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HomeMy WebLinkAboutEDA AGN 07-21-16 SpecialCH COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY AGENDA 1. Call to Order 2. Roll Call 3. Pledge of Allegiance SPECIAL MEETING THURSDAY JULY 21, 2016 4:00 pm City Hall Conference Room 1 590 40th Avenue NE Columbia Heights, MN 55421 BUSINESS ITEMS 4. First Amendment to Second Amended and Restated Contract for Private Redevelopment — Resolution 2016 -17 Motion: Move to waive the reading of Resolution No. 2016 -17, there being ample copies available to the public. Motion: Move to adopt Resolution 2016 -17, a resolution approving a First Amendment to the Second Amended and Restated Contract for Private Redevelopment between the City of Columbia Heights, the Columbia Heights Economic Development Authority, and Columbia Heights Leased Housing Associates I, LLLP. OTHER BUSINESS S. Forms of Cancellation — Tollberg Homes Update 6. 4641/43 Polk St. Acquisition Update 7. Adjourn The next regularly scheduled EDA meeting will be held on August 1, 2016. CH COLUMBIA HEIGHTS AGENDA SECTION BUSINESS ITEM NO. 4 MEETING DATE JULY 21, 2016 CITY OF COLUMBIA HEIGHTS - ECONOMIC DEVELOPMENT AUTHORITY ITEM: First Amendment to Second Amended and Restated Contract for Private Redevelopment DEPARTMENT: Community Development CITY MANAGER'S APPROVAL: BY /DATE: Keith Dahl, July 8, 2016 BY /DATE: BACKGROUND: April 04, 2016, The Columbia Heights Economic Development Authority (the "EDA ") approved resolution 2016 -08 authorizing the execution of the Second Amended and Restated Contract for Private Redevelopment (the "Contract ") between City of Columbia Heights (the "City Council ") and Columbia Heights Leased Housing associates I, LLLP (the "Redeveloper "). The Contract was fully executed by all parties on April 19, 2016. After the Contract was fully executed, the Redeveloper requested an extension on the construction deadlines and the deadline for payment of the administrative fee due to financial delays. The Redeveloper's financial delays stem from the general market conditions present with affordable housing. In order for the Huset Park Senior Living Apartments to be considered affordable housing, a minimum of 55% of the project needs to be funded by tax credit bonds. However, the market for tax credit bonds has been depleted, which has delayed the Redeveloper to meet the minimum financial requirement for this project. More tax credit bonds become available August 1, 2016 for the Redeveloper to meet the minimum financial requirement. A First Amendment to the Contract has been proposed to extend the required deadlines for the commencement and completion of the construction for the Huset Park Senior Living development project and to designate an extended deadline for the Redeveloper's payment of the Administrative Fee. Attached for review is Resolution 2016 -17 and the First Amendment to the Contract. The City Council approved the Contract on July 11, 2016. STAFF RECOMMENDATION: Staff recommends approval of the First Amendment to Second Amended and Restated Contract for Private Redevelopment. RECOMMENDED MOTION(S): Motion: Move to waive the reading of Resolution No. 2016 -17, there being ample copies available to the public. Motion: Move to adopt Resolution 2016 -17, a resolution approving a First Amendment to the Second Amended and Restated Contract for Private Redevelopment between the City of Columbia Heights, the Columbia Heights Economic Development Authority, and Columbia Heights Leased Housing Associates I, LLLP. ATTACHMENTS: Resolution 2016 -17 (2 page) First Amendment to Second Amended and Restated Contract for Private Redevelopment (5 pages) EDA Letter EDA RESOLUTION NO. 2016-17 RESOLUTION APPROVING A FIRST AMENDMENT OF A SECOND AMENDED AND RESTATED CONTRACT FOR PRIVATE REDEVELOPMENT BETWEEN THE COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY, THE CITY OF COLUMBIA HEIGHTS, AND COLUMBIA HEIGHTS LEASED HOUSING ASSOCIATES I, LLLP BE IT RESOLVED BY the Board of Commissioners (the `Board ") of the Columbia Heights Economic Development Authority (the "Authority ") as follows: Section 1. Recitals. 1.01. Pursuant to their authority under Minnesota Statutes, Sections 469.090 to 469.1082 and 469.174 to 469.1794, as amended, the Authority and the City of Columbia Heights (the "City") established the Huset Park Tax Increment Financing District within the Downtown CBD Redevelopment Project (the "Project "), for the purpose of facilitating the redevelopment of certain substandard property within the Project. 1.02. the Authority, the City, and Columbia Heights Leased Housing Associates I, LLLP (the "Redeveloper ") entered into that certain Second Amended and Restated Contract for Private Redevelopment dated as of October 30, 2015 (the "Contract"), amending and restating certain prior agreements and providing, among other things, for the construction by the Redeveloper of certain improvements (the "Minimum Improvements ") on the property legally described within the Contract (the "Redevelopment Property"), and the disbursement of an administrative fee by the Redeveloper to the Authority (the "Administrative Fee ") in connection with the issuance by the Authority of its Tax Increment Revenue Refunding Bonds (Huset Park Area Redevelopment Project), Series 2016 (the "Bonds "). 1.03. The parties have negotiated and propose to execute a First Amendment to the Contract (the "First Amendment") to clarify the definition of "Minimum Improvements," to extend the required deadlines for the commencement and completion of construction of the Minimum Improvements, and to designate an extended deadline for payment of the Administrative Fee. 1.04. The City Council of the City approved the First Amendment at its regular meeting on July 11, 2016. Section 2. First Amendment Approved. 2.01. The First Amendment 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 482900v1 MNI CL205 -23 approved by the President and Executive Director, provided that execution of the First Amendment 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 First Amendment and any documents referenced therein requiring execution by the Authority, and to carry out, on behalf of the Authority, its obligations thereunder. 2.03. Authority staff and consultants are authorized to take any actions necessary to carry out the intent of this resolution. Adopted by the Board of Commissioners of the Columbia Heights Economic Development Authority this July 21, 2016. President ATTEST: Secretary 482900vI MNI CL205 -23 FIRST AMENDMENT TO SECOND AMENDED AND RESTATED CONTRACT FOR PRIVATE REDEVELOPMENT This agreement is made as of 2016, by and between the COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY, a public body politic and corporate (the "Authority"), the CITY OF COLUMBIA HEIGHTS, a Minnesota municipal corporation (the "City"), and COLUMBIA HEIGHTS LEASED HOUSING ASSOCIATES I, LLLP, a Minnesota limited liability limited partnership (the "Redeveloper "). WHEREAS, the Authority, the City, and the Redeveloper entered into that certain Second Amended and Restated Contract for Private Redevelopment dated as of October 30, 2015 (the "Contract"), amending and restating certain prior agreements and providing, among other things, for the construction by the Redeveloper of certain improvements (the "Minimum Improvements ") on the property legally described within the Contract (the "Redevelopment Property"), and the disbursement of an administrative fee by the Redeveloper to the Authority (the "Administrative Fee ") in connection with the issuance by the Authority of its Tax Increment Revenue Refunding Bonds (Huset Park Area Redevelopment Project), Series 2016 (the "Bonds "); and WHEREAS, the parties have determined to revise the Contract to clarify the definition of "Minimum Improvements," to extend the required deadlines for the commencement and completion of construction of the Minimum hnprovements, and to designate an extended deadline for payment of the Administrative Fee. NOW, THEREFORE, in consideration of the premises and the mutual obligations of the parties hereto, each of them does hereby covenant and agree with the other as follows: 1. Amendment to Section 1.1 of the Contract. The definition of "Minimum Improvements" in Section 1.1 of the Contract is amended as follows: "Minimum Improvements" means the construction on the Redeveloper Parcels of a multistory building containing 191 units of multifamily rental housing, along with associated underground structured parking and surface parking. 2. Amendment to Section 3.5(b) of the Contract. Section 3.5(b) of the Contract is amended as follows: (b) hi conjunction with execution of this Agreement, the Authority has refunded the Series 2007 Bonds to achieve debt service savings (such refunding bonds hereinafter referred to as the "Refunding Bonds "), and the Redeveloper has paid to the Authority funds in the amount of $107,325, representing the total actual costs of issuance (including underwriter's discount) of the Refunding Bonds. The Redeveloper agrees that no later than August 31, 2016, the Redeveloper will pay to the Authority an administrative fee of $100,000, which will be deposited into a legally authorized redevelopment fund to be designated by the Authority or City. 3. Amendment to Section 4.3(a) of the Contract. Section 4.3(a) of the Contract is amended as follows: Section 4.3. Commencement and Completion of Construction. (a) Subject to Unavoidable Delays, the Redeveloper shall commence constriction of the Minimum Improvements by March 1, 2017. Subject to Unavoidable Delays, the Redeveloper shall complete the constriction of the Minimum Improvements by September 30, 2018. All work with respect to the Minimum Improvements to be constructed or provided by the Redeveloper on the Redeveloper Parcels shall be in conformity with the Construction Plans as submitted by the Redeveloper and approved by the Authority. 4. Miscellaneous. Except as amended by this Amendment, the Contract shall remain in full force and effect. Upon execution, Redeveloper shall reimburse the Authority for all out -of pocket -costs incurred by the Authority in connection with negotiating, drafting and approval of this Amendment. (Remainder of this page intentionally left blank.) IN WITNESS WHEREOF, the Authority, the City, and the Redeveloper have caused this Amendment to be duly executed by their duly authorized representatives as of the date first above written. COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY By Its President By Its Executive Director STATE OF MINNESOTA ) SS. COUNTY OF ANOKA ) The foregoing instrument was acknowledged before me this day of , 2016 by Gary Peterson and Walt Fehst, the President and Executive Director of the Columbia Heights Economic Development Authority, on behalf of the Authority. Notary Public Authority signature page to First Amendment to Second Amended and Restated Contract for Private Redevelopment CITY OF COLUMBIA HEIGHTS By Its Mayor By Its City Manager STATE OF MINNESOTA ) SS. COUNTY OF ANOKA ) The foregoing instrument was acknowledged before me this _ day of 2016 by Gary Peterson and Walt Fehst, the Mayor and City Manager of the City of Columbia Heights, a Minnesota municipal corporation, on behalf of the City. Notary Public City signature page to First Amendment to Second Amended and Restated Contract for Private Redevelopment COLUMBIA HEIGHTS LEASED HOUSING ASSOCIATES 1, LLLP, a Minnesota Limited Liability Limited Partnership By: Columbia Heights Leased Housing Associates I, LLC Its General Partner STATE OF MINNESOTA ) ) SS. COUNTY OF HENNEPIN ) Mark S. Moorhouse Its Senior Vice President The foregoing instrument was acknowledged before me this day of , 2016 by Mark S. Moorhouse, the Senior Vice President of Columbia Heights Leased Housing Associates I LLC, a Minnesota limited liability company, the General Partner of Columbia Heights Leased Housing Associates I, LLLP, a Minnesota limited liability limited partnership, on behalf of the partnership. Notary Public THIS DOCUMENT DRAFTED BY: Kennedy & Graven, Chartered (MNI) 470 US Bank Plaza 200 South Sixth Street Minneapolis, MN 55402 (612) 337 -9300 Redeveloper signature page to First Amendment to Second Amended and Restated Contract for Private Redevelopment CH COLUMBIA HEIGHTS AGENDA SECTION OTHER BUSINESS ITEM NO. 5 MEETING DATE JULY 21, 2016 CITY OF COLUMBIA HEIGHTS - ECONOMIC DEVELOPMENT AUTHORITY ITEM: Forms of Cancellation — Tollberg Homes Update DEPARTMENT: Community Development CITY MANAGER'S APPROVAL: BY /DATE: Keith M Dahl, July 11, 2016 BY /DATE: BACKGROUND: In January 2016, the EDA approved resolution 2016 -03, authorizing the approval of a Purchase and Redevelopment Agreement with Tollberg Homes for six residential lots to be sold at $22,500 per lot. In March 2016, the EDA approved resolution 2016 -06, authorizing a reduction in the purchase price for two lots to be sold at $18,500 per lot, due to unexpected sewer and water improvements. As of July 2016, Tollberg Homes has purchased four of the six residential lots; two lots for $22,500 per lot and two lots for $18,500 per lot. The remaining two lots, 4606 Polk Street and 4641 Tyler Street, have yet to close because of extensive soil remediation required before a single - family home can be constructed. Tollberg Homes has indicated that by purchasing these remaining two lots, this project will no longer become profitable for them. Thus, Tollberg Homes has requested a cancellation of the Purchase and Redevelopment Agreements for the two lots listed as follows: 4606 Polk Street NE PID 25- 30 -24 -33 -0030 4641 Tyler Street NE PID 25- 30 -24 -33 -0038 Pursuant of section 10 of the Purchase and Redevelopment Agreement, Tollberg Homes must send written notice to rescind the Purchase and Redevelopment Agreement if the soil is determined to be unacceptable. In which case, the Purchase and Redevelopment Agreement is null and void. Attached is the Cancellation Notice sent by Tollberg Homes. Since Tollberg Homes has cited that the soil conditions are the main concern with purchasing the remaining two lots, they are entitled to be refunded all the earnest money deposited. Thus, the EDA will refund $4,000 of the earnest money deposited upon execution of the Forms of Cancellation. RECOMMENDED MOTION(S): No Motion required. ATTACHMENTS: 1. Cancellation Notice — Tollberg Homes 2. Form of Cancellation for 4606 Polk Street (1 Page) 3. Form of Cancellation for 4641 Tyler Street (1 Page) City of Columbia Heights - EDA Letter �I I TOLL: - July 12, 2016 Keith Dahl or whom it may concern Re: The PA's for 4606 Polk St. and 4641 Tyler St. Keith, Tollberg Homes would like to rescind the two purchase agreements for the properties listed above. While working on the other lots purchased from eh city of Columbia Heights it was discovered that there is significant soil issues making the project unfeasible. We formally request a cancellation of both purchase agreements and return of the EM provided to the city. Sincerely, Wade Tollefson CANCELLATION OF PURCHASE AND REDEVELOPMENT AGREEMENT FOR 4606 POLK STREET NE, COLUMBIA HEIGHTS, MINNESOTA This Cancellation of Purchase and Redevelopment Agreement entered into this day of July, 2016, by and between Columbia Heights Economic Development Authority, a public body corporate and politic under the laws of the State of Minnesota ( "EDA ") and Tollberg Homes, LLC, a Minnesota limited liability company ( "Tollberg "). WHEREAS, EDA and Tollberg entered into a Purchase and Redevelopment Agreement, dated January 4, 2016 (the "Purchase Agreement ") regarding the real property legally described as Lot Thirteen (13), except the North Half (NI/2), the North Thirty Feet (N30') of Lot Fourteen (14), Block Two (2), Sheffield's Second Subdivision, Anoka County, Minnesota, commonly referred to as 4606 Polk Street NE, Columbia Heights, MN (the "Property "); WHEREAS, EDA and Tollberg desire to terminate the Purchase Agreement. NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, EDA and Tollberg hereby agree as follows: 1. Tollberg represents and warrants to EDA that Tollberg has not assigned, transferred, or conveyed its interest in the Purchase Agreement or any interest in the Property. 2. Tollberg acknowledges reimbursement of its $2,000.00 Earnest Money paid pursuant to the Purchase Agreement. 3. The Purchase Agreement is hereby cancelled, terminated and null and void and neither party shall have any further rights or obligations thereunder. Tollberg hereby acknowledges that it has no interest in the Property. IN WITNESS WHEREOF the undersigned have executed this instrument the day and date first above written. ECONOMIC DEVELOPMENT TOLLBERG, LLC AUTHORITY OF THE CITY OF CRYSTAL By Its President By Its Executive Director 4828541 CBRCL205 -56 M Its President and Chief Manager CANCELLATION OF PURCHASE AND REDEVELOPMENT AGREEMENT FOR 4641 TYLER STREET NE, COLUMBIA HEIGHTS, MINNESOTA This Cancellation of Purchase and Redevelopment Agreement entered into this _ day of July, 2016, by and between Columbia Heights Economic Development Authority, a public body corporate and politic under the laws of the State of Minnesota ( "EDA ") and Tollberg Homes, LLC, a Minnesota limited liability company ( "Tollberg "). WHEREAS, EDA and Tollberg entered into a Purchase and Redevelopment Agreement, dated January 4, 2016 (the "Purchase Agreement") regarding the real property legally described as Lot Twenty -five (25) and the South 20 feet of Lot Twenty -six (26), Block Two (2) of Sheffield's Second Subdivision, Anoka County, Minnesota, commonly referred to as 4641 Tyler Street NE, Columbia Heights, MN (the "Property "); WHEREAS, EDA and Tollberg desire to terminate the Purchase Agreement. NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, EDA and Tollberg hereby agree as follows: 1. Tollberg represents and warrants to EDA that Tollberg has not assigned, transferred, or conveyed its interest in the Purchase Agreement or any interest in the Property. 2. Tollberg acknowledges reimbursement of its $2,000.00 Earnest Money paid pursuant to the Purchase Agreement. 3. The Purchase Agreement is hereby cancelled, terminated and null and void and neither party shall have any further rights or obligations thereunder. Tollberg hereby acknowledges that it has no interest in the Property. IN WITNESS WHEREOF the undersigned have executed this instrument the day and date first above written. ECONOMIC DEVELOPMENT TOLLBERG,LLC AUTHORITY OF THE CITY OF CRYSTAL By Its President By Its Executive Director 482850v1 CBR CL205 -58 Its President and Chief Manager