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HRA 03/10/1983 - 29376CITY OF FRIDLEY HOUSING & REDEVELOPMENT AUTHORITY MEETING MARCH 10, 1983 CALL TO ORDER: Vice - Chairperson Prieditis called the March 10, 1983, Housing & Redevelopment Authority meeting to order at 7 :30 p.m. ROLL CALL: Members Present: Elmars Prieditis, Carolyn Svendsen, Duane Prairie, Walter Rasmussen Members Absent: Larry Commers Others Present: Jerrold Boardman, City Planner Nasim Qureshi, City Manager Sid Inman, City Finance Director Dennis Schneider, City Council Ed Hamernik, City Council Mark Haggerty, 6441 University Ave. N.E. Terry McNellis, Piper, Jaffray & Hopwood Jim Casserly, O'Connor & Hannan Warren Johnson, NSP Larry Benson, NSP Lorraine Nelson, 6080 Central Ave. N.E. APPROVAL OF FEBRUARY 17, 1983, HOUSING & REDEVELOPMENT AUTHORITY MINUTES: MOTION BY MS. SVENDSEN, SECONDED BY MR. PRIEDITIS, TO APPROVE THE FEB. 17, 1983, HOUSING & REDEVELOPMENT AUTHORITY MINUTES AS WRITTEN. UPON A VOICE VOTE, ALL VOTING AYE, VICE - CHAIRPERSON PRIEDITIS DECLARED THE MOTION CARRIED UNANIMOUSLY. I. CENTER CITY DISTRICT A. Copy of Landscape Architect Contract as requested by HRA on Feb. 17, 1983 Mr. Boardman stated the HRA requested this at the last meeting. It was for the HRA's information and no action was needed. 8. Information on Problem developing with Hardware Lease Mr. Boardman stated the HRA had received copies of the correspondence between himself and Dick Carson, President of Clothing Liquidators, regarding the past -due rent payments for the hardware building. HOUSING & REDEVELOPMENT AUTHORITY MEETING, MARCH 10, 1983 PAGE 2 Mr. Rasmussen stated that in the future, he felt the City should develop some type of formal guidelines with regard to certain fundamental things that have to be looked at before they would enter into any type of lease arrangement. Mr. Rasmussen stated he had objected to this when Mr. Carson came before the HRA asking to lease the hardware building, and he was the only one who voted against it. Mr. Prieditis asked Mr. Boardman to give an update on this situation. Mr. Boardman stated the first rent payment was due Jan. 10. When that payment was not received, he had contacted Mr. Carson toward the end of January. Mr. Carson had indicated the payment was on its way. When the February payment was missed along with the January payment, several letters were sent out. In Mr. Boardman'.s discussion with Mr. Herrick, Mr. Herrick had indicated that Mr. Boardman should write a letter to Mr. Carson giving a final date of March 11. If no payment is received by that date, legal action will be taken to have the operation removed from the building. Mr. Rasmussen stated they have already wasted taxpayers' money. By the time they get this operation out of the hardware building, they will probably be out $12,000 plus attorney's fees. Also, there was no provi- sion in the lease to protect the HRA against any liens for unpaid work done in the building. There could easily be some bills for remodeling that was done and not paid for. Mr. Rasmussen stated the HRA should know how many bills are not paid, how much the HRA's obligation is, and to see if this money can be collected in any way. He could not believe the City had waited 90 days for any payment; but since they have., they should aggressively protect their interest. Mr. Rasmussen stated he would also like to have information on how much the City has lost, if any, in other unpaid rents in 1982 and the current status of those rents. He would like to have this information for the next meeting. Mr. Prieditis agreed he would like to see those figures. Mr. Prairie stated the HRA definitely should have some type of procedure to follow before entering into leases. He had assumed the City had some type of procedure. Even though the HRA, except for Mr. Rasmussen, had voted in favor of the leasing of the hardware building, they did so reluctantly. They had asked Staff to check into the financial statements and how Mr. Carson's other operation was run. Staff had reported back that it was a good operation and the financial looked good. MOTION BY MR. RASMUSSEN, SECONDED Br MS. SVENDSENr TO.REQUEST.STAF;F TO . DEVELOP SOME GUIDELINES FOR FUTURE RENTING OR LEASING OF CITY PROPERTIES TO BE DISCUSSED AT THE NEXT MEETING. UPON A VOICE VOTE, ALL VOTING AYE, VICE - CHAIRPERSON PRIEDITIS DECLARED THE MOTION CARRIED UNANIMOUSLY. • HOUSING & REDEVELOPMENT AUTHORITY MEETING, MARCH 10; 1983 PAGE 3 C. Letter from NSP concerning underground distribution line (Letter from Warren Johnson, NSP, to Mr. Boardman dated Aug. 20, 1982, and Letter from W. W. Eldridge, NSP, to Mr. Boardman dated March 2, 1983) Mr. Boardman stated the reading of the 1982 NSP policy was they would put the underground electrical line in 5th St. free of charge to the HRA because it was in a redevelopment area and was being developed on a section -by- section basis. NSP has now clarified that policy and say they will no longer do the underground electrical free of charge and that the underground work on 5th St. is going to cost $48,630. Mr. Rasmussen stated this seemed like rather a late hour for NSP to be reclarifying their policy. The City wants to go underground with the electrical and the City has been going under the assumption that NSP was going to do this free of charge; now right at the moment when it will delay the whole effort, NSP has come in with a proposal for a $48,000 bill to the City. Was there some kind of compromise that could be made between the City and NSP? Mr. Johnson, Staff Assistant, North Division of NSP, stated NSP has done everything possible in regard to keeping the cost down. Back in August 1982, they indicated that if 75% of the area was renewed, NSP would put in the underground system within the area itself. However, there happens to be a feeder line passing through on 5th St. that passes through the renewal area to service other areas. In NSP's policy of doing underground work within an urban area, when there is a feeder line of such a capacity that it carries through to service other people, it has never been the intent of NSP to bury this at NSP's expense. They do it at their expense only in the area where the renewal is. That is what NSP's policy has always been. He was sorry if NSP-led the City astray in that regard, but they felt that both sides understood this when dis- cussions were started last year. Mr. Boardman stated the City met several times with NSP to discuss the possibility of getting the underground work done free of charge. It was his understanding that the underground work would be done free of charge, and he thought they had looked at all of the lines including 5th St. The indication he had gotten from NSP at their last meeting was that it wasn't a policy change but a reclarification of that policy. Mr. Johnson stated it was his understanding that the City was going to widen 5th St. NSP already has existing overhead lines along 5th St., and they will move the overhead lines at NSP's expense. He stated they arrived at the $48,000 figure by subtracting the cost of going under- ground from the cost of moving the overhead lines. Mr. Rasmussen stated that regardless how NSP approaches this, he still felt NSP has led the City to believe that there was no cost. The City is trying to do some redevelopment which will create more electricity for NSP. He felt Mr. Johnson should go back to NSP and discuss this again to see if some adjustment can be made in the cost. 0 HOUSING & REDEVELOPMENT'AUTHORITY MEETINGS MARCH 10, 1983 PAGE 4 Mr. Johnson stated they are under the jurisdiction of the Public Services Commission, and each type of service has to pay its own way. One community cannot subsidize another. He could not make this kind of decision, but would have to discuss it with their management people. MOTION BY MR. RASMUSSEN, SECONDED BY MR. PRAIRIE, TO REQUEST MR. JOHNSON TO DISCUSS WITH NSP MANAGEMENT THE COST OF UNDERGROUND FACILITIES AND TO COME UP WITH AT LEAST A 50% REDUCTION IN THE $48,630 COST. UPON RECEIPT OF THIS INFORMATION AND BECAUSE OF THE URGENCY, A DECISION ON HOW TO PROCEED WILL BE MADE BY THE HRA PRIOR TO THE NEXT MEETING. Mr. Boardman stated the City is in a real time bind on this. The engineers are looking for a decision at this meeting. At this time, the options are either to go underground at whatever cost or move the overhead poles to the east side of 5th St. which NSP has said will be at their expense. Of course, then the power would not be below ground. Mr. Haggerty stated he would prefer to have the electricity underground. He referred to the letter dated Aug. 20, 1982, from Mr. Johnson which stated: "In an urban renewal area wherein 75% of the buildings are being demolished and undergrounding of electrical lines are required by the urban renewal plan, NSP will at its own expense replace its overhead system with a standard underground system . Then, in the letter dated March 2, 1983, Mr. Eldridge, General Manager of the North Division, stated: "We have made a cost comparison and have determined the additional cost of installing underground versus relocation of overhead for the portion of the existing main feeder line on 5th St. N.E. from Mississippi St. to 63rd Ave. N.E. to be $48,630." Mr. Haggerty stated this was in direct contradiction to what was stated in Mr. Johnson's letter dated Aug. 20. Mr. Haggerty stated he signed the contract on the office building back in December 1982 so obviously NSP knew about the project. He felt if for no other reason than for public relation purposes in an urban development area, there should be some serious consideration by NSP. From a legal standpoint, because of the circumstances, the City would go ahead and have the service put underground but would do it under protest, reserving the right to go to the Public Services Commission and from there to the courts. He thought there should be some serious consideration on the part of NSP for a reduction in this cost because there has been an absolute misrepresentation in writing from a municipal entity. Mr. Johnson stated he would go back to the management people and explain this situation to them. He stated they should have an answer for the City by the end of the next week. UPON A VOICE VOTE, ALL VOTING AYE, VICE- CHAIRPERSON PRIEDITIS DECLARED • THE MOTION CARRIED UNANIMOUSLY. • HOUSING & REDEVELOPMENT AUTHORITY MEETING, MARCH 10, 1983 PAGE 5 II. MOORE LAKE DISTRICT A. Letter from Menton C. "Duke" Addicks, Jr., dated March 1, 1983, concerning removal of residential west of Old Central from Moore Lake Redevelopment Area Mr. Boardman stated Mr. Addicks is the attorney representing Mr. & Mrs.. Dan Nelson. They are requesting the HRA and City Council remove these residences from the redevelopment district. The HRA had a copy of Petition No. 2 -83 dated March 8, 1983, with the signatures of those property owners. Those signing the petition are Elaine and Thomas Gray, Daniel and Lorraine Nelson, Gloria Wiemann, and Frances and Edward Rush. It was his understanding that Scott Kohanek had refused to sign the petition. Mr. Boardman stated he would like the HRA to receive this petition and continue discussion and decisions because some additional work has to be done on legalities and the process for removing property from a redevelopment district. He stated he would prepare a report for the HRA. MOTION BY MR. RASMUSSEN, SECONDED BY MR. PRAIRIE, TO RECEIVE PETITION NO. 2 -83 REQUESTING THE HRA AND CITY COUNCIL TO EXCLUDE THE RESIDENTIAL • PROPERTY LOCATED BETWEEN CENTRAL AVENUE AND MOORE LAKE FROM THE EXISTING MOORE LAKE REDEVELOPMENT DISTRICT AND MOORE LAKE TAX INCREMENT DISTRICT. FURTHER DISCUSSION TO BE CONTINUED AT THE NEXT MEETING. UPON A VOICE VOTE, ALL VOTING AYE, VICE - CHAIRPERSON PRIEDITIS DECLARED THE MOTION CARRIED UNANIMOUSLY. B. St. Phillips Request (Memo #83 -17 from Executive Director) Mr. Boardman stated that at the last meeting, the HRA had requested Staff to get some estimates on soil compaction tests for the property at Old Central and Rice Creek Road. That cost would be between $1,500 and $2,000. Mr. Boardman stated he attended a meeting with St. Phillips Human Services, Inc., on March 3. At that meeting there was some discussion on two other possible sites that might be better sites. Unless they get some further direction from St. Phillips, he did not think the HRA was in a position to spend any money on soil compaction tests. Ms. Svendsen stated the St. Phillips Human Services, Inc., will be meeting next week and will be interested to know what action, if any, the HRA took at this meeting. Mr. Prieditis stated he would think the site selection would depend on the soil conditions. How can St. Phillips select a site until they know what the soil is like? The HRA could commit to the soil tests regardless of whether St. Phillips picked the Moore Lake site, and they could conceivably decide not to select it based on the soil conditions. • HOUSING &'REDEVELOPMENT AUTHORITY MEETING, MARCH 10, 1983 PAGE 6 Mr. Boardman stated that since the property is in a redevelopment district and will eventually be developed, soil tests will have to be made at some time anyway. MOTION BY MR. RASMUSSEN, SECONDED BY MR. PRAIRIE, TO AUTHORIZE STAFF TO GO AHEAD WITH SOIL COMPACTION TESTS FOR THE PROPERTY AT OLD CENTRAL AND RICE CREEK ROAD. UPON A VOICE VOTE, PRIEDITIS, PRAIRIE, AND RASMUSSEN VOTING AYE, SVENDSEN ABSTAINING, VICE - CHAIRPERSON PRIEDITIS DECLARED THE MOTION CARRIED UNANIMOUSLY.. III. DISCUSSION ON FISLIC PROGRAM AND BOND RESERVE FUND Mr. Boardman stated this was brought up at the last meeting and the HRA members were asked to review these programs for discussion at this meeting. He stated Mr. Haggerty, Mr. McNellis from Piper, Jaffray & Hopwood, and Mr. Casserly from O'Connor & Hannan were here to give a brief explanation of the programs. Members of the City Council had also been invited to attend as this directly affects City Council action in the passing of a resolution. Mr. Haggerty stated that, as Mr. Boardman had mentioned, he had given the • HRA some materials on some programs that were available that, after dis- cussing them with City Staff, Mr. Haggerty thought might be helpful for adding new tools to the HRA redevelopment districts, keep businesses and firms in Fridley, and also to attract new business. He stated he has done a lot of work in tax increment financing, reserve systems, industrial revenue bonds, and securities. In his work, he has been very impressed with two firms, who are represented at this meeting. Mr. Haggerty stated that Jim Casserly, a former partner of his, was in the Legislature for eight years and authored most of the tax increment financing statutes the State now has. Mr. Casserly's firm, O'Connor & Hannan, other than Briggs & Morgan of the St. Paul Port Authority, is the only law firm that is a national firm that has a bond counsel and has set up a reserve system through the City of Minneapolis, City of Blaine, and is in the process of setting one up for the City of Marshall. However, there are a number of other nationally recognized law firms locally that have consented to the concept under Minnesota Statutes and federal law. In his opinion, there was no other firm with more experience in setting up this type of system than O'Connor & Hannan. Mr. Haggerty stated Piper, Jaffray & Hopwood is the only underwriting firm he knew that has actually underwritten a program under the reserve system. This was done in Blaine. Other programs are going on in Minneapolis. Piper, Jaffray & Hopwood seem to have the tools and the knowledge for a very innovative program to be used for both tax exempt financing as well as • conventional financing. He stated Terry McNellis, who worked for the City of St. Paul for ten years, recently came to Piper, Jaffray & Hopwood. His specialty is commercial, but primarily in housing. . HOUSING & REDEVELOPMENT AUTHRORITY MEETING, MARCH 10, 1983 PAGE 7 Mr. Haggerty stated the reason why he brought these people together was because he was trying to find a mechanism that would not cost the City or the HRA any money up front and yet would be a resource that would review what the City and the HRA has and would come back with some ideas and tools on how to work a program. Mr. Haggerty stated Congress outlawed the FISLIC program so that program will be dead as of April 14. However, the FISLIC concept can still be used for conventional financing. There are two other types of programs similar to FISLIC. One is called a collaterilized program which deals with mortgages and would be the most likely one to be used in the City of Fridley. The reserve system was another one they were looking at. Another program he thought would be good for Fridley in helping retain companies was a commercial rehab program. Mr. Haggerty handed out copies of a resolution he hoped to bring before the City Council on Monday, March 14. Mr. Haggerty stated O'Connor & Hannan have been charging $10,000 to set up a reserve system in other cities plus other fees. Piper, Jaffray & Hopwood historically has been charging a number of fees. Through a number of negotiations, both firms have consented to this particular resolution which has been discussed with a number of City Staff members as well as Larry Commers, Chairperson of the HRA. This resolution gives O'Connor & Hannan and Piper, Jaffray & Hopwood a one year exclusive right for industrial revenue bonds and general obligation bonds in the tax increment district. They would be bond counsel and underwriters, but if nothing is sold, they receive no payment. Mr. Haggerty stated he would like the HRA to look over the resolution and make a motion supporting the resolution. Mr. Boardman stated he and Mr. Haggerty had met with Mr. Commers. Mr. Commers' overall response was favorable. He did not have any problem with setting the wheels in motion as long as the HRA had review power when any program was brought back so decisions could be made. Mr. Commers had no problem with this resolution. MOTION BY MR. RASMUSSEN, SECONDED BY MR. PRAIRIE, TO APPROVE RESOLUTION NO. 33_lgR3 A "RESOLUTION RELATING TO THE DEVELOPMENT OF A GENERAL RESERVE BOND FUND SYSTEM, A HOUSING PROGRAM, AND A COMMERCIAL BUILDING REHABILITA- TION LOAN PROGRAM; RETAINING A SPECIAL COUNSEL FOR SUCH PURPOSES: AND DESIG- NATING GENERAL BOND COUNSEL FOR THE CITY ". UPON A VOICE VOTE, ALL VOTING AYE, VICE - CHAIRPERSON PRIEDITIS DECLARED THE MOTION CARRIED UNANIMOUSLY. Mr. Prieditis stated he would like to thank Mr. Haggerty for his interest in Fridley and for promoting this for the good of Fridley. 0 . HOUSING & REDEVELOPMENT AUTHORITY MEETING; MARCH 10, 1983 PAGE 8 IV. FINANCIAL A. Check Register MOTION BY MR. PRAIRIE, SECONDED BY MS. SVENDSEN, TO APPROVE THE CHECK REGISTER DATED MARCH 9, 1983, IN THE AMOUNT OF $13,206. UPON A VOICE VOTE, ALL VOTING AYE, VICE - CHAIRPERSON PRIEDITIS DECLARED THE MOTION CARRIED UNANIMOUSLY. B. Financial Report Mr. Boardman stated there was no financial report. There would be a financial report at the next meeting. V. OTHER BUSINESS: Mr. Boardman stated that in the agenda, he had included letters and information dealing with the acquisition of the Tom Ryan building, 6385 -6389 University Ave. N.E. He stated there was a breakdown on relocation costs and a fixture appraisal that was submitted for Tom Wing, Discount Batteries, tenant at 6385 University Ave. N.E. Mr. Boardman stated an agreement has been reached on the fixtures in the amount of $2,695 and on the relocation cost in the amount of $3,616. Included was a report from the relocation consultant. He stated he would like the HRA to approve these payments. MOTION BY MR. RASMUSSEN, SECONDED BY MS. SVENDSEN, TO APPROVE A PAYMENT OF $2,695 FOR FIXTURE ACQUISITION AND $3,616 FOR RELOCATION COSTS TO TOM WING, DISCOUNT BATTERIES. UPON A VOICE VOTE, ALL VOTING AYE, VICE- CHAIRPERSON PRIEDITIS DECLARED THE MOTION CARRIED UNANIMOUSLY. ADJOURNMENT: MOTION BY MR. RASMUSSEN, SECONDED BY MR. PRAIRIE, TO ADJOURN THE MEETING. UPON A VOICE VOTE, ALL VOTING AYE, VICE - CHAIRPERSON PRIEDITIS DECLARED THE MAR. 10, 1983, HOUSING & REDEVELOPMENT AUTHORITY MEETING ADJOURNED AT 9:30 P.M. Respectfully subp itted, Lynn Saba Recording Secretary 0