091294 EDA Official File Copy
CITY OF NEW HOPE
EDA AGENDA
EDA Regular Meeting #11 September 12, 1994
President Edward J. Erickson
Commissioner W. Peter Enck
Commissioner Gerald Otten
Commissioner Terri Wehling
Commissioner Marky Williamson
1. Call to Order
2. Roll Call
3. Approval of Minutes of August 8, 1994
4. Discussion Regarding Letter of Intent Submitted by Minne Mufflers, Inc. on City-
Owned Parcel at 42nd and Nevada Avenues (#523)
5. Discussion Regarding Development of City-Owned Parcel at 5009 Winnetka
Avenue North (//505)
6. Adjournment
CITY OF NEW HOPE
4401 XYLON AVENUE NORTH
HENNEPIN COUNTY, MINNESOTA 55428
Approved EDA Minutes August 8, 1994
Meeting #10
CALL TO ORDER President Erickson called the meeting of the Economic Development
Authority to order at 11:31 p.m.
ROLL CALL Present: Erickson, Enck, Otten, Williamson, Wehling
Staff Present: Malecha, Hanson, Donahue, Leone, Bellefuil
APPROVE MINUTES Motion was made by Commissioner Otten, seconded by Commissioner
Enck, to approve the EDA minutes of July 25, 1994. All present voted in
favor. Motion carried.
SECTION 8 President Erickson introduced for discussion Item 4, Resolution Approving
Item 4 the Section 8 Housing Program Contract for Administrative Services
Between the Metropolitan Council and the City of New Hope and
Authorizing President and Executive Director to Execute Agreement.
This revised contract establishes the responsibilities of the Metropolitan
Council and the City of New Hope in managing the Section 8 Housing
Assistance Program.
There are two basic changes in the contract:
1. The administration fee available to the City will increase from
$16.56 per unit/month to $21.00 per unit/month for basic
administrative services. (The contract allows the City to receive
an increase in fee for program management concurrent with an
increase fee available to the Metropolitan Council. The fee
increases are regulated by the Department of Housing and Urban
Development.)
2. The Metropolitan Council will pay ongoing administrative fees on
a monthly basis, even though the City will only be required to
submit quarterly invoices/reports. (The City is currently required
to submit monthly invoices/reports.)
Staff finds that the $21.00 per unit/month is an adequate administration
fee. Currently 255 families in New Hope receive assistance from this
program.
EDA RESOLUTION Commissioner Enck introduced the following resolution and moved its
94-08 adoption: "RESOLUTION APPROVING THE SECTION 8 HOUSING
ASSISTANCE PAYMENTS PROGRAM CONTRACT FOR ADMINISTRATIVE
SERVICES BETWEEN THE METROPOLITAN COUNCIL AND THE CITY OF
NEW HOPE AND AUTHORIZING PRESIDENT AND EXECUTIVE DIRECTOR
TO EXECUTE AGREEMENT." The motion for adoption of the foregoing
resolution was seconded by Commissioner Otten, and upon vote being
taken thereon the following voted in favor thereof: Erickson, Otten,
Williamson, Enck, Wehling; and the following voted against the same:
New Hope EDA August 8, 1994
Page 1
None; Absent: None; whereupon the resolution was declared duly passed
and adopted, signed by the president which was attested to by the
executive director.
IMP. PROJECT #474 President Erickson introduced for discussion Item 5, Consideration of
Item 5 Request to Delay Payment of Real Estate Taxes, Foremost, Inc., 7528
42nd Avenue North (Improvement Project No. 474).
The EDA acquired the Foremost property at 7528 42nd Avenue for
redevelopment purposes on July 19, 1993. The City entered into a two-
year lease with Foremost at that time, which allowed Foremost to occupy
the property for a 24-month period commencing on the date of closing
pursuant to the terms of the lease. The lease requires Foremost to pay all
operating expenses and real estate taxes during the course of the 24-
month period in lieu of a specific rental payment. Payments under the
lease consist of the real estate taxes due May 15, 1994 (full year's taxes),
and February 1, 1995 (a prorata share of taxes due and payable in 1995
through July 19, 1995). The City forwarded the property tax statement
to Foremost, Inc. this spring and the property taxes have not yet been
paid.
Staff has contacted and met with the owner of Foremost, Inc. and the
owner is requesting EDA consideration of allowing him to pay only the first
half of taxes at this time and paying the second half taxes this fall.
The City Attorney also officially notified Foremost, Inc. on June 20th that
they were in default of the lease agreement and that if the default was not
corrected within 10 days after the notice the EDA has remedies available
to it, as set forth in the lease agreement.
Councilmember Enck did not support amending the contract. Mayor
Erickson commented that part of the agreement with Foremost is that if
the taxes are paid they can remove the equipment and fixtures. City
Manager Donahue stated that if Foremost does not pay their taxes, the
equipment and fixtures would not be released and they have no rights to
the building. Mayor Erickson directed City staff to inspect the property to
see that Foremost, Inc. has not removed any equipment or fixtures.
MOTION Motion by Commissioner Enck, seconded by Commissioner Williamson, to
Item 5 deny the request by Foremost, Inc to delay payment of real estate taxes
and to enforce the original contract. Voting in favor: All. Motion carried.
ADJOURNMENT Motion was made by Commissioner Enck, seconded by Commissioner
Wehling, to adjourn the meeting. All present voted in favor. The New
Hope EDA adjourned at 11:37 p.m.
Respectfully submitted,
Valerie Leone
City Clerk
New Hope EDA August 8, 1994
Page 2
~-'~ REQUF~T FOR ACTION
Originating Department Approved for Agenda Agenda Section
City Manager EDA
Kirk McDonald i,~ 9-12-94 Item No.
By: Management Assistant By: // 4
DISCUSSION REGARDING LETTER OF/ INTENT SUBMITTED BY MINNE MUFFLERS,
INC. ON CITY-OWNED PARCEL AT 42ND & NEVADA AVENUES (IMPROVEMENT
PROJECT NO. 523)
Welsh Companies has submitted the attached Letter of Intent by Minne Mufflers, Inc. on the
City-owned property at 42nd & Nevada Avenues. The City executed an agreement With Thorpe
Bros. earlier this summer to market the property on behalf of the City. Staff will be meeting
with the interested parties on Monday afternoon, September 12th, to review their concept
development plans for the site and staff may bring this item to the EDA for consideration on
Monday evening. The City Attorney has prepared the enclosed correspondence on this matter
and staff will have further information to present on this issue at the meeting. The parties
interested in the property may also be in attendance.
Review: Administration: Finance:
RFA-O01 ~
Companies
Comprehensive Real Estate Services
8200 ~ormandale Boulevard, Suite 200
Minneapolis, Minnesota 55437
612.897,7700 Fax 897,7704
September 1, 1994
Uly Thompson
Thorpe Bros.
8085 Wayzata Blvd.
Minneapolis, MN 55426
RE: Parcel of land on Nevada and 42nd, New Hope, Minnesota
Dear Uly:
This letter shall confirm the interest of Minne Mufflers, Inc., a Wisconsin Corporation, a
Franchisee of CARX Muffler and Brake, to purchase the above captioned property for the
development of a CARX Muffler and Brake store on the following terms and conditions:
Premises: An approximate 65,000 square foot parcel located at Nevada Avenue
and 42nd Ave in New Hope, Minnesota as more accurately described
in Exhibit "A".
Survey: Seller to provide Buyer with survey at Seller's expense.
Seller: City of New Hope.
Buyer: Minne Mufflers, Inc.
Price: $3.90 per square foot.
Utilities: Seller to provide all utilities to the site as it is.
Earnest Money: $10,000.00
Brokerage Commission: Seller and Buyer represent that they have not dealt with any
other real estate broker or agent in connection with the
purchase of this property by Minne Mufflers, Inc. except Thorpe
Bros. and Welsh Companies. All real estate brokerage fees shall
be the sole responsibility of the Seller.
Conditions: Buyer's attorney will prepare purchase contract in coordination
with the Seller's attorney.
All site design to be completed and all costs associated with all
site work to be done by Buyer. All improvements to be
constructed by Buyer at Buyer's sole cost.
Seller to provide Buyer with all environmental reports done on
on the property. If additional environmental tests are needed to
be done then the cost for such tests to be the responsibility of
the Seller.
Seller warrants the premises to have clear, good, marketable title
and free of all liens and encumbrances. Title Insurance
commitment from a Title Company acceptable to Buyer at Sellers
expense.
Seller agrees to indemnify Buyer from all costs associated with
the contamination and\or removal of the contamination that are
existing or found at a later time and not caused by the Buyer.
Buyer receives a "No Association" letter or a similar letter of
comfort from Minnesota Pollution Control Agency and such
letter is acceptable to Buyer at its sole discretion.
Contingencies: Buyer receiving all necessary approvals, permits and licenses,
including without limitation, all construction and operation of
a CARX Muffler and Brake store.
The execution of mutually agreeable Purchase Agreements.
Buyer receiving necessary financing.
It is understood and agreed that this Letter of Intent is a non binding offer and not a final
binding Purchase Agreement, and that the agreement of the parties when finally reached will
be embodied in a definitive Purchase Agreement containing such additional terms as are in
all respects satisfactory to both parties. The actual Purchase Agreement detailing all rights,
duties, and obligations will be drafted by Buyer to incorporate all of the business terms
specified herein, as well as such other terms or conditions as are acceptable to both parties.
If the foregoing is acceptable, please confirm by and returning a duplicate copy of this letter
to the undersigned.
Sincerely,
MINNE MUFFLERS, INC.
J[FF BERNSTEIN
ACKNOWLEDGED AND AGREED TO THIS DAY OF SEPTEMBER, 1994.
City of New Hope
By:
CORRICK & SONDrtALL,
ATTORNEYS AT LAW
~burgh ~ecu~ Office
8525 Edlnb~ok Cros~g ~ 0.0~
~uite
Br~ P~k, Minneso~ 55443
FAX (~) 4~
September 9, 1994
Kirk McDonald
Management Asst.
City of New Hope
4401Xylon Avenue North
New HoDs, UN 55428
RE: CARX /Proposed Purchase of 42nd and Nevada Avenue Property
Our File No: g9.10000
Dear Kirk:
At your request ! reviewed the September 1, 1994 Statement of
Intent to purchssea 65,000 sq. ft. parcel located at 4grid Avenue
and Nevada Avenue, Said letter was prepared by the Welsh Companies
on behalf of Minne Mufflers, Inc., d/b/a CARX Muffler.
1. The $3.g0 per sq. ft, price seems low. Whenever we have
condemned property along 42nd Avenue, we seem to always pay square
foot pr~oes in the $5.00 to $6.00 range. ! realize land values
have declined over the las~ several years and as a result, the
offered pr{ce m~ght be reasonable. An appraisal is probably
necessary to determine if this is a reasonable offer.
2, I would object to providing the Buyer with a survey at
the City's cost, I believe this is a Buyer's expense. However, if
a survey had ulready been prepared which is acceptable to the
Buyer, ! would not see a problem with providing them with a copy of
the survey.
3. The brokerage commission language requires clarification.
We should not pay any brokerage commissions that exceed the
~ercentage ~ayment we agreed to in our listing agreement with our
own agent. Zr this paragraph means the two agents are going to
split that oayment ~rovided by our listing agreement, then it is
SE --'ud-94 FRI I3:09
Mr. Kirk McDonald
September~§, 1994
Page 2
a¢ceD~able. However, we should not p~¥ any commission to the
Buyer's agent that exceeas the percentage payment we have agreed to
with our own listing agent.
4. ! have no problem with the Buyer"s attorney being
responsible for preparation of sales documents. However~ this
language must be clarified to insure that we reserve all rights to
approve the sales documents.
5. The environmental language oreates some problems, [ have
no problem w~th providing the Buyer with all environmental reports
we have al re~d¥ done on the. proDerty, however we should not agree
to pay ~he cost of any additional environmental testing required,
Bas~celly, this property should be sold "as Is" ~nd the Buyer
should be free to enter onto the prooerty and do whatever tests it
belteves necessary, at ~ts cost, to ear,sly ~tself that the
~roperty w~11 suit its needs. Zt would not be unreasonable to
provide the Buyer with an indemnification and hold h~rmlees
provision rela~ng to environmental concerne~ but not to the extent
~nd~cated ~n th~s letter. It should be limited only to remed~at~on
costa required by the MPCA, the Federa~ EDA or other gevernment~l
authorities t~ it ~S established that at the t~me of sale the
contamination existed at the property. ~ would not recommend ~he
very b~oad ~ndemn{f~cat~on clause proposed by th~s document.
Aga~n~ the better course of action would be sell the property "as
is" Without any guarantee concerning contamination. This may be a
moot point anyway {f the Buyer obtains a "no action" letter from
the Minnesota Pollution Contro] Agency.
§. F~nally, the f~nal paragraph should be amended to
indicate the letter of ~ntent is no~ a b~ndlng offer or accept, ance~
nor is ~t a binding purchase agreement-
Please cont&ct me ~f you have any other questions,
Very truly yours,
Steven A. Sondrall
slf~
cc= D~n~el J. Donahue
~- REQUF.~T FOR ACTION
originating Department Approved for Agenda Agenda Section
City Manager EDA
.~~ 9-12-94
Kirk McDonald Item No.
By: Management Assistant By 5
/
DISCUSSION REGARDING DEVELOPMENT OF CITY-OWNED PARCEL AT 5009
WINNETKA AVENUE NORTH (IMPROVEMENT PROJECT NO. 505)
Staff requests to discuss with the EDA the development alternatives for the City-owned parcel
at 5009 Winnetka Avenue North. Please refer to the enclosed attachments for further
information.
Review: Administration: Finance:
RFA-O01 ~
CITY OF NEW HOPE
MEMORANDUM
DATE: September 9, 1994
TO: Dan Donahue, City Manager
FROM: Kirk McDonald, Management Assistant, Community Development Coordinator
SUBJECT: Development Options for City-Owned Parcel at 5009 Winnetka Avenue North
The New Hope Economic Development Authority needs to make a decision regarding the
development of the City-owned parcel at 5009 Winnetka. The original intent of acquiring the
property was two-fold: 1) to demolish/remove the blighted structure from the site and 2) to
construct handicapped accessible housing units in conjunction with the newly created 5-City
CO-OP Northwest Community Revitalization Corporation (CRC) to provide affordable home
ownership opportunities. The existing structure has been removed and it is time to determine
exactly how the site is going to be developed. As I see it, there are three (3) options:
Option 1 - Original Concept Proposal
City staff cooperated with the CO-OP Northwest CRC in preparing a grant application for
Federal HOME funds to construct new or rehab existing homes to provide additional affordable
housing on scattered sites throughout the 5-City area. The application was successful and New
Hope's portion of the application was based on the construction of a handicapped accessible
duplex on this site. The HOME funds are to be used as a second mortgage write down to make
the homes affordable for low/moderate income residents. The City has solicited interest from
interested handicapped persons and currently has a list of about 10 persons who are interested
in home ownership.
In addition to the HOME funds, staff also wrote a grant which was funded with $40,000 through
the Minnesota Housing Finance Agency's Land Trust Program. The City acquired the property
for approximately $40,000 and the original intent was to use the MHFA funds to acquire the
site. The MHFA program requires that the City own the site and it was thought that the project
would be more affordable if the land cost was deducted from the sale price. Therefore, both
the Land Trust funds (used for property acquisition) and the HOME funds (used for second
mortgage write-downs) would be used in conjunction with one another to construct an affordable
housing duplex for persons with low/moderate incomes.
Over the past several months the EDA has indicated that they are not necessarily interested in
owning the land. If that is the case, we should determine if we are going to forfeit the MHFA
grant funds and not utilize them for this project.
Option 2 - Original Concept Proposal Revised
If the EDA does not desire to own the land or use the MHFA Land Trust funds, staff is still
encouraging the City to proceed with the development of a handicapped accessible duplex on the
site using HOME funds as a second mortgage write down so that the goal of providing
affordable housing in cooperation with CO-OP Northwest can still be accomplished. The
amount of HOME funds requested from the CRC can be increased and other sources of funds,
including CDBG and scattered site housing money (see attached project description/budget).
After meeting with Hennepin County officials recently, we are confident that the CRC will
approve an increase in their contribution and staff would like to present this to the CRC at their
September meeting so that we can proceed with the construction yet this fall. The City would
act as the developer on the site and the roll of the CRC would be to meet us at the closing with
a $20,000 second mortgage write down for each of the two units.
If the EDA is not agreeable with Option 1, I certainly hope they will respond positively to this
option so that we can utilize the HOME funds that have already been secured. After all, this
is the reason the CRC was formed in the first place and the other cities are already proceeding
on their projects.
Option 3 - Market the Property
The third alternative would simply be to market the property as it exists. While this would
accomplish the first objective of removing a blighted structure, it would not necessarily
accomplish the second objective of providing a unique affordable housing home ownership
opportunity for several handicapped persons. The City would also have little control over the
development of the site except for approval of building plans.
Please let me know if you have any questions or comments.
cc: Steve Sondrall, City Attorney
PROJECT DESCRIPTION
5009 WINNETKA AVENUE NORTH
NEW HOPE, MN 55428
Detailed description of project:
5009 Winnetka Avenue North is a residential property purchased by the City of New Hope EDA from
HUD on Februal~ 7, 1994. The lot is large enough to be divided into two lots, both suitable for
construction of a new home. The site is currently vacant and ready for construction.
The dimensions of the rectangular corner lot are 159' x 128' and contain 19,200 square feet. The lot
faces east on Winnetka Avenue North. The site was zoned R-1 Single Family Residential but was rezoned
to R-2 Single and Two-Family Residential due to the size of the lot, the surrounding zoning, and the
proposed use of the site. The site is bordered on the north (across 51st Avenue) by R-2 and R-3
properties, on the west by R-1 properties, on the south by an R-O Residential Office Zoning District, and
east, across Winnetka Avenue, by I-1 and I-2 Industrial Zoning Districts.
Due to the size of the lot, the City of New Hope has determined that the highest and best use for the site is
as a twinhome. The twinhome will be handicap accessible and will face north on 51st Avenue North. The
twinhomes will be built on grade, with a central dividing wall. The units will have two bedrooms, a living
room, kitchen/dining area, utility room, bathroom, and garage. Accessibility requirements such as wider
halls and doorways will be incorporated into the units. In addition, the developer will work with the buyer
to incorporate additional accessibility needs into the unit. The homes are being marketed and sold to
low/moderate income families.
Responsibilities:
The New Hope EDA is responsible for acquisition, demolition, and preparation of the site for
construction. In addition, New Hope staff is responsible for marketing the site, drafting specifications for
the project, finding a developer/builder, and overseeing construction. If qualified buyers are found during
the construction, the developer/builder will work with the buyer on accessibility details. If no buyers are
found, the developer/builder will construct the twinhome to meet accessibility guidelines.
The City of New Hope will work with Marquette Bank New Hope to handle financing for qualified buyers.
It is anticipated that the future buyers will be using first-time home buyer funds for the purchase of the
units. Thompson Associates, has been hired through the CHDO, to facilitate the application process and
determine which applicants qualify for purchasing the property.
Marketing:
City staff has been marketing the property through the City newsletter, local newspaper, and newspapers
and newsletters targeted at the disabled community. In addition, City staff have sent flyers and press
releases to a number of organizations that provide services to the disabled population. Currently, the City
has 10 individuals who have requested applications forms for purchasing the homes.
Income level of Homeowners:
The qualifying homeowners must meet the income guidelines required for HOME-funded projects. City
staff estimates that one twin home will cost between $75,000 and 80,000 dollars. An income of $27,000
to $29,000 is sufficient for purchase of o~ ~these properties.
The following estimated amounts are for both units combined.
EXPENDITURES ANTICIPATED ACTUAL
Acquisition/site prep $42,000 $42,467
Construction ($70/sq. ft. x 1220 sq. ft.) $170,800
Thompson Associates (marketing) $2,000
Misc. (legal, staff, taxes, site upkeep, fees, etc.) $17,000 $13,006
TOTAL $231,800 $55,47~1 (to date)
REVENUES
Proceeds from sale of twin home $160,000
City contribution (CDBG/EDA/Scatter site funds) $29,800
HOME funds $42,000 ($20,000 second mortgage, $1,000
marketing per unit)
HOMEOWNER REQUIREMENTS ($80~000 UNIT)
Cost per month (principle, interest, taxes, insurance) $700
Annual income required $28,980
Monthly income required $2,415
SCHEDULE FOR COMPLETION:
Choose a developer/builder September 1994
Begin Construction October 1994
Construction complete March 1995
Close/Transfer December 1994-March 1995