Sources
& Uses Schedule
Request for City Council Committee Action
From the Department of Community Planning & Economic Development
Date: May 4, 2004
To: Council Member Lisa Goodman,
Community Development Committee
Refer To: MCDA Board of Commissioners
Prepared by: CPED Staff and
Jim White, Senior Project Coordinator, Phone 612-673-5170
Presented by: Lee Sheehy, CPED Director, Phone 612-673-5125
Approved by: Lee Sheehy, CPED Director _________
Subject: Approval of term sheet for Midtown Exchange (formerly
Sears) redevelopment project and related actions necessary for the development.
RECOMMENDATION: (1) Approve term sheet for Ryan Companies’ Midtown
Exchange project. (2) Authorize preparation of redevelopment agreement
and related documents consistent with such terms. (3) Approve the project
employment goals set forth in the term sheet. (4) Authorize redevelopment
and tax increment financing plan modification to be prepared concurrently
with project analysis. (5) Authorize sub-grant of existing TBRA funds
to Ryan Companies for environmental testing and remediation at Midtown
Exchange. 6) Waive the City Procurement Policy to allow United Properties
to continue management of the former Sears properties until transfer of
property to the Developer. (7) Refer to MCDA Board of Commissioners for
concurrence and approval.
Previous Directives
On December 3, 1997, the MCDA Board of Commissioners (“Board”)
authorized a $2,000,000 Leveraged Investment Account loan and a $200,000
NRP Loan to STA Associates, Inc.; on July 17, 1998, the Board approved
$500,000 in MILES funding for retrofit items; on October 24, 1997, and
April 24 and October 30, 1998, the Board authorized grant applications
to and receipt of $4,600,000 from Metropolitan Council Tax Base Revitalization
Account; in Fall 1998 the Board authorized Federal Empowerment Zone designation
to include the project area and receipt of $3,000,000 from HUD for the
Zone; on March 25, 1999, the Board approved Empowerment Zone funding for
retrofit items, pollution abatement and a childcare facility; on April
9, 1999, the Board appropriated $650,000 in FUND CBG and waived 3% City
admin fee; in June 1999 the Board authorized application to HUD for an
$8,500,000 Economic Development Initiative grant and loan for parking
ramp construction contingent on application for a $6,500,000 Section 108
loan; on July 19, 1999, the Board directed staff to proceed with ramp
construction financing and development plans and require STA to meet certain
conditions before ramp construction could begin; on March 12, 2001, the
City Council confirmed a settlement in lieu of foreclosure between MCDA
and STA Associates, Inc., and STA Development Corporation regarding the
Great Lake Center, and authorized the necessary steps to implement the
settlement, including the direction to refer the appropriation requests
to City Council to secure the funds needed for the settlement; on August
10, 2001, the Board confirmed the settlement terms in lieu of foreclosure
for a lender to lender workout with Marquette Bank regarding the Great
Lake Center project; on June 10, 2002, the City Council approved a resolution
to set up funds to receive and spend rental income from the project on
property management and professional services for the project; on August
26, 2002, the Board approved the sale of 2815 10th Ave S to Project for
Pride in Living for $5,000; on September 13, 2002, the City Council adopted
resolutions approving the Lake Street Center Redevelopment and Tax Increment
Finance Plans; on September 13, 2002, the Board approved the sale of the
northern portion of the Lake Street Center property to Allina Health System
for $5.2 million; on October 28, 2002 the Board approved the purchase
of equipment from MDI for use at the Lake Street Center buildings; on
December 30, 2002, the Board authorized the preparation of a Request for
Redevelopment Proposals for the Lake Street Center; on April 8, 2003,
the Board authorized the Deputy Executive Director to send out the Request
for Proposals (RFP) for the Lake Street Center Project; on July 29, 2003,
the Board approved a process for rating and recommending a developer for
the Lake Street Center Project; on October 24, 2003, the Board ranked
two development teams for the project; on November 10, 2003, the Board
authorized the appropriate MCDA officials to execute and deliver all necessary
documentation required to repay the remaining Marquette and NRP loans
for Lake Street Center prior to December 31, 2003; on December 29, 2003,
the City Council authorized the transfer of most MCDA programs and assets
(excluding real estate) to the City; on January 6, 2004, the City Council
granted Ryan Companies 6 months exclusive development rights for the former
Sears site; and on February 3, 2004, the Council concurred with housing
as a land use at Midtown Exchange and up to $13 million in appropriate
funding, subject to final agreement on a housing mix and financing plan.
Financial Impact
(Check those that apply)
___ No financial impact - or - Action is within current department budget.
(If checked, go directly to Background/Supporting Information)
___ Action requires an appropriation increase to the Capital Budget
___ Action requires an appropriation increase to the Operating Budget
___ Action provides increased revenue for appropriation increase
___ Action requires use of contingency or reserves
_x__ Other financial impact (Explain): The development of this property
will reduce the City’s property inventory, increase its tax base,
increase job opportunities for City residents, retain and enhance a historically
significant building, enable emerging businesses to grow, improve public
transit, and create new and site-sensitive connections to the Midtown
Greenway.
___Request provided to the Budget Office when provided to the Committee
Coordinator
Community Impact
The redevelopment of one of
the largest buildings in Minneapolis, the former Sears site, will have
a significant impact for the betterment of south central Minneapolis.
Its opening will create a large office market where none currently exists.
The project will bring the first hotel to Lake Street and create new job
opportunities for area residents. Approximately 360 housing units in the
project will create a 24-hour presence which will improve the street vitality
and safety. The Global Marketplace will provide new opportunities for
emerging businesses to expand, drawing shoppers to the neighborhood from
the larger metropolitan area. Lastly, connections to the Midtown Greenway
will further serve to create a desirable point for residents to migrate
for shopping and recreation.
Ward
8
Neighborhood Notification
The Chicago Lake Project Review
Committee, with representatives from Powderhorn Park Neighborhood Association,
Phillips West, East, and Midtown, the Central Neighborhood Improvement
Association, Urban Ventures, the Chicago Lake Business Association, and
the Greater Lake Street Council, was notified of this report in advance
of its presentation. A copy of this report was sent to each of these organizations,
as well as the Phillips Partnership and Midtown Community Works. Additionally,
a broadly-noticed and cable-cast community meeting was held on April 13th
in the neighborhood, and a website www.midtowncommunityworks.org has been
developed specifically to inform the public about the project’s
status.
Questions and answers from the meeting are posted on the Midtown Exchange
News website, along with new questions received by alliance members. A
meeting evaluation form completed by participants showed a high level
of satisfaction on most meeting elements and provided direction in how
to improve the next meeting.
The next community meeting is scheduled for May 26th. 7 pm at Anderson
School. The alliance will be working with neighborhood groups and the
Chicago Lake Review Committee to set the agenda and get the word out for
this meeting.
Attachment 3 - Chicago Lake Redevelopment District Guidelines, provides
the historical perspective on the Community participation process.
City Goals
· Build communities where all people feel safe and trust the City’s
public safety professionals and systems.
· Maintain the physical infrastructure to ensure a healthy, vital
and safe City.
· Deliver consistently high quality City services at a good value
to our taxpayers.
· Create an environment that maximizes economic development opportunities
within Minneapolis by focusing on the City’s physical and human
assets.
· Preserve and enhance our natural and historic environment and
promote a clean, sustainable Minneapolis.
· Promote public, community and private partnerships to address
disparities and to support strong, healthy families and communities.
· Foster the development and preservation of a mix of quality housing
types that is available, affordable, meets current needs, and promotes
future growth.
Comprehensive Plan
2.9. Minneapolis will strengthen long-term confidence in the economy by
building innovative public to private sector partnerships.
2.6. Minneapolis will focus resources and efforts on connecting residents
to living wage jobs.
4.1. Minneapolis will encourage reinvestment along major urban corridors
as a way of promoting growth in all neighborhoods.
4.4. Minneapolis will continue to provide a wide range of goods and services
for city residents, to promote employment opportunities, to encourage
the use and adaptive reuse of existing commercial buildings, and to maintain
and improve compatibility with surrounding areas.
4.9 Minneapolis will grow by increasing its supply of housing.
4.12 Minneapolis will reasonably accommodate the housing needs of all
of its citizens.
Land Use
As outlined in Attachment 2,
substantial land use review and approval processes are underway. As is
customary, the Term Sheet includes contingencies for the parties related
to such final review and approvals. In adopting this Report and Term Sheet,
the City does not commit to such approvals. Ryan does, however, reserve
the right not to proceed if such approvals are not received or not received
on a timely basis.
Living Wage/Job Linkage
The City's job linkage and living
wage/business subsidy policies if applicable, will be incorporated in
the redevelopment contract.
This report outlines the terms and conditions negotiated to date for the
Midtown Exchange project. The term sheet is included as Attachment 1 to
this report. Staff’s recommendation is to (1) approve term
sheet for Ryan Companies’ Midtown Exchange project, (2) authorize
preparation of redevelopment agreement and related documents consistent
with such terms, (3) approve the project employment and contracting goals
set forth in the term sheet, (4) authorize redevelopment and tax increment
financing plan modification to be prepared concurrently with project analysis,
(5) authorize sub-grant of existing TBRA funds to Ryan Companies for environmental
testing and remediation at Midtown Exchange, (6) waive the City Procurement
Policy to allow United Properties to continue management of the former
Sears properties until transfer of property to the Developer, (7) refer
to MCDA Board of Commissioners for concurrence and approval.
The key elements of the term sheet are outlined in this report. If these
are approved by the City Council, drafting will begin immediately on the
project redevelopment agreement. The timetable is such that the redevelopment
agreement must be executed in June, and the City will close with Ryan
shortly thereafter.
Staff will need to return to the City Council for land sale approvals,
financing commitments, zoning actions and other implementation items prior
to execution of the redevelopment contract. Ryan intends to begin site
redevelopment activities in July, with completion expected in the first
quarter of 2006. Allina wants to occupy a portion of its space in late
2005. A pre-development timetable is attached as Attachment 2.
