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HomeMy WebLinkAboutHRA MINUTES 01271987• C= TY CDP' S T_ ANTHONY HO U S= N G AND R E D EV E L O PME N T AUTHOR = TY M S N UT E S .JANUARY 27 , 1987 The meeting was called to order by Chairman Sundland at 9:50 P.M. Present for roll call: Sundland, Vice Chair Enrooth, Secretary/Treasurer Marks, and Commissioners Ranallo and Makowske. Also present: David Childs, Executive Secretary William Soth, H.R.A. Attorney Larry Hamer, Public Works Director John Arkell and Steven Yurick, President and Project Manager for Arkell Development Jim Johnson, Executive Vice President, Kloster Madsen, Inc. NOVEMBER 25 1986 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 payment of $342.00 and $1,912.50 to the Dorsey & Whitney law firm for legal services to the H.R.A. during October and November, 1986. Motion carried unanimously. NEW BUSINESS Arkell Presents Contractor Considered for Partner on Phases II and III, Kenzie Terrace Redevelopment Project Twenty-three million dollars in bonds had attracted many companies to become partners on this project, Mr. Arkell told the H.R.A. members. The developer indicated he had asked the President of Kloster Madsen, Inc., John Ryan, to call the H.R.A. Chairman to affirm his firm's interest in becoming a partner in the project. However, Mr. Arkell added, he was facing a deadline of having to pay a $400,000 Letter of Credit, January 30th and was present that evening to request he be allowed to put up a $100,000 Irrevocable Letter of Credit •with the City of St. Anthony to keep the bonds it currently as in its possession as well as the arbitrage which is being held in an escrow account and delay that deadline another month. -2 - The developer indicated further that: - Kloster Madsen's attorneys would be unable to get the paper work connected with the partnership completed before the January 30th deadline; - he perceives the two firms are 85% to 90% of the way home towards that objective; - a 30 day extension to complete those arrangements would be required; - he hoped the month's extension would not.result in more than a month's delay in the June date set by the bonding requirements for "showing marketable progress in construction." Chairman Sundland reported his conversation at 5:00 P.M. that afternoon with John Ryan, the Kloster Madsen President in which he had learned the following: Kloster Madsen has a strong interest in the project; the firm had been erroneously told Phase II would be for rental to persons over 55 and Phase III would be rented to anyone (it • will all be 55 and over); the Kloster Madsen President had agreed with the H.R.A. Chair that the "two would not mix"; one of Kloster Madsen's greatest concerns was Amendment 9, Section 4, of the Redeveloper's Agreement, which the contractor perceived unnecessarily tied Phase I, completed by another developer, in with Phases II and III; Kloster Madsen did not anticipate it would take a whole month to clear up questions they had but considered a month a "comfortable cushion" to work with; - the contractor considered a meeting with the H.R.A. Chairman, Executive Director, and Attorney would be very helpful. The Chairman indicated he personally was very pleased that Kloster Madsen, a fine firm with a good reputation, was interested in the project, perceiving this would be "a partnership made in heaven" as far as St. Anthony is concerned. He also corrected the impression that Arkell had any control over the arbitrage. Mr. Arkell agreed with that conclusion and said he thought the contractors had fully understood he never again wanted to go through the trauma of another large crowd of neighbors protesting "150 college kids • moving into one of the buildings." The developer then told the H.R.A. 0 -3- members that, in keeping with his "new outlook on life," Arkell would not be the lead partner on this project, but was negotiating to have. Kloster Madsen take over 80% of the partnership. He told the Secretary/Treasurer he anticipated the meeting of Pat Brinkman and Kloster Madsen representatives, January 29th, would resolve all but two or three of the questions the contractor has about the partnership which could be resolved with the meeting with the H.R.A. Attorney and Executive Director. If an impasse should develop after that meeting, Mr. Arkell said he had a number of people, including a Texan, still interested in the project because of the 1985 bonds and their tax status. Mr. Soth confirmed that it was possible that the $400,000 Letter of Credit should be reduced to $360,000 under the contract because Phase I is completed. He also advised that if the H.R.A. is inclined to grant the month extension, it would be a good idea to have $100,000 which is "out of the pocket money" required to get an agreement from the developer to waive the provision in the redevelopment agreement which says the "developer isn't in default until the City has given a Notice of Default after which Arkell would have 30 days to cure" in return. Mr. Arkell indicated acquiesence with that being done and said his intent had always been to meet the Friday deadline. •Chairman Sundland pointed out to the developer the hardships some of the persons present for the discussion were experiencing as business owners in the center which Arkell is to develop. The Chairman then asked the Kloster Madsen representative to affirm the impression he had gotten from his own conversation with Mr. Ryan that "Kloster Madsen had a strong interest in this project but it is of paramount importance to your company that you get the questions you have answered." James Johnson, Executive Vice President of Kloster Madsen, said the Chairman had been correct in the impression he had gotten that the contractor was "very much interested in being involved in the development of the projects." Mr. Johnson apologized for Mr. Ryan's inability to be present that evening but said he knew the Kloster Madsen President had a long list of questions about the proposal which had been made to the contractors. Not all of them were of the same importance but they all needed answering so Kloster Madsen could make a reasonable and intelligent decision in a short period of time. Mr. Johnson agreed the extra 30 days would give his firm the cushion it needed to make that decision but also indicated he perceived it was possible that determination could be made in "two weeks at a minimum", if all those questions were answered satisfactorily. is • • • -4- In relation to Kloster Madsen's concerns about the tie-in between Phase I and the last two phases, Mr. Soth stated that he did not perceive the H.R.A. had ever considered those two projects to be tied together as a practical matter. However, he said he understood the contractor's concern that the Arkand Partnership had technically not been released from its responsibilities for Phase I and since, the Attorney said, the H.R.A. is about ready to issue a Certificate of Completion for Phase I, those concerns would be laid to rest with that action. In any event, Mr. Arkell said, he perceived the meeting with his firm's attorney, Mr. Brinkman and Mr. Ryan on Thursday would probably take care of the majority of the contractor's concerns, including those related to the META Partnership's connection to Phase II and III. H.R.A. Actions Motion by Ranallo, seconded by Marks to grant Arkell a 30 day extension of the $400,000 Letter of Credit due January 31, 1987 under the Redevelopers Agreement for Phase II and III for the Kenzie Terrace Redevelopment Project on the condition that Arkell deliver a $100,000 Letter of Credit and waive the 30 day default notice the H.R.A. is now required to give the redevelopers in the Redevelopment Agreement. Any Letters of Credit would have to be for a full year as recommended by the H.R.A. Attorney. Motion carried unanimously. Motion by Marks, seconded by Enrooth to direct staff to update the current appraisal and have a review appraisal of the project property done as recommended by the Executive Director. Motion carried unanimously. Tentative Timetable for Obtaining Relocation Benefits Given Business Owners Mr. Childs told Diane and Bob Slick of the Alternative Bar, 2533 Harding Street N.E., and Russell S. Underhill of B & J Antiques, 2513 Harding Street N.E. that the City would give them approximately a 90 day notice before they would be'required.to vacate the property if it is acquired by the H.R.A. Mr. Arkell confirmed that under the worst case scenario it would probably be the first of August before their buildings would be torn down. 4 The best guess if everything falls into place as planned that night, would be that the City would probably not be acquiring the property much before mid -summer. Commissioner Ranallo added that there would be even further delays if Arkell and Kloster Madsen haven't come together before the 30 day deadline which was discussed that evening. Chairman Sundland reminded the store owners that the City also has a liquor store in the same center which has to be replaced when the redevelopment project starts. -5- Mr. Slick then indicated` the inconsistencies in what the adjoining shopping center management was saying about the promise they had made related to upgrading that, center - had caused them to rethink their decision to move into the vacant Penny's store in that area. He said he wanted to stay in St. Anthony and perceived his alcohol -free bar was a service business ,people were finding more attractive than ever in the present atmosphere' -of prohibitive Dram Laws and liability insurance. Mr. Childs said the City would be glad to help him located within St. Anthony, if there is a building available. Councilmember Ranallo said the Slick's business had been an asset to the City in spite of early concerns and the Council would certainly like to see them stay here. Mr. Childs reiterated that the City would not be acquiring any land before the Arkell-Kloster Madsen Partnership is a reality. ADJOURNMENT Motion by Ranallo, seconded by Makowske to adjourn the Housing and Redevelopment Authority meeting at 10:25 P.M. Respectfully submitted, ,,len Crowe, Secretary 01 :cjk • Motion carried unanimously.