07-14-09 HRA Agenda
AGENDA
GOLDEN VALLEY HOUSING AND REDEVELOPMENT AUTHORITY
REGULAR MEETING
July 14, 2009 - 6:30 PM
Golden Valley City Hall
7800 Golden Valley Road
Council Chambers
1. Roll Call
2. Approval of Minutes - April 14, 2009 HRA Meeting
3. Approval of Bills:
City of Golden Valley
TOTAL
Bill Summary:
General Fund - 2009
Valley Square -
Capital Project Fund - Area B
Tax Increment Fund
Golden Hills -
Capital Project Fund - Central Area
Tax Increment Fund
North Wirth -
Capital Project Fund - District #3
TOTAL
4. Receive and File June Financial Reports
5. North Wirth Redevelopment Area
First Amendment to GVEC Properties, LLC Private
Development Agreement
6 Other Business
7 Adjournment
$191,927.82
163,327.10
3,238.10
-0-
3,594.64
-0-
21,767.98
$191,927.82
Pages
.8-9
57 -58
59-61
62-68
This document is available in alternate formats upon a 72
763-593-8006 (TTY: 763-593-3968) to make a request. Examples
may include large print, electronic, Braille, audiocassette, etc.
REGULAR MEETING
OF THE
HOUSING AND REDEVELOPMENT AUTHORITY
April 14, 2009
Pursuant to due call and notice thereof, a regular meeting of the Housing and
Redevelopment Authority of the City of Golden Valley, Hennepin County, Minnesota, was
held at 7800 Golden Valley Road in said City on April 14, 2009 at 6:30 pm,' the City
Council Chambers.
Approval of the Minutes
rove the minutes of
The following members were present: Chair Paula Pentel and Commissio
Freiberg, Linda Loomis, DeDe Scanlon and Robert Shaffer. Also present
Director Thomas Burt, HRA, Assistant HRA Director Jeanne Andre
Assistant Christine Columbus.
MOVED by Freiberg, seconded by Loomis, and motio
the January 13, 2009 HRA meeting.
Approval of Bills
MOVED by Loomis, seconded by Freiber
bills as submitted, reimbursing City exp
n carried unanimously to approve the
HRA.
MOVED by Shaffer, seconded
Financial Reports.
ion carried to receive and file the March
Area - Public Hearin
requires a public hearing on the redevelopment plan prior
eso 09-03 for the redevelopment of Douglas Drive Corridor.
resent the plan and how it differs from the plan adopted in 2008.
ndre stated that the HRA adopted a redevelopment plan in
ferred to the Planning Commission to see if it was compatible with the
n. Planning Commission questioned the geographic area of the plan
and som spects of the plan regarding redevelopment opportunities. Since there
were official changes to the plan, the plan is being brought back and will be presented to
the Planning Commission, before being brought before the City Council with another public
hearing. The map is the same except that boundaries now include the right-of-way on all
the parcels. The other changes were in the text, the main change is the addition to section
seven, outlining redevelopment opportunities, infrastructure needs and proposed land use.
Pentel, seeing and hearing no one, Pentel closed the Public Hearing
<t
Regular Meeting of the Housing and Redevelopment Authority
April 14, 2009
Page 2
Adoption of Resolution for Redevelopment Plan For Dou~las Drive Corridor
Redevelopment Proiect Area 09-03
Commissioner Shaffer introduced the following resolution,
RESOLUTION 09-03
RESOLUTION FOR REDEVELOPMENT PLAN FOR DOUGLAS DRIV
REDEVELOPMENT PROJECT AREA
The motion for the foregoing resolution was seconded by Commissioner S~nl '/ie
upon a roll call vote being taken thereon, the following voted in favor thereO~iFreibel'P';'~
Scanlon, Shaffer and Pentel; the following voted against the same: on
said resolution was adopted, signed by the Chair and her signatur
Director.
Other Business
Freiberg asked why Loomis was opposed. Loomis stated
the resolution stating that financial aid to developers is
redevelopment activities.
There was no additional business.
Adiournment
The meeting was adjourned at
Paula Pentel, Chair
ATTEST:
ministrative Assistant
Jeanne Andre, Assistant HRA Director
g
Memorandum
Housing & Redevelopment
Authority
763-593-8002/763-593-8109 (fax)
alley
7800 Golden Valley Rd. Golden Valley, MN 55427
763-593-8014
Date: July 14, 2009
To: Housing and Redevelopment Authority Commissioners
From: Sue Virnig, Finance Director
Through: Thomas D. Burt, Director
Subject: Reimbursement of City Expenditures for the HRA
As of June 30, 2009 the following expenditure amounts were owing to the City by the HRA:
City Expenditures:
1000 Best & Flanagan (March legal-NW#3)*
1000 Best & Flanagan (March legal)
1000 Best & Flanagan (April legal)
1000 Various Vendors(Vet clinic parking lot-D'Amico)
1000 American Testing (VS Well Sealing)
1000 Best & Flanagan (May legal)
1000 Best & Flanagan (NW #3 Agreement)*
GVEC (2008 TIF payment received in January)
City Overhead
City Audit
Amount
72.50
652.10
450.00
3,594.64
3,238.10
225.00
438.60
21,256.88
150,000
12,000
$191,927.82
HRA Expenditures:
9000 General Fund
9120 Valley Square Capital Projects Fund
9250 North Wirth Capital Projects
9280 Golden Hills Capital Projects
163,327.10
3,238.10
21,767.98
3,594.64
$191,927.82
This reimbursement should be approved by the HRA as part of the normal bill paying
process. Those noted with an asterisk are coming from deposit accounts paid by the
Developer.
97060
97060
97512
98129
98130
98130
4029
EFT
EFT
57
HRA of Golden Valley
General Fund
June 2009 Budget Report
Percentage Of Year Completed 25%
2009 Apr-June YTO
Revenue Budget Actual Actual
Transfer from TIF Funds:
Valley Square (3) $10,000 10,000.00 10,000.00
Golden Hills (3) 159,000 159,000.00 159,000.00
Interest Earnings (2) 0 233.92 233.92
Fund Balance 0 0.00 0.00
Totals $169,000 169,233.92 169,233.92
Over
(Under)
Budget
%Of
Budget
Received
0.00
0.00
100.00%
100.00%
233.92
0.00
233.92 100.14%
Over %Of
2009 Apr-June YTO (Under) Budget
Expenditures Budget Actual Actual Budget Expended
Legal Services (1) $6,000 1,327.10 1,927.50 (4,072.50) 32.13%
Audit 12,000 12,000.00 12,000.00 0.00 100.00%
City Overhead (3) 150,000 150,000.00 150,000.00 0.00 100.00%
Miscellaneous 1,000 0.00 0.00 (1,000.00) 0.00%
Totals $169,000 163,327.10 163,927.50 (5,072.50) 97.00%
Notes:
(1) Includes May to date billings from Best & Flanagan.
(2) Interest is through 03/09.
(3) Transfers were be made in June 2009.
5g-----
City of Golden Valley - HRA - Tax IncremQm District Proiections
Vallev Square Tax Increment Fund:
2009 2010
Projected Cash Balance @ 1/1
$398,487 $1,829,042
Plus:
Area B Increment
Interest Earnings @ 2% of Beg. Ba!.
Valley Square Capital Projects Fund (close)
674,854
3,985
765,716
less:
Transfer to HRA General Fund
(14,000)
Debt Service:
2003 Tax Increment Bonds (3.47%)
2003 Taxable Tax Increment Bonds (4.49%)
(1,091,800)
(466,875)
Projected Cash Bal. @ 12/31
$1,829,042
$270,367
Bond Principal & Interest Outstanding @ 12/31
$1,558,675
$0
The 2009 Bond Payments was transferred to the City in December, 2008.
..\f\
......0
City of Golden Valley - HRA - Tax Increment District Proiections
Golden Hills Tax Increment Fund:
(Includes Tax Increment Fund and Debt Service)
2009 2010 2011 2012 2013 2014 2015
Projected Cash Ba!. @1/1 $4,368,985 $5,227,182 $6,108,549 $7,084,866 $9,236,357 $10,420,771 $9,695,811
Plus:
Estimated Tax Increment 3,906,540 3,906,540 3,906,540 3,945,605 3,985,061 4,024,912
Interest Earnings (1% of Beg. Ba!.) 43,690 52,272 122,171 141,697 184,727 208,415
Less:
Transfer to HRA General Fund (159,000) (159,000) (159,000) (159,000) (159,000) (159,000)
Debt Service:
1999 C Tax Incr. Bonds (5.09%) (Callable 02/01/08) (870,320) (869,470) (866,970)
2004 A Tax Incr. Refunding Bonds (2.27%) (225,125) (226,562) (231,187)
2005 B Taxable Tax Incr. Refunding Bonds (4.69%) (417,442) (411,841) (412,766) (407,991) (402,710) (1,759,910) (1,686,475)
2005 A Tax Increment Refunding Bonds (3.50%) (109,071) (116,071) (123,971) (126,571) (128,915) (546,877) (533,282)
2006 A Taxable Tax Incr. Refunding Bonds (5.12%) (1,311,075) (1,294,500) (1,258,500) (1,242,250) (2,294,750) (2,492,500) (2,950,500)
Projected Cash Bat. @ 12/31 $5,227,182 $6,108,549 $7,084,866 $9,236,357 $10,420,771 $9,695,811 $4,525,554
Bond Principal & Interest Outstanding @ 12131 $20,062,785 $17,165,545 $14,293,355 $12,535,035 $9,755,255 $5,065,439 $0
6'
o
HRA Of Golden Valley Capital Proiect Funds
2009 Financial Report 9280 9220 9250
Golden Valley North
Hills Square Wirth #3
Cash Balance @ 04/01/09 $286,412.37 $765,716.64 $21,742.04
Add:
Receipts:
Interest 2,977.85 7,594.20 384.20
Tax Increment
Less:
Expenditures:
City of Golden Valley (1)
GVEC
(2,594.64)
(3,238.10)
(21,767.98)
$286,795.58
$358.26
Cash Balance @ 06/30/09
$770,072.74
(1) Breakdown on City Expenditures Memo
(01
~lley
Memorandum
Housing & Redevelopment
Authority
763-593-8002 I 763-593-8109 (fax)
7800 Golden Valley Rd. Golden Valley, MN 55427
763-593-8014
Date: July 9, 2009
To: Housing and Redevelopment Authority Commissioners
From: Jeanne Andre, Assistant Director
Through: Thomas D. Burt, Director
Subject: GVEC Private Development Agreement
The Housing and Redevelopment Authority entered into a private development agreement with
GVEC Properties, LLC in 2006. Under the agreement GVEC purchased former railroad property
from the HRA for the construction of office condominiums. GVEC agreed to undertake soil
corrections needed to develop the property and the HRA agreed to provide tax increment on a
pay-as you-go basis to reimburse the developer for these costs over the twenty year life of the
project. Under the agreement the HRA has issued a note to be repaid by the tax-increment over
time. The note consists of the original reimbursement amount plus interest at 6 percent.
The developer agreed to complete the project in a timely manner, in three mandatory phases
(with a fourth optional phase). Phase I required 10,500 sq. ft. to be completed by June 30, 2006,
Phase 2 required the completion of an additional 6000 sq. ft. by December 31, 2008 and Phase
3 requires completion of an additional 10,500 sq. ft. by December 31,2011. The optional Phase
4 would allow an additional 4,500 sq. ft. By December 31,2008, the developer completed only
15,000 sq. ft., which means the developer is in default. While the default does not place the
HRA at risk, since this is a pay-as-you-go district, it will delay the date at which this property will
go back on the general tax rolls. In any case, the developer will only be able to receive
reimbursement for its expenditures until the end of the district in 2028.
Sec. 9.2 of the development agreement addresses remedies on default. If the HRA is to seek
remedy for a default it must give a 60-day notice of the default and allow 60 days to cure the
default. A notice was mailed to the developer on March 9,2009. No further construction has
occurred due to lack of demand for the units. The main applicable provision of Sec. 9.2 is:
"The HRA may suspend its performance under this Agreement until it receives assurance
from the Developer, deemed adequate by the HRA, that Developer will cure its default and
continue its performance under this Agreement."
Staff has worked with the developer on an approach that will allow the developer to proceed as
quickly as possible given current market conditions but not penalize the HRA for this delay.
if
An amendment to the development agreement is proposed as a way forward that promotes
completion of the development but considers the HRA's interests. The proposed amendment
would stop the accrual of interest on the outstanding Tax-Increment Note starting on January 1,
2009, the first day of default, until the project is no longer in default. Under this agreement the
tax-increment generated in this district (minus funds withheld to cover fiscal disparities and
charges by the State of Minnesota and Hennepin County) would continue to be forwarded to the
developer, but interest would not accrue on the outstanding balance until the project is not in
default.
While the developer does not know when market conditions will lead to further development,
staff does not recommend withholding TIF payments, even though the agreement indicates that
this option exists. However having the developer continue to receive interest for a period in
which it is not performing could be seen as rewarding the developer for its non-performance.
That is why the staff has recommended the amendment as drafted. The developer is reviewing
the draft amendment but has not signed off on the amendment at this time.
Requested Action:
Approve First Amendment to GVEC Properties, LLC Private Development Agreement.
{,3
FIRST AMENDMENT
TO
GVEC PROPERTIES, LLC PRIVATE DEVELOPMENT AGREEMENT
THIS AGREEMENT, effective as of July _, 2009, is made and entered into by and
between the HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY
OF GOLDEN V ALLEY, a public body corporate established and existing under Minnesota
Statutes, Section 469.001 et seq., with its principal offices at 7800 Golden Valley Road, Golden
Valley, Minnesota 55427 (the "HRA"), and GVEC PROPERTIES, LLC, a Minnesota limited
liability company, with its principal office located at 101 East Fifth Street, Suite 1901, St. Paul,
Minnesota 55101 ("Developer").
WHEREAS, the HRA and Developer entered into the GVEC Properties, LLC Private
Development Agreement, effective January 10, 2006 (the "Development Agreement"); and
WHEREAS, pursuant to the Development Agreement, Developer purchased from the
HRA a site in the North Wirth Parkway Redevelopment Area legally described as Lot 1, Block 1,
North Wirth Parkway 5th Addition, Hennepin County, Minnesota (the "Development Property"),
and commenced construction on the Development Property of an office condominium project
with a minimum of approximately 27,000 square feet, and a maximum of approximately 31,500
square feet, together with parking that meets City zoning requirements, and certain other
improvements; and
WHEREAS, a portion of Developer's costs for soil correction and environmental
remediation of the Development Property are being financed by tax increment pursuant to the
Tax Increment Note issued by the HRA to Developer; and
WHEREAS, Developer has failed to complete construction of Phase II of the
Improvements in accordance with the schedule contained in the Development Agreement, and
such failure constitutes an Event of Default under the Development Agreement, which is
continuing; and
WHEREAS, the parties wish to enter into this First Amendment to modify the schedule
for completion of Phase II of the Improvements, waive the existing Event of Default with respect
to the failure to complete Phase II of the Improvements, and amend the Tax Increment Note with
respect to the payment of interest thereon;
NOW, THEREFORE, in consideration of the foregoing, and in consideration of the
mutual terms and conditions contained herein, the parties hereby agree as follows:
1. Capitalized terms used herein and not otherwise defined shall have the meanings
given to them in the Development Agreement.
2. The first paragraph of the Section 4.2 of the Development Agreement is revised to
state as follows:
bL/
Developer has competed construction of the Phase I Improvements, and the HRA
has issued a Certificate of Completion to Developer for the Phase I
Improvements. Developer shall complete construction of 100% of the shell of the
Improvements without interior finishing for the Phase II and Phase III
Improvements on or before December 31, 2011. The times provided herein for
commencement and completion of construction shall be extended to the extent of
any Unavoidable Delays.
3. The HRA waives the Event of Default now existing due to the failure by
Developer to complete construction ofthe Phase II Improvements by December 31, 2008. The
HRA waives no other Events of Default, now existing or hereafter arising.
4. Attached hereto is an Amended Tax Increment Note, which shall supersede and
replace the original Tax Increment Note. Upon execution of this First Amendment by both
parties, the HRA shall execute the Amended Tax Increment Note and deliver it to Developer,
and Developer shall deliver the original Tax Increment Note to the HRA for cancellation.
5.
and effect.
Except as amended hereby, the Development Agreement continues in full force
IN WITNESS WHEREOF, the HRA has caused this First Amendment to be duly
executed in its name and behalf and its seal to be hereunto duly affixed, and Developer has
caused this First Amendment to be duly executed in its name and behalf, on or as of the date first
above written.
HOUSING AND REDEVELOPMENT AUTHORITY
IN AND FOR THE CITY OF GOLDEN V ALLEY
By
Its Chair
And
Its Director
GVEC PROPERTIES, LLC
By:
Its:
65
STATE OF MINNESOTA)
) SS.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this _ day of
_, 2009, by Paula Pentel, Chair, and Thomas D. Burt, Director, of the HOUSING AND
REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF GOLDEN VALLEY, on
behalf of the organization.
Notary Public
STATE OF MINNESOTA)
) SS.
COUNTY OF HENNEPIN)
The foregoing instrument was acknowledged before me this ~ day of
_,2009, by , of GVEC PROPERTIES, LLC, a
Minnesota limited liability company, on behalf of the organization.
Notary Public
{k;
AMENDED TAX INCREMENT NOTE
$454,182.89
Minneapolis, Minnesota
The Golden Valley Housing and Redevelopment Authority in and for the City of
Golden Valley (the "HRA"), promises to pay to GVEC Properties, LLC ("Developer"), and its
permitted assigns, solely to the extent and in the manner hereinafter provided, the principal sum
of $454,182.89, together with interest which shall accrue as provided herein, on the Payment
Dates as hereinafter defined.
This Amended Note is a special and limited obligation and not a general obligation of the
HRA, and has been issued by the HRA pursuant to the GVEC Properties, LLC Private
Development Agreement, dated January 10,2006, between the HRA and Developer, as amended
by the First Amendment thereto, dated July _, 2009 (the "Development Agreement"), to aid in
financing environmental remediation costs incurred by the HRA and Developer within and for
the benefit of Tax Increment Financing North Wirth District No. 3 (the "Tax Increment
Financing District"). Capitalized terms used herein and not otherwise defined herein shall have
the meanings given to them in the Development Agreement.
This Amended Note supersedes and replaces the original Tax Increment Note issued by
the HRA to Developer pursuant to the Development Agreement, dated December 5, 2006.
The principal of this Amended Note consists of Developer's reasonable out-of-pocket
costs and expenses actually incurred by Developer for environmental remediation, reasonably
required to permit construction of the Improvements on the Development Property, plus interest
accrued on the original Tax Increment Note, minus the payments by the HRA on the original Tax
Increment Note.
Interest shall accrue at the rate of 6% per annum on any unpaid principal, commencing
upon issuance by the HRA to Developer of Certificates of Completion for all of Phase I and
Phase II of the Improvements, provided that no Event of Default by Developer is then in
existence, and continuing until this Amended Note is paid in full. Accrued interest which is not
paid on any Payment Date, as hereinafter defined, shall be added to principal.
Each payment on this Amended Note shall be by check made payable to Developer and
mailed to Developer at its postal address within the United States which shall be designated from
time to time by Developer.
Principal and interest on this Amended Note shall be payable solely from Tax Increment,
as hereinafter defined, on each February 1 and August 1, commencing August 1, 2009, to and
including February 1, 2027 (the "Payment Dates"), or until payment in full if earlier. On each
Payment Date, the HRA shall apply all Tax Increment to the payment of this Amended Note.
All such payments shall be applied first to accrued interest and then to the principal amount of
this Amended Note.
"Tax Increment" is defined as all tax increment derived by the HRA from the Tax
Increment District in any calendar year then on hand with the HRA. In the event that Tax
Increment is not sufficient to pay the principal of and interest on this Amended Note when due,
the failure of the HRA to pay such principal and interest shall not constitute a default hereunder.
67
THE HRA MAKES NO REPRESENTATION OR WARRANTY THAT THE TAX
INCREMENT WILL BE SUFFICIENT TO PAY THE PRINCIPAL OF AND INTEREST ON
THIS AMENDED NOTE.
This Amended Note and the HRA's obligation to make any payments under this
Amended Note shall terminate upon the earliest of (a) occurrence of an Event of Default by the
Developer under the Development Agreement, which is not cured within the time permitted by
the Development Agreement, (b) February 1, 2027, or (c) payment in full of all principal and
accrued interest. Any unpaid principal and interest remaining at the time of termination of this
Amended Note shall be considered satisfied and discharged.
EXCEPT AS TO THE OBLIGATION TO MAKE PAYMENTS FROM THE TAX
INCREMENT, THE AMENDED NOTE IS NOT A DEBT OF THE HRA, THE CITY OF
GOLDEN VALLEY, OR THE STATE OF MINNESOTA (THE "STATE"), AND NEITHER
THE HRA, THE CITY OF GOLDEN VALLEY, THE STATE NOR ANY POLITICAL
SUBDIVISION THEREOF SHALL BE LIABLE ON THE AMENDED NOTE, NOR SHALL
THE AMENDED NOTE BE PAYABLE OUT OF ANY FUNDS OR PROPERTIES OTHER
THAN TAX INCREMENT.
Developer shall never have or be deemed to have the right to compel any exercise of any
taxing power of the HRA or the City of Golden Valley or of any other public body, and neither
the HRA nor the City of Golden Valley nor any director, commissioner, council member, board
member, officer, employee or agent of the HRA or the City of Golden Valley, nor any person
executing or registering this Amended Note shall be liable personally hereon by reason of the
issuance or registration hereof or otherwise.
This Amended Note may not be assigned by Developer prior to issuance by the HRA of
Certificates of Completion for all of Phase I and Phase II of the Improvements, and issuance by
the City of Golden Valley of a Certificate of Occupancy for a minimum of 7,500 square feet of
Phase III of the Improvements, except that Developer may assign and pledge this Amended Note
to secure any loan to finance the costs of the Project, and may also assign this Amended Note to
an assignee of the Development Agreement in an assignment which meets the requirements of
Article VIII of the Development Agreement.
IN WITNESS WHEREOF, the HRA has caused this Amended Note to be executed by
the Chair and Director of the HRA, and has caused this Note to be dated as of July _,2009.
Paula Pentel, Chair
Thomas D. Burt, Director
THIS INSTRUMENT WAS DRAFTED BY:
Best & Flanagan LLP
225 South Sixth Street, Suite 4000
Minneapolis, Minnesota 55402-4690
011800/960702/1093140_2
6g