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HRA 05/12/1983 - 29373CITY OF FRIDLEY HOUSING & REDEVELOPMENT AUTHORITY MEETING MAY 12, 1983 CALL TO ORDER: Chairperson Commers called the May 12, 1983, Housing & Redevelopment Authority meeting to order at 7:40 p.m. ROLL CALL: Members Present: Larry Comers, Elmars Prieditis, Duane Prairie Members Absent: Carolyn Svendsen, Walter Rasmussen Others Present: Jerrold Boardman, City Planner Dave Newman, City Attorney Sid Inman, City Finance Director Mentor "Duke" Addicks, Jr., Pepin, Dayton, Herman, Graham & Getts Attorneys at Law (See Attached List) Howard Helgen, St. Phillips Human Services, Inc. . APPROVAL OF MARCH 31, 1983, HOUSING &'REDEVELOPMENT AUTHORITY MINUTES MOTION BY MR. PRIEDITIS, SECONDED BY MR. PRAIRIE, TO APPROVE THE MARCH .31, 1983" DOUSING & REDEVELOPMENT AUTHORITY MINUTES AS WRITTEN. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. APPROVAL OF APRIL 27, 1983, HOUSING & REDEVELOPMENT AUTHORITY MINUTES: MOTION BY MR. PRIEDITIS, SECONDED BY MR. PRAIRIE, TO APPROVE THE APRIL 27, 1983, HOUSING & REDEVELOPMENT AUTHORITY MINUTES AS WRITTEN. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. ADOPTION OF AGENDA: Mr. Boardman explained that this was a new item on the agenda. It gave the HRA or the Staff an opportunity to add new items to the agenda. He added the following hero as Item #3: Letter to Steve Hardel dated May 6, 1983 MOTION BY MR. PRAIRIE, SECONDED BY MR. PRIEDITIS, TO ADD THE FOLLOWING ITEM TO THE AGENDA AS ITEM #3: LETTER TO STEVE HARDEL DATED MAY 6, 1983. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. 0 HOUSING & REDEVELOPMENT AUTHORITY MEETING, MAY 12,'1983- PAGE 2 1. CONSIDERATION OF A PETITION FOR T AL OF 6028- 44= 62 -70 -80 OLD CENTRAL Mr. Boardman stated this request was discussed in his memo #83 -46; however, he did want to tell the HRA that there are other alternatives involved: (1) to retain the property within the district; (2) to act in favor of the petition and set up public hearings necessary to remove the properties from the district; or (3) attempt to negotiate or compromise by agreement with the neighborhood to include the property within the district. Mr. Addicks stated he is an attorney practicing law in Minneapolis. He started with his law firm this past January, and before that he was the Legislative Counsel for the League of Minnesota Cities for about nine years and the author of the hand- book which the City of Fridley uses in its affairs. He drafted and lobbied through the first state -wide tax increment authority bill back in the mid- 1970's. He stated he is familiar with Housing & Redevelopment Authorities and the use of tax increment financing. Mr. Addicks stated that in reviewing the HRA's minutes and the testimony at their hearings, it seemed clear to him that the residences involved in the petition were not properly included and should not be included in the redevelopment plan and project. They are asking that the HRA start the process to exclude these residences and that as part of the motion for exclusion that written notice be mailed to these homeowners concerning any future attempt to redevelop the property. As the HRA will notice by their minutes, the residents involved did not participate in any of the public hearings back in 1981 when the redevelopment plan and project were establis lied. Mr. Addicks stated the first question was: What type of property are they talking about? In his hand -out (a handwritten letter with attachments), he stated there was a map which shows the area they are requesting be excluded. They are not including the property just to the north which is included in the tax increment financing district. The residences they are concerned with are only within the redevelopment project and are not contained within any tax increment financing district, except for Parcel 2440 which is two pieces of rental property which he believed was included within the tax increment district but separated by one lot from the district. Mr. Addicks stated they would like to show the HRA some slides of the residences from a variety of viewpoints to give the HRA an idea of the property being talked about. These are all single family homes. Nelson's rental property (two houses - Parcel 2400): front house, 900 sq. ft., built about 1945 estimated market value of the two residences because one parcel is for tax purposes: $59,400 non- homesteaded tax: $1,703.58 on both pieces of property Mr. Addicks believed both structures were located within the small portion of the tax increment district. • HOUSING & REDEVELOPMENT AUTHORITY MEETING, MAY 12, 1983 PAGE 3 Nelson's home, 6080 Central Ave. (Parcel 2420): Two -story walk -out, 1,092 sq. ft., with attached greenhouse with pool, 1,408 sq. ft. Built in 1979 Est. market value: $133,800 Homestead Tax: $2,670/yr. Rush's home, 6028 Central Ave. (Parcel 2540): House built about 40 yrs. ago, 1,176 sq. ft. Lot size: 100' x 395' Est. market value: $66,000 Wiemann's home, 6044 Central Ave. (Parcel 2500): House built in 1958, 3,600 sq. ft. Lot Size: 100'_x 450' Est. lyark.et value: $83,400 Gray's home,6062 Central Ave. (Parcel 2460): House built in 1945, 2,800 sq. ft. Lot size: 100' x 350' Est. market value: $73,600 Mr. Addicks stated that in conjunction with the petition which was mailed and filed with the City, there were signed petitions from the neighborhood supporting the original petition. There were approximately 737 signatures on these petitions. Mr. Commers accepted the petitions consisting of 11 pages for filing and clarification. Mr. Addicks stated the Nelson's also took some photographs of their property including some pictures of the inside of their home for the HRA to look at. Mr. Addicks stated these are nice homes in good shape, fairly recently built, with a fair amount of market value on them indicating some substance. Mr. Addicks stated he would like to go through the material attached to his hand- written memo to support his legal opinion that the homes should not have been included in the redevelopment project and ought to be excluded both as a matter of law and, more importantly, as a matter of fairness to the residents who have b-een on this property for some time. Mr. Addicks stated the first document in the hand -out was a copy of a memo §811 -13 from the HRA Executive Director to the HRA dated Feb. 1981 concerning the establishment of the Moore Lake Redevelopment Area. The first paragraph indicates that the Moore Lake Redevelopment area, "by definition, can be considered blighted due to under - utilization, traffic safety, major soil problems and some deteriorated structures ". • Mr. Addicks stated the Redevelopment Plan was attached later in the hand -out, butt he would like to call the HRA's attention to Resolution HRA 6 -1981 entitled, 0 HOUSING & REDEVELOPMENT'AUTHORITY MEETING, MAY 12, 1983 PAGE 4 "Resolution Approving the Moore Lake Redevelopment Plan and Filing of a Project Application to the City Council of the City of Fridley ". He would like to call attention to the third and fourth "Whereas ": "The said Redevelopment Project is blighted and deteriorated due to economic obsolescence of commercial and residential structures, poor soil conditions, development patterns, traffic and parking design and unsightly general conditions; and, Whereas, the Housing & Redevelopment Authority has determined it is necessary to undertake a Redevelop- ment project for the purpose of removing, preventing or reducing blight, blight- ing factors or causes of blight through any work or undertakings as are allowed by MSA Chapter 462.421, Subdivision 13." Mr. Addicks stated that regarding the finding that the "area is blighted and deteriorated due to economic obsolescence of commercial and residential structures ", he did not see that concerning the property involved here. "Poor soil conditions"-- he stated there certainly are poor soil conditions under most of Fridley. "Poor development patterns" - he did not know. That was a determination the HRA would have to make. "Traffic and parking design" - there certainly are traffic problems up and down Old Central. "Unsightly general conditions" - perhaps the property to the north of these residences is blighted, but these residences certainly are not. Mr. Addicks stated the next document is page 7 of the HRA's March 26, 1981, public hearing meeting minutes, at which time testimony was gathered from various wit- nesses to support the Moore Lake Redevelopment Plan and Project. This portion concerns the testimony of Mr. Boardman, not as the Executive Director of the HRA, but as the City Planner. In the third paragraph, Mr. Boardman stated that "he felt these areas (Areas 1, 2, and 3 - Mr. Addicks stated they are only concerned about Area 1 right now) would be eligible under State Law as a blighted condition for a redevelopment district. He stated he would like to point out that under MSA 462.421, Subd. 13, a Redevelopment Project shall mean any work or undertaking: (1) To acquire blighted areas or other real property for the purpose of removing, preventing, or reducing blight, blighting factors, or the causes of blight. (Mr. Addicks stated there is no blight on these particular residences.) (2) To acquire open or undeveloped land which is determined to be blighted ... due to the existence of faulty planning characterized by the subdivision of sale of lots laid out ... or inadequate size... which have prevented normal development of the land by private enterprise and have resulted in a stagnant and unproductive condition of land potentially useful and valuable... (3) To acquire land or space which is vacant, unused, underused, or inappropriately used." Mr. Addicks stated that in the next paragraph, Mr. Boardman is talking about Area 1. He summarizes some testimony from witnesses saying that the testimony • basically "shows that the area was blighted due to conditions of unusual and HOUSING & REDEVELOPMENT AUTHORITY MEETING, MAY 12, 1983 '''''PAGE 5 I difficult physical characteristics of the ground... blighted due to faulty arrange- ment which creates conditions of traffic safety hazards... also, there was vacant land located just north of West Moore Lake Drive that was unused due to obsolete layout of existing structures ". Mr. Addicks stated Mr. Boardman did not mention these residences located in Area 1. In fact, not in any of the testimony was there any mention of these residences. The only mention he had found of them was in the minutes of the tax increment financing district approval to the north of this property. There was a mention of one of the rental structures in a survey one of the city, officials did of the various structures within the entire Moore Lake Redevelopment area,but it was only of one of the older rental properties and no mention was made anywhere of the residential structures. He did not know if the HRA was aware that there were nice homes here or the condition of those homes, and he felt that should have been brought out more at the public hearings as evidence. He did not see how they were properly included in the Redevelopment Project. Mr. Addicks stated the next document is the Moore Lake Redevelopment Plan upon which the project is based and upon which the later tax increment districts created were based. On page 2 of that Plan, Paragraph B, Eligibility, stated: "The Moore Lake Redevelopment District is eligible as a publicly assisted redevelopment district for the following reasons: Area 1 (paragraph 3): The land area south and east of the shopping center is largely vacant and underutilized due to poor soil conditions." (Again no mention of the six residences.) "This property is blighted because of the cost to make this land developable. In addition to the soil problems, the City will be initiating a restoration project for Moore Lake which will assess this property with necessary costs of the project." Second sentence of paragraph 3 stated: "This area is the drainage inlet to Moore Lake which is primarily unstable soil for development." Mr. Addicks again stated there is a lot of concern about poor soil conditions being the grounds for the inclusion of this entire property within the project area. Mr. Addicks stated that page 6 of the Redevelopment Plan gives the first indica- tion of the residential homes. Under Area 1, middle of the paragraph, it stated: "The land east of Highway 65 north and south of Rice Creek Road including: Shorewood Shopping Center, Sears Surplus Store, Shorewood Inn, and seven residen- tial homes." Again, no mention of the types of homes and the condi ion of the homes, of er than their existence. Mr. Addicks stated that on page 12 of the Redevelopment Plan was the "Procedure for Amendment" which stated that the "Moore Lake Redevelopment Plan may be modi- fied provided the modification shall be adopted by the Fridley Housing and Redevelopment Authority and the Fridley City Council under the provisions of the Municipal Housing and Redevelopment Act of the State of Minnesota, Section 462.525, Subdivision 6 ". Mr. Addicks stated that, as stated in his May 5, 1983, letter to the HRA, at the public hearing on the Moore Lake Redevelopment Plan, Mr. Boardman had stated • that "under State Law in setting up a redevelopment district, there are findings HOUSING & REDEVELOPMENT AUTHORITY MEETING, MAY 12, 1983 PAGE 6 that have to be made by the HRA. Those findings are laid out in the definitions. First of all, the HRA must determine the area is blighted or deteriorated. He read the definition of 'deteriorated' into the record ". Mr. Addicks stated he would now like to draw the HRA's attention to the definition in the Statutes, which was the definition Mr. Boardman had quoted into the minutes: "Subdivision 11. 'Deteriorated area' means any area with buildings or improvements which, by reason of dilapidation, obsolescence, overcrowding, faulty arrangement or design, lack of ventilation, light, and sanitary facilities, excessive land coverage or deleterious land use or obsolete layout, or any com- bination of these or other factors, are detrimental to the safety, health, morals, or welfare of the community." Mr. Addicks referred to Subdivision 13 which is what the HRA adopted in their March 26, 1981, minutes: "'Redevelopment project' shall mean any work or under- taking: (1) to acquire blighted areas and other real property for the purpose of removing, preventing, or reducing blight, blighting factors, or the causes of blight; (2) to acquire open or undeveloped land which is determined to be blighted by virtue of conditions of unusual and difficult physical characteristics of the ground; or the existence of faulty planning characterized by the subdivision of sale of lots laid out in disregard of the contours or of irregular form and shape or of adequate size...." Mr. Addicks stated again the argument that seems to be used in the inclusion of most of the property, at least in Area 1, is that the area was blighted by virtue of conditions of unusual and difficult physical characteristics of the ground. Although he agreed the ground under these residences is poor soil,_poor soil really refers in Subd. 13 to open property or undeveloped land. Poor soil, according to legislative history and the law, cannot be used to define blight or property that already has development on it. Mainly poor soil is used as an argu- ment for using tax increment financing for various schemes cities get involved in for financing vacant property, mainly used to finance the development of property that has undeveloped vacant land which has poor soil conditions. It was very clear, at least in his mind, that poor soil was not a condition of blight in areas which have already been developed. Clearly here, none of the residences are blighted in any way, shape, or form. Mr. Addicks stated he thought the property was rightly not included in the tax increment financing plan. He believed that to use tax increment financing on this parcel, they have to create something different, an economic development district, which could be based on the plan they have but they would have to make several different findings in order to use the economic development plan. Thus, it was a matter of law and, more importantly, a matter of fairness to the people that they be excluded from the redevelopment plan and project area and provision made for written notice so that in the future, if they are to be included in an economic development area, they can attempt to participate in the creation of an economic development area. HOUSING & REDEVELOPMENT AUTHORITY MEETING, MAY 12, 1983 _ PAGE 7 Mr. Comers asked if Mr. Addicks had any disagreement with the manner in which the notices were given in the original creation of the plan and district. Mr. Addicks stated he believed the HRA did follow the legal procedures involved in notification and publication. The law does not require that notices be mailed to residences. Mr. Commers stated that, as he understood it, the essence of Mr. Addicks' argu- ment was that since it is a redevelopment district, the definitions Mr. Addicks was talking about in terms of blight, and specifically the findings that appear to rely to a great extent on soil problems, indicate that these properties do not meet those conditions and definitions to be included in the district. Mr. Addicks stated that was essentially correct. Mr. Addicks stated the residents were at the meeting and would be happy to answer any questions the commissioners might have. Mr. Comers asked Mr. Boardman that in going back into the minutes regarding this project, did they initially start out with it being anything other than a redevelop- ment project? Mr. Boardman stated, no, they had always intended to set it up as a redevelopment . district. There are actually two districts involved- -the redevelopment district which is the 462 district laying out the general boundaries in which the HRA can operate, and the actual tax increment districts that were established as .projects within the redevelopment district. Mr. Comers stated that with regard to the inclusion of the specific parcels within the project itself, did Mr. Boardman recall or do the minutes reflect any mention of those parcels, other than just being pointed out in the plan? Mr. Boardman stated there were none that he was aware of. One of the reasons the parcels were included was primarily to develop an overall integral system within the district. He stated he has gone through the minutes, and their con- versations were primarily directed toward the vacant property north of Moore Lake. W. Comers stated it was his recollection that the HRA was aware that the homes were there, but that there was not a great deal of discussion, if any, relating specifically to them. Mr. Boardman stated the homes were pointed out in the legal descriptions, and it was pointed out in the discussion that there were seven homes, but there was not a lot of discussion at that point on the homes themselves. Mr. Prieditis stated the HRA's primary interest was in the northern end of the district, also some questions about the traffic, and that the traffic was hoped to be improved with some development within the district. r� U HOUSING & REDEVELOPMENT AUTHORITY MEETING, MAY 12, 1983 PAGE 8 Mr. Commers stated he remembered they were very concerned about the drainage into the lake. If anything was done with the lake, would that require any type of work or improvements to be made to these parcels that face along the east side of the lake? Mr. Boardman stated that would be a possibility. They have presently gone through a condemnation on some of that property with the Nelson's to put in the necessary pipes and drainage system to bypass some of the drainage into the Moore Lake system. He stated one of the things they were very concerned about was the traffic and the traffic generated on Old Central. Mr. Commers asked if the City had an easement across the back of the Nelson's property. Mr. Dave Newman stated that on one parcel of the property, a condemnation process has occurred. They do have an easement for one portion of it; but there is another storm sewer system, and there are some legal questions on the easement for that. Mr. Commers asked about the question raised by Mr. Addicks regarding the definition of blight and the ability to use that on approved parcels of property. Mr. Boardman stated Mr. Addicks was talking primarily about the vacant property definition in which it talks about soils with unusual conditions. He thought it was their intent in including these houses that there is blight from other condi- tions, blight due to unusual layout or blight due to layout of property that under - utilizes land. He thought that was one of the reasons why the property across the street to the east and up around Rice Creek Road and Old Central was also included as part of the redevelopment district. Mr. Commers asked if it was necessary to make sure that each parcel within the district qualifies or meets a definition in order to justify the plan or to look at the district as a whole. Mr. Boardman stated it was his understanding with the legal opinion he had at that time that they did not have to take each individual parcel and define each parcel as blight. All they had to do was define the general condition of the area as blighted. For that reason, they took the large major portions of property and described those major portions in the discussions. At that time they were using Holmes & Graven. He felt if they proceed further, they will need further legal advice as to whether the definition they used was an appropriate definition. He still felt it was an appropriate definition and that not each and every parcel within the property has to be described as a blighted parcel. Mr. Newman stated he would concur with Mr. Boardman. He felt the definition of deteriorated area was talking in general terms. Without having done extensive research, he would think it was talking about general areas of development. • HOUSING & REDEVELOPMENT AUTHORITY MEETING, MAY 12;'1983 PAGE 9 Mr. Commers stated that if the parcels are excluded from the redevelopment area, did Mr. Boardman see any disadvantages? Mr. Boardman stated there could be some disadvantages to the HRA. It depends on the overall plan, how the property to the north is developed, and what kind of associations they want for that property, including the traffic, parks and recrea- tion, bikeway /walkway access, and other things that are involved in an overall development of a plan. If these residences are eliminated, the HRA may be limited in their effectiveness in theoverall development of the district. They would have to work around the property, and it may cause some problems and may cause some differences in their plan which may affect the overall development of the plan. Mr. Newman pointed out that Area 2, the southern portion, includes Heather Hills which has $300,000 homes. Under any general definition of bighted, certainly these homes are not blighted, but it could very well mean that under statutory definition for overall development, that area is properly within the district. He thought it was important they don't look only at the general definition but to keep in mind the statutory definition. Mr. Prieditis asked if any of the property owners or businesses in Area 2 had asked to be excluded from the redevelopment district. Mr. Boardman stated no other property owners or businesses had asked to be excluded from the district. Mr. Commers asked Mr. Boardman if he had anything he would like to bring to the HRA's attention at this point. Mr. Boardman stated he had done some quick calculations based on the lot areas. The square footage for a normal sized lot under city code is 9,000 sq. ft. Based on that figure, if they redeveloped the area just where the homes are located into single family residences, they should be able to put in approximately 30 single family units. Mr. Commers asked if Staff opposed the exclusion of these homes, or did Staff have enough information to make a recommendation or were there any other dis- cussions with the homeowners to see if there were any compromises. It seemed unfair to keep something hanging over these homeowners' heads indefinitely. Mr. Boardman stated he had talked briefly with Mr. Addicks about whether there was any possibility of compromise with the homeowners. There are some things the HRA can do such as delay any acquisition,of these homes for a period of years or they can set up a first right of refusal on purchase. Mr. Addicks stated he did have a meeting with his clients at which they discussed the alternative of deferring development of those parcels of property for a stated period of years (10 -12 yr, contract, perhaps purchasing the property 6f any of the homeowners were willing to sell for the fair market value during the contract period. He stated his clients were unanimously opposed feeling-that by the time HOUSING & REDEVELOPMENT AUTHORITY MEETING, MAY 12, 1983 PAGE 10 10 -12 years had passed they would be much closer to retirement, into retirement, or well into retirement and then be faced with the loss of their properties at probably a worse time in their lives. Mr. Addicks stated he felt the HRA should keep in mind the definition of a Redevelopment Project, which is what they are really talking about. Again, referring to Subd. 13 of the State Statutes, it states that a "Redevelopment Project shall mean any work or undertaking: (1) to acquire blighted areas and other real property for the purpose of removing, or reducing blight, blighting factors, or the causes of blight ". He stated sub - paragraph 1 primarily refers to property which has things on it, primarily residences, but could also mean property with businesses on it. Sub - paragraph 2 states: "to acquire open or undeveloped land which is determined to be blighted by virtue of conditions of unusual and difficult physical characteristics of the ground ". Under that sub- division they intentionally had to amend the law to include poor soil and improper size of the lots and the strange shapes of undeveloped land because, historically, that has never been considered blight and to remove some legal arguments to people who were opposed to using tax increment for undeveloped land. Mr. Addicks stated what he heard Mr. Boardman saying was that because these things are considered to be blight as dealing with undeveloped or vacant land, therefore it must be blighted under the previous sub - paragraph. He stated he did not think that was an appropriate way to read that, because that had to be included to make it clear to the legislature that even though these things were not blight, there were good reasons to include undeveloped property in a redevelopment project. Mr. Addicks stated that when he was with the League of Minnesota Cities and work - ing with cities concerning the areas of redevelopment projects, it was often a technique of the cities to include within the project area homes that were adjacent to a blighted area. He stated that does not work very well because people get very upset about it and there has been some litigation. Certainly if there has been blighted areas within which and in the middle of which are scattered some pretty nice homes, those areas have generally been considered to be part of the blight with the catch -all definition because they are totally within a blighted area and surrounded by blight. In this situation where the residences are kind of adjacent to a "blighted" area, he did not know if it could even be called a blighted area, because he did not think this blightedness met the definition of sub- paragraph 2 under Subd. 13, which may or may not be blighted but certainly it was appropriate land to be included in a redevelopment project. Mr. Commers stated he did not want to get into the varying legal opinions of the definitions. The HRA.has their lawyer, too, and they have to rely on his advice in this matter. Mr. Prieditis stated if he could see some technical problem in excusing the properties which would mean they were not able to develop pr make improvements within Area 1 and the redevelopment district, he would be inclined to keep the residences within the district. But, if there were no technical problems, and • by looking at the map, he did not see that much of a problem, he would like to ..propose that the HRA proceed and start the process for the removal of these resi� dences from the district. HOUSING & REDEVELOPMENT AUTHORITY MEETING, MAY 12, 1983 PAGE 11 Mr Prairie asked what kind of problems could result in any of the three areas if the HRA removed these residences from the district. Would it set a precedent? Mr. Boardman stated it was his feeling that if they start eliminating properties from the redevelopment district (he was not talking about eliminating properties from the tax increment district), they could have some problems as far as the fragmentation of the overall planning of what.the HRA is trying to accomplish. He stated the HRA included the Shorewood Center and the commercial property across the street. He thought there were some real problem conditions, and one of the objectives of trying to bring that whole area up deals with building some-resi- dential density in the district. Included with that residential - density is the development of a livable space which includes recreation, access, a bikeway/ walkway, handling the traffic problems, and a whole series of things that have to be looked at. By fragmenting the space, they are restricting their capabilities of looking at that, restricting their possible access points, restricting their potential for improvements, and restricting their ability to do the overall plan. Mr. Boardman stated one thing they looked at was the consistency of the plan and putting the plan together as a cohesive unit. That is why they set up their base district. On top of that, they use their tax increment district to develop projects. Then tax increment funds can be used anywhere in the redevelopment area for road improvements, drainage, etc. When they start eliminating redevelopment districts, they limit what they can spend as far as their tax increment dollars. They can no longer spend their tax increment dollars in areas outside the redevelop- ment district. If, by removing these homes from the overall district, they hamper their ability to improve that overall district, he felt the HRA would not have done what they were initially established to do. The questions they have to ask them- selves are: Do they want those homes in the overall district? By being out of the district, does the HRA feel those properties would hamper their overall improve- ment of the district, or is there some ability to compromise? Mr. Commers stated the HRA has no intention of acquiring these people's homes. It happened to come in the context because of the condominium project proposal, but there are all kinds of homes in the redevelopment area and they have no inten- tion of acquiring any homes. Mr. Ed Kaspszak, 1317 Hillcrest Dr., stated there are going to be a lot of changes in 25 years, and there are going to be a lot of changes in ownership. What is true today may not be true five years from now. His suggestion was that until there is a real demand for this property, the HRA should not tamper with it. He understood what the HRA is trying to do, but he felt that when the time is right and the project is right for this area, the people will accept it and there won't be all these problems. Mrs. Lorraine Nelson, 6080 Central Ave., stated that regarding the easement problem mentioned earlier, they have an easement going partially through their yard, and they were not opposed to the easement. The question arose when the City went half way across their yard when the City could have just followed the line down below. The City's reason was they did not want to cross over a sewer line, but a little farther down, about 100 ft., they did cross the other sewer HOUSING & REDEVELOPMENT AUTHORITY MEETING, MAY 121, 1983 PAGE 12 line. She stated they felt if the City could cross the sewer line farther down, the City could have done the same in their back yard. She did not think people were afraid of easements; there was just a misunderstanding in this case. Mr. Leo Nelson, 6065 Central Ave., stated that Mr. Boardman made the statement about the area where the homes are located not being developed to its maximum potential and that 9,000 sq. ft. was all that is required for building a house. It was his understanding that 9,000 sq. ft. was the minimum, and he hoped any big development plans did not include development to just minimum requirements. Mr. Bill Donohue, 1316 Hillcrest Dr., stated he would like to know the circum- stances by which the line was drawn to include these residences. It seemed a terrible injustice to just draw a line and include these people's homes when they are already paying very good taxes on their properties. Mr. Dan Nelson, 6080 Central Ave., stated that in looking at the district, Area 1 looks like a big district; however, most of it is the lake itself, about one - fourth is the park and recreation area, and a small portion is their homes which consti- tutes about 10 acres of land. He would like to know the total taxes that 10 acres produces as opposed to what the HRA thinks it might produce. He stated a township is composed of 23,014 square acres. This 10 acres is producing quite a bit of taxes and is only representing .0004% of the City of Fridley, fie stated there isn't much that can be developed in there that would produce any more than they are producing in their taxes right now. He thought it was a shame that it is even being considered, and their homes should be ruled out of the redevelopment district. Mr. Commers stated they have no project before them at this time to indicate they are considering taking those homes and redeveloping. Mr. Boardman is talking about any incidental use of some of the property they might need to develop other parcels. It does present problems if they exclude these properties, because if they exclude these homes, why not exclude other homes across the street and others on Rice Creek Road? It is not so simple as saying the HRA is being unfair or treating this roughly. There has been a district set up by public hearing, people gave testimony on why they felt the line should be drawn the way it was. The HRA had no information to the contrary and set up the district based on the testimony they did have. Mr. Dan Nelson stated he has had offers to buy the front portion of his land. As a realtor or as a seller, he did not feel he could honestly sell that land to anyone who wants to develop nice homes without telling that person that the area is in a redevelopment district. He is being hampered as a private citizen and cannot move in the general direction of good business because of this situation. He stated he has also had an offer on his rental property, and again he is bound hand and foot because of this district. He wanted the HRA to know there are a lot of things that take place with their decision. Mrs. Lorraine Nelson asked why the HRA couldn't exclude their homes from the district. Then, if the City feels they need to use part of their property, they . can come and ask them and some compromises can be made. HOUSING & REDEVELOPMENT AUTHORITY MEETING, MAY 12, 1983 PAGE 13 Mr. Boardman stated there are some real questions as to whether the HRA can use tax increment monies outside the tax increment district or the redevelopment district. Mr. Prieditis stated he felt any kind of compromise can be made-and a good design and good development can be worked around some fixed situations. He was looking in terms of why is there an HRA and why are they trying to do things. He felt the answer to that was probably to make the maximum amount of people happy and for the good of the total community. If they are making seven families unhappy and insecure, then why should this be done? As far as building density, it should never become a goal. He did .not agree with the philsophy that the maximum use of the land is some sort of ideal. He would propose the HRA leave these residences alone and remove their properties from the redevelopment district. Mr. Newman stated it was his understanding that there has been a trend at the legislature to restrict the use of various development plans. If they do exclude the property at this time and at a later date try to include it, the conditions and requirements may be different and the property may be such_ at that time that it doesn't meet those requirements. Mr. Boardman stated the statement was being made that whenever the HRA wanted that property back in the redevelopment district, all they had to do was have a public hearing and put it back in. That was not necessarily the case. Mr. Newman had brought up the point that at a future date, they may not be able to put it back in. The redevelopment.districts may be eliminated at that time. When the property is included in the district, any improvements within that section would also require a public hearing. Mr. Boardman stated redevelopment districts are not necessarily negative from the perspective that it is taking property. Redevelopment districts can be beneficial in the sense that improvements are happening. Even if the HRA feels they do not want to acquire the homes, he still felt the homes should be included in the redevelopment plan and then some type of compromise made that says the homes will be left in the district for the purposes of .... Mr. Addicks stated maybe something could be worked out. If the HRA doesn't intend to take the homes in the near future for redevelopment, but want to use the properties for purposes incidental to the development to the north, maybe some kind of language could be drafted for inclusion of this property in the redevelop- ment district. He stated he would discuss this with his clients. Mr. Commers stated the HRA would continue with their agenda while Mr. Addicks discussed the possibility of some kind of compromise with his clients. 2. CONSIDERATION OF A REQUEST FOR "RIGHT OF DEVELOPMENT" BY ST. PHILLIPS HUMAN SERVICES, INC.: Mr. Howard Helgen stated he was a member of the St. Phillips Human Services, Inc., committee. He stated he had a drawing he would like to present to the HRA. 6 HOUSING & REDEVELOPMENT AUTHORITY MEETING, MAY 129 1983 PAGE 14 Mr. Helgen stated that the plans have been changed from a building of 60 units to a building of 40 units. The reason for the change from 60 units to 40 units is because this is a HUD project. Their consultant felt that with the number of units available for the entire metropolitan area, it would be very unlikely that St. Phillips could get funded for a 60 unit building, because there are not that many units available. Mr. Helgen stated the drawing shows the building on the corner of Old Central and Rice Creek Road, and it encompasses approx. 167,000 sq. ft. Much of the area is unbuildable, and it was possible that by cutting off an edge of the property, they can get by with using around 120,000 sq. ft. Mr. Boardman stated that on May 2, the City Council approved puttingg $80,500 of CDBG funds into the project. The maximum the 14RA can put in is $32 (1,(100. If the land cost is more than that, that excess land cost has to be absorbed by St. Phillips. Mr. Helgen stated he has been in contact with Mr. Saliterman, who is the owner of the property. Mr. Helgen stated he has had some preliminary negotiations with Mr. Saliterman and he felt it was possible to reach a negotiated price with Mr. Saliterman. Mr. Saliterman has agreed informally to bear the cost of soil correction. 40 Mr. Boardman stated the cost of soil correction for the building was about $600 /unit. With 40 units, that would be $24,000 for soil correction costs.. Mr. Boardman stated St. Phillips Human Services, Inc., is asking for right of development. This right of development is based on 40 units. Because of the lower interest rate, the amount of bonding capacity is about the same as last year. He would recommend they see what they can do to reduce the amount of land that is necessary for the development and to do the development right so they can eliminate some of the land costs. Mr. Helgen stated that if they get right of development, he would work out an option on the property with Mr. Saliterman before they submit the application. By doing that, they feel they would have a stronger chance of getting the funds. He stated he thought they could acquire enough space within the property and stay within the parameters of $24,000 and the $80,500 CDBG funds. MOTION BY MR. PRIEDITIS, SECONDED BY MR. PRAIRIE, TO GRANT A RIGHT OF DEVELOPMENT TO ST. PHILLIPS HUMAN SERVICES, INC., AS REQUESTED IN MR. BOARDMAN'S.MEMO- #83 -45 AND AS OUTLINED IN MR. BOARDMAN'S LETTER TO ST. PHILLIPS HUMAN SERVICES, INC., DATED MAY 13, 1983. Mr. Commers suggested that Mr. Helgen meet with Staff and the City Attorney to find out the mechanics on how the option should be written. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. HOUSING & REDEVELOPMENT AUTHORITY MEETING, MAY 12, 1983 PAGE 15' 3. LETTER TO STEVE HARDEL DATED MAY 6, 1983: Mr. Boardman stated they are still trying to compromise on condemnation based on new information gotten.from HUD. They do have the potential for more exposure than the $81,500. For example, if they go into the condemnation hearing and at the condemnation hearing, they say the value of that property is $73,000, the City still has an exposure of $15,000 relocation on top of the $73,000, so they could have the potential of $88,000 instead of $81,500. In lieu of condemnation, this letter dated May 6 was sent to Mr. Hardel making an offer of $81,500. That $81 500 gives him what he is allowed under relocation law with an appraised value of 166,000. Mr. Hardel has accepted the offer of $81,500 with the condition they also get a payback for the $400 appraisal cost. Mr. Commers stated he would like the HRA to get a report on what is involved in relocation determinations. MOTION BY MR. PRAIRIE, SECONDED BY BR. PRIEDITIS, TO APPROVE THE OFFER OF $81,500 ON THE HARDEL PROPERTY. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. 4. CONTINUED: CONSIDERATION OF A PETITION FOR THE REMOVAL OF.602844 ^6270 "80 • OLD CENTRAL ENU E FROM'THE MOORE "LAKE EDEVE OP NT'-IS I : Mr. Newman stated he has talked to Mr. Addicks, and there appears there may be some possibility of working out some compromise; however, they would like to have some time to work out the specifics and look at the legality. He would like the HRA to continue this item until the next meeting and direct Staff to work out the details. Mr. Addicks stated that as long as their homes would be preserved and as long as they can have a fairly specific idea of what type of uses could be requested in the future, his clients felt fairly comfortable in working out an agreement. Mr. Addicks stated he would like the HRA secretary to mark the slides and photo- graphs that had been presented as exhibits at the meeting. He would also request a copy of the minutes be sent to him. If there was anything in the minutes he would like elaborated further, he would write a letter to the City Council explain- ing his understanding of the conversations. The secretary recorded the slides as Exhibits 1 -26 and the photographs as Exhibits 1 -14. MOTION BY MR. PRAIRIE, SECONDED BY MR. PRIEDITIS, TO CONTINUE THIS ITEM UNTIL THE NEXT MEETING. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED • UNANIMOUSLY. 6 HOUSING & REDEVELOPMENT AUTHORITY MEETING, MAY 12, 1983 PAGE 16 5. FINANCIAL REPORT: Mr. Commers stated he had not been at the last meeting, and he had had some questions about the financials. He stated he had talked to Mr. Inman. His questions related to the shifting of administrative expenses from the revolving fund to the construction fund. He had asked Mr. Inman to give a little bit of forecast as to what they would be spending in administrative expenses this year, and it looks like it is going to be in the area of $90,000 this year with the next year being projected at $120,000. The purpose of this was to see if they could perhaps direct Staff to give the HRA some kind of breakdown between personnel salaries and costs and any other costs the HRA is reimbursing the City for. Mr. Inman stated that after he had talked to Mr. Commers, he had asked Staff to begin to prepare what is called an "hours audit ". He hoped to present this to the HRA soon. 6. CHECK REGISTER: MOTION BY MR. PRIEDITIS, SECONDED BY MR. PRAIRIE, TO APPROVE THE CHECK REGISTER DATED MAY 11, 1983, IN THE AMOUNT OF $11,115.64. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMERS DECLARED TIIE MTTION CARRIED UNANIMOUSLY. 7. OTHER BUSINESS: Mr. Prieditis stated that at the last meeting, they had agreed to set up a special meeting for the purpose of discussing Phase 3 of the Center City Project. That meeting had not yet taken place. He felt very strongly that they should do some brainstorming about what they would like to see happen over there in li;gh_t of the criticism the HRA has received from the community and for these people who do not know what is going to happen there. Mr. Commers agreed. The rental of the hardware store could probably have been handled differently; but, otherwise, in terms of acquisition, they have had two rights of development and people have spent a lot of money trying to develop it. It was just a result of a lot of factors including a down -turn in the economy. that just made it impossible to do anything. As far as the letters to the news- paper, he did not think a good portion of that criticism was justified. Con- versely, he thought the HRA has to do their best to try to get something moving and perhaps it is necessary to have an outside group come in and make a study. The HRA members agreed to meet at 6 :30 p.m. on June 9 to discuss Phase 3 of the Center City Project. ADJOURNMENT: Chairperson Commers declared the May 12, 1983, Housing & Redevelopment Authority • meeting adjourned at 10:30 p.m. Respectfully submitted, eco Secretary g to y 7 Ue� AOA, I* fl o �3 f 33� l �6 au �c