112398 EDA Official File Copy
I
CITY OF NEW HOPE
EDA AGENDA
I I I
EDA Regular Meeting #9 November 23, 1998
Agenda #9
President W. Peter Enck --
Commissioner Sharon Cassen
Commissioner Don Cellier
Commissioner Pat La Vine Nerl~y
Commissioner Gerald ~tten
1. Call to Order
2. Roll Call
3. Approval of Minutes of November 9, 1998
4. Motion Directing Staff to Prepare Redevelopment Contract for Senior
Outreach Services, Inc. for the Development of an Adult Daycare Facility
on a Portion of Lot 2, Block 1, Science Industry Center 3rd Addition
(Improvement Project No. 493)
5. Resolution Approving Addendum to Bass Lake Court Townhome Project
(Improvement Project No. 614)
6. Adjournment
CITY OF NEW HOPE
4401 XYLON AVENUE NORTH
NEW HOPE, MINNESOTA 55428
Approved EDA Minutes November 9, 1998
Meeting #8 City Hall
CALL TO ORDER President Enck called the meeting of the Economic Development Authority to
order at 8:48 p.m.
ROLL CALL Present: Enc~k, Cassen, Collier, Norby, Otten
Staff Present: Sondrall, Hanson, Donahue, Leone, McDonald, Henry, French,
Schuster, Johnson
APPROVE MINUTES Motion was made by Commissioner Otten, seconded by Commissioner Cassen, to
approve the EDA minutes of September 28, 1998. All present voted in favor.
Motion carried.
IMP. PROJECT597 President Enck introduced for discussion Item 4, Discussion Regarding
9200 49th Ave. N. Development of City-Owned Property at 9200 49th Avenue North (Improvement
Item 4 Project No. 597).
Mr. Kirk McDonald, Director o£ Community Development, explained that over
the past 16 months the City has received several inquiries from
industrial/commercial businesses and developers who have had a potential interest
in the property.
In July the EDA directed staff to develop a request for proposal that outlines the
type of development the City desires for the site, present it to the EDA for
approval, and seek RFPs from interested persons. A draft RFP has been prepared.
However, staff has recently met with Gary Nordness, President of Essence Real
Estate Services, Inc., and with the owners of Contract Hardware Company, Inc.
who are interested in negotiating with the City for the purchase of the property and
who have presented a concept plan that would maximize development on the site.
Mr. McDonald described the type of business and the proposal.
Mr. McDonald asked whether the EDA is desirous of having staff pursue
negotiations with ERSI and Contract Hardware Company for the potential purchase
of the city-owned property at 9200 49t~ Avenue North.
The EDA agreed that the proposal appears to be a compatible use and directed
staff to proceed with negotiations. Mr.' :McDonald stated his intention to report
back to the EDA within a month.
IMP. PROJECT 645 President Enck introduced for discussion Item 5, Discussion Regarding Appraisal
Regent Apartments of Regent Apartments at 7136 60a Avenue, 6017 Louisiana Avenue and 7124
Item 5 Lombardy Lane (Improvement Project No. 645).
Mr. Kirk McDonald advised the EDA that the appraisal of the properties revealed
a value of $1,000,000. He also estimated the cost to relocate the 35 tenants would
be $258,000. He illustrated the redevelopment area and suggested incorporating
the two adjacent single family homes at 7128 60~" and 7104 Lombardy to the
project.
New Hope EDA November 9, 1998
Page 1
He presented four options for consideration by the EDA.
Commissioner Norby emphasized the need for high density housing such as
townhomes for moderate income residents.
Commissioner Collier inquired whether the area is in a Tax Increment District.
Mr. McDonald affirmed that the properties are in a plan area and TIF dollars can
be expended.
Mr. Dan Donahue, City Manager, stated that due to the complexity of the project,
he suggested authorizing a planning firm to conduct a financial analysis. He noted
the importance of determining how to best stage the process.
Commissioner Cassen recommended including the entire area if a project is
undertaken.
The EDA directed staff to hire a plarming firm to conduct a financial analysis and
several concept plans for potential redevelopment in the. area.
IMP. PROJECT 603 President Enck introduced for discussion Item 6, Resolution Requesting the
7819 Angeline Drive Purchase of Tax Forfeited Land at 7819 Angeline Drive (Improvement Project No.
Item 6 603).
Mr. Donahue stated staff has recently learned that the City needs to pay the
appraised value of the property in order to purchase it. The property at 7819
Angeline Drive has an assessed value of $1,000 and a fair market value of
$13,700. Staff is requesting authority to purchase the property for no more than
'$5,000.
He noted the lot next to 7819 Angeline Drive may be available next year and staff
would like to acquire both properties to pursue a scattered site redevelopment
project.
RESOLUTION Commissioner Norby introduced the following resolution and moved its adoption:
EDA 98-11 "RESOLUTION REQUESTING PURCHASE OF TAX FORFEITED LAND
Item 6 AT 7819 ANGELINE DRIVE". 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 thereof; Enck, Cassen, Collier, Norby,
Otten; and the following voted again.~t 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.
ADJOLrRNMENT Motion was made by Commissioner Norby, seconded by Commissioner Collier, to
adjourn the meeting. All present voted in favor. The New Hope EDA adjourned
at 9:15 p.m.
Respectfully submitted,
Valerie Leone
City Clerk
New Hope EDA November 9, 1998
Page 2
I I EDA
RF.Q T FOR ACTION
Originating Department Approved for Agenda Agenda Section
EDA
Community Development r.-... ,,
8 Item No.
ByKirk McDonald B3r:. 4
MOTION DIRECTING STAFF TO PREI~ARE REDEVELOPMENT CONTRACT FOR SENIOR
OUTREACH SERVICES, INC. FOR THE DEVELOPMENT OF AN ADULT DAYCARE FACILITY ON A
PORTION OF LOT 2, BLOCK 1, SCIENCE INDUSTRY CENTER 3"D ADDITION (IMPROVEMENT
PROJECT NO. 493)
At the August 8 EDA meeting, the EDA approved a Resolution Declaring Preliminary Intent to Convey
Property to Senior Outreach Services, Inc. for an Adult Daycare Facility. The resolution was necessary
so that Senior Outreach Services could commence negotiation proceedings with its financing institution,
allowing them to prepare a financial plan for the successful completion of the project. The resolution was
simply the initial step in the process to a final cooperation agreement to construct the facility.
The resolution set forth the EDA's willingness to convey a portion of the property at 5501 Boone AVenue
North to Senior Outreach Services for an adult daycare facility on a deferred loan/grant redevelopment
contract. The entire purchase price would be in a deferred loan subject to 100 percent forgiveness in the
event all of the conditions of a Redevelopment Contract were satisfied. The conditions included:
1. A thirty (30) year contract term.
2. A reversionary clause which would automatically convey the property back to the EDA in the event
the property was not developed and operated as an adult daycare facility on or before November
2000.
3. A second lien or mortgage in the amount of the EDA's $376,764 purchase price for the property. This
lien or mortgage would be forgiven in the event all conditions of the Redevelopment Contract were
met.
4. CareBreak would make an annual payment to the EDA in an amount equal to the portion of real
estate taxes the Ci~ Would receive if the property was fully taxable for real estate purposes.
5. CareBreak would be required to immediately prepare and submit development plans for site and
building plan review acceptable to the City.
6. That CareBreak enters into a Redevelopment Contract which incorporates the foregoing conditions
and restrictions and any other conditions or restrictions required by the City.
(cont'd.)
MOTION BY ~ SECOND BY
/-/- /
RF'A-OO!
Request for Action Page 2 11-23-98
.At the time the resolution was approved, staff indicated that a Redevelopment Contract would be
brought back to the EDA for consideration in the future.
Subsequent to the date that the resolution was approved, Senior Outreach Services has secured the
necessary funding for the project. They have al.so developed Concept site plans for the development of
the south half of the city-owned parcels and are in the process of developing more complete plans and
initiating the necessary applications for the planning/zoning approval process. A representative from
Senior Outreach Services will be present at the EDA meeting to further discuss these plans.
Staff has also had preliminary discussions with representatives of NorthRidge Care Center on potentially
developing a temporary parking lot on the north side of.the site for NorthRidge employees. It is
anticipated that this would be a separate agreement with NorthRidge and co_.uld be similar to the current
· arrangement with the Sunshine Factory at 42"d & Quebec Avenues, where a temporary parking lot is
constructed on the city-owned property and the cost of constructing the lot would be paid for by the user
of the parking lot. The temporary nature of the parking lot would facilitate additional development on the
north portion of the property in the future.
If the EDA is agreeable to the concept site plans presented by Senior Outreach Services, the next step
in the process would be for the EDA to direct staff to prepare a Redevelopment Contract between the
EDA and Senior Outreach Services for this project.
Staff recommends approval of .a motion directing staff to prepare a Redevelopment Contract for Senior
Outreach Services, Inc. for the development of an adult daycare facility on a portion of Lot 2, Block 1,
Science Industry Center 3~ Addition.
· ~ I '. · -
~ '"-'~"- SOUTHLINE LOT ~ BLK.~
200 :
.e' ~n s~d prior years h~e bee~ psJ.d for 1~ de~cribeg m ~his plat.
.... , 19~ ,.
WHEREAS, the Economic Development Authority in and for the City of New Hope (hereafter
RI)A) is the fee owner of the property legally described as follows:
Lot 2, Block 1, Science Industry Center 3rd Addition;
W'I-~.~AS, the described property was partially paid for and acquired with Community
Development Block Grant funds (CDBG funds) pursuant to a Land Disposition
Agreement with Ht-~r~pin County; and
WHEREAS, the Land Disposition A~eemcnt requires thc FDA to commit the property to
development and use as an adult daycar~ facility and/or senior center public
facility with a thee-year period from the date the CDBG r¢imlmrsem, ent was
received by the EDA from Hennepin County; and
W¥~.REAS, the F.,DA is desirous of conveyin~ the property in fee subject to certain
restrictions and covenam$ to Senior Outrcach Services, Inc., a Minnesota non-
profit corporation, for development and use as an adult daycare facility; and
WHEREAS, Senior Outtz~h Services, Inc. has represented to the lEDA that it is a 501(C)(3)
corporation desirous of obtaining the referenced property to construct sad operate
an adult daycam facility in complis~z with the I. and Disposition Agreement
between the EDA and County.
NOW, ~RR, BE IT RESOLVED by the EcOnOmic D.evelopment Authority in and
for thc City of New. HOpe as follows:
1. The FDA l~reby declares its intent to convey Lot 2, Block 1, Science Industry Center
3rd Addition to Senior Outreach Services, lr~. subject to the followin~ conditions:
a. Senior Outreach Sm'vices, Inc. will immediately px~'par~ and submit to the City.
sad FDA a proposed preliminary plan rel~ardin~ the type of facility it intends to
construct on tho property. The EDA's conveyance et' ss. id property will bo
subject to the City's approval of a site and building plan for the property.
Further, the EDA will convey to Senior Outreach Services, Inc. only that portion
of the property necessary to successfully complete the approved site and buildh~
plan.
b. Any conveyance of the property by the EDA to Senior Outreach Services, Inc. "
shall be Subject to reversionary .clause Wansferri~ title back to tim ~.r)A in the
event Senior Ouu'esch ~rviccs, Inc. fails to develop and use the property as an
adult daycare facility. The reverter shall be effective automatically upon the
expiration of the three-year implementation period referred to in the I. and
Disposition Agreement between the EDA and Heunepin County.
c. The conveyance shall also bc..subject to a Lieu or second mortgage given m
]aDA w secu~ the FDA's $376,764.00 purch~ price for the property. The
EDA shall agree to forgive this lien sadior mortgage if Senior Ouu'each Services,
Inc. continues m use tlz property for an adult daycare center for a period of
thirty (30) years from the date of the FDA's conveyance of the pro~rty. The
lien or mortgagc amount shall be increased by accrued interest pursuant to a
schedule .for reduction or forgiveness of the debt over the thirty (30) year
operation period. The schedule for debt forgiveness shall be mutually agreed
upon by the parties at a later date.
d. That Senior Outreach Sertdces, Inc. will make an annual payment W ~ EDA in
lieu of real c.starz taxes in the event the property is exempt from real estal~ taxes
for any reason. This amount shall be equal to that portion of taxes thc City
would have received in the event thc pwperty wu subject to real estate taxes as
a non-exempt property.
e. That Senior Outreach Services, Inc. will enter into a Redevelopment Contract
with the l/DA which shall incorporate aU terms and restrictions rehfing to the
F.I')A's conveyance of this property.
f. The terms, restrictions and covenants contained herein are not intended to be an
exhaustive list of those conditions that may be included in the Redevelopment
Contract referenced above.
This resolution is intended by the EDAm communicate its intent to convey the
property to Senior Outreach Services, Inc. for comtruction and operat{on of an
adult daycare facility. The conveyance is meant to be financed as a deferred loan
subject to forBiveuess in full or in part purp,snt to Senior Outreach Services, Inc.
compliance with the dcvelopment, conslniction and operation requirements yet m
be fuUy defined ami ~ forth in thc Redevelopment Contract.
h, The New Holm City Manaser/F.,DA Executive Director and his staff is hereby
authorized and directed to continue working with Senior Outreach Services, Inc.
to implement the development and construction of an adult daycare facility on the
subject property.
Ad~tedbytl~NcwHol:~coao~cI~wlopm~Au~3~,Hcrmcp~C~n~y, Min~a,~i$
~y ~ , ,.1~8,
W. Peter F.a~, President
Attest:
Daniel I. Donahue, Execufi~ Director
JENSEN SWANSON & SONDRALL, P.A.
Atto~s At La~
Tm-q~lc)z~ (6121 424-8811 · TI~U~AX (612) 493.~193
c. Au~m {~-,~=,~t August 6, 1
Mir. Kirk McDonald
D~elop~ Direr
C~ of New H~
~1 Xylou Av~ No~ --
N~ H~, ~
~ ~ No. ~.111~
D~ ~k:
88/86~8 ll:l~ lt~S.ATTO~-YS -~ 5~151~ NO.?19 ~ '
August 6, 1998
4. In thc event the properly ia exempt from real estate taxes, Cate, break would make an annual
payment to the ]~DA in In amount equal to the portion of real. estate taxes thc City would receive
i~ the property was fully taxable for ~ estate purposeS.
5. Carebre.~ would be required to i,,=~diately prcpare mi submit development plans t'or site and
building plan review a___~ee_~able to the Cit~.
6. That Catcbre. ak enters into a Redevelopmcm Contract which incorporates the foregoing condilions
and ~estricttom and any or. bet conditions or restrict/om required by the CiW.
This R~olution should provide Senior Outtmch Setvtces, Inc. with the ~ indication by the I/DA
that the ED A intmxls to work with and convey this property to Carebtmk f0t the ~es of
imDlementhl8 a succe~ful adul! daycate facility at the pwpetty. With fl~ie Reaolution Catebtcxk should
be able to c~um~ence nesotiafion ptoccedin~ with ira finsm't~ imtitu:too, ~llowin8 it to prepare ~
trmanctal plan for the ~cessful Cuu~letion of the project. Obviously. thio ia ,tm?ly the initial step tn
the process to a t"mal cooperatJoa agremlem with Carebrmk to comtruct this facility. I am sure
nmnerous ~dflittonal rounds of discussions anct oeaotiattom will be necesm7 before we reach t final
Redevelopment Contract, closing and conveyance on the property to Carebruk.
Pleue contac~ me if you have my further questions or cornmems regara~n$ the enclosed Resolution.
Very truly yours,
St~a A. Sondr~ll
SAS:st
Enclosures
Daniel ~. Domhue
Valerie Leon~
~ EDA
REQUEST FOR ACTION
Originating Department Approved for Agenda Agenda SecUon
EDA
Community Development
ByKirk McDonald
RESOLUTION APPROVING ADDENDUM TO BASS LAKE COURT TOWNHOME PROJECT
REDEVELOPMENT CONTRACT (IMPROVEMENT PROJECT NO. 614)
The enclosed resolution approves an Addendum to the Bass Lake Court Townhome Project
Redevelopment Contract. Also attached is the proposed Addendum and correspondence from Steve
Cramer, Executive Director of PPL, and Robert Silverman, attorney for PPL.
The Addendum address the following three issues:
1. PPL has assigned its interest in the project to PPL - Bass Lake Court Limited Partnership. PPL
remains as the general partner of this limited partnership. Article 6 of the Redevelopment Contract
permits PPL to make this assignment of interest and the City was aware a limited partnership would
be formed by PPL to carry forward with this project. This is why the contingency for the assignment
was originally included in the Redevelopment Contract. Due to the assignment of interest, the
Addendum is necessary.
2. The Addendum will re-characterize the funds the EDA has committed to the project as a grant
instead of a loan. In reality, Section 5.4 of the Redevelopment Contract results in total forgiveness of
the loan anyway upon completion of the contract. In other words, the loan reverts to a grant on the
condition PPL successfully completes the project. As pointed out in the correspondence from PPL's
attorney, the current characterization of these funds as a loan rather than a grant adversely affects
the ability of PPL to maximize its financing through the sale of Iow income housing tax credits.
3. Lastly, the Addendum eliminates the restriction on PPL's use of $500,000 of the $1,400,000 in
proceeds the EDA' has committed to the project in tax increment financing funds. The original
Redevelopment Contract indicates the EDA will commit funds in excess of $900,000 to a maximum
of $1,400,000 if land acquisition costs through a condemnation proceeding results in the need to
expend these funds. PPL recently met with the City Manager, City Attorney and Community
Development Director to request that this restriction be lifted due to increased project costs. This
issue is addressed in detail in the attached correspondence from Steve Cramer. The major reasons
for the project cost increases include:
Request for Action Page 2 11-23-98
· Significantly more site work related to resolving drainage concerns and the construction of a
storm water pond on School District property.
· Increased scope of work for rehabilitation of existing fourplexes.
· Booming construction market, which has raised prices and decreased interest in small
rehabilitation projects.
The City Manager and staff are supportive of the request and believe that PPL has tried to contain
the project costs to the best of their ability. The enclosed Addendum would remove the restriction
and simply commit $1,400,000 of funds for any appropriate project purpose, as defined in Section
5.1 of the Redevelopment Contract.
Staff recommends approval of the resolution approving the Addendum to the Redevelopment
Contract. --
11,/1~"~ 17:10 .TS~,S,~T'I'[]~S "> 5'31~1~ NO.Bff~B ~
JENSEN SWANSON & SONDRALL, P.A.
Afforne~$ At ~
852S EDINBROOK CROSSING, S?g, 201
BROOELV~ PARI~ M~ZqESOTA SS443-1999 '
T~HONE (6~ 4~11 · T~EF~ (612) 49~$1~
C.A~N~t Novem~r 19, 1998
~.o,~ Q, ~vs~sr^~ Kirk Mc,Donald
Community ~vel~ment D~mr
Ci~ of N~ H~
~1 Xylon Ave~ No~
New Hope, ~
Re: B~
~ ~ No.: ~.~1~
Pl~ ~d ~lo~ a pr~ EDA ~mludon A~ov~g A~dum to B~s
Co~ To~ ~oj~t ~el~m C~
I~8 EDA ~g. ~ mclo~ is &e ~~ Add~ ~ a Nov~r 13, 1998
le~r ~ A~ Ro~ Silv~ explff~ ~ ~d for ~ Ad,dura. Mr.
S~ve~ h ~ a~y for PPL
B~lly, PPL
P~e~p. PPL ~ as ~ ge~ ~r of ~ ~ ~rme~. Afficle 6 of
~e R~evel~t Co--ct ~u PPL m ~ ~h ~i~m of in~, ~, we
~re aw~e a l~ p~r~ w~d
proj~t at i~ ~p~n. h ~t, ~is ~ ~y ~e ~n~ge~y ~r ~ ~i~t ~s
~lud~ in ~e ~elop~nt Con~ fo~ at Ar~ 6. ~ w ~h ~i~nt of
~m~st, ~e ~~ Ad~
- ~- &e p~ A~~ ~ r~e~ ~ a ~t ~e ~s &e ~DA ~s ~d
wffi commit
a ~ f~v~ of
~vo~ m a ~ on &e co~ ~ ~~ly co~let~ ~e project.
~iu. ~ pwblem is ~ ~ e~ ~ Mr. S~v~'s Novem~r 13, 1998
le~r. ~refo~, m ~v~ ~is problem, ~ A~~ m ~e R~evel~t Co~t
re~h~r~g ~e pr~ co~d ~ ~ ~A as ~t m~y is n~s~.
il/ig/cJ8 I?:10 $S&S, RTTOR~LrYS * 5~151~ H0.858 F4~E] '
November 19, 1998
Pa~e 2
Also, the Addendum eliminalzm the restriction on PPL's use of $500,000 of the $1,400,000 in proceeds
we have corm*o.i~ to the Project. Specifically, rite Redevelopment Contract ~ currently written indicates
the EDA will commit funds in excess of $900,000 to a maximum of $1,400,000 if land acquisition costs
through a condemnation proceeding results in the need to expend these funds. The enclosed Addendum
would remove that addendum and simply comfffit $1,400,000 of funds for any appropriate purpose as set
out in Section 5.1 of the Redevelopment Contract. I believe Steve I~r, d3e executive direcwr of PPL,
h:,.~ written a November 18, 1998 letter indicating the reasons prompt/nS his request for the relaxcct
restrict[om on thc use of the finat $500,000 of thc $1,400,000 finaac~-g.
Please contact me if you have any questions regarding the Resolution, fi~ Addendtun or any information
conmirtcd in ]Vlr, Silverman's November 1~, 1998 let~r.
Very truly yours,
Steven A. Sondrall
Enclosures
Dan Donahuc
Yalerie Leone
RDA RIgSOLUTION NO. 98..
I~SOLUTION APPROVING ADD~NDUM
TO BASS LAKE COURT TOWNIIOME PRO. CT
REDEVELOPMENT CONTRACT
BE IT RESOLVED by the Economic Development Authority in and for the City of New Hope,
Minnesouc~s follows:
WHEREAS, the Ecoriomic Development AuthOrity (hereinafter referred to as "EDA") adopted
at its February 9, 1998 meeting FDA Resolution No. 98-01l approving the February 11, 1998
Redevelopment Contract with Project For Pride in Living, Inc. (hereinafter referred to as "PPL") for
construction of the Bass Lake Court T0wnhomeS Project. and
WHEREAS, Article 6 of the Redevelopment Contract permits PPL to assign its interest in the
Redevelopment Contract to a limited partnership in which PPL is a general parmer, and
WHEREAS, PPL hu assigned its Redevelopment Contract interest to PPL - Bass Lake Court
Limited Parmership and PPL is the general parmer of said partnership, and
WHEREAS, pursuant to the explanation provided by PPL's a~a~ey's November 13, 1998 letter,
it is necessary to re-characterize a~ a grant the funds committed by the EDA for the consu'uction and
redevelopment of the Bass Lake Court Townhomes Project to insure the project can obtain maximum
financing from the proposed allocation and sale of the Low Income Housing Tax Credits to be purchased
by the National Equity Fund, and
~, to implement the maximum benefits as described above the February 11, 1998
Redevelopment Contract must be amended as set forth in the proposed Addendum to Redevelopment
Contract attached as Exhibit A.
NOW, THEREFORB, tie IT RF.,SOLVED bl, the City Council of the City of New Hope,
Minnesota, as follows:
1. That the Addendum To Redevelopment Contract is hereby approved.
2. That the President and Executive Director are authorized a~d directed tO sign the
Addendum to Redc-,,clopment Conu'act.
3. That the Executive Director is authorized and dkected to make any changes in the
Redevelopment Contract or addendum necessary to effect the developr~nt of the Bass
Lake Court Townhomes Project except for increasing the grant amount provided for in the
Addendum to Redevelopment Contract.
ii
11/19/98 17:10 3'~-'?~, ~TTOFS',~S -> 531512~ 1,40.858 P00'~
Adopt~l t~ the City Council this 234 day of November, 1998.
P~¢sident
At. st:
F. xe~-ufive Direcwr
2
11/19/S8 17:10 ISiS,ATTORNEYS ~ 5315136 N0.858 P806
ADDENDUM TO
REDEVELOPMENT CONTRACT
1. Parties. The parties to this Addendum are the EcOnomic Development Authority in and for the
City of New Hope, a Minnesota Municipal Corporation (hereinafter referred to as the
Project for Pride In Living, Inc., a Minnesota Non-Profit Corporation {hereinafter referred to as
"PPL") and PPL - Bass Lake Court Limited Partnership, a Minnesoui Limited Parmership
(hereinafter referred to as "Partnership?.
2. Purpose. The purpose of this Addendum is to modify and amend the February 11, 1998
Redevelopment Contract entered i~lW between the t/DA arid PPL for development and construction
of the Bass Lake Court Townhomes Project located in the City of New Hope as that project is
more fully de,~fibed in the plans and specifications subnfitted to the City of New Hope by PPL.
3. Ame_ndment to Article 6; Assi _~!ment q f ..Inte.r~. t, PPL, by and throuth its attorney, Robert
Silverman, has informed the I/DA, per a November 13, 1998 leuer, litlached as Exhibit A, that
PPL has transferred and assigned its interest in the Bass Lake Court Townhome Project to the PPL
- Ba,~ Lake Court Limited Partnership, and that PPL is the General Parmer of the Partnership.
Based on this representation, the parties hereto agree that the Parmership shall and hereby assumes
all of the rights and obligations of the February 1 I, 1998 Redevelopment Contract heretofore held
by PPL. Further, all parties herew consent to PPL's assi/~uneat of i~s interest in the
Redevelopment Contract to the Parmership and the Partnership hereby agrees to a,s,mme all
obligations of PPL in the Redevelopment Contract or as herea/~ modified and amended by
Addendum.
4. Amendment to Article 5. Article 5 section 5.1 aral 5.3 of the Redevelopment Contra~t governs
the use of EDA lo~ proceeds and the collateral for said loan.
Tlme lEDA hereby agrees its characterization as a loan of the funds it will make available to the
project under Article ~ is illcorreot. Said proceeds shall be hereafter characterized as a (~raIl£ for
purposes of this Addendum and the Redevelopment Contract.
a.) Secfiou 5.1. The Loan, Basically, rection 5.1 s~ates the EDA loan for the project shall
be $900,000.00 but that the EDA will make $500,000.00 in additional loan proceeds
available in the event the condemnation is nece,~sary to acquire any land de~ribed by the
Redevelopment Contcact as "Under Negotiation" and in the further event acquisition costs
for said. "under negotiation" land exceeds $250,000.00. Per this Addendum, the £DA
hereby agrees thi~ section is hereby re-titled "The Grant" and hereby removes the
restriction for the availability of the additional $500,000.00 in grant proceeds set forth in
section 5. I. It further al~rees to increase the Orant funds available to the project from
$900,000,00 to $1,400,000.00. Hewers, the EDA, will not be required to provide any
· /hnds for this project in excess of $1,400,000.00 for any reason or under any
circumstances.
b.) Section 5.3. Collateral. Section 5.3 requires a loan al~recment, mortgage note and
mortgage to secure the proposed loan required by section 5.1. Pursuant to this Addendum
modifying the characterization of ~ £DA fimds as grant funds, the t/DA agrees a loan
agreement, mortl[age note and mortgage are inappropriate and not required. Therefore,
-1-
this requirement is hereby suicken and deleted from the Redevelopment Contract.
However, in consideration for this modiflcaiion and the elimination on the restrictions on
the use of additional grant funds provided for in (a) above, the Partnership agrees It will
prbvide payment and performance bonds on all construction and renovations as
represented in F. ahibit A attached, that the City of New Hope and the EDA will be named
as an oblilgee on said bonds and thai copies of said bonds will be delivered to the City
Manger and City Attorney for review and approve prior to the release of any additional
grant funds for the project subsequent to the execution of this agreement.
_Effect of th$ Addendum. It is the in~ent of ~e parties to this Addendum to amend the
Redevelopment Contrac~ r~ provide that the EDA funds be treated as Grant funds. Any provision
of the Redevelopment Contract not consistent with this intent is hereby void. Otherwise, all
provisions of the Redevelopment Contract not modified by this Addendum shall remain in full
force and affect.
Da~ed; November 23, 1998
F_,CONOMIC DEVELOPMENT
AUTHORITY ~ AND FOR THE
CITY OF NEW HOPE
By:
Its President
lis Executive Director
PRO~ FOR PRIDE IN LIVING, INC.
Im PresMent
_ ._ 'PPL - BAS~ LAKE COURT
LIMITED PARTNERSHIP
By Project for Pride In Living, Inc., the General
Parm~r
By:
Its President
-2-
__11/1~/98 WEO 11:59 FAX 612 $40 7800 DORS~/ & WEI'I"N~ ~002
DORSEY & WHITNEY LLP
am.,~n~ T~I,~,,HON E; (612) 34.0-2600 ~^~
ROG HEST~14~ RO2~,.RT 3, $11 ,VERMAN
CLl~.ffA MZah. (612) 34G-2'/42 oKe^'r
P~z (612) 3~2644
sikerman.robert~dnrscylaw.com
November13,1998
BY FAX
Steven Sondrall
Attorney for City of New Hope
8525 Edinbrook Crossing
Brooklyn Park, MN 55443
Re: Bass Lake Court Townhomes--Project for Pride in Living, Inv.
Dear Mr. Sondxall:
The Economic Development Authority in and 'for the City of New Hope ("City") and
Project for Pride in Living, lac. ("PPL") entered into a Redevelopment Contract dated February 11,
1998 for thc purpose of assisting in thc development of the Project defined in the Contract. As
permitted, PPL has transferred its interest in the pwject to PPL-Bass Lake Court Limited Partnership
("Partnership"), a Minnesota Limited Partnership in which PPL is the General Partner. The
Redevelopment Contract cootemplates that certain funds would be advanced by the City to PPL and
that those funds would be characterized as a loan, although the loan would be forgiven upon
completion of the Project. PPL and the Partnership request the City to characterize the ihnds being
provided by the City as a grant rather than a loan for the masons set forth h~e~fftcr.
The Partnership has now acquired thc commercial building as well as all of the
townhous¢ property which is to be used for thc Project, In addition, the Partnership will obtain full
payment and performance bonds for all construction and renovation, as required by the project's
lenders. Unless objected to by other lenders, the Partnership will cause the City to be named as an
obligee on those bouds. The Partnership believes that those facts and assurances should satisfy the
City's concerns that the City's funds will be devoted to the Project and that the Project will achieve
completion. The Redevelopment Contract by its t~Tns indicates that upon such completion, thc
"loan" would be deemed paid. We suggest that the currcnt facts together with the delivery of thc
11/18/98 ~ 11:$9 FAI $11 340 7800 DORSEY & WHIT~Y ~003 ~
DORS£Y &. WHITNEY LLP ;
Steven Sondrall
November 18, 1998
Page 2
bonds should satisfy thc CilT's concerns over completion. Howcver, the characterization of the
City's funds as a "loan" could cause some con,erin to the other funding sources.
As you know, the Partnership h~ received an allocation of Low Income Housing Tax
Credits and a commilment by thc National Bquity Fund to purchase thc credits. The sale proceeds
provide signiScaut funds to the Project Characterizing the City's participation as a "loan" has raised
issues on thc amount of the Tax Credit available based upon an argument that the "loan", particularly
if it is forgiven as is anticipated, may not be included in the Parmership's tax basis °fthc Project.
A reduction in basis will reduce thc available Tax Credits and therefor thc-15roceeds of thc sale of
the 'fax Credits. Ig as the Partnership proposes, tbe City's funds are characterized as a grant to PPL
with PPL thtm immediately contributing the funds to the Partnership as a capital contribution, there
should be no concern that tho funds will not be included in the Partnership's bash for purposes of
calculating the Tax Credits. Characterizing the funds as a grant to PPL with an immediate capitol
contribution by PPL to the Partnership also satisfies an internal tax issue within the Partnership
particularly w/th regard to the partner's internal basis in the Partnership. Finally, while it is likely
the other lender participants in the Project would approve a mortgage in favor of the City, the
existence of the City's mortgage would complicate the documentation process and may even delay
approvals.
In conclusion, the Partnership believes that it has and will ~provide reasonable
assurances to the City that the Project will be completed and therefore satisfy the City's concerns that
its i'unds will be spent for the purpose intended. However, the characterization of those funds is
likely to have an impact on the overall project's viability and, therefore, the Partnership asks the
City to revise the Redevelopment Contract to reflect the funds as a grant to PPL so that PPL can
contribute those lunch to the Partnership for project purposes. We would, of course, be willing to
discuss this with the City, as would Ms. Kugler and Mr. Crarner. Tl~snk you for your consideration.
PJS/]kk
Enclosure
cc by fax: Kkk McDonald
Steve Cramcr '
Lisa Ku$1er
~J~ ~ ~ IN ~, I~:. ~~
2516 ~ A~
T~ J~12) 87~11
November 18, 1998
Kirk McDonald
City of New Hope
4401 Xylon Avenue north
New Hope, MN 5::428
RE: PPL Bass Lake Court ~
I ah~ very pleased "o report that PPL has now purchased the seven four-plexes which comprise
thc rehabilitation t ortion of this developmcm. ]tte office building at 7332 Bass Lake Road has
been purchased at the city Council's request, from the EDA funds allocated to the project. The
gas tanks have been removed from the gas st~ttion property, testing has been completed, the
modest mount of contaminated soil uncovered has been properly disposed of, and the MPCA
has written the Iett~ which allow residential reuse of this site. :We have also finished bidding
out the construction and rehabilitation for the project Unfortunately, the bids reflect the
booming consm~ion market, which has rais~ prices and decreased interest in small
rehabilitation pmj ~ ~cts.
As you know, we lmve worked closely with ~qew Hope and Crystal staff to resolve many difficult
problems, particuLtrly the lack of adequate chainage and consequent flooding experienced by the
existing four-plex~, and the adjoining homecwners. The lack of capacity of the existing storm
sewers and the wa:,, the site had originally been filled add to the amount and complexity of site
work required. TEe eventual solution - creating a storm water ponding area on the School
District property ,) that new storm sewers w.,.ll drain both north and south - necessitates
complete regradin:_; of the p-layfield at Thors-~n Community Center. The condition of the four-
plexes and a variety of City and lender requiIements have also increased the scope of work
beyond the ~ )roject estimates. We received very competitive bids for the new construction
and site work port OhS of the project, but had to work harder to interest contractors in the
rehabilitation porti on.
The Redevelopme ~t Contract between the New Hope EDA and PPL set aside up to an additional
$500,000 to cover potential costs for the col~temnation of properties required for the project
which could not 1~: obtained by PPL through private negotiation. Environmental clean up costs
for the gas station were also unknown. We are pleased that we were able to acquire the School
District land, the s,venth fourplex and the office building by negotiation and that the gas station
site could be cleazed up at moderate cost.
11/18/98 ~ 16:36 FAX 612 874 6444 PPL ~003 ~
Kirk McDonald
November 18, 19~8
Page Two
However, in order to cover all of the project construction costs, we are requesting that the
Redevelopment Contract be amended to allow the additional $200,000 to be used for all project
costs, in order to meet our funding gap described on the attached page. We are also requesting a
technical change f:om a loan to a grant to ow.ucome another tax credit problem, as explained in a
letter from our a~,mey sent to Mr. Son&aLl.
The underwriting Ired/or allocation requirem~mts of the other fundinl~ sources make increases in
those awards imp¢ ssible or unlikely. If we delay the project start, portions of the Low Income
Housing Tax credit funds will star~ to disapl~mr while, our costs to maintain vacant units will
increase. Our only other alternative would 1>: to drastically scale back the project by
rehab'flitating only three buildings, thus increasing the number of rehabilitated units from 14 to
22. This would pzesent parking and zoning problems which could adversely impact the new
construction. We have spent the past six wex;ks working with our contractors and subcontractors
'to evaluate the cox~truction and we have aco~ted all ~easonable cost reductions as indicated on
the attached page.
We believe our parmership with Hew Hope on this project has resulted in a development which
will be a credit to ~ll of us. If we can resolve these last matters, we can start construction in early
December and be ::eady for occupancy July l, 1998.
We ale committed to the success of this development and look forward to discussing this request
with you and the F, DA.
Thank you for yo~r consideration.
cc: Dan Donahue
Steve Sondrall
Lisa Kugl~:r
Chris Wilson
PPL-BASS LAKE COURT ,' ~.~.~ 11116198
I .U..~E~ ,, - ! CURRENT BUDGE~,,~..~,~.~ -v./DiFFERENCE ORIGINAL DIFFERENCE
FINAL BIDS /.' MHFA BUDGET bid-original
Fourplexes 832,000 ~'-- 832,000 832000
School District land t04,000 104,000 104,000
Gas station (allowance) 250,000 250,000 250,000
Office Building 235,000 235,000
TOTAL LAND 1,421,000 1,421,0~ 1,18~,0~0 236,000
New Consffuclion 1,733,1 53 1,796,161 (63,008) 2,031,536 (298,383)
construction conlingency 34,663 2o~, 82,865 (48,202) 81,261 (46,598)
Rehabilitation 1,1 34,997 646,666 488,3,31 734,516 400,481
conlJngency 55,630 5% 113,452 (57,822) 112,362 (56,733)
Site work 608,382 363,325 245,057 608,382
Site work contingency 18,251 3% 18,251 193,624 (175,372)
TOTAL CONSTRUCTION 3,~8~,079 3,002,469 682,607 19.4% 2,969,676. 926,401 21%
Total Soft Costs (design, legal, fees,title) 688~73 623,773 (116,500) -18.6% 642,772 (134,499)
Totat Financing & Cam/in0 (+ resewes,retocatJofl) 43?,649 374,813 62,736 16,7% 332',416 100,134
To~l Devek)flment Cost 6,951,899 6,422,066 629,843 9.8% 6,084,663 867,036 17.1%
sou cE_s "'1
MHOP 1 ,$56,480 1,356,460 1,356,480
City of New Hope 900,000 884,490 35,510 900,000
Net Tax Credits 1,656,267 1,656,267 ! ,582,588 73,679 4.7%
MHFA First Mort. gage 334,610 334,810 ! 512,676 (177,866) -34.7%
MHFA Deferred Loan 530,000 530,000 393,120 . 136,880 34.8%
Family Housing Fund 200,000 200,000 340,000 (140,000) -41.2%
HOME Loan 260,000 280,000 280,000
Met Cour~il 200,000 200,000 200,000
Total Financing Committed 6,467,667 6,422,047 629,862 9.8% 6,084,864 667,035 17.1%
GAP ~'~~,2 "~ wflhout office building: 587,035 11.5%
~ PPL-BASS LAKE COURT 11/16/98
I CdSTS NOT INCLUDED IN INITIAL BUDGET ESTIMATES ', I
Irrigation 40,879
grading school district property 32,500
sod for school distdct property 4,000
4 storm sewer inlets-homeowners 2,100
3 inlets, 2 manholes required by school district 3,000
excavation/grading to do new storm pond 93,000
additional sidewalldddve for surveillance 45,240
additional walks & patios for rahab 25305
additional lighting 5,000
subtotal site costs: 251,024 37.4%
change from moderate to gut rahab, including
demolition 34,400
regrading 10,400
additional sheetrock 83,050
replace all plumbing fixtures 50,000
replace hot water with forced air heating 24,795
replace all windows 39,423
Group Home accessory building 3,000
subtotal rahab costs 245.068 36.6%
Underestimate/busy market premium 174,288 26.0%
I NITAL CONSTRUCTION ESTIMATE 2,806,152
FINAL BID TOTALS 3,476,532
difference 670,380 24%
GAS STATION
BUDGET: 250,000
Appraisal 143,000
!Relocation 20,000
Tanks 14,512
soils 8,420
185,932
I available
[ for award 64,068
PI=L-BASS LAKE COURT 11116/98
SIGNIFICANT CHANGES MADE IN NEW CONSTRUCTION
Change to steel siding, delete gutters 32,600
Change to slider windows (from casements) 16,777
Delete heat exchanger & program thermostat 16,100
Revise roofing shingles (25 yr) 5,500
Change to hi-build paint, textured ceilings 16,400
Change to standard vinyl flooring 4.669
Eliminate I/2 course block, change window jambs 6.166
98,212
SIGNIFICANT CHANGES MADE IN REHAB UNITS
Revise front entry porches to smaller, wood frame
Revise courtyard entry to muse existing
Revise basement stair to share entry
Use slider windows
Same paint, flooring changes as new construction
Adjust room sizes to reuse walls in I/2 upstairs
Reuse 2 newer roofs
Change to steel siding, delete gutters