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HomeMy WebLinkAboutHRA MINUTES 03101987C 2 TY OF S T . ANTHONY 0. HOU S = N G AND RED EVE LO PMENT AUTHOR = TY M = NUT E S MARCH 1 0, 1 9 8 7 The meeting was called to order by Chairman Sundland at 9:00 P.M. Present for roll call: Sundland, Vice Chair Enrooth, Secretary/ Treasurer Marks, and Commissioners Ranallo and Makowske. Also present: David Childs, Executive Director William Soth, H.R.A. Attorney John Arkell, President of Arkell Development Neal Peterson, Bloomington Councilmember and associate of Steve Yurick of Builders Sources, who serves as the project manager for the Kenzie Terrace Redevelopment Project. JANUARY 27, 1987 HOUSING AND REDEVELOPMENT AUTHORITY MINUTES Motion by Ranallo, seconded by Marks to approve as submitted. Motion carried unanimously. • CLAIMS Motion by Marks, seconded by Makowske to approve payments of $482.50 and $693.75 to the Dorsey & Whitney law firm for their legal services to the H.R.A. during December, 1986 and January, 1987. Motion carried unanimously. AGENDA ADDENDA Certificate of Completion Ordered Executed for Walker on Kenzie Project Mr. Soth confirmed that his firm had prepared the above document which had been submitted by the Walker Management, Inc. for the signatures of H.R.A. officials. The March 6th letter which accompanied the Certificate had advised that the project final closing would take place within the next two weeks. H.R.A. Action Motion by Makowske, seconded by Marks to authorize the H.R.A. Chairman and Secretary to sign the Walker on Kenzie Certificate of Completion which had been provided by staff for approval. Motion carried unanimously. 0 V s ne for -2- ect Mr. Arkell said he was present that evening to reiterate the information he had already conveyed through private telephone conversations with each H.R.A. member, that "once again he had chosen the wrong partner to complete the above project" because he had been unable to get a final agreement with the Kloster -Madsen Construction Company to come in with him on the project. The developer said he realized this failure would probably cause the H.R.A. to start looking for a developer to succeed him on the project. He had brought the Bloomington Councilmember with him that evening, Mr. Arkell said, because Mr. Yurick's business associate had participated in the negotiations with Kloster -Madsen. Mr. Arkell reported that he also: -received assurances from the Richfield Bank that they would be will- ing to provide the $360,000 Letter of Credit required by the Redevel- opment Agreement; -asked whether the H.R.A. would consider extending the March 20th deadline on the additional $100,000 Letter of Credit for an addi- tional 30 days if the $360,000 were taken care of by the bank. The H.R.A. response was as follows: Ranallo -stated that in view of the extensions the developer had been granted over the last five years, he personally felt the Executive Director should start immediately to look for another developer for the project; -wanted the H.R.A. Executive Director and Attorney to be directed to sit down together to determine just where the project legally stood at this point; -indicated that, if that consultation provided assurance that the H.R.A. would not be at risk of losing the $100,000 Letter of Credit and the redevelopment bonds by waiting, he would not oppose delaying action for a few more days. Sundland -indicated he wouldn't be opposed to drawing up a new Re- development Agreement with Arkell if the Letter of Credit for $360,000 is provided by the bank before March 20th. Mr. Arkell's response was that: -he expected to hear from his bank the next day; • -3- -the bank was well aware of the time pressures he faced, but were waiting for an opinion from their attorney; -unfortunately, that attorney was the same one who had delayed the Kloster -Madsen decision; -he wasn't sure Kloster -Madsen would be the contractor for the project if Arkell continued as developer; -reported he had gotten a message that the (Ted) Turner Construction Company is very interested in looking at the project because it was so similar to the ones they had constructed in the past; -it would be no problem to place the project bonds at 7-1/2$ without a Letter of Credit. The Bloomington Councilmember added that: -there had been so many bonds issued before the January deadline, contractors were shopping around for the best deals; -Kloster-Madsen seemed to believe they could get a better deal with a project in Egan even though that community's rental is already overbuilt; • -there were a good number of projects like St. Anthony's for which bonds have been issued, but no action taken for the same reason; -bonding had been issued for six projects in Bloomington but only one was being built yet, and the same was true of projects in Minnetonka and other communities as well; -he was convinced a deal could be worked out with another partner for this project because "St. Anthony is so uniquely located and the pro- ject has such attractive rent structures for this project"; -the cash flows from the rents had to be acceptable for the project to succeed. H.R.A. Action Motion by Ranallo, seconded by Enrooth that, since the Housing and Redevelopment Authority perceives Arkell Development is now in default with the terms of its Redevelopment Agreement for Phases II and III of the Kenzie Terrace Redevelopment Project, the Executive Director is directed to contact other developers to finish the final phases of that project. Mr. Childs is also directed to consult with the H.R.A. Attorney as to the H.R.A.'s legal position related to cashing in the $100,00 Letter of Credit and whether it would be all right to wait until March 20th to cash that in. The H.R.A. further directs the Executive •Director to call a Special H.R.A. meeting whenever that determinatin is made by staff. • -4- Before a vote was taken on the motion, the Bloomington Councilmember asked whether the H.R.A. would consider granting a 30 day extension of the $100,000 Letter of Credit. When Commissioner Ranallo indicated he did not think that would be possible, Councilmember Peterson said he perceived St. Anthony would certainly be justified for taking those damages but he knew from his own experience that would put St. Anthony no farther along towards getting another developer for the project because the knowledge that the damages had been taken might "cast a black shadow over the project." He suggested a decision be delayed until the Council's March 24th meeting. Chair Sundland indicated that, if staff determined the H.R.A. had that much buffer time, it would not bother him as much as it seemed to bother Commissioner Ranallo. However, since that was not one of the issues which was addressed in the motion on the floor, the Chair suggested the vote on that motion be taken before any further discussions were held related to an extension. Motion carried unanimously. Developer's Request for Extension Discussed The Commissioner's reaction to granting an extension of the $100,000 Letter of Credit went as follows: • Marks -said he agreed with Commissioner Ranallo's insistence that the H.R.A. should not grant a 30 day extension because he was not certain that would leave enough time before the bonds would no longer be available; -expressed concern that the City might lose the bonds if the project wasn't started on time because John Arkell can't come up with the financing to complete the project right away; -perceived that the H.R.A. might be facing that problem whether the extension of the Letter of Credit is granted or not; -told Mr. Arkell "the best thing which could happen for St. Anthony would be for you to get your house in order so the H.R.A. wouldn't have to repeat all the hearing pro- cesses which would be required if another developer took over the project." Soth -added that at least 120 days would be required to pur- chase the land. Makowske -anticipated the time schedule remaining for the H.R.A. to retain the bonds would be defined by Mr. Childs and Mr. Soth during the consultation the H.R.A. had directed they • hold; and, therefore, -5- -indicated she believed there should be no assurances made to the developers until after those dates have been deter- mined. Soth -agreed the whole matter depended on the H.R.A. knowing right away what the developer's bank was going to do about the $360,000 Letter of Credit. Enrooth -indicated he was "tired of playing the worst case scenario game with this project"; -told Mr. Arkell the whole matter was now in his hands and the result of his contacts with his bank would have to be addressed at a special meeting and not that evening. Sundland -agreed there was time between the meeting that evening and March 16th to find out whether Mr. Arkell was going to be able to proceed with the project; but -asked what the H.R.A. members wanted to do if Mr. Arkewll came in before the 17th with "concrete and not just verbal" assurances of financing from his bank; -wondered if they agreed with his own peception that the best route to take if that assurance was given, would be • to continue with Arkell as the project developer because "he has the approved plan for the project." Makowske -told Mr. Arkell that as far as she was concerned, he was certainly in the running if he could get the $360,000 Letter of Credit from the Richfield Bank. Mr. Arkell responded by saying he wasn't really looking for a decision by the H.R.A. that evening but did want to call to their attention that "the Letter of Credit was a requirement of the Redevelopers Agreement only and the bonds would not disappear just because he hadn't made good on them." The developer said another developer could take over the bonds and the project without a Letter of Credit no matter what he did. Soth -told Mr. Arkell that the H.R.A. was facing a timing problem with the bonds and couldn't proceed to acquire the land for the project without the Letter of Credit. Ranallo -said he believed the developer should understand the pres- sures which have been imposed on the H.R.A. members because of the delays with this redevelopment project; -cited his own experience of recently being confronted in a restaurant by a former tenant of the shopping center who accused him of being the one "who was responsible for run- ning her out of St. Anthony because of a redevelopment pro- ject on which nothing was being done yet." 0 -6- when Chair Sundland asked Mr. Arkell whether he would be able to proceed with the project if the bank granted him the $360,000 Letter of Credit before March 20th, the developer told him his position in relation to the final phases had been completely reversed from what he had experienced with the Kenzington. The developer said he gets at least three calls a month from investors who want to place the bonds on a permanent basis at 7-1/2%, where he had been unable to complete the Kenzington because he couldn't find financing. Mr. Arkell told the H.R.A. members they had been a lot more patient about his problems than he would probably have ever been and he recognized he had no argument for further patience. The Chair reiterated that he would be glad if Arkell was able to pull off his arrangement with his bank but cautioned that only a "concrete" assurance that the bank was granting the $360,000 would do, and any suggestion that such a decision would depend on an attorney's opinion would be unacceptable. ADJOURNMENT Motion by Ranallo, seconded by Enrooth to adjourn the St. Anthony Housing and Redevelopment Authority meeting at 9:30 P.M. • Respectfully submitted, Helen Crowe, Secretary :cjk •