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HomeMy WebLinkAboutNov 27, 2017 ECONOMIC DEVELOPMENT AUTHORITY (EDA) MINUTES OF THE SPECIAL MEETING OF NOVEMBER 27, 2017 The meeting was called to order at 6:30 pm by President Marlaine Szurek. Members Present: Murzyn, Schmitt, Buesgens, Szurek, Herringer, Williams, and Novitsky Staff Present: Walt Fehst, Keith Dahl, and Shelley Hanson Also present: Owen Metz from Columbia Heights Leased Housing Assoc. III LLC and Martha Ingram-Legal Counsel from Kennedy & Graven PLEDGE OF ALLEGIANCE- RECITED BUSINESS ITEMS 1. Approval Consideration of First Amendment to the Contract for Private Redevelopment-Resolution 2017-33 Dahl explained that on July 10, 2017, the Columbia Heights Economic Development Authority (the “EDA”), as well as the City Council (the “Council”) of the City of Columbia Heights (the “City”) approved the establishment of the 47th and Grand tax increment financing (commonly referred to as “TIF”) district, and adopted the TIF plan for said TIF district. Therefore, pursuant to State Statute, Sections 469.174 to 469.1794 the EDA was authorized to undertake and provide TIF assistance to facilitate redevelopment within the 47th and Grand TIF district. On August 7, 2017, the EDA approved Resolution 2017-23, a resolution which approved a Contract for Private Redevelopment by and between the Columbia Heights Leased Housing Associates III, LLLP (the “Developer”) and awarded the sale of, and provided the form, terms, covenants and directions for the issuance of its TIF revenue note (the “TIF Assistance”) in the amount of $1,482,000 projected over 12 years. This amount of TIF Assistance was originally found to be necessary for the proposed development of a 173 unit multi-family, workface housing project (the “Proposed Development”) on the corner of 47th and Grand Avenue NE. However, since the original approval of the TIF Assistance for the Proposed Development, the Developer has reduced the amount of units in the Proposed Development from 173 units to 148 units. Therefore, because the unit reduction constitutes a substance alteration of the Contract for Private Redevelopment, the EDA has the legal right to reevaluate the amount of TIF Assistance provided to the Developer for the Proposed Development. And, based on analyses conducted by Ehlers, TIF Assistance in the amount of $1,170,000 over 12 years would be substantially sufficient for the Proposed Development to become financially feasible. Attached for consideration is the proposed First Amendment to the Contract for Private Redevelopment in which TIF Assistance for the Proposed Development has been reduced. Again, this agreement constitutes a financial obligation of the EDA to reimburse the Developer for a portion of qualified costs related to land acquisition, soil correction, site preparation, and public improvements for the Proposed Development. Staff recommends approval of Resolution 2017-33 as presented. EDA Special Meeting Page 2 Nov 27, 2017 Questions from members: Williams questioned whether this would reduce the amount we receive through the TIF process. Ingram said this contract has nothing to do with the bonds or revenue specifics received by the City. That issue will go to the City Council later tonight. Motion by Williams, seconded by Schmitt, to waive the reading of Resolution 2017-33, there being ample copies available to the public. All ayes. MOTION PASSED. Motion by Williams, seconded by Schmitt, to adopt Resolution 2017-33, a resolution approving a First Amendment to the Contract for Private Redevelopment between the Columbia Heights Economic Development Authority and Columbia Heights Leased Housing Associates III, LLLP. All ayes. MOTION PASSED. EDA RESOLUTION NO. 2017-33 RESOLUTION APPROVING A FIRST AMENDMENT TO CONTRACT FOR PRIVATE REDEVELOPMENT BETWEEN THE COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY AND COLUMBIA HEIGHTS LEASED HOUSING ASSOCIATES III, LLLP BE IT RESOLVED BY the Board of Commissioners (the “Board”) of the Columbia Heights Economic Development Authority (the “Authority”) as follows: 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 47th and Grand 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 and Columbia Heights Leased Housing Associates III, LLLP (the “Redeveloper”) entered into that certain Contract for Private Redevelopment dated as of August 7, 2017 (the “Contract”), 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”). 1.03. Based on a decrease in size and number of units of the Minimum Improvements, the parties have negotiated and propose to execute a First Amendment to the Contract (the “First Amendment”) to revise the definition of “Minimum Improvements” and to provide revised terms of the Note and revised Minimum Market Values of the Minimum Improvements resulting from said decrease in scope. 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 approved by the President and Executive Director, provided that execution of the First Amendment by such officials shall be conclusive evidence of approval. EDA Special Meeting Page 3 Nov 27, 2017 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, including without limitation the Assessment Agreement, and to carry out, on behalf of the Authority, its obligations thereunder. 2.03. Auth ority 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 27th day of November, 2017.        ___________________________________________ President ATTEST: ______________________________ Secretary SEE APPENDIX A- ASSESSMENT AGREEMENT-AT END OF MINUTES 2. Approval Consideration of Collateral Assignment of Tax Increment Financing Revenue Note- Resolution 2017-34 Dahl told members that the Columbia Heights Economic Development Authority (the “EDA”) has been requested by the Columbia Heights Leased Housing Associates III, LLLP (referred to as “Dominium”) and the CitiBank, N.A. (the “Lender”) to approve a Collateral Assignment of its Tax Increment Revenue Note, Series 2017 (the “TIF Note”) in connection to the Grand Central Flats Project located on the corner of 47th and Grand Avenue NE. Dominium and the Lender have agreed to enter into a Construction Loan Agreement to finance part of the acquisition and construction costs related to the Grand Central Flats Project. The Lender has requested that Dominium provide collateral for the Construction Loan Agreement. Therefore, Dominium has offered the TIF Note as collateral for the Construction Loan Agreement. However, in order for the Lender to accept the TIF Note as collateral, the EDA is required to approve the Collateral Assignment and agree to certain other matters fully contained within the attached Collateral Assignment of Interest in Payments under Tax Increment Revenue Note pursuant to the Contract for Private Redevelopment by and between the EDA and Dominium (the “TIF Agreement”), but also the First Amendment to the TIF Agreement as well. Please note: The Collateral Assignment of the TIF Note is merely an assurance to the Lender that if Dominium defaults on the Construction Loan Agreement, the Lender would legally be able to collect the rents and the tax increment payments under the TIF Note. Furthermore, in the event that Dominium would default on the Construction Loan Agreement, the EDA would not be obligated to pay the Lender more than what is collected through tax increment. Staff recommends approval of Resolution 2017-34 as presented. EDA Special Meeting Page 4 Nov 27, 2017 Questions from members: Schmitt questioned how those payments would be made. Ingram told members that if Dominium defaults on the loan during construction then the bank would be entitled to receive the payments directly. Motion by Buesgens, seconded by Williams, to waive the reading of Resolution 2017-34, there being ample copies available to the public. All ayes. MOTION PASSED. Motion by Buesgens, seconded by Novitsky, to adopt Resolution 2017-34, a resolution approving a Collateral Assignment of interest in payments under Tax Increment Revenue Note, between Columbia Heights Leased Housing Associates III, LLLP and CitiBank, N.A. All ayes. MOTION PASSED. COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY RESOLUTION NO. 2017-34 RESOLUTION APPROVING A COLLATERAL ASSIGNMENT OF INTEREST IN PAYMENTS UNDER TAX INCREMENT REVENUE NOTE, BETWEEN COLUMBIA HEIGHTS LEASED HOUSING ASSOCIATES III, LLLP AND CITIBANK, N.A. BE IT RESOLVED By the Board of Commissioners ("Board") of the Columbia Heights Economic Development Authority ("Authority") as follows: Section 1. Recitals. 1.01.  Pursuant to their authority under Minnesota Statutes, Sections 469.090 to 469.1081 and 469.174 to 469.1794, as amended, the Authority and the City of Columbia Heights (the “City”) established the 47th and Grand 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 and Columbia Heights Leased Housing Associates III, LLLP (the “Redeveloper”) entered into that certain Contract for Private Redevelopment dated as of August 7, 2017, as amended (the “Contract”), 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”). 1.03. Pursuant to the terms of the Contract, the Authority will issue its Tax Increment Revenue Note, Series 2017 (the “TIF Note”) to the Redeveloper on the date of Redeveloper’s closing on its construction financing for construction of the Minimum Improvements, which will include execution by the Redeveloper of certain loan documents with Citibank, N.A. as lender (the “Lender”). 1.04. The Redeveloper has requested that the Authority consent to the terms of a collateral assignment of payments under the TIF Note to the Lender, as memorialized in a Collateral Assignment of Interest in Payments under Tax Increment Revenue Note between the Redeveloper and the Lender (the “Assignment”), in substantially the form presented to the Authority. 1.05. Pursuant to the Contract, the Redeveloper must seek approval from the Authority prior to making any assignment of the Contract or Note. EDA Special Meeting Page 5 November 27, 2017 1.06.   The Board has reviewed the Assignment and finds that the approval and execution of the Authority’s consent thereto are in the best interest of the City and its residents. Section 2. Authority Approval; Other Proceedings. 2.01. The Assignment, including the consent of the Authority related thereto, 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 consent to the Assignment 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 consent attached to the Assignment and any other documents requiring execution by the Authority in order to carry out the transaction described in the Assignment. 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 27th day of November, 2017. OTHER BUSINESS Dahl informed members that water piping had frozen and broke at the property located at 3841 Central Ave which resulted in about 3-4 inches of water in the lower level with damage done on the upper two levels as well. Staff said at this point it is probably easier to auction off what can be salvaged from the home and then have it demolished than to try and move the structure to another location. Members tended to agree. Szurek asked about any further updates regarding the HyVee construction timeline. Dahl said they have to start construction by June 2018 according to the Site Plan and TIF approvals. He noted that the Meineke lease is up at the end of December and that it will not be renewed at the 4300 Central Ave site. Herringer said the developer who owned the north parcel of the 47th and Central Ave site has sold that piece to HyVee so that they now own both of the parcels at the corner. The meeting was adjourned at 6:50 pm. Respectfully submitted, Shelley Hanson Secretary APPENDIX A ______________________________________________________________________________ ASSESSMENT AGREEMENT and ASSESSOR’S CERTIFICATION By and Between COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY and COLUMBIA HEIGHTS LEASED HOUSING ASSOCIATES III, LLLP  This Document was drafted by: KENNEDY & GRAVEN, Chartered 470 U.S. Bank Plaza Minneapolis, Minnesota 55402 ASSESSMENT AGREEMENT THIS AGREEMENT, made on or as of the ___________, 2017 by and between the Columbia Heights Economic Development Authority, a public body corporate and politic (the “Authority”) and Columbia Heights Leased Housing Associates III, LLLP, a Minnesota limited liability limited partnership (the “Redeveloper”). WITNESSETH, that WHEREAS, on or before the date hereof the Authority and Redeveloper have entered into a Contract for Private Redevelopment dated August 7, 2017, as amended by a First Amendment thereto dated as of November 6, 2017 (as so amended, the “Redevelopment Contract”), pursuant to which the Authority is to facilitate development of certain property in the City of Columbia Heights hereinafter referred to as the “Property” and legally described in Exhibit A hereto; and WHEREAS, pursuant to the Redevelopment Contract the Redeveloper is obligated to construct certain improvements (the “Minimum Improvements”) upon the Property; and WHEREAS, the Authority and Redeveloper desire to establish a minimum market value for the Property and the Minimum Improvements to be constructed thereon, pursuant to Minnesota Statutes, Section 469.177, Subdivision 8; and WHEREAS, the Authority and the Anoka County Assessor (the “Assessor”) have reviewed the preliminary plans and specifications for the improvements and have inspected such improvements; NOW, THEREFORE, the parties to this Agreement, in consideration of the promises, covenants and agreements made by each to the other, do hereby agree as follows: 1. The minimum market value which shall be assessed for ad valorem tax purposes for the Property described in Exhibit A, together with the Minimum Improvements constructed thereon, shall be $11,544,000 as of January 2, 2019, and $17,760,000 as of January 2, 2020 notwithstanding the progress of construction by such date, and as of each January 2 thereafter until termination of this Agreement under Section 2 hereof. 2. The minimum market value herein established shall be of no further force and effect and this Agreement shall terminate on the Termination Date, as defined in the Redevelopment Contract. The event referred to in Section 2 of this Agreement shall be evidenced by a certificate or affidavit executed by the Authority. 3. This Agreement shall be promptly recorded by the Authority. The Redeveloper shall pay all costs of recording. 4. Neither the preambles nor provisions of this Agreement are intended to, nor shall they be construed as, modifying the terms of the Redevelopment Contract between the Authority and the Redeveloper. 5. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of the parties. 6. Each of the parties has authority to enter into this Agreement and to take all actions required of it, and has taken all actions necessary to authorize the execution and delivery of this Agreement. 7. In the event any provision of this Agreement shall be held invalid and unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. 8. The parties hereto agree that they will, from time to time, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such supplements, amendments and modifications hereto, and such further instruments as may reasonably be required for correcting any inadequate, or incorrect, or amended description of the Property or the Minimum Improvements or for carrying out the expressed intention of this Agreement, including, without limitation, any further instruments required to delete from the description of the Property such part or parts as may be included within a separate assessment agreement. 9. Except as provided in Section 8 of this Agreement, this Agreement may not be amended nor any of its terms modified except by a writing authorized and executed by all parties hereto. 10. This Agreement may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. 11. This Agreement shall be governed by and construed in accordance with the laws of the State of Minnesota. 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 ________, 2017 by Marlaine Szurek and Walter R. Fehst, the President and Executive Director of the Columbia Heights Economic Development Authority, on behalf of the Authority. Notary Public COLUMBIA HEIGHTS LEASED HOUSING ASSOCIATES III, LLLP, a Minnesota Limited Liability Limited Partnership By: Columbia Heights Leased Housing Associates III, LLC Its General Partner By ________________________________________ Owen Metz Its Authorized Representative STATE OF MINNESOTA ) ) SS. COUNTY OF __________ ) The foregoing instrument was acknowledged before me this _____ day of _____________, 2017 by Owen Metz, the Authorized Representative of Columbia Heights Leased Housing Associates III, LLC, a Minnesota limited liability company, the General Partner of Columbia Heights Leased Housing Associates III, LLLP, a Minnesota limited liability limited partnership, on behalf of the partnership. Notary Public CERTIFICATION BY COUNTY ASSESSOR The undersigned, having reviewed the plans and specifications for the improvements to be constructed and the market value assigned to the land upon which the improvements are to be constructed, hereby certifies as follows: The undersigned Assessor, being legally responsible for the assessment of the above described property, hereby certifies that the values assigned to the land and improvements are reasonable. Anoka County Assessor STATE OF MINNESOTA ) ) ss COUNTY OF ANOKA ) The foregoing instrument was acknowledged before me this ___ day of ____________, 2017, by _____________________, the Assessor of Anoka County. Notary Public EXHIBIT A of ASSESSMENT AGREEMENT Legal Description of Property Lots 1 and 2, Block 1, Grand Central Lofts, Anoka County, Minnesota And Outlot A, Grand Central Lofts, according to the recorded plat thereof, Anoka County, Minnesota.