for the purpose of receiving payment of, or on account of, the principal of and interest on such Note and for all other purposes, and all such payments so made to any such registered owner or upon the owners order shall be valid and effectual to satisfy and discharge the liability of tile Authority upon such Note to the extent of the sum or sums so paId. (f) Taxes. Fees and Chames. For every transfer or exchange of the Note, the Registrar may impose a charge upon the owner thereof sufficIent to reImburse the Registrar for any tax, fee, or other governmental charge required to be paid with respect to such transfer or exchange. (g) Mutilated. Lost. Stolen or Destroved Note. In case any Note shall become mutilated or be lost, stolen, or destroyed, the RegIstrar shall deliver a new Note of like amount, maturity dates and tenor in exchange and substitution for and upon cancellation of such mutilated Note or in lieu of and in substitution for such Note lost, stolen, or destroyed, upon the payment of the reasonable expenses and charges of the Registrarin connection therewith; and, in the case the Note lost, stolen, or destroyed, upon filing with the Registrarofevidence satisfactory to ifthat such Note was lost, stolen, or destroyed, and of the ownership thereof, and upon fumishing to the Registrar of an appropriate bond or indemnity in form, substance, and amount satisfactory to it, in which both the Authority and the Registrar shall be named as obligees. The Note so surrendered to the Registrar shall be cancelled by it and evidence of such cancellation shall be given to the Authority. If the mutilated, lost, stolen, or destroyed Note has already matured or been called for redemption in accordance with its ierms, it shall not be necessary to issue a new Note pJior to payment. 3.04. Preoaration and Deliverv. The Note shall be prepared under the direction of the Executive Director and shall be executed on behalf of the Authority by the signatures of its President and Executive Director. In case any officer whose signature shall appear on the Note shall cease to be such officer before the delivery of the Note, such signature shall nevertheless be valid and sufficient for all purposes, the same as if such officer had remained in office until delivery. When the Note has been so executed, it shall be delivered by the Executive Director to the Ownerthereofin accordance with the Agreement. Section 4. Security Provisions. Economic Development Authority Special Meeting Minutes Februmy 9, 2009 Page 8 of 8 4.01. Pledae. The Authority hereby pledges to the payment of the principal of and interest on the Note all Available Tax Increment under the tenns and as defined In the Note. Available Tax Increment shall be applied to payment of the principal of and Interest on the Note in accordance with the tenns of the fonn of Note set faith in Section 2 of this resolution. 4.02. Bond Fund. Until the date the Note is no longer outstanding and no prlncipalthereof orinterestthereon (to the extent required to be paid pursuant to tlJis resotution) remains unpaid, the Authority shall maintain a separate and special "Bond Fund" to be used forno purpose other than the payment oflhe principal of and interest on the Note. The Authority irrevocably agrees to appropriate to the Bond Fund in each year all Available Tax Increment. Any Available Tax tncrement remaining in the Bond Fund shall be transferred to the Authority's account for the T1F District upon termination of the Note in accordance with its terms. 4.03. Additional Bonds. tflhe Authority issues any bonds ornotes secured by Availabte Tax Increment, such additional bonds or notes are subordinate to the Note in all respects. Section 5. Celtification of Proceedinos. 5.01. Celtification of Proceedinos. The officers of the Authority are hereby authorized and directed to prepare and furnish to the Owner of the Note celtified copies of all proceedings and records of the Authority, and such other affidavits, celtificates, and infonnation as may be required to show the facts relating to the legality and marketability of the Note as the same appear from the books and records under their custody and control or as otherwise known to them, and all such celtified copies, ce/1ificates, and affidavits, including any heretofore furnished, sll811 be deemed representations of the Authority as to the facts recited therein. Section 6. Effective Date. This resolution shall be effective upon execution of the Agreement. Adopted this 9th day of February 2009. ADJOURNMENT President, Peterson, adjourned the meeting at 6:51p.m. Respectfully submitted, ~~ Cheryl Bakken Community Development Secretary G :\EDAminutes2009\2 -9-2009