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1982 05 20 e MINUTES ------- CHANHASSEN HOUSING AND REDEVELOPMENT AUTHORITY REGU LAR MEETING MAY 20, 1982 CALL TO ORDER Vice-Chairman Cliff Whitehill called the meeting to order at 7:40 p.m. Present were Commissioners Bohn, Horn and Whitehill. Commissioners Gullickson and Russell were absent. Executive Director Martin and Assistant City Attorney Mertz were also present. APPROVAL OF MINUTES Bohn moved, seconded by Horn, to approve the minutes of the March 18, 1982 meeting as presented. All voted in favor and the motion carried. ~~~Q!~~ ~~~~~~~~NT ~~Q~CT!Q~ f~QQ~~~ i~~~OLQlIO~ ~82~~l . Martin presented proposed revisions to pages 4, 8, 8a, 14, and 15 of the standard form Assessment Agreement which were pre- pared by the Attorney to clarify language in the Agreement per- taining to the application of HRA special assessment reduction payments against the outstanding principal balance, as opposed to both principal and interest. Horn moved, seconded by Bohn, to adopt Resolution #82-4, Clarifying the Amount of Assessment Reduction Payments and Clarifying the Nature of Covenants to be made by the Redeveloper. All voted in favor and the motion carried. ~~QQ~Q~~~~~ !~~ ~~~~~~~~l ~Q~~~~~~l - i~~~Q~Ql!Q~ ~82~2l Martin reviewed the proposed Assessment Agreement for the Fluoroware, Inc. project as executed by the Redeveloper, and explained that the total amount of the HRA special assessment reduction payment obligation is $80,612, based upon a market value of $1,151,600 for building and site improvements. Mr. Jay Bennett, Attorney for Fluoroware, Inc. was present to represent his client. He explained that 1981 real estate taxes had been placed in escrow awaiting establishment of the Special Assessment Reduction Program. He requested that the delinquent tax penalties in the amount of $2,818.44 added to the unpaid 1981 taxes be paid by the HRA, and that the penalties be cre- dited against the total assessment reduction due Fluoroware. e Mertz explained that the proposed "Second Addendum to the Assessment Agreement" provided for the payment of tax penalties as "eligible assessments". Horn asked Mertz if payment of the tax penalties would establish a legal precedent which could open the door to Page 2 - HRA Minutes - May 20, 1982 e similar requests in the future. Mertz responded that no prece- dent would be established due to the unique nature of the Fluoroware situation. Bohn and Whitehill felt that Fluoroware's request to credit payment of tax penalties against the total HRA assessment payment obligation was reasonable in light of the considerable time (over 2 years) that it took the HRA to enact the assessment reduction program, and because Fluoroware had apparently relied on the establishment of the program as an inducement to build within the Business Park. Whitehill moved, seconded by Horn, adoption of Resolution #82-5 Approving Participation of Fluoroware, Inc. in the Assessment Reduction Program; and, approval of the first and second adden- dums to the Standard Form Assessment Agreement as drafted by the Attorney; and, approval of revised pages 4, 8, 8a, 14, and 15 of said Assessment Agreement in order to clarify the amount of the Assessment Reduction Payment. The total assessment reduction payment to be paid by the HRA under the terms of the Assessment Agreement with Fluoroware, Inc. shall be $80,612, and the HRA elects to pay this amount in semi-annual installment payments to the City, until such time as the HRA elects to prepay the remaining principal balance. All voted in favor and the motion carried. , DAYCO CONCRETE/BROCKPAHLER ASSESSMENT AGREEMENT - (RESOLUTION #82~6)-------------------- ---------- --------- ----------- Martin reviewed the proposed Assessment Agreement for the Dayco Concrete/Brockpahler project as executed by the Redeveloper. He explained that the total amount of the HRA special assessment reduction payment is $26,348, based upon a market value of $376,400 for building and site improvements. Mr. David Brockpahler, redeveloper, was present to answer any questions of the HRA. e Bohn moved, seconded by Whitehill, adoption of Resolution #82-6 Approving participation of David W. Brockpahler in the Assessment Reduction Program; and, approval of the Addendum to the Assessment Agreement as drafted by the Attorney; and appro- val of revised pages 4, 8, 8a, 14, and 15 of the standard form Assessment Agreement clarifying the amount of the special assessment reduction payment to be made by the HRA. The total assessment reduction payment to be made by the HRA under the terms of the aforementioned Assessment Agreement shall be $26,348. The HRA shall pay this amount to the City in semi- annual installment payments until such time as the HRA elects to prepay the remaining principal balance. All voted in favor and the motion carried. e Page 3 - HRA Minutes - May 20, 1982 Q~l!~~ ~~l~l~Qi INC. ~~~~~~~~~! ~Q~~~~~~! - i~~~Q~Q!lQ~ !~~~2l Martin presented the proposed Assessment Agreement for the United Mailing, Inc. project, which consists of a 184,600 sq. ft. Office/Manufacturing/Warehouse facility on a ten (10) acre site in the "Park Two" subdivision. He explained that the Assessor has agreed to establish a market value based on actual "utilization" of the United Mailing, Inc. facility over a 4-year period. The Assessor has certified an "average" market value of $1,981,400 for building and site improvements to be used for the purpose of computing the assessment reduction obligation of the HRA. Based on this market value, the HRA special assessment reduction payment totals $138,698. Martin added that levied and pending special assessments are approxi- mately $128,483, and that trunk sewer and water unit charges will likely be an additional $25,000 - $30,000. Consequently the HRA's payment obligations will not cover 100% of the costs associated with public improvements serving the United Mailing, Inc. site, as was indicated in the May 14, 1982 memorandum from Martin to the HRA. . Bohn moved, seconded by Horn, approval of Resolution #82-7 Approving the Assessment Agreement for the United Mailing Building; and, approval of the Addendum to said Assessment Agreement; and, approval of revised pages 4, 8, 8a, 14 and 15 of the standard form agreement as previously approved by Resolution #82-4. The total assessment +eduction payment to be paid by the HRA under the terms of the United Mailing, Inc. Assessment Agreement shall not exceed $138,698. The HRA shall pay this amount to the City in semi-annual installment payments until such time as the HRA elects to prepay the remaining prin- cipal balance. All voted in favor and the motion carried. DOWNTOWN PROJECT REDEVELOPER AGREEMENTS: 6-MONTH EXTENSIONS Martin reviewed the request of Bloomberg Companies and Kraus-Anderson Development Corporation for six month extensions to their respective Redeveloper Agreements, which are due to expire on May 27, 1982. He recommended approval of both exten- sion requests in order to maintain the status quo with the Downtown Redevelopment Project, because of the Developer's knowledge and continued interest in the Project, and because it would be unlikely that other Developers could be attracted to construct the Project under the existing economic conditions. He added that the financial position of the Redevelopment Project Tax Increment District should continue to improve during the next year or two, even without the start of the Downtown Project construction. . Martin also advised the HRA that extension of these agreements must be approved by the City Council following HRA action. I I. Page 4 - HRA Minutes - May 20, 1982 William McRostie of Bloomberg Companies and Dennis Spalla of Kraus-Anderson were both present to speak in support of their respective requests. Spalla said that Kraus-Anderson is still interested ~n constructing their portion of the Downtown Project, but added that they may request a contract revision to allow them to build the project in phases due to high interest rates and dif- ficulty in securing prime tenants. He said that Phase One would likely involve renovation of the Instant Web building. McRostie said that Bloomberg Companies can't move forward with their portion of the project until Kraus-Anderson and the City starts construction. John Havlik was present and expressed concern over the uncer- tainty that the overall Downtown Project has created for his business. Horn stated that he preferred a one-year contract extension, since it is highly unlikely that construction will begin within the next six months. Spalla said that Kraus-Anderson would agree to a one-year extension if the HRA preferred it. . Whitehill and Bohn both felt that the interests of the City would be better protected by short-term contract extensions that would give the City more flexibility in future decision-making. Whitehill moved, seconded by Bohn, to approve a six-month extension to both the Bloomberg Companies and Kraus-Anderson Redeveloper Agreements commencing May 27, 1982, and to direct the Attorney to prepare the necessary contract amendment for execution by the HRA Chairman and Executive Director following action by the City Council. All voted in favor and the motion carried. REVIEW OF 1981 FINANCIAL AUDIT REPORT Martin presented a brief overview of the year-end status of the HRA's active funds, as audited by DELAHUNT VOTO AND COMPANY, LTD., Certified Public Accountants. He also reviewed the auditor's recommendations relative to HRA funds, as contained in their "Management Report and Recommendations" dated December 31, 1981. . Bohn and Whitehill expressed concern about the Auditor's recom- mendation regarding the receipt of tax increment revenues from the State and County. Both Commissioners felt that the current system which provides for the payment of tax increment monies directly to the HRA includes adequate safeguards to the City, since the City Council approves the expenditure of tax incre- ment funds when approving any Bond Issue and Redevelopment Plan. In fact, all HRA expenditures are authorized by the City well in advance of specific obligations being made by the HRA. - Page 5 - HRA Minutes - May 20, 1982 e Martin suggested that this issue be more fully discussed during the next few months as the 1983 Budget is being prepared. The Commissioners agreed with this suggestion and noted their review of the Audit Report for the record. APPROVAL OF BILLS Whitehill listed on 17,1982. moved, seconded by Horn, approval of the bills as the HRA Accounts Payable dated April 19, 1982 and May All voted in favor and the motion carried. OLD BUSINESS: ~~~~~ ~~Q~~~!! !~g~!~!!!Q! i~~~Q~~ !l~l . Martin advised the HRA that John Huber had contacted him by telephone last week and offered to sell his property to the HRA for the reappraised value of $154,000, if the HRA would accept his offer within the next 30 days. Martin noted that Huber had ordered his own appraisal of this property (up to $300 of which must be paid for by the HRA), but that he had not yet seen a copy of Huber's appraisal. Martin suggested that no action be taken by the HRA until Russ Larson and he had an opportunity to review Huber's appraisal and until Huber's offer to sell was submitted in writing. The Commissioner's agreed with this suggestion and directed Martin to secure a copy of Huber's appraisal before any reimbursement is made to cover the cost of the appraisal. The HRA also directed the Attorney to meet with Huber to see if acceptable terms for acquisition of his pro- perty could be worked out prior to the next HRA meeting. ADJOURNMENT Bohn moved, seconded by Horn, to adjourn the meeting at 9:30 p.m. All voted in favor and the meeting was adjourned. e