041293 EDA OFFICIAL FILE COPY
C~Y OF NEW HOPE
EDA AGENDA
EDA Regular Meeting//5 April 12, 1993
Agenda//5
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 March 22, 1993
4. Consideration of Request by LaNel Financial Group, Inc. for Changes to New
Hope Terrace Assessment Agreement
5. Resolution Authorizing Commencement of Eminent Domain Proceedings to
Acquire Property at 5009 Winnetka Avenue North (//505)
6. Resolution Authorizing the President and Executive Director to Execute Purchase
Agreement and Lease for Foremost Property at 7528 42nd Avenue North
(Improvement Project No. 474)
7. Resolution Authorizing the President and Executive Director to Sign Contamination
Remediation and Right of Entry Agreement (Improvement Project No. 474)
8. Consideration of Request for Extension on Development Contract Improvements,
Autohaus, Inc., 7709 42nd Avenue North (Improvement Project No. 467)
9. Adjournment
CITY OF NEW HOPE
4401XYLON AVENUE NORTH
HENNEPIN COUNTY, MINNESOTA 55428
Approved EDA Minutes March 22, 1993
Meeting #4
CALL TO ORDER President Erickson called the meeting of the Economic
Development Authority to order at 9:51 p.m.
ROLL CALL Present: Erickson, Otten, Wehling, Williamson
Absent: Enck
APPROVE MINUTES Motion was made by Commissioner Otten, seconded by
Commissioner Williamson, to approve the EDA regular and
executive session minutes of February 22, 1993. All
present voted in favor. Motion carried.
NEW HOPE TERRACE President Erickson introduced for discussion Item 4,
APARTMENTS Presentation of Interim Audit Report Prepared by
Item 4 Springsted Relative to the Assessment Agreement and Tax
Increment Financing on the Emerald Pointe Apartment
Complex (formerly New Hope Terrace).
Mr. Donahue indicated that on February 22, 1993, the EDA
authorized proceeding with an audit and directed staff to
report back no later than April 12th. He informed the EDA
that part of the information is available and a final
report will be presented at the April 12th meeting.
NEW HOPE COMMUNITY President Erickson introduced for discussion Item 5,
REVITALIZATION Resolution Appointing Directors to the Board of the New
CORPORATION Hope Community Revitalization Corporation.
Item $
EOA RESOLUTION Commissioner Wehling introduced the following resolution
93-04 and moved its adoption: "RESOLUTION APPOINTING DIRECTORS
Item $ TO THE BOARD OF THE NEW HOPE COMMUNITY REVITALIZATION
CORPORATION". The motion for the 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, Wehling; and
the following voted against the same: None; Absent: Enck;
whereupon the resolution was declared duly passed and
adopted, signed by the president which was attested to by
the executive director.
ADJOURNMENT Motion was made by Commissioner Williamson, seconded by
Commissioner Wehling, to adjourn the meeting, as there was
New Hope EDA March 22, 1993
Page 1
no further business to come before the EDA. All voted in
favor. The New Hope Economic Development Authority
adjourned at 9:52 p.m.
Respectfully submitted,
Valerie Leone
City Clerk
New Hope EDA March 22, 1993
Page 2
ru/-t
~~~~,)~~ REQUEST FOR ACTION
Originating Dep~ment Approved for ~enda ~enda Section
City Manager ~ 4-12-93
Ito~ No.
BT: Dan Donahue BT:~ 4
/
CONSIDE~TION OF REQUEST BY LANEL/FINANCIAL GROUP, INC. FOR CHANGES TO NEW HOPE
TER~CE ASSESSMENT AGREEMENT
LaNel Financial Group has asked the EDA to amend the assessment agreement on the
New Hope Terrace Project (36th Avenue west of the railroad tracks). This would
lower the market value of the project from $6.4 million to around $5 million (to
be determined by the Hennepin County Assessor). With the lowering of market
value is a lowering of taxes. The request comes about due to the artificial
setting of market value by the assessment agreement and the owners inability to
sustain the needed profit for the investors.
Renew: Ad~stratlon: F~ce:
~A-O01
SPRINGSTED 222 South Ninth Street
Suite 2825
PUBLIC FINANCE ADVISORS Minneapolis, MN 55402-3368
(612) 333-9177
Fax: (612) 333-2363
Home Office
85 East Seventh Place 16655 West Bluemound Road
Suite 100 Suite 290
Saint Paul, MN 55101-2143 Brookfietd, WI 53005-5935
(612) 223-3000 (414) 782-8222
Fax: (612) 223-3002 Fax: (414) 782-2904
6800 College Boulevard
Suite 600
Overland Park, KS 66211-1533
(913) 345-8062
Fax: (913) 345-1770
1800 K Street NW
Suite 831
Washington, DC 20006-2200
April 7, 1993 (202) 466-3344
Fax: (202) 223-1362
Mr. Daniel J. Donahue, City Manager
City of New Hope
4401 Xylon Avenue North
New Hope, MN 55428
Re: New Hope Terrace Assessment Agreement
Dear Mr. Donahue:
We have been asked by the City of New Hope (the "City) to provide an analysis of the
projected financial status of the Assessment Agreement (the "Agreement") which is currently in
place for the New Hope Terrace Project (the "Project") as the Agreement relates to the valuation
of the Project for real estate tax purposes. In conducting our analysis, we have relied upon
information received from City staff and Hennepin County. In addition, we have met with
representatives of La Nel Financial Group, Inc. to discuss their interest in the Project.
We have previously provided an analysis of the Project and the consequences to the City of an
adjustment to the Agreement in the form of reducing the valuation of the subject property. This
analysis was contained in a letter dated March 18, 1993. That letter and its analysis is
incorporated by reference into this document.
The City has asked us to perform additional analysis on this matter. We have been asked to
determine the effect on the financial status of La Nel Financial on the current Agreement and
the effect of a reduction in the taxes payable under the Agreement. This letter represents the
results of our analysis on this issue.
We have met with representatives of La Nel Financial Group and reviewed the operating results
of the Project for 1992. From that information we have projected out through 2003 an income
statement and cash flow for the Project. We have limited the projections to 2003 as that is the
final year for payment of the Bonds which were issued in support of the Project. These
projections were adjusted to reflect a higher rent income than shown in 1992. This adjustment
was made to reflect a stronger rental market in the future.
The information we have received from La Nel Financial was provided to us under a
Confidentiality Agreement between Springsted and La Nel. The information we reviewed is
considered by La Nel to be in the nature of a trade secret and we have agreed not to disclose
the information.
New Hope, Minnesota
April 7, 1993
Page 2
The income and cash flow statements which were generated based on the actual 1992
operating results of the Project were reviewed by La Nel representatives to make Sure that the
projections were an accurate depiction of the probable course of future events. These
projections were also compared to industry standards for similar structures as compiled and
published by the Institute of Real Estate Management.
We have not included in our analysis the effect of a sale of the property by La Nel Financial in
the future. Future events and projected sale prices are too speculative to provide information
which may be relied upon for this analysis.
We then analyzed the projections to determine the Internal Rate of Return (IRR) to La Nel and
the Return on Equity (ROE) of the Project.
We prepared three versions of the income and cash flow statements. These versions are
described below.
Version I.
The first version of the income and cash flow is based on a continuation of the current
Agreement and reflects no change in the valuation for real estate tax purposes.
Version II.
The second version reflects a change to the Agreement and reflects a reduced value for the
Project to be used in the calculation of real estate taxes.
Version III.
.The third version reflects the current Agreement and also takes into account a holdback of
certain funds by the lender. The current mortgage on the Project includes a holdback from La
Nel Financial. The effect of the holdback is to have La Nel make payments on the full amount
of the mortgage, while a portion of the proceeds of the mortgage are held in escrow, earning
interest at a rate substantially below the rate of the mortgage.
INTERNAL RATE OF RETURN
Under Version I of the income and cash flow, the IRR of the Project is negative through 2003.
Under Version II of the income and cash flow, the IRR of the Project is positive through 2003,
but is less than 2%.
Under Version III of the income and cash flow, the IRR of the Project is negative through 2003.
Under this version, the IRR is twice as large as the IRR under Version I. Since the IRR under
Version I is negative, the Version III IRR is twice as large a negative number as found in Version
I.
RETURN ON EQUITY
Under Version I of the income and cash flow, the ROE of the Project is below 7% through 2003.
Under Version II of the income and cash flow, the ROE of the Project through 2003 is less than
10%.
New Hope, Minnesota
April 7, 1993
Page 3
Under Version III of the income and cash flow, the ROE of the Project through 2003 is less than
6%.
SUMMARY
The results of our analysis indicate that in general, the IRR of the project will be negative if the
current Agreement is continued. Accounting for the holdback on the mortgage, the IRR is an
even larger negative figure. The ROE in Version I and Version III will be positive, but not
exceedingly high.
If the current Agreement is adjusted to reflect a revised valuation for real estate tax purposes,
the IRR will be positive, but not at a high level,
After you have an opportunity to review this letter, please contact us if you have any questions
or comments about the analysis contained herein or any other area related to the Project or the
Agreement.
Yours truly,
Robert Thistle
Vice President
~~ REQUEST FOR ACTION
originating Depar/~nent Approved for Agenda Agenda Section
Hanager 4-27-92 EDA
Dan Donahue ~ Item No.
By: By:
DISCUSSION REGARDING REOUEST BY LaNEL FINANCIAL GROUP, INC. TO AHEND ASSESSHENT
AGREEHENT FOR NEN HOPE TERRACE APARTHENTS
This is back on the agenda as a discussion item.
LaNe] is the new owner o/: New Hope Terrace Apartments on 36th Avenue west o/: the
railroad tracks. They have acquired, in addition to the comp]ex, an agreement
that previously existed with the City and the original developers. That
agreement required the market value to go up every year by a minimum o/: 2%
regardless o/: any actions by the assessor. Since the sale paid o/:/: the old
housing bonds, the new owners have voided all subsidies /=or ]ow and moderate
income renters.
Proposed by way o/: negotiations between LaNel and city sta/:/: is a scheme to
retain 10 o/: the original 30 low and moderate income apartments i/: the city would
release LaNe] /:rom the assessment agreement and allow the market value to be set
by the assessor free o/: any arti/:icial limits such as a 2% increase /:or every
year. Since the apartments were partially developed through TIF bonds, those
bonds and their repayment are very important to the city. That is the reason /:or
the assessment agreement--to guarantee money would be available through the year
2004 to pay o/:/: the bonds. At the current time there is in excess o/: $500,000
in reserves. This would more than meet 2 years o/: bond payments.
The EDA is considering the LaNel request as a way to provide housing for citizens
in need and meet its /:uture obligations to pay of{ the bonds. Yet to be
developed is a specific plan to guarantee that a sufficient ~]ow o~ TIF money
would always be available.
Renew: Ad~stratlon: F~ce:
LaNel
Financial Group, Inc.
4601 Excelsior Blvd., Suite 601
Minneapolis, MN 55416
(612) 920-5338
Apr il 1, 1992
Daniel J. Donahue
City Manager
City of New Hope
4401 Xylon Ave. N.
New Hope, MN 55428
Re: New Hop~ Terrace Apartments
Dear Dan,
As a follow up to our meeting on Wednesday and as an effort to
address the concerns that the City has with our proposal of March
5, 1992, we would make the following suggestions.
1) The City agree to reduce the market value amount
specified in the assessment agreement to what ever level we are
able to negotiate value with the county assessor. What ever that
number turns out to be would then be the minimum value for the
assessment agreement going forward with the actual fair market
value being determined each year through the normal county
assessment procedure, but not less than that initial minimum
value.
2) In consideration of the above, we will agree to retain
ten units under the low income housing criteria as defined in the
housing revenue bonds initially issued on this project.
3) The ten units would remain low income for the full term
of the tax increment bonds.
4) In the event, and only in the event that the legislature
approves the current legislation allowing the use of excess tax
increment to assist or subsidize low income housing, the City
would agree to make up the difference between the low income rent
paid by the residents and the then current market rate of those
units from the excess tax increment funds.
Dan, it should be clear that if the legislature fails to act we
would still be obligated to maintain the ten units of low income
housing.
This proposal would bring in line the real estate taxes to a
tic and actual market value, allowing this project to
operate in an economically sound fashion and be the asset that
everyone hopes it will be to the City of New Hope. Additionally,
the community will have available to its residents affordable
housing.
Please let me know if you have any questions and also when you
expect this to be presented to the City Council.
Very truly yours,
Paul G. Brewer
President
PGB/lp
cc: Frank Lang
Greg Bronk
LaNel
Financial Group, Inc.
4601 Excelsior Blvd., Suite 601
Minneapolis, MN 55416
(612) 920-5338
March 5, 1992
Daniel J. Donabue
City Manager
City of New Hope
4401 Xylon Ave. N.
New Hope, MN 55428
Re~ New Hope Terrace Apartments
Dear Dan,
After our discussion with you on Tuesday concerning the real
estate market value of New Hope Terrace and the issue of low
income housing units, we would make the following proposal:
On the condition that the City will set the market value for
real estate tax purposes and the Assessment Agreements at
$5,000,000, which is consistent.with our recent purchase price,
we will agree to retain 10 units under the low income housing
criteria that was in existence when the Housing Revenue Bonds
were in place.
It is our understanding that a bill is currently before the
State Legisla=ure that would allow for the use of excess tax
increment funds to assist or subsidize low income housing. In the
even= that that bill passes, our proposal would involve the City
making up =he difference from excess tax increment funds between
the low income ten= paid by the residents on the 10 units and the
then current market rate of those units (approximately $230 per
unit per month).
In the event that the State does not approve the current
pending legislation, we would phase out the 10 units equally over
a two year period.
Dan, we would like to proceed as quickly as possible on the
market value issue so that we know how to deal with the current
residents as we are now in =he process of giving notice on the
low income units of rental increases
~=rch 5, 1992
Page Two
We understand that it may be some time before final resolution on
the legislation takes place, but we are willing to take that risk
so long as we do have the opportunity to phase out those units
over the two year period.
Very~yours,
Paul G. Brewer
President
PGB/lp
EUA
REQUF. T FOR ACTION
Originating Deparhnent Approved Mr Agenda Agenda Section
Manager 4-13-92 EDA
Item No.
Dan Oonahue
By: By: 6
DISCUSSION REGARDING REQUEST BY LaNEL FINANCIAL GROUP, INC. TO AMEND ASSESSMENT
AGREEMENT FOR NEW HOPE TERRACE APARTMENTS
LaNel is the new owner of New Hope Terrace Apartments on 36th Avenue west of the
railroad tracks. They have acquired, in addition to the complex, an agreement
that previously existed with the City and the original developers. That
agreement required the market value to go up every year by a minimum of 2%
regardless of any actions by the assessor. Since the sale paid off the old
housing bonds, the new owners have voided all subsidies for low and moderate
income renters.
Proposed by way of negotiations between LaNel and city staff is a scheme to
retain 10 of the original 30 low and moderate income apartments if the city would
release LaNel from the assessment agreement and allow the market value to be set
by the assessor free of any artificial limits such as a 2% increase for every
year. Since the apartments were partially developed through TIF bonds, those
bonds and their repayment are very important to the city. That is the reason for
the assessment agreement--to guarantee money would be available through the year
2004 to pay off the bonds. At the current time there is in excess of $500,000
in reserves. This would more 'than meet 2 years of bond payments.
The EDA is considering the LaNel request as a way to provide housing for citizens
in need and meet its future obligations to pay off the bonds. Yet to be
developed is a specific plan to guarantee that a sufficient flow of TIF money
would always be available.
MOTION BY SECOND BY
Renew: Adminl~ration: Finance:
RFA-O01 ~
NEW HOPE TERRACE President Pro tem Enck introduced for discussion Item 6,
PROPERTY Discussion Regarding Market Value of New Hope Terrace
item 6 Property.
Mr. Donahue explained that the New Hope Terrace Apartment
building on 36th near the railroad tracks was built with
tax increment funds. He stated the building was recently
sold to LaNel.
He stated currently there is a developer's agreement that
includes an assessment agreement with a 2% escalator. The
assessment agreementhas established a market value of 6.2
million dollars for payable 1992. He stated LaNel, the
new owners, recently purchased the property for 5 million.
He stated LaNel has approached the City about amending the
developer's agreement whereby the market value could be
lowered and thus the taxes paid could be lowered. The
original development used housing bonds where it was
required to set aside 20% {or 30 units) to persons who
qualified under income guidelines. With the new purchase
of the building, the old bonds were paid off and thus
there is no longer a requirement to provide for the 20%
set aside. Mr. Donahue informed the EDA that persons
receiving notification of this discontinuation will press
the City Council for action to reinstate part of the low
and moderate income housing.
He indicated that he has spoken with Ember Reichgott and
Ann Rest regarding the situation and they are very
interested.
Mr. Donahue reiterated that LaNel would like the market
value lowered. At the current time the Hennepin County
Assessor has provided an unofficial valuation of 5.5
million for the property, and does not feel the market
value would be set at 5 million dollars.
He indicated that he believes the only way the City could
provide relief would be to use excess tax increments
towards the lost low and moderate income units. At the
present time, state law forbids the use of excess
increment or any increment to go into direct housing
subsidy. However, there is a tax increment amendment bill
before the Legislature which would allow tax increments to
be used directly for housing subsidy.
President Pro tem Enck stated he is uncomfortable
eliminating 1.2 million of tax capacity to one particular
property owner since it would set a precedent. He noted
the tax loss not only affects the city but also includes
the school district, county, watersheds, etc. He felt
this would impose a burden upon others in the taxing
New Hope EDA March 23, 1992
Page 4
district since the current value is built into the tax
capacity for generating revenues.
Commissioner Williamson stated that many apartment
buildings within the City are deteriorating and may need
help in the future. She commented that if a developer
purchases these apartments at a distressed value and is
willing to make some sort of a deal with the City, it may
be in the City's best interests to do so. She expressed
concern for low and moderate income persons not having
decent places to reside.
President Pro tem Enck agreed that in the future that may
the case; however, in this case there is a binding
contract.
Commissioner Otten indicated he would prefer to retain the
original development contract.
Commissioner L'Herault inquired of the number of units
which would be made available if the value is dropped to
5.5 million.
Mr. Donahue stated many scenarios are being discussed. He
stated if the bill passes regarding use of excess tax
increment funds, the developer would be willing to
designate 10 units. In the event that the State does not
approve the pending legislation, LaNel would phase out the
10 units over a two year period.
Mr. Donahue suggested deferring action until a decision is
made regarding the tax increment bill.
Commissioner Williamson indicated the sale of the property
has been taking place for over a year and will be no
surprise to most of the apartment dwellers. She indicated
there had been rumors of losing the low income housing if
the apartments changed ownership.
AD~OURNNENT Motion was made by Commissioner Williamson, seconded by
Commissioner L'Herault, to adjourn the EDA meeting as
there was no further business to come before the Council.
All present voted in favor. The New Hope EDA adjourned at
10:21 p.m.
Respectfully submitted,
Valerie Leone
City Clerk
New Hope EDA March 23, 1992
Page 5
Commissioner L'Herault, approving revised corrective
action design workplan for 42nd/Nevada Avenue soil
contamination cleanup and authorizing advertisement for
bids to excavate and treat impacted soils. All present
voted in favor. Motion carried.
BID/SOIL CLEANUP President Pro tem Enck introduced for discussion Item 5,
Item $ Approval of Bid Submitted by Bergerson-Caswell, Inc. for
Groundwater Quality Monitoring Well Abandonment and
Construction for 42nd/Nevada Avenue Soil Cleanup (Project
#462), in the amount of $2,296.
Mr. McDonald stated the bid is for abandoning a well and
constructing a new well. The MPCA is requesting that a
monitoring well at the location of the soils to be
excavated be abandoned prior to excavation and that an
additional groundwater monitoring well be constructed near
Park Ridge Way Apartments after the excavation of
contaminated soils.
MOTION Motion was made by Commissioner L'HeraUlt, seconded by
Commissioner Otten, approving bid submitted by Bergerson-
Caswell, Inc. for groundwater quality monitoring well
abandonment and construction for 42nd/Nevada Avenue soil
cleanup (Project #462), in the amount of $2,296. All
present voted in favor. Motion carried.
NEW )lOPE TERI)J~CE President Pro Tem Enck introduced for discussion Item 6,
APARTMENTS Discussion Regarding Request by LaNel Financial Group,
Item 6 Inc. to Amend Assessment Agreement for New Hope Terrace
Apartments.
Mr. Donahue explained that LaNel is the new owner of New
Hope Terrace Apartments on 36th Avenue west of the
railroad tracks. He indicated that LaNel has approached
the City regarding changing the assessment agreement which
was originally made in 1986-87 between the City and the
developers of the property which guaranteed a certain
minimum market value of the apartment project in order to
pay off housing bonds.
Mr. Donahue stated the life of the bonds will run through
2004 and the City does not need to change the assessment
agreement if it does not desire to do so.
He reviewed scenarios discussed with LaNel which may
advantageous to the City. One of the options is to retain
10 of the original 30 low and moderate income apartments
for the life of the bond issue (until year 2004) if the
City would amend the assessment agreement. The amendment
would include allowing the market value to be set by the
assessor free of any artificial limits such as a 2%
New Hope EDA April 13, 1992
Page 2
increase. He noted a minimum market value should be
established to ensure a certain tax flow until the bonds
are paid off.
Mr. Donahue illustrated tax projections based on the
current assessment agreement. He stated the owners would
be required to pay $269,000 in taxes next year. If the
agreement was amended, based on $5.5 million, $233,000
would be generated in taxes, or a tax savings to the
apartment owners of $36,000. The City's analysis would
show that if the owners provided 10 units of apartments at
$200 per month or $24,000/year, LaNel would have a net tax
savings of $12,000.
He also reviewed the projections for year 2003. The cost
of providing the 10 units would be $29,000 and the owner
would have a tax savings of approximately $15,000.
Mr. Donahue stated 2/3 of the savings would be for the
public good and 1/3 to the apartments owner.
He informed the EDA that Paul Brewer from LaNel Financial
Group is present to answer or clarify questions.
Commissioner Williamson questioned the current market
value. Mr. Donahue stated the payable 1993 market value
is $6.4 million (which would generate $269,000 in taxes).
Mr. Donahue stated at the current time there is an excess
of $500,000 in reserves which would meet two years of bond
payments. Under the current agreement it is projected to
be $1.5 million. When the bonds are paid off, the money
is to be redistributed to the taxing jurisdictions or 7%
to the City (17% less 10%).
He stated if the EDA agrees to the change, the excess
increment will not continue to build, but rather the funds
will subsidize the housing. The approximate cost would be
between $120,000 to $150,000.
President Pro tem Enck commented that this happens to be
one project which the City planned well.
Mr. Donahue noted that he is aware of no other city which
has undertaken changes to assessment agreements to benefit
low and moderate income housing.
Mr. Brewer, LaNel, was recognized and stated New Hope
Terrace Apartments was purchased for $5.5 million dollars
which was substantially less than the value stated on the
assessment agreement. He noted when the property was
purchased real estate taxes were considered. He stated it
New Hope EDA April 13, 1992
Page 3
is their goal to get taxes in line with the value. He
stated he recognized the property had 30 units designated
as low income rentals which the previous owner rented for
less than the market rental rate. He stated the units
were primarily rented by low-income elderly persons. Mr.
Brewer continued stating that in this area LaNel currently
has over 1,000 units of multi-family housing, two of which
are Anthony James and Broadway Village Apartments which
are mostly elderly. Because of this, LaNel did not want
to lose the current tenants at New Hope Terrace even
though they were subsidized, yet at the same time the
property could not be economically operated with 30 low-
income units.
Mr. Brewer reviewed his proposal regarding reduction of
the market value. He stated it would not jeopardize the
tax increment financing which exists on the property as
there is sufficient reserves.
He emphasized the assessment agreement amendment would not
only benefit LaNel as a property owner operating on an
economic basis but would also meet and retain some of the
City's low-income housing needs.
Commissioner L'Herault questioned whether the negotiated
purchase price was a reflection of the tax situation.
Mr. Brewer stated that was not the controlling factor as
a number of buyers were competing for the property. He
noted the elimination of the low income units makes up
part of the difference. However, it would be nice to
retain the current low-income tenants since they have
proven to be good tenants.
Commissioner L'Herault again questioned if the tax burden
was reflected in the purchase price.
Mr. Brewer replied that he could not say that it had a
direct impact although it may have indirectly entered into
the offer. He stated the purchase price was determined
based upon the projected revenues generated from the
property.
President Pro tem Enck stated the change in valuation
would amount to $450,000 over a lO-year period. He
pointed out that the City has an obligation to the taxing
districts bymaintainingthe agreement. He remarked that
a benefit would be given to one {property owner and
recipients of low-income housing) at the expense of
another {taxing districts such as the schools).
He expressed displeasure with the City being perceived as
New Hope EDA April 13, 1992
Page 4
the cause behind the elimination of the low-income housing
units.
He pointed out that the agreement was in place when the
property was purchased and the apartment complex was
purchased at a discounted price.
Mr. Donahue asked the EDA for direction as to whether or
not to proceed. He reiterated President Pro tem Enck's
comment regarding the benefit to one at the expense of
another.
Ms. Colleen Barstein was recognized and stated she resides
at the New Hope Terrace Apartment. She has been living
with her mother in a 2-bedroom subsidized apartment for
four years. She indicated she was shocked to learn of the
$250 increase in rent with the elimination of the
subsidized rent. Ms. Barstein stated she would like to
continue living in New Hope and urged the EDA to reach a
compromise for the continuation of the subsidized program.
She indicated without the subsidized housing, people will
be forced to move out or pay the $700 rent. It will be
difficult to find another place to live especially since
many of the affected persons are elderly. She noted they
view the apartments as their home.
She commented that the merchants at Winnetka Commons
Shopping Center may be affected by the tenants relocating.
President Pro tem Enck expressed empathy and stated it is
a difficult dilemma. He inquired of the occupancy rate.
He noted even if there was a change in the agreement, 2 of
the 3 tenants would be adversely impacted since there
would be only 10 rather than 30 subsidized units.
Mr. Brewer stated the apartments are 95% occupied and the
market in New Hope is good.
Commissioner Otten inquired of alternate subsidized
housing within the City.
Mr. Donahue reported that the options are limited.
Section 8 is the predominant program; however, the waiting
list is about 5 years. He stated Metro Housing was
contacted regarding emergency housing in the form of
vouchers but the hardship would not qualify under its
"emergency" program. He mentioned senior apartment
complexes within the City: Anthony James, Chardon Courts,
St. Therese, and North Ridge Apartments.
Commissioner Williamson questioned how the program was
New Hope EDA April 13, 1992
Page 5
subsidized or how the apartment owners were reimbursed.
Mr. Brewer explained that there was no reimbursement; the
owners were required to provide 20~ of the units at a
reduced rate that met the federal guidelines.
Mr. Sondrall, City Attorney, reported that an annual
certification was submitted to the City and the County.
Commissioner Williamson stated it is a serious issue and
she hopes Mr. Brewer can find a way to continue the
program. She stated it is difficult to find subsidized
housing as clean and well operated as New Hope Terrace
Apartments.
She asked how many units of the subsidized units are
currently occupied.
Mr. Brewer replied that there are 16 or 17 apartments.
Ms. Williamson questioned whether Mr. Brewer is confident
that he could maintain a 95% occupancy at the full-market
rate.
Mr. Brewer replied that he believes they can. He noted
that New Hope has an overall vacancy of 3% and the market
is very tight. He noted last year Anthony James
Apartments had 1/10 of 1% vacancy. He stated the normal
turnover on an apartment project is 50-60% of its units
whereas in a senior complex, turnover of 15-20% is high.
Commissioner Otten inquired whether Hennepin County will
be assessing the property.
Mr. Donahue stated the assessment agreement Sets the
market value and the escalator is an automatic 2% until
the life of the contract.
Commissioner Otten noted it is a private venture and it
appears there is little the City can do regarding the
market value set by the contract. He conveyed he does not
feel the City should be lowering the taxes at this time.
Commissioner Williamson indicated philosophically she
agrees with Commissioner Otten; however because the City
originally put stipulations on the property at the time of
construction, she feels the City has a responsibility to
the residents to maintain the subsidized housing end of
the agreement.
Commissioner L'Herault stated it was a package and one has
to use caution when identifying only part of the
New Hope EDA April 13, lg92
Page 6
agreement.
Commissioner L'Herault asked whether it can be approached
another way without impacting the taxing districts.
President Pro tem Enck stated the lower market value will
enable the bonds to be paid off; however, there will be
less money going into the pool and little surplus to be
redistributed at the end of the contract. He noted he
does not feel the City should be changing contracts and he
has not seen anything sufficient enough to warrant a
change to the contract.
Mr. Donahue commented that in the year 2004, the City
would gain $250,000 with the contract as is. If the
contract is changed as proposed, the City would gain
$100,000. Therefore, the housing subsidy program could be
viewed as costing the City $150,000.
Mr. Donahue inquired whether the EDA desires staff to
discuss the matter with the County and/or School District
for their input.
Commissioner Williamson indicated that she would like
President Erickson's input regarding the proposal.
President Pro tem Enck commented that it is appropriate to
have all members actively participate in the decision. He
directed staff to bring the item back on the April 27th
agenda for discussion.
AUTOHAUS - #467 President Pro tem Enck introduced for discussion Item 7,
Item 7 Request for Extension on Development Contract Improvements
- Autohaus (#467).
Mr. Donahue stated staff has met with Autohaus and is
recommending to table further consideration on this item
until the May 11th meeting.
NOTION Motion was made by Commissioner Otten, seconded by
L'Herault, to table until Nay 11, lgg2, the request by
Autohaus for an extension on their development contract
improvements. All present voted in favor. Motion
carried.
OTHER BUSINESS Mr. Donahue informed the EDA that PRISM continues to be
Prism interested in obtaining the City-owned property on
42nd/Nevada Avenue for a new facility. He stated they
have retained an architect and have developed conceptual
drawings which they wish to present to the EDA. The
drawings are in the Mayor's office for the EDA to review.
He informed the .EDA that PRISM would like to meet
New Hope EDA April 13, 1992
Page 7
A condition of the Development Agreement is that the EDA
will furnish a certificate of completion certifying that
all obligations of the developer have been completed in
the construction of the project.
MOTION Motion was made by Commissioner Enck, seconded by
Item 5 Commissioner Williamson, to authorize the Executive
Director to Sign Certificate of Completion for the
Winnetka West Barrier-Free Housing Project (#466). All
present voted in favor. Motion carried.
NEd HOPE TERRACE President Erickson introduced for discussion Item 6,
APARTRENTS Discussion Regarding Request by LaNel Financial Group,
Item 6 Inc. to Amend Assessment Agreement for New Hope Terrace
Apartments.
The EDA resumed d~scussions previously held on March 23,
1992, and April 13, 1992.
Mr. Donahue explained that LaNel Financial Group is
requesting that the City amend its assessment policy
regarding the New Hope Terrace project. The assessment
policy was developed at the time of the original
construction in 1986 which had a minimum market value and
required a 2% escalation of that market value every year.
In 1993, that market value will be at $6.4 million. They
are requesting an amendment to the assessment agreement
that would allow the county assessor to set the market
value for 1993 and that would be the minimum amount or
floor that the market value could not go under for the
life of the bond issue through the year 2004.
If the City agrees to the amendment, LaNel will retain ten
of the thirty units for low to moderate income housing.
LaNel is projecting that the average subsidy wilt be $230
per month. For ten units this would amount to
approximately $28,000 per year.
President Erickson interjected that the City needs to
ensure that the "floor" is beneficial to the City of New
Hope in that it would never be so low that the bonds could
not be paid.
Mr. Donahue stated that if the EDA wishes to pursue this
change, he would discuss the specifics with Hennepin
County.
He noted he personally would like the EDA to grant the
request to LaNel as it would save ten of the subsidized
units. However, on the down side, the City's risk is
increased since the bonds are not yet paid off. He
New Hope EDA April 27, (992
Page 2
pointed out that certain things can happen which may be
out of the City's control {i.e. if the new owners file
bankruptcy} and there may not be adequate reserves to pay
the bonds.
Mr. Sondrall, City Attorney, noted that taxes will have a
priority even in a bankruptcy case. The value of the
property may decline during a bankruptcy case since the
building may be allowed to deteriorate.
President Erickson responded favorably to the amendment to
the assessment policy since 1) it would allow ten out of
the thirty renters to remain until the year 2003; 2) there
will be cash flow to maintain and upkeep the premises; and
3) the new owners are stable and experienced in rental
management.
Mr. Paul Brewer, President of LaNel Financial Group, Inc.,
was recognized. He reiterated their proposal to retain
ten units in exchange for readjustment to the property's
market value.
He reviewed planned improvements to the property including
patio maintenance, caulking of siding, exterior
staining/painting, landscaping, insulation to the pipes in
the underground garage to reduce heat loss, wallpaper
border and lighting in hallway, carpet replacement, and a
new identification sign.
He presented a chart showing the net cash flow with a
reduction of taxes to 5 million and also based on 5.5
million.
Mr. Greg Bronk of LaNel addressed the EDA. The current
taxes are $268,000 based on a $6,267,000 value. If the
value is reduced to $5,000,000, the taxes would be. reduced
to $203,207 or $65,000 reduction. The cost of the ten low
income units would average $27,600 annually. Therefore,
the net reduction of taxes would be $37,800.
He next reviewed taxes based on a $5,500,000 value. The
taxes would be $223,000 or a $45,000 reduction. After the
ten unit subsidy, the net reduction of taxes would be
$17,500. He stated the additional cash flow created by
reduced taxes will be used to partially fund the fore-
mentioned improvements.
Commissioner Otten questioned whether there is any legal
precedent. He remarked of the circumstances where a
private contract is being altered to provide a trade-off
between taxes and low-income housing.
New Hope EDA April 27, 1992
Page 3
Mr. Sondrall replied that he does not believe there is a
legal precedent. The EDA is considering re-negotiating
the assessment agreement. He stated it will not affect
other agreements currently in effect.
Mr. Donahue stated he has learned of assessment agreement
modifications made by other cities; namely St. Anthony and
Bloomington. However, he was not aware of any specific
instances where the changes were made for a direct housing
subsidy.
Mr. Sondrall stated there is a legitimate public purpose
if the EDA desires to amend the agreement. The EDA must
protect the City in meeting the financial obligation of
the bonds as well as to ensure quality housing for low to
moderate income persons.
Commissioner Williamson questioned whether there would be
any surplus if the market value was lowered.
Mr. Donahue stated the surplus will be less than if the
agreement is not amended. Certain provisions could be
made in the agreement to act as safety nets.
Commissioner Enck commented that he does not believe New
Hope has the prerogative to use the bonds as requested.
The amendment would have an adverse affect on all New Hope
tax payers, school district, and the county. He noted
LaNel purchased the property as a distressed sale buying
a 5.5 to 6.0 million dollar structure for 5 million
dollars and the corporate profits could be utilized to
subsidize the low to moderate income units.
President Erickson pointed out that the other taxing
districts will not receive any tax dollars until the bonds
are paid off. As soon as a complex starts creating a
negative cash flow, maintenance and upkeep decreases which
in turn draws a different clientele. The new owners have
no legal obligations to retain any low to moderate income
units; however, LaNel is willing to compromise in exchange
for lower taxes. If the City does not assist, there will
be no low to moderate income units in the building. The
petitioners are good owners as proven by Anthony James and
Broadway Village Apartments operations in the City.
Commissioner L'Herault conveyed that he agrees with
Commissioner Enck in that the owners were aware of the
assessment agreement when they made the purchase. He
expressed empathy that tenants may be evicted since they
cannot afford the full rent. He continued by stating on
the other hand LaNel would be saving $65,000 for retaining
only ten people in the apartment building.
New Hope EDA April 27, 1992
Page 4
President £rickson asked Mr. Donahue to explain the actual
cost to the City.
Mr. Donahue stated the City would give up a certain tax
flow that goes into the tax increment issue. He stated
there is a $532,000 fund balance and anything in excess of
the principal and interest goes into the reserve balance
which is saved over time. In the year 2003, when the
final interest and principal payments are made, the County
divides the money by the taxing jurisdictions. He
projected that the current assessment agreement would bear
the City $250,000. He stated if the proposal is accepted
and the value is set around $5 million, the City's share
would be lowered to $100,000.
President Erickson suggested tabling the item until the
County could establish the market value and the City
Attorney could prepare a draft agreement.
Commissioner Williamson questioned whether the EDA could
determine the market value rather than the County.
Mr. Donahue stated if the value does not appear to be a
safe enough amount, an escalator could be built into the
contract in order to minimize the City's risk.
Commissioner Otten stated he is pleased that LaNel has
purchased the property but feels the EDA should not be
making amendments to the assessment agreement at the
taxpayers' expense.
Commissioner Williamson reported on the difficulty she
experienced reaching her decision on the matter.
She commended LaNel for wanting to negotiate a possible
solution to the housing problem. She encouraged them to
solve the problem and maintain the 10-30 units on their
own. She pointed out that as an elected official the
situation has to be viewed as to how it impacts the city
as a whole, and she does not feel she can support it.
Commissioner Otten stated he wants to see the new owners
make a success of the operation. He noted his concern
with the compromise being based on the low to moderate
income housing issue. He remarked that the current
assessment agreement does not appear to jeopardize the
financial standing of the new owners or prevent them from
running a successful operation.
MOTION Motion was made by Commissioner Enck, seconded by
Item 6 Commissioner L'Herault, to make no amendments to the
assessment agreement for New Hope Terrace Apartments.
New Hope EDA April 27, 1992
Page 5
i REQUEST FOR ACTION
Originating Department Approved for Agenda Agenda Section
Manager 4-12-93 EDA
/~ Item No.
By: Dan Donahue By: 5
RESOLUTION AUTHORIZING COMMENCEMENT OF EMINENT DOMAIN PROCEEDINGS TO ACQUIRE
PROPERTY AT 5009 WINNETKA AVENUE NORTH (PROJECT #505)
On March 22, 1993, a motion was made directing staff to proceed with the purchase
of this property.
The enclosed resolution authorizes the direct purchase and commencement of
eminent domain proceedings if a direct purchase is unsuccessful. One appraisal
has already been completed; this resolution authorizes obtaining additional
appraisals necessary to establish a fair market value and just compensation for
said property in preparation for eminent domain proceedings.
Staff recommends approval.
MOTION BY ~/'/"~a4~L SECOND BY ~
To: ? /Y7 ¢ -loS
Review: Administration: Finance:
RFA-O01 ~
A P R -- ? -- 9 ~ 1-.I E :E~ 1 6 : .~ ~ O C~ R R I C K ~ $ 0 N B R A L L P . 0 2
EDA RESOLUTION 93-
RESOLUTION AUTHORIZING COMMENCEMENT
OF EMINENT DOMAIN PROCEEDINGS TO
ACQUIRE PROPERTY AT 5009 WINNETKA AVENUE NORTH,
NEW HOPE, MINNESOTA
WHEBE~S, the City of New Hope Housing Policy includes goals
and objectives of providing safe, healthy and attractive
residential environments which offer a broad and full choice of
housing types, and to maintain a high quality reetdentta]
environments through the rehabiltation or where needed
redevelopment of residential units, and
WHEREAS, the following legally described real property
(Property) is located tn the City of New Hope, Hennepin County,
Minnesota, also known as 5009 Winnetka Avenue North:
That pert of the Southeast Quarter of the Northeast
Quarter, Section 7, Township 118, Range 21, described as
beginning at a point on the East tine of said quarter -
quarter distant 330 feet south along said East line from
the Northeast corner thereof; thence North along said
East line 150 feet; thence west parallel to the North
line of said quarter - quarter 168 feet; thenoe South
parallel to said East line 150 feet; thence East to the
point of beginning, except the West 7 feet of the East dO
feet thereof, according to the Government Survey thereof,
and
HER~, the Economic Development Authority in and for the
City of New Hope (EDA) does hereby determine that the Property is
blighted by reason of delaptdation, obsolescenoe, faulty
arrangement or design and that in its judgment the acquisition of
this property will be for the benefit of the public health, welfare
and safety of the citizens of New Hope, and
WHERE&S, Minn. Sta[. §489.101, Subd, 4, gives the Economic
Development Authority in and for the City of New Hope the authority
to acquire property by power of eminent domain under Min,~ st~t,
Chapter 117, and
WHEREAS, the Economic Development Authority in and for the
City of New Hope has determined it is necessary to acquire this
property by eminent domain proceedings,
~PR-- T--9~ WEB ~ 6 : ~4 CORR I CK ~ SOHDR~LL P . 0~
NOW, THEREFORE~ BE IT RESOLVED by the Economic Development
Authority in and for the City of New Hope as follows;
1. That the Executive Director and President are hereby
authorized to acquire by direct purch&se or if direct
purchase is unsuccessful to commence eminent dom&in
proceedings under ~_nn..StaI~ Chapter 117 to acquire the
property at 5009 Winnetka Avenue North in the City of New
Hope, legallly described as follows:
That part of the Southeast Quarter of the Northeast
Quarter, Section 7, Township 118, Range 21,
descriDed as beginning at ~ point on the East line
of said quarter - quarter distant 330 feet south
along said East line from the Northeast corner
thereof; thence North along said East line 150
feet; thence West parallel to the North 3ina of
said quarter - quarter 168 feet; thence South
parallel to said East line 150 feet; thence East to
the point of beginning, except the West 7 feet of
the East 40 feet thereof, according to the
Government Survey thereof,
2. That the Executive Director is hereby directed and
authorized to obtain additional appraisals necessary to
establish fair market value and just compensation for
said property an preparation for said eminent domain
proceedings.
3. That any actions authorized by this Resolution, which
have a}ready taken place are hereby approved~ ratified
and adopted,
Adopted by the Economic Development Authority in &nd for the
City of New Hope this day of , 1993.
Edw. J. Erickson, President
Attest:
Dantel J. Donahue, Executive Director
REQUEST FOR ACTION
Originating Department Approved for Agenda Agenda Section
City Manager EDA
1~-~4-12-93 Item No.
Kirk McDonald
By: Management Assistant By:~/ 6
RESOLUTION AUTHORIZING THE PRESIDENT AND EXECUTIVE DIRECTOR TO EXECUTE
PURCHASE AGREEMENT AND LEASE FOR FOREMOST PROPERTY AT 7528 42ND
AVENUE NORTH
The enclosed resolution authorizes the EDA President and Executive Director to execute the purchase
agreement and lease agreement in connection with the Foremost property at 7528 42nd Avenue
North. The acquisition price is $450,000 and Foremost will be allowed to occupy the property for
a 2-year period commencing on the date of the closing. Foremost is responsible for operating
expenses and real estate taxes during the course of the rental period. They also will be allowed to
remove all machinery and fixtures from the property when the lease expires. Foremost also is paying
all past due real estate taxes and unpaid special assessments.
Staff recommends approval of the resolution.
MOTION BY ~//~_ .. SECOND BY /F~7~/7-]
Review: Administration: Finance:
RFA-O01 ~
APR-- ?--95 WEB 15 : 4T CORR I CK & $ONDRALL P . 04
EDA RESOLUTION NO, g3-.
RESOLUTION AUTHORIZING THE PRES[DENT
AND EXECUTIVE DIRECTOR TO EXECUTE
PURCHASE AGREEMENT AND LEASE FOR
FOREMOST PROPERTY AT 7528 42ND AVENUE NORTH
WHEREA~, the property owners of 7528 42nd Avenue North,
commonly known as the Foremost property, are desirous of selling
said property to the Economic OeYelopment Authority tn and for the
City of New Hope (hereinafter "EDA"), and
WHEREAS~ the EDA is desirous of acquiring the &for&described
property tn accordance with the Purchase Agreement and Lease
Agreement attached to this Resolution.
NOW, THEREFORE~ BE IT RESOLVED by the Econom~e Development
Authority tn and for the City of New Hope as follows:
1. That tt ts in the best interests of the Economic
Development Authority in and for the City of New Hope to
) acquire the Foremost property located at 7528 42nd Avenue
North in accordance with the terms and provisions of the
Purchase Agreement and Lease Agreement att&chad hereto,
2, That the Economic Development Authority in and for the
City of New Hope hereby directs and authorizes the
President and Executive Director to enter into the
attached Purchase Agreement and Lees& Agreement with the
Sellers of the Foremost property and to take whatever
additional acts are necessary to complete the acquisition
of this property.
Adopted by the E~onomi= Development Authority in and for the
C~ty of New Hope this . day of , 1993.
Edw. J. Erickson, Chairman
Attest:
Dental J. Donehue, Executive Director
~PR-- 7--95 WED 1 ~ : 46 CORR I CK & SONBR~LL P . 02
April 7, 1993
Mr. Kirk McDonald
Management Assistant
City of New Hope
4401Xylon Avenue North
New Hope, MN 55428
RE; Acquisition of Foremost Property
Our File No. 99.11090
Dear Kirk:
Please find enclosed a proposed Purchase Agreement and Lease in
connection with the acquisition of the Foremost property. Also, !
have enclosed & Resolution for the EDA's adoption in the event they
want to pursue the acquisition in accordance with the enclosed
Purch&se Agreement and Lease.
The acquisition price for the property is proposed at $450,000.
Also, Foremost, [nc, will be allowed to occupy the property for a
24 month period commencing on the date of closing pursuant to the
terms of the enclosed Lease. Essentially, Foremost will pay
operating expenses and real estate taxes during the course of the
24 month rental period in lieu of a specific rental payment. We
are also allowing Foremost to remove any personal property,
machinery and equipment, trade fixtures or removable fixtures from
the property at the termination of the lease. However, their
ability to remove said items is conditioned upon payment of
o~erating expenses and real estate taxes connected with the rental
period,
As part of the purchase acquisition, Foremost is also paying
past due real estate taxes and unpaid special assessments. This
amount equals $110,832,18. Therefore, this amount will be
subtracted from the purchase price before the closing is finalized.
APR-- 7--9S WE~ I 5 ~ 47 CORR I CK ~ SON~RALL P . 0~
Mr. Ktrk McDonald
April 7, 1993
Page 2
~n other words, the Sellers w~ll not be receiving $450,000 at the
closing. $&~d amount will be adjusted based on unpaid taxes,
special assessments and other clostng costs.
Please contact me if you have any further questions regarding this
matter.
Very truly yours~
Steven A. Sondrall
slt2
Enclosure
¢c: Dante1 J, Donahue (w/eric)
Valerte Leone (w/eric)
612425586?
APR-- 9--9~ FR I 1 4 = 25 CORR I CK ~ SONBRALL P . ~ 1
LEASE AGREEMENT
THIS AGREEMENT made end entered ~nto this_____ day of
, 1993, by and between The Economic Development
Authority in and for the City of New Hope (hereinafter "Lessor")
and Foremost, Inc., a Minnesota Corporation (hereinafter "Lessee");
W I T N E S S E T H:
1. .LEASED PREMISES.,.
The Lessor ~n consideration of the rents and covenants herein
contained, to be pa~d, kept and performed by the Lessee, does
hereby demise, 3ease and let unto the Lessee, and the Lessee
does hereby hire and take from the Lessor the following, to-
wit: (the "Leased Premises"):
7526 42nd Avenue North, common3y known as the Foremost,
Inc. property
2. TERM.
The Lessee shall have and hold the Leased Premises herein
demised, together with all rights, privi leges and
appurtenances thereunto pertaining and belonging unto the said
Lessee for a term of two (2) years, commencing on the
day of , 19__ and ending the ___._ day of
.......... , 19, The Lessee may terminate this lease
at any time during the rental period by 9tying Lessor ninety
(90) days written notice of their intention to terminate the
lease, in the event of termination by the Lessee, the rent
shall be adjusted on a pro-rata based to the date of
termination, This lease shall automatically terminate at the
end of the 24 month period without notice by either party.
3. _RENT~
The Lessee shall pay, during the term of this Lease, One
Do31ar ($1.00) and other good and valuable consideration as
set forth herein. On the date of execution of this Lease, the
Lessee shall pay the rent and the real estate taxes payable in
1993 against the property, On May 15, 1994, Lessee shal3 pay
the real estate taxes payable tn 1994 against the property.
on February 1, 1995, Lessee shall pay its pro rata share of
real estate taxes in 1995 against the property. The payment
of real estate taxes shall be deemed as a prepayment of
additional rent and not as a security deposit hereunder.
612425586?
APR-- 9--95 ER I I 4 : ~8 CORR I OK ~ SONDRALL P . O l,
~UTHORZZEO USE.
It is agreed that the Leased Premises shall be used by the
Lessee for the Foremost, Inc. sheet metal business and for no
other purpose, subject to all local and state regulations
regarding the use of said premises. Lessee further
acknowledges and agrees that it is accepting the property in
an "as is" condition and agrees that the property is fit for
Lessee's intended use. Lessee further acknowledges it has
occupied this building prior to Lessor's ownership and will
indemnify and hold harmless Lessor for any injury or damage
caused by the condition of this property and improvements
thereon or Lessor's use of the property notwithstanding any
contrary language in other provisions of this lease.
ADDIT~ONA~_REN~.
Lessee shall pay as additional rent ali operating expense as
defined herein. Any additional rent pay&bls hereunder which
remains unpaid at the end of the term of this Lease shall be
due and payable upon the termination date.
"Operating Expenses" shall mean and include the following
expenses with respect to the building in which the Leased
Premises are situated, the parking 3ct serving said building,
and the real estate on which said building and parking lot ere
located=
(a) Real estate taxes, including installments of special
assessments payable in the year for which such expenses
are being determined;
(b) Insurance premiums and any license, permit or inspection
fees; and
(¢) Costs for all labor, material and services, including,
but not limited to, security service, janitor service and
utilities, for the operation, repair, maintenance,
management and upkeep of the building, including common
areas thereof, parking lot, and lands on which the same
are situated to the extent that the Lessor is responsible
for such expenses under this Le~se.
HOL.O~!.~_OVER~
If the Lessee hO~ds over beyond the term of this Lease with
the written consent of the Lessor, it is agreed that the LeaSe
2
APR-- 9--9~ FR I 14 : 09 CORR I CK ~ $ONDRALL P . 02
is automatically extended for a period of thirty (30) days
under the same terms and conditions.
7. RENEWAL OPTION,
Lessee shall have no option to renew this ]ease.
8. CARE AND MAINTENANCE.
The Lessee shall be wholly responsible for the exterior and
~nterior maintenance of the Leased Premises and all costs
assootated therewith, The Lessee shall further keep the
Leased Premises in an orderly, olean and sanitary conditton~
as required by the laws and ordinances applicable thereto;
shell neither do nor permit to be done on said premises
anything in violation of laws or ordinances applicable
thereto; shall neither omit nor suffer waste in said premises;
and shall pay for a11 g]ass broken by its fault or negligence,
or the fault or negligence of ~ts employees.
It is agreed that the maintenance and repair obligations of
the Lessee hereunder shall extend to alt parts or portions of
the Leased Premises, including the 9rounds, parking areas,
entrance and overhead garage doors, and including heating and
plumbing, electrical and mechanical fixtures and equipment
whether located on the interior or on the exterior of the
Leased Premises,
It is further understood and agreed by the parties hereto that
upon termninat~on of this Lease the building may be demolished
by the Lessor and, therefore, that fact will be taken into
account regarding painting, upkeep and repair of the premises.
9. ~TILIT[.E.S.
The Lessee shall pay for a11 utilities, including gas,
electrictty~ c~ty water~ and any other service used by Lessee
during the term of th~s Lease.
IO. ~NSURANQE,
The Lessee shall maintain in full force and effect during the
term of its Lease a policy of public liability ~nsurance under
which both Lessor and Lessee are named tnsureds. The minimum
limits of ltabtllty of such ~nsur&nce shall be $500~O00 for
injury or death to any one person~ $1,500,000 for injury or
death to more than one person and $100~O00 fop property
damage, The policy shall further contain a provision
APR-- 9 -- 9 :~; F R I I 4 ' 0 9 C 0 R R I OK & S 0 N D R A L L P . 0--~
requiring ten (10) days written notice to be given to the
Lessor before & cancellation of the policy can be effected.
Lessee hereby agrees to deltver a duplicate copy of said
policy to Lessor, Said coverage may be provided by a
combination of primary and excess liability coverage.
11, DESTRUCTION OF LEASED PR..EM[SE~,
Should the Leased Premises become untenantable or unfit for
occupancy in whole or in part by the total or partial
destruction of the building by fire or other casualty, this
Lease shall be terminated and Lessee shall have no further
r~ghts hereunder. The Lessor shall have no obligation to
restore the premises and the rent to be paid hereunder shall
be abated in proportion to the loss and impairment of the
e~reement between the parttes hereto.
t2. CLA.IMS FOR LOS~.~.
The Lessee shall make no claim against the Lessor and shall
hold the Lessor harmless for any loss of or damage to property
of the Lessee caused by theft, burglary, fire, water,
windstorm or other casualty or cause, unless said loss or
damage was caused by Lessor.
13. ~.IGHT TO..INSPEC~ .....
The Lessor may at all reasonable times enter the Leased
Premtses to inspect the same.
14. ALTERATIONS/REMOVA~.L.E FIXTURES~
The Lessee shall pay the cost of any alterations made to the
Leased Premises and will not be compensated for any
alterations at the termination of the Lease. Further, Lessor
agrees Lessee may during the rental period remove al~ personal
property, trade f~xtures, machinery and equipment and any
other removable fixtures and to otherwise salvage all
removable property form the real property. Lessee shall not
be required to pay for ~ny salvaged item except all costs of
removal and all costs to secure the building shall be paid by
Lessee, However, Lessee agrees that nothing shal~ be removed
from the property unless Lessee is current on al~ payments due
hereunder to Lessor. Lessee further agrees that tt wtll give
Lessor at least 24 hours notice before removing any salvagable
property from the premises and a description of the property
to be removed.
R F' R -- 9 -- 9 ~ F R I I 4 : 1 0 C 0 R R I C K ~ $ 0 N I] R ¢~ L L P . 0 4
15. HAZARDOUS MATERIALS.
Lessee agrees that tt w~ll not transport, store, use generate,
treat and d{spose of any toxic or hazardous substances, and
will use the Premises, all in compliance with any local, state
or federal zoning, environmental or hazardous waste laws or
other environmental laws or regulations from and after the
Commencement Date. Lessee will comply with any disposal or
tr~ns~)ortat~on of any toxic or hazardous substances ~ncluding,
wtthout limitat~on, any reporting requirements relating to any
storage tanks located ~n the Leased Premises. If requ~red~
Lessee shall file reports on any such activities w~th the
appropriate authority. At the expiration or termination of
this Lease, Lessse shall remove any tanks for storage of any
toxic or hazardous substances instal led by Lessee ~n
compliance with all applicable statues, rules and regulations.
If, at any t~me during the Term of this Lease, any local,
state or federal authority should request a report on any
toxic or hazardous substances Lessee has stored, used or
d~sposed of on or from the Leased Premises, Lessee will etther
cause sa~d report to be made as soon as practicable at its own
~ost and expense, or {f not made within thirty (~0) days of
Lessor's request for the same, w~l~ ~e~mburse Lessor, as
Additional Rent, for Lessor's cost of obtaining said report.
Lessee agrees to absolutely ~ndemnify, defend and hold Lessor
harm]ess of and from any loss, damage, costs, expenses,
including a~l attorneys fees~ ar~s~ng out of or in any manner
related to the generation, transportation, treatment, storage,
manufacture, emission, use or disposal of any toxic or
hazardous substances {n, from, to or about the Leased
Premises. This warranty shall survive the expiration or
termination of this Lease.
16. ~IVER.AND INDEMNITY.
Lessor shall not be liable to Lessee, or those claiming by,
through or under Lessee, for any tnjury~ death or property
damage occurring ~n, on or about the Premises unless caused by
the fault of Lessor, Without limitation of the foregoing~
Lessor shall not be iiable to Lessee for any, and Lessee
hereby releases Lessor from all damage, compensation or claims
arising from: loss or damage to books, records, f~les, money,
securtt~es~ negot{able instruments or othe~ papers ~n or about
the Premises; the necessity of repairing any portion of the
Premises or the amenities within or wtthout the Premises; the
~nterruption ~n the use of the Premises; accident or damage
resulting from the use or operation of Lessor, Lessee, or any
5
612~255~67
APR-- 9 -- 9 5 ER I 1 4
other person or persons whatsoever of elevators~ or heating,
cooling, electrical or plumbing equipment or apparatus; any
fire, robbery, theft, or any other casualty; and leakage or
bursting of pipes or water vessels or any roof or wall
leakage~ in any part or portion of the Premise;; water, rain,
snow or underground water that may leak into, flow on, or flow
from, any part of the Premises.
Lessee shall defend with counsel approved by Lessor (which
approval will not be unreasonably withheld), indemnify and
save Lessor harmless from and against all liabilities,
obligations, damages, fines, penalties, claims, demands,
costs, charges, judgment and expenses, including, but not
limited to, reasonable architects' and attorneys' fees, which
may be imposed upon or incurred or paid by or asserted against
the Lessor, the Property or any interest therein by reason of
or in connection with any of the following occurring during
the term of this Lease: (t) Any alterations and anything done
in, on or about the Premises or any part thereof in connection
therewith; (ii) The use, non-use, possession, occupation,
condition, operation, maintenance or management part of Lessee
or any of its agents, contractors, servants, employees,
licensees or invitees; (iv) Any accident, injury, death or
damage to any person or property occurring in or on the
Premises; and (v) Any f~tlure on the part of Lessee to perform
or comply with any of the covenants, agreements, terms,
provisions, conditions or limitations conta~ned in this Lease
or its part to be performed or complied with. Nothing
contained in this Section shall be deemed to require Lessee to
indemnify Lessor to any extent prohibited by
After termination of this 3ease, it is agreed that Lessee
shall not be responsible for any care, upkeep or removal of
the four (4) test wells on the Premises.
17. pEFAUL~...
Should the Lessee (a) fall to pay rent in accordance with the
terms of this Lease, or (b) default in any of the covenants
contained herein and said default remains uncured after ten
(10) days written notice thereof is given by the Lessor, the
Lessor, in either such event, shall hereby be authorized to
re-enter the Leased Premises, eject the Lessee and take full
possession of the premises, terminate this Lease at its
option, and relet the premises should it deem such a reletttng
to be in its best interest. The Lessee shall further, in the
event of either nonpayment of rent or default, have the right
to remove from the Leased Premises all personal property of
the Lessee and store the same at the risk and expenses of the
6
~PR-- 9--95 FR I 14 : i 5 CORR I CK ~ SONBRALL P . 02
Lessee. Should the Lessor determine that any action or
proceeding at law or otherwise is necessary to enforce the
terms and conditions hereof, the Lessee agrees that reasonable
attorney's fees and all other necessary costs and
disbursements may be charged against the Lessee as additional
rent, which additional rent shall be due and payable upon
receipt of an invoice therefor from the Lessor.
The Lessee also agrees that tf it, or any permitted sublessee
or assignees, if such be the case, be the subject to any
voluntary or involuntary proceedings under the Bankruptcy Act
of the United States, as amended, or any other insolvency
proceeding, or should any proceeding for the appointment of a
receiver or trustee be commenced against the Lessee, or any
permitted sublessee or assignee, then, and in any such events,
the Lessor may in addition to its other remedies at law, and
at its option, terminate this Lease and pursue one or more of
the remedies set forth in the first paragraph of this Section
in the same manner as if the Lessee had defaulted in any
covenant contained herein.
18. .ASSIGNMENT.
The Lessee shall not assign this Lease or any interest herein,
or sublet any part of the Leased Premises, or permit any other
person or entity, whether jointly with the Lessee or
otherwise, to occupy any part thereof with the exception of
Foremost, InCo Should the Lessee make any such assignment or
subletting or permit any such occupancy, neither the
acceptance of rent by the Lessor thereafter from Lessee or any
other person or entity, nor any failure on the part of the
Lessor for any particular period of time to take action on
account of such breach or to enforce its rights with respect
thereof, shall be deemed a waiver of the breach, and such
breach shall be a continuing breach ~for so long as may such
sub-tenancy or occupancy continue. It is understood and
agreed that any assignment of this Lease made with the consent
of the Lessor sh&]l not release or discharge the obligations
of the Lessee hereunder; further, the Lessee shall remain
secondarily 3table for any rent or other obligation to the
extent that the same is not satisfied in full by any sub-
lessee or assignee.
IN WITNESS WHEREOF, the Lessor and Lessee have caused this
]ease to be executed in duplicate as of the day and year first
above written.
APR-- 9 -- 9 ~ F R I 1 4 -' i -~ C 0 R R I C K ~ S 0 N B R A L i P . 0 1 ~
In the presence of: THE ECONOMIC DEVELOPMENT
AUTHORITY IN AND FOR THE
CITY OF NEW HOPE
(Lessor)
By
Its
By
Its _..
In the presence of: FOREMOST, INC,
(Lessee)
By
Its
By
Its
The undersigned, for and in consideration of the Lessor's
execution of thts le&se, do hereby unconditionally guarantee the
performance of al1 obligations of the Lessee herein, tnc]uding
spec~flcally the obligation to pay rent as set forth ~n the
agreement.
Allen V. Fredenda11
Kathleen M. Fredenda11
8
fi'~ P R -- '~ -- 9 $ F R I i 4 : 1 8 C 0 R R I C K & $ 0 N D R A I_ L P . 0 2
STATE OF MINNESOTA )
) ss.
COUNTY OF HENNEPIN )
The forego!ng was acknowledged before me this day of
j 199__, by Edw. J. Erickson end Daniel J.
Oonahue, the and ...................... ,
respectively, of the Economic Development Authority in and for the
City of New Hope.
Notary Public
STATE OF MINNESOTA )
COUNTY OF HENNEPIN )
The foregoing was &cknowledged before me thts day of
., 199__, by and
, 'the and
respecttve3y~ of Foremost, Inc., a Minnesota corporation, on behalf
of said corporation.
Notary Public
STATE OF MINNESOTA )
COUNTY OF HENNEPIN )
The foregoing was acknowledged before me th~s _. day of
~ 199__, by Alien V. Fredenda]l and Kathleen M.
Fredenda13.
Notary Public
c:\wp51\cnh\fredenda11.3ea
APR-- 9--9~ FR I 1 4 = I 8 CORR I CK & SONI) RALL P . 0~
PURCHASE AGREEMENT
THIS AGREEMENT, entered into this day of
1993, by and between the Economic Development Authority in and for
the City of New Hope, Minnesota ("EDA") and Alien V. Fredenda11 and
Kathleen M. Fredenda11, joint tenants ("Sellers").
W I T N E S S E T H;
WHEREAS, Sellers are the owners of certain real property
located at 7526 42nd Avenue North~ City of New Hope, Minnesota
having a legal description as follows:
("Real Property");
WHEREAS, Sellers desire to sell the Real Property to the EDA
and the EDA desires to purchase the Real Property upon the terms
and conditions set forth in this Agreement·
NOW, THEREFORE, in consideration of the mutual promises,
covenants and conditions contained herein, tt ts hereby agreed by
and between the parties as follows:
1. PurGhase and Sale_Q~ t. he Real Property. On the Closing
Date, Sellers shall sell and EDA shall purchase all right, title
and interest in and to the Real Property. The purchase price shall
equal Four Hundred and Fifty Thousand Dollars ($450~000.00), which
amount shall be pa~d by the EDA to Sellers on the Clostn9 Date,
2. Closin~ Bate. The Closing Date shall be on
, I993, at 10:00 a,m. at the offices of
3. Warranty. Deed. Sellers shall convey title to the Real
Property to EDA by a general warranty deed subject to the following
conditions or exceptions, if any, on the Closing Bate and,
effective on the Closing Date, beneficial ownership and the risk of
loss to the Real Property shall pass from Sellers to EDA.
4, Baal Estate Taxes ap.d_.Special Assessments, All real
estate taxes payable in 1992 and prior years shall be paid by
Sellers on the Closing Date· In addition, for 1993 through the
Closing Date~ all real property taxes shall be pro-rated to the
Closing Date and paid by Sellers. Sellers shall pay all unpaid
special assessments, if any, on the Closing Date including all
special assessments certified to the taxes payable in 1993.
APR-- 9 -- 9 ~ F R I i 4 -" 26 C 0 R R I ~3 K & $ 0 N ]~ R A L L P . 82
5. Damage to Real Prolle.~t.y, If, prior to the Closing Date,
the Real Property is damaged, in whole or in part, this Agreement
shall nevertheless be enforceable, it being the intention of the
parties that the risk of loss shall be with the EDA. However, the
purchase price shall be adjusted downward based on the amount of
available insurance coverage Sellers ere entitled to on any and all
policies in force and effect through the Closing Date. Sellers
further agree to include the EPA as a named insured on said
policies covering the Real Property. This agreement shall be
voidable at Buyer's option if Seller cannot deliver marketable
title to the property within a reasonable time notwithstanding the
language contained in this paragraph.
6. Rent_al o.f.Real Promer~t.y. Subsequent to the Closing Date,
Foremost, Inc. shall retain possession of the Real Property and
shall enter into the attached rental agreement with the EPA to rent
the same from the EPA for a payment of $1,00 and other good and
valuable consideration, and upon the other terms and conditions
contained in the attached agreement.
7. Sellers' D..o.cuments, On the Closing Date, Sellers shall
deliver to the EPA, the followtn~ documents:
(a) Warranty Deed to the Real Property;
(b) Mortgage satisfaction from Norwest Bank;
(c) Sellers' Affidavit,
(d) Any other documents required to provide marketable
title to the property as determined by Buyer or its
attorneys.
8. EDA's .Documer)ts. On the Closing Bate, the EPA shall
deliver to Sellers the check described in Paragraph 1 hereof,
9, Payments_ of Fee~. The payment of fees and expenses in
connection with these transactions shall be allocated as follows:
(a) Each party will pay their own attorney's fees;
(b) The Sellers shall pay the recording fees for all
documents necessary to provide marketable title to the
EDA including the State Deed Tax.
(c) The EPA will pay all other fees and expenses
incurred in connection with closing these transactions,
10. M_i_sce 11 aneou_s, The fbi low1 ng provisions shal 1 be
applicable to this Agreement,
APR-- 9--95 FR I 14 ~ 26 CORR I CK ~ SONBRALL P . 0~
(a) This Agreement shall not be assignable or
transferable by e~ther party.
(b) This Agreement sets forth the entire agreement and
understanding between the parties re3ating to the subject
matter contained herein and merges all prior discussions
between them.
(c) Any notice or request given under this Agreement
shall be in writing and shall be sufficiently addressed
if sent by postage prepaid, first class mail as follows;
If to the EDA to:
The Economic Development Authority in and for
the City of New Hope
4401Xy]on Avenue North
New Hope, MN 55428
If to Sellers to:
Allen V. Fredendall and Kathleen M. Fredendall
7526 42nd Avenue North
New Hope, MN 55427
With a copy to:
Merritt~ Furber & Timmer
2100 Lincoln Centre
M~nneapolis~ MN 55402
[N WITNESS WHEREOF, the parties have executed and delivered
this Agreement as of the date ftrst above written.
CITY OF NEW HOPE
By
Edw. J. Erickson, Mayor
By
Daniel J. Donehue, City Manager
~PR-- 9--9~ FR I 14 : 27 CORR I CK ~ SON~R~ P . 04
Allen V. Fredenda11
Kathleen M. F~edendall
c:\wp51\cnh\Fredendall .eg~
EDA
REQUEST FOR ACTION
Originating Department Approved for Agenda Agenda Section
City Manager 4-12-93
Item No.
By:Dan Donahue By: 7
RESOLUTION AUTHORIZING THE PRESIDENT AND EXECUTIVE DIRECTOR TO SIGN CONTAMINATION
REMEDIATION AND RIGHT OF ENTRY AGREEMENT (#474)
The Agreement requires Electronic Industries to continue the ground water
contamination remediation efforts at their property (7516 42nd Avenue North)
after demolition of the building despite eminent domain proceedings by the City.
Our City Attorney has prepared the enclosed resolution.
Staff recommends approval.
/
Review: Administration: Finance:
RFA-O01 ~
EDA RESOLUTION NO. 93-_
RESOLUTION AUTHORIZING THE PRESIDENT
AND EXECUTIVE DIRECTOR TO SIGN
CONTAMINATION REMEDZATION AND RIGHT OF ENTRY AGREEMENT
WHEREA~, the Economic Development Authority in and for the
City of New Hope (hereinafter "EDA") has acquired fee title to
property previously occupied by Electronic Industries, inc.
(hereinafter "EI") located at 7516 42nd Avenue North, and
WHEREAS, EI has entered into a January 24th, 1985 Stipulation
Agreement with the Minnesota Pollution Control Agency to remediate
ground water and soil contamination located at the site, and
WH__H~, the EDA has acquired fee title to the property by
eminent domain proceedings under the condition that EZ continuea to
comply with the January 24th, 1985 Stipul&tion Agreement referenced
above.
NOW, THEREFORE, BE IT RESOLVED by the Economtc Development
Authority in and for the City of New Hope ss follows:
1. That the President and Executive Director of the Economtc
Development Authority in and for the City of New Hope are
hereby directed and. authorized to enter into a
Contamination Remediatton ~nd Right of Entry Agreement
with Electronic Industries Holding, Inc. for the purpose
of facilit&ting the letter's compliance with the January
24th, 1985 Stipulation Agreement for contamination
cleanup of the site required by the Minnesota Pollution
Control Agency.
Adopted by the Economic Development Authority tn and for the
City of New Hope this day of , 1993.
Edw. J. Erickson, Chairman
Attest:
Daniel J. Don&hue, Executive Director
~PR-- 7--9~ WED 15 : 5~ CORR I CK & SONDR~ P . 02
CORRICK & ~)NDRALL
8525
~b~k
FAX (6tm
April 7, 1993
Kirk McDonald
Management Asst.
City of New Hope
4401 Xylon Avenue North
New Hope, MN 55428
RE: Electronic Industries Condemnation Matter
Our File No: 99.53004
Dear Kirk:
Please find enclosed a proposed Contamination Remediation and Right
of Entry Agreement executed by Electronic Industries. Said
agreement requires Electronic [ndustries to continue the ground
water contamination remediation efforts at their property despite
the City's acquisition of same by right of eminent domain.
! would like this agreement on the EDA agenda for April 12th for
consideration. I am requesting that a resolution be passed
authorizing the President and Executive Director of the EDA to sign
this agreement so that contamination remediation efforts can
continue at the Electronic Industries site after demo3ttion of the
buildtng.
Contact me if you have any questions.
Very truly yours,
St even A. $ondral 1
Enclosures
cc= Daniel J. Donahue (w/eno)
Valerie Leone (w/enc)
~PR-- 7--9~ WEB 1 6 ~ 0 1 CORR I CK
CONTAMINATION REMEDIATION AND RIGHT
OF ENTRY AGREEMENT
WHEREAS, certain'ground water and soil contamination have been
found on property described on Exhibit A attached and previously
occupied by Electronic Industries Holding, [nc, (hereinafter "EI"),
and
WHEREAS, E! has entered into a Stipulation Agreement effective
January 24, 1985 with the Minnesota Pollution Control Agency
(hereafter "MPCA") for the stated purpose to remediate said ground
water and soil contamination, and
WHEREAS, the Economic Development Authority in and for the
City of New Hope (hereafter "EOA") has acquired fee title to the
property through eminent domain proceedings in accordance with
~jnn. Stat. Chap. 117, and
WHEREAS, notwithstanding the EDA~s acquisition of the property
through eminent domain proceedings E! has agreed to complete ground
water and soil contamination remediation efforts in accordance with
the terms of the Stipulation Agreement and all subsequent
amendments thereto between E! and the MPCA, and
WHEREAS, to facilitate E['s compliance with its Stipulation
Agreement with the MPCA the EDA has agreed to execute the herein
Agreement with EI, and
WHEREAS~ the part,es wish to reach an agreement regarding the
continued remediatton of the contamination on the EDA's property.
NOW~ THEREFORE, IT IS HEREBY AGREED AS FOLLOWS=
I, Permission. The EDA grants permission to E! to enter
upon the Property to operate and maintain the existing ground water
and soil contamination remediation program in accordance with the
January 24, 1984 MPCA Stipulation Agreement and al3 amendments
thereto and in accordance with the terms set forth below. This
permission shall require E! to make necessary electrical and sewer
connections to any existing Remedial Withdrawal Wells so that all
water discharged into the City's sanitary sewer system can be
monitored for billing purposes.
2. Remedial W~lls. The Remedial Withdrawal Wells shall be
for the purpose of pumping contaminated ground water out of the
ground, treating it, and then discharging the treated ground water
into the City's sanitary sewer system. All Remedial Withdrawal
Wells shall be approved by the MPCA, shall have a direot sewer
hookup for the treated output water, shall have s locking cap to
prevent tampering, and protective posts to prevent well damage.
All remedial monitoring wells shall also conform with MPCA
regulations to prevent tampering and damage.
3. pet.mi..ts and___~pDrovsls. A direct sewer connection to the
Remedial Withdrawal Wells shall be discussed with and approved by
the Director of New Hope Public Works before any construction on
the Remedia3 Withdrawal Wells or the sewer connection is started,
All necessary permits for all work contemplated by this Agreement,
including electrical permits and sewer connection permits, must be
obtained by Et prior to any work being commenced at the Property.
All necessary approvals for the sewer connection and the well
installation must be obtained by E! from the Metropolitan Waste
Control Commission and the Minnesota Department of Health prior to
beginning of the work for which these approvals are necessary.
4, Abandonment or Other Relocation. When the need for any
Well has ended, the We3ls shall be abandoned in accordance with
Federal, State and City statutes and regulations, all at EZ's sole
expense. At the EDA's written request, E! shall immediately
relocate any well, however the EPA she13 pay the relocation costs
unless relocation ts required by the MPCA. Zn the latter event, E!
shall be responsible for said relocation costs.
5. ~sts and Expenses. All costs associated w~th the
installation and operation of the remed~ation system and the
necessary sewer and electrical connections shall be borne by
Any hookup to a City sewer system shall include a meter to measure
the amount of water entering the s~nitary sewer. E! shall pay the
appropriate sewer charges based upon the flow of water as shown by
the meter~ as we33 as the cost of the meter and its installation.
6. Re__.~. EI shall keep the EDA updated and informed as
to the installation and use of the Remedial Wells, and shall
provide the EDA with a31 reports that E! makes to the Minnesota
Pollution Contro~ Agency regarding the Remedia~ We~l in particular
and the contamination origtnattn~ from the site in generalo
7. Indemnification. E! agrees to defend, save and keep the
EPA and City, its officers, agents and employees harmless from
claims, demands, actions or causes of actions and expenses
(including, without limitation, reasonable attorney's fees, witness
fees and disbursements incurred in the defense thereof) arising out
of or in connection with any activity performed by E[, its
officers, a~ents or employees in conjunction with the installation
and operation of the remediation system~ and any re3sted activities
contemplated by this Agreement.
8. Bestoration of .U. ti3ity Servi.~e, Zndemnification. EPA
a~rees that if~ by reason of ~ts activities, or the activities of
APR-- ?--95 WED 16 : 02 CORR I CK & SONDRALL P . 04
any of its contractors, agents, successors or ass~gns~ utility
service to the property is disrupted the EDA shall use its best
efforts to restorer such servtce at the earliest practicable time.
[f as a result of such d~sruption EZ's equipment must be
reconnected following any such d~sruption, the reconnect~on shall
be made under the supervls~on of EI (and the MPCA if they so
require) ~t EDA expense,
ECONOMIC DEVELOPMENT AUTHORITY IN AND
FOR THE CITY OF NEW HOPE, A MINNESOTA
MUNICIPAL CORPORATION
Dated: By
Its President
By
Its Executive Director
Dated: ~..2.-~ ELECTRONIC. IblDUSTRIE$ HOLDING INC,
As ~n Officer of the C~rpor~tton
c:\wp51\cnh\EI .agr
~ EDA
'.,~~~)b.] REQUF~T FOR ACTION
originating Department Approved for Agenda Agenda Section
City Manager EDA
/~ 4-12-93
Kirk McDonald p / Item No.
By: Management Assistant By:fi/ . 8
/
CONSIDERATION OF REQUEST F~R EXTENSION ON DEVELOPMENT CONTRACT
IMPROVEMENTS, AUTOHAUS, INC., 7709 42ND AVENUE NORTH (IMPROVEMENT
PROJECT 467)
On April 4, 1991, Autohaus, Inc. and the City of New Hope executed a Development Contract
regarding specific improvements to be made to the Autohaus property, such as the installation
of concrete curb, landscaping improvements, storm drainage improvements, paving and lighting
improvements and the demolition of the Animal Hospital building. The contract called for the
improvements to be made to the property by April 14, 1992. Autohaus subsequently requested
an extension of time in which to complete the improvements which the Council approved on
June 8, 1992. The new extension required all site/building improvements north of the south line
of the building to be completed by October 31, 1992, and improvements on the rear portion of
the property to be completed by October 31, 1993. An Addendum setting forth this extension
was mailed to Autohaus on June 12th for signatures and when it was not returned a second
follow-up letter was sent in November. The improvements agreed to were not completed last
fall and in February, 1993, the City sent correspondence indicating that Autohaus was in default
of the agreement.
Autohaus has met with staff and sent the attached March 18th letter requesting a further
extension to complete the improvements. Staff requests to discuss said extension with the EDA.
LEASING & SALES / FOREIGN AND DOMESTIC AUTOMOBILES
Audi March 18, 1993
GM
FORD Mr. Dan Donahue, City Manager
Mr. Kirk. McDonald
Management Assistant/Community Development Coordinator
NISSAN City of New Hope
4401 Xylon Avenue North
HONDA New Hope, Minnesota 55428
RE: Addendum to City of New Hope Development Contract
CilRYSI,ER 'with Autohaus of Minneapolis, Inc.
~ Dear Mr. Donahue and Mr. McDonald,
Thank you for your letter of February 19, 1993. As you know, we wo(dd like to
BMW Complete the proposed work as soon as practical, but would reiterate some of
the things that I told you of.
MERCEDE$ First of all, we were planning on doing the work north of the south line of the ,
building last fall. Because of the weather and scheduling conflicts, that could
VOLVO not be accomplished. We are planning on having that work completed as
soon as the spring weather and road conditions would allow.
ACUI~A We would request the City, though, to help this project, release the certificate of
deposit in the amount of $26,~.00 to fund a portion of this work. As you know,
T O Y O T A the car sale business has been slow and I have had some internal accounting
problems here that have delayed and affected our ability to complete the work
initially contemplated in a timely fashion.
PORSCHE
I would also like to remind you of the $187,000 initially borrowed. That balance
JAGUAR is now down to approximately $118,000. We have been trying to pay that in
advance as cash flow would allow, and our ~cords reflect that we have paid
approximately $23,000 ahead of schedule. I would request that you take Iltat
into consideration in re,easing the certificate of deposit.
.... . _ 7709 4lind Avenue North ~ ltlitsncepolis, MIV 55~7 · (6llt) 535.5707
Page 2 ,
City of New Hope, March 18, 1993
I would also like to note that we have done a substantial amount of
improvements and betterment to the property. We have painted the building,
installed new awnings and ha.ye a new sign ordered to be installed this spring.
The building's appearance has been dramatically improved by these efforts.
In regard to the back portion of the lot, we would request that you allow a delay
of between three and four years to complete that part of the work. You know
that we have done a lot of work back on that property, too, and have done
grading after removing bad material and products that have been dumped
there. We have also grassed in the area, so it will be neat in appearance.
The automobile industry has been severely hampered by the economic
recession that we have had. In the history of the United States, automobile
companies themselves have suffered some of the largest losses in history. Our
business is progressing, but we have not made the s(rides, nor had the sales
that we had hoped for, and that is another reason for the request for delaying
some of this additional work.
We have removed the building in the front part, which was an eyesore, and are
doing everything within our power to meet these development goals and
deadlines.
We would appreciate your consideration for this last request. I will be waiting
to hear from you in the hopes that we can resolve these matters on an
amicable basis. Thank you for your consideration.
Sincerely// / ,
Thorrffis I~ul Oestrelch, Vice President
Th&lrth ,~'I~E~. B o & ~cher, president "/~d~~
4401 Xylon Avenue North New Hope, Minnesota 55428 Phone: 531-5100 FAX (612) 531-5'
February 19, 1993
Mr. Thomas Boettcher, President
Autohaus of Minneapolis, Inc.
7709 42nd Avenue North
New Hope, MN 55427
Subject: ADDENDUM TO CITY OF NEW HOPE DEVELOPMENT CONTRACT WITH
AUTOHAUS OF MINNEAPOLIS, INC.
Dear Mr. Boettcber:
I am writing to inform you that the City has some serious concerns about your ability or willingness
to satisfy your obligations under the Development Contract and Mortgage involving the Autohaus
property. As you are well aware, the original Development Contract called for improvements to be
made to the property by April 14th, 1992. You subsequently requested an extension, which the City
Council granted at the June 8th Council meeting. That new extension required all site/building
improvements north of the south line of the building to be completed October 31st, 1992, and
improvements on the rear portion of the property to be completed by October 31st, 1993. An
Addendum setting forth this extension was mailed to you on June 12th for your signature and has not
been returned. A second follow-up letter requesting your signature was sent to you on November
13th, with copies of the Addendum, and has not been returned. Without the signed Addendum, you
are in default under the Development Contract and the Mortgage. Even if the Addendum is signed,
you are still in default under the extended deadlines because all of the improvements north of the south
building line were not completed by October 31, 1992, as outlined in the Addendum.
As you are aware, the City holds a Certificate of Deposit in the amount of $26,300.00 which was
irrevocably assigned to the City by Autohaus to secure performance under the Development Contract.
The City is currently reviewing its options, which include drawing on the Certificate of Deposit. The
assignment contains an authorization for the City to redeem the Certificate by presenting the Certificate
of Deposit and a written notification by the City Manager or Mayor that Autohaus is in default on the
Development Contract. In addition, you are in default under your mortgage, which the City may
foreclose upon.
In order to get this development back on track, the City requests that you take the following action by
March 15th:
1. Execute both copies of the Addendum and return the same to the City.
2. Provide the City with an acceptable schedule for completing ~e various improvements required
under the Development Contract and other agreements you signed with ~e City.
3. Apply to the City Council for a further extension so as to allow you to complete the
improvements per the revised schedule~
Family Styled City'l,,JC]~-/~ ICTI~ For Family Living
Thank you for your attention to this matter and please contact me if you have any questions.
Sincerely,
Kirk McDonald
Management Assistant/Community Development Coordinator
Enclosures: Addendum to Development Contract
cc: Dan Donahue, City Manager
Steve Sondrall, City Attorney
Mark Hanson, City Engineer
Doug Sandstad, Building Official
Valerie Leone, City Clerk
Thomas Oestreich, Autohaus
Project File/Planning Case File
February 3, 1993
Mr. Kirk McDonald
Management Asst.
City of New Hope
4401Xylon Avenue North
New Hope, MN 55428
RE: Autohaus Addition
Our File No: 99.15025
Dear Kirk:
A review of our file indicates that the City holds a Certificate of
Deposit in the amount of $26,300.00 which was irrevocably assigned
to the City by Autohaus to secure performance under the Development
Contract. The assignment contains an authorization for the City to
redeem the Certificate by presenting the Certificate of Deposit and
a written notification by the City Manager or Mayor that Autohaus
is in default on the Development Contract. Additional options
available to the City include foreclosure on Autohaus's mortgage
due to the failure of Autohaus to sign the extension, as well as
failure to meet the deadline set forth in that extension.
You may wish to include the following in your next correspondence
to Autohaus:
The City has some serious concerns about your ability or
willingness to satisfy your obligations under the Development
Contract and mortgage involving the Autohaus property. As you
are well aware, the original Development Contract called for
improvements to be made to the property by April 4th, 1992.
You subsequently .requested an extension, which the Council
granted. That new extension required all site/building
improvements north of the south line of the building to be
completed October 31st, 1992, and improvements on the rear
portion of the property to be completed by October 31st, 1993.
An Addendum setting forth this extension was mailed to you for
your signature, and has not been returned. Without the signed
Addendum, you are in default under the Development Contract
and the Mortgage. Even if the Addendum is signed, you are
still in default under the extended deadlines.
Mr, Kirk McDonald
February 3, 1993
Page 3
The City is currently reviewing its options, which include
drawing on the Certificate of Deposit in the amount of
$25,300.00 plus accrued interest, which Certificate the City
currently holds under an assignment from Autohaus. In
addition, you are in default under your mortgage, which the
City may foreclose upon.
In order to get this development back on track, you wilt have
to do the following within the next (four weeks) (or whatever
number of weeks you think is appropriate, Kirk):
1. Execute the Addendum and return the same to the City.
2. Provide the City with an acceptable schedule for
completing the various improvements required under the
Development Contract and other agreements you signed with
the City.
3. Apply to the City Council for a further extension so as
to allow you to complete the improvements per the revised
schedule.
If you want some additional or stronger language, be sure and let
me know.
Sincerely,
Martin P. Malecha
s3w2
cc: Daniel J. Donahue
Steven A. Sondral-1, Esq.
4401 Xyton Avenue North New Hope, Minnesota 55428 Phone: 531-5100 FAX (612) 531-517.:
13, 1992
Mr. Thomas Boettcher, President
Autohaus of Minneapolis, Inc.
7709 42nd Avenue North
New Hope, MN 55427
Subject: ADDENDUM TO CITY OF NEW HOPE DEVELOPMENT CONTRACT WITH AUTOHAUS
OF MINNEAPOLIS, INC.
Dear Tom:
As you are aware, earlier this year Autohaus requested an extension of time on the Development Contract with
the City which required that specific improvements be made to the property by April 4, 1992. At the Sune 8th
meeting, the New Hope City Council approved an addendum to the Development Contract which approved an
extension of time on the improvements. The Addendum basically required that all site/building improvements
north of the south line of the building be completed by October 31, 1992, and that the improvements on the
rear portion of the property be completed by October 31, 1993. The Addendum was sent to you on June 12th
for signature.
The City is contacting you for two reasons:
1. In review of our records, the City Clerk has informed me that the City has not yet received an executed
copy of the Addendum from Autohaus. Please execute the Addendum and return it to the City Hall as
soon as possible. If you have misplaced your copies, please give me a call and I will forward you
additional copies for your signature.
2. City Manager Dan Donahue has informed me that you stopped at the City Hall several weeks ago and
indicated that you would not be able to complete all the improvements, as outlined in the Addendum,
by October 31st. This will probably necessitate that the Council approve another extension or
Addendum to the Development Contract. Please review the enclosed copy of the Addendum, outline
the improvements that you were not able to complete, and submit a letter to the City outlining your
intentions to complete the improvements and/or requesting an extension on the improvements.
Thank you for your attention to this matter and please contact me if you have any questions.
Sincerely~ ,-,,
Kirk McDonald
Management Assistant/Community Development Coordinator
Enclosures: Addendum to Development Contract
cc: Dan Donahue, City Manager
Steve Sondrall, City Attorney
Mark Hanson, City Engineer
Doug Sandstad, Building Official
Valerie Leone, City Clerk
Thomas Oestreich, Autoha~amily Styled City~ For Family Livinl
P~o~ect/Planning Case Files
4401Xylon Avenue North New Hope, Minnesota 55428 Phone: 531-5100 FAX ~612) 53!-57
June 12, 1992
Mr. Thomas Boettcher, President
Autohaus of Minneapolis, Inc.
7709 42nd Avenue North
New Hope, MN 55427
Subject: ADDENDUM TO CITY OF NEW HOPE DEVELOPMENT CONTRACT WITH
AUTOHAUS OF MINNEAPOLIS, INC.
Dear Tom:
Enclosed please find two copies of the addendum to City of New Hope
Development Contract with Autohaus of Minneapolis, Inc. which was
approved by the New Hope Economic Development Authority at their
June 8th meeting. The Addendums have been executed by the Mayor
and City Manager with signatures notarized.
Please execute both copies and have the signature notarized, retain
one copy for your files, and return one copy to the City.
Sincerely,
Kirk McDonald
Management Assistant/Community Development Coordinator
KM/lb
Enclosures: Two (2) Addendums to Development Contract
cc: Dan Donahue, City Manager
Steve Sondrall, City Attorney
Mark Hanson, City Engineer
Doug Sandstad, Building Official
Valerie Leone, City Clerk
Thomas Oestreich, Autohaus
Project File $467
Family Styled City'~~ For Family Living
ADDENDUM TO CITY OF NEW HOPE
DEVELOPMENT CONTRACT
1. Parties. The part'les to this Addendum are the City of New
Hope (hereafter City), Autohaus of Minneapolis, [nc.
(hereafter Autohaus) and Thomas W. Boettcher, individually
(hereafter Boettcher).
2. Purpose. This Addendum shall modify the April 4, 1991
Development Contract entered into by the parties. Autohaus
and Boettcher acknowledge and agree that they are in breach of
the performance conditions of said contract and ~n
consideration for the City's agreement not to immediately
pursue its remedies under the terms of the April 4, 1991
contract Boettcher and Autohaus have agreed to enter into this
Addendum.
3. Unperformed Conditions. Specifically, Autohaus and Boettcher
acknowledge and agree that they have failed to perform all the
requirements of paragraphs 2.A) through I) and 3 of the
Development Contract. With respect to ~he work required by
these provisions the parties hereto agre~ as follows:
a.) The installation of concrete curb from the most southerly
wall of the building northward to the property line shall
be completed by October 31, 1992. The remainder of the
curbing as shown on the site plan shall be installed by
October 31, 1993. All curbing shall be of a surmountable
type as approved by the City. Autohaus and Boettcher
shall submit a diagram of said curbing for approval to
the City prior to installation.
b.) Installation of bituminous paving in' the body shop and
repair storage area shall be completed by October 31,
1993.
c.) All plantings shown on the site plan north of the
buildings most southerly wall shall be installed by
October 31, 1992. All other plantings shown on the site
plan shall be installed by October 31, 1993.
d.) The six-foot opaque security fence around the perimeter
of the body shod and collision repair storage area shall
be installed by October 31, 1993. The existing fencing
shall remain in place until the new security fence is
installed.
e.) The installation o{ lighting shown on the site plan shall
be completed by October 31, 1992. However, the parties
agree that the existing lighting for the collision repair
area as of the date of this Addendum is adequate and no
further lighting is required notwithstanding the lighting
required by the site plan.
f.) All planted areas completed in 1992 will be sprinkled by
October 31, 1992. All planted areas completed ~n 1993
will be sprinkled by October 31, 1993.
9.) The installation of the outdoor trash enclosures will be
completed by October 31, 1993.
h.) The front display area will be completed by October 31,
1993. However, the parties agree that the installation
of bomanite paving will occur not later than six months
after termination of Universal Color Lab's existing lease
or vacation of the property by Universal Color Lab,
whichever occurs earlier. The parties further agree that
during the interim period the front display area can be
paved with concrete and bituminous.
i.) The islands in the transport lane aCea will be installed
by October 31, 1993.
j.) The public improvements for storm water drainage and
erosion control required by paragraph 3 of the
Development Contract must be completed in conjunction
with the construction of the bituminous paving in the
body shop and repair storage area. Autohaus and
Boettcher acknowledge and agree said bituminous paving
will not be allowed unless the drainage and erosion
cont,'ol work'is completed simultaneously with the paving
work all to be completed no later than October 31, 1993.
However, Autohaus and Boettcher will complete seeding of
this area by June 15, 1992 to minimize the erosion until
the drainage improvements are constructed.
Effect of Addendum. The parties agree that this Addendum
shall not change the other provisions of the April 4, 1991
Development Contract which shall remain in full force and
effect. This Addendum shall be construed as supplemental to
and not inconsistent with the Development Contract. The
parties further agree that a breach of this Addendum shall
also constitute a breach of the April 4, 1991 Mortgage,
Security Agreement and Fixture Financing Statement given by
Boettcher to secure the April 4, 1991 Mortgage Note executed
2
by Boettcher, Au~ohaus'further agrees that assignment of the
Certificate of Deposit given as financial security to insure
performance of the Development Contract shall also extena to
the herein Addendum,
AUTOHAUS OF MINNEAPOLIS, ~NC.
Dated: By
Its President
Dated:
Thomas W. Boettcher, individually
STATE OF MINNESOTA )
COUNTY OF HENNEPIN )
egoing was acknow]edged before me this //,//L~ day of
.~'~/ , 1992, by Edw. J. Erickson and Daniel J.
Donah~e, the Mayor and City Manager, respectively, of the City of
New Hope, a Minnesota municipal corporation, on behalf of said
municipal corporation.
No{ a~--~ub ~ c~ '
1~ HENNEPI~ COUN~
~ %.~ )~C0mm. ExP. Ju~ 12, 1~ .~
STATE OF MINNESOTA )
) ss.
COUNTY OF HENNEPIN )
The foregoing was acknowledged before me this day of
1992, by , the
President of Autohaus of Minneapolis, Inc., a Minnesota
corporation, on behalf of said corporation.
Notary Public
STATE OF MINNESOTA )
) ss.
COUNTY OF HENNEP[N )
The foregoing was acknowledged before me this day of
, 1992, by Thomas W. Boettcher, individually.
Notary Public