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Regular Meeting Minutes dated February 25, 2014 Motion carried. Voting Yes: Chairperson Backous, Commissioners Riley, Johns, Kuzma, LeTourneau, Strommen, and Tossey. Voting No: None. 5. HRA BUSINESS 5.01: Adopt Resolution HRA #14 -03 -052 Amending the 2013 Housing and Redevelopment Authority Budget (HRA) Finance Director Lund reviewed the staff report and recommendation to adopt the draft resolution to amend the 2013 HRA budget. She indicated this is a housekeeping item to align the budget to reflect actual activity. Motion by Commissioner LeTourneau, seconded by Commissioner Riley, to adopt Resolution #HRA -14 -03 -052 Amending the 2013 Housing and Redevelopment Authority Operating Budget. Motion carried. Voting Yes: Chairperson Backous, Commissioners LeTourneau, Riley, Johns, Kuzma, Strommen, and Tossey. Voting No: None. 5.02: Discuss Development Management Incentive Compensation — McDonald's City Administrator Ulrich stated the HRA closed on the McDonald's land sale and with that comes the obligation to pay an incentive compensation fee as outlined in the development management contract that is still binding with Landform Professional Services. He explained that at issue are the significant and fundamental changes to the project: the proposed development management compensation was agreed to in October of 2012, nearly a year and a half ago; actual development costs for the site are now known; the McDonald's building was reduced in size; the final allocation of costs to McDonald's is now known; and, the number of projects moving forward as part of this development reduced from three (Super America, Wiser Choice, and McDonald's) to solely McDonald's. City Administrator Ulrich stated as a result of these project and site impacts, staff recalculated the incentive compensation fee due to Landform, including costs for signage, and it equaled $36,764.50. City Administrator Ulrich reported that the City has received threatened litigation from Landform's attorney if the HRA does not approve the original fee of $51,441. He recommended the HRA consider a number that more appropriately reflects current costs and site improvement costs that were paid to the project by McDonald's. Staff is concerned that those costs (sanitary sewer, storm sewer, water) were included in the cost of the land so it is not appropriate or within the spirit of the agreement to double count as additional site development costs. In addition, the original calculation by Landform took project costs outside the McDonald's parcel (i.e., Sunwood Drive and improvements made to the plat) that McDonald's did not agree to pay for. Darren Lazan, Landform Professional Services, stated he hopes they can work through this matter without further disruption to the HRA or Landform. He felt there was a significant disconnect between the contract terms in place today governing this transaction. The contract Housing and Redevelopment Authority / March 11, 2014 Page 2 of 5