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032408 EDA CITY OF NEW HOPE EDA MEETING City Hall, 4401 Xylon Avenue North March 24,2008 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 3. Approval of regular meeting minutes of March 10, 2008 4. Request that the EDA authorize staff to proceed with contracting LHB Corporation for a probability analysis report of the city center area (improvement project no. 842) ;). Resolution authorizing signatures on Termination of Covenants and Restrictions related to the North Ridge Care Center, 5430 Boone Avenue North, Minnesota Masonic Home North Ridge, o\'vner 6. Adjournment EDA Minutes Regular Meeting CALL TO ORDER ROLL CALL APPROVE MINUTES NORTH RIDGE CARE CENTER Hem 4 MOTION Item 4 ADJOURNMENT EDA Meeting Page 1 CITY OF NEW HOPE 4401 XYLON AVENUE NORTH NEW HOPE, MINNESOTA 55428 March 10, 2008 City Hall President Opem called the meeting of the Economic Development Authority to order at 7:58 p.m. Present: Martin Opem Sr., President Andy Hoffe, Commissioner Karen Nolte, Commissioner Steve Sommer, Commissioner Daniel Stauner, Commissioner Staff Present: Kirk McDonald, Executive Director Valerie Leone, City Clerk Jason Quisberg, City Engineer Steve Sondrall, City Attorney Eric Weiss, Community Development Intern Motion was made by Commissioner Hoffe, seconded by Commissioner Stauner, to approve the Regular Meeting Minutes of February 25, 2008. All present voted in favor. Motion carried. President Opem introduced for discussion Item 4, Resolution authorizing signatures on Termination of Covenants and Restrictions related to the North Ridge Care Center, 5430 Boone Avenue North, Minnesota Masonic Home North Ridge, owner. Mr. Steve Sondrall, city attorney, explained that MilU1esota Masonic Home North Ridge has requested release of covenants and restrictions relating to a refunding bond issue for North Ridge Care Center. He stated he reviewed the matter with Dorsey & \Vhihley, the city's bond counsel, and the release is appropriate as the bonds are paid. Mr. Sondrall pointed out that the form must be revised to include signature lines for EDA officials rather than HRA officials. He recommended the EDA postpone action until the next meeting. Motion was made by Commissioner Hoffe, seconded by Commissioner Stauner, to postpone action on the resolution until the March 24, 2008, meeting. All present voted in favor. Motion carried. Motion was made by Commissioner Nolte, seconded by Commissioner Sommer, to adjourn the meeting. All present voted in favor. Motion carried. The New Hope EDA adjourned at 8:00 p.m. March 10, 2008 Respectfully submitted, ~~ Valerie Leone, City Clerk EDA Meeting Page 2 March 10, 2008 EDA REQUEST FOR ACTION Originating Department Approved for Agenda Agenda Section Community Development March 24, 2008 EDA Item No. 4 By: Curtis Jacobsen, CD Director Eric Weiss, CD Intern By: Request that the EDA authorize staff to proceed with contracting LHB Corporation for a probability analysis re ort of the city center area (im rovement ro'ect no. 842) Requested Action Staff requests that the EDA authorize staff to proceed with the contracting of LHB to conduct a probability analysis of 12 parcels (10 buildings) which are being considered for inclusion in a potential tax increment financing district for the redevelopment of the city center. Policy/Past Practice It is the past practice of the EDA to enter into interim agreements with developers during the discussion and investigation of the potential for redevelopment of sites within the city. The interim agreement outlines preliminary steps and a schedule of milestones for both parties to achieve. The interim agreement stipulates that by April 21, 2008, the city's redevelopment counsel will complete analysis of projected TIF revenues and determine whether Phases lA and IB are financially feasible. This analysis will help the city and redeveloper determine the project's feasibility. Background In the smmner of 2007, Ryan Companies approached the city to propose a potential redevelopment in the city center area. A redevelopment that may potentially include a Super Target. At the December 10 City Council meeting, staff and Ryan Companies requested authority for staff to negotiate an interim agreement vvith Ryan. Some of the highlights of the agreement include: ID Authority is willina to negotiate exclusively with the Redevelo er wltil August 11, 2008. SECOND BY TO: I: \RFA \PLANNING \PLANNING \Planning\ Q - City Center Blight Analysis 3-24-08.doc Request for Action, Page 2 of 3 March 24, 2008 . By February 15, 2008, the Authority and its redevelopment counsel will determine whether the parcels in Phase I qualify for inclusion in a new redevelopment TIF district. ID By March 24, 2008, the Redeveloper will develop a preliminary concept plan and will provide information to perform a TIF revenue analysis. . By April 21, 2008, the Authority's redevelopment counsel will determine the financial feasibility of Phases lA and lB. . April 28, 2008, the Redeveloper and city staff will present the preliminary concept and their findings as to financial feasibility to the Authority. · If the Authority accepts the April 28 presentation, the Redeveloper will host a community open house of the project plan by June 14, 2008. In determining the potential for the creation of a TIF district, it must be determined that the district qualify under two preliminary standards. The first qualifier is a "coverage test." This test requires that 70 percent of the parcels included in the district are "occupied" by buildings, streets, utilities, or paved/gravel parking lots. A parcel is considered occupied when at least 15 percent of its total area is occupied by improvements. The city and Krass Monroe have conducted a preliminary report of the 12 parcels to be included in the district and have determined the district would qualify as a TIF district under the coverage test. The second qualifying test for the creation of a new TIF district requires that more than 50 percent of the buildings, not including outbuildings, are considered "structurally substandard." Structurally substandard shall mean buildings containing defects in structural elements or a combination of deficiencies in essential utilities and facilities, light and ventilation, fire protection including adequate egress, layout and condition of interior partitions, or similar factors, which defects or deficiencies are of sufficient total significance to justify substantial renovation or clearance. A building is not structurally substandard if it is in compliance with the building code applicable to new buildings or could be modified to satisfy the building code at a cost of less than 15 percent of the cost of constructing a new structure of the same square footage and type on the site. The building official has conducted a preliminary exterior analysis of the 10 buildings included in the 12 parcels to be included in the district, and has determined all would qualify as structurally substandard. The city, Krass Monroe and Ryan Compan,ies have discussed contracting LBo to conduct a "probability review." Mike Fischer of LHB has extensive qualifications conducting TIF dish'ict analysis in a variety of cities. A probability analysis would be a less extensive analysis than a full blight report but would be adequate in determining, on a more official basis, the structural substandard stahlS of the buildings. The probability review would include Fischer and the building official meeting to discuss what code deficiencies have already been identified by the building official. The two \vould conduct em exterior review of all buildings and an interior review of the publicly accessible buildings. This review will be used to make a best estimate at the probability of the buildings meeting the sh'ucturally substandard criteria. This review would not be a guaranteed analysis, but has been effective in the past in determining the substandard status of buildings at a lo\'ver cost. Because the probability revie\v is not a full analysis, the cost is considerably lower. LHB has quoted the city an estimate of approximately $2,500 for the probability review (plus reimbursable expenses). A full report has been estimated at $25,000 (plus reimbursable expenses). The city has requested the redeveloper share the cost of the review 50-50. Request for Action, Page 3 of 3 March 24, 2008 RecommendationlN ext Steps Staff requests the EDA authorize staff to proceed with contracting LHB for a probability review. If the EDA agrees, LHB will conduct its research and complete its analysis within 45 to 60 days. Attachments: · LHB Proposal for TIF Analysis Services at City Center · Krass Monroe correspondence e Interim agreement 250 Third Avenue North, Suite 450 Minneapolis, Minnesota 55401 612.338.2029 Fax 612.338.2088 www.LHBcorp.com March 14, 2008 Kirk McDonald City Manager City of New Hope 4401 Xylon Avenue North New Hope, MN 55428 PROPOSAL FOR TIF ANALYSIS SERVICES AT CITY CENTER Thank you for the opportunity to submit a proposal for Redevelopment TIF analysis services for propeliies in the proposed City Center area. LHB is a full-service architecture, planning and engineering firm with 175 employees in our Minneapolis and Duluth offices. Our Community Design studio has extensive experience working \vith local governments on their planning, design, architectural and engineering needs. Having been personally involved as a fonDer City Council President and currently a Planning Commissioner, I understand how cities function and the importance of maintaining the suppoli of the city council and community throughout the process. PREVIOUS EXPERIENCE LHB has significant experience with a variety of inspection and facility assessment projects, including the analysis of over 70 TIF districts in the past four years. Examples include: City of Columbia Heights TIF inspection services City of St. Paul TIF inspection services City of St. Anthony Village, NW Quadrant TIF inspection services City of St. Louis Park TIF District inspection services City of Mound TIF District "1-2" inspection services City of Osseo TIF inspection services City of New Richmond, WI TIF inspection services Minnesota State Colleges and Universities system facility assessments State of Minnesota facility assessments Property Condition assessments for the St. Paul Depariment of Planning and Economic Development (FranklinJEmerald Neighborhood) Condition survey of every property along the 1-394 corridor for the Minnesota Depariment of Transportation, prior to and during the construction ofI-394 ADA compliance assessments for the State of Minnesota (82 buildings in 1992) Duluth, lvIN Minneapolis, MN City Center TIF analysis Page 2 of5 March 14,2008 METHODOLOGY A. Survey the proposed TIF district to determine if it meets the "Coverage Test": 1. To meet the coverage test, parcels consisting of 70 percent of the area of the district must be "occupied" by buildings, streets, utilities, or paved or gravel parking lots. 2. A parcel is not considered "occupied" unless at least 15% of its total area contains improvements. B. Make the following attempts to inspect the interior of each building in the district: 1. Obtain property owner's consent for inspection. 2. Document all property conditions relative to Minnesota Statutes Section 469.174 Subdivision 10. C. Determine replacement cost for each building: 1. Replacement cost is the cost of constructing a new structure of the same square footage and type on the site. 2. A base cost will be calculated by establishing the building class, type and construction quality. 3. Identify amenities, which increase the value of the building over the standard construction quality level. 4. Review building permits for each parcel. 5. The base cost and cost of amenities will be totaled to determine the replacement cost for the property. D. Determine the existing condition of each building: 1. "Structurally substandard shall mean containing defects in structural elements or a combination of deficiencies in essential utilities and facilities, light and ventilation, fire protection including adequate egress, layout and condition of interior partitions, or similar factors, which defects or deficiencies are of sufficient total significance to justify substantial renovation or clearance." E. Determine Code Deficiencies in each building: 1. Determine technical conditions, which are not in compliance with current building code applicable to new buildings. 2. Determine costs to correct identified deficiencies. 3. Compare cost of deficiency corrections to replacement value of building. 4. A building is not structurally substandard if it is in compliance with building code applicable to new buildings or could be modified to satisfy the building code at a cost of less than 15 percent of replacement cost. City Center TIF analysis Page 3 of5 March 14,2008 F. Prepare a final report outlining findings: 1. Prepare a tabulated spreadsheet of the entire proposed district properties conditions. 2. Prepare a written narrative analysis of the redevelopment district describing why the property within the district does or does not meet the criteria as "structurally substandard" as established in Minnesota Statutes Section 469.174, subdivision 10. 3. Deliver final reports to City staff. ASSUMPTIONS Preliminary boundaries of the prospective district include ten buildings on twelve parcels that will require field inspections. The City of New Hope will provide the following: . A parcel map and/or aerial photo of the area to be inspected, including GIS infonnation with specific parcel data . A list of all parcels including owner, current known business or resident name and address. COST AND FEE STRUCTURE We propose to \vork on an hourly basis with the following key staff: Project Principal, Michael Fischer (TIF analysis) Project Manager/Inspector, KC Lim Project Administrator (Property owner contacts, documentation) Teclmician Assistance (if necessary) $200/hour $130/hour $65/hour $70/hour We will work on an hourly basis with an approximate fee budget of $25,000 plus reimbursable expenses for the inspection of the ten structures and a full report outlining the findings for the TIF district. We understand that the City might prefer that we perfonn a probability review of the ten structures to determine the potential validity of the District before conducting the required thorough interior inspections. The probability review would include a meeting with the City Building Inspector to learn what code deficiencies he has already identified in the buildings. We would then drive by each building and enter the ones that are publicly accessible to make our best guess at the probability of the building meeting the substandard criteria. It is impOliant to note that these are educated guesses and do not come with guaranteed results. We will work on an hourly basis with an approximate fee budget of $2,500 plus reimbursable expenses for a probability review of the ten buildings. This fee would be above and beyond the proposed fee for conducting the required building inspections as it would require additional trips and time from our team. City Center TIF analysis Page 4 of5 March 14,2008 In addition, we are available at the hourly rates listed above, to consult on appropriate TIF strategies based on what we are finding in the field. SCHEDULE Assuming full cooperation with the property owners and the City, we will have all ten building inspections and a full report completed within 45-60 days of beginning our work. TERMS We propose using an AlA Document B727 (Standard Form of Agreement Between Owner and Architect for Special Services). The contract will include "limit of liability" language (equal to our fee or $10,000 maximum, whichever is greater). In addition, the contract will contain language negotiated with the city indicating that LHB and the City, acting through the City's legal representative, will, to the fullest reasonable extent, cooperate and coordinate efforts in preparing responses to any third party challenges to the inspections. TEAM CREDENTIALS Michael A. Fischer, AM - Project Principal/TIF Analyst Michael has twenty-two years of architectural experience as project principal, project manager, project designer and project architect on municipal planning, educational, commercial and governmental projects. He is a Vice President at LHB and cUlTently leads the Community Design Group in LHB' s Minneapolis office. Michael completed a two-year Bush Fellowship at the Massachusetts Institute of Technology in 1999, earning Masters Degrees in City Planning and Real Estate Development. Michael has served on over 35 committees, boards and community task forces, including a term as City Council President and Chair of the Duluth/Superior Metropolitan Planning organization. He is currently a Planning Commissioner in Edina, Minnesota. He was one of four architects in the country to receive the National "Young Architects Citation" from the American Institute of Architects in 1997. J(eow Chai (1(. C.) Lim, AM - Project Architect K.C. has seven years of international experience prior to becoming an architect in the United States and has been with urn since 1988. His experience includes multi-story speculative offices, commercial buildings, hospitality, manufacturing, residential, and cinema renovation and design. His close attention to the client's needs has contributed to a unique relationship \vith the owner and the designed space. K.C. is a creative designer who also has a special focus on architectural presentation and a unique rendering skill to bring forward the intricate design idea to clients. In addition to design, K.c. prepares construction documentation and manages projects. Lydia lr1ajor - GIS/Coverage Analysis Lydia recently joined LHB's Urban Design and Planning group, bringing with her a passion for design that benefits the client, the community, and the enviromnent. Her experience includes designing and drafting commercial and residential propeliies at a variety of scales. Lydia integrates her skills with AutoCAD, ArcGIS, and the Adobe Creative Suite to produce plans, color renderings, booklets, and other presentation materials. Communication is a critical component in City Center TIF analysis Page 5 of5 March 14,2008 all projects, and Lydia's uses her education as a writer to create compelling project documents, including proposals, requests for variance, and other public-relations materials. NEXT STEP Upon acceptance of this proposal, we will draft an ALA Owner/Architect agreement for your reVIew. Thank you for the opportunity to submit a proposal for your project. Please contact me at (612) 752-6920 if you have any questions. LHB INC. ~~ MICHAEL A. FISCHER, AlA VICE PRESIDENT c: Tn<IMAF/KCL L:\MARKETING\Proposal Letters\2008\TIF Proposals\t~ew Hope City Center TIT Analysis 03-14-08.doc KRASS MONROE James R. Casserly jcasserly@krassmonroe.com Direct 952.885.1296 Gay L. Cerney gcemey@krassmonroe.com Direct 952.885.4393 Also admitted in New York MEMORANDUM To: City of New Hope Attn: Kirk McDonald, City Manager Attn: Curtis Jacobsen, Community Development Director From: Gay Cerney, Esq. James R. Casserly, Esq. Date: March 19,2008 Re: Ryan Companies/City Center Our File No.: 10048-32 We have reviewed the proposal submitted by Michael Fischer of LHB to the City dated March 14, 2008 for LHB to perform tax increment district qualification analysis for the parcels and ten buildings contained in Pha?e 1 of the Ryan Companies' proposed City Center Development. In its proposal, LHB projected a budget of approximately $25,000 to perform a full analysis. On page 3 of the proposal, LH8 also offered to perform a "probability review'>' of the ten buildings to determine whether they would likely qualify as "structurally substandard" for purposes of determining their eligibility for inclusion in a redevelopment tax increment district. LHB stated that such a review would likely cost approximately $2,500, plus expenses. In recent weeks, the City building inspector has inspected the buildings and stated that, in his opinion, all ten buildings would be likely to be deemed structurally substandard. These findings were discussed with Mark Schoening of Ryan Companies US, Inc., and Ryan and the City agreed that it would be desirable to obtain the opinion of a professional blight analyst regarding the buildings' condition before either party spent significant additional time and money on the project. 8000 NORMAN CENTER DRIVE, SUITE 1000 GlMINNEAPOLlS, MINNESOTA 55437-1178 TELEPHONE 9521885.5999 Gl FACSIMILE 9521885-5969 W'Mv.krassmonroe.com We and City staff participated in a conference call with Mr. Fischer last week, in which Mr. Fischer understood that the parties wished to obtain a professional opinion without at this point having to pay for a full blight analysis. In response, he suggested the "probability review" which is referred to in his proposal. He told us that, while LHB cannot guarantee a building will be deemed structurally substandard based solely on a probability review, such a review would' give the City a very good idea as to that likelihood at a reasonable cost. We typically recommend to our municipal clients that they undertake a professional blight analysis before creation of a redevelopment tax increment district. However, that expense is probably not warranted this early in the process of reviewing the project's overall feasibility. We would recommend that the City retain LHB to perform the probability review, given that it would give the City a good preliminary indication of the status of the buildings at a reasonable cost. G:\WPDATA\N-NEW HOPE\3ZICORW,COONALD JACOBSEN GLC01.00C €9 Page 2 1-14-08 INTERIM AGREEMENT This INTERIM AGREEMENT entered into effective the 28th day of January, 2008, by and between the Economic Development Authority in and for the City of New Hope, Minnesota, a Minnesota public body corporate and politic (the "Authority") and Ryan Companies US, Inc., a Minnesota corporation (the "Redeveloper"). WHEREAS, the City Center site (the "Site") consists of approximately 51.7 acres of land, mainly surrounding the intersection of Winnetka and 42nd Avenues with 31 acres in the northwest quadrant, 4.4 acres in the northeast quadrant, 15 plus acres in the southeast quadrant, one half acre on the southwest quadrant and an additional 1.1 acres in the northwest quadrant of 42nd and Xylon Avenues; and \^lHEREAS, the Authority desires for the Site to be redeveloped primarily as a commercial site with a smaller segment of mixed use or multi-family residential development; and WHEREAS, the Redeveloper is proposing a redevelopment (the "Project") for the Site and has requested that the Authority negotiate exclusively with the Redeveloper while the Project is being studied. 'WHEREAS, the Redeveloper has initially suggested a fIrst phase ("Phase 1") that includes approximately 32.36 acres located in the northwest, northeast and southeast quadrants of Wilmetka and 42nd Avenues; and VVREREAS, the Auth011ty is willing to negotiate exclusively with the Redeveloper until August 11, 2008, provided that deadlines for celiain milestones described below are met. NOvV, THEREFORE, in consideration of the premises and mutual obligations of the p31iies contained herein, each of them does hereby agree as follows: 1. Inte11m Nature of Agreement. The Auth011ty and the Redeveloper agree that this Agreement is intended to be preliminary in nature. Before the Authority and the Redeveloper can make a decision on whether to proceed with the Project, it will be necessary to assemble and consider information relating to the economics, site assembly, phasing, environmental remediation and other aspects of the Proj ecl. The purpose of this Agreement is to allow the Redeveloper an opportunity to assemble such infonnation, to prep31'e a preliminary concept plan and to negotiate with the Auth011ty conceming the approval of a tenn sheet (the "Tem1 Sheet") with a view to eventual execution of a contract for p11vate redevelopment (the "Redevelopment Agreement") which will set f01ih the rights and responsibilities of the Auth011ty and the Redeveloper with respect to the Proj ecl. 2. AIITeements ofthe Authority. (a) The Authority agrees to cooperate with the Redeveloper in the Redeveloper's undertakings and agrees that during the term of this Agreement the Authority will not negotiate with any third party in connection with redevelopment of the Site. (b) The Authority will negotiate with the Redeveloper in good faith, including examining options for acquisition, relocation, public improvements, demolition, infrastructure improvements, and the creation of a tax increment fInancing ("TIP") district or districts for the Project area. (c) The Authority will provide to the Redeveloper all of the following which the Authority has in its possession and which relate to the Site: market analyses, blight reports, surveys, soil, engineering, and geotechnical reports, previous concept plans and estimates of environmental remediation and soils correction costs. 3. Undertakings of the Parties. (a) By February 15, 2008, the Authority and its redevelopment counsel will determine, on a preliminary basis, whether the parcels in Phase 1 qualify for inclusion in a new redevelopment TIP district and will share their findings with the Redeveloper. (b) On an ongoing basis, the Redeveloper will review such findings and the reports and other materials provided by the Authority on an as-needed basis. The Redeveloper and Auth0l1ty will identify additional issues and concerns. ( c) By March 24, 2008, the Redeveloper will, in consultation \vith the AuthOlity and the City, develop a preliminary concept plan. The Redeveloper will provide infonnation requested by the Auth0l1ty'S redevelopment counsel in order to perfonn a TIP revenue analysis, including the projected product types, ta.xable value and completion dates of the new or renovated buildings to be constructed in Phase 1. (d) By April 21, 2008, the Authority's redevelopment counsel vvill complete its analysis of projected TIP revenues from Phases 1A and 1B and the Redeveloper and the Authority will jointly detennine whether either or both of Phases lA and IB are financially feasible, given the amount of TIP or other Authority assistance potentially available to the Project. ( e) On April 28, 2008, the Redeveloper and City staff will present the preliminary concept plan and their findings as to financial feasibility to the Board of the Authority. 2 (f) lfthe Authority so elects following the presentation on April 28, then by June 14, 2008, the Redeveloper shall host a community open house with the assistance of City staff to present the preliminary concept plan for Phase 1 and solicit feedback from City residents. Before the open house, neither the Authority nor the Redeveloper will make any community presentation relating to the Proj ect. (g) The parties will then determine a timetable for negotiation and execution of a Contract for Private Redevelopment for Phase 1. 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 subparagraph (b)(3) below). (b) The Redeveloper shall be responsible for: (1) fees and costs of its counsel and consultants, (2) the cost of any additional market studies, environmental analyses, soil borings, or surveys performed by the Redeveloper, and (3) one-half (112) of the fees incurred after the date of this Agreement by the Authority's redevelopment counsel relating to TIF district qualification and creation, financial feasibility analysis of the Project and drafting and negotiation of the Redevelopment Agreement and related documents. (c) Upon execution of this Agreement, the Redeveloper shall make a deposit of $5,000.00 to be applied by the Authority to reimburse costs and fees incurred by the Authority for which the Redeveloper is responsible under Paragraph 4(b )(3). The Redeveloper shall replenish this deposit when the balance falls below $l ,000.00 upon request by the Authority. (d) In accordance with City policy, the Redeveloper will pay all nornlal and customary City fees associated with the plan review and approval process. 5. Ternl of Agreement. This Agreement shall be binding upon the parties until August 11, 2008, unless tenninated sooner by the Authority for the Redeveloper's failure to timely comply with any of the deadlines set forth in Paragraph 3 or by mutual agreement of the parties. 6. City and Authoritv Use of Work Product. lfthe Redeveloper decides not to proceed with redevelopment of the Site, the Redeveloper shall make available at no cost to the City and the Authority for their unrestlicted use all available non-proprietary work product, including market analyses, soil and engineeling reports, geotechnical reports, construction budgets arld other documentation produced specifically for the Site. ., .) IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed in each oftheir names as of the date first above written. ECONOMIC DEVELOPMENT AUTHORITY IN AND FOR THE CITY OF NEW HOPE, MINNESOTA By: President By: Executive Director RYAN COMPA.NIES US, INC. By: Its: G:\WPDATA\N\NEW HOPE\06\DOC'INTERllvl AGREEMENT 1-14-08,DOC 4 EDA Request for Action Originating Department Approved for Agenda Agenda Section Community Development March 24, 2008 EDA Item No. By: Curtis Jacobsen, Director CD By: Kirk McDonald, City Manager 5 Resolution authorizing signatures on Termination of Covenants and Restrictions related to the North Ridg Care Center, 5430 Boone Avenue North, Minnesota Masonic Home North Ridae, owner Requested Action The Economic Development Authority (EDA) is requested to approve the resolution authorizing signatures 0 the Termination of Covenants and Restrictions related to North Ridge Care Center at 5430 Boone Avenu North. The agreement was originally approved by the New Hope BRA (Housing Redevelopment Authority) Subsequent to that time, the New Hope EDA was established and BRA activities are now routinely handle through the EDA, per the city attorney. Policy/Past Practice It is the past practice of the EDA to authorize signatures, when appropriate, on documents related to project within the city that have complied with original approval documents as amended, completed and verified. Background The EDA considered this matter on March 10 at which time action was postponed pending the releas documents being amended for signatures by the EDA. Historical backgroUlld previously provided at the March 10 meeting. The HRA last met in session on March 8 1999, at which time the sale of North Ridge Care Center to Minnesota Masonic Homes and the release of th nursing home portion of the development from the agreement in consideration for the payoff aIl10Ull.t 0 $585,000 was the topic. The original agreement entered into on December 17, 1982, contained certain covenaIl.t aIld restrictions that the property be available for OCCUPaI1CY by lower income tenaIlts per Internal Revenu code. Subsequent to various amendments over the years, the income restrictions were scheduled to Motion by Second by To: //! -k)['/:f I:\RFA \PLAt'\JNING\PLANNING\Planruncr\Q & R - North Ridge Pro er 'Release 3--10-08.doc Request for Action March 10, 2008 Page 2 expire on May 15, 2007. All rental requirements imposed by the covenants and restrictions are still in effect and will remain so per other documents and restrictions pertaining to North Ridge Care Center. The o\vners of the facility have requested that the EDA provide a document in recordable form for the termination of covenants and restrictions that are now no longer required. The attorney for the ovmers has provided a "Termination of Covenants and Restrictions" form for the EDA's execution. This item is routine in nature and helps to provide clear title for the property. Recommendation The city attorney and staff recommend that the EDA authorize execution of the attached resolution authorizing signatures on the amended "Termination of Covenants and Restrictions." Attachment(s) . Resolution · Termination of covenants and Restrictions (amended) . City attorney letter 3-4-08 · Letter and attachments - Johnson, Killen & Seiler City of New Hope EDA Resolution No. 2008- Resolution authorizing signatures on Termination of Covenants and Restrictions related to the North Ridge Care Center, 5430 Boone Avenue North, Minnesota Masonic Home North Ridge, owner WHEREAS, the EDA has received a request from Minnesota Masonic Home North Ridge for the issuance of a Termination of Covenants and Restrictions as they relate to the North Ridge Care Center; and WHEREAS, the restrictions and covenants necessitated that the property be available to lower income tenants to comply with certain Internal Revenue Service codes; and WHEREAS, the term of those restrictions has expired effective May 15, 2007. NOW, THEREFORE, BE IT RESOLVED by the Economic Development Authority in and for the city of New Hope, Hennepin County, Minnesota: 1. That the President and Executive Director are hereby authorized and directed to sign the Termination of Covenants and Restrictions as relates to the North Ridge Care Center at 5430 Boone Avenue North. 2. That a fully executed document be forwarded to both the Minnesota Masonic Home North Ridge, the owners, and to their attorney. Adopted by the Economic Development Authority in and for the city of New Hope, Helmepin County, Minnesota, this 24th day of March 2008. President Attest: Executive Director TERMINATION OF COVENANTS AND RESTRICTIONS Know all men by these presents, that those certain restrictions and covenants in favor of the undersigned, the Economic Development Authority in and for the city of New Hope, Minnesota, a Minnesota municipal corporation, set forth in that certain deed dated December 17,1982, made and executed by the undersigned, as grantor, to North Ridge Care Center, Inc., a Minnesota corporation, as grantee and as recorded in the Office of the County Recorder in and for Hennepin County, Minnesota, as Document No. 4762836 and in the Office of the Registrar of Titles of Hennepin County, Minnesota, as Document No. 1494994 and as such covenants and restrictions were amended by the following documents: (a) Amendment to Covenants and Restrictions dated December 1, 1986, and filed for record in the Office of the County Recorder of Hennepin County, Mirmesota, as Document No. 5213116 and in the Office of the Registrar of Titles of Hennepin County, Minnesota, as Document No. 1802435; (b) A Second Amendment to Covenants and Restrictions dated as of August 1,1989, and as recorded in the Office of the County Recorder of Hennepin County, Minnesota, as Document No. 5610251 and in the Office of the Registrar of Titles of Hennepin County, Minnesota, as Document No. 2063367; (c) A Third Amendment to Covenants and Restrictions dated as of November 1, 1995, and recorded in the Office of the County Recorder of Hemlepin County, Minnesota, as DocUlnent No. 6505794 and in the Office of the Registrar of Titles of Hennepin County, Minnesota, as Document No. 2657104; (d) A Certificate and Declaration as to Qualified Project Period dated as of December 31, 1986, and recorded in the Office of the County Recorder of Hemlepin COlmty, Minnesota, on January 26, 1987, as Document No. 5217330 and as recorded in the Office of the Registrar of Titles of Hennepin County, Mirmesota, on January 24, 1996, as Document No. 2672118; and (e) An Amended and Restated Certificate and Declaration as to Qualified Project Period dated as of November I, 1995, and recorded in the Office of Lhe County Recorder of Hennepin County, Minnesota, on November 28,1995, as Document No. 6505795 and as recorded in the Office of the Registrar of Titles of Hemlepin C01.mty, Minnesota, on January 24, 1996, as Document No. 2672119 have been fully satisfied and are now terminated and the County Recorder of Hennepin COlmty, Minnesota, and the Registrar of Titles of Hennepin County, Minnesota, are hereby authorized and directed to discharge the same upon the record thereof. Dated this day of ,2008. President Attest: Executive Director STATE OF MINNESOTA ) )ss. COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this day of , 2008, by , the President, of the Economic Development Authority in and for the city of New Hope, lvIinnesota, on behalf of the Authority. Notary Public LESLIE A. A-l\'DERSON TUCKER J. HUMMEL GORDON L. JENSEN' MELANIE P. PER.SELLIN"-.l STEPHEN M. RINGQillST' STEVEN .A.. SOll<'DR~L I Real Property Law Specialist Certified By Tne lviinnesota State Bar Association "Licensed in Illinois/Colorado 'QW?lified Neutral Mediator under Rule 114 JENSEN ANDERSON SONDRALL, P.A. Attomeys At Law 8525 EDTh'BROOK CROSSING, STE. 201 BROOKLYN PARK, ML'iNESOTA 55443-1968 TELEPHONE (763) 424-8811 $ TELEFAX (763) 493-5193 e-mail law@jasattorneys.com Writer's Direct Dial No.: (763) 201-0211 e-mail sas@jasattorneys.com March 4, 2008 Curtis Jacobsen Community Development Director City of New Hope 4401 Xylon Avenue North New Hope, :MN 55428 Re: North Ridge Care Center Request to Release Covenants and Restrictions Our File No.: 99-10011 (Community Development) Dear Curtis: This letter is in follow up to the February 4, 2008 letter we received from attorney Steven Seiler regarding a release of covenants and restrictions relating to a refunding bond issue for Nortbridge Care Center. .Mr. Seiler's letter and attachments have been reviewed by me and attorney Jerry Gilligan from the Dorsey Law Finn. The Dorsey fIrm has acted as the City's bond counsel for many years and Jerry Gilligan has been personally involved \vith this Nortbridge Care Center bond issue. - It is our collective opinion the release should be provided as requested in MI. Seiler's letter. The bonds are now paid and the release is now appropriate. IvIr. Gilligan informs me the rental requirement relating to the "QualifIed Project Period" imposed by the covenants and restrictions are still in effect and will remain in effect by other documents and restrictions pertaining to Northridge Care Center. As a result, this is really a routine item which helps to clear title to the property from unIl.ecessary covenants no longer in effect by the terms of the documents under which they were created. Contact me if you have any further questions. Very truly yours, Steven A. Sonmall, City Attorney, City of New Hope cc: Valerie Leone P:\A.ttorney\SAS\l Client Files\2 City of New Hope\99.10011(coITll'Ilunity development general)\C. Jacobsen itr re NOr'"l.h,..-idge release afcovenants.ooc JOHNSON. KILLEN & SEILER STEVEN J. SEILER THOMAS A. CLURE * JOHN N. NYS * STEVEN C. FECKER ROBERT J. ZALLAR ROBERT C. PEARSON JAMES A. WADE * :j: JOSEPH J. ROBY, JR. *:j: NICHOLAS OSTAPENKO * RICHARD J. LEIGHTON *.. JOSEPH V. FERGUSON * ALOK VIDYARTHI LAURA SCHACHT WEINTRAUB PAUL W. WOJCIAK * ROY J. CHRISTENSEN * ATTORN EYS DIANA BOUSCHOR DODGE * JESSICA L. DURBIN MICHELE L. MILLER (~ A iiArir~:~o~ c!-f~ T~iii1j_ __ _""~~7 ~ ,,~ ~~ ~ ~_ "'" ~ ___~ ~__ 'MO~~_ R""-_ ""~~ JOHN J. KILLEN, RETIRED 230 West Superior Street, Suite 800 Duluth, Minnesota 55802 www.duluthlaw.com Telephone: 218-722-6331 Facsimile: 218-722-3031 JOSEPH B. JOHNSON (1919-2000) . ALSO MEMBER OF WISCONSIN BAR .. ALSO MEMBER OF NORTH DAKOTA BAR :j: CIVIL TRIAL SPECIAUST CERTIFIED BY THE MINNESOTA STATE BAR ASSOCIATION AND THE NATIONAL BOARD OF TRIAL ADVOCACY February 4, 2008 WRITER'S E-MAIL ADDRESS: sseiler@duluthlaw.com The Housing and Redevelopment Authority of New Hope, Minnesota 4401 Xylon Avenue North New Hope, MN 55428 RE: North Ridge Care Center Our File No.: 21,806-6 Ladies and Gentlemen: Our office represents Minnesota Masonic Home North Ridge, the o\vner and operator of North Ridge Care Center. In 1982, the City of New Hope issued life care facility revenue bonds for the benefit of the North Ridge facility, which was then o\^lned by a for-profit entity called North Ridge Care Center, Inc. The bonds were previously refunded or repaid and, therefore, are no longer outstanding. Incident to the issuance of the bonds, however, the Housing and Redevelopment Authority conveyed property to NOlih Ridge Care Center by deed dated December 17, 1982, a copy of which is attached. That deed contained certain covenants and restrictions that, effectively, required the property to be available for occupancy by lower income tenants as required by Internal Revenue Code ~ 1 03(b). However, those restrictions were only to be binding for a limited period of time. Subsequent to the granting of the deed, there were various amendments made to the covenants and restrictions, copies of which are all attached. The most recent document is an Amended and Restated Certificate and Declaration as to Qualified Project Period dated as of November 1, 1995. That document provides that the restricted period would end on May 15, 2007. On behalf of our client, we now feel that the covenants and restrictions in the deed and in all of the amendments have now been fully satisfied and the covenants and restrictions should no longer be binding on the property. Accordingly, we request you provide us with a document in recordable form to terminate the covenants and restrictions so they can be removed from the Certificate of Title for that portion of the property which is registered and can be ignored as W:\2 I 806\006\ltrs\housing redev auth 00 I.doc JOHNSON, KILLEN & SEILER, P .A. February 4, 2008 Page 2 encumbrances on the abstract property in future title insurance commitments and policies. A draft document to accomplish the satisfaction and termination is attached to this letter. If you agree 'With our interpretation that the covenants and restrictions have been fully satisfied and can be terminated, I would appreciate it if you could provide me with a document, in substantially the form attached, so that the covenants and restrictions can be removed from the title. If you feel the covenants and restrictions are, in whole or in part, still binding, I would appreciate discussing that vvith you. Your most considerate and immediate attention to this request would be greatly appreciated. SJS/gr Enclosure Y DillS very trilly, J! ~~