1990 10 18HOUSING AND REDEVELOPMENT AUTHORITY
REGULAR MEETIN~
OCTOBER 18, 1990
Chairman Horn called the meeting to order.
MEMBERS PRESENT:
Jim Bohn
Don Chmiel, Charlle Robbtns, Clark Horn, Tom Workman and
STAFF PRESENT: Todd Gerhardt, Asst. Executive Director
APPROVAL OF MINUTES: Chmtel moved, Workman seconded to approve the Minutes
of the Housing and Redevelopment Authority meeting dated September 18, 1990
as presented. Ail voted in favor and the motion carried unanimously.
VISITOR PRESENTATIONS: None.
UPDRTE REGARDING THE MRRKET ~ DEVELOPHENT.
Gerhardt: This meeting regarding Market Square is an update by Brad
3ohnson and Clayton Johnson regarding their negotiations with the new
grocer from Gateway Foods and where we're at to date on negotiating and
signing the development contract. I'll open it up to either Clayton or
Brad.
Chmiel: Can I ask just one question?
Horn: Sure.
Chmiel: Who dances and who sings? 3ohnson and 3ohnson. It sounds like an
old vaudville team.
Brad Johnson: Just remember Clayton Johnson is not my brother.
Horn: And you don't sell floor wax right?
Bohn: Or band-aids.
Brad Johnson: Mr. Chairman and members of the HRA. I'll try to give you
just a brief update and answer any questions that you may have regarding
the market square development. Basically Tom and Mayor Chmlel are aware
that we made.a presentation to the Council a couple of weeks ago where they
approved the new site plan for the market square development which to
anybody there was very little change other than the size of the grocery
store. The basic objective is that with the Gateway opportunity that we
have, they would like to put in a 35,000 square foot store expandable to
45,000 and the site will accommodate that with very few modifications. The
reason they want to come with a store of that size is they feel that will
be more competitive and maintain the integrity of the center for a number
of years and the type of store that they're proposing is a Festival Foods
Store which, as I understand it, and I've been in some but I don't go into
Rainbows, is the same as a Rainbow inside. Once you're in, you feel like
you're in a Rainbow store for those of you that visit the Rainbow. Their
pricing is very competitive to the Rainbow. The Rainbow is just a little
bit tinst higher than a Cub Store would be and that makes them very
competitive with any of the standard supermarkets and their customers seem
to be people who want to pay a good price but also want to get in and out
Housing and Redevelopment Authority
October 18, 1990 - Page 2
of it within a 20 to 30 minute period and that's kind of the market they
seem to be after. They've also selected to put most of the Rainbow stores
in the 494 circle and inside of that and they're using the Festival stores
to be on the outside ring such as Handover, Forest Lake, Chanhassen. Places
like that. Probably Shakopee. Places like that. Where they are in our
negotiations with them is that the package is as right today down at
LaCrosse and we're just going through the process. This is sort of
bureaucratic. The size of Gateway is the same size as Super Value so they
have, they're owned by a company called $cribbner and so they have various
levels of approvals of this type of a credit. Where we are is it's been
run up the flagpole shall we say and supposedly approved where it had to be
approved and now we're going through the paperwork process of validating
it, remembering that they're making a commitment to about a 4 million
dollar credit. In other words that's about, they have to guarantee the
mortgage for 20 years so that's about a 4 million dollar guarantee by the
company. They have found and very quickly in their minds, found an
operator. Lyle King who is currently operating 3 stores for them and he is
out of South Minneapolis and he already has a Festival Store. I think on
the banking side, the bank has most of the stuff they currently need and
they're waiting for the copy of the lease from Gateway. It is Just the
process. You know we set these goals. This week we had hoped to have a
copy of the lease but it took them so long to put the package together that
the package just arrived on Monday so now our goal is to get a copy of the
lease on Monday and have next week to work it out. As soon as the lease is
signed, the banks are ready to close. We're going through all the legal
work necessary to prepare the documents so we're fast tracking it and
that's sort of where we are. We're putting forth our best efforts to
accomplish that wouldn't you say. As I say, you never know.
Clayton 3ohnson: Yeah, it's just the formality of the Gateway lease that's
the missing link at this point.
Brad Johnson: And those of you that work for larger companies know that
that sometimes is not a 10 minute problem even if everybody on the lower
level really makes the decisions for it.
Robbins: Now Brad just some questions. You had mentioned that the size of
this store to be projected was 40,000 square feet?
Brad Johnson: 35,000 square feet. Nas expandable to 45,000.
Robbins: Assuming 35,000, that's a lot larger than the original plan.
Where would the space come from? Would it come from the.
Brad Johnson: Well we had an expansion space potentially, if you recall
correctly.
Robbins: What I am getting back to is the original drawing we had that
showed your concept drawing of the various stores. Where's that coming
from? Where's the space coming from?
Horn: The expansion.
Robbins: I saw it. I'm just making sure whether I saw that.
Housing and Redevelopment Authority
October 18, 1990 - Page 3
Brad Johnson: Well, it doesn't look a lot different because it's a little
bit deeper and we had lO,O00 approximately square feet of expansion space
for the original grocery store and then we had another 10,000 square feet
to the west that we were not developing at this time so you combine those
two and we're up around 45,000 square feet. $o we just took up a blank
space that we had next to what was going to be the drug store. Moved the
drug store into that space and created the necessary space and also by
deepening the site plan. And actually at the Council meeting, if you
recall, I showed you both plans and you really had to look at it to figure
out what the difference was. We changed none of the architecture so far.
Their signage is different. Obviously a Rainbow looks different than a Cub
so we'll come back later and work through the signage issues that will
probably evolve and things like that but that would have to go back to the
Planning Commission. There are some fast track things we're just saying
let's just come back and get that straighten out.
Chmiel: One additional store was just consummated to Festival and added
into that.
Brad 3ohnson: Pardon me?
Chmiel: I said one exact space that you removed was added into Fesitval
and that's all that really took place.
Brad 3ohnson: That's right. And the fact that we moved it over and we
were able to pick up about another 3,000 or 4,000 square feet. We had
sufficient parking on the site to accomplish what we needed to do also.
Horn: Could you or Todd or the Mayor update us on the Council action.
Brad 3ohnson: Well the Council approved the site plan which is what we
came with with some, maybe you can read what they are but with some
requirements. Isn't that correct? The list of all the requirements we had
before.
Gerhardt: The planning report here.
Chmiel: Zg conditions I think.
Horn: They're all in the report?
Chmiel: Yeah.
Brad 3ohnson: There wasn't really anything new in the conditions as I
recall.
Horn: You agreed with all of those?
Chmiel: No, there wasn't any changes at that time.
Gerhardt: Well there was one that they didn't agree with and that was the
display stand in front of Bernie's.
Horn: Which?
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October 18, 1990 - Page 4
Gerhardt: A display stand in front of Bernie's store. Council voted that
not to be included. That no display be outside any of the stores.
Robbins: Brad, what is your opinion on terms of working with Gateway/
Festival in terms of their, I guess the old drawing we had would show the
site the way it was developed in terms of the architecture if you will. Do
they agree with that...
Brad Johnson: What we have is in the signage because they have a different
sort of a style of sign than Super Value does. So we're going to have to
just come back and work our way through that.
Robbins: But as far as our architecturally, they're staying within the
confines that we originally saw the plans?
Brad 3ohnson: Rs much as they can except for the signage area.
Robbins: Well the signage but in terms of the...
Brad Johnson: We'll be back probably with some modifications to the front
of their building because obviously, as ! said a Rainbow building. They've
done the sign different and we have to figure out how to adapt their
signage to this building.
Robbins: What is the overall timing now? Next week or the next couple
weeks?
Brad Johnson: We're working on it nearly 24 hours a day. I can only move
as fast as their particular system works and I called, I'm working my way
up. I can now tell you that the chairman was here in town today and he's
on his way back and because he wasn't down there he couldn't look at a
package today. We're just trying to track it along and as far as I know,
on Monday they should get the go ahead to release the lease to us to
review. I told them I'd just come down and work through the lease. I can
make most of the basic decisions so I should be able to work it out with
them. So we hope to get the lease done next week.
Horn: What was Bernie's reaction to eliminating any outdoor display?
Brad Johnson: We were the one that recommended the outdoor display and as
I said in the meeting I feel it's needed because I think one, he's going to
have outdoor display anyway whether it's permitted or not and this gave us
a way of sort of containing it. I thought what we decided was the proper
way, that is a permitted use in the underlying zoning. .To display
merchandise for sale outdoors if you have a conditional use permit.
Horn: Does he have a conditional use permit now?
Brad Johnson: No. No. I don't think so.
Horn: He's doing it now.
Brad Johnson: Right.
Horn: But most lawn and garden stores do.
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October 18, 1990 - Page 5
Brad Johnson: So all we were thinking about, and we'll come back. Bernie
was happy with that. We'd come back and work our way through the whole
system and give the complete rational as to whether that's a good idea or
not for his business. Let's do that es one issue as a condition, or I
guess it's not a conditional use permit because it's a PUD so we come back
and try to modify the agreement so that one location and I guess we'll try
to make a case for Bernie and Bernie will try to make a case that this is a
good idea. Rs potential owners of it, we think it's a good idea because we
think we're going to have the need anyway. And he is in a corner space
down there so it wouldn't hurt so we were just trying to identify some nice
way of allowing that to happen under a controlled environment.
Horn: Although the 7 Hi Lawn and Garden store does. The Eden Prairie Lawn
and Garden store does.
Brad Johnson: Yeah. It's just not a permitted use under our PUD.
Robbins: I don't see why that would have anything to do with the HRA.
Horn: It doesn't.
Brad Johnson: It doesn't. I'm just answering questions. It just goes
through the process.
Chmiel: The Council's already done that.
Brad 3ohnson: I didn't hear the Council say it was a bad idea or good
idea. They just said it wasn't proper for us to bring it up at that time
and we were glad to remove it.
Robbins: Brad, just more of a general question. Does Festival, for lack
of words, the word isn't threat but have more of a style of products where
your other tenants would be more threaten by what they sale? I mean are
they more of a whole service store? More discount or what?
Brad 3ohnson: They're more discount but they would not necessarily compete
with our other tenants. The one thing the Festival will do is bring 3 -
times as much business.
Robbins: What?
Brad 3ohnson: It increases the volume of business they say 2 to 3 times.
Horn: Do you have an estimated ground breaking date at this point?
Brad 3ohnson: Each day. I would say now, as the paper quoted me today,
was the let of November. First part of November and they also said this is
like a minefield. You wake up in the morning and you make one move and it
can blow up in your face. $o we're still alive but we're moving along and
we'll try to keep everybody informed. I know you don't want to be involved
in lease agreements and it isn't really so much of a negotiation right now.
It's really the process.
Housing and Redevelopment Ruthority
October 18, 1990 - Page $
Horn: So you're not going to lose a season? I mean you can get it started
enough this season?
Brad 3ohnson: That's our pIan believe me. I mean we've gone too far.
We're doing everything we can. Don mentioned in his thing. We just spent
another $50,000.00 betting that we'll get this thing done in the next
couple of weeks.
Horn: If we did get started on the first, when would you plan to have it
open?
Brad 3ohnson: The earliest we can pave the parking lot is approximately
May lSth. So we're thinking like Suns lSth. In other words, we could have
everything done and the stores all done so we're quoting to the tenants
that they would take possession in the month of May probably and then open
starting in 3une. Some tenants will open sooner than others. Some tenants
have seasonal requirements like the hardware store and Bernie. Some are
just anxious to get over there like the drug store is.
Bohn: What's the drug store? You have a drug store?
Brad 3ohnson: Center Drug.
Horn: What's the date that we have on Bernie's current agreement? March?
Robbins: Yeah, March 1.
Horn: So we're going to have to amend that.
Brad 3ohnson: And I've talked to the people who are, I think Mr.
Copeland's going to come over and sit down with Don and Todd to work out an
arrangement so that all the agreements are floating around relative to
Bernie and his end are worked out. Everybody seems to be fairly cooperative
over there.
Horn: Good. Well sounds great.
Brad Johnson: Well it sounds great but like I said, we have a little bit
of work left to do.
Horn: Well it sounds better than the last meeting.
Brad ~ohnson: Oh yeah. I wasn't here. The staff has, the paperwork is I
believe all prepared. We've got some minor little documents that have to
be taken care of but with the urgency of a closing you know, when all these
actually get done but I think most of the thing is now, from the City's
side ready to be completed and we're working our hardest to get it done.
And like I say, we can't move certain things. Some people know that we
haven't signed because we now have a paper in town. We've not signed
certain things so some of the tenants want to wait until the grocery store
is signed. They did sign a letter of commitment and did all the things
that you would do normally up until now.
Horn: So our action tonight is to approve the revised development
contract?
Housing and Redevelopment Authority
October 18, 1990 - Page 7
Gerhardt: Right with the Ievel of subsidy being reduced from where, if you
remember, that the first agreement had a subsidy that took into account the
amount of sales that would occur with Super Value. That's changed now into
a lump sum dolIar amount up front and that has been changed in the
development contract that's attached to this report. And the second action
you would have to take tonight is the site plan review process. You have
control over that and the plan has changed and you should have gotten the
revised plans and I'II take a motion on that too.
Robbins: And do we have control on the lump sum?
Gerhardt: On the dollar amount of the lump sum?
Robbins: Not the dollar necessarily but the timing of the award in terms
of whether you do it now or stage it out for 2 or 3 years. It does make a
dollar difference.
Horn: Right. Has somebody done a present value calculation difference on
these two approaches?
Gerhardt: Yes. Sid Inman from Publicorp as mentioned in Don's report did
a performs of it and it did faII into the criteria'of making it.
Horn: It's going to move the numbers significantly closer together though.
Gerhardt: Yeah. It's not a big difference In dollar amounts from being
reduced from the 660 to 500. I would say almost equal.
Workman: What exact page of the contract is that on?
Horn: What was that question?
Workman: The lump sum.
Horn: Where is it on the contract?
Chmiel: I don't think I have seen it in there.
Gerhardt: It's usually on page 13.
Brad Johnson: It's on page 9...
Gerhardt: It says $700,000.00 but that includes the purchasing of one of
the outlots that the HRA agreed to for approximately, it was $200,000.00.
Brad Johnson: No. Actually what the original contract we had with the
City was to substitute to the grocery store.., land write down and the
purchase of a lot which we'll repurchase back from you.
Workman: I thought it was actually two lots.
Brad Johnson: No, it's actually just one lot and an easement across a
lot...and that's, these are all things we had worked out previously in the
previous agreement. The only change here is shifting 616 to basically a
rent buy down away from the concept of.
Housing and Redevelopment Authority
October 18, 1990 - Page 8
Workman: Sales performance?
Brad 3ohnson: Sales performance. This is more of a standard way of doing
it and most people have land write downs because they put them on the land
write downs so we can reduce our cost. So we can lower the rent to the
tenant to make it attractive for him to come in. That's more normal rather
than direct subsidy of a business.
Chmiel: Yeah, and that's over a 20 year period too is it not?
Brad Johnson: Yeah. It's a 20 year savings to them of significant
doIIars. For your information I think...first of the year $700,000.00.
Previously we were subsidizing that and that's just part of being.
Horn: Well yeah, if you have a bigger operation you're going to lose more.
Brad Johnson: Yeah, but they're not coming to us for any upfront help with
that. They just feel the lease, they're comfortable with it and we make
the project work based upon that.
Horn: Any other questions?
Wot kman: None.
Robbins: I would move that we adopt the agreement as stated in the memo in
item 2, update regarding Market Square development.
Horn: Okay. For the development contract as stated?
Robbins: Yes.
Horn: Is there a second to that motion?
Wot kman: Second.
Robbins moved, Norkman seconded that the Housing and Redevelopment
Authority approve the revised site plan, reduced level of subsidy for the
development contract and the goals as stated in the staff re, ri dated
October 8, 1990. Rll voted in favor and the mot[on carried unanimously.
CONSIDER ACQUISITION OF THE LOT LYIN~ EAST OF THE ~$ SITE.
Gerhardt: Attached for the HRA's consideration tonight is a request from
Brad 3ohnson regarding three tracts of land located around the existing
Hanus Body Shop. Included in that tract is a westerly piece called Tract 1
and two tracts lying east called Tracts 4 and 3. Included in the report
staff recommended that the HRA look at purchasing these properties and
establishing a true market value in this area of approximately $2.30 a
square foot. The HRA is in condemnation right now with the Apple Valley
and Taco and that makes a stronger case as we get into court procedures
with these two entities, And staff has aIso recommended that this aIso
gives the HRA control of this area and what could be done and also keeping
it out of the controi of Hanus in trying to expand his use there if he
should come in and buy those parcels back from the Federal government.
Because these pieces are within a tax foreclosure right now and if somebody
Housing and Redevelopment Authority
October 15, 1990 - Page 9
would come up with the money to alleviate this debt, they could come in
there and develop those parcels.
Horn: Does the City have that same right?
Gerhardt: To come in and develop?
Horn: Under condemnation? Could we buy them from the tax?
Gerhardt: Yes. Brad has controlling interest on those parcels right now.
A partnership.
Brad 3ohnson:, 2 or 3 years ago I got control of those three parcels. As
you know I've come with a couple proposals and have not had necessarily
successfully completed. I'm getting pressure now finally from the lawyers
for the people that represent the IRS. This has been a bankruptcy
situation and they accepted my settlement at that time. I did it just to
get control and that was back when we were trying, of that whole area so we
could move Bernie. And originally so we could move Bernie and Loren and
all those guys over there. At this point we've actually got the Hanus
building itself at the time we took it was paying no rent and it currently
is paying a very reasonable rent. Hanus himself was proposing moving out
in December and a company called Toll Welding Supplier is moving in which
is a nice clean retail sort of operation to take over his space. So that
eliminates a lot of the...with parking the car and then you'd have space in
the back. Then I've given a redevelopment scenario for a development to
come in and we purchase the land back. I don't know if you're aware of it
but by McDonald's, it'd be a comparable site, the owners are asking $5.00 a
square foot and nobody's selling anything but I think in the $3.00 to $3.50
range that's a reasonable resale.
Hot n: Questions? Don.
Chmiel: Yes. If we go through with this, I think we should have or
contingent upon our review of our attorney to see if there's any federal
taxes relating back to that particular property.
Horn: Yep.
Gerhardt: That would be staff's recommendation.
Chmiel: I just want to make sure.
Workman: We're talking about purchasing Tract 3, 4 and 1 right? But this
talking about purchasing the Hanus land.
Brad 3ohnson: I call it the Hanus land because...contract through Hanus.
Workman: So it's not the actual body.
Brad Johnson: The Hanus building is owned by...
Gerhardt: And they entitled to Tracts 1, 3 and 4 also?
Housing and Redevelopment Authority
October 18, 1990 - Page 10
Brad Johnson: No. The family Hanus is. ! bought it under contract for
deed or Lotus did so I'm the equitable owner. Hanus is the fee owner.
Gerhardt: How long is the contract good for?
Brad 3ohnson: 80 days.
Horn: Other questions or comments?
Robbins: I guess I was the one that had raised the questions last time
about the, in terms of you know do we want to become landlords for the sake
of being landlords? In reading this I can see both sides of the argument.
Do we acquire the land or don't we acquire the land. In terms it does give
us the control of it. In terms of assuming we acquire the land and Todd or
Brad or Clayton, obviously you're better than we are to interpret this but
I think it goes back to what Don was saying. We want to make sure that if
we acquire this that, and free and clean when we have title to this
otherwise if it does lean on it, we don't have a whole lot. We're faced
with the same problem Brad is.
Gerhardt: You're correct. And that's the recommendation of Mayor Chmiel
was that staff and the City Attorney be directed to review thos documents
to assure that that would not occur.
Horn: How long would that take?
Gerhardt: I would say within 2 to 3 weeks.
Horn: So our action then this evening would be to direct staff to explore
the feasibility of this proposal?
Chmiel: So moved.
Horn: Is there a second?
Robbins: Second.
Chmiel moved, Robbins seconded that the. Housing and Redevelopment Authority
direct staff to explore the feasibility of acquiring the land lying east of
the Hanus building site. Ail voted in favor and the motion carried
unanimously.
Horn: It isn't on here but this average comes out to $2.71 a square foot
developed which is more than what we're proposing. Any other comments on
that item or questions?
PRESENTATION BY TOM MORK REGARDING CROSSROADS N~TIONiM- B~I~K DEVELOPMENT.
Tom Mork: Thank you. Good evening. Appreciate the opportunity to visit
with you tonight and give you an update on Crossroads Bank. I also would
like to apologize for not having invited myself sooner. I guess having
moved into the area I somewhat take it for granted that seeing some of you
on a regular basis suffices as an update and that's an oversight on my
part. I apologize for that and I will be here every HRA meeting if you'd
like me to in the future to keep you better informed about how we're doing
Housing and Redevelopment Authority
October 18, 1990 - Page ll
on getting the tank going. This experience of starting Crossroads Bank has
certainly been an interesting one for me. ~t's been one filled with bad
news and good news. The bad news of course is that we don't have a bank
going yet and I'm not a banker yet. I'm still a banker in waiting. The
good news is though that I'm here tonight to tell you that we are as
committed as ever to having the bank at West 79th Street and Market Blvd..
We've not waivered on our commitment to getting the bank established or to
the Chanhassen area one bit. In fact quite the contrary. As I think you
know, I have moved to the area. My wife and I just signed a purchase
agreement on Friday to buy a home here so I intend to make that my firm
personal commitment to being in this area to be a banker. But that still
doesn't mean that I have a bank to open tomorrow. But, I do want to tell
you tonight that we are making progress. It may not seem like it to people
looking in from the outside. Ne have certainly been stymied in some of our
efforts to get the bank established by what we would consider forces beyond
our control. Those being a regulatory and an economic climate that has
turned somewhat against us at times in the past 2 years. I would have to
say somewhat tongue in cheek that if our future success is anything like
our timing on getting a new bank going, I sometimes wonder about it but we
probably could have picked a better time to start a new bank but
nonetheless we're far enough down the path that we're not going to turn
back. Ne are negotiating to have a bank open. It will be Crossroads Bank.
I am not at a great deal of liberty to give you all the details of it but I
will tell you that I spent the entire day today in negotiations and I'm
hopeful that within the very near future, maybe a week, maybe 2 weeks but
certainly I would hope that by the next HRA meeting I can come back and
tell you that we are ready to move ahead. I am very, very confident that
that indeed will happen. I don't have any other prepared statements for
this evening other than to answer your questions to the best that I can but
I am here to tell you that our commitment is, well like I said, not
waivered one bit. Ne regret that we don't have the bank open yet. ! don't
think anybody is as upset about that as we are. Ne have experienced
certainly plenty of expense outflow on this enterprise and we hope to have
an earning asset in place very quickly. So I would just open up to
questions that you might have that I can answer and I'll certainly do my
best.
Horn: Without divulging anything that's proprietary, would you say that
the delay has been caused more by the regulatory agencies or from financing
the endeavor?
Tom Mork: They tied in. Ne were 65~ complete with our financing
requirements when we encountered a delay with the regulators that certainly
hurt our efforts. And while that is somewhat proprietary, needless to say
we spent a great deal of time communicating with not only the office of the
Comptrol the currency in Washington D.C. but with the Federal Reserve Board
of Governors as well. This mainly occurred approximately a year ago when
we were in the middle of our fund raising and was going exceptionally well
and that was about the time that Congress was passing the Bailout Bill for
the $ & L industry as well and the rules changed while we were in the
middle of our fund raising effort so we've had to deal with that setback.
It's not discouraged us enough to make us stop trying but we have had to
adopt some different kinds of strategies.
Housing and Redevelopment Authority
October 18, 1990 - Page 12
Horn: At one time I believe we were under the impression that you had
received the go ahead from the Regulatory Commission.
Tom Mort: We had our Charter approved and we still do. Our Charter is
still in effect. That has actually been in effect for 18 months now. $o
that is exactly right. Our Charter has been approved and still is there.
Horn: Any other questions?
Bohn: Would you be moving into a temporary structure on the site?
Tom Mork: Correct. I'm glad you brought that up. We received approval
from the Council for both our permanent building and our modular building.
However, it was very obvious to us that there was some displeasure with the
nature of our modular building and so we have been talking with the same
supplier to build us a building that would add an additional 1,000 square
feet. It would be brick. It would have a hip roof and it would have a
much more attractive sight lines and when we get to that point, we will
come back in all likelihood to have you take another look at what our plans
are in that respect. The plans for the permanent building have not changed
at all. They are still in place. Gut we are sensitive to the fact that
there was some concern about the modular building and in response to that
we would like to upgrade that and make it a little more visually pleasing
for the community.
Chmiel: Aesthetically pleasing.
RobbinG: How long do you expect that building, that temporary building
would be there?
Tom Mort: I think the contract that we have says that it can't be there
for any longer than 2 years. I believe that's the way.
Chmiel: What time does that time clock start moving?
Workman: 2 years goes fast.
Tom Mork: Yeah, tell me about it.
Gerhardt: 2 years as soon as we close.
Tom Mork: Yeah, and in that regard, approximately 2 weeks ago we asked our
attorney and Lindquist to check with John Dean who I think is still with
Holmes and Graven but be is still the attorney representing the HRA on this
particular project to make sure that all the title work is in place because
we have every intention of closing on it. ! think that was the one
remaining open item on the closing of the property.
Chmiel: And we have a closing date on that property, what's the time
frame?
Gerhardt: Well the purchase agreement that we have between TC & B and the
HRA ends January 16, 1991 so we have not established a closing date and I
haven't heard from you or your attorneys regarding a potential date.
Housing and Redevelopment Authority
October 18, 1990 - Page 13
Tom Mork: Yeah, I don't think a potential date has been established
because I think up until the last time I checked, which was about 2 weeks
ago, I don't think we knew exactly where the status of the title work was
but I presume that's in pretty good shape.
Gerhardt: The title work has been completed and we do bold title. Clear
title to the property.
Tom Mot k: Okay.
Horn: Other questions? Thanks a lot Tom.
Tom Mork: Thank you for having me. I appreciate it.
Horn: Keep us posted.
Tom Mot k: Sure, I'li do that.
Workman: Thanks Tom.
UPDATE REGARDING THI~ WEST 78TH STREET DET/~HHENT IHPROVEMENT PROJECT.
Gerhardt: Included in your packet was an update on the West 78th Street
detachment project that is located on the western edge of the downtown
area. City Council at their second meeting in September approved and
reinitiated the West 78th Street detachment project. This project has been
delayed over the last couple of years for a variety of reasons. The
upgrading of TH 5 and how those improvements may impact West 7$th Street.
Mr. Burdick and his request of having that street relooked at in providing
a free right in, right out in a private street that would serve his
property and that's about it. And the updating of County Road 17 as it
impacts the West 7$th Street detachment. Staff felt it was important that
the HRA were updated on this item because it is within the redevelopment
district and does affect some of the property owners who were looking at
providing special assessment assistance. One in fact was the 3ames Company
who had a 30,000 square foot retail center proposed for what would be that
island section out there right now.
Horn: This doesn't mean that our bill is getting higher with BRW because
of the delay does it?
Gerhardt: No.
Chmiel: Good point. Thank you. I like that.
Horn: Any other questions?
Chmiel: The only question I have is, has anybody talked with Abby Bongard?
8eing in the house where she's at. If that delay's going to be another
year, to see if she wants to stay there longer than that because she's had
a lot of concerns with the move that she might have to get out.
Gerhardt: Right. The HRA should also be aware, Mayor Chmiel's talking
about the intersection of TH lOl and TH 5 improvements were planned to
Housing and Redevelopment Authority
October 15, 1990 - Page 14
occur this upcoming spring of 1991. That has been delayed to the spring of
1992 because of, if you're in there tearing into that intersection as well
as the intersection of Dell Road and TH 5, you're interrupting the two
means of transportation and access to what is Redmond Products, the Press,
all the businesses along there and to have both intersections tore up just
is not, creates a traffic problem for that area. So that project has been
delayed to 1992 for that reason but it does work in conjunction with the
TH 5 improvements for that area. And we are continuing to, with
condemnation with the Taco, Apple Valley and the Meadows Apartments and we
have been working agreements with all those people in buying up the leases
with the Meadows Apartments so when they do become vacant, we then step in
and buy those so'that reduces our cost for relocation for those tenants.
Workman: There's really no way we can get all this done? I'd rather see
that done next spring. I mean we're in that bad of a sitdation that we
couldn't possibly get them accomplished at the same time?
Gerhardt: It wouId just have havoc in that area. You're ripping up the
bituminous. You're going to have a lot of people driving on gravel and
with the amount of semi's with Lyman Lumber and the distribution out of
there. Redmond Products and the amount of distribution from there and The
Press, it would be a mess if you didn't provide at least one hard surface
coverage to the site. From what Gary tells me, everything will run
smoothly as we go into 1992.
Workman: Why couldn't we build a temporary access inbetween those two
intersections?
Gerhardt: With the amount of traffic on TH 5, you need a controlled light
situation and placing another light in there would Just more delays and
more potential for accidents.
Horn: I think we need to push the Highway Department again to allow us to
run TH 101 down to Dakota because of this delay. You know it's been, it
creates a problem in downtown for us that Ne didn't think would go on this
long and it seems to me based on the fact that first of all TH 5 is being
delayed which really goes back to this intersection, we should push them
again to move that. We don't want to wait until 1992 until we get this
traffic out of our downtown.
Gerhardt: I'll raise the question to Gary and see if we can't get a letter
off requesting that again. But the important thing I think that alleviates
all this is getting that Dell Road intersection done. That will have the
traffic signals in there and that will be the truck route to serve those
businesses.
RobbinG: What's that date for the Dell Road?
Gerhardt: Dell Road will be this coming spring of ~991. They're doing a
lot of the cutting work and filling of that area right now.
Chmiel: They're moving rather quickly.
Gerhardt: And Eden Prairle also has an interest over there. They've got
proposed developments for both sides of the road that need to get done and
Housing and Redevelopment Authority
October 18, 1990 - Page 15
in place. They've delayed them also for those.
Horn: That helps the businesses over there but what does it do for getting
traffic out of our downtown?
Chmiel: Not much.
Gerhardt: Nothing for traffic coming from the west heading east but the
traffic coming, using TH 5 to get to 494 where a lot of Redmond has
warehousing space over in Bloomington and The Press and that, they use the
highway 494 so for those businesses it helps. It doesn't help the traffic
coming from what is TH 101 south and the traffic coming from the west to
the east.
Robbins: Will the construction of either, let's be somewhat pessimistic
and say that the Dell Road is delayed. Let's assume that it doesn't start
really firm construction until next spring or next summer, will that
construction as well as the TH 101 realignment, how will that, obviously
it's going to cause a problem with the Hazeltine because on TH 5. Are we
going to try to push that through to try to squeeze them inbetween the
events or is it going to be going on during the events or what's your
thoughts Todd?
Gerhardt: Highway 5 is, Tom probably could update you more with his
activtities in that program but TH 5, MnOot is more than aware of Hazeltine
and the Open coming and they've taken action and planned for that so the
lanes will be open. I don't know if they're going to delay construction
during that week.
Robbins: They'll either have to accelerate it or else hold it back. One
or the other.
Gerhardt: There will be, I'm sure some kind of delay there. You don't
want one lane traffic in a section where you're diverting people over. I'm
sure they want a good flow of traffic through there but !'m sure they've
taken that into account. But there will be a lot of dirt being moved
around and that occurring. They will be under a traffic construction
project there and there will be some temporary lanes that will not be
perfect. I'm not going to sit here and say it will because you've got a
major project out there. A lot of work needs to be done.
Horn: I get very anxious to get transportation projects moving but I don't
want to start it prematurely so we don't have a good overall, or at least
as good a plan as we can get. We know it's going to be a problem. I think
we should push MnDot again to temporarily route TH 101 down to TH 5 because
the delay is becoming very intolerable for our downtown.
Chmiel: Yeah, it's causing a lot of congesting and problems within those
intersections and I agree with Clark in that aspect of it.
Horn: Anything ~lse? Now it's time to talk about the acquisition of the
Pryzmus property.
Housing and Redevelopment Authority
October 18, 1990 - Page 16
CONSIDER ACQUISITION OF THE JOHN PRYZMUS PROPERTY.
Chmiel: I think we also have to, don't we need some kind of recommendation
we have to have on this?
Gerhardt: I think Don's memo to the HRA really lays it out in a lot of
detail. He gets into the history of the entire parcels over there and the
acquisitions of both Pauly and the Pony in figuring purchase price per
square foot for that area. And similarly he did negotiate with 3ohn. 3chh
is approximately 5~, give or take, higher than what we had purchased those
buildings per square foot but staff would look to the HRA in some type of
direction of how to proceed with this acquisition if it is in your
interest.
Horn: The question is do we want to risk going after 5~ I guess.
Chmiel: Well you know, I was looking at the total amount of dollars as
we're looking at Kallestad's Pony and Pony being a little smaller and
Pauly's being a little larger and looking at the inbetween figure from what
Don has indicated here, that $350,000.00 which seems reasonable but I would
like to direct staff to go back to Mr. Pryzmus and offer $340,000.00. To
see whether or not he would be amenable to those dollars. I guess I'm
looking at just the difference between the Pony and that and thinking maybe
there's a $10,000.00 spread difference rather than $20,000.00.
RobbinG: Pryzmus' buildings got more easily rental space doesn't it?
Gerhardt: You're really looking at two different users there. You had a
restaurant/bar with an apartment above it where Pryzmus has got more office
and then he has the apartments up above.
RobbinG: And carpet space in the basement.
Gerhardt: Yeah so he does.
RobbinG: Todd, I guess in line with Don'$ questions...in terms of the
dollars and I can't speak for the dollars. I don't know whether they're
high, low or indifferent. I guess that's what I would be looking for in
terms of some type of comparison square footage of the other parcels that
were in question. In other words, can we have some type of a comparison in
terms of square footage? Frontage space if you will. Number of floors,
etc. in terms of so we can do what's called comparisons of properties and
see if in fact this ties out to anything because I can't speak to this
number.
Gerhardt: Well, and Don somewhat highlighted it. He didn't get into the
true dollar per square foot but.
RobbinG: No, I know but I guess I would just feel more comfortable having
something to compare to and people who own property know about
comparatives. Comparatives to me is exactly what it says. I'd like to see
what it was compared to.
Gerhardt: Well it is very, it worked out quite easily here that both the
size of Pauly's was quite a bit larger than the Pony and give or take a
Housing and RedeveIopment Authority
October 18, 1990 - Page 17
couple of dollars, the square footage acquisition price was similar.
Robbins: But I think that the uses of the properties could be different.
In other words, Pauly's property and Pony are, .ell they're being used
differently. They were being used differently than maybe Pryzmus' property
is. In terms of maybe the construction interior is different. Maybe the
reinforcements are different. Maybe the special uses permits if any are
different, etc, etc, etc. That could influence the cost. The price of the
land.
Bohn: Well the building that Pryzmus has got there is newer and a lot
better constructed than either one of those other two buildings. A block
building right?
·
Robbins: Those are my comments.
Horn: Does anyone have any comments on the Mayor's recommendation for an
offer? Or is someone willing to make a motion?
Robbins: I would motion that'we table until we have comparison of other
pricings.
Horn: We're not under any pressure on this at ail are we on time?
Gerhardt: Well, there are some other factors. Mr. Pryzmus is sort of
locked into a certain price on this and he has some other outstanding debts
that he has to cover so I mean that's where he came to his dollar amount
and then in comparing it to what, I mean those guys talk. They know how
much Pauly's sold for and how much the Pony sold for and I think Don's
recommendation was a good one. Just stay consistent with the Kalsted sale
and being similar. No, there's no pressure. John did call me and was very
interested in what action may be taken on this and I responded, I said I
didn't know. But it's up to you. I mean we can go in and get those.
Robbins: Did staff recommend that $350,000.00 was reasonable?
Gerhardt: I would think that we could get a purchase agreement on the
$340,000.00. John would probably jump on it.
Horn: Is there a second to the motion?
Workman: To Don's?
Horn: To the motion on the floor to table.
Robbins: The motion was to table until Ne see a review of other pricings
and comparison of the square footage of the other proximity buildings.
Workman: I'd second it.
Robbins moved, Workman seconded to table action on acquisition of the
John Pryzmus property for further comparison pricing. Robbins and Workman
voted in favor of tabling. Horn, Chmtel and Bohn voted against tabling and
the motion failed ~ith a vote of 2 to 3.
Housing and Redevelopment Authority
October 18, 1990 - Page 18
Horn: Is there an alternate motion?
Chmiel: Yeah. I'd like to make a motion that we direct staff to go back
to Mr. Pryzmus and offer that $340,000.00.
Horn: Is there a second to that motion? I'll second that motion for
discussion. Further discussion? If not I'll call for the question.
Chmiel moved, Horn seconded to direct staff to offer $340,000.00 as an
acquisition price for the John Pryzmus property. Chmiel and Horn voted in
favor and Workman, Robbins and Bohn opposed. The motion failed with a vote
of 2 to 3.
Chmiel: We can't table and we can't pass it. We'd better talk about it.
I think one of the things that I'm looking at is I'm sure Don has gone
through the geometrics as to total amounts of dollars and square foot and
that's what I'm taking into consideration because that's what those figures
were really derived at previously. In looking at what's being proposed for
the differences from the $330,000.00...
(The tape ended at this point in the meeting.)
Chmiel moved, Robbins seconded directed staff to investigate the leases of
the tenants in the John Pryzmus building and determine the value of the
property. All voted in favor and the motion carried unanimously.
APPROVAL OF SEPTEMBER AND OCTOBER
Robbins moved, Bohn seconded to approve the Housing and Redevelopment
Account Payables for September and October, 1990 as presented. All voted
in favor and the motion carried unan[mously.
Chmiel moved, Workman seconded to adjourn the meeting. All voted in favor
and the motion carried. The meeting was adjourned at 8:45 p.m..
Submitted by Don Ashworth
Executive Director
Prepared by Nann Opheim