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HomeMy WebLinkAbout5M - Ehlers & Assoc. - Blocks 2 & 4 Redevelopment MEETING DATE: AGENDA #: PREPARED BY: AGENDA ITEM: DISCUSSION: ISSUES: 16200 Eagle Creek Avenue S.E. Prior Lake, MN 55372-1714 CITY COUNCIL AGENDA REPORT DECEMBER 18,2006 5M PAUL SNOOK, ECONOMIC DEVELOPMENT DIRECTOR CONSIDER APPROVAL OF A RESOLUTION AUTHORIZING THE MAYOR AND CITY MANAGER TO EXECUTE THE CITY'S STANDARD PROFESSIONAL SERVICES AGREEMENT WITH EHLERS & ASSOCIATES TO PROVIDE REDEVELOPMENT AND FINANCIAL ADVISORY SERVICES FOR REDEVELOPMENT OF BLOCKS 2 AND 4 Introduction In accordance with the recommendation of the Economic Development Authority, the City Council is asked to authorize the execution of the City's Standard Professional Services Agreement with Ehlers & Associates, Inc. to provide redevelopment and financial advisory services for redevelopment of Block 2 and Block 4. Historv Redevelopment of the downtown area is a high priority in the 2030 Vision and Strategic Plan. At its July 20th meeting, the Economic Development Advisory Committee recommended that the EDA direct staff to engage a consultant to provide redevelopment and financial advisory services for the redevelopment of Blocks 2 and 4. Per the Economic Development Advisory Committee's recommendation, the Economic Development Authority, at their September 2006 meeting, authorized staff to retain a consultant to provide these services and prepare such recommendation for consideration by the City Council. Current Circumstances and Conclusion Staff solicited proposals from the two most prominent Twin Cities area firms that provide redevelopment and financial advisory services, Ehlers & Associates, Inc., and Springsted. Based upon the proposals received from each, it is recommended that Ehlers & Associates, Inc. be retained. The City has a great deal of experience working with Ehlers. Ehlers is experienced in general project management and financial services, and coordination of key project activities needed to complete redevelopment, including but not limited to managing the request for proposal process, establishing a tax increment financing district, selecting a master developer, developer negotiations, and securing development agreements. To facilitate downtown redevelopment in a coordinated fashion, a request for proposal (RFP) would be prepared by the consultant for consideration by developers. The redevelopment RFP will identify the City's expectations, the City's desire to redevelop larger areas in a coordinated fashion, the type of assistance the City may provide, and the legal considerations. V.(1,=;nd;J ;~"'Q.I;.;rt.=;"?r':~r:Qf;r:~'l-i.:.o, ~'~ir.;"\.L\Q;,~lliID'Qt,p~i?fl~~~i~~;' ,t~o (12 3%) Phone 952.447.4230 / Fax 952.447.4245 c:) ::(. cl FINANCIAL IMPACT: The cost of retaining Ehlers & Associates, Inc. to provide redevelopment and financial advisory services is $15,000. Funds are available from the professional services portion of the City's economic development budget. ALTERNATIVES: 1. Approve the Resolution 2. Deny the resolution 3. Defer for a specific reason RECOMMENDED MOTION: Alternative 1. ATTACHMENTS I EXHIBITS: 1. EDA Agenda Report making recommendation to City Council. 2. Resolution Authorizing the Mayor and City Manager to Execute the City's Standard Professional Services Agreement with Ehlers & Associates to provide redevelopment and financial advisory services for redevelopment of Block 2 and Block 4. 3. Standard Agreement for Professional Services R'v'\genda (12-1 DOC ,teiTI Con5uit S\iCS RESOLUTION 06 - xx A RESOLUTION AUTHORIZING THE MAYOR AND CITY MANAGER TO EXECUTE THE CITY'S STANDARD PROFESSIONAL SERVICES AGREEMENT WITH EHLERS & ASSOCIATES, INC. TO PROVIDE REDEVELOPMENT AND FINANCIAL ADVISORY SERVICES FOR THE REDEVELOPMENT OF BLOCKS 2 AND 4 IN THE DOWNTOWN AREA MOTION BY: SECOND BY: WHEREAS, pursuant to the Comprehensive Plan, Downtown Development Guide, 2030 Vision and Strategic Plan, and Prior Lake Development Potential market analysis, the City desires to facilitate progress and encourage the redevelopment of the Downtown area; and WHEREAS, as part of the redevelopment of the Downtown area, the City and its Economic Development Authority (EDA) anticipates redevelopment of the properties located on Block 2, bounded by Main Avenue, Pleasant Street, Colorado Street and the City parking lot; and WHEREAS, as part of the redevelopment of the Downtown area, the City and its EDA anticipates redevelopment of the properties located on Block 4, bounded by Main Avenue, County Highway 21, Dakota Street and Erie Street, excluding the property at (address) Main Avenue and the City Library; and WHEREAS, the redevelopment of these properties along with other improvements in the Downtown area are essential to the improvement of the health, safety and welfare of the Downtown and the City as a whole; and WHEREAS, given the complex nature of redevelopment, it is necessary to retain professional redevelopment and financial services in the redevelopment of Blocks 2 and 4, and WHEREAS, The City solicited proposals for professional redevelopment and financial advisory services and received the following proposed fees: Consultant Ehlers & Associates Springsted Fee $15,000 (not to exceed) $10,500 (threshold; final amount TBD) WHEREAS, Ehlers & Associates, Inc. is a qualified professional redevelopment and financial services consultant and has provided a proposal to provide the necessary services to redevelop Blocks 2 and 4. R:lAgenda Reports\2006\December 18, 2006IAgenda Ite~esm~r@~@~oc Phone 952.447.4230 / Fax 952.447.4245 NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF PRIOR LAKE, MINNESOT A, as follows: 1. The recitals set forth above are incorporated herein. 2. The Mayor and City Manager are authorized to execute the Standard Professional Services Agreement with Ehlers & Associates, Inc. for the provision of redevelopment and financial advisory services. 3. The costs for retaining Ehlers & Associates redevelopment and financial advisory services will be paid from the economic development fund balance. PASSED AND ADOPTED THIS 18th DAY OF DECEMBER, 2006. YES NO I LeMair I Dornbush Erickson Haugen Millar LeMair Dornbush Erickson Haugen Millar Frank Boyles, City Manager R:lAgenda Reports\20061December 18, 2006IAgenda Item 5MIResolution Authorizing Ehlers.doc STANDARD AGREEMENT FOR PROFESSIONAL SERVICES THIS AGREEMENT is made on the day of , 20 , between the City of Prior Lake, Minnesota (hereinafter "City"), whose business address is 4646 Dakota Street, Prior Lake, MN 55372-1714, and Ehlers & Associates, Inc... a Minnesota corporation (hereinafter "Consultant") whose business address is 3060 Centre Pointe Drive, Roseville, MN 55113. PRELIMINARY STATEMENT The City has adopted a policy regarding the selection and hiring of consultants to provide a variety of professional services for City projects. That policy requires that persons, firms or corporations providing such services enter into written agreements with the City. The purpose of this agreement is to set forth the terms and conditions for the provision of redevelopment and financial advisory professional services by Consultant for Redevelopment of Blocks 2 and 4 hereinafter referred to as the "Work". The City and Consultant agree as follows: 1. Scope of Work. The Consultant agrees to provide the professional services shown in Exhibit "A" in connection with the Work. Exhibit A is attached hereto and incorporated herein as if fully set forth. 2. Time for Performance of Services. The Consultant shall perform the services described in Exhibit A within the following timeframe unless otherwise agreed upon in writing: 24 months. 3. Compensation for Services. City agrees to pay the Consultant an amount not to exceed $15,000 for the services as described in Paragraph 1. A. Any changes in the scope of the work which may result in the compensation due the Consultant shall require prior written approval by an authorized representative of the City or by the City Council. The City will not pay additional compensation for services that do not have prior written authorization. B. Special Consultants may be utilized by the Consultant when required by the complex or specialized nature of the Project and when authorized in writing by the City. C. City agrees to pay Consultant for extra services by the Consultant or Special Consultants when authorized in writing by the City. 4. The City agrees to provide the Consultant with the complete information concerning the Scope of the Work and to perform the following services: A. Access to the Area. Depending on the nature of the Work, Consultant may from time to time require access to public and private lands or property. As may be necessary the City shall obtain access to and make all provisions for the Consultant to enter upon public and private lands or property as required for the Consultant to perform such services necessary to complete the Work. 1 R:\Agenda Reports\2006\December 18, 2006\Agenda Item 5M\Standard Agt Prof Services - Blocks 2 & 4 Redevelopment. DOC Created on 10/11/20063:46 PM B. Consideration of the Consultant's Work. The City shall give thorough consideration to all reports, sketches, estimates, drawings, and other documents presented by the Consultant, and shall inform the Consultant of all decisions required of City within a reasonable time so as not to delay the work of the Consultant. C. Standards. The City shall furnish the Consultant with a copy of any standard of criteria, including but not limited to, design and construction standards they may require in the preparation of the report for the Project. D. Owner's Reoresentative. A person shall be appointed to act as the City's representative with respect to the work to be performed under this Agreement. He or she shall have complete authority to transmit instructions, receive information, interpret, and define the City's policy and decisions with respect to the services provided or materials, equipment, elements and systems pertinent to the work covered by this Agreement. 5. Method of Payment. The Consultant shall submit to the City, on a monthly basis, itemized bills for professional services performed under Section 4 of this Agreement. Bills submitted shall be paid in the same manner as other claims made to the City. A. Proaress Pavment. For work reimbursed on an hourly basis, the Consultant shall indicate for each employee, his or her name, job title, the number of hours worked, rate of pay for each employee, a computation of amounts due for each employee, and the total amount due for each project task. Consultant shall verify all statements submitted for payment in compliance with Minnesota Statutes Sections 471.38 and 471.391. For reimbursable expenses, if permitted in Exhibit A, the Consultant shall provide such documentation as reasonably required by the City. B. Abandoned or Susoended Work. If any work performed by the Consultant is abandoned or suspended in whole or in part by the City, the Consultant shall be paid for any services performed on account of it prior to receipt of written notice from the City of such abandonment or suspension, all as shown on Exhibit A attached hereto and incorporated herein by reference. C. Pavments for the Consultant's Reimbursable Costs. The Consultant shall be reimbursed for the work of special consultants, as described in Section 3B, and for other items when authorized in writing by the City. Such items shall include: transportation of principals and employees on special trips to the Project or to other locations, materials and supplies, and AutoCAD as required to expedite the work, and reproduction of reports. 7. Project Manager and Staffing. The Consultant has designated Rebecca Kurtz and Sid Inman to serve on the Project. They shall be assisted by other staff members as necessary to facilitate the completion of the Project in accordance with the terms established herein. Consultant may not remove or replace Rebecca Kurtz or Sid Inman from the Project without the approval of the City. 8. Standard of Care. All Work performed pursuant to this Agreement shall be in accordance with the standard of care in Scott County, Minnesota for professional services of the like kind. 9. Audit Disclosure. The Consultant shall allow the City or its duly authorized agents reasonable access to such of the Consultant's books and records as are pertinent to all services provided under this Agreement. Any reports, information, data, etc. given to, or prepared or assembled by, the Consultant under this Agreement which the City requests to be kept confidential shall not be o~ PRlo", R:\Agenda Reports\2006\December 18, 2006\Agenda Item 5M~Standard Agt Prof Services - Blocks 2 & 4 ~~~ Redevelopment. DOC """"E,o<~ Created on 1 0/11/2006 3:46 PM made available to any individual or organization without the City's prior written approval. All finished or unfinished documents, data, studies, surveys, drawings, maps, models, photographs, and reports prepared by the Consultant shall become the property of the City upon termination of this Agreement, but Consultant may retain copies of such documents as records of the services provided. 10. Term. The term of this Agreement shall be from December 18, 2006 through December 18, 2008 the date of signature by the parties notwithstanding. This Agreement may be extended upon the written mutual consent of the parties for such additional period as they deem appropriate, and upon the terms and conditions as herein stated. 11. Termination. This Agreement may be terminated by either party by seven (7) days' written notice delivered to the other party at the address written above. Upon termination under this provision if there is no fault of the Consultant, the Consultant shall be paid for services rendered and reimbursable expenses until the effective date of termination. If however, the City terminates the Agreement because of the Consultant has failed to perform in accordance with this Agreement, no further payment shall be made to the Consultant, and the City may retain another contractor to undertake or complete the work identified in Paragraph 1. If as a result, the City incurs total costs for the work (including payments to both the present contractor and a future contractor) which exceed a maximum Agreement amount, if any, specified under Paragraph 3, then the Consultant shall be responsible for the difference between the cost actually incurred and the Agreement amount. 12. Subcontractor. The Consultant shall not enter into subcontracts for services provided under this Agreement except as noted in the Scope of Work, without the express written consent of the City. The Consultant shall pay any subcontractor involved in the performance of this Agreement within the ten (10) days of the Consultant's receipt of payment by the City for undisputed services provided by the subcontractor. If the Consultant fails within that time to pay the subcontractor any undisputed amount for which the Consultant has received payment by the City, the Consultant shall pay interest to the subcontractor on the unpaid amount at the rate of 1.5 percent per month or any part of a month. The minimum monthly interest penalty payment for an unpaid balance of $100 or more is $10. For an unpaid balance of less than $100, the Consultant shall pay the actual interest penalty due to the subcontractor. A subcontractor who prevails in a civil action to collect interest penalties from the Consultant shall be awarded its costs and disbursements, including attorney's fees, incurred in bringing the action. 13. Independent Consultant. At all times and for all purposes herein, the Consultant is an independent contractor and not an employee of the City. No statement herein shall be construed so as to find the Consultant an employee of the City. 14. Non-Discrimination. During the performance of this Agreement, the Consultant shall not discriminate against any employee or applicants for employment because of race, color, creed, religion, national origin, sex, marital status, status with regard to public assistance, disability, or age. The Consultant shall post in places available to employees and applicants for employment, notices setting forth the provision of this non-discrimination clause and stating that all qualified applicants will receive consideration for employment. The Consultant shall incorporate the foregoing requirements of this paragraph in all of its subcontracts for program work, and will require all of its subcontractors for such work to incorporate such requirements in all subcontracts for program work. 3 R:\Agenda Reports\2006\December 18, 2006\Agenda Item 5M\Standard Agt Prof Services - Blocks 2 & 4 Redevelopment. DOC Created on 10/11/20063:46 PM 15. Assignment. Neither party shall assign this Agreement, nor any interest arising herein, without the written consent of the other party. 16. Services Not Provided For. No claim for services furnished by the Consultant not specifically provided for herein shall be honored by the City. 17. Severability. The provisions of this Agreement are severable. If any portion hereof is, for any reason, held by a court of competent jurisdiction to be contrary to law, such decision shall not affect the remaining provisions of this Agreement. 18. Entire Agreement. The entire agreement of the parties is contained herein. This Agreement supersedes all oral agreements and negotiations between the parties relating to the subject matter hereof as well as any previous agreements presently in effect between the parties relating to the subject matter hereof. Any alterations, amendments, deletions, or waivers of the provisions of this Agreement shall be valid only when expressed in writing and duly signed by the parties, unless otherwise provided herein. 19. Compliance with Laws and Regulations. In providing services hereunder, the Consultant shall abide by all statutes, ordinances, rules and regulations pertaining to the provisions of services to be provided. The Consultant and City, together with their respective agents and employees, agree to abide by the provisions of the Minnesota Data Practices Act, Minnesota Statutes Section 13, as amended, and Minnesota Rules promulgated pursuant to Chapter 13. Any violation of statutes, ordinances, rules and regulations pertaining to the services to be provided shall constitute a material breach of this Agreement and entitle the City to immediately terminate this Agreement. 20. Waiver. Any waiver by either party of a breach of any provisions of this Agreement shall not affect, in any respect, the validity of the remainder of this Agreement. 21. Indemnification. Consultant agrees to defend, indemnify and hold the City, its officers, and employees harmless from any liability, claims, damages, costs, judgments, or expenses, including reasonable attorney's fees, resulting directly or indirectly from a negligent act or omission (including without limitation professional errors or omissions) of the Consultant, its agents, employees, or subcontractors in the performance of the services provided by this Agreement and against all losses by reason of the failure of said Consultant fully to perform, in any respect, all obligations under this Agreement. 22. Insurance. A. General Liabilitv. During the term of this Agreement, Consultant shall maintain a general liability insurance policy with limits of at least $600,000 for each person, and each occurrence, for both personal injury and property damage. This policy shall name the City as an additional insured for the services provided under this Agreement and shall provide that the Consultant's coverage shall be the primary coverage in the event of a loss. The policy shall also insure the indemnification obligation contained in Paragraph No. 21. A certificate of insurance on the City's approved form which verifies the existence of this insurance coverage must be provided to the City before work under this Agreement is begun. B. Worker's Comoensation. The Consultant shall secure and maintain such insurance as will protect Consultant from claims under the Worker's Compensation Acts and from claims for 4 R:\Agenda Reports\2006\December 18, 2006\Agenda Item 5M\Standard Agt Prof Services - Blocks 2 & 4 Redevelopment. DOC Created on 10/1112006 3:46 PM bodily injury, death, or property damage which may arise from the performance of Consultant's services under this Agreement. C. Professional Liabilitv Insurance. The Consultant agrees to provide to the City a certificate evidencing that they have in effect, with an insurance company in good standing and authorized to do business in Minnesota, a professional liability insurance policy. Said policy shall insure payment of damage for legal liability arising out of the performance of professional services for the City, in the insured's capacity as the Consultant, if such legal liability is caused by an error, omission, or negligent act of the insured or any person or organization for whom the insured is legally liable. Said policy shall provide an aggregate limit of $1,000,000. 23. Records Access. The Consultant shall provide the City access to any books, documents, papers, and records which are directly pertinent to the specific contract, for the purpose of making audit, examination, excerpts, and transcriptions, for three years after final payments and all other pending matters related to this contract are closed. 24. Ownership of Documents. All plans, diagrams, analyses, reports and information generated in connection with the performance of the Agreement ("Information") shall become the property of the City. The City may use the Information for its purposes and the Contractor also may use the Information for its purposes. Reuse of the Information for the purposes of the project contemplated by this Agreement ("Project") does not relieve any liability on the part of the Contractor, but any reuse of the Information by the City or the Contractor beyond the scope of the Project is without liability to the other, and the party reusing the Information agrees to defend and indemnify the other from any claims or liability resulting therefrom. 25. Governing Law. This Agreement shall be controlled by the laws of the State of Minnesota. Executed as of the day and year first written above. Reviewed for form: CITY OF PRIOR LAKE City Attorney Mayor City Manager EHLERS & ASSOCIATES, INC. By: Its: 5 R:\Agenda Reports\2006\December 18, 2006\Agenda Item 5M\Standard Agt Prof Services - Blocks 2 & 4 Redevelopment. DOC Created on 10/11/2006 3:46 PM EXHIBIT A As excerpted from the attached document "A Proposal to the City of Prior Lake for Financial Advisory Services", dated July 31, 2006, Ehlers & Associates, Inc. will provide the City of Prior Lake and Prior Lake Economic Development Authority with Redevelopment Management Services for the redevelopment of Blocks 2 and 4 in Downtown Prior Lake, from project inception through implementation. Services will be comprised of general project management and financial services, and coordination of key project activities needed to complete redevelopment, including but not limited to managing the request for proposal process, establishing a tax increment financing district, selecting a master developer, developer negotiations, and securing development agreements. Manaaement · Establish a project management team and a strategy to implement redevelopment of Blocks 2 & 4 in Downtown Prior Lake · Coordination of property acquisition by developer · Develop and manage the public participation process through effective public involvement and communications. · Implement use of Ehlers' website product to enable staff, consultants and developers to share data and schedules over the Internet · Coordinate project communications and marketing with City's communications staff and developer ' · Work with City and VFW in incorporating a new VFW facility into the redevelopment project · Preparation of master development agreement · Assistance with special legislation if appropriate ReauestforProDosalProcess · Manage the Request for Proposals process: - Development of Request for Proposals, to include developer as acquirer of the necessary properties - Issuance of Request for Proposals 6 R:\Agenda Reports\2006\December 18, 2006\Agenda Item 5M\Standard Agt Prof Services - Blocks 2 & 4 Redevelopment. DOC Created on 10/11/20063:46 PM - Selection of Developer TIF I Proiect Financinq · Preparation of project budget · Project financial feasibility analysis · Development proforma analysis · Determine the appropriate returns for the developer · Determine the appropriate level of assistance, and assure maintenance of that level through the process · Creation and modification of tax increment financing district(s) · TIF qualification · TIF process coordination · Conduct and evaluate the "but for test" DeveloDer Neaotiations · Development negotiations with selected developer · Assist with the development agreement 7 R:\Agenda Reports\2006\December 18, 2006\Agenda Item 5M\Standard Agt Prof Services - Blocks 2 & 4 Redevelopment. DOC Created on 10/11/20063:46 PM A Proposal to the City of Prior Lake for Financial Advisory Services July 31, 2006 Firm Name and Address PrimarY Contact Ehlers & Associates, Inc. Rebecca Kurtz 3060 Centre Pointe Drive 651/697-8516 Roseville, MN 55113 Rkurtz@ehlers-inc.com PrimarY Contact Sid Inman 651/697 -8507 Sid@ehlers-inc.com . EHLERS & ASSOCIATES INC Proposal for Financial Advisory Services from Ehlers & Associates, Inc. For the City of Prior Lake, Minnesota July 31,2006 -1- TABLE OF CONTENTS 1. Ehlers' General Company Profile...... ................................. ......... 3 2. Experience Working With Communities That Have Comparable Characteristics to the City of Prior Lake... . . . . . . . . . . . . . . . . . . ... . . 5 3. Experience in Providing Development Services........................... 8 4. Experience in Providing Economic Development and Housing Financing Services... ... ... ... ... ... ... ... ... '" ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... .... 9 5. Experience in Tax Increment Financing (TIF) Compliance and Document Preparation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 6. Professional Staff Assigned to Work With City Staff, Including Lead Representative... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... .... 12 6. Five (5) References of Contact Persons... ... ... ... ......... ... ...... ...... ... .... 15 Proposal for Financial Advisory Services from Ehlers & Associates, Inc. For the City of Prior Lake, Minnesota July 31, 2006 -2- 1. Ehlers' General Company Profile Introduction Ehlers & Associates, Inc. provides local governments with a wide range of financial services. We specialize in comprehensive services relating to bond issuance and debt management, financial planning, and community economic development and redevelopment. Our full service approach provides unique financial solutions including strategic planning, negotiating development agreements, proforma analysis, rate/fee studies, legislative research and support, impact analysis, referendum support, annexation/merger plans and school enrollment and projections. We are proud of our long-term relationships with our clients. We don't just do "deals" -- we help build communities. Ehlers has the experience and resources to help you through the maze of financial options, offering practical and creative solutions to help you build a better community. History Ehlers service to local government begins in 1955. History is more than a statistic. Almost 50 years of continuous service means: Stability--Ehlers will be there when you need us. Our employee turnover is very low and our corporate structure is designed for the long-term. Adaptability--We have adapted to the multitude of changes in state law, federal regulation, market conditions, local government finance, and pressing local issues. Perspective---We bring the results of the lessons learned from 50 years of service to local government in the upper Midwest. In 1997, Ehlers built and occupied new home offices in Roseville, Minnesota, and expanded the space in 2003. This building was designed specifically to meet our current and future needs and the location provides easy access to our clients. Ehlers maintains a fully staffed 14-person office in Brookfield, Wisconsin and an eight person office in Lisle, Illinois. Ehlers' service capacity has grown remarkably in the past decade as the firm has more than doubled in size. Today, we have a total of 64 employees in our three offices, with over 40 in Roseville alone. These talented people enable the firm to add clients and offer new services while continuing to meet the needs of existing clients. We believe that financial advisory services must be based on a clear understanding of local government. In the Minnesota office, 15 of Ehlers' financial advisors have worked in government for a combined total experience of 164 years in direct public service. Ehlers staff has worked in city management, county administration, city financial management, school district administration, redevelopment agency management, HRA executive director, regional planning, state agency services, and state legislature support. This first-hand experience helps to make Ehlers a financial advisor and not just a bond consultant. While debt financing is the majority of our work, over 30% of our revenue is derived from general, non-bond financial consulting. Proposal for Financial Advisory Services from Ehlers & Associates, Inc. For the City of Prior Lake, Minnesota July 31,2006 -3- Independent The term independent is a hallmark of our firm. Our policy has been to always remain independent of any underwriting or investment banking interest in any financial service provided. This means that our only interest is representing your interests in non-bond financial consulting or in the financial markets. Ehlers & Associates is a charter member of the National Association of Independent Public Finance Advisors. Employee-Owned When a firm claims to be employee owned - know what that means. Does it mean one employee owner or a small group of employee owners? At Ehlers, it means that all employees have ownership through an employee's stock ownership trust (ESOT). Ehlers is unique in this regard. Ownership sets the tone for the operation of the firm and the nature of the services you receive. All employee ownership at Ehlers means: · Every Ehlers employee has a vested interest in providing the best possible service. · Our focus is on the long-term success of the firm and its clients, not solely on short-term profit and return on investment. · A horizontal corporate structure which gives individuals autonomy in decision making. · A quality control process that requires third party reviews of every tax increment financing plan and every proposed bond issue. Technology Making effective use of technology is essential. Ehlers is committed to keeping pace with constantly changing computer technology. However, technology for its own sake, misses the target. Technology must be applied to provide better service to our clients. Ehlers does this by: · Leading the way onto the Internet with the first public finance website for local government in Minnesota and Wisconsin. Our website brings you information on Ehlers, bond sales, local government finance, and legislation. . Internet bidding available at no charge on bonds for all clients. . Using e-mail to expand access to Ehlers' staff and to exchange data in new ways. . Creating individual web sites for public participation in significant projects. . Interactive web sites for citizens to calculate the property tax impact of referenda and other significant projects. Proposal for Financial Advisory Services from Ehlers & Associates, Inc. For the City of Prior Lake, Minnesota July 31,2006 -4- 2. Experience Working With Communities That Have Comparable Characteristics to the City of Prior Lake Ehlers & Associates knows what it takes to convert financing plans into reality. This knowledge comes from helping cities face the challenges of limited resources and multiple demands. The following case studies highlight Ehlers' experience with cities that have comparable characteristics to Prior Lake. Richfield, MN Richfield has faced a number of challenges of a first ring suburb. Ehlers has assisted the City with proving that redevelopment is a powerful force. In recent years, significant redevelopment successes can be seen in: · Shops at Lyndale · Richfield Rediscovered · Airport expansion · Best Buy Ehlers played an extensive role in the redevelopment of Richfield. Our staff has played an active role in creating and implementing the finance plans that were keys to each of these projects. Ehlers is currently involved with the Cedar Avenue Redevelopment Area (CARA). CARA is a redevelopment project, which was necessitated by the expansion of adjacent Minneapolis - St. Paul airport. The 300-plus acre residential area will be redeveloped to airport compatible uses including retail, office, hospitality and specially insulated replacement housing. Ehlers provides project management services including: · Preparation of master development agreement · Development proforma analysis · Preparation of project budget · TIF qualification · Assistance with special legislation · TIF process coordination · Coordination of acquisition, communications, project marketing · Developer negotiations · Project financial feasibility analysis Proposal for Financial Advisory Services from Ehlers & Associates, Inc. For the City of Prior Lake, Minnesota July 31, 2006 -5- Hopkins, MN The Downtown area is the heart of Hopkins, and Ehlers has played an extensive role in its redevelopment. The City's most recent achievement is the construction of Market Place Lofts, a mixed-use development consisting of 42 condos and 17,000 sq/ft of retail. Other downtown projects include the construction of the Hopkins Center for the Arts and a restaurant/theater complex. Ehlers evaluated options and assisted the City in the implementation of the facilities finance plan, as well as completed proforma analysis and negotiations of the development agreement. Since housing is an important part of the vitality of downtown Hopkins, Ehlers assisted the City with the redevelopment of a mobile home park into 66 town homes. This redevelopment had been a City goal for more than 15 years and was realized in 1996. The financing for the development included a complex mixture of five series of revenue bonds, general obligation tax increment bonds, and pay-as-you-go notes. Our first objective was to protect the City's long-term financial interests while at the same time providing an incentive to the developer of the project to build quality town homes and stay on budget for the project. Attesting to the success of the project are the sale of all housing units and the retirement of two of the bond issues. County Road 3 Corridor Study. Ehlers' staff served on a multi-firm team that created a comprehensive plan for the reconstruction of County Road 3 and the redevelopment of the adjacent land uses. Ehlers conducted financial analysis to determine the feasibility of project alternatives. The finance plan created through the Corridor Study will allow the City to finance its share of the project without a complicated application of special assessments. In 1997, Ehlers implemented phase one of the plan with the issuance of General Obligation Tax Increment Bonds. Eagan, MN Eagan, Minnesota is a vibrant community of about 66,000 people located in the southeastern portion of the Twin Cities Metropolitan area. Eagan's once vital Cedar Grove gateway area has experienced a lack of new investment due to changes in retail marketing trends and other development in the southern part of the metropolitan area. In an effort to revitalize the area, the Cedar/Highway 13 Taskforce was formed in 1998 and began implementing their vision to "once again make the area a strong vibrant gateway to the City of Eagan by creating a viable mixed-use area that utilizes its highway visibility and accessibility, while maintaining compatible land use relationships with surrounding uses." The Taskforce also developed five goals for the redevelopment: . Revitalize Cedar Grove Area as a gateway/landmark of the community. . Improve traffic access and circulation to and through the area. · Encourage a mixture of market-supportable land uses compatible with one another and with the surrounding area. · Incorporate new urban development expectations by incorporating a pedestrian focus, transit opportunities, mixed residential and commercial uses, uniform and cohesive design elements, structured parking and public green space. · Protect long-term vitality of residential areas adjacent to commercial areas and consider the needs of existing businesses in redevelopment or relocation efforts. Implementation of the plan moved slowly because of a variety of complex issues. Proposal for Financial Advisory Services from Ehlers & Associates, Inc. For the City of Prior Lake, Minnesota July 31, 2006 -6- In 2004, the City completed a second Request for Proposal process and partnered with Schafer Richardson to complete a multi-phased, mix-use redevelopment project. The Schafer Richardson development plans include over 900 housing units with a mix of town homes, apartments and flats, as well as over 250,000 square feet of retail space. The plans also include a transit station and the possibly of future access to bus rapid transit. The first phase of construction is expected to begin later in 2006, and like all large redevelopment projects, the project will take several years to complete. Additional redevelopment has been spurred in the area and includes a 126-unit senior living facility, a 230-unit townhome and condominium project, as well as additional housing and warehouse projects. The City of Eagan retained Ehlers' financial and project management services to assist with the project and coordination of activities. Ehlers staff worked with the City to establish a project management team and a strategy to implement the redevelopment of the Cedar Grove area, as well as to assist with managing and implementing other redevelopment projects in the community. The plan identified key activities needed to complete the redevelopment, such as establishing the tax increment financing district, selecting a master developer, and securing development agreements. A project team that includes key staff met weekly to monitor the project's status, set project deadlines and resolve any redevelop Elk River, MN Elk River is very much like many small historic communities. Its historic downtown was experiencing pressure from large retailers on the edge of town, and was in need of revitalization. But like many communities, Elk River had a number of failed proposals and efforts to begin redevelopment. Elk River began working with Ehlers & Associates as its redevelopment consultant in 2001. In September 2001, Elk River's Housing & Redevelopment Authority developed a problem statement, identified the core business district as the focus of the redevelopment, and developed a primary goal for redevelopment. In February 2002, the HRA held an open house for the community on design objectives, concepts and development strategies. In March, the HRA issued a request for proposals from developers and received five submittals. Developer MetroPlains has received approval for the project which will encompass two blocks - Bluff and Jackson - and construction is scheduled to begin in 2005. The project will include 20,000 square feet of commercial development and both for-sale and rental housing units, along with a riverwalk connection to a city park to be built among the river. Proposal for Financial Advisory Services from Ehlers & Associates, Inc. For the City of Prior Lake, Minnesota July 31,2006 -7- 3. Experience in Providing Development Services Creation of New Financing Tools Ehlers is truly a leader in creating new financing tools to assist our clients in meeting their development and redevelopment goals. We have been instrumental in assisting cities structure new legislation for needed tools, as well as providing fiscal impacts analysis and testifying. In addition we have assisted several cities in creating new redevelopment loan programs. Our roles as active members of several trade organizations also offer opportunity to expand tools on a general legislation basis, such as the new city capital improvement bond authority. Alternative Financing Options A good example of finding new ways to finance projects is the City of Elk River lease revenue bond project. For a major building project, the City Council had artificially capped the total debt amount at a specific dollar amount. We had originally expected to structure the financing as a lease revenue bond to be sold by the City's EDA. When construction costs exceeded budget, we were able to keep the bond issue the same size by convincing MBIA to insure the bond issue and to supplant a bond funded debt service reserve with a surety bond. The surety bond, given current investment rates, also saved the City tens of thousands of dollars in negative arbitrage. Revenue Bond Financing Ehlers is serving as financial advisor to Anoka County on the Vikings stadium and has been involved in planning for the County's potential $215,000,000 sales tax revenue bonds for the project. Ehlers has also issued RFP's for underwriting services on revenue bond projects as diverse as a $19,000,000 CitylYMCA combined community center in Andover; and $6,000,000 telecommunications financing to install fiber optics in every home in a Minnesota city. Proposal for Financial Advisory Services from Ehlers & Associates, Inc. For the City of Prior Lake, Minnesota July 31, 2006 -8- 4. Experience in Providing Economic Development and Housing Financing Services Ehlers has a 16 person team that is dedicated to assisting cities meet their development and redevelopment objectives. The majority of the team members have worked for local, county or State government and understand the development goals from the City's perspective. Our redevelopment experience is best described by the results achieved by our clients. A few recent examples of successful projects, include the Apache Plaza redevelopment in St. Anthony, the Heart of the City in Burnsville, the Excelsior and Grand project in St. Louis Park, the Snelling/Larpenteur Redevelopment in Falcon Heights, the Gateway Redevelopment in St. Paul, and the K-Mart Redevelopment in Columbia Heights. We also understand the value of smaller redevelopment projects for larger and smaller cities. Examples of smaller redevelopment efforts include the Richfield Rediscovered project, which replaced blighted homes with new homes on a parcel-by-parcel basis; small mixed-use developments in Little Canada; and downtown redevelopment planning in Rosemount. Other details of redevelopment include comprehensive communications strategies for any new redevelopment projects and project management for cities short on community development staff. For long-term redevelopment we have a new website product which enables staff, consultants and developers to share data and schedules over the Internet. In our work evaluating the "but for test" through proforma analysis, we are able to measure what are appropriate returns for the developer and initiated the concept of a "Look Back" provision within development agreements. In addition our knowledge on development costs, private financing requirements and returns required by commercial, industrial, for sale housing and rental developers is unsurpassed by our competitors and assures our client that the appropriate level of assistance is provided. Ehlers is a full service advisory firm. While the bonding process and economic development are a major emphasis of our business, our goal is to help communities grow and be a viable contributor to the general economy of the area. In many cases, communities need to undertake short and long-range planning for capital and budgetary needs, undertake user rate studies and delivery systems and be able to provide adequate timely and accurate information to the general public. Our staff specializes in these areas and will work with you to identify the need for any special project work. We will not recommend the undertaking of a project just because we have the expertise. Rather, we will provide the necessary personnel and resources to accomplish your goals and needs. Request for Development Proposal Services Ehlers' experience is that the management of the Request for Proposal process is labor intensive during the initial phase of the process and decreases after selection of the developer. The real expense is in the on-going project management and development negotiations with selected developer. Ehlers has assisted numerous communities with their efforts in selecting a developer for a project. These communities include Eagan, Elk River, North Branch, Richfield and St. Anthony. The request for proposal should include detailed explanations of what outcomes the City is looking for to ensure that the developers' responses meet the City's expectations. While our experience says that many developers do not want to spend a lot of money on the report, the RFP should list specific items that the developers must address. For example, if tax increment is involved, the developer should be required to discuss values, phasing and perceived gaps in financing. Proposal for Financial Advisory Services from Ehlers & Associates, Inc. For the City of Prior Lake, Minnesota July 31,2006 -9- Development Management Services Ehlers provides the most extensive set of Redevelopment and Development Management Services available to cities embarking on redevelopment projects. We have assisted communities at a wide range of points in the redevelopment/economic development process on projects ranging from $500,000 to $170 million with an aggregate value of $1.7 billion. These services have included working with community-based task forces, development and coordination of RFP's, developer selection, grant writing and project management from project inception through implementation. Service Club Relocation Service clubs, such as VFWs and American Legions are the fabric of our communities, and many downtown redevelopment projects include incorporating a new facility into the redevelopment or relocating the service club. Ehlers is familiar with the special relationships that service clubs have and has been successful in addressing these issues in other cities. Ehlers has worked with several communities, including Richfield, Rosemount and Sauk Rapids, in the relocation of their service club as a part of a downtown redevelopment. Developer NegoUaUons Ehlers has extensive experience in developer negotiations; negotiating development agreements with an aggregate value of $1 billion for clients on public-private development projects that include wide range of commercial, residential and mixed used developments. But just as critical as experience in this area, is the need for a financial advisor that is independent. Ehlers works only for public sector clients and will not work for developers, ensuring that you can avoid even a perception of any conflict of interest. Pro Forma Analysis One of the biggest challenges communities face when working with developers is determining what is the appropriate level of assistance. Ehlers financial advisors regularly conduct Pro Forma Analysis for communities pursuing redevelopment, to help assess the appropriate level of need and developer assistance. Referendum Planning and Public Participation Process It is becoming more and more difficult for communities to gain support for redevelopment, for community investments (public facilities and infrastructure) and for budget measures that raise revenue and reduce services. The public expects to be involved earlier in the process. Ehlers has developed a public participation process that is helping communities achieve results through effective public involvement and communications. Grant Writing Ehlers has extensive knowledge in grants that are available to communities for planning, development and redevelopment projects. Ehlers routinely writes grants proposals for clients that are undertaking these types of projects, but do not have the staff available or staff time to prepare them. Proposal for Financial Advisory Services from Ehlers & Associates, Inc. For the City of Prior Lake, Minnesota July 31, 2006 -10- 5. Experience in Tax Increment Financing (TIF) Compliance and Document Preparation Financial advisors are often viewed as "bond consultants", but debt is only one part of municipal finance. Ehlers & Associates provides services geared to meet the wide range of financial issues facing local government. Local financial resources often play a role in economic development. Ehlers' staff brings the experience gained from participation in hundreds of development projects. This experience covers all forms of development and all types of public participation. Ehlers helps you assemble the pieces of the puzzle determining need, assessing risk, evaluating options, and making it happen. Tax increment financing (TIF) serves as the primary development finance tool for many cities. No one knows TIF better than Ehlers! Ehlers & Associates has more experience in the use of tax increment financing than any other financial advisory firm. Ehlers' TIF qualifications include: . Ehlers' staff has participated in more than 800 projects requiring the creation, modification and use of tax increment financing districts . 16-person TIF team focusing on the use of tax increment financing . Two full-time TIF process coordinators . Preparing of annual state auditor reports and the development of TIF reporting software . Presenting annual Ehlers & Associates Seminar on tax increment financing . Performing TIF compliance reviews to allow cities to be proactive in identifying issues and problems before they are uncovered by the Office of the State Auditor (OSA) . Making recommendations for systems to accommodate the requirements of the OSA, and assisting communities in responses to questions and/or non-compliance issues We also understand the importance of taking care of the details. One area of expertise is our practice in the new laws extending terms of TIF districts, deficit pooling and changes to tax rates necessary for meeting G.O. TIF Bonds as well as internal loans and revenue bonds. The laws provide a great amount of flexibility, especially for cities that may have a large amount of non- TIF resources in TIF accounts. We have a great working relationship with the Office of the State Auditor (OSA) and we are asked by the OSA to participate in their seminars, for opinions on interpretation of TIF statutes and they are pleased with the standard we have set in proforma analysis and look back provisions for meeting the required "But-For" findings. This relationship is further distinguished by the mutual respect two of our employees (a CPA and a former county TIF employee) who are responsible for completing OSA TIF reporting forms and responding to OSA inquiries and audits have with the OSA staff. Proposal for Financial Advisory Services from Ehlers & Associates, Inc. For the City of Prior Lake, Minnesota July 31, 2006 -11- 6. Professional Staff Assigned to Work with City Staff, Including Lead Representative Staffing is a critical element of this proposal. The people who provide the service have a direct effect on the quality of the service. Ehlers & Associates uses a team approach. One financial advisor will have primary responsibility for our work with Prior Lake and will be assisted by several other financial advisors and research analysts. This approach fixes responsibility and assures continuity of service for the client from the time of the proposal through any follow-up work on a bond issue. Additionally, it allows a better match of Ehlers' staff expertise and experience to the particular needs of the City. Prior Lake may find after a period of time that another financial advisor within our firm is better suited to serve the particular needs of the project. We encourage this type of flexibility and interchange. Ehlers & Associates offers a group of individuals with an exceptional combination of expertise and experience to act as the financial advisory team for Prior Lake. We propose that Rebecca Kurtz and Sid Inman serve as the lead advisors for the City. All members of the team are located in our Roseville office. Rebecca Kurtz would serve as the primary contact on all matters related to tax increment, economic development projects and redevelopment projects. Rebecca has over 11 years of experience in the area of public finance and redevelopment. She has extensive experience in tax increment financing, abatement, project management, proforma analysis, communications strategies, and program development. Sid Inman would serve as the primary contact on all matters related developer negotiations and proforma analysis. Sid has over 26 years of experience in the area of public finance and redevelopment. Sid has extensive experience and is an industry leader in tax increment, developer negotiations, proforma analysis and bond work. Rebecca and Sid are partners for several other major Minnesota clients including Eagan, Richfield, Hopkins and Elk River. Complete Resumes to follow. Proposal for Financial Advisory Services from Ehlers & Associates, Inc. For the City of Prior Lake, Minnesota July 31, 2006 - 12- Rebecca Kurtz, CIPFA Financial Advisor Bachelor of Science (Business Economics and Journalism -- Advertising), South Dakota State University Certified Independent Public Finance Advisor EXPERIENCE · Over 11 years of experience in economic development, housing, and redevelopment. · Served as Business and Community Development Representative for the Minnesota Department of Trade and Economic Development. · Expertise in the creation of Tax Increment Financing (TIF) Districts, rules and regulations. · Development of short and long-term plans, policies, procedure and priorities for Economic Development and Redevelopment. · Extensive knowledge and experience in redevelopment and project management. . Negotiation of major development and redevelopment agreements. · Experience with issuing various types of general obligation and lease revenue bonds and refundings. SPECIAL EXPERTISE . Tax Increment Financing . Tax Abatement · Redevelopment Project Management, including coordination of planning, public involvement, development recruitment, financing options, financial analysis, project budget, and communications. PROFESSIONAL MEMBERSHIPS · Economic Development Association of Minnesota - President . National Association of Independent Public Financial Advisors . National Association of Housing and Redevelopment Organizations . Minnesota Government Finance Officers Association . Minnesota City Clerks Association . Mid-America Economic Development Council Proposal for Financial Advisory Services from Ehlers & Associates, Inc. For the City of Prior Lake, Minnesota July 31, 2006 -13- Sid Inman, CIPFA Senior Financial Advisor EXPERIENCE Master in Public Administration, Universities of Northern Colorado and Alaska . Actively involved in local government finance since 1978. . Served as financial advisor to cities in this region. . Served as Financial Analyst for Minnesota Public Schools. . Served as Finance Director for the City of Fridley. . Participated in over 200 different development projects covering all forms of local participation in the development process. . Participated in public finance projects involving all forms of borrowing including general obligation municipal bonds, revenue bonds, current and advance refundings, lease purchases and economic development issues. Bachelor of Arts (Business Administration) University of Northern Iowa SPECIAL EXPERTISE Three years of advanced doctoral studies University of Minnesota . Recognized leader in field of tax increment financing in the State of Minnesota, involved in the creation of more than 200 tax increment financing districts. . Significant experience in conducting financial feasibility and pro-forma analysis of development projects. Certified Independent Public Finance Advisor PROFESSIONAL MEMBERSHIPS . National Association of Independent Public Financial Advisors . National Association of Housing and Redevelopment Organizations . Economic Development Association of Minnesota . Minnesota Government Finance Officers Association . Minnesota City Clerks Association Proposal for Financial Advisory Services from Ehlers & Associates, Inc. For the City of Prior Lake, Minnesota July 31, 2006 -14- 6. References of Contact Persons We have tried to provide a list of Minnesota cities, which are served directly by members of the City of Prior Lake team: City of Hopkins: 952/935-8474 Jim Kerrigan, Economic Development Authority Director City of Richfield: 612/861-9700 Steve Devich, City Manager Chris Regis, Finance Director City of Elk River: 763/635-1000 Scott Clark, Community Development Director City of Eagan: 651/675-5000 Jon Hohenstein, Community Development Director Fees At Ehlers & Associates, our general philosophy on billing is if a client is not happy with the service, we ask them not to pay the bill. We often do not operate with a contract and are retained on an as- needed basis. The majority of our non-bond work is an estimate of a not-to-exceed at the outset of the project, and a monthly bill based upon actual time spent thereafter. Our experience with the management of the Request for Proposal process is that it is labor intensive in the short-term, and decreases in the long-term. The real expense is in the on-going project management and negotiations with the selected developer. For example, in the City of Elk River it was two years before the development negotiations and agreement were approved and construction was commenced. The process for the City of Eagan has also been lengthy. It has been about three years to complete the development negotiations and signed agreement, and recently the developer has requested the City to renegotiate the contract. Because the fees are based on the complexity of a project, Ehlers usually bills projects at an hourly rate with a not to exceed amount. Ehlers proposes that fee for the Redevelopment of Block 2 and Block 4 in the City of Prior Lake not exceed $15,000. At the time the not to exceed amount if reached, Ehlers meets with the clients to review the services to determine if you choose to continue with the services. We urge you to talk to the clients that we have worked with to receive feedback on this approach: City of Hopkins: 952/935-8474 Jim Kerrigan, Economic Development Authority Director City of Richfield: 612/861-9700 Bruce Palmborg, Housing and Redevelopment Authority Director Proposal for Financial Advisory Services from Ehlers & Associates, Inc. For the City of Prior Lake, Minnesota July 31,2006 -15 - City of Elk River: 763/635-1031 Scott Clark, Community Development Director City of Eagan: 651/675-5000 Jon Hohenstein, Community Development Director Unless otherwise agreed to by the City and Ehlers, additional services will be charged on an hourly basis according to the following fee schedule and are subject to annual adjustments. Financial Advisor $175/hour $135/hour $65/hour Financial Analyst I Clerical Support We do not charge for mileage or regular business expenses except for messenger and overnight services. We reserve the right to annually review the fees and adjust them to account for inflation. The establishment of a tax increment district includes all necessary resolutions and documents at a flat fee of $7,500 to $15,000 depending upon the type of district and the number of parcels. Ehlers is willing to negotiate a final fee schedule as part of each assignment, and we are also able to provide written estimates of costs for individual assignments. Proposal for Financial Advisory Services from Ehlers & Associates, Inc. For the City of Prior Lake, Minnesota July 31, 2006 -16-