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1992 08 20CHANHASSEN HOUSING AND REDEVELOPMENT ~UTHORITY REGULAR MEETING AUGUST 20, 1992 Chairman Horn called the meeting to order at 7:30 p.m.. MEMBERS PRESENT: MEMBERS ABSENT: Clark Horn, Tom Workman, Don Chmiel and Jim Bohn Charlie Robbins STAFF PRESENT: Don Ashworth, Executive Director; and Todd Gerhardt, Asst. Executive Director APPROVAL OF MINUTES: Chmiel moved, Bohn seconded tb approve the Minutes of the Housing and Redevelopment Authority meeting dated July 23, 1992 as presented. All voted in favor and the motion carried. VISITOR PRESENTATION: Brad Johnson: Mr. Chairman, members of the Commission. -As you know, I've been negotiating the process of acquisition of the Hanus building now for about 6 or 7 months and one of-the problems that we've been having is Mr. Brown's interest in the acquisition of the property, small portion of that property. And we kind of thought we had worked through most of the angles last time and I think you guys can confirm this or not for me. I think we determined last time that the objective was not to tear the building down but get the area fixed up so that it looked presentable to the community. And hold onto it as a potentially a long term investment and some other people said; well maybe we could sell it or whatever. Last Thursday Gary called me and said well, and remember his main objective I think in life is-to make sure that he's there in business. That whole corner has been his life and he wants to make sure he's there. And he's concerned if the ownership transfers to the city, he may not be there some time down the line and that's what's making it difficult to change the lease around because the lease is pretty straight forward. He would be there for just about forever. He said that he would like the opportunity to purchase the whole building and I said, well are you prepared to do that at this time? I don't think he. really is but I brought the issue up to Todd and he said, well maybe it's possible for us to purchase the building, fix it up, sell it to Gary say in the next 2 to 3 years at a price we have or purchased it for plus all the costs of the improvements. And that would be a cash transaction at the time he'd decide to do'it, and if he can't accomplish.that in say 3 years, then he forgot everything we wanted. He'd give up his option to purchase the small part and he would Just be in there as a tenant. I've worked an arrangement out with him in cch'capt. It is a change and we didn't have time, we're not asking you for so much a vote on this but is that, would that be an alternative. In other words, the City would purchase it and probably own the building amywhere from a year to 3 years. Gary would put up some earnest money and have an option to purchase it at any time but only for cash. And the purchase price would be approximately, just a little bit more than you actually paid for it, including all improvements and all acquisition costs. He is also willing to agree that if sometime 'down the line there is the need for an entry that's into the back. If you all remember the Hanus building, into the Housing and Redevelopment Authority Meeting August 20, 1992 - Page 2 back property which the City is going to own. That is the Apple Valley concrete.area and the Taco store and whatever, that he'd be willing to, as part of the agreement, to agree at whatever cost he purchased it at, to release the north portion of that building to be demolished to in say the first bay. So that if a person wanted to put a real nice building in the back, we could make the building Just a little bit shorter sO a road would go in there better. Just from an access point of view. That's where we are. He's agreed to all those types of things. These are things that Todd and Don and ! have been working on conceptually. It's not part of your packet. I just ne'ed some direction. Horn: Okay, why don't we bring that up at our next meeting Todd. Brad Johnson: I think the problem we're trying to accomplish today is we want to do some work on that issue. You approved the purchase. What we're trying to do is approve the lease and the option and the sale is subject to that. I'm not asking you to do that today, I Just need some direction. · Chmtel: I guess what Clark has said, there 'isn't any action that can be done on it because it's Visitor Presentation. So referral has to be-done to the next particular meeting. We can't really give -you any direction to take on this at that particular time. Gerhardt: At our next meeting, staff would like to put a report together laying out the options to the HRA and also at that meeting, if the HRA wishes, because there seems to be some urgencies in moving ahead with this, if you feel comfortable with it at that time, we will have, from what the attorney's telling me, an'option agreement that would'be an attachment to the purchase agreement. And if you felt comfortable at that time, you could approve it at that time and move ahead. But at tbts time, the attorney's reviewing it. Staff doesn't feel comfortable in even talking about this in more detail~ We just wanted to make you aware. Brad wanted to make you aware of where he's at and that he wasn't successful in getting, or there was an option for Brown to purchase what is the bays that he has in that building right now. You, at your last meeting, had approved a purchase agreement contingent upon that option and his lease be dropped out. And from that time, Mr. Brown has shown interest in acquiring the building and holdin~ it for a long term. And as Brad stated, it felt like the HRA wanted to go in there, clean it up and really was somewhat hesitant'in takin~a long term ownership. So there are some pluses and minuses in this and we'd like to lay that out to you in our next HRA meeting. Hot n: 0 kay. Brad Johnson: Yeah, the only urgency on this is that we're negotiating and it's tough to negotiate a month at a time. Because we have a contract with Gary to close so maybe we can figure out how to handle that. Workman: Mr · Chairman? So the agreement would be Gary Brown specific then? In other words, the whole purchase agreement would have in it Gary Housing and Redevelopment Authority Meeting August 20, 1992 - Page 3 Brown would be the person we'd sell it to. is that what you're talking about? Brad Johnson: He's already got, in real life, it's just a modification of the existing contract. What's happening is we tried to modify his agreement and then satisfy his concern. We're getting sort of a mess of an agreement with him. It's just difficult to do. Workman: He would only buy a segment of the building? Chmiel: Is that correct? He's looking at buying' Just that one segment? Brad Johnson: No, the whole building. Chmiel: The entire building? Brad Johnson: The entire building. Paying cash. It'd just be an option to purchase it all at your cost. Workman: Because I did have some anxiety about purchasing the building thinking we were going to be in a long term arrangement. Brad 3ohnson: Yeah, that's what we heard last. time. Workman: And I didn't feel good until it sounded like Clark had said that we were looking for, we were only going to. be temporary owners. Take care of the problem and then sell it so that doesn't sound like a problem to me. Gerhardt: And one of the other things that you would accomplish in this is that Brown, if he doesn't move ahead and acquire the building within the next 2 to 3 years, he drops his option of acquiring his two bay section. That would also be in that agreement, and that was your'wish at the last meeting. Brad 3ohnson: Yeah. To be very specific, he had to pay cash. There will be no strings later on whatsoever, other than the building being what you want it to be which we get done in the next 18 months. Thank you. Horn: Okay, thanks Brad. Okay, any other visitor presentations? CONCEPTUAL PLAN REVIEW FOR A HIGHWAY 5 RND M~KET BOULEVARD ENTRY MONUMENT- PRESENTATION BY BARTON A$CHMAN. Gerhardt: Mr. Chairman, HRA members. At our last HRA meeting staff was directed to work with both Barton Aschman and Jeff Farmakes, a local Chanhassen resident, to come up with some additional concepts incorporating Mr. Farmakes' ideas of entry monuments to be located at Market Boulevard and Great Plains Boulevard and Highway 5.' Included in your packet were three concepts that were designed with some input from Mr. Farmakes. However, in the last couple weeks Mr. Farmakes has been out of town and there wasn't, there seemed to. be a little bit of Housing and Redevelopment Authority Meeting August 20, 1992 - Page 4 confusion in some of the ultimate design of what Jeff had hoped to see. And that isn't any fault on Barton Aschman or Jeff's fault, you know it's just time. And I'd like to have Scott Midness from Barton Aschman go through his three concepts.and then give Self an opportunity to critique them a little bit to make sure that we're following through in what 'his ultimate vision of that area would be. Scott Midness: You probably had a chance to look at this...three concepts, two of which you've seen before. That have been changed a little bit. Concept A is a revision of the original one that we've been doing since about the last 2 years. A limestone wall...break up the top slightly...skyline effect. We dropped that ever so slightl¥...the wall. itself. We've also increased the size of the logo, whatever it will end up being as far as the city logo, on the end so that as you're coming around the radius wall, there will be... Materials have changed a little bit...possibility of incorporating a little more elegant material, in this case possibly some copper lettering and... In this scheme we have shown the typical Chanhassen letter' font. As you remember, throughout the process, that was recommended to be consistent with the downtown. In no way does this mean that this scheme would have to have this font and so on. Many of these walls can have... The second one reacting to the fact that both A and C were sort of a 2 dimensional type wall and we tried to experiment with the fact that maybe if we pulled back this wall, as you can see in this diagram...this wall in front would be a front view of about a 2 foot seating wall...size of that wall. The letters would be free standing in front of it. Visibte...the sign itself. The back would be some type of masking, be it trail bed or shurb massing along here. Then in the back, again some type of logo...and that would be backlit at night with the letters themselves being... The third scheme is consistent with.Jeff's proposal he did last time. One of the comments we had when we met with Don Ashworth and Todd was that, the logo, although very nice, might not be visible until you get right up on it. So one idea would be to pull that logo out to the edge so as you come around here, you'd have a better chance to see some type of logo form to it. We've also increased the height of the piece up on top as...lettering per scale...to give you an idea of what can be done as far as the...is concerned. What that is is we talked about the fact that if the vertical element is not desired in this... Again, those could be copper or some type of material that... The height for these, I'll go back.to this one. This one was about 6'8'. You can see the figure on the left. The top here would be about 10'6' or 7" This wall here would have be 8'6" at this point. And approximately ;bout... Again, that one has been .... Consistent with all three and the same sight line has been talked about, specifically Market Blvd., would be the fact that some type of back drop of...and then some type of very colorful annual beds in front with the hedge material, whether it would be...anchoring that site. A couple things to keep in mind that you probably don't want to do this at all four intersections, and that's how we presented this fact that this would be the Market Boulevard. There are alternatives to Great Plains would be to actually not have a medallion...so we could do something where the top pieces would be removed and... I think that's very important, especially since the Holiday station, we just don't have the height to... Housing and RedeveIopment Authority Meeting August 20, 1992 - Page 5 Horn: I think Tom has a suggestion on a variation. Workman: I think it's starting to get busy with those two extra leaves. It is our logo but I don't know that we want to idol it. Make it an idol figure or something. But, and these might get damaged. Z-don't know. Well, they wouldn't be that expensive but some sort of brass port light type thing where those are on the side for extra lighting or something at night. Make it look warm. To me those leaves make it look a little. Horn: Kind of distract from the center one? Wot kman: Yeah. Horn: I think we're all in agreement on that. We've just been discussing it. I like that light idea. Chmiel: I guess those leaves being on both sides to me, it's probably there for more balance than anything else. eut I think from a standpoint it would look much better without those two. Workman: I know that's incorporating another element. A light element. Horn: Except they're very subdued right? Scott Midness: Yes. Chmiel: How would you, I thought at the time we were'looking at'having some lighting directly onto the wall. With a flood or something. Scott Midness: Yeah. What would happen is, we were talking about this one down there. The idea is very small here... Chmiel: Right. The concentration on that one specific thing. Scott Midness: Right. Horn: I think we're all in agreement on this. Scott Midness: Lighting is very critical on this and it's pretty hard to show it. 8ohn: What's the height from the ground to the top of the wail? - Scott Midness: From here to here? Bohn: Yes. Scott Midness: This is about 8'6" from here to here and like I said, we've increased the size of this... Bohn: Do you think the height is high enough off the ground so you don't get kids playing there? Housing and Redevelopment Authority Meeting August 20, 1992 - Page 6 Scott Midness: Yeah, it's a tough'balance between people walking...and having an appropriate scale to the corridor. Workman: Are you still Clark, the idea of some sort of brass lighting, ornamental lighting? Horn: I would be open to that. I don't know how Don and Jim feel. If there's something that would work into the concept. Something really subtle on the end. Scott Midness: You could have an actual light fixture. Workman: You know like people have on their houses. Only bigger of course. Horn: A little globe type of thing. Similar to the old street lights. Scott Midness: If we did do that, the uplighting would have to be really controlled so you don't hit a light with light. Horn: I guess I'm open either way. If there 'were some little subtle lighting at the ends that would work right, that'd be fine with me. If it doesn't work, I could go along with Just the way it is without the leaves. Workman: I guess with that, ! think Jeff designed that maple leaf. It's looking more like a Christmas tree. The one above it~ the negative. Horn: Kind of like this one. Workman: I think that looks more like a maple leaf. That looks a little fat. Like a small bush. I don't know if that's, are we putting final. Gerhardt: If you like that maple 'leaf up there, I mean that could be used as the model for it. scott Midness: It's essentially the same shape except for balance. Workman: It's got another row. Scott Midness: The stem goes down rather than up. Workman: I know it's difficult to put the points maybe on this but it just looks fat. Chmiel: If you look at the maple leaf down below, %he one up above and the other proposal, that maple leaf is more of the design. Scott Midness: ...work out because this would actually have to be strong enough. I think the point could be worked out... The connection is the hard part. Horn: This is what we'd be looking for. 'Something like that. Housing and Redevelopment Authority Meeting August 20, 1992 - Page 7 Scott Midness: Obviously this is a graphic... Horn: I like that. Workman: Self, what do you think of lights? Brass. 3elf Farmakes: I think the tendency sometimes, when you're lookin~ at this kind of stuff, you keep on adding stuff onto it. Workman: Well I subtracted a couple thin~s. Jeff Farmakes: I don't know if it needs, from'the read that it's going to get, additional types of lighting as in a flood. I don't know... The perception of this thing is to look at it two ways. One if you're standing by it. And the other is if you're driving by it from a couple hundred feet away. The lighting I think would be distracting to a center point. This is an arc. The center, visual cen~er to i't until you make the turn on Market. And I think the reason, I'm not sure. I didn't get a chance to discuss this thoroughly as, like I said, I was out of town. I think that that green on the side maybe adds a little color when you turn on Market Street and you're not seeing that element. Because it is dark. You get past it. If you take your drawing that you have in your packet and sort of bend it, look at it from the side, you can .kind of see what you'd be seeing once you turn off Market and drive by. Scott Midness: I think Jeff has a good point. When you look at this flat, it will be...visualize it. I think the infamous video we had gave a better idea of the roundness of the wall itself. It's much more elegant that it shows on here. Jeff Farmakes: I think too, that if you added, if you flood it and you add additional light fixture on it, you're going to burn out. You'd be in danger of burning out. Your eyes are going to go to the light fixture. It would be pretty tough to mute that if you were looking directly into... I'm not sure if, I haven't been involved in the site evaluation. Where you're at. Where you view a site and the height of the letter and you look where. You know what that'read is from the highway and as you curve, because obviously you're not going to ~et a 360 sightline here. You've got a wall and I'm assuming that you're going to angle this so that you're getting the maximum read of people turning into Market and yet still get a peripheral view as you're driving straight through. Scott Midness: One thing we can do, obviously the next step is to go out there and stake something. If everybody's'comfortable with the location and the height, that would be the next step. Because obviously we put down on paper of 8'6". It might be 9. It might be 7. We don't know until we actually get out there. 3elf Farmakes: ...the proportion drawing, maybe just alternate the person standing next to it. How big they are. Housing and Redevelopment Authority Meeting August 20, 1992 - Page 8 Scott Midness: Yeah. We are restricted, if you remember, by the right-of-way. We can't do any built structure within that and consistent with what we've done before, we've always sort of kissed that line to get it as close to that intersection because what we're concerned about here is obviously traffic coming from the south and the traffic coming... Bohn: Is there going to be a sidewalk running over to that path in'front on TH 5 all the way over to 79th Street? Scott Midness: From here to here? Hot n: Yeah. Scott Midness: It's on this side right now. What we've shown here is part of the TH 5 improvement. If one is desired as part of this development. Bohn: I think there should be a sidewalk going on that side so people don't have to cross the street twice. Workman: Except this isn't really going to be a place where people are going to be hanging out is it? Bohn: People will be walking. Scott Midness: ...but it wouldn't be a combination. Bohn: People are going to make a path right across that grass if we don't put a sidewalk there. Horn: That's'always something that can be added. Bohn: People always walk the shortest distance. Workman: Yeah, but where are they going to be walking from? Bohn: From Highway 5. People come, on the weekends you see people walking along TH 5. That path they put all the way to CR 4, they walk along. Last weekend there was all kinds of people. Either bikes or pedestrians. Horn: That wouldn't have any impact on this design would it? Scott Midness: The fact that one is...it makes a lot of sense. just be a matter of regrading that so we can accommodate it. It'd Horn: So I don't think we really need to focus on that this evening. Our major effort is on the monument itself and I believe we have a consensus of the group. Is someone ready'for approval tonight or do you want to look at more? Bohn: I just want to take a look at Jeff's smaller drawing. The leaves on that one are smaller. Different. Housing and Redevelopment Authority Meeting August 20, 1992 - Page 9 Workman: Is there smaller leaves there? Bohn: Yeah. Jeff Farmakes: ! modified Concept C and enclosed the leaves rather than exposing them. I thought it might be dangerous with that type of edging if it wasn't enclosed. '' Workman: That to me adds rather than distracts. 3elf Farmakes: It's small enough to add some color but not to distract from the image, 8ohn: I like that. Horn: Yeah, I like that. Jeff Farmakes: Also, the edging is more true to form to what the Chaska brick building you see here with additioDal leafing on the edge of the stone. You have some more, it's kind-of a Seorgian effect on the way the keystoning comes together. Workman: I'd move this approval. Horn: Is that a motion Tom? Workman: Yep. Horn: Is there a second? Bohn: I'll second. Horn: Further discussion? The motion is to approve this concept. Scott Midness: I think that's fine. I think what we have to realize is that there's other dimensions. We're talking about the same dimensions... Horn: We're talking about the dimenstons...Rtght this ornamentation instead of. 3elf Farmakes: The dimensions are slightly the same height but slightly longer. Proportionately even out so you don't get a stubby middle. You know you get a big middle and a couple little stubby arms. Workman moved, Bohn seconded that the Housing and Redevelopment Authority approve Concept C Modified for the entry monument for High~ay 5 and Market Boulevard intersection. All voted'in favor and the motion carried. Workman: Can we refer to that in the motion as Concept D? Horn: C modified. Housing and Redevelopment Authority Meeting August 20, 1992 - Page l0 Workman-' C modified? Okay. Horn: Right. This is what we're looking at. Thanks a lot Jeff. You've been a big help in this. I think this is something we were all uncomfortable about. ! personally feel good about what we've come up with. UPDATE ON THE BOWLING CENT£R/¢ON?ERE~ ~ENTER/HOTEL A~EA. Gerhardt= Mr. Chairman, HRA members. I wish I had more information tonight to give you on where we are with the acquisition of the bowling alley. I did contact legal counsel today and seeing where we.are with Mr. Dahlin in negotiating a purchase price. At this point, we have made an offer over to Mr. Dahlin. Dahlin was supposed to make a counter offer the early part of this week.. Legal counsel did not receive that counter offer. I was on the phone today with Roger's office and we called Mr. Rommel, who is Mr. Dahlin's attorney and he would not take. our call. I do not see this as any way of them trying to back out of it. I think that Mr. Dahlin is caught in his day to day activities and I would expect before next week that we will receive a counter offer. I know that some of the partners, Mr. Dorek, Mr. Bloomberg, Mr. 3ohnson, are somewhat anxious to know if we're going to get this building loqked up and signed into a purchase agreement. If Ne cannot get that offer out of them, then we may have to look at other means of trying to acquire that property. If that's the HRA's intent of following through with that. To date, the partnerships, the Dinner .Theatre, the bowling alley group, the hotel group, have shown interest in it. Again, the Dinner Theatre people are somewhat concerned on the impact onto the Dinner Theatre with this facility and I see that Jim is here tonight and he may wish to express his concerns regarding that. But I would hope that between the HRA and the Dinner Theatre people, we can come to some type of terms on that so we do not effect that operation. Also included in Don's report was, we want to move ahead with this and look at interviewing three project managers which they would act as project manager for the development of that area. You're working with a redevelopment of an existing building. You're talking about new construction and the demar~ds'and the times associated with reviewing that project are going to be just overwhelming and Don and I don't have the time in the day to meet with the architect and construction developer on site. And'I would expect that almost to be anywhere from a 6 to 4 hours per day that you'd have to meet with those people once the project got started. In Don's memo he was going to highlight some of the advantages of going with this project and Just the Senior Center, you know there seemed to be a problem almost every day down there. Things that we didn't anticipate. Things that the architect had missed. That's really the role of the project manager. To be on site. To be over seeing the project. Coordinating with the architect. Coordinating with the builder and looking for places where we can save money. Looking at places for a long run where it would be for the betterment of the development. And staff would just like to get some input from you on this project and the idea of using a project manager on this. Again, I'd just like to stress that we could interview these people can get their ideas on it and we're not out anything. It would be I think worth the time to sit down with these people and listen and see what they have to say. Housing and Redevelopment ~uthority Meeting August 20, 1992 - Page 11 Horn: Okay. Why don't we see at this time if anyone would came to comment from the public on this. Not the project manager issue per se but the whole project. Is there anyone that wants to speak to the issue? Clayton. Clayton Johnson: We'd like to think we're operating on some sort of a timetable and I guess that's the thing that concerns me. Z think my comment last time was that, in the process of developing every 6ther parcel downtown, we have not been able to develop anything without the threat of condemnation. ~nd I think one of the things that's happened, I think staff's been very busy with the Target proposal and we understand that but I think the offer that you've put forth is very fair and I think the thing that would bring this thing to a head is the'threat of condemnation because the offer, in my own appraisal of the property, and I'm basing it on what the County ~ssessor says it's worth. Minus the liabilities that are currently against it, your offer is very fair. And the minute that you introduce the threat of condemnation, the owner is going to have a down side. Right now he has no down side. He can continue to negotiate, negotiate, negotiate, negotiate and drive your price up. But the minute you threaten condemnation, he has the threat of going before some commissioners and them coming up with a value that's less than what you're currently offering. And you know, we came to you in May or March. ~pril or May with a plan for the redevelopment of the south side of West 78th Street. It was very comprehensive, we've asked for some decisions on what's going to happen. There are a couple things that directly effect us and our ability to carry out that plan. One is whether or not you're going to put a road through the back and what impact that has on our structures back there. ~nd then the other thing is, a solution to what we see is a problem with Filly's. We think it's a real problem. It's been with us for a long time and we~ it effects us in two ways. Number one, it effects our ability to get.the partners in the hotel to put the money into the project to expand the project. ~nd the other thing it does, it effects our ability to develop the back of what I call the FMG building. We have to know who our netgbb, or is. We have to know who our neighbor is and what business he's going to be in. Is it a bar? Is it a bowling alley and the City came with the proposal that we've been considering now for some time, which is a combination of a public and private project. We've just asked that two things happen in - order for us to proceed. Our architect's here tonight and he's anxious to get going on the conceptual design-of the first phase of the hotel expansion. 8ut it's really impossible to do without knowing what's going to go on behind this. ~nd what we had asked for is a decision and I think that the decision that we're looking for is a commitment to carry out the project in some way,.shape or form and I don't believe, in my own experience, that that's going to happen until you at least use the threat of condemnation. I think it's going to go on and on. Several things are happening on the hotel side. You know the hotel business has been very good. Not only in our particular site but throughout the metro area. The Mega Mall's been a very positive impact. It's almost like having a World Series here every week. ~nd what happens and what we're concerned about obviously is that if we don't meet the need, somebody else will. ~nd we feel that our conceptual plan for our building has always been to get it up around 120' rooms. That's the most'efficient Housing and RedeveIopment Authority Meeting August 20, 1992 - Page 12 operation and obviously we couldn't start there. We started at 84 but now we're ready to go the next phase. And if we don't expand it, then we're inviting some other competition in and that's going to happen eventually anyway. There's going to be another hotel in Chanhassen. We're not afraid of that and we're not, but we are frustrated in our ability to proceed. I guess that's what I had'hoped would come out of tonight's meeting was a staff report that would give some recommendations to the HRA and take some action on it and I know that Todd would have to speak for himself, but I think that the pressure of the Target thing has probably taken a lot of everybody's time and that's been difficult-. But the thing that you could do is, if the staff were supportive of that, and that is to initiate action that would start condemnation. That would get the ball rolling. Anything else? Chmiel: Yeah. Just one quick. You mentioned the fact of not knowing what's behind, going to take place. Even.when Ftlly's was there, you did build at that particular time knowing Fllly's was existing. And I guess I just wanted to point that fact out. Clayton Johnson: There's no denying that but neither do we deny that it is a problem too. No question about that. Chmiel: Right, and I understand that. Clayton Johnson: And really Don, if it's not public development back there, that's fine too but then Mr. Oahlin and us are going to have to get together and decide what we're going to do. We have to who our neighbor is and what the project is. The hotel people operate just like opening a retail center. The hotel people do not want to open 28 additional rooms any time after the first of September. Now I'm talking next September okay, and in order %0 accomplish something like that, we have to be working at it right now. Chmiel:' I like to drive past there in the evening and see all those caws parked there. Clayton 3ohnson: Yeah, well lt's been steady billed every month you know and it's a combination of the Dinner Theatre is very helpful but'the industrial park is really the base that's made it successful. Horn: We've had people in that can't stay there. It's full. They have to go down to the strip and stay. I think we've got, obviously our first choice is not to have to go through that process. We'd like to work with people. But in this case we do have other people involved in this. It's not the City with one particular person getting it moving. -So as I see it, we have three options tonight. We can decide to proceed immediately in a condemnation. We can set a time limit to where we will begin to do that. Or we can just let it go and see what .happens and let Todd negotiate. Is there a comment on those options? Gerhardt: Well, and 3ohn can attest to this. Mr.'Dahlin is going to have a very difficult time again this year in operating. From John tells me, there's no direction .from him to his son and himself in the operation Housing and RedeveIopment Authority Meeting August 20, 1992 - Page 13 of the bowling center. I mean if you don't start getting the leagues up and running right now, and start talking to some of the women during the afternoons, you're not going to have an operation. You're not going to have any revenue coming into the.facility. And right now he's sort of being a lame duck owner/operator I guess, if John would agree with me. He's acting like an individual that's ready to sell the building because he's just not showing any interest in tMe facility. And I am surprised that he hasn't responded and I don't'know the details. Jim Walston from Roger's office was directed to work with him in the negotiations:and I do- know Jim was on vacation so for me to be busy, I guess maybe I couldn't call anybody and it wasn't my responsibility to negotiate with him. And 3im was going off the best knowledge that he had that they were going to fax this counter offer. Ma¥Se Mr. Dahlin's on vacation, like a lot of people are in the early part Of August. But I don't know, those sound like excuses but I would say that ! would hope that at our next HRA meeting that we would have some type of signed purchase agreement back to you and if not, we can monitor over the next 4 weeks before our next meeting or call for a Special meeting.at which time you could authorize condemnation to start. ~ wouldn't give us a blanket of, if we don't have some type o~ terms in 2 weeks that you start condemnation. [ would like to sit down and talk to' you and update you on where we're at instead of giving us a blanket like that. Horn: What's the recommendation from the rest of the board? 'Tom, what do you think? Workman: Well, I don't know Todd, you're giving me an optimistic view of being able to get it done, right? Gerhardt: Yeah. Workman: You sound optimistic. Gerhardt: He's going to continue to"be, you know second half taxes are going to come out here in a couple of months you know and if you don't have revenue coming in, if you don't have the leagues over there and 3chh doesn't start getting some direction from this guy on how to do that, there's not going to be any revenue and he's going to go into the hole even more. And the purchase price is even going to be less you know as we get into this thing. He's going to owe more and more. $o yeah, I guess I am optimistic because there's debt out there and there's going to be more debt. Horn: So your recommendation at this point would be to let you proceed with the negotiations until our next meeting at least? Gerhardt: Yeah, and if we feel that their Counter offer is unrealistic, and that he's not working with us like we had hoped, I'd like your direction to call for a special meeting to update you on that and the possibility of maybe entering into condemnation. Chmiel: I think that aspect of it. I think if it is warranted to have'a special meeting, I think a special meeting should be called. Because Housing and Redevelopment Authority Meeting August 20; 1992 - Page 14 we're leaving everybody in the lurch right now as well. Trying to get things moving and I think that would be a more desireous way to'go. Bohn: I agree. I think if we don't have the purchase agreement by our next meeting, we should be in condemnation. Horn: Right. Do you need a motion on that? Gerhardt: I'd like one, yeah. Horn: Okay. Someone move'that we let Todd negotiate. If he gets back with an unreasonable counter offer, we would hold a special meeting and proceed with condemnation at that point. Is that the motion? Workman: Is that a motion that needs to be seconded? Bohn: I'll make that motion. Wot kman: Second. Bohn moved, Workman seconded to direct staff to negotiate with the bowling center and if an unreasonable counter offer is presented, that a special meeting of the Housing and Redevelopment ~uthortty be called to proceed with condemnation. All.voted in favor and the motion carried. Horn: Next item would be to authorize Todd to go out and get quotes on a project management firm. Chmiel: Can we just back up just a tad. Gerhardt: Not to get quotes, but to interview. Horn: Interview? Gerhardt: Yeah. Horn: Would we get quotes? Gerhardt: There would be some type of pay schedule as a part of the interview process. They would have to submit a p~oposal to us for their services. There could be a range in there. There would be some hourly wages established in there. Between Don and I and probably Roger's office, we would send out a sheet to those people inviting three firms to interview for that and certain criterias that.we*d like to see as a part of that interview. Similar to the process that the City Council went through in hiring Bonestroo to do the storm water ponds. -Some other projects. Architects on the community, center. Some of the other things. Horn: Is there a motion to direct staff to-seek proposals? Chmiel: So moved. Horn: Is there a second to the motion? Housing and Redevelopment Authority Meetin8 August 20, i992 - Page i5 Wot kman: Seco nd. Horn: Further discussion. Chmtei moved, Nor kmart seconded that the Housing and Redevelopment Authority direct staff to interview for am Project Nanagement firm. Ail voted in favor and the motion carried. Horn: Don, you had another question? Chmiel: No. I think you covered it. I see the construction manager, the CM as opposed to the general contractor and normaZly the general contractor doesn't try to save money. The CH does. The construction manager watches the outlays of dollars and has tendency to save a project x number of dollars over a long haul. Horn: Especially at critical times. Chmiel: And compensates for his wages as well and there's still additional savings there. Horn: Okay, let's move onto item number 4. CONSIDER APPROVAL OF PURCI~SE A~R~E~NT WITH B-C, ~tJRDI~ FOR THE TA,,~ET SITE. Gerhardt: Mr. Chairman, HRA members. Attached is a purchase agreement between the Housing and Redevelopment Authority, Mr. Sim B.C. Burdick, and Brigitte Burdick for Lots 1, 2, 3, 4, 5, Block 1, Burdick Park 2nd Addition. Lot 3, Block 2, Burdick Park Addition for the price of $4.00 a square foot and the resale of a portion of that back to Target, DaYton/ Hudson Corporation for $3.00 a square foot for approximately 10 acres. My maps are somewhat colored up...make sure we know what we're buying and reselling. Highway 5 here. Nest 78th Street along here. This purchase agreement would take into account these five lots and this lot on the south side of Monterey Drive...being called. And we're in negotiations right now with Charlie 3ames to buy Lot 1 also. But it's not a part of this purchase agreement. With this purchase agreement, the HRA would continue to hold lands that are colored in the blue. This being a future entry monument similar to what you approved tonight. A wall element in that location. This location, as we met with a group.of people with Barton-Aschman, University of Minnesota, concept drawings of how Target could lay out in this area, it was a consensus of that group to preserve the stand of trees that are located on Mr. Burdick's property. And to preserve those trees, the best way to do it is to take an ownership position in it. And also included in this area would'be a storm water ponding for the Target site. Again, taking ownership of that gives us maintenance of it. Any type of improvements we may have to make'for that pond once a developer has built it to the City's specifications. And then again, we're taking ownership of Lot 3 on the end. This lot could be used for a variety of different purposes down the line and gives you control of how that would be developed into the future. There may be' needs along with Market Square for a facility for storage of outside materials. U-Hauls. Some of Bernie's equipment. That stuff and a Housing and Redevelopment Authority Meeting August 20, 1992 - Page 16 simple building that could act for' more a cold storage for those types of facilities. Or it could be to the expansion of what is the Chaska Machine Tool manufacturer down in the area. In your agreement .it lays out that there would be a simultaneous closing with Target and Ryan and giving back these lands, not colored in, back to Target and back to Ryan. Those lands colored in weren't. This last Monday we met with the Target people and Ryan had expressed concerns and coming up with the necessary monies of holding those lands and concerns regarding the buildability of some of those lands because of the utilities that exist in the area and some of the poor soils that have been laid out on the James piece that they've found through some soil borings. ! think that those are hinderances on the site bu~ I think it's Just a matter of massaging where buildings can be located and that sort. However, the difficulty of them coming up with a million dollars seems to be a problem. And I'm going to say it's a minor problem that we can work it out. Similarly, to the problems that we had with Market Square and the developers in holding the outlots on that facility. Where the HRA came in and acquired them and are holding them today and have controls over the future development of those outlots and the architectural styles and recouping your money that you've reinvested back into those facilities and the development's rights of buying those back. So I will stand here and answer any questions you may have on the purchase agreement. Staff would recommend that the attorney draft some language for that part in Section 7 that would pertain to Ryan and that we either work out some type of letter of credit or the HRA holds it and they pay our holding cost and then have a drop dead date within the next 3 years. Horn: Okay, questions. Tom. Chmiel: Before Tom gets to this Mr. Chairman. Maybe we don't really have to move on this, only because the newspaper said we already completed this last Friday. At that was in today's newspaper. Maybe we can get a retraction on that with the news media to let them know that we're acting on it this evening and we didn't act on it last Friday. Horn: How did we vote? Chmiel: It passed~ Horn: Oh it did, okay. Gerhardt: You guys move fast but I don't it was that fast. Workman: Todd, you know I don't know that I've heard a whole lot more about what's going on and where we are. Is Target still trying to figure out if they want to do this? Are they ready to go with this? What's the feeling? Gerhardt: Well, they continue to spend money and getting approval. They went to the Planning Commission last night. They continue to contract with other services. RLK Engineering. They're out doing soil borings on the site. I'm sure Jim's not paying for those. Horn: At least you hope not. Housing and Redevelopment Authority Meeting August 20, 1992 - Page 17 Workman: Well I'll tell you what, you know and I guess they're moving on down the line. I don't know that there's a whole lot that's going to be done to stop them. There's a couple o~., I guess the HRA's supposed to be insulated from maybe a lot of public opinion but it's flying around out there. ! know that everybody up here has gotten them. There's a couple of groups of people obviously building up out there. One that says, fabulous. We're going to get a Target in town. And then the other group that says, oh my God, it's going to ruin this town and what do we need a Target for. There's one in Eden Prairie and on and on and on. And tell me if this explanation is at least somewhat although simple, a correct explanation. What we're probably doing, you know maybe,..of the Board, what we're probably doing is we're probably doing what is probably overall best for this site in that it's kind of an odd piece of property. It's divided into about 5 lots. We could sit and wait. We could say no- to Target and what we could have is somebody coming in and building 5 different fast food franchises here and we could have a real fun looking thing. Horn: Goodyear store and an Rapid Oil Change. Workman: And oil 'and car wash and everything else. Or we could say, boy we're not really interested in the Target and eventually, at least a Target type operation would come in, being WalMart or K-Mart or other. Or across the street or other. Or we could say yes to Target and develop this whole site in a civilized manner. Is that at least what you guys are? Chmiel: That's my saying. Bohn: That's the same here. Workman: Alright, then I have no more to say. Gerhardt: And there's a variety of other reasons that go along with it. I mean just your interest in it. Staff has got them to make at least $200,000.00 worth of improvements to their building and after the Planning Commission. Workman: The Planning Commission has? Gerhardt: No. This is staff and then I think after the Planning Commission meeting last night, there's going.to'be other dramatic improvements to the building. Additional landscaping. ! mean the nice thing about this, the joint meeting was nice. You had everybody involved up front. You're preserving a natural stahd of trees. Eden Prairie's going through that right now. They were on TV this evening and they've got a natural hardwood forest over there that they've got residents · trying to raise money to buy these and to save them. You know. It's a real question, if Target came in here... (There was a tape change at this point in the discussion.) Chmiel: ...In doing that, you puli away from the downtown area as well. By putting something, I think we're doing something sort of unique and a o. Housing and Redevelopment Authority Meeting August 20, 1992 - Page 18 little different by putting it within the downtown to keep that stimulous of business going for those business people. So there's a lot of pros and cons to the issue. My understanding, well last night the Planning Commission met and there wasn't anyone there in opposition to this proposal. So it might be just a small faction or it could be a large faction. I'm not sure at this time but I'm sure we'll probably see them at Council. Horn: Well, it is a use we don't currently have and .really don't have planned anywhere else. Okay, any other comments or questions before we call for the motion? If not, I'll call for the motion. Workman moved, Bohn seconded that the Housing and Redevelopment ~uthority approve the Purchase Agreement with B.C. Burdick and Brigttte Burdick for the acquisition of Lots 1, 2, 3, 4, and 5, Block 1, Burdick Park Second Addition and Lot 3, Block 2, Burdick Park Addition conditioned on the subsequent resale of a portion of this property back to Ryan Construction and Target Stores, Inc.. All voted in favor and the ~otion carried. Gerhardt: That motion included having Roger redraft that one section? Chmiel: Yes. REQUEST BY NEST VILLAGE TONNHOUSE P/~RTNERSHIP TO REDUCE MIN[~JH M~RKET VALUE. Gerhardt: Mr. Chairman, HRA members. Attached for your consideration is a letter from Mr. David Vanney representing the West Village Townhouse Partnership. Hr. Vanney is requesting a reduction in his minimum market value from $2,525,800.00 down to $2,050,000.00. Hr. Vanney's request in this is he feels that represents a truer value of his facility .and .that the townhouse development is making a difficult time in their cashflows. After discussions with Orltn Schafer, the County Assessor, he would feel comfortable in using that as a minimum market value. Staff's only hesitancy in having you agree to this minimum market value. This is the first time I think that the HRA has ever been requested of this, is that this may open up other avenues for other people 'to come in and. make those. Staff never gave you a recommendation. We can live with either of the two. We worked very closely with Orlin in establishing these minimum market values and I think everybody is pretty much comfortable with those. Again, the housing market in the Twin City area has gone down in the years. However, in Chanhassen the. re's not a lot of them so, and you don't see a lot of turnover either. So I leave it up to you to decide on whether you want to go alon gwith this request or not. David Vanney is here and I think he would like to speak on behalf of the partnership. David Vanney: Good evening gentlemen. I'm David Vanney'. I'm the attorney for West Village Townhouse Partnership. I don't have an ownership interest so I guess I don't really consider it my project but I've work closely with my clients on a variety of problems involving that project. Basically they're requesting the reduction in the minimum assessments for several different reasons and they believe the request should be granted for several reasons as well. The first reason being Housing and Redevelopment Authority'Meeting August 20, 1992 - Page 19 that the cash obligations that are required by the special assessments have been satisfied so that in terms of satisfying those needs, it isn't necessary to maintain the same higher assessment. The other reason the request is being made is because the value of the property has, actually I'm not sure it was ever as high as the minimum assessments but there's no question that that property's value is substantially less than the minimum assessments. In fact, I did my best to convince the Carver County Assessor that it should be worth less than $1.9 million and he said, well we've looked at it and $2,050,000.00 is our evaluation-and so that's fine if that's what they determined. We can live with that figure. But that is the sort of values that we are talking about. The final reason that we are making this request is, this project has been a severely distressed one. The partnership has recently gone through a re-organization. The two gentlemen who are the main developers, the main partners have resigned just primarily because of the financial problems associated with the partnership. Just to give you one example- They paid a lot for the property but it already has a lot of significant deferred maintenance problems. And it turns out that the construction of those units Just wasn't as good.a quality as the other partners felt they should have had for the money. Because of those deferred maintenance problems, there have been a lot of ongoing costs and reducing the minimum assessment would help to address those cashflow needs. Still another area of concern in terms of thetr, cash~low situation was their mortgage and they've spent almost the last year negotiating a new mortgage with the Resolution Trust Corporation and I'm-happy to report that they have gotten a new mortgage commitment. But for all those reasons, we feel that the reducement of assessment would be both good and fair, not only to the partnership but also for the City of Chanhassen. And perhaps you have some questions about our request. I'd be happy to answer them, or try to. Hot n: Questions. Chmiel: Yeah, I have just a question in regard to this. First thing I looked at this is how and why was this agreement met? Come up with this conclusion. Gerhardt: When we establish minimum market values, I meet with the developer and I say, what is the minimum market value that you feel that you can live with. Staff does not try to establish the highest value we can get. We're talking about a 'minimum market value. In this case, the developers wanted to get as much increment as they could to take advantage of the program and there's no question in David's or my mind that the $2,500,000.00 was their construction loan amount. And they said' it's going to cost us $2.5 million to build this thing. And so that's how we established the minimum market value of $2.5 and David would agree with me on that point. David Vanney: Yeah. That is, I think that figure does reflect what went into the project, although Just to give you one example. I mentioned the re-organization of the partnership and one of the beefs of the surviving partners is that a lot of that $2.5 consisted of developer fees and so forth and so that's part of the reason why they have these deferred maintenance problems. Now I'm just saying that's the sort.of the tenure Housing and Redevelopment Authority Meeting August 20, 1992 - Page 20 that they had. So these partners are saying, why. Well again, ! wasn't involved in the initial project but the surviving partners said geez. They never should have agreed to a figure such as $2.5 miIlion reflecting what they thought were the costs of the project because had you done a cashflow analysis back then in terms of what you would get for rents, it would never cashflow with the $2.5 million value. In other words, no one would pay that much for it. It may only have been worth say $2.2 or $2.3 million initially and the market has gone down since then. Gerhardt: And staff doesn't negotiate on those thin~s. We don't try to hammer them up. We take a set of plans down to the County Assessor.2 He reviews them and he agrees with that'value or disagrees with it. Saying yeah, that could be the minimum market value or it couldn't be. There was not even a blink of their eye when they established that thing back then. But again, from what Orlin's telling me, over the years apartment values, the apartment people have been-lobbying legislators dramatically in trying to get the tax rate changed On those which they were successful in doing and giving a loophole for that. And you've seen those come down because a lot of them are empty and the market has been over built and with that comes down the value of those buildings. Bohn: Is this'development part of the development-of-townhouses that are already there? Gerhardt: It's the four set of buildings right off Kerber. Bohn: Right, and this is an addition to that?- Gerhardt: It's both phases ! and 2. Back in '87 they built phase which was 32 units. David Vanney: That's correct. Gerhardt: Then in '88 they built the second phase. Another 32 units so you have a total of 64 units over there which takes into account the total value of those units of $2,525,000.00. Bohn: So this is existing buildings? Gerhardt: Right. Horn: Does this get readjusted'then typically on a yearly basis? Gerhardt: Orlin $chafer would make the adjustments on those values for taxes payable in 1993. That's a part of our motion tonight is you've captured enough increment off the project to meet your debt obligation. But in all our agreements, the minimum market value goes for and with the length of the bonds. And so the only downfall in this is that you somewhat open the door for other people to come in and make the-same request. Horn: One way to look at this would be that this is what we went into the deal with this number. And for the period that we're dealing with, that's what we negotiated. After this comes out of our increment and Housing and Redevelopment Authority Meeting August 20, 1992 - Page 21 goes back to the County, then it will be adjusted on a yearly basis, up or down, based on the County right? Gerhardt: Right. I mean in 1993 the value of $2,500,000.00. Instead of getting say, what was it. What are the yearly taxes right now? David Vanney: I'm thinking they're about $100,000.00. -About 4% effective rate. Gerhardt: So you're going to lose approximately about $25,000.00 to $20,000.00 of increment each year in lowering this.value.' Horn: It would be interesting to see what the Assessor says. when it goes back on the County roll. Gerhardt: He will establish the value of $2,050,000.00. But over the years, he will look at that and if he sees that some apartments sell-or' somebody buys them or, you know he watches trends and if those are goihg up, he will make adjustments. And I think, were there adjustments to .it since the time they were built? David Vanney: No, there haven't been any adjustments. They've always been rental units. Horn: Of all of the landowners we have in the increment, and the tax assessor's opinion, is this the only one because of the unique nature of it that would be in this category or what is our liability here? Gerhardt: Our liability? Horn: In terms of opening 'it up...with current evaluation. Gerhardt: I'm going to say very little because most of the minimum market values that we establish are below the market. Most industrial buildings will sell anywhere from $35.00 to $40.00 a square foot and we've got them in at $30.00. We don't try to gouge them. We just, it's more of a legal process that we, establish a minimum value. Horn: So if we were to approve this, our policy then is we drop it. The assessed valuations drop but if they go up, we stay where we .are? Gerhardt: Right. Chmiel: One other question that I have. Gerhardt: There's a lo% of buildings out there right now that are higher than our minimum market value. Chmiel: In dealing with the partnership as they have and the problems that existed, and the changes that have taken place, is this partnership involved with any other businesses in this? Included in this particular phase of dollars. Housing and Redevelopment Authority Meeting August 20, 1992 - Page 22 'David Vanney: This particular partnership only is involved in this project. The 64 units. Although I'll say that these, the partners themselves have other similar projects in other parts of the Twin Cities area. Horn: But not in our community? David Vanney: That's correct, yeah. Workman: I'm confused. And I'll be forthright about that. I've spent too many hours on the Board of Equalization to understand what, I do have a good understanding about what we're doing here and so it's very serious business. How is this different? How is this project any"different than any say residential homeowner or any other commercial homeowner? Gerhardt: The HRA, in entering into the special assessment agreement with the partnership has a legal binding right that they cannot lower the minimum market value below the $2,500 and some Odd thousand dollars. Hr. Vanney can take us to Court but he will 'more than likely lose because they've entered into a contract that they will'for the period. Workman: So it's the HRA's duty, not the Board"of Equalization and not the Council Gerhardt: Correct. Workman: Because it is a tax increment and HRA. Gerhardt: You have a contractual obligation and so dbes the partnership with the HRA and you with the partnership in establishing this minimum market value. You, in making sure that you pay the specials and the partnership making sure that they pay the taxes based on that minimum market value and that that value would not be lower. Workman: So, it was our staff was saying $2 1/2 million is too much but $2,050,000.00 is about where it is and Orltn agrees with that. ! guess the quality of construction and your mortgage, I've never heard those arguments used at a Board of Equalization. ! know Clark has sat at those and he probably remembers them thoroughly. Gerhardt: Well from a business aspect, they. take a revenue approach on it. There's physically a market value for a building based on revenues that are. Workman: Well I don't disagree with that. ! just, it'd be interesting next time to hear a homeowner come in and say geez, I just can't pay my mortgage. Could you. Horn: The difference here Tom is that if he weren't dealing with us, he wouldn't be tied into a contract that'd hold him at a valuation of $2.5. Since he's dealing with us, he's got that contract. If he were out dealing with the Assessor, he would already do what he's asking us to do. But legally, the Assessor doesn't do that. We do that because we entered into a contract. Housing and Redevelopment Authority Meeting August 20, 1992 - Page 23 .. Workman: It doesn't really effect the general fund revenue? Revenues into our general fund? . Horn: It does ours, not the general fund. Just. the increment. Workman: The increment. Gerhardt: It scares us when that happens you know because our budgets are all predicated on the revenues coming in here. And when you start playing with reducing these values, we have a' debt analysis and that's why we get the good bond ratings we get is based on those revenues and projections on those. When you start lowering these values and reducing the revenues that come in, then we're not going to be able to meet those obligations and some of the projects that you want to do in the future. So $20,000.00 but you take $20,O00.O0.over 10-12 years left of the district, it's quite a bit of money. Horn: I think from a logical standpoint, it makes sense. What it does though is there's a precedent definitely here that we need to take careful consideration on. Workman: Well and that's my concern. Somebody, I don't know if Todd or if you said, somebody said that this would be fair for the City of Chanhassen. How would this be fair for the City of Chanhassen? ._ Oavid Vanney: I guess the one point that I was making is that it's going to be difficult to maintain a good quality project if your cashflow isn't good. It means you may have a deteriorating property. The rents will go down and you don't then have the same, perhaps the tenants aren't as good quality as you might like. So I've seen a lot of properties over the years where if your cashflow is seriously jeopardized, it's probably because it's going into a tailspin and it becomes kind of a public eyesore. I guess the other point that I was trying to make is that I don't, everone recognizes that in the State of Minnesota we pay high taxes and in the case of this particular partnership, they're paying even more than fair. So that's the other aspect of it. Workman: We could have the threat of letting our property rot before your very eyes. I mean Copeland could let.Medical Building go rotten. Say gee, you'd better lower our taxes. Maybe I'm being too simple here but I don't have any question you're paying a lot of taxes believe me. Chmiel: But this is a different type of property in comparison and I think what they're saying right now is...by the ones that are. Wot kman: too high. don't. Heritage Square could do that. They could say our valuation is Our building's going to rot right before you eyes if you Horn: I think the other issue that Todd pointed out is that in most cases we're below what the assessed valuations would be. In this case, we're above it. Workman: At residential we're at 90. Housing and RedeveIopment Authority Meeting August 20, 1992 - Page 24 Horn: No, in terms of our increment. Types of buiIdings that are increment and a majority of the cases in his opinion were below the value. This is the only one that we're above. Workman: Who's above Todd? Who else would be above? Gerhardt: Well, the only other person I've dealt with ham been the mini- storage facility. And we've got him in at $18.00 a square foot. It's not like a building with a foundation and everything. It's tin and everything like that but Orlin $chafer will not budge on it, and it's above the minimum market value. But Orlin will not budge on that and he feels very comfortable with it. Even if we didn't have one, if they fought it, he feels very comfortable he would win-that one. So I leave. it up to Orlin on those issues. Horn: I think we should go with his recommendation because it is somewhat scarey but. Chmiel: Could I just make one question back to Todd? If the HRA should agree with this, and put it at that minimum market value, that $2,050,000.00, which would be established with tax payable in '93. And you also indicate, and into the future. Clarify that to me. Gerhardt: The $2 million 53 again. Chmiel: No, I understand that part of it but as you say, the last statement and into the future. Gerhardt: Will not go any lower than that. Chmiel: Okay. I u~derstand. Brad Johnson: Mr. Chairman, could i Just say something about this... Horn: Sure. Brad Johnson: I'll speak in favor of what he's suggesting. I don't know if you were the developer of the property originally and when they, if you look at all our assessment agreements, we've always as Todd said, been well below what we assumed 'the taxes were 'going to be. This particular project, the assessment agreement was written after the mortgage was put on the property and as a method of financing, some specials that were put on there, and didn't have anywhere near the controls you would normally have 'in a project. And when I heard, was il $1,900.00 a unit or something. I said it's the death of the project, we had agreed to $1,300.00 or $1,400.00 a unit. The $500.00 is in excess of what you can afford to have' in an apartment building. We have been, just are trying to decide what access route we-should take through in order to get into the Oaks area. And one of the things that we've decided is we don't want to go through this apartment building because we're afraid,. based upon that it's going to deteriorate far more quickly than anything we've ever seen before. If you go in the back, I know you Just did some repairs there recently but it's got, already has some of the economic look to it. And that's just bringing other people in and saying, stay Housing and Redevelopment Authority Meeting August 20, 1992 - Page 25 away from there. We've got to figure out how to berm it around it. It is in fact a fairly nice looking building but the infrastructure and many of the things that are in there are in decay already and I would encourage you for that reason, two reasons. One, tt needs it. Zt's not uncommon to request this and I also think that whoever originally requested this did this before for economic reasons. You know to get more tax increment and was not aware of what he was doing to the project at the time. Even though Ne were. We just didn't step forward and say you shouldn't do that but Clayton and I both were sitting in the room when this all happened and we felt that'it was in excess of what taxes. Chmiel: Next time say it. Brad Johnson: I know it. Well, just remember it.. So they did agree and it wasn't him but we were aware of this project and it is'over taxed and they're just caught, like he just said. He can't, Tom come in and change it like we're doing most apartment buildings. And in addition to that, the average value in apartment buildings has dropped 20~ since'they constructed this. So I wouldn't be too concerned about your other projects. Maybe unless the one Todd mentioned but this one always has had a, we could see it coming. Horn: Let me ask this. Todd, is.there's way we could'negotiate that if there are some things below standard from a maintenance standpoint, that we could get an agreement that if Ne did this, those could be brought up to standard? Gerhardt: Sure. Horn: I think what we'd like to do is have staff take a look at this and see if there's some things that they 'would recommend to be brought uP from a maintenance standpoint as a compromise for doing this. Gerhardt: I don't think David would have a problem if you made that a part of your motion because he made those statements that he'll let his building start to deteriorate. They won't do that because they have the tenants in the buildings then and that just hurts their revenues. They've made dramatic changes in the last couple of months already over there. They've repaved the parking areas. I don't know about the interior things. I think they've done some' replacement of carpet and heating elements. But there's something David and I and the building inspectors, maybe we could walk through and you could give us a plan of what you're capital improvements in the next couple of years would be in upgrading that facility. It'd be appreciated. Workman: And I think Clark hit on the head. What maybe I was trying to get out is that if Ne do this, we lose taxes. We lose all sorts of'other stuff and what are we going to get? What are we going to get? Are we going to see people get lower rent over there? Is it going to improve the project at all or is it just going to, as Ne say, keep this partnership in business. And then they may not. Gerhardt: You're putting $20,000.00 to $25,000.00 back into their pocket each year with hopes that they will re-invest that money in improving the Housing and Redevelopment Authority Meeting August 20, 1992 - Page 26 facility. It's like where you used to live-in the townbomes. If you've got a good association that has a lot of money, they will re-invest. They will paint your place. They will do a good-maintenance. There's a lot of townhouse developments that don't have 'good associations and if they're not plush with money, they just don't make the improvements. Workman: But we don't have a guarantee that they're going to do that. Put $20,000.00 or $30,000.00 back into somebody'm pocket and they go to Vegas. Horn: With this we'll at least get some guarantee that any improvements that need to be made, will be made. Workman: I think that's the key. Horn: Is there a motion on this? Chmiel: So moved. Horn: With the recommendation? Chmiel: With the recommendation as well as the condition that you so indicated previously. Workman: What was the, I guess I'd like to know what the detalils of that. Horn: Could we get a second first and then discussion. 8ohn: Second. Horn: Okay, further discussion. Workman: I mean are we going to approve this and have staff take' care of the details on what should and shouldn't be done? I mean are we talking about paint, or what are we talking about? Gerhardt: Well I don't know what the condition of the inside of the building is. From the outside. Chmiel: Exterior wise I think .it's good. Workman: I'm not going to worry about the linoleum. I mean I~m worried about appearances. Gerhardt: We haven't received any complaints from any of the tenants over there. We have received complaints.of tenants that live in other apartment complexes in town but, David you have plans of making, I don't know what problems there might be. David Vanney: In terms of the interior, there were some moisture problems that were caused by...windows. There's a lot of windows there so you need a lot of weather stripping just to form a better seal. That's one of the interior problems. Another interior problem was... Housing and Redevelopment Authority Meeting August 20, 1992 - Page 27 carpet was deteriorating quite quickly. I guess those are just two things that come to mind. I don't have an exhaustive list but I can say this, and that is when we were dealing with Orlin Schafer, we'had identified approximately, if the number's correct, about $60,000.00 of current maintenance items that needed to addressed and I think the bulk of those items have already been taken care of. But the thing that this partnership has learned, the maintena~e problems are ongoing and so there.just has to be more... Horn: I think the way the motion reads is that the staff and building inspector would accompany you on an inspection of the property and you would submit to them then what your proposed maintenance plan would be. Chmiel: Yeah, that'd be under staff direction. Gerhardt: Yeah, and between David, you and I and Steve Ktrchman, we can walk through some of the units and then come up with a list and then maybe you can provide us an update on a yearly basis of some of the maintenance thing that you've done over there. Chmiel moved, Bohn seconded that the Housin~ and Redevelopment ~uthortty reduce the minimum market value of the ~est Village Townhouses to $2,050,000.00 and that the partnership dismiss its.property tax petition for taxes payable in 1992 and allow the new minimum market value of $2,050,000.00 be established for taxes payable in 19~93 and into the future. Also, that the staff and building tnepector would accompany the applicant on an inspection of the property and the applicant should submit a maintenance plan proposal. All voted in favor and the motion carried. Brad Johnson: Could I ask one more question about this? Horn: Sure. Brad 3ohnson: This is, for him it's an important issue and we've been working with the Planning staff on the access that they currently have. They currently have a public road that runs, if you recall, that's a public road that you see coming in there. I run my dog around there quite a bit to see what it's like and what's happened is that that road is not really totally up to standard of a road and the place, when we decide not to bring that road all the way through, one of the problems that project has, it has a lack of parking around the garages and just pushing people out. So one consideration you might do when you talk to the planners is that when the public access is not needed all the way through, that maybe, and this is back to the corporate trough here. Is that a public project that maybe the MA would sponsor is that that, right now, you know how you require most of your projects to have internal storm water drainage and stuff like that. This is done like a house. Your drainage is not out of your parking lot. The parking lot drains to the exterior rather-than into the interior. And so if you walk around there and you've got water all the way around the buildings and' it's... (The taping of the meeting ended at this point.) Housing and Redevelopment Authority Meeting August 20, 1992 - Page 28 Norkman moved, Chm[el seconded to approve the HRA Accounts Payable dated 8-10-92 as presented. Al! voted [n favor and the motion carried. Chmiel moved, Bohn seconded to adjourn the meeting. All voted tn favor and the motion carried. The meeting ~as adjourned. Submitted by Don Ashuorth Executive Director Prepared by Nann Opheim