Memo Letter From Don RoesnerCITY OF HOPKINS
MEMORANDUM
DATE: December 6, 1995
TO: The Honorable Mayor and City Council
FROM: l fr Jim Kerrigan, Director Planning & Economic Development
SUBJECT: October 17, 1995, Letter from Don Roesner
At the December 12 work session, one of the agenda items will
involve a discussion of the above letter and the response by Bob
Deike. Mr. Deike will be present at this meeting to respond to
questions. This item is scheduled for a 15- minute period.
JK12065A
November 9, 1995
Don Roesner
618 West Park Valley Drive
Hopkins, MN 55343
RE: Response to Memo Dated 10/17/95
Dear Don:
Enclosed is a letter from Bob Deike addressing your concern about
the Hopkins HRA borrowing from Tax Increment Financing District 1 -1
to 2 -6 in order to facilitate construction of the Sonoma Handicap
Housing Project.
In summary, Mr. Deike has stated that the transaction meets all
statutory requirements and is appropriate from a fiscal standpoint.
His opinion is consistent with what staff has previously told you
concerning this matter.
If you have any questions, you can call Jim Kerrigan or Paul
Steinman at 935 -8474. If you wish to discuss this with the City
Council, please let me know, and I can arrange time at a future
work session.
Sincerely,
Steve Mielke
City Manager
Enclosure
Copies:
JK10255A
C I T Y O F H O P K I N S
Chuck Redepenning
Bob Anderson
Fran Hesch
Charles Kritzler
Gene Maxwell
Jim Kerrigan
Paul Steinman
Bob Deike
1010 First Street South Hopkins, Minnesota 55343
Phone: 612- 935 -8474 Fax: 612- 935 -1834
An Equal Opportunity Employer
Dear Jim:
BRADLEY &DEIKE, P.A.
Attorneys At Law
SUITE 306, 5100 EDEN AVENUE
EDINA, MINNESOTA 55436 -2337
Mr. James Kerrigan
City of Hopkins
1010 First Street South
Hopkins, MN 55343
Re:. Tax Increment Financing Districts No. 1 -1 and 2 -6
October 27, 1995
PATRICK J. BRADLEY
ROBERT J. DEIKE
STEPHEN J. WONTOR
(612) 927 -4333
FAX (612) 927 -7049
At your request I have reviewed the handwritten memo you received from Don Roesner
concerning the $566,500 loan made from Tax Increment District 1 -1 to finance the National
Handicap Housing Institute project in District 2 -6. Mr. Roesner is apparently concerned about
why the HRA made the loan and by what authority.
The loan was made to provide financing for the housing project. At the time that the housing
project was started and the HRA needed funds to finance its acitivities, there was no money being
generated by District No. 2 -6: The HRA's only options at that time were to borrow funds from an
outside source or to use funds from District 1 -1. The HRA decided that the more responsible
decision, from a fiscal standpoint, was to use its own funds rather than pay interest on borrowed
funds. The transaction was structured as a loan so that tax increment that was generated from the
housing project could be paid back to District 1 -1 and used for other projects.
Transfers and loans between municipal funds is a commonly -used alternative to incurring the costs
of borrowing money. To the extent that the funds are repaid, they are not considered to have been
spent from the fund from which they were borrowed.
The loan agreement for the loan from District 1 -1 to District 2 -6 states that the entire principal
amount of the loan will not be repaid. The repayment schedule does not take into account any
inflationary growth in the values of District 2 -6. If normal inflation is considered, there could be
generated sufficient tax increment to repay the entire loan.
However, whether or not the transferred funds are actually repaid is not important because the
HRA had the legal authority to spend the funds from District 1 -1 on the housing project. At the
time that the tax increment plan for District 2 -6 was approved the HRA also expanded the
boundaries of its Redevelopment Project No. 1, the project within which District 1 -1 is located.
Mr. James Kerrigan
October 27, 1995
Page 2
According to the plan that expanded the boundaries of Redevelopment Project No. 1, the purpose
of the expansion was to allow the expenditure of District 1 -1 tax increment funds on projects
within the expanded area, including, specifically, the housing project for which the District 2 -6
was created. The budget for District 1 -1 included a budgeted $805,000 for housing purposes so no
change in the budget was needed.
Based on my review of the relevant documents, it appears to me that the HRA took all of the steps
necessary to allow it to spend the funds on the housing project. Structuring it as a loan merely
made good fiscal sense.
I hope that this letter is helpful to you. Let me know if I can be of further assistance.
Sincerely,
Robert J. Deike
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5-73
DATE: December 7, 1995
TO: The Honorable Mayor and City Council
77,/fROM: Paul T. Steinman, Community Development Specialist
SUBJECT: Topic of Discussion for December 12, 1995, Work Session
PURPOSE
The purpose of this memo will be to outline a number of questions
which need to be addressed to provide direction on this issue to
City staff and the Arts Facility Steering Committee.
OVERVIEW
CITY OF HOPKINS
MEMORANDUM
The Arts Facility Steering committee recently proposed the
construction of a 30,000 square foot arts facility, for a total
cost of approximately $3.4 million. Such proposal assumes a site
location at the north side of the former Suburban Chevrolet
property. The Steering Committee asked, within their proposal,
that the Council provide them the go -ahead to begin a fundraising
campaign and, in conjunction with this, contract with Opus
Corporation to begin design plans of the facility.
Discussion at this meeting indicated that various issues needed
to be addressed prior to moving forward on this project. These
issues are the following:
• Referendum
• Parking /traffic related to the location of the facility
• Project operating cost /revenue estimates
• City funding of a $500,000 loan to the School District
• Design
It was discussed that the Council work session on December 12
would involve a discussion of design issues. The intent of the
December 12 work session has been expanded somewhat to also
include Council's reaction to other aspects of the project.
PS12075A
PRIMARY ISSUES
Staff feels that, in order to provide adequate direction, the
following issues need to be discussed at the December 12 work
session by each of the Council members and Council members - elect:
• Should a referendum be pursued?
• Should staff and the Steering Committee begin to examine
other site locations for this project?
• What are the specific design elements that the Council would
like to see included /excluded from the current Steering
Committee proposal?
Other issues which staff will be able to participate in
addressing are as follows:
• What are the financial implications of the $1.5 million
expenditure, plus an additional $500,000 loan to the School
District?
• Should the services of a facilitator be utilized to aid in
resolving outstanding issues?
• What is an appropriate activity schedule that should be
followed over the next several months?
CONCLUSION
In order for staff and the Steering Committee to continue to
pursue this project, it is important that the Council come to
some consensus on the three questions identified above, in
addition to providing any other direction it feels necessary at
this time.
PS12075A