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HomeMy WebLinkAbout6.a. HRA Construction Loan Requesta � CITY OF ROSEMOUNT HOUSING REDEVELOPMENT AUTHORITY AGENDA FEBRUARY 16, 1988 **********ANNUAL************ 7:00 P.M. Special H.R.A. Meeting ******ORGANIZATIONAL******** **********MEETING*********** 1. Call to Order 2. Chairman's Review of 1987 3. ELECTION OF 1988 CHAIRMAN & SECRETARY a. Election of Chairman for 1988 b. Election of Secretary for 1988 C. Discuss Stipend Payments for Members d. Adopt Resolution for Compensation of Members e. 4. REVIEW SOUTH ROBERT SgUARE PROJECT a. Review Information on Short Term Loan Request b. Update on Bid tabs for South Robert Square Project C. d. 8. ADJOURNMENT February 11, 1988 TO: Mayor and City Council HRA Board FROM: Don F. Darling, Ex Dir Subject: Construction Funding South Robert Square Project 2875 -145TH ST. W. ROSEMOUNT, MINNESOTA 55068 612--423-4411 Attachedplease' find my memo 'dated January 29, 1988 that outlined to the HRA Board, information leading to a request that the City Council consider participating in the Downtown Project once again by providing short term funding for construction of the current project now under bid. We must report that at present we have not opened bids for this project even though that was scheduled for 2:00 p.m., Tuesday, February 9th. Due to a Postal Service problem one of the Bidders reportedly did not receive one of the Addendum to the Plans and Specs. This then prompted yours truly and Milt Bruflodt to agree to extend the bid opening date to 2:OO p.m., Thursday, February 18th. This will then delay the award to sometime in March of 1988. The delay in awarding bids will give some assurance that all 'is well with the project and we are in no way causing a problem for the HRA in doing this project at this time. Based on the above estimates provided by the Architect we are looking at a need to finance One Million dollars in short term construction funding for this project. The HRA would at this time request consideration by the City Council, to embrace the concept of the City Reserves being utilized to fund the short term construction funding needed for the South Robert Square Project and cause this item to be placed back on a future City Council Agenda for final consideration when final construction costs are known. This is a short term arrangement with a maximum term of 12 months. There will be several draws required as the full amount will not be needed at the start of the project. This would then allow the City Finance Section the opportunity to stage return of the investments without penalty. The HRA Board approved a "concept" of interest payment on the construction funding of 1% to 1.5% over the Current Jumbo CD rates. This offering to you for your consideration during the discussion on this request. January 29, 1988 0 '-�/ (I)i I yof (�klosemount TO: HRA Board FROM: Don F. Darling, Ex Dir Subject: Construction funding South Robert Square 0 2675 -145TH ST W. ROSEMOUNT. MINNESOTA 55068 612-423-4411 We are scheduled to report to you at the February 2, 1988 Regular HRA meeting that we are going forward with the South Robert Square Project. With this in mind we wish to discuss with you the need for Construction Financing for this project. We have written confirmation from Miller & Schroeder that we have both the construction loan and the long term definitive loan for the project but it is being suggested that the HRA in an effort to leverage the fundsavailable and save monies during this process consider asking the City Council to participate with the HRA by utilizing City Reserve Funds as construction funding for this project. This would create considerable savings in HRA funds and would still generate interest earnings for the City Reserve Funds being utilized in this process. We are projecting considerable savings should this process be ,favorable to both Council and the HRA Board. These projections of estimated needs and savings will be avaiiable at the February 2, 1988 meeting or sooner for your information and review. Our concern when discussing this at the Staff level was whether is would be allowed by Law and would Miller & Schroeder insist on having the Construction Funding interest earnings as well as the Definitive Bonds. We have directed Attorney Knutson to investigate both issues. He has reported that after having contacted Miller & Schroeder about their involvement in this phase of the funding, they expressed a willingness to go along with whatever the City decides is in its best interest. Also, he advised that a Short Term Construction Loan by the City in favor of the HRA is certainly permissible under Minnesota Statute. With this information in hand I would request that you authorize Staff to approach the City Council with this same information at the February 16, 1988 Regular meeting of the Council and from there, should they approve, the necessary papers and contracts be drawn up to facilitate finalizing the transactions needed regarding the short term loans. Further, Staff would recommend that an interest rate 1 to 2 points above the Jumbo CD Rate on the date of the loan be established as the rate to be offered by the HRA for the construction fund loan.