051407 EDA
CITY OF NEW HOPE
EDA MEETING
City Hall, 4401 Xylon Avenue North
May 14, 2007
EDA Meeting will commence upon
adjournment of the City Council Meeting
President Martin Opem Sr.
Commissioner Andy Hoffe
Commissioner Karen Nolte
Commissioner Steve Sommer
Commissioner Daniel Stauner
1. Call to order
2. Roll call
"'"l _A.pproval of regular meeti11g minutes of February 12, 2007
.:).
4. Resolution aut110rizing a11 interiIn agreement \vith Insignia Development for the Bass
Lake Road Apartme11ts redevelopn1e11t project (8400 and 8420 Bass Lake Road al1d
8401, 8411, and 8421 58th Avenue) (in1proven1el1t project no. 795)
Q. Motion autl10riziI1g expenditure of S15,OOO for legal fees related to a cost recovery
claim against Unocal/Chevron (improven1ent project 110. 697)
6. Adjourlune11t
CITY OF NE\V HOPE
4401 XYLON A VENuE NORTH
NEW HOPE, MINNESOTA 55428
EDA Minutes February 12, 2007
Regular Meeting City Hall
CALL TO ORDER President Opem called the meeting of the Economic Development Authority
to order at 10:40 p.m.
ROLL CALL Present: Martin Opem Sr., President
Andy Hoffe, Commissioner
Karen Nolte, Commissioner
Steve Sommer, Commissioner
Daniel Stauner, Commissioner
Staff Present: Dan Donahue, City Manager
Kim Berggren, Community Developme11t Assistant
Curtis Jacobsen, Community Development Specialist
Valerie Leone, City Clerk
Kirk McDonald, Director of Community Development
Steve Sondrall, City Attorney
Vince VanderTop, Assista11t City Engineer
APPROVE MINUTES Motion "vas made by Commissioner Sommer, seconded by Commissioner
Nolte, to approve the Regular Meeting Minutes of January 8, 2007. All
present voted in favor. 1\1otion carried.
IMP. PROJECT 811 President Opeffi introduced for discussion Item 4, Update regarding t11e
Item 4 Northgate project its financial feasibility a11d request to tern1inate interim
agreement (improvement project no. 811).
Jv1r . Kirk McDonald, director of conlffiunity development, provided
background of tl1e proposed project and noted at the January 8 meeting the
market study for t11e site was presented. He explained tl1at due to tl1e land
cost for the \'V"estern portion of the site, a large 27 or 36-unit development does
not appear financially feasible. He stated the developer vvould like tl1€ city to
consider a 13-unit development utilizing the four eastern lots 011ly (gas station
property and three citY-O\VI1ed lots). Mr. McDonald stated a profit of $54,000
is projected for tl1e sn1aller 13-unit development. He asked the EDA to
C011sider \vhether they \vish to pursue a large project and provide a11
additio11al subsidy to the project beyond the contribution of lalld or \vhether
they wish to proceed V\7it11 a smaller project which may be financially feasible.
He stated if neither Opti011 is acceptable to t11e EDA, action should be take11 to
termiIlate the interin1 agreement.
Mr. 1\1cDonald conveyed his appreciation to Mr. Abdel-Karim for his
EDA Meeting
Page 1 February 12, 2007
cooperation during the project revieV\7. He asked the EDA to allo\,y the
developer an opportunity to address the EDA.
J\1r. Anvvar Abdel-Karim was recognized. He asked the EDA to approve a
smaller project invobling four lots and emphasized the development would
improve the aesthetics of the area, increase property values, and generate
property taxes for the city. He stated the development 1rVould be quality
construction.
Mr. Frank Drake, realtor with Edina Realty, \,vas recognized and pointed out
that J\1r. Abdel-Karim has expended over $7,000 and has complied vvith all of
the city's requests. He emphasized the smaller project vvould be attractive and
they would continue to pursue the acquisition of the western lots.
President Opem thanked Mr. Abdel-Karim for his efforts but noted the
agreement by the city to sell the three lots for one dollar each \vas contingent
upon development of the entire block. The EDA discussed the current
competition (existing nevv to\",rnhomes that are unsold at Winnetka Green and
Winnetka Townhomes), and the increased demand for apartment rental
properties. The consensus of the EDA was to continue land-banking the city-
oV\7ned property.
MOTION Motion \-vas made by Commissioner Stauner, seconded by Commissioner
Item 4 Nolte, to terminate the interim agreement (improvement project no. 811).
All present voted in favor. Motion carried.
ADJOURNMENT Motion \vas made by Commissioner Nolte, seconded by Commission
Sommer, to adjourn the meeting. All present voted in favor. Motion carried.
The New Hope EDA adjourned at 11:01 p.m.
Respectfully submitted,
~~
\7alerie Leone
City Clerk
EDA Meeting
Page 2 February 12, 2007
EDA
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Request for Action
Originating Department Approved for Agenda Agenda Section
Community Development May 14, 2007 EDA
Item No.
By: Kirk McDonaldJ CD Director By: 4
Kim Berggren, CD Assistant
Resolution authorizing an interim agreement ,,yith Insignia Development for the Bass Lake Road Apartments
redevelopment project (8400 and 8420 Bass Lake Road a11d 8401, 8411, and 8421 58th Avenue) (improvement
project no. 795)
Requested Action
Staff requests that the Economic Development Authority (EDA) apprO\Te a resalutioll aut110rizing all interim
agreement vvith Insignia De\relopment far tile Bass Lake Road Apartments site. The agreement outlines how
prelimb.lary respollsibilities aJ.ld redevelopment costs vvill be sllared and provides a schedule for mo.ving
forvvard.
" Policy/Past Practice
Olle of the strategic goals of the City PlaIl states that the city V\rill encourage maintenance, redevelopmellt, alld
relllvestment ill properties to improve tlle tax base. To assist with this goal, tlle city often selects a preferred
redeveloper and participates in a development agreement for the redevelopment of a site in the city.
Background
Per tile direetiol1 of tlle City Connell, staff 1135 beell communicating Witl1 I1lsigrua Development for several
montlls about a possible redevelopment project at the Bass Lake Road Apartments site. Insignia Developmellt
vvas one of the three redevelopmellt teams tllat participated 111 the city's 2005 Request for
Qualifications/Proposals process for the proposed redevelopment of tIle Bass Lake Road Apartments site. As
tlle Council is aware, PariPassu/Trio Developmellt was selected as the preferred developer in 2005, but has
since witlldravvn from the project. Because of Insignia's good performance during tlle 2005 RFQ/P process, the
city l1as remained lllterested in "\-vorking ,vith Insignia on a possible project at tIle apartments site alld the City
Council directed staff to cOlltinue discussions about options for proceedillg "vith a project.
Motion by ...~~ Yil--LI$~ Second by
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To: :k// In -
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Request for ACtiOl1, Page 2 of 3
May 14, 2006
Interim agreement
After several mOllths of discussion, staff and Don Dram of Insignia Development have agreed on a draft
interim agreement for the possible rede"velopment of the Bass Lake Road Aparhnents. The agreement Qutlliles
the following:
0 Responsibilities of the city and tile redeveloper
0 Includes ho'\>\! preliminary costs '\vill be sllared
0 Describes how the city and redeveloper will contribute to the process
0 Timellile with deadlines
0 First deadline: Redeveloper to submit market study to city by December I, 2007
0 Agreement end date: October I, 2008
Don Dram has also provided a letter to the city expressing his interest in the project (attached).
Funding
If tlle EDA formally approves the attached interim agreemellt, Insignia will submit a $500 non-refundable fee.
Per the agreement, a $5,000 refwldable deposit to co"ver Insignia's portion of incurred costs is due at tlle time
the redeveloper submits a concept plan for the site. The redeveloper will be required to replenish this deposit
,vhen the balance falls beloyv $1,000, upon request by t11e city!. Funds for the city's preliminary redevelopment
expenses V\Till come from the EDA budget. After the TIF district is established for the project, tile city may
decide to seek reimbursement for eligible expenses.
Recommendation
Staff recommellds approval of the attached resolution authorizu1g an interim agreernellt with Insignia
Development.
Attachments
1. InteriIn agreelnent
2. Letter from Don Vram, Insignia Development (May 7, 2007)
City of Ne,,\r Hope
EDA Resolution No. 2007-
Resolution authorizing all interim agreement \vith
Insignia Development
for the Bass Lake Road Aparhnents redevelopmellt project
WHEREAS, the Bass Lake Road Apartment site (the "Site") consists of approximately 3.6
acres of land with five tax parcels at 8400 and 8420 Bass Lake Road and 8401,
8411 and 8421 - 58th A'venue; and,
WHEREAS the City plans to rede'velop the Site into for-sale multifamily housing or mixed-
use development; and,
WHEREAS, Insignia Development demOllstrated to the city its qualifications and commitment
to the redevelopment project during tile city's 2005 Request for Qualliications/
Proposals process; and,
WHEREAS, the Redeveloper proposes to lllvest time, expertise, and mOlley to cOlltinue to
"vark vVitll the City to study the redevelopment options, refine its original
cOllcept plall, alld exa:mllle the ecollomic feasibility of rede\Teloping the Site; and,
WHEREAS, prelimiIlary redevelopment activities l1eed to be accomplished and tile City and
tlle Redeveloper seek to ''\lark as partners to pay for aIld accomplisll the
necessary tasks.
NOW, THEREFORE, BE IT RESOL VED, tllat tiLe ECOll0miC Development Authority of the city of
New Hope, 1VIinnesota autllorizes the lllterim agreement ("Exllibit Aff) beh,yeen
the City and Insiglua Developmellt)' whicll outlines responsibilities and cost
sharing agreemellts bet\t\ree11 the two parties.
Adopted by tlle ECOll0miC Developmellt Authority of the city of New Hope, Hennepin COlUlty,
1VIinnesota, t1us 14th day of May, 2007.
Martin Gpem Sr., President
Attest:
Daniel J. Donahue, Executive Director
INTERIM AGREEMENT
This INTERIM AGREEMENT entered into effective the _ day' of , 2007, by and
between tile Economic Development Authority in and for the City of Nevv Hope, Minnesota, a
lvlinnesota public body corporate and politic (the /I Authority") and Insignia Development LLC, a
lvfumesota limited liability compan}' (the "Redeveloper").
WHEREAS, the Bass Lake Road Apartments site (the "Site") consists of approximately 3.6
acres of land with five 12-unit rental apartment buildings at 8400 and 8420 Bass Lake Road and
8401, 8411 and 8421 - 58th Avenue; and
WHEREAS, tlle Redeveloper migllt determllle to expand the redevelopment site to include
the four single-family' lots at 8400, 8404, 8408, and 8412 58th Avenue North; and
WHEREAS, tlle Authority desires for the Site to be redeveloped as ovvner-occupied market-
rate llousmg or mixed-use development; and
WHEREAS, the Redeveloper is proposing a redevelopment (the "Project") for the Site and
l1.as requested that the Authority 11egotiate exclusively vvith the Redeveloper wInle the Project is
being studied.
WHEREAS, tlle Authority is willlilg to negotiate exclusi\Tely with the Redeveloper until
October 1, 2008, provided that deadlines for certain milestones described below are met
NOW, THEREFORE, in COllsideration of tile premises 311d mutual obligatiolls of tile parties
COlltauled herein, eacll of them does hereby agree as follo'^ls:
1. Interim Nature of Agreelnellt. TIle Autl10rity and the Redeveloper agree t11.at tlus
Agreemellt is intended to be preliminary in 11ature. Before tlle Autllority and tlle Redeveloper can
make a decisioll on \vhet1ler to proceed with the Project, it will be l1ecessary to assemble and
COllsider information relating to tile eCOll01nics, site assembly, phasing, envirol1illental remediatiol1
and other aspects of the Project. The purpose of this Agreement is to allow the Redeveloper all
opportrnuty to assemble such information, to prepare a preliminary concept plaIl and to negotiate
with tlle Autllority concerning tile approval of a term sheet (the "Term Sheet") with a vie,,,! to
evelltual execution of a COlltract for private redevelopmellt (the "Redevelopment Agreement")
'\",llicl1 will set forth the rights and respollsibilities of the Authority and the Redeveloper with
respect to the Project.
2. Ulldertakings of the Autl1ority.
(a) The Authority. agrees to cooperate vvith the Redeveloper in tlle Redeveloper's
undertakings alld agrees t11at during the term of tl1is Agreemellt the Authority will
not negotiate ,vith any tllird party in cOilllectioll with redevelopment of tlle Site.
(b) Tl1e Authority will negotiate vvith the Redeveloper in good faith the terms of tl1e
Redevelopment Agreement, which includes exa.m.ining options for acquisition,
tenant relocation, demolition, infrastructure improvements, and the creation of a tax
increment financing district for the Site.
(c) The Authority will provide to the Redeveloper all market analyses, blight reports,
surveys and soil, engineering, and geotechnical reports that have been done for the
Site, as well as previous concept plans and estimates of any environmental
remediation and soils correction costs prepared by previous redeveloper candidates
for the Site.
(d) The Authority will begin negotiations with the currel1t property owner in al1
attempt to acquire the Site.
3. Undertakings of the Redeveloper.
(a) By December I, 2007, t11e Rede\Teloper ,vill review the reports and other materials
from the Autl10rity refere11ced above and will complete a market study for the
project site.
(b) By April 1, 2008, the Redeveloper V\Till, ill C011sultatioll .VVitll t11e Autllority, the City
and Cit~y residents, develop a preliminary concept plan. If tlle Redeveloper proposes
to redevelop an area larger than the Site, tI1.e Redeveloper must indicate its ability to
acquire the additiollal parcels volUlltarily as evidenced by executed options or
purchase agreements.
(c) B)' June I, 2008, the Redeveloper V\Till also complete any additional envirolunelltal
assessme11t tlle Redeveloper deems necessary to estimate tlle cost of any
ellvironmental remediation aIld soil corrections in order to COllstruct tl1.e Project or
will notify the AuthorityT tllat no further testlllg \vill be required.
(d) By August I, 2008, tl1e Redeveloper shall submit a COllstruction pro forma, fi11ished
housing unit values al1d such otl1er financial i11formatioll as the Authority or its
rede"velopment consultants may request ill order to assess the ecorlomic feasibility
of the Project, tl1e amount of Authority assistance to be provided to tl1e project, and
tlle price to be paid by tile Redeveloper to tlle Autl10rity for the Site.
(e) By September 1, 2008, the Redeveloper sIlall:
EI Host a COllUTIUlUty opell house in conjunction vvit11 city staff to present project
plans 311d solicit feedback from the neig11bor11ood; and
E1 Obtain Authority approval of a Term S11eet.
(f) By October 1, 2008, the Redeveloper \'\Till have negotiated and obtained Authorit~y
approval of a Redevelopment Agreeme11t.
2
(g) During the term of this Agreement, the Redeveloper shall also:
II Present progress reports to the Authority or to City Council, if requested; and
EI If the Redeveloper determines that the Site is not economically feasible to
redevelop, the Rede\Teloper shall deliver to the Authority for its unrestricted
use at no cost to the Authority all work product, market analysis, architectural
and engineering reports, construction budget, research materials, and other
documentation produced for the Site.
4. Responsibility for Costs and Redeveloper Deposit.
(a) During the term of this Agreement the Authority or the City shall be responsible
for fees and costs of its planning and engineering consultants and the City Attorney
(except as set forth in subparagraphs (b)(3) and (4) below).
(b) The Redeveloper shall be responsible for:
(1) fees and costs of its cOUl1sel and C011sultants,
(2) the cost of aI1Y additional market studies, environme11tal analyses,
soil borings, or surveys performed by the Rede"veloper,
(3) if the Redeveloper proposes to redevelop an area larger than the Site,
the additional costs of property acquisition, resident relocation,
dernolitioll, bligl1t analysis, sur"veys, and environmelltal testing for
tile additio11al parcel(s), as \vell as tl1e cost of any required re-
engineering of the i11fr as true ture improvements described in
subparagraph ( a)(3) above (such costs may be eIigib Ie for
reimbursemellt Witll tax increlnent, however), aJ.ld
(4) fees lllcurred after tlle date of Authority approval of this Agreemellt
by the Authority's rede\Telopment counsel, Krass Monroe, P .A., for
fi11ancial al1d feasibility analysis of tl1e Redeveloper's project,
draftll1g and negotiatioll of the Terln S11eet and Redevelopment
Agreement and, "vith respect to allY additional parcels to be
acquired by tlle Redeveloper, review of blight aI1al)Tsis and revie\v of
qualificatiol1 of such parce~s for i11clusion in tlle tax increment
district.
(c) Upon execution of this Agreement, the Redeveloper shall pay a nOll-refundable fee
of $500.00 to tIle AutIlority. Upon the Redeveloper's submittal of tlle concept plan,
the Redeveloper s11all also make a deposit of $5,000.00 to be applied by the
Autl10rity to reimburse costs 311d fees :incurred by the Authority for which the
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Rede'veloper is responsible nnder this Paragrapll 5. The Redeveloper shall replenish
this deposit when the balance falls below $1,000.00 upon request by the Authority.
(d) In accordance with City policy, the Redeveloper will pay all normal and customary
City fees associated with the plan review and approval process.
5. Term of Agreement. This Agreement for exclusive negotiations shall be binding
upon the parties until October 1, 2008, unless terminated sooner by the Authority for the
Redeveloper's failure to timely comply vvith any of the deadlines set forth in Paragraph 3 or by
mutual agreement of the parties.
6. City and Authority Use of Work Product. If the Redeveloper decides not to proceed
vvith rede'velopment of the Site, the Redeveloper Sllall make available at no cost to the City and the
Authority for their unrestricted use all available 11on-proprietary work product, including market
analyses, soil and engineering reports, geotecluucal reports, infrastructure construction budgets,
and other documentation produced specifically for the Site.
IN WITNESS WHEREOF, the parties l1ave caused this Agreement to be duly executed III
eacll of their names as of the date first above written.
ECON01\1IC DE\TELOPMENT AUTHORITY
IN AND FOR THE CITY OF NEW HOPE, 1v1INNESOTA
By:
President
By:
Executive Director
INSIGNIA DEVELOPMENT LLC
By:
Its:
4
i' ~.,- '-_d -~,~ il I~' ~ ~ ' "'7-"-"'1.
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6889 Ro\vland Road Suite 100 Eden Prairie, MN
m Phone 952-949-3630 Fax 952-949-3730
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I May 8, 2007
I
Mayor tvlartin Opem Sr.
City of Ne\\' I-lope ;
4401 Xylon Avenue North
Ne\\' Hope,iv1N 55428
I Dear Ivlayor Open1: ~
I
I Insignia Developn1ent appreciates the opportunity to be involved with the Bass Lake
Road redevelopment project My staff and I are aware of your efforts to make this
project a reality and look fOf\Vard to \vorking with the City of New ~Iope on a successful ~
J
project IS
I
Over the past fevv months, \ve have been monitoring the hOllsing nlarket and believe that I
the schedule \ve have discussed "vith your staff alld sho\vn in the Interin1 Agreement is
realistic. Tlle key for both Insignia and the City is the :t\1arket Study \vhich \~/e are
I cOlnlnitted to have c0111pleted by Decelnber 1. \\'e intend to present this study to the City
ft Council sometime in Decen1ber. The results of the Ivlarket Study, along \vith Council and
I staff direction~ and econo111ic feasibility \;vill determine \vhethel' this project moves
~ I
I forward \vith Insignia Developn1ent as a partner. I
I I have enjoyed working with Kirk and his staff throughout this long process. Their
I professionalism, enthusiasm and COffilnitment to this project and to Insigl1ia have been I
I encouragIng. I
Thank you 011 behalf of our team.
I I
~ Respectfully,
m
~
c-~"\ (Q C) i fi.
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.., Donald R. DraIn I
President
I DRU/lun
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i CC: Council1\1en1ber Andy I-Ioffe
~ Council Tvlelnber Karen Nolte
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Council Member Steve S01l1n1er
~ Council Melnber Daniel Stauner
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Affiliated with the JMS Group
EDA
Request for Action
Originating Department Approved for Agenda Agenda Section
Ci ty. Manager/ May 14, 2007 EDA
Cornmulut)r Development
Item No.
By: Dan Donahue, City Manager
Kirk McDo11ald, CD Director By: 5
ICim Berggren, CD Assistant
MOtiOll authorizlllg expellditure of $15,000 for legal fees related to a cost recovery claim against
Unocal/Clle\Tron (improvement project #697)
Requested Action
Staff requests tllat tile Economic Developlnellt Autllorii}T (EDA) pass a nlotioll to autllorize expellditure of
" $15,000 for legal fees related to a cost reCOVer}T claim agalllSt Ull0Cal for the property formally addressed as 5550
WiImetl<a A vellue North.
. Background
In early 2006, the City Connell autllorized staff and tile city attorney to 'Alork \VitIl attorlley's from Moss &
Barnett OIl a cost recovery claim agalllst Unocal/Chevroll for contamirlation clecul up tllat the city rmdertook in
2004. During 2006, tlle COlU1Cil autllorized expellditures of $34,000 for legal services from Moss & Banlett. TIle
.~ city has lllcurred all additiollal $15,000 of legal expellses III 2007 related to this matter.
, Recommendation
TIle City COllilCil revievved and discussed tllese legal fees at closed meetings held 011 April 23 and Ivlay 7, aJ.ld
agreed to aut110rize tile expe1lditures. Staff is seeking a formal motioll from the EDA autllorizu1g tile
~ expenditures at tlus time.
Funding
Staff recolrunellds uSlllg funds from tlle EDA budget to pay for tile fees.
Motion by \~ C::;/P-fjJ? /Ill U- Second by
To: /y 11" iJ};J (/ ~
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I: \ RF A \ AD:MIN \ q- Auth payment Moss&Barnett.doc