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HRA 11/10/1983 - 29367CITY OF FRIDLEY • HOUSING & REDEVELOPMENT AUTHORITY MEETING NOVEMBER 10, 1983 ... ......... .. ............................... . CALL TO ORDER: Chairperson Comers called the November 10, 1983, Housing & Redevelopment Authority meetint to order at 7:37 p.m. ROLL CALL: Members Present: Larry Commers, Elmars Prieditis, Carolyn Svendsen, Duane Prairie Members Absent: Walter Rasmussen Others Present: Jerrold Boardman, City Planner Dave Newman, City Attorney St'l Inman, Finance Director Jim Casserly, O'Connor "& Hannan Maynard Nielson, Fridley Lions John Gargaro, Fridley, Lions Bob Cook, Fridley Lions . Mark Haggerty APPROVAL OF OCTOBER 13, 1983, HOUSING& REDEVELOPMENT AUTHORITY MINUTES: MOTION by Mr. Prieditis, seconded by Ms. Svendsen, to approve the October 13, 1983, oR —using & Redevelopment Authority minutes as written. Upon a voice vote, all voting aye, Chairperson Comers declared the motion carried unanimously. 1. COMMISSIONER'S FINDINGS Mr. Boardman stated that previously he had given the HRA the commissioner's findings on both the Hardel and Ryan properties. He stated he has talked to Mark Haggerty, attorney for Mr. Ryan, and Stan Rischard, attorney for Mr. Hardel. Both have indicated they are going to be seeking an appeal on the commissioner's findings. On the Hardel property, the City's appraisal was $82,000 including fixtures, and the commissioner's award was $91,300. Hardel's appraisal was $97,055. Mr. Boardman stated that on the Ryan property, the City's fixture and appraisal was $137,117 ($24,117 - fixtures; $113,000 - land and building). The commissioner's award was $177,300. Ryan's appraisal was $234,000. Mr. Haggerty has indicated his client is looking at appealing this process. Mr. Haggerty stated he was looking for two things from the HRA: (1) He thought Von Klug & Associates should be presenting a proposal soon on relocation. Rather than have his client wait another 30 days for relocation, he would like to have the HRA give City Staff the authority to pay whatever Von Klug thinks is reasonable on relocation. (2) The commissioner's award HOUSING & REDEVELOPMENT'AUTHORITY -MEETING; NOVEMBER'10; 1983 — PAGE 2 • was definite] less than 50% of what the thought it would be- -less than Y Y 9 50% of the difference between the City and Ryan's appraisal. He has talked to his client about some form of compromise. Mr. Ryan obviously feels it is worth $234,000. If there is any leeway whatsoever, maybe something could be worked out. If the HRA could give him some indication if there was any kind of flexibility on the commissioner's award, he would take th_ts information back to his client. Mr. Newman stated that from a legal standpoint, there was the question of whether the HRA has the authority to delegate any amount of money without first reviewing the proposal, or if the HRA would even want to surrender that right of at least reviewing the proposal. Mr. Haggerty stated there was a 120 -day wait on relocation because they agreed to give the HRA protection on the mechanics of this. They have already run through that 120 days. Since there is no history of changing what Von Klug is suggesting on relocation, it seemed it would be appropriate to delegate authority to Staff so they would not have to bother the HRA again. They know the maximum is $10,000 so it will be $10,000 or less. Mr. Prairie suggested it might be feasible for the HRA to authorize Staff to pay out 75% of the relocation payment, then the HRA could review the proposal and agree to the balance of 25 %. • Mr. Commers asked why Von Klug has not been able to present the relocation proposal earlier than this. Mr. Haggerty stated one problem was they didn't realize until about 30 days ago that Von Klug needed to see Mr. Ryan's financial statements. There has been some problem because the financial statements are not totally in order and they are reviewing them. Mr. Commers stated the HRA may want to look at those financial statements in making the determination. Mr. Prieditis agreed. He stated there are examples of what can happen, just like questioning the City's appraisal and the commissioner's award. He would like to hear the facts before they delegate out any authority. Mr. Commers stated it appeared there was some reluctance on the part of the HRA to delegate authority to Staff to accept the Von Klug report and make the relocation payment. Mr. Haggerty stated he would have no problem with the disbursement of payment as suggested by Mr. Prairie. If the HRA could send Mr. Ryan something, he would appreciate it. Mr. Commers stated Mr. Ryan does have his money on the quick -take. • Mr. Prieditis asked what the consequences would be after a partial payment if the HRA disagreed with what was being requested on the relocation payment and the actual revenues. 0 HOUSING & REDEVELOPMENT AUTHORITY MEETING NOVEMBER 10, 1983 PAGE 3 Mr. Haggerty stated that in the quick -take, they had an agreement with Mr. Ryan whereby if the commissioner's award was less than what had been paid, he had agreed to pay the difference. He did not think they would have any problem with that, that if the HRA -felt the award was not appropriate on relocation, Mr. Ryan would pay it back. Mr. Coroners stated that since no motions have been made by the HRA on the subject of relocation, the Chairperson would indicate that no change was in order. Mr. Commers asked what Staff's recommendation was regarding the commtssioner''s award. Mr. Boardman stated it was the City Attorney's legal opinion that the HRA was in a pretty good position and any appeal would.not create a lot of difference in the process. At this point, it was up to the HRA as to whether they wanted to be flexible in the amount of estimated costs for the appeal. The estimated costs to the HRA in defending any of the appeals would be between $3,000- 3,500. Mr. Newman stated that was the cost of legal fees. In addition, there would be the cost of the appraiser's and commissioner's testimony. He would estimate an additional $500 -750. . Mr. Prairie stated that with this whole situation with Mr. Ryan, the HRA has been subject to some criticism. Based on that, he thought it was difficult to make any compromises because he felt the HRA had already, been more than generous. Ms. Svendsen stated she was in opposition to any additional settlement. She felt the HRA has been very considerate of Mr. Ryan and has been fair to him in helping him relocate. MOTION by Mr. Prieditis, seconded by Ms. Svendsen, to affirm the award of the commissioner in terms of the HRA's offer to Mr. Tom Ryan. Upon a voice vote, all voting aye, Chairperson Commers declared the motion carried unanimously. 2. LION'S CLUB PROPOSAL FOR HARDWARE LEASE: Mr. Boardman stated he and Mr. Inman, met with John Gargaro last week before the Lion's Club Board meeting. Mr. Gargaro had gone to the regular Lion's Club meeting and had indicated they were still interested in the hardware building. Mr. Gargaro was going to discuss this with the Board and come back to the HRA �%,ith a proposal on the Tease of the hardware building. There was also discussion of the lions constructing a new building, not necessarily in the Center City area, but in one of the tax increment districts- -North Area or "bore Lake Area, He did not know whether that cost would be beneficial to the Lions as compared • to a lease arrangement on the hardware building and ungrading the facility that they may only have for a short period of time. HOUSING & REDEVELOPMENT AUTHORITY MEETING, NOVEMBER 10, 1983 PAGE 4 Mr. Gargaro stated that in talking to the Board and some of the general membership, they felt they do have some interest in acquiring something for their club to have as a meeting room and rental generating some income to the Lions. The only thing they ascertained was they felt they would need some help in the renovation of the building based on the face that it is not up to code as it exists for the purpose needed by the Lions, and the cost would be so extreme for their Club to do it, it might be almost impossible. Based on the terms of the lease they could negotiate, the Club did not feel they would care to put as much money into the building without having a lengthier commitment than three years. Mr. Coroners asked what would be required to upgrade the building. Mr. Gargaro stated the primary expense was the sprinkler system, which is required by code because of the meeting capabilities of the building. A rough estimate of a sprinkler system is $12- 15,000 - -about 40 -50% of their total expense. Also needed was a new floor, some ceiling work, partitions, two extra escape doors, and restroom facilities. Mr. Comers asked if anything had been discussed about rental rates. Mr. Boardman stated they have talked about the possibility of $3 /sq. ft. There is about 12,000 sq. ft. so it would be about $36,000 /yr or $3,000 /mo. That is still open for negotiation. Rather than the possibility of the HRA sharing in the cost of upgrading the facility, he would rather see a reduced rental rate and allow the Lions to do the work and bear the cost of upgrading the building. Another thing that has been discussed is a graduated increase starting from very little the first year, more the second year, to a higher value by the third year, allowing the Lions to get in with le S lease cost to them. Mr. Gargaro had indicated that the $3.00 would be discussed - andthey would come back with a counter offer. Mr. Commers stated he thought it was difficult at this point for the HRA to make any dicisions without a firm proposal from the Lions Club. He thought represent- atives from the Lions Club should get together with Mr. Boardman and talk about some specifics. He stated the problem on the timing is that there is a plan, and the HRA does intend to redevelop that area. It would seem more realistic that the hardware building is going to have to be included in the overll project. So, from the HRA's point of view, if they had a 5 -10 yr. lease with the Lions Club, it could hold the total redevelopment of that area. The HRA did recdgsize the great community effort put forth by the Lions Club and the HRA would like to try and work something out with the Lions. The building is sitting vacant, which doesn't do anybody any good. If there is any way it can be used, it should be in use. He would think something equitable could be worked out to make it feasible to the Lions. Mr. Boardman stated he needed a proposal from the Lions Club telling what they need as far as rent and what it is .going to cost and what they need to break even or make a profit. • • HOUSING & REDEVELOPMENT AUTHORITY MEETING NOVEMBER 10 1983 PAGE 5 Mr. Gargaro stated he has been unsuccessful in getting this kind of informa- tion from the membership. He stated the input he has gotten from most of the members is they feel three years is not long enough. Mr. Prieditis stated the Lions Club in the hardware building could even become a part of the total redevelopment, but that is something they do not know at this time. Mr. Inman stated that in order for them to really negotiate with the Lions Club, they are going to need to know what it is going to cost the Lions. If they could have some parameters on what the Lions are looking for, it would be very helpful. Mr. Gargaro stated he did not think $3 /sq. ft. would fly. Obviously, they would also look for some relief from their contribution to the City (they are presently giving 8 %) because of the capital expense they would have to expend. Mr. Inman stated ore of the proposals discussed with some sort of factor on the Lion's income. certain income, they might not be so nervous. any concern about a 3 -year minimum rental; and Lions before that time, there would be some ty they have made. was a minimum square foot rent If they knew they had a He asked the HRA if they had if the HRA had to remove the De of buy -out on the investment Mr. Comers stated it was his personal opinion that something like that could be feasible. The HRA would like to work something out with the Lions. He thought Staff should be able to put together a couple of different proposals for the Lions to consider. Mr. Haggerty stated what he would do is get the exact rental rate that the Lions would have to be paying in the new facility at Skywood. Then the Lions can use that figure as a benchmark in working with the HRA. Mr. Boardman stated that would be helfpul. They need some point at which they can negotiate with the Lions in order to try to work out some compromise. Mr. Prairie stated Staff should try to have that information by the next meeting. Further discussion on this item was continued until the next meeting. 0 0 HOUSING & REDEVELOPMENT AUTHORITY MEETING; NOVEMBER 10 ;1983 PAGE 6 3. TAX INCREMENT PLAN Mr. Boardman stated that as noted in his memo #8386, he had anticipated some modifications in the figures in the plan. The amended copy had been recctvred in the mail that day. He stated dim Casserly was at the meeting for any discussion on the tax increment financing di'stri'ct. He stated the tax increment district does include both the property where Johnson Printing will be located and the Skywood ball. Mr. Boardman stated one of the things looked at by Staff with O'Conner and'Hannon is giving the_HRA the maximum amount of flexibility within the documents so they can take the necessary actions needed without necessarily having to go back over and over again and amending the plan with the public hearing process. For this reason, they set it up with dollar amounts in the plan for the maximum capture of increments on those proposals. Mr. Boardman stated that also included in the agenda packet was an «Action Alert" regarding "Industrial Development Bond Authority- Attacked in Congress ". They are looking at major changes in LDB legislat -';,n ir, the next few years. That points out how important a reserve system is to the City of Fridley staying competitive with development. • Mr. Comers asked Mr. Casserly to go through the Tax Increment Financing Plan and indicate the changes that were made. He stated that from now on, it would be very helpful to have any changes to documents marked in some way so they can be easily picked out. Mr. Casserly stated this plan allows for maximum alternatives. The specific amounts right now they have agreed to is $30.000. The second amount that has been contemplated in some time frame would be how to deal with traffic or the potential landscaping problem with the neighbors. The third problem is how does any municipality or public entity fund a reserve to facilitate future growth and development? The third part of this is something that is still 2 -3 years off, and all this does is provide a vehicle to help develop that reserve funding system. There are natural limitations built into the statute that says if you do not use the reserve fund system, you cannot keep on collecting increments for a pool, and those increments will be shut off. These are referenced by statute. Mr. Casserly stated this plan is really a planning tool. The kind of district they are proposing at this time is not a redevelopment district. It only qualifies as an economic development district with a maximum length of 10 yrs. with 8 yrs. of increments. This is not a 25 -year district, and he would encourage the City to do the districts on a parcel -by- parcel basis and keep them as short as possible. Mr. Inman stated that regarding the legislation on IDB authority, it was • Staff's recommendation to leave it as is. • HOUSING & REDEVELOPMENT AUTHORITY MEETINGo NOVEMBER 10 1983 PAGE 7 Mr. Boardman stated he is looking for approval of Resolution No. HRA -17 -1983, "A Resolution Establishing Tax Increment District No. 4 within Redevelopment Project No. 1 and Approving and Adopting a Proposed Tax Increment Financing Plan Thereof ". He stated that in that resolution, they are requesting that the plan be sent to the County, school districts, and to the City Council requesting the City Council to hold a public hearing. MOTION by Mr. Prieditis, seconded by Ms. Svendsen, to adopt Resolution No. HRA -17 -1983. Upon a voice vote, all voting aye, Chairperson Commers declared the motion carried unanimously. Mr. Casserly stated that a municipality such as Fridley really is adversely impacted by the legislation pending before Congress. Fridley would be limited under the formula to $42 million of tax increment financing. By the end of this year, the City of Fridley will have closed some $142 million, assuming they have no more requests proposed before the end of the year. Actual bond issues authorized and closed will exceed at least three times the amount that is in the congressional legislation. For cities that are aggressively pursuing development, these are the ones that will be the most severely impacted. Mr. Commers stated maybe some Staff member should be directed to write a Is letter to their state representatives and state senators and perhaps attend some of the meetings. Mr. Boardman stated that right now he is on the NAHRO Legislative Committee working with Minneapolis, St. Paul, Duluth, and a lot of other people trying to push legislation, and they are working through Senator Durenberger's office. They are very concerned about the IDB legislation and are working closely with the representatives to get it either stopped, changed, or modified. 4. FINANCIAL REPORT: Mr. Commers stated that as he understood it, there have been CDBG monies granted to Anoka County, and those funds are controlled by the City Council. He asked if there were any plans or requests for the use of any CDBG monies regarding any development. Mr. Boardman stated the 1984 allocations will be coming before the City Council next month and they are looking at a about $160,000 worth of allocation. There has been no discussion on the allocation at this time. The City Council is the final body who will be making the determination as to how they want to spend those monies. It is clearly in the realm of the HRA to utilize those funds in the sense that those funds would be used for economic develop- ment for the elimination of slum and blight. Any of the redevelopment districts that are set up and the tax increment districts that are set up, other than economic deveopment districts, can be classified as slum and blighted areas. • HOUSING & REDEVELOPMENT AUTHORITY MEETING NOVEMBER 10 1983 PAGE 8 • Mr. Commers asked if the HRA should be looking at making a request for CDBG funds. Are there any rehab projects? Mr. Boardman stated the only rehab project they really have is the Holly Center. They have been doing single family rehabs through the past year. The year before they allocated about $150,000 into rehab. All single family rehab is contracted out to the Anoka County CAP Agency. The City Council have in the past allocated monies for weatherization for the elderly, handicapped retrofit for single family homes, and direct rehab. Also, Anoka County uses some of the block grant funds for county -wide rehab. The City gets some of that rehab dollar also. As far as the HRA operating any single family rehab, he would recommend against it. Mr. Boardman stated that last year, the City Council allocated some funds for human service activities. They also allocated funds and will be reallocating those funds in December to a LAWCON match for the removal of some homes in the North District. The City Council has looked at allocating some funds for the removal of handicapped barriers in public facilities and actual construc- tion will be started in the spring in the park facilities and in City Hall. They also looked at the possibility of $7,000 being allocated for a drainage study in the North Tax Increment District. If the City Council does not reallocate the funds to the LAWCON match, the study will be done next spring. • Mr. Commers asked if it would be possible for the HRA to receive and review the proposals being made for the use of 1984 CDBG funds. Mr. Boardman stated he would get this information for the HRA. Mr. Inman stated the financial report included all the activities year -to -date and was very detailed. He stated the report had just been completed and he had not had time to review it. He stated if the HRA members would like to see cash flow analysis, he would get that for them also. Mr. Commers stated the cash flow analysis would be helpful in tying it in with the financial statements. Mr. Inman stated he would mail that to the members before the next meeting. Mr. Commers stated he would like to review the financial statement and discuss it at the next meeting. 5. CHECK REGISTER; MOTION by Mr. Prairie, seconded by Mr. Prieditis, to approve the check register as presented. Upon a voice vote, all voting aye, Chairperson Commers declared the motion carried unanimously. HOUSING & REDEVELOPMENT AUTHORITY MEETING; NOVEMBER'10; 1983 PAGE 9 16 6. OTHER BUSINESS: A. HRA Report Mr. Boardman stated the HRA's first report was printed and mailed out in October. Mr. Commers stated he thought the report was very well done. Mr. Commers stated he thought it was the understanding of the HRA that it would be good to have an annual report. He thought it was important because of the size of the projects and the things they are doing, the HRA really has an obligation to keep the citizens informed. Mr. Boardman stated the HRA may want to consider a different time than October to issue the next report. Mr.Commers stated he would like to have the report come out after their October meeting when they make the decision of what they are going to be doing. • The HRA concurred they would like to publish an annual report. b. Proposed Letter to Tenants of Shopping Center Mr. Boardman stated the City has been contacted by Paul Klaverkamp, the attorney for Dr. Suh, who owns the property where the old National Tea Building was. Mr. Klaverkamp is asking the City to assist Dr. Suh in whatever manner is possible to help Dr. Suh with his leasing problems. Dr. Safi fits I major bal l obn payment in February- One One request was for the HRA to send a letter to the tenants in the building so that Dr. Suh would have this letter to show prospective tenants to help him lease the building. Mr. Boardman stated they asked Mr. Klaverkamp to draft a letter of what he would like the City to do. Mr. Newman then redrafted a letter similar to Mr. Klaverkamp's. He stated Staff would like some direction from the HRA in this - situation. It is quite clear in talking to Mr. Herrick and Mr. Newman that Dr. Suh would probably have no legal action against the HRA. Because he is in the redevelopment district, it does not necessarily force the HRA to consider any action. However, Mr. Boardman stated he knew the HRA has indicated in the past that if it was at all possible to help, they should look at whatever means they have available to help. • Mr. Commers stated he thought writing the letter was fine. 0 HOUSING & REDEVELOPMENT AUTHORITY MEETING, NOVEMBER 10, 1983 PAGE 10 Mr. Boardman stated Dr. Suh has a balloon payment in February. All the leases in the center are coming up for renewal, and not one of the tenants has shown any interest in renewing. That is going to cause Dr. Suh a major problem when he tries to look for financing on the balloon payment. One other consideration Mr. Klaverkamp is requesting is that the City consider some kind of assistance to Dr. Suh in getting refinancing. He stated Staff has indicated to Mr. Klaverkamp that the City would probably not have any problem with writing the letter, and they will work with him, if at all possible, to help in the financing arrangements up to the point where they don't necessarily want to commit the HRA to any action for acquisition. Mr. Boardman stated the HRA is in a very strong position if they want to work with some kind of equity, not necessarily putting its cash money into it, but backing any kind of bank loan, or whatever, on a contract basis: Mr. Inman stated that Mr. Klaverkamp is claiming that the result of the lack of rents is due to the HRA. He did not feel that was due to the HRA, the situation existed, and that is why the HRA is in that area. He con- . curred that the HRA was on very firm legal ground. He would recommend the HRA not pay anything, but merely underwrite the loan with a bank. Mr. Commers requested Staff to contact Mr. Klaverkamp telling him that the HRA has looked at other alternatives and is recommending no action for assistance at this time. Chairperson Commers stated it was the concensus of the HRA to authorize legal counsel to send the letter, as drafted, to the tenants of the shopping center. c. Von Klug & Associates Mr. Boardman stated the HRA had received a copy of a letter from Von Klug & Associates. All this is information to the HRA. At the last meeting, the HRA approved a $12,500 settlement to Von Klug & Associates. Von Klug is reuqesting a payment of $3,000 against that balance. So far, the HRA has paid Von Klug & Associates $6,000. "The only project left is the Ryan property and it should be done within a couple of weeks. He would like the HRA to authorize a payment to Von Klug & Associates in the amount of $3,000. MOTION by Mr. Prairie, seconded by Ms; Svendsen, to authorize a payment To Von Klug & Associates in the amount of $3,000 under the $12,500 settlement previously approved. . Upon a voice vote, all voting aye, Chairperson Commers declared the motion carried unanimously. 0 HOUSING & REDEVELOPMENT AUTHORITY MEETING, NOVEMBER 10, 1983 PAGE 11 ADJOURNMENT: Chairperson Commers declared the November 10, 1983, Housing & Redevelopment Authority meeting adjourned at 10:15 p.m. Respectfully su mitted, 4-),� LYnIhe Saa Recording Secretary 0