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HomeMy WebLinkAboutEDA June 17, 2003 " 1685 CROSSTOWN BOULEVARD N.W.'. ANDOVER, MINNESOTA 55304 . (763) 755-5100 ,-I FAX (763) 755-8923 . WWW.CI.ANDOVER.MN.US CITY OF ANDOVER ECONOMIC DEVELOPMENT AUTHORITY SPECIAL MEETING June 17,2003 - 6:00 p.m. CONFERENCE ROOM A AGENDA 1. Call to Order 2. Approve Minutes - June 3, 2003 3. United Properties Commercial Site Presentation 4. United Properties Residential Site Presentation 5. Approve 151 Amendment to Declaration of Restrictive Covenant 6. Marketing Strategy I Andover Station North 7. Discuss EDA Position on Lease Revenue Bonds , , i 8. Other Business .~ 9. Adjourn '-~ C I T Y o F CV NDOVE 1685 CROSSTOWN BOULEVARD N.W. . ANDOVER, MINNESOTA 55304. (763) 755-5100 FAX (763) 755-8923 . WWW.CI.ANDOVER.MN.US TO: EDA President and Commissioners CC: John Erar, Executive Director FROM: Vicki V olk, City Clerk SUBJECT: Approval of Minutes DATE: June 17, 2003 INTRODUCTION The following minutes have been provided by Time Saver Secretarial for approval by the EDA: June 3, 2003 Regular Meeting (Nowak, Schultz absent) Copies are attached for your review. ACTION REQUIRED The EDA is requested to approve the minutes of the June 3, 2003 meeting. Respectfully submitted, U()/b Vicki V olk City Clerk CITY of ANDOVER / ANDOVER ECONOMIC DEVELOPMENT AUTHORITY MEETING JUNE 3,2003 - MINUTES A Meeting of the Andover Economic Development Authority was called to order by Vice President Trude, June 3, 2003, 6:02 p.m., at the Andover City Hall, 1685 Crosstown Boulevard NW, Andover, Minnesota Present: President Mike Gamache (arrived at 6:03 p.m.); Commissioners Don Jacobson, Mike Knight, Ken Orttel, Julie Trude; and Voting resident members Fred Larson (arrived at 6: 13 p.m.). Absent: Voting resident member Robert Nowak; and Non-voting resident member Edward Schultz Also present: Executive Director, John Erar City Planner, Courtney Bednarz City Engineer, David Berkowitz Finance Director, Jim Dickinson Others APPROVAL OF MINUTES April 15. 2002: Correct as written. MOTION by Jacobson, Seconded by Knight, approval of the Minutes as written. Motion carried unanimously. President. Gamache arrived at 6:03 p.m. RECEIVE VERBAL UPDATE ON ANDOVER STATION NORTH MITIGATION PLAN City Engineer Berkowitz explained RLK has been working with United Properties to put the plan together. This was presented to Tim Kelly at the Coon Creek Watershed; he then brought it to the TEC (Technical Evaluation) Panel which looked at this in a favorable way. The Wetland they are taking from Andover Station will go to Andover Station North. Mr. Berkowitz explained the Watershed has requested that they either apply for aformal \ approval or they give a presentation to the TEC Panel and he felt that once it is fine tuned, they / will give a presentation to the TEC Panel. . He explained it is their evaluation that goes to the Board for approval. Mr. Berkowitz stated the only drawback is the wetland that is proposed for the northeast comer Andover Economic Development Authority Meeting Minutes - June 3, 2003 Page 2 of the property may not be a favorable location due to the hydrology. There is not a lot of drainage that goes to that area and to develop a wetland into a good healthy wetland, water has to drain to it He explained that they may need to look at those 3.5 acres to be moved to another location on site or add to the existing wetlands. He explained RLK suggested they sit down with SEH to make sure that what they do does not impact future development of the area. Commissioner Trude asked if they looked at the parcels to make sure they will not be losing retail space. Mr. Berkowitz stated they have. Commissioner Knight asked what was left in the south site for storm water drillnage. Mr. Berkowitz stated the south side would handle just the storm water drainage and run off. Commissioner Knight stated the southern ponds are no longer an amenity in the site plan. Mr. Berkowitz stated in the site plan, they do show amenities like trails and landscaping around it. Mr. Erar stated the amenities that were originally recommended are still in place, there is just a . reconfiguration of the ponds. Commissioner Knight asked how much water there would be. Mr. Erar stated there would be a large area of water. Commissioner Trude asked if they were looking at a large cup or a shallow / saucer because they would be looking at a safety issue with retail in the area. Mr. Berkowitz stated they have only had a chance to look at the site plan so they do not how what the cuts are and how deep the ponds will be. Mr. Erar stated the water table will be the same. Mr. Berkowitz explained the ponds would be holding ponds and they will make use of the area. Commissioner Jacobson noted the Povlitski property would have to take care of their own storm water drainage. Mr. Berkowitz stated this was true. Commissioner Jacobson asked with this plan were they figuring in the drainage for the entire site, including the bank. Mr. Berkowitz stated they were. Voting Resident Member Larson arrived at 6:13 p.m. Commissioner Trude stated at one point there was mention of Prairie Knoll Park and asked if this was included in the plan. Mr. Berkowitz stated it was not. Commissioner Trude asked if the wetland in Prairie Knoll Park that was not included could be a potential wetland area because it already includes a wetland that was not counted. Mr. Berkowitz stated that was true. Commissioner Trude stated she would prefer they not go into the parks. UNITED PROPERTIES COMMERCIAL SITE VERBAL UPDATE J Mr. Keith Ulstead of United Properties updated the Commission on the Target project Mr. Ulstead explained the documents are circulating and will get signed and put it in escrow. He Andover Economic Development Authority Meeting Minutes - June 3, 2003 Page 3 stated the other main piece is the purchase agreement with Target. They met with them and Ryan Companies earlier in the week and the lawyers are busy redrafting papers and they will close directly with Target. Their timing is subject to getting the approvals and platting done to close on the property in mid August and to get their footings in the ground before the frost, build in the mid winter and open next summer. Mr. Ulstead stated Target made some concessions in regards to Knowlans. He stated at the June 17111 meeting, there will be a presentation regarding this project. They have had several meetings with City staff over the last month to work out any problems. Commissioner Trude asked ifthis would include options. Mr. Ulstead stated there have been several options discussed and there are certain givens. Target is a big box that cannot change and they need a certain amount of parking and RLK has told them that they need a certain amount of ponding. He stated the options they have are what the boardwalk looks like, what kind oflight fixtures and the landscaping plan. Mr. Ulstead stated there are not a lot of options to look at. Mr. Erar stated Target would meet all of Andover Station's design guidelines and they need to have access coming in and out of the site from Quinn as well as Martin Street. They have not seen the full color layout of the site and they will strive to achieve what the Board envisions. Mr. Ulstead stated they will be bringing in a plan that would accomplish Target's needs, United's needs and the City's needs. Based on all of the meetings with staff, there will be some items that cannot be achieved. Commissioner Jacobson asked what kind of a Target it will be. Mr. Ulstead stated it would be a Target Greatland. Commissioner Knight stated he did not want it to look like a North Dakota Prairie in the front of the building. Commissioner Trude stated she thought the landscaping would be more important around the buildings than the buildings themselves. President Gamache asked if they were still looking at a restaurant on the comer of Bunker. Mr. Ulstead stated they are. RECEIVE VERBAL UPDATE ON ANDOVER STATION RESIDENTIAL Mr. Ulstead explained they are working with Brueggeman on a purchase agreement on the site. He will hopefully have the purchase agreement signed by June 17111. He explained that there is ) wording regarding environmental issues and he believed this was due to Bruggeman's lawyer being cautious and not being up to date on what the City has done with the site. He stated the only problematic piece with the Bruggeman plan is they feel they were pushed pretty hard on price and they would like to take down a portion ofland this fall and build eight units and market Andover Economic Development Authority Meeting Minutes - June 3, 2003 Page 4 and sell the units and then construct the rest in the spring of next year. He stated this was problematic because his option with the City was an all or nothing deal and someone has to sit on the land over the winter and no one wants to own a non-income producing piece of land. He was not anxious to buy the entire piece from the City and then have Bruggeman buy a piece from him so he is trying hard to have Bruggeman purchase it all. Commissioner Jacobson stated because the design of the Bruggeman property is substantially different than before, it was suggested they have an informal meeting with the people behind the property. He wondered if this was done yet. Mr. Bednarz stated there is a neighborhood meeting on June 12th in the Council Chambers at 6:00 p.m. DISCUSS LEASE REVENUE BONDS (SUPPLEMENTAL) City Finance Director Dickinson stated if the City Council decides to go ahead with the Community Center Project and elects to go through lease revenue financing, the EDA will be involved because the City Council will ask the EDA to fund a bond for this. Mr. Dickinson explained thirty years is the maximum financing that can be done on a Lease / Revenue Agreement. One million or more is included in the City's debt limit. He stated their current legal debt limit is around thirty million and what they are using at this point is only for the equipment bond purchases and the public works facility. They currently have three to four million of the legal debt limit used. Commissioner Trude asked if the bonds for TlF Projects were included in this. Mr. Dickinson stated the TlF Bonds were issued by the City and are put out there as revenue bonds and they have increments coming in to pay ofIthe bonds in the future so these are not assigned to the debt limit. If they did not have revenues or they started projected shortfalls and had to go out a levy for a portion of it. then they could come into the levy limit. He explained the chances of this happening with the City's current structure would be zero to none. Commissioner Jacobson asked if they were looking at thirty years for the bonds. Mr. Dickinson stated they were. Mr. Dickinson explained the structure of the bonds can be complicated. Tax exemption rules still apply. This will be a 503c qualified issuance because the YMCA will be involved. Mr. Dickinson stated some of the issues historically taking place on these structures is how they would handle remodeling in the future and this should be handled up front. Mr. Dickinson explained trustee and indenture is they will have an outside trustee managing the , / capitalized interest and they want to make sure the investors are protected. They have to have a trustee to have the market to buy into it. Andover Economic Development Authority Meeting Minutes - June 3, 2003 Page 5 Commissioner Jacobson stated the land would be leased out by the City and asked ifwe would need to put this into a legal document. Mr. Dickinson stated this would be something that could be drawn up in a legal document. Commissioner Knight stated that when lease revenues go over the ten million mark. it puts up a red flag at the State. He asked what this means. Mr. Dickinson stated the Lease Revenues are filed with a lot of entities and flags can appear. He does not see this as a problem. RECEIVE UPDATE ON EDA PROPERTY ACQUISITION OF GREAT RIVER ENERGY SITE City Administrator Erar explained John Dahl of McKenzie Metro Appraisal recently updated the appraisal that was done about one year ago for a portion of the Great River Energy property located along Bunker Lake Boulevard. The appraisal takes into account the existence of power line easements and the land that was dedicated for Bunker Lake Boulevard. Mr. Erar discussed the appraisal information with the Commission. Mr. Erar explained staffhas evaluated this and recommends the EDA not move forward on this purchase due to the cost and the constraints. They could still have an option with Great River Energy to approve anything that goes on the site. He thought it was still worthwhile to go forward to see if Great River Energy would be open to an option. Commissioner Trude stated having some control over this property would be beneficial. After discussion, the Commission authorized Mr. Erar to negotiate with Great River Energy for an option. Commissioner Jacobson stated he had a conflict of interest so he decided to remain present for discussion. OTHER BUSINESS There was none. Motion by Orttel, Seconded by Johnson, to adjourn. Motion carried unanimously. The meeting adjourned at 6:59 p.m. Respectfully submitted, Susan Osbeck. Recording Secretary 0) J 1685 CROSSTOWN BOULEVARD N.W. . ANDOVER, MINNESOTA 55304. (763) 755-5100 FAX (763) 755-8923 . WWW.CI.ANDOVER.MN.US TO: EDA President and Board FROM: John Erar, EDA Executive Director SUBJECT: United Properties Commercial Site - Presentation DATE: June 17,2003 INTRODUCTION United Properties' representatives will be in attendance to present architectural renderings of the new Target Greatland development and site plan. DISCUSSION In order to move the development of the Target Greatland forward; the EDA Board will be requested to give preliminary site and building approval to the site development plan. Staff will I continue to work with United Properties and Ryan Properties to ensure that all covenants and design standards previously adopted by the Board are satisfied. Provided the design and plans are acceptable, United Properties will move forward with final site negotiations. ACTION REOUIRED The EDA Board is requested to provide United Properties with preliminary site and building plan approval for a Target Greatland store in Andover Station South. Re~<C~ ,U:tted. ~mr / C I T Y o F (f) NDOVE 1685 CROSSTOWN BOULEVARD N.W. . ANDOVER, MINNESOTA 55304. (763) 755-5100 FAX (763) 755-8923 . WWW.CI.ANDOVER.MN.US TO: EDA President and Board FROM: John Erar, EDA Executive Director SUBJECT: United Properties Residential Site - Presentation DATE: June 17,2003 INTRODUCTION United Properties' representatives will be in attendance to present architectural renderings of the new Bruggeman Homes development and site plan. DISCUSSION In order to move the development of the residential site forward, the EDA Board will be requested to give preliminary site and building approval to the site development plan. Staff will continue to work with United Properties and Bruggeman Homes to ensure that all covenants and design standards previously adopted by the Board are satisfied. Provided the design and plans are acceptable, United Properties will move forward with final site negotiations. ACTION REOUlRED The EDA Board is requested to provide United Properties with preliminary residential site and building plan approval for Bruggeman Homes in Andover Station South. Respectl' submitted, ~i (C~ J rar / cD J 1685 CROSSTOWN BOULEVARD N.W. . ANDOVER, MINNESOTA 55304. (763) 755-5100 FAX (763) 755-8923 . WWW.CI.ANDOVER.MN.US TO: EDA President and Board FROM: John Erar, EDA Executive Director SUBJECT: Approve 1" Amendment to Declaration of Restrictive Covenant DATE: June 17,2003 INTRODUCTION The attached document specifies a revised understanding between Target Corporation, United Properties, Festival Foods and the City Economic Development Authority as it relates to the non-compete grocery store provision incorporated within the original Declaration of Restrictive Covenant dated August 6, 2002. DISCUSSION If the EDA Board may recall, the original non-compete restrictive covenant prevented a competing grocery store facility from being constructed on EDA owned property. In order for a new Target Store to be constructed, the various parties. needed to amend the original covenant with regards to modifying the non- compete provisions to meet the needs of both Festival Foods and Target. Originally, Target had indicated a strong desire to construct a SuperTarget that would have brought that new business into direct competition , with Festival Foods. However, even with the operation of a Target Greatland, there would be a limited array of grocery items that could come into competition with a grocery store operation. Consequently, it was important to further define the restrictive nature of the covenant to accommodate the needs of Target and address the concerns of Festival Foods. Through several months of very complex negotiation that began last year, United Properties and my office worked with Target and Festival Foods to develop an acceptable revision to the non-compete provisions. The attached document represents that effort and is presented for EDA Board approval. The revisions to the original Declaration of Restrictive Covenant only affect the non-compete provisions and do not modify any other terms of existing agreements. ACTION REQUIRED Approve the 1" Amendment to Declaration of Restrictive Covenant as presented. The City Attorney has reviewed this document and has no legal objections to its adoption. J FIRST AMENDMENT TO DECLARATION OF RESTRICTIVE COVENANT I. RECITALS 1. Andover Economic Development Authority is identified as the "Grantor" in that certain Declaration of Restrictive Covenant dated August 6, 2002 recorded and filed as Document No. 1541249 on August 6, 2002, in the office of the Anoka County Recorder ("Declaration "). , 2. United Properties Investment LLC, a Minnesota limited liability company, is identified as the "Grantee" in such Declaration and is the party benefited by a "No Grocery Use Restriction" as defined in the Declaration ("Restriction") and is the record fee simple owner of Lot 1, Block 1, Andover Marketplace, Anoka County, Minnesota, which is defined as "Lot I" in the Declaration and referred to herein as the "Benefited Parcel". 3. In a Development Agreement dated September 25, 2001, between Grantor and Grantee, Grantor agreed to file the Declaration against certain real property located in the City of Andover defined in the Declaration as the "Property" to benefit the owner of the Benefited Parcel. The Declaration was a requirement of Grantee before Grantee would agree to construct improvements on the Benefited Parcel which improvements include an approximately 50,000 square foot grocery store "Grocery Store"). In reliance on the Declaration, Grantee has constructed such Grocery Store and entered into a long term lease of the portion of the Benefited Parcel on which the Grocery Store has been constructed, with Knowlan's Supermarkets, Inc. which also relied on the Declaration in the entering into of said lease. 4. In connection with the proposed development of a Target Greatland store on a parcel of property currently subject to Declaration ("Target Store"), Grantor has requested that Grantee agree to amend the Declaration to allow the development of real property described on Exhibit A to this First Amendment ("Target Parcel") for a Target Store. 5. Because Grantee has determined, after consultation with Knowlan's Supermarket, Inc. that the development of the Target Parcel as a Target Store is in the best interest of Grantee 1513391vl I 6/6/03 Doc# 1760444\2 I and Knowlan's Supermarket, Inc. Grantee is willing to agree to limited changes to the Declaration under the terms and conditions as set forth below. II. AGREEMENT The Declaration is hereby amended as follows: 1. Application to Target Parcel Only. The terms of this "First Amendment" apply to only the Target Parcel and to no other real property subject to the Declaration. 2. Contingency. This First Amendment will be of no force and effect unless and until: i) ownership of the Target Parcel is transferred of record (whether through mesne conveyances or directly from Grantor) to Target Corporation; or ii) ownership of the Target Parcel is transferred of record (whether through mesne conveyances or directly from Grantor) to a third party which in turn leases the Target Parcel to Target Corporation and a memorandum or short form or other notice of such lease is made of record (the "Contingency"). Until such time as the Contingency occurs and with respect to all property subject to the Declaration other than the Target Parcel, the Declaration and the Restriction as described in the Declaration, rather than in this First Amendment, shall apply. 3. Target Parcel Restriction. Subsequent to the occurrence of the Contingency, the , "Restriction", shall mean the following: I No business shall be operated on the Target Parcel which offers any of the following: (i) Fresh or frozen uncooked meats and uncooked poultry; (ii) A bakery department offering goods baked on-site; (iii) A delicatessen department offering freshly prepared foods and counter service; or (iv) Fresh produce (fruits and vegetables). (the "Target Parcel Restriction") Restaurant and other food service facilities, including snack bars, luncheonettes and fast food operations, whether or not intended primarily for on premises consumption or otherwise will not be subject to the Target Parcel Restriction. In addition, this Target Parcel Restriction shall not be deemed to prohibit the incidental sale of prepackaged foods containing meat (including sandwich meat), frozen pizzas and frozen dinners, prepackaged baked goods or prepackaged deli-type foods (such as sandwiches, pre-packed single serving salads or seasonal fruit baskets). J 1513391v1 2 6/6/03 Doc# 1760444\2 / Subsequent to the occurrence of the Contingency, the "Restricted Use" Definition and the "Primary Business" definition as set forth in the Declaration will not apply to the Target Parcel Restriction. Prior thereto, such definitions will apply. 4. Burden. Benefit. Successors and Assigns. The above Target Parcel Restriction is intended to be a servitude running with the land and shall bind the owner of the Target Parcel and all future owners and occupants of the Target Parcel. The Target Parcel Restriction shall be for the sole benefit of the fee owner ofthe Benefited Parcel, its successors or assigns ("Benefiting Party"). 5. Termination of Declaration As To Target Parcel Onlv. Notwithstanding anything in the Declaration or this First Amendment to the contrary, the terms, conditions, and restrictions set forth in the Declaration and this Amendment shall cease to apply to the Target Parcel if and when all of the following should occur: i) the expiration without renewal or earlier termination of the lease agreement with the Benefiting Party and its current lessee, Knowlan's Supermarkets, Inc, ("Lease"); ii) and the Benefiting Party has not entered into a lease agreement with another full service grocer within six (6) months following the expiration or earlier termination of said Lease; and iii) at such time as conditions i) and ii) occur there is operating upon the Target Parcel a Target Store which is open for business to the public. Until and unless all three conditions listed above as clauses i) through iii) occur, the Declaration and this First Amendment shall remain in full force and effect. I 6. Remedies As To Target Parcel Only. In the event the Benefiting Party claims that the owner or occupant of the Target Parcel ("Burdened Party") has violated the Target Parcel Restriction, the Benefiting Party shall provide written notice to the Burdened Party identifying the violation ("Notice of Violation") and the Burdened Party shall then have fifteen (IS) days in which to cure any such violation. If at the end of said fifteen (IS) day period, a violation continues, then the Benefiting Party may elect to proceed with anyone, or all of the following: (i) Seek injunctive relief to enjoin the violation of this First Amendment; or (ii) Be entitled to such other remedies available at law or in equity, however in no event shall the Benefiting Party be entitled to punitive or consequential damages arising out of any breach or alleged breach of this First Amendment; (iii) In the event an action is commenced to enforce any provision of this First Amendment, the prevailing party shall be entitled to recover costs and expenses incurred in such action, including reasonable attorneys' fees, from the non-prevailing party(s). iv) Any action seeking one or more fonns of relief shall not be a bar to an action at the same or subsequent time seeking other forms of relief. Any delay in realizing or failure to realize on any remedy herein for a default or breach hereunder shall not be deemed a waiver of that default or breach or of any subsequent default or breach of a similar or different kind, and no waiver of any right or remedy hereunder shall be effective unless in writing and signed by the person against whom the waiver is claimed. / 1513391v1 3 6/6/03 Doc# 1760444\2 7. Continuing Effect. Except as amended herein, the terms and conditions of the Declaration remain in full force and effect as to all real property subject to the Declaration. 8. Authority. Grantor and Grantee each represent and warrant to the other that they have the full capacity, right, power and authority to execute, deliver and perform this First Amendment and all required actions, consents and approvals therefore have been duly taken and obtained. This First Amendment dated as of ,2003 [Balance of Page Intentionally Left Blank] / 1513391vl 4 6/6/03 Doc# 1760444\2 ANDOVER ECONOMIC DEVELOPMENT AUTHORITY By: Its: By: Its: STATE OF MINNESOTA ) ) ss COUNTY OF ANOKA ) The foregoing instrument was acknowledged before me this day of - , 2003, by , the and by , the of Andover Economic / Development Authority, a body corporate and politic, on behalf of said Authority. Notary Public SEAL SIGNATURES FOLLOW ON NEXT PAGE 1513391 vi 5 6/6/03 Doc# 1760444\2 UNITED PROPERTIES INVESTMENT LLC By: Its: By: Its: STATE OF MINNESOTA ) ) ss COUNTY OF HENNEPIN ) The foregoing instrument was acknowledged before me this day of - , 2003, by , the I and , the of United Properties Investment LLC, a Minnesota limited liability company, on behalf of said Company. Notary Public SEAL DRAFfED BY: Lindquist & Vennum, P.L.L.P. (LBG) 4200 IDS Center, 80 S. 8th St. Minneapolis, MN. 55402 1513391vl 6 6/6/03 Doc# 1760444\2 The undersigned has consented to foregoing FIRST AMENDMENT TO DECLARATION OF RESTRICTIVE COVENANT. KNOWLAN'S SUPER MARKETS, INC., a Minnesota Corporation By: Its: STATE OF MINNESOTA ) ) ss: COUNTY OF ) The foregoing instrument was acknowledged before me this day of - , 2003, by , the , of Knowlan's Super Markets, Inc., a corporation under the laws of the state of Minnesota, on behalf ofthe corporation. Notary Public My Commission Expires: Doc# 1760444\2 The undersigned has consented to foregoing FIRST AMENDMENT TO DECLARATION OF RESTRICTNE COVENANT. TARGET CORPORATION a Minnesota Corporation By: Its: STATE OF MINNESOTA ) ) ss: COUNTY OF ) The foregoing instrument was acknowledged before me this day of - , 2003, by , the , of Target Corporation, a corporation under the laws of the state of Minnesota, on behalf of the corporation. Notary Public My Commission Expires: Doc# 1760444\2 @ 1685 CROSSTOWN BOULEVARD N.W. . ANDOVER, MINNESOTA 55304. (763) 755-5100 FAX (763) 755-8923 . WWW.CI.ANDOVER.MN.US TO: EDA President and Board FROM: John Erar, EDA Executive Director SUBJECT: Discuss Marketing Strategy for Andover Station North DATE: June 17,2003 INTRODUCTION The development of a site layout for Andover Station North is at point where the EDA Board will need to provide some direction to staff regarding the marketing of this property. As the Board is aware, there has been and continues to be interest in developing the site by both large and small business interests. DISCUSSION Staff has had discussions with several interested parties that are in the beginning stages of expressing interest in either acquiring individual parcels or large scale tracts of property to develop a master plan for the entire site. Staff would like to engage the EDA Board on this topic to begin the process of determining how to deal with prospective development interests. Staff will suggest various approaches at the meeting as time permits. ACTION REOUIRED For EDA Board consideration. J~m;",d' (j) 1685 CROSSTOWN BOULEVARD N.W. . ANDOVER, MINNESOTA 55304. (763) 755-5100 FAX (763) 755-8923 . WWW.CI.ANDOVER.MN.US TO: EDA President and Board FROM: John Erar, EDA Executive Director SUBJECT: Discuss EDA Board Position on Lease Revenue Bonds DATE: June 17, 2003 INTRODUCTION On June 4, 2003, the City Council declared its intent to support the issuance of lease revenue bonds for the new Andover Community Center. It was suggested that as the EDA Board will be called upon to issue the lease revenue bonds for this project, that the EDA Board should discuss its position relative to the issuance of these bonds. DISCUSSION Staff will be available at the meeting to respond to any questions or issues raised by the EDA Board. BUDGET IMPACT The issuance of Lease Revenue Bonds by the EDA Board will not affect EDA finances as debt service payments will come from a myriad of facility revenue sources, including YMCA Lease revenues, advertising, user fees, concessions, rentals and capital campaign pledges, with any difference in operating revenues and expenditures appropriated annually by the City Council through a separate City tax levy. Financial Performas prepared by the City finance department suggests that the facility will need minimal public subsidy for the first several years of operation. However, the level of public subsidy under a Lease Revenue Bond may be adjusted annually in response to rising or declining operating revenues generated by the new Community Center. The EDA is authorized under state statute to serve as the issuing agency. I have attached a copy of the state statute for Board review and information that was provided to the City by its fiscal advisor, Ehlers and Associates. ACTION REQUIRED Discuss EDA Board position relative to issuance of Lease Revenue Bonds. Minnesota Statutes 2002, 469.1 03 hllp:/Iwww .revisor.leg.state .mn. us/stats/ 469/103 .hlInl Minnesota Statutes 2002, Table of Chapters / Table of contents for Chapter 469 469.103 Revenue bonds; pledge; covenants. Subdivision 1. Authority. An economic development authority may decide by resolution to issue its revenue bonds either at one time or in series from time to time. The revenue bonds may be issued to provide money to pay to acquire land needed to operate the authority, to purchase or construct facilities, to purchase, construct, install, or furnish capital equipment to operate a facility for economic development of any kind within the city, or to pay to extend, enlarge, or improve a project under its control. The issued bonds may include the amount the authority considers necessary to establish an initial reserve to pay principal and interest on the bonds. The authority shall state in a resolution how the bonds and their attached interest coupons are to be executed. Subd. 2. Form. The bonds of each series issued by the authority under this section shall bear interest at a rate or rates, shall mature at the time or times within 20 years from the date of issuance, and shall be in the form, whether payable to bearer, registrable as to principal, or fully registrable, as determined by the authority. Section 469.102, subdivision 6, applies to all bonds issued under this section, and the bonds and their coupons, if any, when payable to bearer,shall be negotiable instruments, J Subd. 3. Sale. The sale of revenue bonds issued by the authority shall be at public or private sale. The bonds may be sold in the manner and for the price that the authority determines to be for the best interest of the authority. The bonds may be made callable, and if so issued, may be refunded. Subd. 4. Agreements. The authority may by resolution make an agreement or covenant with the bondholders or their trustee. The authority must first decide that the agreement or covenant is needed or desirable to do what the authority may do under this section and to assure that the revenue bonds are marketable and promptly paid. Subd. 5. Revenue p1.edge. In issuing general obligation or revenue bonds, the authority may secure the payment of the principal and the interest on the bonds by a pledge of and lien on authority revenue. The revenue must come from the facility to be acquired, constructed, or improved with the bond proceeds or from other facilities named in the bond-authorizing resolutions. The authority also may secure the payment with its promise to impose, maintain, and collect enough rentals, rates, and charges, for the use and occupancy of the facilities and for services furnished in connection with the use and occupancy, to pay its current expenses to operate and maintain the named facilities, and to produce and deposit lof2 6/12/20035:24 PM Minnesota Statutes 2002, 469. I 03 http://www.revisor.leg.state.mn.us/stats/469/103.html sufficient net revenue in a special fund to meet the interest and principal requirements of the bonds, and to collect and keep any more money required by the resolutions. The authority shall decide what constitutes "current expense" under this subdivision based on what is normal and reasonable under generally accepted accounting principles. Revenues pledged by the authority must not be used or pledged for any other authority purpose or to pay any other bonds issued under this section or under section 469.102, unless the other use or pledge is specifically authorized in the bond-authorizing resolutions. Subd. 6. Not city debt. Revenue bonds issued under this section are not a debt of the authority's city nor a pledge of that city's full faith and credit. The bonds are payable only from project revenue as described in this section. A revenue bond must contain on its face a statement to the effect that the economic development authority and its city do not have to pay the bond or the interest on it except from revenue and that the faith, credit, and taxing power of the city are not pledged to pay the principal of or the interest on the bond. Subd. 7. Not applicable. Sections 469.153, subdivision 2, paragraph (e), and 469.154, subdivisions 3, 4, and 5 do not apply to revenue bonds issued under this section and sections 469.152 to 469.165 if the interest on the revenue bonds is subject to both state and federal income tax or if the revenue bond proceeds are not loaned by the authority to a private person. Subd. 8. Tax increment bonds. Obligations secured or payable from tax increment revenues and issued pursuant to this / section or section 469.102 are subject to the provisions of section 469.178. HIST: 1987 c 291 s 104 Copyright 2002 by the Office of Revisor of Statutes, State of Minnesota. , / 20f2 6/12/20035:24 PM , (J') -0, a) , \ = "C "C C ~.r;j ;... a) o = =~ ; CO a) ~ 0 ....- -- ,..=~~ a)= ~ OJ ....- 0 "C ;... 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