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EDA 08/25/03OFFICIAL FILE COPY -- CITY.OF NEW HOPE EDA MEETING City Hall, 4401 Xylon Avenue North August 25, 2003 President W. Peter Enck Commissioner Sharon Cassen Commissioner Don Collier Commissioner Mary Gwin-Lenth Commissioner Steve Sommer 2. 3. 4. o Call to order Roll call Approval of regular meeting minutes of July 28, 2003 Discussion regarding request by Bear Creek Capital and CVS Pharmacy to authorize appraisal of properties by city at applicant's expense (improvement project no. 729) Resolution authorizing approval of a term sheet between the New Hope Economic Development Authority and Ryland Homes for the redevelopment of the Winnetka Avenue East property (improvement project no. 751) 6. Adjournment EDA Minutes Regular Meeting CITY OF NEW HOPE 4401 XYLON AVENUE NORTH NEW HOPE; MINNESOTA 55428 July 28, 2003 City Hall CALL TO ORDER ROLL CALL APPROVE MINUTES BROADWAY LANEL Item 4 EDA RESOLUTION 03-06 Item 4 ADJOURNMENT EDA Minutes Page 1 President Enck called the meeting of the Economic Development Authority to order at 8:36 p.m. Present: W. Peter Enck, President Sharon Cassen, Commissioner Don Collier, Commissioner Mary Gwin-Lenth, Commissioner Steve Sommer, Commissioner Motion was made by commissioner Sommer, seconded by Commissioner Collier, to approve the Regular Meeting Minutes of June 23, 2003. All present voted in favor. Motion carried. President Enck introduced for discussion Item 4, Resolution relating to a redevelopment agreement with Broadway LaNel, a limited partnership; approving termination of the redevelopment agreement and authorizing execution of various documents. President Enck noted in order for Broadway LaNel to refinance the refunding bonds, it is obligated to pay the EDA the amount required under the formula of the 1985 Redevelopment Agreement which equates to $50,000 (40% of the fn'st $125,000 distributed to the partners in Broadway LaNel). President Enck acknowledged LaNel Financial Group's request to the EDA to waive the payment requirement. The EDA chose to uphold section 4.08 of the redevelopment agreement requiring payment of the 40%. Commissioner Sommer introduced the following resolution and moved its adoption "RESOLUTION RELATING TO A REDEVELOPMENT AGREEMENT WITH BROADWAY LANEL, A LIMITED PARTNERSHIP; APPROVING TERMINATION OF TIlE REDEVELOPMENT AGREEMENT AND AUTItORIZING EXECUTION OF VARIOUS DOCUMENTS." The motion for the adoption of the foregoing resolution was seconded by Commissioner Collier, and upon vote being taken thereon, the following voted in favor thereofi Enck, Cassen, Collier, Gwin-Lenth, Sommer; and the following voted against the same: None; Abstained: None; Absent: None; whereupon the resolution was declared duly passed and adopted, signed by the president which was attested to by the executive director. Motion was made by Commissioner Collier, seconded by Commissioner Gwin- Lenth, to adjourn the meeting. All present voted in favor. Motion carried. The New Hope EDA adjourned at 8:39 p.m. Respectfully submitted, Valerie Leone City Clerk July 28, 2003 EDA REQUEST FOR ACTION Originating Department Approved for Agenda Agenda Section Community Development 8-25-03 EDA Item No. By: By: 4 DISCUSSION REGARDING REQUEST BY BEAR CREEK CAPITAL AND CVS PHARMACY TO AUTHORIZE APPRAISAL OF PROPERTIES BY CITY AT APPLICANT'S EXPENSE (IMPROVEMENT PROJECT NO. 729) REQUESTED ACTION Staff requests to discuss the attached correspondence from Peter Coyle, Larkin Hoffman Law Firm, on behalf of Bear Creek Capital and CVS/Pharmacy regarding a potential redevelopment project at the southwest quadrant of Bass Lake Road and Winnetka Avenue. Representatives will be present to address the EDA. POLICY/PAST PRACTICE The EDA considers development proposals for various sites in the city when developers approach the city. BACKGROUND Bear Creek Capital and CVS/Pharmacy have Submitted the attached correspondence regarding their continued interest in the sites at the southwest quadrant of Bass Lake Road and Winnetka Avenue. The City Council and EDA have previously'discussed this matter on May 19 at a Council work session and at the May 27 EDA meeting. At the May 27 EDA meeting, the EDA declined to participate in a proposal to share the cost of appraisals for the property. Bear Creek Capital and CVS are still interested in the site and Peter Coyle from Larkin Hoffman has submitted the attached correspondence outlining a revised proposal. The correspondence states "Thank you for meeting with Bill Tippmann and me regarding a redevelopment proposal to construct a CVS/Pharmacy in the southwest quadrant of Winnetka and Bass Lake Road. On behalf of Bear Creek Capital and CVS/Pharmacy, I am writing to formalize their request that the city of New Hope enter into a preliminary development contract relating to this proposed redevelopment and authorize the competition of an appraisal of the affected properties in this quadrant. The redevelopment would, at a minimum, require the purchase and removal of the existing Sinclair gas station and certain residential structures. In addition to the proposed use, the redevelopment would enable the city to site much-needed ponding facilities to alleviate serious drainage problems being experienced by residents. The appraisal would enable the city and Bear Creek/CVS to better analyze the feasibility of this undertaking before committing to the formal process. "CVS/Pharmacy will commit to reimburse the city for the cost of engaging a qualified appraiser, plus reasonable city costs incurred, subject to review of estimates. Our ~]oal is ,to have the appraisal in hand in MOTIONBY ~ SECONDBY ~ TO: ~~ I:RFA \ plannin~livable communities ~ (~-CVS discussion 8-25-03 Request for Action Page 2._ 8-25-03 order to make a firm decision for proceedidg by [he end of September 2003." The city manager, city attorney and community development director met with the representatives and indicated that the revised proposal would be submitted to the EDA for discussion purposes. In the long-term, staff is supportive of a commercial redevelopment in this area that is consistent with the concepts endorsed by the Livable Communities Task Force. Staff has also recently been made aware of the fact that the Lyndale Garden property is now on the market. FUNDING If the EDA determines to proceed with this proposal, staff recommends that the applicant submit the routine development fees to cover consultant costs, including a $500 non-refundable application fee and a $5,000 deposit. ATTACHMENTS · Larkin Hoffman Correspondence · Previous Proposal and Concepts · Article -' · Map PETER J, COYLE DJR, DIAL (952) 896-3214 E-MAIL pcoytel~lh~l.com August 4, 2003 LARKIN, HOFFMAN, DALY & LINDGREN, LTD. ATTORNEYS AT LAW 1500 WELLS FARGO PLAZA 7900 XERXES AVENUE SOUTH BLOOMINGTON. MINNESOTA 55431-1194 TELEPHONE (952) 835-3800 FAX (952) 896-3333 Mr. Kirk McDonald Community Development Director City of New Hope 4401 Xylon Avenue North New Hope, Minnesota 55428 Re: Proposed Evaluation of Redevelopment Dear Kirk: Thank you for meeting with Bill Tippmann and me regarding a redevelopment proposal to construct a CVS/Pharmacy in the southwest quadrant of Winnetka and Bass Lake Road. On behalf of Bear Creek Capital and CVS/Pharmacy, I am writing to formalize their request that the City of New Hope enter into a preliminary development contract relating to this proposed redevelopment and authorize the completion of an appraisal of the affected properties in this quadrant. The redevelopment would, at a minimum, require the purchase and removal of the existing Sinclair gas station and certain residential structures. In addition to the proposed use, the redevelopment would enable the City to site much- needed ponding facilities to alleviate serious drainage problems being experienced by residents. The appraisal would enable the City and Bear Creek/CVS to better analyze the feasibility of this undertaking before committing to the formal process. CVS/Pharmacy will commit to reimburse the City for the cost of engaging a qualified appraiser, plus reasonable City costs incurred, subject to review of estimates. Our goal is to have the appraisal in hand in order to make a firm decision for proceeding by the end of September 2003. Please call me to confirm when this will be scheduled for action by the City's Economic Development Authority. Sincerely, Peter J. Coyle, for LARKIN, HOFFMAN, DALY & LINDGREN, Ltd. Cc: Bill Tippmann Tim Baird Morry Silverman Steven Sondrall, Esq. 873951. I Bear Cre~k Capita] has acc!tzired ma_ny properties ~eimflar to the Sincl-ir Marketing facitity and the adjoining residential properties. We feel confident that the evcntu~ cost of these properties can be quantified prior to either tl~e ciLT or Bear Cre~k Capir-] having mcurrcci the economic risk should thc ciD' be asked to file the necessm-~ ciocuments rs bc~in the (~UCk Talcs process for the acquisition for thc properlies re~ to complc~ Phase One. This is not tr~c of Phase Two (i.e., Hardware Hanks parcel). It ia our hope that all loroloertics can be acquired on a friendly basis. We beheve that once the Phase One propcrcy owners are ccmvinccd of :he public ptzrpose and community benefits inherent in the Winnetke Avenue West projec: as well as thc city's willingness to uae it's C~uick Take powers it' recltzired, these owners will be w~lli_rlg tO enter into serious neBotiations with the city or Bear Creek Capital to facilit~l~ a non-adversarial chanl~e of ownership. BthL~ Creek Capital pm...po_aes we end"the city agree to share the cost of direct p~.arz? costs rc~ci to eelS_ ~b~liih the likely cost of acquisition of the .p_ro_p_e__r~_e_s ~, ~1~...cost ef'llL!5,O00_. This am. oLlnl: is believed sufficient Lu ~apt~trc r~c cost m: 8.auc~t appra~ .a~ for' ti~ ~~es as well as ,n,~, l,~,o 1 expenses incurred i~ the city to beg~ the ,~,~r,~. ...... Ear-des .'T°m.? men nave conecuve mow:Ledae of the Creek r~._;,_, __.,, _, _ ~__--,- . ~oo~r~ r-n~ 't.a~ 'tm~opert. ies. Bear ....... ~ ~ ....... '~ -~ ~-----~ ~u i~oo~[,~vlij LTl tile propcr~ from the 1o : -- _-~__~ ~ --,~ waacusa J~ir, l~ntary :~chool cai schoOl The likelT.costs appear to be e~ca/Jy fe,e, qfl:rle and; a~-cmcn~s with thc ~y ana/or ~car Creek Capital. ?mzqeted ~l~._14.- Thc following outlines Bear Creek Capital's assurncd tLme frames for the pre- cievel°l°:nent aSl:~Cts of Pha~e One: A~eeme~t Peruse: The city and Bear Creek 15 d~3m, end/ntt: Oapital w/Il negotiate the Cost ~haring and lndcranity. June 15, 2003 2 1~ ~003 8~27R~ BER~C~EEK · L~nd Acqtti~tton and · Pre]iminar~ Project DesiBn a~d City Review Su~cient to obtain preliminary plan approval · Final Site ~nflnuerinf and ~~e · F/nM Permitting. _Proieet 60 d~Fs, ending August 15, 2003 90 daFa, ending November 15, 2003 30 dmZ, ending December 15, 2003 ~0 da~s, ending August 15, 2003 60 day's, ending October 15, 2003 60 clays, ending December 15, 2003 As smMd above, the enelosed Conce/~.t Ci1~ P. " m~gs ~th you ~d ~,,- ~,-~ ,:'~ ~ 2~ ~e p~duct of Scvcr~ . spec]fi~ly mind ~ · ;~ repel. ~e f~o~ d~i~ .... ,,, Wirmetka Avenue - ~cac~.t~. ace~l~ road. · Pub]lc Roadway access m fumre.,'~~m aim. from Baas ~e Rd. Ped~ ~ ~__ . ':~,','.. ~ W~ne~ Arena. ~tea at ~e ~C~o ~'~ass ~ Road ~d Op~m spaces and internal POdoatrlan/biko trails throu-- ~m~ ~r po~ ~s ~ ~ .... . W~a A~ue. ~ ~p mt ~e ~8~ of Bass ~ Road ~d The proposed development would worle ~ wirJ~ any of the future developments r~ occur wi~.hLn thc ~Vinneflca Avenue'west area (i.e., tjx= accommodation or removal of the exist, lng Hutas..,.a~ Junior High ~hool or Wlmmel:l~ F. lemenlmr~ School). Mmrlmtmbilitw, of*the DeveloDm~,,,t use sn.o.wn a~ me eastern portion of the Pha~e One prol~rty, AC ~J~is we continue ~o request the user's iden~ ~ confidential through the ..... . .......... n :: eu.uur~_ u~ rd~e ~tuck Study Research Phase -~-~ ~=~ a~ ~e~g ~o~- to--rd a nei~borho~-oficn~cd ~sm~t for ~s ~on of ~e pr~. The ~8e One 8e~--, ..- .x= caq, we wl/l beghl immediately ,~, ..~--~...= ...... ~naring and Indenz~i,~v. A..--~..--.,o .=2. ___.., '~.""" ~.-~'*= ~m~ ~m:cessar~ ~oal: ....... - ..... , w~ w-~ ~;onLLT~I¢ CO ' ' ~eqmm~e prope~ owners --- ....... · . , . neeo~acc w~th thc .... --~ . _ =.,-u Gunu~uc r~Jc project s dcm ! look .~ur wor~ sesmon wit2~ city c0Ilm:il ~m Me~adav ----- .....~n~. forward w nave any c~emions... -, --y &=--. riease call ffyou Sincerely, cc: Timo~y Baird 4 CONCEPT 1 CONCEPT 2-- CONCEPT ~ CONCEPTUAL PLAN '~' changes sweeping the industry, such as the rise of mail-order prescriptions. Drugstore overdose? By John Reinan SMr Tribune $Mff Wr~Wr Lowell Anderson's field has gotten a lot more crowded since he began running a phar- macy 37 years ago. Walgteens, the nation's largest drugstore chain, was the first to arrive on his tuff. It was followed by pharmacies in grocery stores and mass retail- ~s such as Wal-Mart and Tar- get. · So Anderson isn't overly ~oncemed that CVS Corp., the nation's No. 2 drug chain, plans to build as many as 40 stores in the Twin Cities mem~ area starting early next year. · . But as an independent re- tailer, he's not exacdy thrilled, either. 'When elephants mate, the grass suffers," said Anderson, owner of Bel-Aire Pharmacy in White Bear Lake. 'Unfortu- nately, I'm the gzass." ~ The Twin Cities area ranks as the nation's ninth- or 10th- largest drugstore market, de- Pending on different industry sources. Yet it's been one of the last to be invaded by the na- tional chains. CVS, based in Woonsocket, R.I., has been aggressively breaking out of its eastern base. In the past few years, CVS has expanded into Houston, Dallas, Phoenix, Las Vegas, Tampa and Chicago. The com- pany holds the first or second market share in 67 percent of the regions it serves. The company's sales have grown from $20.1 billion in 2000 to $24.2 billion in 2002, with net profits of $716 million. And the chain squeezes more profit out of its stores than any competitor, with average sales of $767 per square foot com- pared with $654 for its nearest competitor, according to a Wall St~et research report. But the companies already operating in the Twin Cities seem to think the market is big enough to accommodate a new player. With the aging of the baby boom generation, de- mand for prescription chugs is onthe t~e. In addition, drug compa- pies have become much more aggressive about advertising directly to consumers, further fueling the appetite for both prescription and over-the-counter medications. · '%Ye compete with CVS in many markets and aren't par- ticularly con- cemed about their entry [into the Twin Cities],' said Walgreens spokeswoman Carol Hively. Miflnesota still is largely untouched by the large drugstore chains that 'The demand for prescription dominate much of tine rest of the count. drags is increasing, so market share is increasing." Gordon Baflcer, CEO of the 1he bi~est ~rufsto~e chains: Snyders Drug Emporium Club chain, said he's accustomed to ~VolOMns $28.7 bmofl 4,000 / 30% stiff competition in other Sny- Cvs $24.2 billion4,:t00 dersmarkets. :.qbmaom* $i6.8txtlk~ Z000 'Dealing with CVS or having Rile Aid $15.8 b41#ofl3.600 them enter the market is not like, 'Gosh, I don't know what qflc~0es phmnaOes iff illMflsoos these guys will do,' ' Barker IrocerystomsasweUasOscoafldSev. said. 'We already are in competi- tion with them. I can't think of sowces: coe~emek any market other than this one where we're not in competition with CVS. It's not a new con- cept to us.' -- The latest threat. ~ Ye try to spend a ,t more time with , tr patients than te chains proba- ~y can do. On the rescription side, 's going to be an t I co-pa~ 'hether you 'go to ~e or to Walgreens. Jur cost is the tree either way? · Low~ll Anderson, inde- ndomt-drugstore propri- DRUGSTORE from D1 Retailers wage campaign against mail-Order threat Snyders, based in Minne- tonka, ranks No. 2 in Minneso- ta with about 24 percent of the market, according to Chain Drug Review, a New York- based industry publication. Walgreens leads with 46 per- cent of the state's drugstore dollar. Snyders is owned by Katz Group Inc., Canada's second- largest drugstore operator. The privately owned company doesn't release financial fig- utes for Snyders. But between its Snyders and Drag Empori- um stores, Barker said, the chain is "a billion-dollar busi- ness.. That's a big number, but it looks a lot smaller alongside the sales of CVS and Chicago- based Walgreens, which ranks No. 1 nationally with annual sales of $28.7 billion. The two chains, Barker said, are "the 900-pound gorillas" of the drugstore business. "Both of those companies have thousands more stores than we do," Barker said. "It will put us at a little bit of a dis- .advantage in terms of purchas- ing. That's the way the system works. UBut as far as them domi- nating the market, we think Walgreens would have done that already if they were going to do it. We have name recog- nition from 1927. We're open- ing a new store today on Excel- sior Boulevard in St. Louis Park,' Barker said. "We continue to grow here, and we have no intention of being shrinking violets." Last entry? For now, it seems that CVS will be the last major drugstore chain to enter the Twin Cities market. The other three mem- bers of the national top five m Rite Aid, Eckerd and the gro- cery chain Albertsons, which owns,Osco and Sav-on drug- stores -- say they have no plans to build here. Prescription drugs usually account for 60 to 70 percent of a drugstore's revenue. The rest of sales come from the front end: everything from milk to photo processing to over-the- counter medicines. The big drugstore compa- nies are hoping to boost front- end sales by acting more like convenience stores, said Rich- ard Monks, senior editor of Chain Drug Review. "Within the last decade, they've expanded tremendous-, ly into other areas," Monks said. "They are trying to offer a convenient alternative to su- permarkets. The quick-in, quick-out is ~the drugstores' main selling point in that area 'I know for myself, I u~'e drugstores as a convenience store." But reliance on front-end sales can be risky. In the cur- rent sluggish economy, drug- store front-end sales have lagged as cautious consumers keep a tight rein on spending. And photo processing, abig profit center for drugstores, faces a long-term threat from digital photogral~hy. There are also questions about whether consumers who . want one-stop shopping will choose a drugstore over a gro- cery store. "There's an inherent advan- tage for the larger-box retailer to go after the customer with the convenience of one-stop shopping," said Carolyn Sier- aski, general manager for phar- macies at Supervalu Inc. Supervalu operates phar- macies at 52 Cub Foods super- markets statewide, with 44 in the Twin Cities metro area. "The entrance of a big na- tional competitor gives us the opportunity to provide excep- tional services," she said. "We offer prompt service at com- petitive prices, and we think we compete well in the market." Fear of mail-oder There's one topic that unites both large and small dru.[gstore retailers: fear of mail-order prescriptions. About 16 percent of U.S. prescriptions are filled by mail, and that number is expected to grow as more health care plans either force their members to order by mail or give them fi- nancial incentives to do so. Drug retailers argue that the cost savings, if any, don't offset the importance of personal counseling from a trained · pharmacist. 'You won't find any of us that aren't worried [about mail-order prescriptions]," said Snyders' CEO Barker. "We believe wholeheartedly that mail order is detrimental. "You get three pages of in- structions, and do you know what the consumer does? They take it to us, and they take it to Walgreens, and they say, %V'hat do we do?'" Anderson, the owner of Bel- Aire Pharmacy, said he's losing longtime customers to mail or- der. Many of his customers work for 3M, which this year started offering' employees in- centives to order prescriptions by mail. Next month, U.S. Bancorp will begin requiring mail-order prescriptions for some retirees who take maintenance drugs. Anderson said that, too, will cut into his business. "People will come in with these letters and say, Tve been de_,al~n, g with you forever, and I -don t want to leave, but I can't afford not to,' ' Anderson said. : Anderson is fighting back with a mailing to all his pa- tients who are faced with choosing mail-order prescrip- tions. The letter lists what the pharmacist perceives are the drawbacks of mail order. He also printed up a bro- ur, e for patients explaining me behind-the-scenes ac- tivities that customers may not be aware of, such as contacting doctors to resolve potential drug interactions. , He's hoping his customers will appreciate the extra atten- tion he says only a local phar- macy can provide. "We try to spend a lot more time with our patients than the chains probably can do," An- .derson said. And he noted that, m an age of health care plans, a co-payment is a co-payment no matter who's getting it. "On the prescription side," he said, "it's going to be an $11 co-pay, whether you go to me or to Walgreens. Your cost is the same either way." lohn Reinan ls at jreinanOstartribune, con~ 11 LLAGE GREEN GOLF COURSE 8130 8100 5645 564.1 5655 5629 5621 5619 5615 56O5 8119 5650 5618 5610 TO 560O 8011 8OO9 8OO7 OOL ~TH AVE N ST. 8OO8 THERESE NURSING HOME 8001 7910 57~6 5752 57OO 5704. 5720 5716 562O 58O0 780O 5559 794O 5524. 5518 5512 55O6 5500 Z 5559 5537 5531 5519 5509 5501 5520 762~1 55TH EDA REQUEST FOR ACTION Originating DePartment Approved for Agenda Agenda Section Community Development 8-25-03 EDA Item No. By: Kirk McDonald By: 5 A RESOLUTION AUTHORIZING APPROVAL OF A TERM SHEET BETWEEN THE NEW HOPE ECONOMIC DEVELOPMENT AUTHORITY AND RYLAND HOMES FOR THE REDEVELOPMENT OF THE WINNETKA AVENUE EAST PROPERTY (IMPROVEMENT PROJECT NO. 751) REQUESTED ACTION Based on direction provided by the City Council at the July 21, 2003, Council work session, staff and consultants have continued to coordinate on terms of agreement with Ryland Homes on the East Winnetka Livable Communities redevelopment area. Enclosed is a term sheet and resolution prepared by Krass Monroe, P.A., the city's redevelopment consultant. Also enclosed is the most recent revised concept plans prepared by Ryland Homes. Jim Casserly from Krass Monroe will be present at the meeting to review the terms of agreement with the EDA. Approval of the term sheet is the next step that needs to be taken to keep this redevelopment project moving forward. Staff recommends approval of the resolution. POLICY/PAST PRACTICE The East Winnetka Livable Communities redevelopment plan is consistent with the Comprehensive Plan of the city. BACKGROUND Per the attached memorandum from Krass Monroe, "attached is a form of resolution for the EDA which, once we reach agreement with Ryland, may be used by the EDA to approve the term sheet and authorize negotiation of a redevelopment contract with Ryland. The term sheet reflects the results of the city's recent discussions with Ryland. The entire site will be delivered to Ryland on May 1, 2004, for a land sale price of $12,500 per finished unit. Ryland will make a down payment of 10% of the total land sale price and will pay the balance as it sells each finished unit. Ryland will secure its payment obligation with a letter of credit or its equivalent. Buildout will occur over approximately 24 months." Ryland Homes has submitted two final concept plans, as follows: (cont.) MOTIONBY ~ SECOND BY ~~./ TO: Z)4 ¢ -07 / h rfa lannin livable communities -term sheet land Request for Action Page 2 8-25-03 Ori,qinal Plan 78 Carriage Homes 70 Heritage Condos 18 Twinhomes 166 Homes Revised Plan 128 Carriage Homes 56 Heritage Condos 184 Homes The city will receive a higher price for the property if more units are located on the site, so the Council/EDA should discuss the trade-offs with each plan. Both plans are still preliminary and can be modified further, but the EDA needs to establish its preference for number of units and type of units. Jim Casserly will be present to review the terms of agreement in detail with the EDA. The next steps would include: · Continue work on detailed plans · Redevelopment contract · Complete blight report · Creation of TIF District with special legislation authority The current term sheet shows that the project would get under construction in the spring of 2004. ATTACHMENTS · Resolution · Krass Monroe Memo · Term Sheet · East Winnetka Acquisitions NEW HOPE ECONOMIC DEVELOPMENT AUTHORITY COUNTY OF HENNEPIN STATE OF MINNESOTA RESOLUTION NO. A RESOLUTION AUTHORIZING APPROVAL OF A TERM SHEET BETWEEN THE NEW HOPE ECONOMIC DEVELOPMENT AUTHORITY AND RYLAND HOMES FOR THE REDEVELOPMENT OF THE WINNETKA AVENUE EAST PROPERTY BE IT RESOLVED by the New Hope Economic Development Authority (the "EDA") as follows: Section 1. Recitals. 1.01 The EDA has chosen Ryland Homes ("Ryland") of The Ryland Group, Inc. as its Developer/Builder for the Winnetka Avenue East site (the "Site"). 1.02 The Site is located within Redevelopment Project No. 1. 1.03 The EDA and Ryland have worked to refine the Site plan and determine the economic feasibility of the redevelopment project. 1.04 The EDA has presented a term sheet (the "Term Sheet") to Ryland, attached as Schedule A, which outlines the project and the terms and conditions under which the EDA is willing to acquire the parcels in the Site which the EDA does not already own and then convey the entire Site to Ryland for redevelopment. Ryland has indicated its willingness to undertake the project in accordance with the Term Sheet. 1.05 It has been proposed that the EDA enter into a COntract for Private Redevelopment (the "Contract") with Ryland if mutually agreeable terms can be reached consistent with the Term Sheet. Section 2. Findings. 2.01 The EDA hereby finds that the redevelopment project promotes the objectives as outlined in its Restated Redevelopment Plan for Redevelopment Project No. 1 established pursuant to Minnesota Statutes, Section 469.001 et seq. 2.02 The EDA hereby finds that the Site is located in an area which the EDA intends to include in a new tax increment financing district pursuant to Minnesota Statutes, Sections 469.174 through 469.1799, and, as applicable, Laws of Minnesota 2003, 1st Special Session, Chapter 21, Article 10, Section 10, all as amended and supplemented from time to time. Section 3. Authorizations. 3.01 The President and the Executive Director (the "Officers"), along with necessary staff, attorneys and consultants for the EDA, are hereby authorized to negotiate a Contract for Private Redevelopment with Ryland relating to the Site, which Contract shall be presented to the EDA for its approval. Adopted by the EDA this __ day of ,2003. , President ATTEST: ., Executive Director G:\WPDATA\N\NEW HOPE\18~)OC\EDA RESOLUTION AUTHORIZING TERM SHEET.DOC 2 KRASS MONROE, P.A. ATTORNEYS AT LAW Gay Greiter, Esq. Email ggreiter~assmonroe, com Direct (952) 885-4393 MEMORANDUM To: From: Date: Re: City of New Hope Atto: Kirk McDonald, Community Development Director The Ryland Group, Inc. Attn: Chris Enger, Land Resources Manager Gay Greiter, Esq. James R. Casserly, Esq. August 18, 2003 Approval of Term Sheet with Ryland. Our File No. 10048-18 Attached is a form of resolution for the EDA which, once we reach agreement with Ryland, may be used by the EDA to approve the term sheet and authorize negotiation of a Redevelopment Contract with Ryland. The term sheet reflects the results of the City's recent discussions with Ryland. The entire site will be delivered to Ryland on May 1, 2004 for a land sale price of $12,500 per finished unit. Ryland will make a down payment of 10% of the total land sale price and will pay the balance as it sells each finished unit. Ryland will secure its payment obligation with a letter of credit or its equivalent. Buildout will occur over approximately 24 months. G:\WPDATAWWEW HOPE~18\COR~vlCDONALD GG 01.DOC SUITE 1100 SOUTHPOINT OFFICE CENTER * 1650 WEST 82ND STREET · MINNEAPOUS, MINNESOTA 55431-1447 TELEPHONE 952/88~5999 * FACSIMILE 952/88~5969 www. kmssmonme.com ~ TERM SHEET City of New Hope Bass Lake Road and Winnetka Avenue August 6, 2003 Redeveloper: Authority: City: Redevelopment Property: Authority Property: Private Property: Property Acquisition and Eminent Domain: Creation of TIF District: The Ryland Group, Inc. New Hope Economic Development Authority The City of New Hope, Minnesota The Authority Property and the Private Property, as defined below. The cross-hatched parcels shown on the diagram attached as Exhibit A and currently owned by the Authority, which the Authority would agree to sell to the Redeveloper. The [ 14] parcels adjacent to the Authority Property as shown on Exhibit A and currently owned by various individuals. The Authority will attempt to purchase the Private Property through negotiations with the current owners. If the Authority is unable to pumhase some of the parcels in that manner, the Authority will acquire them through eminent domain, including the use of quick take, provided (1) the required public purpose findings can be found to support such action and (2) a Contract for Private Redevelopment has been executed. The Authority will pay the relocation expenses of the owners/tenants of the Private Property. If the Redeveloper elects to construct Phase 11 by adding additional parcels to the Redevelopment Property in addition to the Authority Property and the Private Property, the Authority will assist the Redeveloper in acquiring such parcels voluntarily, but will not use eminent domain to acquire such parcels. The Authority will provide the same level of assistance for Phase II as it is for Phase I. The Authority shall create a tax increment financing district for the Redevelopment Property (the "T~ District") assuming the statutory tests for establishment are met. The Authority will properly consider and will need to make all the necessary findings, including the "but for" finding on need for establishing the TIF Public Improvements: Site Improvements: Zoning and Land Use Approvals/Easements: District'. Conveyance of the Authority Property and the Private Property to the Redeveloper shall be contingent upon the Authority's ability to establish a TIle District. The Authority will perform and pay for the following work on the parcels in the Redevelopment Property before conveying the parcels to the Redeveloper: · Building demolition and removal of demolition debris, basements and driveways · Site clearance · Sanitary sewer to the edge of the Redevelopment Property · Water mains and laterals to the edge of the Redevelopment Property · Environmental remediation · Vacation of a portion of Sumter Avenue North and any other public rights of way that would interfere with the proposed redevelopment The Redeveloper shall construct and pay for all site improvements, including: · Utility relocation within the Redevelopment Property · Storm sewers and storm water system elements (ponds, pipes and infiltration systems) · Any public or private streets within the Redevelopment Property, including curb and gutter · Landscaping according to City-approved landscape plans · Trails and other pedestrian improvements pursuant to City- approved site plans · Grading and import/export of soil in accordance with City- approved grading plans · Retaining walls and fences, if needed · Streetscape and street lighting in accordance with City- approved plans Normal and customary site and building plan review requirements will be followed. The Redeveloper shall pay for rezoning, subdivision, platting, plat amendment, PUD and preparation of restrictive covenants, easements, reciprocal easements, and any other documentation necessary for the construction and sale of the Minimum Improvements. The Redeveloper shall be responsible for obtaining all land use and zoning approvals. Permits/Fees: Minimum Improvements: Conveyance: Survey: The Redeveloper shall comply with all applicable City building codes and construction requirements. The Redeveloper will pay the normal and customary permit, plan review, utility access and park dedication fees and shall be responsible for obtaining all building permits prior to construction. The Redeveloper shall construct (except that in the case of the twinhomes, if not constructed by the Redeveloper, the Redeveloper shall cause the twinhome builder to construct) the following Minimum Improvements on the Redevelopment Property for the following sales prices, assuming a total of 166 units (or 184 units; see below). The average unit sales price shall not be less than $200,000, including upgrades. Approximately 70 (56 in 184-unit site plan) Heritage condominiums with a base sales price of approximately $149,000 per unit, exclusive of upgrades. A combination of three floor plans will be used. Approximately 78 (128 in 184-unit site plan) Carriage townhomes with a base sales price of approximately $169,000 per unit, exclusive of upgrades. A combination of three floor plans will be used. Approximately 18 (none in 184-unit site plan) twinhomes with a base sales price of approximately $200,000 per unit, exclusive of upgrades. A site plan of the Redevelopment Property showing the expected configuration of the Minimum Improvements appears as Exhibit B. A description of the housing types appears on Exhibit C. Specifications of construction materials and fixtures are outlined in Exhibit D. The available upgrades are listed on the attached Exhibit E. The Authority shall convey the Redevelopment Property to the Redeveloper after it has acquired all of the parcels in the Private Property and completed the work to be performed by the Authority on the Redevelopment Property. The Authority undertakes to convey the Redevelopment Property to the Redeveloper by May 1, 2004 (the "Closing"). The Authority shall provide the Redeveloper with a boundary line survey of the Redevelopment Property. 3 Taxes/Special Assessments: Land Sale Price: Letter of Credit: Title: Infrastructure/Other Fees: Internal Drives: The Authority will pay all special assessments pending or levied on the Redevelopment Property at Closing, except that the Redeveloper shall pay any unpaid original assessments for main and lateral water trunk charges. Taxes will be prorated between the parties at Closing. The Authority shall sell the Redevelopment Property to the Redeveloper for a price of $12,500 per unit, including the sites to be developed for twinhomes, if any. (Total land sales price of $2,075,000 if 166 total units or $2,300,000 if 184 total units.) The Redeveloper will deliver a promissory note and a letter of credit (see below) to the Authority at the Closing. The principal payment schedule shall include a down payment of 10% of the total land sale price at Closing and thereafter a payment of $12,500 upon the sale of each finished unit, with the 10% down payment to apply to the last of the units to be sold; provided that at no time shall the aggregate of such principal payments be less than that payable according to the following schedule: May 1, 2004 ........................ 10% down payment August 1, 2004 .................... 18% of the total land sales price November 1, 2004 ............... 18% " February 1, 2005 ................. 18% " May 1, 2005 ........................ 18% " August 1, 2005 .................... Remaining balance The Redeveloper's promissory note shall be secured by a letter of credit from a nationally-recognized institution or equivalent security as agreed to by the Authority and shall be reduced by each unit or quarterly payment requirement as described above. The Authority will transfer marketable title by quitclaim deed and will pay for a title commitment. Any title insurance and/or endorsements requested by the Redeveloper will be paid for by the Redeveloper. At the Closing the Authority will provide the Redeveloper with evidence of marketable title. City fees (park dedication, SAC, WAC, storm water, development, infrastructure, impact, permits, other) are set forth on Exhibit F. There shall be no increases by the City in its portion of such fees for the Redevelopment Property through October 31, 2005. The Redeveloper will construct internal drives on the Redevelopment Property as shown on the Site Plan in accordance with City specifications. The respective condominium and Timing: Financing/Encumbrances: Remedy Upon Redevel- oper's Default: Tree Preservation: Effect of Term Sheet: townhome association(s) will have maintenance responsibility for the drives (including upkeep, street sweeping and snowplowing). Begin on or about May 1, 2004 Complete on or about June 30, 2006 The Redeveloper will obtain any necessary private financing. The Redeveloper and shall not encumber the Redevelopment Property and will indemnify and hold the Authority harmless fi.om any liens. The conveyance transferring the Redevelopment Area to the Redeveloper will contain a right of reverter which will be superior to the rights of any liens. The right of reverter shall be released for each finished unit upon the sale of such unit. In the event of default the City will also retain the 10% down payment of the land sale price. The Redeveloper will use its best efforts to preserve the large trees on the Redevelopment Property. This Term Sheet outlines the terms under which the parties are willing to enter into a Contract for Private Redevelopment, but does not constitute an offer or acceptance on either party's part. Ail rights and obligations with respect to the Redevelopment Property shall only he as provided for in a Contract for Private Redevelopment approved by the Board of the Authority. If there is a twinhome component in the project: Twinhomes: Nine sites within the Redevelopment Property may be resold by the Redeveloper to another builder, to be identified, for the construction of 18 twinhomes. The Redeveloper shall cause such builder to adhere to the provisions of the Contract for Private Development insofar as those provisions relate to the nine twinhome sites. The Authority shall approve the twinhome builder prior to that builder's commencement of construction. G:\WPDATA'uN'uNEW HOPE\I 8\DOC',TERM SHEET V4.DOC Redevelopment Property (Authority Property and Private Property) EXHIBIT A 6 Site Plan (Housing Mix and Layout) EXHIBIT B 7 EXHIBIT C Description of Housing Types Heritage Condominiums: Will range in size from 1,276 to 1,671 sq. ft. in - and -unit building configurations and will contain a mixture of three one-level and two-level designs. Carriage Townhomes: A traditional style row townhome with a rear entry, two-car tuck-under garage and a lookout basement. The townhomes will contain a mixture of three different models ranging in size from 1,595 to 1,947 sq. ft. Nine different brick and siding front elevations will also be intermixed. The townhomes will be constructed in - and -unit building configurations. Twinhomes: To be supplied by twinhome builder. 8 Construction Materials and Fixtures EXHIBIT D Heritage Condominiums [ Manufacturer ] Product Style/Name Interior Features Exterior Features Carriage Townhomes ] M~nufacmrer I Product Style/Name Interior Features Exterior Features Twinhomes Manufacturer Product Style/Name Interior Features 9 Exterior Features 10 Heritage Condominiums: 2. 3. 4. Upgrades EXHIBIT E Carriage Townhomes: 2. 3. 4. Twinhomes: 2. 3. 4. 11 CITY OF NEW HOPE East Winnetka Options .' Concept A ~ i Concept B ! ~ i : (166 Units) I ; (184 Unite) I Difference ~roperty - Square Feet i ~ i ITotal Square Feet i 690,895 I I 690,895 ! Original Market Value .i rs 3,874,929i I$ 3,874,929 i Development i Assessed~. i 1 [For SaFe i Value , / I iCarnage Townhomes iS 200,000 j 78 i 128 !units ---- i iTwinhOmes 225,000! 18 iunits 0 lunits -~ i !Heritage Condos 180,000! 70 iunits 56 lunits ,' Total Housing (units) J : 166 iunits 184 lunits 18 New Market Value $ 32,250,000 iS 35,680,000 $ 3,430,00-0 I~reaSe__i'n Market V. lue i I 8.3 i 9.2 il : C~o~veragei (units per acre)/ i 10.5 I; 11.6 , Sources and Uses J ! I I Sources I J ! ._ i PV of Available Tax Increment (6/1/03) 5.00% $ 5,437,937 = $ 6,083,390 $ 645,453 Land Sales $ 12,500 ~ 2,075,000 __~ 2,300,000 2~.5,000 '~Tota Sources I 7,512,937 ~i T ' . L-- i 8,383,390 ~ i Uses: I ZZZZZZ~ i~ 870,453 i ! 7/1/2003 and later i i i - ~ · ou/,z41 697,241 J _ I I~os[s of Issuance (% of T.I.) 2.5%i 135,948 I 152,085 I 0 , !Before 7/112003 -Already spent I 2 604 555 ....... r 16,1~36 16,136 East Winnetka Comparisons 01 Prepared by Krass Monroe, P.A. 8/22/03 7940 ; 5420 542! :- .; 54,16 5417 ~ 54.10 5411 ; East Winnetka Study Area- Planning District 6 .... :m L ................... ~ - ....... ; ......... - ......... =-- .... - ~j~m~Ji~J,' 56TH AVE N h: ~ 7615 · ~ ! '~1~ 5540 ;' 5.537 ; ~ 5538 i t:.,, , 5519 5512 7601 ,- ~ ~ ,..".: · " / ..: .. : 55TH AVE N ............ ~.----?-----~ .: ...~ 5426 i 5427 :; ST RAP ~417 .: City-Owned Properties in Comprehensive Planning District 6: 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 5340 Winnetka Ave. N. 5406 Winnetka Ave. N. 5410/12 Winnetka Ave. N. 5420 Winnetka Ave. N. 5422 Winnetka Ave. N. 5506 Winnetka Ave. N. 5518 Winnetka Ave. N. 5524 Winnetka Ave. N. 5532 Winnetka Ave. N. 5550 Winnetka Ave. N. 5520 Sumter Ave. N. 5530 Sumter Ave. N. 5546 Sumter Ave. N. 5559 Sumter Ave. N. 7603 Bass Lake Road Ext. 7621 Bass Lake Road Ext. 7801 Bass Lake Road August 14, 2003 I YLAND The Ryland Group. Inc. Attention: Kirk McDonald Community Development Director City of New Hope 4401 Xylon Avenue North New Hope, MN 55428 Re: Ryland Plans for the City of New Hope Dear Mr. McDonald: Please find enclosed the most recem Ryland plans (2) for your review. Please contact Dan Petrik with any questions at 952.229.6032. Sincerely, ~ Mier~a Land Administrator Ryland Homes, Twin Cities STUDY AR~A "A" ~ 26 Jo ;~ I ' [ _%/ 2,5' /7 ?L~4 I-Iomes,'?2L~ C~zrr/'~e ttomes, 100 50 0 $ 00 200 Scole: I Inch = 100 Feet I, 61_ 2L~5 STUDY ARR& ?~ I-Iome~.' ?L~ I-ler/?~e Condos, ?L~ £w/n /-Iomes 50 0 100 200 I Scale: 1 Inch - 100 Feet