Idaho Falls Redevelopment Agency

IDAHO FALLS REDEVELOPMENT AGENC Y P.O. BOX 50220 IDAHO FALLS, ID 83405 October 19, 2017 Regular Meeting Minutes Council Chambers Call to Order: Lee Radford called the meeting to order at 12:00. Members Present: Lee Radford, Brent Thompson, Kirk Larsen, Terri Gazdik, Dave Radford, Thomas Halley. Members Absent: Chris Harvey Also Present: Brad Cramer; Matt Parks, Esq., Ryan Armbruster (via telephone); and interested citizens. Modifications to Agenda: Cramer requested a change to #5 Approval of Purchase and Sale Agreement. Cramer stated that it should state that it is Resolution Approving Purchase and Sale Agreement. Cramer requested an addition to the Agenda to include reviewing the letter of engagement with Rudd and Company for the audit. Dave Radford moved to amend the Agenda pursuant to Cramer’s request, including changing #5 to state Resolution Approving Purchase and Sale Agreement; and adding an item to review the engagement letter with Rudd and Company for the audit, Thomas Hally seconded the motion and it passed unanimously. Minutes: Kirk Larsen moved to approve the minutes of September 21, 2017 Thomas Halley seconded the motion and it passed unanimously. Approval of Bills: Lee Radford presented the finance report dated October 19, 2017. The following bills were presented to be paid from the Snake River Allocation Fund: Redevelopment Association of Idaho, $2,050.00 for dues; EICRMP, $2,181.00 for insurance; Elam and Burke, $4,561.30 for legal services; Rebecca Thompson, $115.00 for transcription of minutes; Clock Tower, LLC., $125,000.00 for Culver’s reimbursement; and a bill to be ratified to GFB, LLC $112,221.00, for the Deseret Book reimbursement. The following bill was presented to be paid from the Jackson Hole Junction Revenue Allocation Fund: Elam and Burke, $12,350.65 for legal services. Brent Thompson moved to approve the Finance Report, Thomas Halley seconded the motion and it passed unanimously. Resolution Approving the Purchase and Sale Agreement: Kelsch Project. Brent Thompson chaired this agenda item as Lee Radford recused himself. Thompson asked Jeremy Malone to give a status report on the project. Jeremy Malone. Malone stated that they are breaking ground and they have found some surprises, including 4 different cases of contaminated soil (3 were anticipated), the 4th one was found on Monday by “A” Street. Malone stated that they will remove that contaminated soil by the end of the week. Malone stated that Monday they will do a test blast for the rock excavation to determine how the rock separates under blasting condition. Malone stated that they will have over 1000 blast points on the site and will be able to complete excavation by the 1st week in November. Malone stated that if the Resolution is approved today they will have the concrete subcontractor start working on footings and foundations and try to have those finished prior to snow. 1 Idaho Falls Redevelopment Agency October 19, 2017 Thompson asked if they are scheduled to have work completed by August 2018. Malone stated that the shell and core portion will be completed by August with tentative improvements within the buildings. Malone stated that the last portion will be the plaza and they want all the heavy equipment off before they do the topping slab of the plaza. Matt Parks, Esq., stated that the draft of the purchase and sale agreement that was included in the packet was revised to account for the receipt of the guaranteed maximum price proposal (GMP) by the Oppenheimer Company. Parks stated that the revision to the contract accounted for the establishment of a GMP of $4.3 million for 3 condominium units that will be purchased by the Agency, including the surface parking, the garage parking and, the plaza. Parks stated that they have structured it to be based on the actual cost of construction, subject to the $4.3 million cap. Parks stated that there is also the potential for Agency payment for relocation or undergrounding of powerlines on the property which is still within the GMP. Parks stated that there is an exhibit attached to the Agreement, including the Parking Management Agreement which establishes the Agency and IF-1 (Oppenheimer) obligations regarding parking management. Parks stated that the Oppenheimer Development Company would be appointed as the initial operator to handle the management obligations for the parking management of the garage and surface parking until the Agency/City determines that it will handle the parking in-house or use a 3rd party parking management operator. Parks stated that there is also an attachment to the PSA a copy of the condominium declaration covenants and conditions. Parks stated that they are straight forward and divide the obligation between the parties as to which areas are common areas, and which parties will be responsible for maintenance on different areas. Parks stated that the exact number on the common area allocation are not available as it is too early to have a condominium plat in place. Parks stated that the allocation will be based on square footage of the interior spaces of the units, so each floor of the Oppenheimer building will be accounted for and then the parking units and plaza will be accounted for. Parks stated that the final agreement attached to the PSA is a right of first refusal and option for the IF-1 entity to purchase the garage and parking from the Agency on an option as well as if the Agency were to sell the property in the future, it would be subject to the right of first refusal. Parks stated that the option and right of first refusal is not triggered by the Agency’s transfer of the property to the City. Parks stated that if the Agency transfers the property to the City the right of first refusal and option would run with that transfer. Brent Thompson asked Parks for the terms of the option. Parks stated that the price determination is based on the amount the Agency has paid for the unit. Parks stated that there is a maximum amount that is not going to be greater than the amount paid, subject to an annual increase of 2.5%. Parks stated that the option period does not begin until 5 years after the closing on the property. Matt Parks stated that there is still a need for confirmation from the City Engineer and/or Harper Leavitt to confirm that the numbers are acceptable. Parks stated that all indications appear that they are, but they need additional time to crunch the numbers. Parks stated that the Resolution provides the authority for the Vice Chairman and executive director to execute the Contract if the GMP amount does not exceed $4.3 million and they have confirmation from the City and/or Harper Leavitt that the cost estimates are acceptable (commercially reasonable). Cramer stated that the City Engineering Department will have a report to Cramer by 10/20/17 to make sure the per-unit costs are fair and reasonable. Cramer stated that Harper Leavitt is reviewing the cost in detail and reviewing the structure of the garage to ensure that any over sizing that was required are noted and accounted for. Cramer expects the report from Harper Leavitt in a week. Brent Thompson asked if there will be undivided interests in the property based on the number of units. Parks stated that it is covered in the Condominium Declaration with the legal descriptions for the units 2 Idaho Falls Redevelopment Agency October 19, 2017 and it will be a standard legal description with an undivided interest in the common areas. Parks stated that they do not have the plat yet, but once it is available the legal description for the units will be prepared and will provide for the interest in the units and undivided interest in the common areas. Cramer stated that the vote on the Purchase and Sale Agreement is the commitment for $4.3 million towards the project. Cramer presented a slide that outlined when payments were due as it is not $4.3 million all at once. Cramer stated that there are small costs at the time the PSA is executed; costs at closing; costs for excavation; and some costs don’t get paid until after the CO are issued. Cramer stated that the Agency could not write a $4.3 million check today, but with the payments spread the Agency does have the projected cash flow and budget to make all the financial commitments over the period. Cramer stated that Oppenheimers are carrying some of the cost throughout the project and that is reflected. Cramer stated that other projects that might come forward will have to be considered very carefully. Thomas Halley asked if the parking garage is the largest cost. Cramer agreed that the parking garage is the bulk of the cost of the project. Thompson asked if they will be near the maximum price. Cramer stated that it will be unlikely for the cost to come in less than $4.3 million. Dave Radford asked if the plaza is included in the surface parking and owned by the Agency. Thompson clarified that the Agency will own 3 units including the surface parking unit, the plaza unit, and underground garage. Gazdik asked if they should have the study back from Harper Leavitt before they vote. Cramer stated that the Purchase and Sale Agreement is written so that if the reports come back and the costs are not fair and reasonable the Agency can back out, renegotiate number and fine tune the Agreement. Parks stated that the approval process will have the Board authorize the executive director and vice-chair to execute the PSA after receiving the information from the city engineer and Harper Leavitt. Brent Thompson moved to have the Resolution read by Title followed by a rollcall vote, Halley seconded the motion and it passed unanimously. Armbruster read the Resolution by title. RESOLUTION OF THE BOARD OF COMMISSIONERS OF THE URBAN RENEWAL AGENCY OF IDAHO FALLS, ALSO KNOWN AS THE IDAHO FALLS REDVELOPMENT AGENCY, APPROVING THE PURCHASE AND SALE AGREEMENT BETWEEN THE AGENCY AND IF-1, LLC.; AUTHORIZING THE CHAIR, VICE-CHAIR, OR EXECUTIVE DIRECTOR AND SECRETARY RESPECTIVELY TO EXECUTE AND ATTEST SAID AGREEMENT, SUBJECT TO CERTAIN CONDITIONS; AUTHORIING THE EXECUTIVE DIRECTOR TO EXECUTE ALL NECESSARY DOCUMENTS REQUIRED TO IMPLEMENT THE AGREEMENT AND TO MAKE ANY NECESSARY TECHNICAL CHANGES TO THE AGREEMENT, SUBJECT TO CERTAIN CONDITIONS, AND PROVIDING AN EFFECTIVE DATE. Thompson requested a roll call vote: Kirk Larsen, yes; Terri Gazdik, yes; Lee Radford, abstain; Brent Thompson, yes; Thomas Halley, yes; Dave Radford, yes. The motion passed unanimously. Request for Assistance on Riverwalk Drive. Cramer stated that the staff notes give a history of the project with the OPA and the maximum reimbursable amount. Cramer reminded the Board that the OPA did not only cover the site remediation for the hotel. Cramer stated that there is the rock removal, a major sewer and trunk line across the site, improvements to the trail side and the big piece for the Agency was to construct Riverwalk Drive. Cramer stated that the Woodbury group was only required by the city Code 3 Idaho Falls Redevelopment Agency October 19, 2017 to build Riverwalk across the frontage of the property, and they agreed to be the contractor and build the rest of the road to connect from Utah to Pancheri. Cramer stated that as part of the OPA the Agency agreed to a maximum reimbursable amount of $3.489 million. Cramer stated that early in the project there were large change orders, with one being $300,000 in rock removal that was not anticipated because the test holes on the site went around a ridge of rock. Cramer stated that Woodbury came to staff and asked if they needed to stall the project and ask for an adjustment to the OPA. Cramer stated that Woodbury tried to save additional savings so they could come in close to the budget on the project. Cramer included the minutes from the meetings (2x). Cramer stated that Woodbury has listed all the change orders for the project and demonstrated that there were over $500,000 in OPA change orders, and they’ve tried to find other savings through value engineering, reduce overtime, etc. Cramer showed a slide that shows the final amount requested to finish the project of $295,000.00 to cover the overages. Cramer stated that the vote for the PSA on the Kelsch project will affect the Agency’s ability to make this additional payment right away. Cramer stated that if the Agency wants to grant the request or a portion thereof, it would have to do so at the expense of another project, such as the purchase of the Aladdin Floral building. Cramer stated that there is a timing problem as all the expensive requests are coming forward right now. Cramer suggested that if the Agency is in favor of the request, could the payment be made over time. Halley asked if there would be interest attached if the payment was paid over time. Cramer stated that he has not had time to look into options. Brent Thompson asked what is happening with Aladdin Floral. Lee Radford stated that it is moving forward and the Bankruptcy is moving forward, and a Trustee may be appointed and if a Trustee is appointed, the Trustee can decide whether to sell the property. Jeff Stokes, Woodbury. Stokes stated that if they take out the earlier expense on the lava rock of $350,000 at the beginning of the project, they would have fell within the maximum reimbursable amount. Stokes stated that working right at the red line required Stokes and the other trades to keep their pencil sharp during the project. Stokes stated that he has always tried to stay transparent an open with the Agency. Stokes stated that they worked with the City and had them sign all the change orders. Stokes stated that they have pending change orders to close out the project and that will go through the same process with the City signing on the change orders. Stokes stated that he is still trying to carve out additional money when they close out the project. Lee Radford asked if the pending change orders will change the requested $295,000. Stokes stated that he has $130,399.00 in pending change orders, and that is included in the $295,000.00. Stokes stated they are trying to get all unit prices verified. Lee Radford stated that Riverwalk Drive came in on budget. Lee Radford stated that the park has an overage. Stokes stated that he has gone to Parks and Rec and sat down with Greg Weitzel, and Weitzel agreed to install the plants and reduce some of the cost in the Park. Stokes stated that Parks and Rec will finish the round-about. Lee Radford stated that the overrun on Springhill Suites public improvements is due to rock excavation. Lee Radford asked how the park went from $689,000 to $1 million. Stokes stated that the actual park layout and design had to be a lot of guess work and the steep grade on the improvements were not approved by the City and Park Department for safety in mowing, so the area had to be raised and elevated by doubling the size of the rock wall and that increased by $185,000. Stokes stated that the design in the retention area was problematic when the City Engineers came out and didn’t like the steep grades of the slop for maintenance and the fractured rock was a hazard area so they were asked to dress the area up for public safety and maintenance. Dave Radford stated that the request is based on a $350,000 overage on change orders that have been approved by the City. Dave Radford asked if Stokes would be willing to stretch the payment out, if the 4 Idaho Falls Redevelopment Agency October 19, 2017 Agency was willing to cover the overage. Stokes stated that he will be ok with any assistance the Board is willing to give. Dave Radford asked if this is setting a precedent for future projects. Stokes stated that they knew about the overage since the beginning of the project and came to the Board and Staff early on and asked for direction. Stokes stated that they do have a contingency built in and some other things built in. Stokes stated that the original bid cost with Knife River was underbudget. Stokes stated that the real problem was the rock at the beginning, and if that expense was taken out they would have come in on budget. Lee Radford stated that half was the rock and half was the park. Lee Radford stated that he wants to know how the park was expanded without the Agency being consulted. Lee Radford wants Greg Weitzel to be involved in the discussion to see if they can absorb some of the overage as they were the ones authorizing the increases. Dave Radford suggested tabling this item until they get a chance to discuss the costs with Parks and Rec. Thomas Halley asked if the extra cost on the park was based on inadequate information on elevations. Stokes indicated that it was a weak design. Stokes stated that they designed the project to stay within a reasonable budget. Stokes stated that they didn’t want to lessen the improvements and wanted to keep to an expected standard. Stokes stated that they didn’t finish all the park, they only went as far as they can and part of it is kept natural. Stokes stated that the original design only had 2’ walls and steep slopes and when they looked at what was going to be built there were steep ramps going to the turf areas. Stokes stated that the areas that were an issue were as you came off the trail there were steep grades to get down to the landings. Halley asked if the Park design was done by Parks and Rec. Stokes stated that it was done by Woodbury. Larsen asked if Parks and Rec got to look at the design. Stokes stated that Parks and Rec review of the plans initiated the changes along with the engineer. Dave Radford moved to wait until the next meeting to allow staff to research the exact numbers. Cramer stated that on the second to last page of the packet there is a detailed spreadsheet that lists all the change orders for each improvement. Kirk Larsen seconded the motion. Kirk Larsen stated that they should consider other City organizations that might have some responsibility in funding the overages. Lee Radford suggested that the director should talk to Parks and Rec and get their perspective. Lee Radford stated that it is a nicer park, but the Agency didn’t agree to the nicer park. Halley asked who designed the park. Stokes stated that they had a design delivered at the bid, that was then reviewed by Woodbury, and then Parks and Rec reviewed the design, and Parks and Rec decided the slope was too steep. Stokes stated that there were a lot of moving parts during the OPA. Stokes stated that the comments that came back from the City at the time that they had already started to close out the OPA and they thought they could still work through the budget issues. Stokes again stated that the overrun on the rock was the problem, as they could absorb the other overruns. Stokes stated that if they remove $350,000 from the requested overage they would have come in on budget. Stokes stated that they did not anticipate the rock problem. Terri Gazdik clarified that there are $140,000 of change orders that have not been approved by the City. Stokes stated that they have reviewed the changes, but they have not all been signed. Gazdik asked if the City has gone through all the costs being presented. Cramer stated that he doesn’t know to what level engineering has gone through the changes. Cramer stated that he has only seen a list, as to what the change order is, and what the dollar amount is. 5 Idaho Falls Redevelopment Agency October 19, 2017 Brent Thompson asked if the $130,00 is included in the $295,000.00. Stokes indicated that the $295,000 includes all pending change orders, and it is anticipated to come down some. Lee Radford stated that the Agency is trying to be behind the project even though there was a guaranteed maximum. Lee Radford stated that they would like it to settle out on the change orders and get some answers on the park as to what happened. Lee Radford called for a vote on the Motion made by Dave Radford, The Motion passed unanimously. Project Update: Jackson Hole Junction. Cramer stated that it is scheduled to go for a public hearing before the City Council on November 9, 2017, and it will be on the City Council’s work session on November 6, 2017. Armbruster suggested having representation from the Board Members to attend the public hearing. Armbruster stated that it would be helpful to support the reaction in supporting the Plan to the City Council. Thomas Halley indicated he will be there, and asked for additional help. Halley stated that it begins at 3. Halley stated that they can change the order of the Agenda so people don’t have to wait for the agenda item they are waiting for. Mayor Rebecca Casper. Mayor Casper stated that it is difficult to set a definite time, unless you want to be first. Mayor Casper stated that if they want a set time, they will put them first on the Agenda for 3:15 for the work session on November 6. Mayor Casper stated that the public hearing on November 7, could lend itself to testimony from members of the Board. Mayor Casper asked if Councilman Halley must be either a Council member or a Board member, or if he can play dual roles. Halley stated that in the past on other things he has not recused himself. Brent Thompson indicated he will attend the work session on November 6. Audit Engagement with Rudd and Company. Cramer stated that he has not received in the email with the letter of engagement. Armbruster stated that they need a motion from the Board to authorize the Chair and vice-chair to sign the engagement letter with the auditor so they can start the FY 2017 Audit. Lee Radford stated that he has no problem using Rudd and Company, but the City changed its auditor to Moss Adams. Dave Radford asked if the fee will be the same and are there any changes with scope of work. Cramer stated he has no information. Lee Radford asked how soon the engagement letter needs to be signed. Armbruster stated that the statute gives plenty of time to get the audit done, so if they want to defer the signing of the letter to the next meeting that will be ok. Dave Radford moved to defer the Engagement letter with Rudd and Company until the November meeting, Larsen seconded the motion and it passed unanimously. Dave Radford asked why the City changed to Moss Adams. Halley stated that they felt it was good to move it around a little bit, so things don’t get too cozy. RAI Legislative Activities. None. Next Regular Meeting: November 16, 2017. Dave Radford moved to adjourn the meeting, Brent Thompson seconded the motion and it passed unanimously. 6 Idaho Falls Redevelopment Agency October 19, 2017 Respectfully Submitted: Beckie Thompson 7 Idaho Falls Redevelopment Agency October 19, 2017