HRA 02/09/1984 - 6742HOUSING & REDEVELOPMENT AUTHORITY MEETING
THURSDAY, FEBRUARY 9, 1984 7:00 P.M.
CITY OF FRIDLEY
AGENDA
HOUSING & REDEVELOPMENT AUTHORITY MEETING THURSDAY, FEBRUARY 9, 1984 7:00 P.M.
Location: Council Chambers (upper level)
CALL TO ORDER:
ROLL CALL:
APPROVAL OF MINUTES:
Housing & Redevelopment Authority Minutes: January 12, 1984
APPROVAL OF AGENDA
CHECK REGISTER APPROVAL . . . . . . . . . . . . . . . . . . . 1 - 1D
*Motion to approve Check Register No. 1 -27 -84
in the amount of $74,959.29
*Motion to approve payment of P.O. No. 20287 for legal
fees to Herrick & Newman P.A. in the amount of $215.00
RESOLUTION DESIGNATING OFFICIAL DEPOSITORY FOR FRIDLEY
HMISING AND REDEVELOPMENT AUTHORITY. . . . . . . . . . . • • • 2
*Motion to approve Resolution No. HRA 4 -1984
ADJOURNMENT:
CITY OF FRIDLEY
HOUSING & REDEVELOPMENT AUTHORITY
MEETING
JANUARY 12, 1984
CALL TO ORDER:
Vice- Chairperson Prieditis called the January 12, 1984, Charter Commission
meeting to order at 7:42 p.m.
ROLL CALL:
Members Present: Elmars Prieditis, Carolyn Svendsen, Duane Prairie,
Walter Rasmussen
Members Absent: Larry Commers
Others Present: Jerrold Boardman, City Planner
Sid Inman, Finance Director
Dave Newman, City Attorney
Jerry Paschke, 7270 University Ave. N.E.
Mark Haggerty
Wally Rasmussen, 7806 Alden Way
APPROVAL OF NOVEMBER 10, 1983, HOUSING & REDEVELOPMENT AUTHORITY MINUTES:
MOTION BY lit. RASMUSSEN, SECONDED BY MR. PRAIRIE, TO APPROVE THE NOV. 10, 1983,
HOUSING & REDEVELOPMENT AUTHORITY MINUTES.
Mr. Prieditis made the following change to paragraph 2, page 5: "Mr. Prieditis
stated the hardware building could even become a part of a future redevelopment,
but that is something that is difficult to predict at this time."
UPON A VOICE VOTE, ALL VOTING AYE, VICE- CHAIRPERSON PRIEDITIS DECLARED THE
MINUTES APPROVED AS AMENDED.
1. CONSIDERATION OF AMENDMENT BY ENLARGEMENT OF REDEVELOPMENT PROJECT #1:
Mr. Boardman stated that at the suggestion of the City Council, Staff looked
at the possibility of adding all the commercial property already vacant north
of Rice Creek to Redevelopment Project Area #1. They did this and felt there
was good reason to add that property and are making that proposal to the HRA.
Mr. Prieditis asked Mr. Boardman to outline the benefits for adding this
property into Redevelopment Project Area #1.
Mr. Boardman stated the primary purpose for including this is with the
potential of IDB's going out. The reserve.bond fund is one of their biggest
resources at this point in time to promote development. The only way they
HOUSING & REDEVELOPMENT AUTHORITY MEETING, JANUARY 12, 1984 PAGE 2
can use reserve bond monies is if any property is located in a redevelopment
project area. It does not necessitate including that property in the tax
increment to use the funds for projects, but as long as it is in the project
area, they can use the reserve bond fund.
It is also important to note that this property is all presently vacant
property of which some has need for soil correction. This property has been
vacant through the growth years of the City and would probably not develop
without some financial aid being sought. By including this property into
the redevelopment plan, it will afford maximum opportunity, consistent with
the sound needs of the community as a whole, for development through private
investment. It also conforms to the general plan of the City for its develop-
ment.
MOTION BY MR. RASMUSSEN, SECONDED BY MR. PRAIRIE, TO APPROVE RESOLUTION
NO. HRA 18- 1983, "A RESOLUTION AMENDING REDEVELOPMENT PROJECT NO. 1 AND THE
REDEVELOPMENT PLAN RELATING THERETO PURSUANT TO THE PROVISIONS OF MINNESOTA
STATUTES, SECTIONS 462.411 TO 462.716, INCLUSIVE%
UPON A VOICE VOTE, ALL VOTING AYE, VICE - CHAIRPERSON PRIEDITIS DECLARED THE
MOTION CARRIED UNANIMOUSLY.
2. CONSIDERATION OF TAX INCREMENT #5 WITHIN DEVELOPMENT PROJECT NO. 1
Mr. Boardman stated this is strictly one lot within that overall package
in which they do have a proposed development. Mr. Jerry Paschke was pro-
posing a 26,000 sq. ft. commercial facility on Lot 1, Block 2. As part
of the package, they have worked with Mr. Paschke in putting together some
assistance. This assistance is going to be similar to what was worked out
with Johnson Printing & Packaging, in which the HRA will provide $30,000
write -down on the land, and in return, Mr. Paschke will develop the property.
They use the assistance in the write -down to help cover their cost for soil
correction. There is about $60,000 worth of soil correction needed on that site.
This value was the result of the negotiation between the HRA, Mr. Paschke,
and the property owner. The soil correction costs were determined by soil
borings and actual bids on the correction.
The actual taxes that would be generated would be approximately $45,000 per
year. Other costs laid out in the tax increment plan include $30,000 in
administrative cost along with $310,000 in reserve increments for funding
the reserve system. The tax increment plan will give the HRA maximum flexibility
in the deternmination of all project costs.
MOTION BY KS. SVENDSEN, SECONDED BY MR. PRAIRIE, TO APPROVE RESOLUTION
NO. BRA 19 -1983, A RESOLUTION ESTABLISHING TAX INCREMENT DISTRICT NO. 5
WITHIN REDEVELOPMENT PROJECT NO. 1 AND APPROVING AND ADOPTING A PROPOSED
TAX INCREMENT FINANCING PLAN THEREOF".
UPON A VOICE VOTE, ALL VOTING AYE, VICE- CHAIRPERSON PRIEDITIS DECLARED THE
MOTION CARRIED UNANIMOUSLY.
HOUSING & REDEVELOPMENT AUTHORITY MEETING, JANUARY 12, 1984 PAGE 3
3. PUBLIC HEARING ON SALE OF PROPERTY AT 7820 UNIVERSITY AVENUE N.E.:
Mr. Boardman stated that because state law requires a public hearing on
the disposal of HRA property and the contract documents between Mr. Paschke
and the HRA call for such a sale, they have called for a public hearing at
this meeting. In this way, it can be considered with the "Contract for
Private Development" with fir. Paschke on this site.
Vice - Chairperson Prieditis declared the public hearing open at 7:59 p.m.
Mr. Boardman stated this would be a sale of property to Mr. Paschke.
The HRA would be acquiring the property from Dave Harris and Bob Schroer.
The purpose of the sale is to develop a 26,000 commercial facility.
Mr. Boardman stated if there were any comments or questions from people in
the audience, they would hear them at this time.
Mr. Prieditis asked Mr. Paschke to explain his proposal.
Mr. Paschke stated he will be building a building identical to the two
buildings he has built just to the north on 79th. The primary use of the
building will be commercial. The value of the structure, land and improve-
ments will be approximately $1,000,000.
Ms. Svendsen asked if there would be any other costs other than the $30,000.
Mr. Boardman stated the $30,000 is the cost that is laid out in the tax
increment plan with reserve increments of approx. $310 with an administrative
cost of about $30,000. Those are the HRA's actual costs on the project.
Ms. Svendsen asked Mr. Boardman if he had included any information about
the soil correction or the condition of the soil. Sometimes in the past,
the HRA has had documents from the City regarding soil conditions, and she
had not seen any of that kind of information on this project.
Mr. Boardman stated he did not include the actual bids. He stated the City
had been given some bids on the excavation of the soil; then the cost was
negotiated between the City, the existing property owner, Mr. Paschke,
and Mr. Jim Benson, where each of the people took a share of the cost to
come up with the cost of soil correction.
Mr. Prieditis asked what assurances does the HRA have to ensure the
correction of the soil?
Mr. Boardman stated the developer cannot get a building permit until they
show the soil borings, compaction tests, etc. In due process, the building
inspectors review all these things.
Mr. Paschke stated soil borings have been done. There were about 16 borings,
and the City does have those borings and all the bids. The bids were all
submitted to the City by Dave Harris and Bob Schroer. The borings were done
by Suburban Engineering.
HOUSING b REDEVELOPMENT AUTHORITY MEETING, JANUARY 12 1984 PAGE 4
Mr. Prairie stated it might be helpful for the HRA to see some of those
documents.
Mr. Ebardman stated he would get copies of the bids for the HRA.
Vice - Chairperson Prieditis declared the public hearing closed at 8:10 p.m.
4. CONSIDERATION OF CONTRACT FOR PRIVATE DEVELOPMENT BETWEEN HRA AND PACO INC.:
Mr. Boardman stated that at this meeting the HRA members had received the
modified copy of the "Contract.for Private Development ". Jim O'Meara and
Mr. Paschke's attorney, Mr. Bob Lukes, went over these documents and agreed
to what was in the documents. The modifications were made and sent out that
morning. He stated he had underlined those changes from the previous docu-
ments. He also stated the HRA Attorney felt this gives the HRA adequate
protection and the HRA can enter into those contract documents.
NOTION BY MR. RASMUSSEN, SECONDED BY AR. PRAIRIE, TO APPROVE RESOLUTION
NO. ERA 20- 1983,"A RESOLUTION APPROVING AND AUTHORIZING THE EXECUTION OF
A CONTRACT FOR PRIVATE DEVELOPMENT WITH PACO INC.".
UPON A VOICE VOTE, ALL VOTING AYE, VICE- CHAIRPERSON PRIEDITIS DECLARED THE
NOTION CARRIED UNANIMOUSLY.
5. DISCUSSION ON HARDWARE BUILDING:
Mr. Boardman stated John Gargaro had contacted him after the Nov. 22
Lions Club meeting indicating that the Lions were no longer interested in
the hardware building.
Mr. Boardman stated he had had several discussions with Mr. Inman and
Mr. Qureshi, and the Liquor Store Manager, and they have indicated an interest
in renting the hardware building. He stated Mr. Inman would explain their
proposal.
Mr. Inman stated one of his other responsibilities in the City is for the
operation of the liquor store. He stated the, liquor store has maintained
a-substantial marketing advantage over the years because of the natural
boundaries like the river, 35W, and I -694. With the droppage of walk -in
traffic at Holly Center, they have experienced the same profit margin but
a reduction in volume, so they are still in a positive position.
Mr. Inman stated Staff has recently discovered that some of the neighboring
communities will soon be building liquor warehouse operations. Their studies
indicate that while people may not be willing to drive downtown to Surdycks
to get lower prices, they may be willing to go to Spring Lake Park or Blaine.
So, Fridley's attempt here is to be the first and open a liquor warehouse
operation in the hardware building.
Mr. Inman stated the experiment would be in terms of at least a 3 -year
commitment. They have done some cost structures. There have to be some
decisions on the carpeting and ceiling, and they may want to improve the
road in front.
HOUSING b REDEVELOPMENT AUTHORITY MINUTES, January 12, 1984 PAGE 5
Mr. Inman stated that right now they have a lease situation in Holly. Their
early projections say that depending on their volumes, they will probably
do as good in the hardware building as they do in Holly, because of the
heavy expenditures of maintaining both facilities. They might attempt to
negotiate with Mr. Levy and try to help find somebody else to rent the space
in Holly.
Mr. Prairie asked how the other tenants in Holly felt about this possible
move.
Mr. Inman stated they have not officially_informed the other tenants; however,
the other tenants are aware of the fact that every business in that strip is
losing money at the current time.
Mr. Rasmussen stated he thought having a liquor warehouse operation in
the hardware building was a great idea. He thought it was very feasible
if a reasonable price can be negotiated.
MOTION BY MR. RASMUSSEN, SECONDED BY MR. PRAIRIE, INDICATING THAT THE HRA
IS INTERESTED IN EXPLORING THE POSSIBILITY OF A LIQUOR WAREHOUSE FACILITY
IN THE HARDWARE BUILDING AND AUTHO-RIZES THE EXECUTIVE DIRECOOR TO PRESENT
FURTHER INFORMATION ON THIS AT A LATER MEETING,
UPON A VOICE VOTE, ALL VOTING AYE, VICE- CHAIRPERSON PRIEDITIS DECLARED THE
MOTION CARRIED UNANIMOUSLY.
Mr. Prairie stated he thought they were all interested in putting that
building to use, but his only concern was how this might affect the tenants
in Holly Center.
5. CONSIDERATION OF AUTHORIZATION FOR STAFF TO ENTER INTO A LISTING AGRE
Mr. Boardman stated he had attached listing agreements submitted by Mr.
Messler. Mr. Messler was one of the three realtors he contacted for the
leasing for the HRA. The other two were not interested in listing the
properties. He stated he was not looking for the authorization to enter
into any of these documents, but he was looking for the authorization to move
ahead and to try to negotiate an agreement with a leasing agent within the
approximate guidelines of the enclosed documents.
Mr. Boardman stated he has gotten a response back from another agent that
there is no reason the HRA should have to enter into an exclusive listing
agreement, so he wanted to check into that. He would not enter into an
exclusive if he did not have to.
Mr. Boardman stated the reason Mr. Messler is the only one interested is
because he is the leasing agent for Dr. Suh across University. He knows the
area and may have the possibility of putting people in. Mr. Messler said
it is going to be extremely difficult and the only way he will do it is
with a guaranteed price and not as a percentage of the lease. Mr. Messler
would also request that the HRA be flexible with the dollar amount that he
will be able to get for the property.
HOUSING & REDEVELOPMENT AUTHORITY MEETING, JANUARY 12, 1984 PAGE 6
Mr. Boardman stated they have been negotiating and trying to get the property
north of City Hall into a package, and they would not want to restrict them-
selves to more than a one year lease,so it is going to be very difficult.
MOTION BY MS. SVENDSEN, SECONDED BY MR. RASMUSSEN, TO AUTHORIZE THE EXECUTIVE
DIRECTOR TO CONTINUE TO TRY TO NEGOTIATE AN AGREEAWNT WITH A LEASING AGENT
FOR THE LIFESTYLE AND MADSEN BUILDINGS.
UPON A VOICE VOTE, ALL VOTING AYE, VICE- CHAIRPERSON PRIEDITIS DECLARED THE
MOTION CARRIED UNANIMOUSLY.
7. CONSIDERATION OF APPROVAL OF PAYMENT OF THE SETTLEMENT TO DR. RYAN'
AiRA1.4n,riu[ ri Mir Af nrn FROLITecTA \I rTUnT►inr_
Mr. Boardman stated Mr. Ryan has agreed to accept the Commissioner's Award.
The Commissioner's Award was $177,300. The previous payment to Mr. Ryan
was $137,117, leaving a balance of $40,183. He stated they plan to close
on Monday, Jan. 16, and the actual approved interest for that period of
time will be $1,182. He stated that under Minnesota State Law, they are
required to pay interest at a rate of 6 %. He stated he is asking for
authorization from the HRA to pay Mr. Ryan the final payment per Commissioner's
Award of $40,183 plus $1,182 interest.
MOTION BY MR. PRAIRIE, SECONDED BY MR. RASMUSSEN, TO AUTHORIZE THE FINAL
PAY?-XNT PER COMMISSIONER'S AWARD OF $40,183 PLUS $1,182 IN INTEREST, TOTALLING
$41,365, TO DR. RYAN'S AUTOMOTIVE CLINIC.
UPON A VOICE VOTE, ALL VOTING AYE, VICE- CHAIRPERSON PRIEDITIS DECLARED THE
MOTION CARRIED UNANIMOUSLY,,
8. CONSIDERATION OF APPROVAL OF PAYMENT TO DR. RYAN'S AUTOMOTIVE CLINIC
R RELOCATION:
Mr. Boardman stated that also under Minnesota State Law, they are required
to pay relocation on any activity. They have finally gotten all the informa-
tion on the relocation for Mr. Ryan, and Von Klug & Associates are recommend-
ing a payment of $10,000 to Mr. Ryan for relocation as allowed to him under
state law.
MOTION BY MR. RASMUSSEN, SECONDED BY MS. SVENDSEN, TO AUTHORIZE A PAYMENT OF
$10,000 TO DR. RYAN'S AUTOMOTIVE CLINIC FOR RELOCATION.
UPON A VOICE VOTE, ALL VOTING AYE, VICE - CHAIRPERSON PRIEDITIS DECLARED THE
MOTION CARRIED UNANIMOUSLY,
9. CONSIDERATION_ OF APPROVAL OF FINAL PAYMENT TO VON KLUG & ASSOC
Mr. Boardman stated he needed authorization for the final payment of $3,500
to Von Klug & Assoc. for their relocation services.
MOTION BY MR. RASMUSSEN, SECONDED BY MR. PRAIRIE, TO AUTHORIZE THE FINAL PAY-
_ MENT OF $3,500 TO VON )MUG R ASSOC. FOR RELOCATION SERVICES IN THE CENTER
CITY PROJECT.
UPON A VOICE VOTE, ALL VOTING AYE, VICE - CHAIRPERSON PRIEDITIS DECLARED THE
NOTION CARRIED UNANIMOUSLY.
HOUSING & REDEVELOPMENT AUTHORITY MEETING, JANUARY 12, 1984 PAGE 7
10. CONSIDERATION OF APPROVAL OF 1984 MEETING SCHEDULE:
Mr. Boardman stated the Commission members had received a 1984 meeting
schedule.
Mr. Rasmussen expressed his concern of the length of meeting time. Was
there some way of limiting the length of meetings?
Mr. Prieditis suggested the meetings start at 7:00 p.m. instead of 7:30 p.m.
and that they limit the meeting length to not later than 9:30 -10:00 p.m.
The Commissioners were in agreement with the meeting dates on the third
Thursday of each month, but that the meeting time be changed to 7:00 p.m.
and the meetings limited to 9:30 -10:00 p.m.
Mr. Prieditis asked that Mr. Boardman contact Mr. Commers to make sure this
change was agreeable with him.
11. DISCUSSION OF CHECK REGISTERS:
Ms. Svendsen suggested that a little more information be included in the
agenda explaining some of the vague items in the check registers. This
would save the Commissioners some time in their discussion.
NOTION BY MR. PRAIRIE, SECONDED BY MR. RASMUSSEN, TO APPROVE THE CHECK
REGISTER DATED 1217183 TOTALLING $4,533.62; CHECK REGISTER DATED 12131183
TOTALLING $211,672; AND CHECK REGISTER DATED 1111184 TOTALLING $173,196.
UPON A VOICE VOTE, ALL VOTING AYE, VICE- CHAIRPERSON PRIEDITIS DECLARED THE
MOTION CARRIED UNANIMOUSLY.
12. REIMBURSEMENT OF HRA EXPENSES:
MOTION BY MR. RASMUSSEN, SECONDED BY MR. PRAIRIE, TO AUTHORIZE A PAYMENT
OF $20,579.79 REIMBURSING THE CITY FOR ADMINISTRATIVE COSTS.
UPON A VOICE VOTE, ALL VOTING AYE, VICE - CHAIRPERSON PRIEDITIS DECLARED THE
NOTION CARRIED UNANIMOUSLY.
13. UNAUDITED MONTHLY REPORT AS OF 12/31/83:
Vice - Chairperson Prieditis received the unaudited monthly report as of
12/31/83 into the record. He stated the Commission members should review
it; and if they had any questions, they could discuss it at the next meeting.
AnJOURNMFNT -
NOTION BY MR. RASMUSSEN, SECONDED BY MR. PRAIRIE, TO ADJOURN THE MEETING. UPON A
VOICE VOTE, ALL VOTING AYE, VICE- CHAIRPERSON PRIEDITIS DECLARED THE JAN. 12, 1984,
HOUSING & REDEVELOPMENT AUTHORITY MEETING ADJOURNED AT 9:00 P.M.
Respectfully su fitted,
LyrM Saba, Recording Secretary
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6431 UNIVERSITY AVENUE NE FRIDLEY, MINNESOTA 55432 AREA CODE 612 PHONE 571 -3450
February 2 s 1984 f L 202
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ORIGINAL
Sign and RNurn Acknowledg- PURCHASE ORDER This NuwAw Must Appear on
mWe Copy and Advise Shipping AN Correspondence, Invoices.
Dow (R>rnedioMy. Shipping Papers and Packages.
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WECIAL MAMUNGS
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I EXEMPT FROM SALES TAX AS A POLITICAL SUBDIVISION OF THE STATE OF MINNESOTA CITY OF FRIDLEY N0. !03!301
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RBSQ.ITPIOIJ ND. ERA 4 -1984
DESIGNATING OFFICIAL DEPOSITORIES FOR THE
FRII[Y HWSIIG AND REDEVELOPMEZIT AUTHORITY
IT IS HEREBY RESCLVED that the Fridley State Bank is hereby designated as a
depository for the funds of this corporation.
IT IS FURTHER RESCLVED that checks, drafts or other withdrawal orders issued
against the funds of this corporation on deposit with said bank shall be
signed by two of the following:
Sidney C. Inman, Clerk- Treasurer
Nasim M. Qureshi, City Manager
Richard D. Pribyl, Finance Officer
and that said bank is hereby fully authorized to pay and charge to the
account of this corporation any checks, drafts, or other withdrawal orders.
BE IT FURTHER RESCLVED that all transactions, if any relating to deposits,
withdrawals, re- discounts and borrowings by or on behalf of this corporation
with said bank prior to the adoption of this resolution be, and the same
hereby are, in all things ratif ited, approved and confirmed.
BE IT FURTHER RESCLVED that any bank or savings and loan may be used as
depositories for investments purposes so long as the investments comply with
authorized investments as set forth in Minnesota Statutes.
BE IT FURTHER RESCLVED that the signatures of two of the following named
City employees are required for withdrawal of HRA investment funds from
savings and loan associations:
Sidney C. Inman, Clerk- Treasurer
Nasim M. Qureshi, City Manager
Richard D. Pribyl, Finance Officer
BE IT FURTHER RESCLVED that any brokerage firm may be used as a depository
for investment purposes so long as the investments comply with the
authorized investments as set forth in Minnesota Statutes.
PASSED AND ADOPTED BY THE HOUSING AND REDEVELOPMENT AUTHORITY OF THE CITY OF
FRIDLEY THIS DAY OF , 1984-
CHAIRMAN
HOUSING AND REDEVELOPMENT AUTHORITY
ATTEST;
EXECUTIVE DIRECTOR
3/0/24/28
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TOTAL 1984 - $128,077
3 Year - $384,231
Potential CDBG Projects
1. 15% to Human Service Grants - $19,211 - (108,865)
2. City Center Projects
a. Signs
b. Fire Hall relocation
c. Police parking /plaza structure
3
d. 4- corner plaza area
e. Road improvements
g. Other general landscape /public improvements (underground power)
3. Housing rehab /energy
4. Any project benefiting designated low income neighborhoods on
attached map. (park project, street improvement, etc.).
5. Architectural.barrier removal ( handicap trail at Nature Center)
6. Single family rehab
7. Economic development - low interest loan program
8. Association for retarded citizend - thrift shop.
9. Senior housing roll -over study.
10. Riverview Heights acquisition.
11.
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CITY OF FRIDLEY
JOINT MEETING OF COMMUNITY DEVELOPMENT COMMISSION & HUMAN RESOURCES COMMISSION
JANUARY 10, 1983
The meeting convened informally at 7:35 p.m.
Community Development Commission:
Members Present: Ken Vos, Al Gabel
Members Absent: LeRoy Oquist, Carol Fassett, Louis Schmidt
Human Resources Commission:
Members Present: Peter Treuenfels, Bob Minton
Members Absent: Brian Goodspeed, Mary van Dan, Barbara Kocher
Others Present: Jerrold Boardman, City Planner
Bill Hunt, Administrative Assistant
Mark Burch, Asst. Public Works Director
1. 1984 COMMUNITY DEVELOPMENT BLOCK GRANT MONIES:
Mr. Boardman stated that ever;, year they go through the same process with
Community Development Block Grant monies. It takes about six months to
go through the process before the funds are actually available to the City.
He stated Anoka County has now been approved for a 3 -year funding cycle
with the federal government. Each of the years before this, it was on a
year -to -year basis, because Anoka County was on the borderline of 200,000
population. When the 1980 census came through, Anoka County was at 196,000,
so they went through special legislation each of the last three years to get
the federal government to give Anoka County block grants. Now, the estimates
for Anoka County are over 200,000, so this year they are just starting on a
3 -year program.
Mr. Boardman stated the amount of CDBG monies has been going down yearly.
They started out with $280,000. For this year (1984), it is down to $128,000
for Fridley's share. They are looking at about $128,000 for each of the
three years ($384,231 for three years). This $128,000 is based on the HUD
formulas for allocation of funds to Anoka County; it is based on poverty,
housing stock, and population.
Mr. Boardman stated he thought it was important to start looking at a possible
three -year plan. There are going to be some projects that will be on a
project -by- project basis or year -by -year, and they will have to look at
it that way too.
t
JOINT MEETING OF COMMUNITY DEVELOPMENT COMMISSION
AND HUMAN RESOURCES COMMISSION, JANUARY 10, 1984 PAGE 2
Mr. Boardman stated he went through the HUD regulations and sent out a
memo to all the department heads to go through the regulations. With the
feedback from the department heads and his understanding of the HUD
regulations, he put together a list of potential projects he felt would
satisfy the criteria and where there has been an indication of some need
in the past. One problem is there is really no definitive need analysis
in the City as to what is needed or not needed, so that year after year,
they end up coming up with a list of projects, prioritizing that list with
recommendations to the City Council, and letting the City Council select the
projects.
Mr. Boardman stated they have to take into consideration that these monies
are not going to be around much longer, and how are they going to make the
most use of these funds? By far, the best way of doing it is by having
programs where money is loaned out with a payback type of situation, so the
money is continually recycled. The real problem they get into with those
kinds of situations is the amount of staff time that is involved with the
recycling. It is far easier to go with a grant program.
Mr. Boardman stated some of the restrictions they run into are with the
block grant program itself. They have to show the benefit to low and moderate
income persons. Most of the time a loan program is not a workable program
with low and moderate income, because by giving out loans and having those
loans paid back, a lot of the people receiving the loans cannot even afford
to pay back the loans on their limited income. So, the type of programs to
get involved in with the payback situation is more with the economic develop-
ment type of programs - -those programs where you give monies to a company to
get that company to locate in the community so the company can provide low
and moderate income jobs. Then, there is a payback.
Mr. Boardman stated Coon Rapids is working that program. They have put
together several industries in which those industries are providing jobs and
job opportunities to low and moderate income people. Again, it takes a lot
of work and a lot of effort to channel that money into industrial development.
Coon Rapids has an Economic Development Corporation. The monies go to the
corporation, and the corporation is a continuously working body in this area.
Mr. Minton asked what the general purpose was for CDBG funds.
Mr. Boardman stated all CDBG funds have to be used for three purposes:
(1) principle benefit to low and moderate income -- generally defined as 50%
benefit; (2) elimination of slum and blight. All of the City's redevelopment
projects fall within this category; (3) emergency.
Mr. Boardman stated that under the regulations, HUD has increased the human
service ability from 10% (last year) to 15% so this should be looked at
for CDBG funds. He stated that under the human service grants, those funds
can be used for salaries and other tapitol costs for human service -type
activities.
JOINT MEETING OF COMMUNITY DEVELOPMENT COMMISSION
AND HUMAN RESOURCES COMMISSION, JANUARY 10, 1984 PAGE 3
Mr. Boardman stated that over the last couple of years, a few of the
communities within the Technical Advisory Committee to Anoka County on
block grants have been pushing for off - the -top monies for human services,
county -wide, rather than having the human service organizations go from
city to city seeking funding. In other words, there would be a certain
percentage that would be taken off the top of the block grant before it
is allocated down to the communities. Anoka County takes monies off the
top for (1) economic development (for those things that are county -wide
for promotion of economic development); (2) administration of all block
grants; (3) housing rehab. The reason for that is because housing rehab
is a need that is county -wide.
Mr. Boardman stated about 60% of the communities were not interested in
the program. Some of the larger communities- -Coon Rapids, Fridley, and
Blaine - -were interested. The County does not want to do it that way,
because it does not want to get involved in ranking the human service
requests. So, again this year, it will be up to the communities to decide
if they want to allocate funds to human services similar to what was done
last year for the 1983 funds.
Mr. Boardman stated they would go through the list of potential CDBG
projects item by item.
1. 15% to Human Service Grants - $19,211
fir. Boardman felt it was very important to look at where the
human service needs are and how they can supply those needs.
2. Center City Projects
a. Signs
b. Fire Hall relocation
c. Police parking /plaza structure
d. 4- corner plaza area
e. road improvements
f. other general landscape/
public improvements
(underground power)
Mr. Boardman stated one of the things the City has been committed
to in the past and will continue to be committed to is the issue
of redevelopment. Redevelopment is a very good area to put block
grants, because it does meet a need. There has been a lot of dis-
cussion in the past of why block grants are used when there are
tax increments. Tax increment monies are not necessarily all of
the sources of funds that are needed in this type of develo ment
The City of Fridley may have to come-.ip with some dollars at some
point in time.
r
JOINT MEETING OF COMMUNITY DEVELOPMENT COMMISSION
AND HUMAN RESOURCES COMMISSION, JANUARY 10, 1984 PAGE 4
Mr. Boardman stated any of the activities such as stop signs,
public improvements, that are city improvements that are within
the redevelopment district, may be a possible channeling of some
CDBG monies. One thing they have looked at is some major road
improvements as far as the Mississippi St, intersection. They
are also looking at making a commitment in the area for underground
power.
3. Multiple Housing rehab /energy
Mr. Boardman stated there is major energy legislation going on
with the State Energy Agency. If those rules or regulations go
into effect, all apartments will have to meet certain standards for
energy improvements within a year's period of time. There are some
hefty penalties that go along with that. They may want to look at
the possibility of providing some rehab loan monies, but, again,
they have to show the benefit to low and moderate income and he was
not sure if that justification was there or not.
4. Any project benefitting designated low income neighborhoods
(park project,'street improvements, etc.)
Mr. Boardman stated there are three areas in the City that are
classified as low and moderate income areas. The test of the law,
50% to low and moderate income, is there, so they could do almost
any project in those three areas.
5. Architectural barrier removal (handicap trail at Nature Center)
Mr. Boardman stated one of the projects suggested last year was a
loan to churches and other organizations for improvements for handi-
cap accessibility. The response was very negative; therefore, in
order to set up that kind of program, it would take such a massive
educational process they felt it was not worthwhile to go into it.
They did, however, put monies into the 504 improvements that were
suggested by Julee Quarve- Peterson in the study she did for the City.
They are working right now on putting together a package for going
out for bids for curb cuts, improvements to City Hall, and public
facilities such as the liquor store.
Mr. Boardman stated they are looking at the possibility of a handi-
cap trail at Springbrook Nature Center. That would cost around
$45- 50,000.
JOINT MEETING OF COMMUNITY DEVELOPMENT COMMISSION
AND HUMAN RESOURCES _COMMISSION MEETING, JANUARY 10, 1984 PAGE 5
6. Single family rehab
Mr. Boardman stated this is a good back -up program should another
project fall through for some reason.
7. Economic development - low interest loan program
Mr. Boardman stated this is something Coon Rapids is doing. It is
a very difficult project to accomplish.
8. Association for Retarded Citizens (ARC) - thrift shop
Mr. Boardman stated the Association
at the possibility of some start -up
which would provide employment for
citizens to work, repair, and sell
to Good Will. He thought it was a
it should go as a program by itself
thing under human service grants wa
discussed.
9. Senior housing roll -over study
for Retarded Citizens is looking
monies to open a thrift shop,
retarded citizens and elderly
items that are donated, similar
very exciting program. Whether
or whether it should be some -
s something that needed to be
Mr. Boardman stated one of the problems some of the communities
have had and what Fridley is also starting to have is what to do
with "empty nesters ". One of the ways of handling it is through
"roll -over housing ". The roll -over housing is essentially finding
a developer who will build a condo /townhouse development -type
project and will buy the elderly person's single family home, and
will put that money in as equity into the units of condo /townhouse.
The developer that sells the single family to first -time home
buyers who are eligible for a low- interest mortgage. The City,
through the Housing b Redevelopment Authority, provides mortgage
take -out money at a low interest loan for low and moderate income
first -time home buyers. It is a very interesting concept. Brooklyn
Park has done it successfully. However, before they would want to
get into any kind of program, they would want to do an analysis or
study on the kind of housing situation in Fridley. He thought the
study would cost aroung X5,000 to $7,000.
10. Riverview Heights acquisition
Mr. Boardman stated the City Council has allocated $115,000 of
the last CDBG monies for Riverview Heights acquisition. They are
combining that with LAWCON funds, so there is a $165,000 project
and they will be acquiring three of the seven homes in that lower
area south of 79th Street. That will give the City the amount of
park and recreation land needed to satisfy the LAWCON requirment,
and it will take out the worst houses in that area and provide
benefit so some of the homeowners located there.
JOINT MEETING OF COMMUNITY DEVELOPMENT COMMISSION
AND HUMAN RESOURCES COMMISSION, JANUARY 10, 1984 PAGE 7
Mr. Minton stated he thought the senior housing roll -over study sounded
interesting.
Mr. Treuenfels stated it seemed the Commission members present at this
meeting had shown an interest in the following projects: (not prioritized)
1. 15% to human service grants
2. Center City projects
3. Housing rehab /energy (as a back -up project)
4. Single family rehab (as a back -up project)
5. Senior housing roll -over study
Mr. Treuenfels stated he would put a high priority on the 15% going for
human service grants.
Mr. Minton stated that if the senior housing roll -over study could be done
rather economically (between $5- 10,000), he would also give that a high
priority. As far as the projects within the Center City, he would go with
whatever was feasible, with rehab as back -up projects.
Mr. Treuenfels stated that as far as the underground power project in the
Center City area, maybe some of the other projects should be looked at first.
Mr. Boardman stated there has to be some flexibility as far as what projects
are available at the time. One of the things they definitely want to start
looking at, if they are going to start putting some money into the Center
City project, is to put together some type of 3 -year program.
Mr. Minton stated if they are going to use block grant funds in the Center
City project, he would like to see the maximum creative usage of the tax
increment financing and maximum leverage on the part of the block grant funds.
Mr. Boardman agreed. He stated they should look at all the items listed
under the Center City project as 3 -year programs.
ADJOURNMENT:
The meeting adjourned informally at 9:15 p.m.
Respectfully submitted,
CK�'_ —"'Z' �'//j x",
ynn a a _
Recording Secretary
JOINT MEETING OF COMMUNITY DEVELOPMENT COMMISSION
AND HUMAN RESOURCES COMMISSION MEETING, JANUARY 10, 1984 PAGE 6
Mr. Boardman stated the following are some suggestions for projects made
by John Flora:
1. A soil investigation study in the North Area. One of the things
Mr. Flora is looking for with this study is to find where the
worst areas of peat are so they can analyze them as far as
drainage and develop some kind of a drainage plan.
2. Senior transportation plan. Mr. Boardman stated he thought this
might be something that would fall under human service funding.
3. Public Works emergency communication system - -a radio communication
system for emergencies like tornadoes, etc. Mr. Boardman stated
he did not know if this was an eligible activity for CDBG funds.
4. Mississippi River Bank protection on Riverview Terrace
Mr. Treuenfels stated he had always thought of ti.: Fridley Fire Hall as being
marvelously located right in the center of the community in a nice modern
building. Why would they want to relocate?
Mr. Boardman stated there is a question raised by the Fire Department
about access in an out of the fire hall. With the Center City project,
as they increase the density in an around City Hall, develop north of
City Hall, develop across University, and put more traffic into the area,
it is suggested this upsets response time for the Fire Department. One
of the things they have to look at is what is the best fire hall location,
given the circumstances that there is a commitment to develop Center City.
One of those alternatives may be relocating the fire hall into an area
where it has better access.
Mr. Boardman stated if they get involved with some of the Center City
projects, they will probably want to do some kind of a three -year projection
on costs.
Mr. Minton stated he thought it made sense to look at a 3 -year plan.
Mr. Minton stated that, referring to Item #8, the ARC thrift shop, he would
not be in favor of that for CDBG monies. What they are really talking about
is venture capital. The City would want them to have a business plan. If
it is a good risk for ARC, there are little or no- interest loans non - profit
groups can get for venture capital. He stated they should let them do it on
a business basis.
Mr. Boardman stated this would not preclude ARC from applying for human
service funding.
Municip'ced activities William Makela
_
General government
Two metro -area mayors made
recent guest appearances in schools in
their communities. Burnsville mayor
Connie Morrison spoke to juniors and
seniors in Burnsville High School social
studies classes, discussing public
financing, parks, police, the state leg
islature, and a host of other topics. Her
visit to the high school is one in a
series of such visits by public officials.
Fourth graders at Hamilton School in
Coon Rapids asked Mayor Robert
Lewis to lunch and then to speak to
them about city government. The
fourth graders, who planned the lunch
menu themselves, barraged the mayor
with questions about how city govern-
ment works.
The Moorhead city council
approved a resolution authorizing the
mayor to initiate communication with
people in the Soviet city of Lysva. The
Ground Zero Committee of Fargo -
Moorhead Peaceworkers requested
the resolution. Ground Zero is the local
arm of a national effort to pair U.S. and
Soviet communities to bring about dia-
logue between people in the two
countries.
The Oakdale city council took over
city hall for a half day in October.
Council members gave city employees
a half day off as a token of the city's
appreciation of their good work.
Over 300 volunteers spent a day
campaigning door -to -door in South St.
Paul, distributing an information pack-
et about the community which included
information on its schools, churches,
government, the chamber of com-
merce, retail associations, and other
community organizations. The cam-
paign's primary purpose is to sell the
community to itself. The marketing
project is an outgrowth of the city's
competing as a finalist for designation
as an AD- America City.
Charters
A revised city charter is in effect in
1✓
Litchfield. The new charter makes no
major changes, but represents an effort
to delete outdated portions and make
the language more concise. The new
document is about half as long as the
1943 original.
Administration
The Winona city council approved
combining the positions of city clerk
and transit coordinator. The city will
save an estimated $30,000 a year by
merging the positions. The council
rejected an earlier proposal to combine
the duties of clerk and city attorney
because it would have increased costs
by an estimated $12,000 and required
changes in the charter.
Buildings
The Mardag Foundation of St. Paul
awarded Grygla a $9,500 grant for
purchase of kitchen equipment in the
city's community center. The city
applied for the grant on behalf of its
local senior citizen organization. Win-
ger is also getting a grant from the
Mardag Foundation. The city will use
the $5,000 grant for renovating the city
hall basement.
Ordinances
Sauk Rapids has recodified its
ordinances.
Personnel
Wyoming now has a residency ordi-
nance for city employees. It requires
new employees to move to the city
within 18 months. Current employees
living out of the city can stay there,
provided they don't change their resi-
dence. The ordinance applies to all
permanent employees working at least
30 hours a week. It allows the council
to grant temporary waivers if enforce-
ment will create a hardship for an
employee.
Liquor
Aitkin and Proctor have both ter-
minated their on -sale municipal liquor
operations.
Blooming Prairie is selling its
municipal liquor store. Although a
majority of those voting in an advisory
election last fall recommended retaining
ownership, the council decided that
profits from the store didn't warrant
continued operation.
The Owatonna council has removed
the limit of seven on the number of off -
sale liquor licenses in the city. The
current off-sale licensees opposed the
action.
St. Anthony, in an attempt to boost
sagging sales and profits, has opened a
new off -sale warehouse liquor store,
which will emphasize low overhead and
high- volume sales. The city leas
space in a shopping center at under 2
a square foot and saved additional mo -
ey by coating the floor with tennis
court surfacing. The biggest expense
was the purchase of a new $40,000
walk -in cooler, one of the largest facili-
ties of its kind in the upper midwest.
The city plans to continue operating its
other two off -sale stores in the tradi-
tional mariner.
Parks and recreation
Apple Valley, through its parks and
recreation department, will continue
operating Valleywood Golf Course as a
municipal course. A year ago the coun-
cil considered leasing it to a private
operator, but instead gave the new
park and recreation director one season
to turn the course's operation around.
He did so by making the course into a
multi -use facility including family festi-
vals, an art gallery, cross - country
skiing and running, and private party
rentals.
Law enforcement
The Bloomington council has sold
the police department's horses and
Kinnesota cities
Ti4E CITY OF
F*10 Y
DIRECTORATE
OF
PUBLIC WORKS
DATE January 23, 1984
MEMO NO: 84 -05
MEMORANDUM
FROM D.P.W. Bill Deblon, Associate City Planner
I
ACTION
•3
SUBJECT
6500 University Avenue N.E. (Phillips
Service Station)
MEMO NO: 84 -05
MEMORANDUM
FROM D.P.W. Bill Deblon, Associate City Planner
TO
ACTION
INFO.
SUBJECT
6500 University Avenue N.E. (Phillips
Service Station)
Jerry Boardman. it Planner-
A company called "Sparks Tune -Up" (a subsidiary of MAACO Enterprise,
Inc.) plans on aquiring the vacant Phillips Service Station to operate
a business that offers tune' -ups, oil changes and lubrication service.
The property presently has a special use permit for an automobile service
station. There was a question whether this use would fall into the
"repair garage" catrgory consequently requiring a new special use per-
mit. Repair garage is defined in the zoning code as:
A place where major repair of motor vehicles is conducted,
including engine rebuilding or reconditioning and collision
service including body, frame or fender straightening and
overall painting of motor vehicles. Service is limited to
motor vehicles licensed below category "G".
The proposed use is not a repair garage using this definition. The
proposed use is closer to an Automobile Service Station which is
defined as:
A place where fuel and other essential services related
to the operation of motor vehicles are retailed directly
to the public. This does not include motor vehicle repair.
A similar use in the city is Rapid Oil Change. Upon review of their
file, it was found that no additional special use permit was required
for this business. Based on this and the definitions previously
mentioned, I am of the opinion that no additional special use permit
is required.
The developer has been informed that this property is located in the
Center City Redevelopment District and that at some point in time,
may be purchased by the Housing Redevelopment Authority. They would
like to meet with you to further discuss the implications of this
district. I will schedule a meeting at your earliest convience.
MATT BULLOCK CONTRACTING COMPANY, INC.
12403 - 85th Avenue North, Osseo, Minnesota 55369
Phone: 425 -5123
November 8, 1983
S. & H. COI-.Pll:Y, IT:C.
:,�: CGL��:�CTIOI� OF SOIL FOh COI2.:.:.CI�.L i�UILDIlIG AT
79TH & UNIVEIL- SITY AVE. N.E. , F}JDL Y,
TO COFF -.CT BUILDING SITE AS SPLCIFI -ED BY SL' TLi _-
FA ZjAIl; E;:GITZEEF.II:G COKPOr.ATIOII, � 54,165.00.
TO M%i-= PAF.FI. G LOT AS SPECIFILD, w S, 250.00.
TO-2AL P: tiIC - 62,,415.00-
4-- DILCiI H. BULLOCt:, I'r�:SID I:i
ll-, TT BULLOCK CO1:Tirj -:CTII G CO. ,IIV-C.
12403 85th AVE. P %.
OSSEO, I- INT. -SOTA, 55369
JC 14000 VEIT PLACE ROGERS MN 55374 428 -2242
DATE Nov 9 1983
To:
S & N Company
PROJECT:
Site Correction
79th & University N.E.
BID:
Sa4vage reusable material
Excavate unsuitable material and dispose off site
Furnish and place additional granular material
Lump Sum $68669.00
All work per accepted construction methods
VAUkHN Vg'IT, PRESIDENT
COMMERCIAL & RESIDENTIAL EXCAVATION • ROAD BUILDING • DEMOLITION
p ro-o*
ervinq I Minnesotds Housing a
Communitu Deveboment fle�th
SEND '—o A�_—
COMC,e._.s e
f r1 S Tp-s .
ervinq Minnesotds Housinq a
Communitu Dovaloament floc3cls
The issue of Industrial Development Bond limitations being suggested by
Congress is one of major concern to all cities and Housing and Redevelop-
ment Authorities within the Minnesota NAHRO membership. It is important
to stress the success stories of the use of IDB financing and their effect
in the promotion of jobs and investment in the State of Minnesota.
For this reason, Minnesota NAHRO, after careful consideration of the proposed
legislation and the effect of that legislation on its members have adopted
the attached position. We urge you as a member of the Minnesota delegation
to support this position.
We will be happy to discuss this matter with you at your convenience and
provide additional information as you may need to support this position.
Please contact Jerrold Boardman at 571 -3450 for additional information.
Sincerely,
s
1 ml tip
President
Minnesota NAHRO
I
MEMORANDUM
TO: NAHRO Legislative Committee
FROM: NAHRO IDB Task Force
SUBJECT: Federal Legislation Relating to Industrial Development Bonds
DATE: January 3, 1984
After discussing the pending Federal legislation relating to industrial development
bonds, H.R. 4170, the task force recommends that NAHRA support the following
changes to federal law relating to the issuance of industrial development bonds.
A. The following limitations should be imposed upon industrial development
bonds other than Housing Revenue bonds in lieu of various proposals to
impose volume limitations on the amount of industrial development bonds
which may be issued:
1. Before issuing an IDB the issuer, must make a finding that the
development would not occur "but for" the availability. of the IDB
financing.
2. Notice, public hearing, and state approval requirements, similar to
those contained in Minnesota Statutes, Chapter 474, should be applied
to all IDBs.
3. The federal tax exemption should be available only to the extent that
the IDBs are exempt from state income tar.
4. A company, and its related parties, shall be limited to $40,000,000 of
outstanding IDBs.
5. The acquisition of an existing facility should be allowed only if at
least 15% of the proceeds of the IDB are used for rehabilitation of
the facility.
6. No more than 10% of the proceeds of the IDB shall be available to
finance movable equipment.
7. No more than 25% of proceeds of an IDB should be available to
finance the purchase of land.
8. Office condominiums should be limited to $10,000,000 per building,
even if unrelated parties own different units in the condominium.
9. IDBs should not be available to finance any airplane, skybox, or other
private luxury box, any facility primarily used for gambling, or any
store the principal business of which is the sale of alcoholic
beverages for consumption off premises.
B. The following arbitrage limitations should apply to IDBs other than housing
revenue bonds.
1. A yield spread of 1.5% should be allowed for IDBs which are included
in a Common Bond Reserve Fund Program.
2. The yield spread for governmental programs of 1.5% should be
reduced to 1.125% for all other IDBs which are issued as a
governmental program.
3. The alternative of electing a 1/8 or 1/2% yield spread for other IDBs
should be maintained.
HOLMES & GRAVEN
CHARTERED
Attorneys at Law
JEFFREY R. BRAVCHLE
170 Pillsbury Center Minneapolis. M`* 55102
RICHARD LELA%D BROOKS
JAMES S. HOLMES
STEFANIE N. GALEY
DAVID L. GRAVE'S
(612) 338 -1177
DANIEL R. NELSON
JOHN R. LARSON
BARBARA L. PORTwppD
CHARLES R. WEAVER
ROBERT L. DAVIDSON
2200 Northwestern Financial Center. Bloomington. MN 55031
ROBERT J. DEIKE
MARK A. LINDGRE%
ROBERTJ. LI "DALL
(612) 89.1 -9100
LAURA R. KAISLER
JOHN M. LEFEVRE.JR.
CHRISTINE M. CHALE
LARRY M. WERTHEIM
MARY G. DOBBINS
JOHN C. UTLEY
STANLEY E. KEHL
JONATHAN P. SCOLL
Of Counsel:
KATHERINE M. HOLMES
MEMORANDUM
TO: NAHRO Midwinter Conference
Legislative Seminar
FROM: Stanley E. Kehl
SUBJECT: Laws Enacted by the 1983 Legislature
DATE: January 18, 1984
During the 1983 legislative session many bills were introduced which could
have an impact on housing and redevelopment authorities or on public housing
agencies. The following laws were enacted by the Legislature.
Chapter 42 increases the minimum contract amount for which public bidding
is required for a $10,000 to $15,000.
Chapter 44 provides that terminated employees who have the option to
extend group insurance coverage after termination of their own expense, may
extend such coverage for up to twelve months instead of-six months.
Chapter 54 expands the type of investments in which debt service funds can
be invested to include certain bankers acceptances and certain types of
commercial paper.
Chapter 91 provides that Small Business Administration guaranteed loans
may be used as collateral for public deposits.
Chapter 121 is the superfund bill and has many provisions relating to
hazardous wastes, many which affect local government units.
It Chapter 137 requires that printed materials which are prepared or
distributed at the direction of a governing body or its employees, which relate to
an agenda item at a public meeting of the governing body, and which are available
to the members of the governing body must be made available for inspection by the
public. An exception is ea-pressly provided for data which is classified non - public
pursuant to the Minnesota Government Data Practises Act.
1
Chapter 185 amends various provisions of the Minnesota Housing Finance
Agency law, portions of which are incorporated by reference in the Municipal
Housing Revenue Bond statute, Minnesota Statutes Chapter 462C. Deep discount
bonds and other types of innovative financial instruments are authorized.
Chapter 213 provides that interest on all bonds and obligations of the State
of Minnesota and any of its political subdivisions will not be exempt from state
taxation when the bonds are held by banks or corporations. The bill also provides
that the interest will be exempt from taxation only so long as the interest is
exempt from federal income tax. The bill applies to existing bonds as well as new
bonds issued.
Chapter 215 allows a court to require a foreclosure sale of a residential or
agricultural homestead to be by action instead of by advertisement. The bill also
allows the court to extend the period of redemption, and contains other provisions.
Chapter 218 requires any political subdivision to give 30 days written notice
to anv affected town, city, or county of actions which will affect the taxable
status or use of land in the town, city, or county. No penalties are included for
failure to give the required notice.
Chapter 222, Section 14, and Chapter 342, Article III, Section 1 exempts
housing and redevelopment authorities and other special taxing jurisdictions from
the eight percent levy limits.
Chapter 228 amends the requirements for safety glazing material in
windows adjacent to interior or exterior doors, by expanding the definition of
windows which are included.
Chapter 289, Sections 90 to 95 authorize the energy and economic develop-
ment authority to establish a program to make loans and provide financial
assistance for households and municipalities.
Chapter 289, Section 113 encourages the issuers of industrial revenue bonds
to target employment opportunities to qualified employees who are unemployed or
economically disadvantaged. Issuers of industrial revenue bonds must annually for
three years report on the types of jobs created and the persons employed.
Chapter 291, Sections 1 to 5 allows most public pension fund whose assets
are not invested by the State Board of Investment to invest its funds in real estate
ownership interests or loans secured by mortgages or deeds of trust, limited to 10%
of the market value of the pension fund; states in a policy statement that it is the
intent of the Legislature to encourage public and private pension funds to combine
assets for purpose of investing in building construction; requests interested pension
funds to notify the President of the Minnesota AFL -CIO if they desire to
participate in a committee to investigate real estate investments.
Chapter 301, Section 61 authorizes the state auditor to establish the scope
for audits of local governments, which for fiscal years ending after January 15,
1984 shall include financial and legal compliance audits.
Chapter 301, Sections 204 to 210 authorizes the Minnesota Housing Finance
Agency to establish an energy loan program without income limits and to establish
a revolving fund to encourage innovative multifamily housing.
Chapter 301, Section 211 authorizes municipalities to enter into installment
sale contracts of not more than 10 years to purchase capital or other equipment or
services intended to improve the energy efficiency of buildings owned by the
municipality.
Chapter 301, Section 212 provides that a public bid received by a local
government shall not be considered the low bid if it is a product of a prison
industry other than one located in ;Minnesota.
Chapter 309 increases the number of commissioners for multicounty HRAs
3 which include three counties from three to six commissioners.
Chapter 333 prohibits certain indemnification provisions in certain
construction contracts.
Chapter 342, Article II, Section 6 provides that the property tax of a limited
equity cooperation will be valued for property tax purposes of the lessee of its
market value or the value determined by capitalizing the net operating income of a
comparable apartment operated on a rental basis which is not a limited equity
cooperative apartment.
Chapter 342, Article II, Section 12 reduces the assessment ratio for
commercial industrial property from 40% to 34% on the first $50,000 of Market
Value.
Chapter 342, Article II, Sections 15, 16 and 17 limit the reduced assessment
for federal Title II or Housing Finance Agency housing for the elderly or low and
moderate income families, for Farmers Home Administration property for housing
such persons in municipalities of under 10,000 population, and for HUD Section 8
subsidized housing, to that portion of the structure occupied by qualified
individuals or families.
Chapter 342, Article V provides that reimbursements received by local
governments for reduced assessment low and moderate income rental property is
eliminated and folded into the local government aid formula. A transition
provision is included for projects approved before May 1, 1983.
Chapter 342, Article VIII, Sections 1 to 11 establish expended enterprise
zones with various state paid credits.
Chapter 342, Article VIII, Section 15 allows joint boards established by local
governments to issue revenue bonds for redevelopment activities.
Chapter 342, Article X exempts Austin and Hastings from the three year
limitation on holding land for economic development purposes, and sets limits of
six years.
3
Chapter 364 defines temporary employees for the purpose of PURA as
employees employed for 67 days or less instead of 100 days or less. Certain
student employees are defined as temporary employees. Certain limitations are
imposed upon the designation of supervisory employees.
Chapter 365 amends Minnesota Statutes Chapter 474, relating to industrial
revenue bonds, with many technical changes including the elimination of certain
restrictions on bonds issued to refund previously issued industrial revenue bonds.
Resolution No. 7 is a resolution which requests the President and Congress
to extend the authority for the issuance of qualified mortgage bonds beyond the
December 31, 1983 expiration date.
HOLMES & GRAVEN
CHARTERED
Attorneys et Law
470 Pillsbury Center Minneapolis, MT 55402
RICHARD LELLA %D BROOKS
JAMESS. HOLMES
STEFANIEN. GALEY
DAVID L. GRAVEN
(612) 33 9-1177
DANIEL R. NELSON
JOHN R. LARSON'
BARBARA L. PORTWDOD
CHARLES R. WEAVER
ROBERT L. DAVIDSON
22p0 !northwestern Financial Center, Bloomin on, MT 55131
!n
ROBERT J. DEIKE
MARK A. LI %DGRE%
ROBERT J. LINDALL
(612)8939400
LAURA R. KAISLER
JOHN M. LEFEVRE. JR.
CHRISTINE M. CHALE
LARRY M. WERTHEIM
MARY G. DOBBIN$
JOHN C. UTLEY
STANLEY E. KEHL
JONATHAN P. SCOLL
Of Counsel:
KATHERINE M. HOLMES
MEMORANDUM
TO: NAHRO Midwinter Conference
Legislative Seminar
FROM: Stanley E. Kehl
DATE: January 18, 1984
RE: Bills Pending Before the 1984 Legislature
During the 1983 legislative session many bills were introduced which could
have an impact on housing and redevelopment authorities or on public housing
agencies. Some of the bills passed and they are summarized in a separate memo.
Many of the bills did not pass and those are summarized below.
H.F.124 /S.F.206 proposes new law creating a Minnesota Community,
Business, and Job Preservation Board; requires certain employers, operating certain
affected establishments, to give 270 days notice to the Board, affected employees
and employee organizations, and affected municipalities, where foreseeable, prior
to the closing, reduction in operation, or relocation of a facility. (House
Appropriations; Senate Finance)
H.F.134 allows owners of new business facilities to apply to the county
board of the county where the facility is located for a property tax exemption; a
new business facility is that of a business which has located within the taxing
district from another state or country or is a newly constructed facility or an
expanded facility, and which employs at least 10 persons full-time or 5 persons who
have exhausted unemployment benefits full-time; exempts the full market value of
the facility or of the expanded part of the facility from taxation the first year,
80% the second year, 60% the third year, 40% the fourth year and 20% the fifth
year; excludes exempt value from school district valuation for state aid purposes
and metropolitan revenue distribution purposes. (House Tax Committee)
H.F.243/S.F.454 directs the Small Business Finance Agency to administer a
small business job creation incentive program; allows the Agency to lend funds to
small businesses which will use these funds solely to compensate newly hired
employees. The Agency is to determine that incentive funds are necessary, that
funds will be used exclusively to compensate economically disadvantaged persons
who have been unemployed for 90 days, that the business is likely to succeed and
grow, and that the business has a training plan for these new employees. Business
is to repay 70% of loan over 3 years, plus interest, with payments beginning one
year later. (House Appropriations Committee; Senate Economic Development &
Commerce Committee)
-1-
H.F.258 proposes new law authorizing tenants to remedy a landlord's
noncompliance with weatherstripping and caulking energy conservation
requirements, and to deduct actual expenses from their rent; gives owners ten days
to remedy noncompliance after written notice from the tenants indicating
intention to remedy the problem; provides for offsets in actions for restitution of
the premises for non - payment of rent. Limits such deductions to a maximum of
two months' rent. (House Energy Committee)
H.F.272/S.F.54 repeals Minnesota Statutes 1982, Chapter 562, which
requires .surety bonds of plaintiffs bringing civil actions against certain acts of
public bodies, where the court determines that loss or damage to the public or
taxpayers may result from the pendency of the action or proceeding. (House
Judiciary Committee; Senate Judiciary Committee)
H.F.288/S.F.497 requires the owners of rental property to file, prior to
January 1, 1985 and every ten years thereafter, a certificate from a building
evaluator stating that the building is in compliance with the applicable Minnesota
energy efficiency standards. The house file allows a.public housing agency or HRA
to complete the HUD required audits and then, after completing work necessary to
bring the building into compliance with the energy code, file its own certificate.
The senate version exempts public housing from the certificate requirement
altogether. (House Energy Committee; Senate Finance Committee)
H.F.343 provides municipalities, as defined (any political subdivision
authorized to contract), with the option to perform improvements by day labor
(defined as performance of improvements by municipal employees) for
improvements over $50,000. Authorizes the municipality to obtain or confidential
estimate for cost of improvement using day labor prior to opening contractors'
sealed bids for performance of the work; permits the municipality to order the
work done by day labor where the lowest responsible contractor's bid exceeds the
confidential estimate; permits withdrawal from these provisions upon approval of
the question at election; requires payment of the prevailing wage rate as a
minimum if established by the municipality for contractors' employees. (House
Local do Urban Affairs)
H.F.358/S.F.453 establishes a small business job creation incentive program
in coordination with the Federal Job Training Partnership Act of 1982; provides for
five member business review committees in each service delivery area as
designated under the federal act to allocate funds among eligible small businesses;
requires review of Board of Education policies for post- secondary vocational
education and provision of customized short -term training programs by cooperative
vocational centers. (House Government Operations Committee; Senate Economic
Development & Commerce Committee)
H.F.447/S.F. 418 removes the limitation on the tax exemption for
institutions of purely public charity relating to property used for housing the
elderly, handicapped, or lower or moderate income families. (House Tax
Committee; Senate Tax Committee)
H.F.469 authorizes the Attorney General to provide service as bond counsel
to all state agencies and political subdivisions; requires the state to be a self -
insurer as to errors by the Attorney General or other state or local officials
relating to validity or tax exempt status of such obligations; requires the Attorney
-2-
General to assist, upon request from the Revisor of Statutes, in drafting legislation
relating to such public debt or obligations. (Senate Judiciary)
H.F.559/S.F.588 provides that a judgment for the recovery of money shall
bear interest from the time the claim or cause of action accrues (now from the
time of the verdict or report). (Tabled)
H.F.648 /S.F.510 prohibits cities, counties and towns from enacting rent
control provisions. (Vetoed by Governor)
H.F.717 permits a political subdivision to prohibit employees from making,
soliciting, or receiving campaign contributions for candidates for a political
subdivision office, or from participating in any way in the campaign of such
candidates. (House General Legislation and Veterans Affairs)
H.F.789/S.F.730 creates a Minnesota Loan Guarantee Agency, governed by a
seven member board of directors appointed by the Governor, with authority to
guarantee the timely payment of principal and interest on certain mortgage - backed
or loan- backed securities; limits eligible issuers for guaranteed securities and
minimum face amounts of guaranteed security issues ($400,000 generally, and
$200,000 for modified pass - through securities based on and backed by mortgages on
manufactured homes or by energy conservation improvement loans); sets
qualifications for mortgage pools, small business and community development loan
pools, and energy conservation loan pools; requires surety bonds of issuers. (House
Government Operations Committee; Senate Economic Development Committee)
H.F.894/S.F.989 is the Department of Administration's data privacy bill.
The bill amends various provisions of the law including personnel data, summary
data, and housing data. A specific classification of redevelopment data is
established to cover survey data collected for planning, development and
redevelopment by cities and housing and redevelopment authorities. (Tabled)
S.F.133 generally new legislation allowing owners proposing new business
facilities to apply to the various taxing jurisdictions in which the facility is to be
located for property tax exemptions; allows taxing jurisdictions to determine term
of exemptions, which may not exceed 5 years; provides for increases in school
district adjusted assessed valuations by amounts of exemptions and for reductions
in equalized municipal mill rates by treating such exempt property as if taxable.
(Senate Taxes)
S.F.707 sets a salary maximum, at the Governor's salary level, for persons
elected or appointed to employment by a city, county, town, school district, or
other local government body. (Government Operations Committee)
S.F.282 increases the maximum per deim for HRA commissioners from $25
to $35 per meeting with a maximum of $2,500 per year instead of $1,500. (House
Local and Urban Affairs Committee)
-3-
pervinqrMminwnewds Housinq a
cww,w,i%y DewJop ont nmds
NAHRO Legislative Committee Meeting Summary
Special Meeting
January 10, 1984
Attending:
Guy Peterson, Metro Council; Mark Ulfers, Dakota County HRA; Monte Aaker, MHFA;
Bruce Nordquist, City of Richfield; Jerry Boardman, Fridley HRA; Jay Jensen,
MCDA; Jim White, MCDA; Maureen Warren, St. Paul Mayor's Office; Bill Kemp, St.
Cloud HRA; Tim Flaherty, City of Minneapolis; Stan Kehl, Holmes & Graven;
Barbara Grossman, St. Paul PHA.
The Committee discussed the five ballot issues. In doing so, they considered
the cost of each effort as well as the likelihood of each's passage during
this year's abbreviated legislative session. Stan Kehl assisted in this
analysis, offering his observations of the somewhat unusual backdrop and
stage.
The following summarizes the analysis:
Issue
Mn. Stat. 272.02
Energy Code
Tax - Exempt Bonds
462c Allocation
Assessment Modification
Chance of Passage
in 1984
75%
50 -50
Timing uncertainty due
to federal tax bill stall
40%
No Chance
Est. Cost
$4,000 - $5,000
$4,000 - $5,000
$5,000 - $7,000
Up to $15,000
$10,000 - $15,000
in 1985
In addition, because of the uncertainty of federal legislation concerning
revenue bonds, Jerry Boardman, chair-of the IDB Task Force, requested that
that item be removed from the current listing of priorities. Instead, once
the federal status is clear and the Task Force has submitted a position which
is received favorably by the full committee, he requested we ask the NAHRO
board to act immediately. At that time, it's recognized that separate
additional funds may need to be solicited for this item alone. It's important
to note that unless the Task Force, in its diversity, can reach agreement on
provisions for a state bill, no legislation will be recommended by the group
for NAHRO sponsorship.
d
• NAHRO Legislative Committee Meeting Summary
Special Meeting
January 10, 1984
Page -2-
After additional discussion, the results of the ballots received prior to the
start of the meeting were reviewed. Those ballots came from Austin HRA,
Mankato, Richfield HRA, Metro HRA (2) and Robbinsdale HRA.
Given the information about cost and success of passage, Tim Flaherty moved,
and Maureen Warren seconded, that NAHRO delay consideration of the assessment
modification until the 1985 session. The motion carried.
Jerry Boardman then moved, and Tim Flaherty seconded, that the remaining 3
issues be ranked as follows:
1. Mn. Stat. 272.02
2. energy code
3. 462c allocation.
The motion carried, although the group decided that all present should
nevertheless complete ballots, ranking only the three remaining items. This
was done, and the order as described in the motion was sustained by a close
vote.
(After the meeting, the chairperson tallied the absentee ballots, preserving
the same order as was initially indicated by each ballot but considering only
the three items as above. While we recognize that this was not scientific, it
was significant that when this tally was added to that of the meeting
attendees', the result was the same.)
These results were then to be transmitted to the NAHRO board for their final
action. (See attached memo.)
Finally, a draft of a contributions letter was submitted by Barb Grossman for
the committee's review. The letter will be mailed as soon as the NAHRO
president reviews and signs it.
Next meeting will be at the NAHRO Mid - Winter Conference on January 18, at 4 p.m.
Cif VIAL) m1AA0SCir1i HousIAq
Cornfr (ft Nvebpment float
MEMO
To: Mn. NAHRO Board Members
From: Barbara Grossman 0
Re: Legislative Committee Recommendations
January 13, 1984
The Legislative Committee has met five times in recent months to consider NAHRU's
legislative agenda for the upcoming session. After many discussions, the group
articulated the following approach for board consideration.
1. Monitoring and tracking of events at the Legislature should remain at the
core of our program.
2. In addition, NAHRO's involvement should include support of other groups'
bills when appropriate. Specifically, should reinstatement of Mn. Stat.
273.1105 be the subject of proposed legislation, NAHRO's support should be
offered.
Hn. Stat. 273.1105 allowed reduced assessment of multi - family property which
undergoes significant rehabilitation. The provision was seen as an incentive
to owners /developers to improve and continue to offer rental housing. It
appears that during its short life (which ended on December 30, 1983), the
provision was little used. Committee members speculated that this may have
been due to widespread unfamiliarity with its availability. If an attempt is
made to revive the provision, it is likely that the county assessors will
argue against its reinstatement.
3. As for pressing issues on which NAHRO should take the lead, the committee
developed a listing of five items. From this listing, 3 were gleaned and
ranked. In this process, cost, the likelihood of passage, the idiosyncrasies
we might expect during this unusual 6 -week session, and the scope of benefit
to NAHRO agency members were all considered.
The three issues for sponsorship, in their priority order, include the
following:
a) Mn. Stat. 272.02 - This law currently sets a three year limitation on
tax exemption for property held by an HRA for development purposes.
(Also covers municipalities and political subdivisions). The problem
this presents is that it often requires more than three years just to
develop a plan and get the financing in place for such property.
Committee members researched their respective HRAs' experiences and
concluded that the limitation presented a very real impediment. Because
in most places the HRA is generally the holder of such property, "cities"
as separate entities would not be taking the initiative through the
League of Cities or other representative bodies. Therefore it was felt
that if anyone were to tackle this, it would have to be Mn. NAHRO.
v
Legislative Committee Recommendations
Page 2 of 4
b) Mn. Energy Code Changes re: Rental Housing - The State Energy Department
has recently submitted proposed rules for implementing energy code
standards for rental housing. The Legislative Committee reviewed a
preliminary draft of these rules and noted potential problems for public
housing. These problems centered around the state's requirements
differing from the federal standards upon which HRA and PHA energy audits
and improvements have already been made. Further, the state rules impose
substantial penalties ($10,000 per day per unit in violation), and
although state staff argue that public housing wouldn't necessarily be the
target of full enforcement, the committee felt strongly that the exposure
to liability would still exist. With no guarantee of funding to
accomplish improvements related to state standard compliance, and with no
ability to use loaned financing, owners of public housing would be in
jeopardy.
Given that HRAs and PHAs statewide have spent over $22 million in the
last 3 years alone on public housing energy conservation (or $2,200 /unit),
and given that public housing tenants are the least vulnerable to
increases in utility consumption costs (since their gross rents are based
on their incomes), the committee recommended an alternative to the state
standards.
Since the results of the state's 2/28/84 hearing on the proposed rules
(at which NAHRO will testify) will not be known until well into the
legislative session, the committee recommends that NAHRO sponsor
legislation which will substitute the federal energy conservation
standards for the state standards in the case of public housing. This is
especially significant as it appears the Energy Dept. will be sponsoring
legislation to tighten up enforcement of the energy code and that several
senators are intent on pursuing such enforcement legislation.
c) 462c allocation of state bonding authority; competitive system
In 1981, 1982 and 1983 the Legislature enacted several allocation plans
which divided bonding authority between cities and the state. Because of
increased needs and abilities of cities to conduct local housing bond
programs, the current allocation to cities is inadequate. In response,
NAHRO should affirm last year's position and should sponsor legislation
that includes an allocation formula which would provide 50% of the annual
state ceiling to cities. Cities of the first class would be allocated
27 1/2% of the "city pool" and the remaining 72.5% of the cities share
should be available for all cities on a competitive basis.
As part of the same effort, NARRO should also address changes in the
competitive system administered by MHFA. These would include the
following:
Legislative Committee Recommendations
Page 3 of 4
1) The procedures and deadlines for receiving an allocation should be
better publicized to cities, by publishing notice in the state
register and other means.
2) 100% of the loans should be reserved for the first six months for
families and individuals with income below SOX of the maximum family
income.
3) Only projects receiving municipal water and sewer services should be
financed.
4) Cities which have not received an allocation in the past two years
(with the exception of Mpls., St. Paul, or Duluth) or cities which are
doing programs jointly should receive preference.
5) If all factors are equal, and there are more programs than there are
funds available, the programs should be selected by lot.
6) Non -bond proceed criteria should be eliminated because it encourages
Inappropriate bid wars between cities and because it tends to favor
new construction projects over existing housing and housing rehab.
4. Run down on estimated cost and likelihood of passage of each of the above
include:
Issue (est.) Chances for Passage Est. Cost
Mn. Stat. 272.02 75% $4,000 - $5,000
Energy Code 50-50 $4,000- $5,000
462c 40% Perhaps up to
$15,000
These costs are over and above the basic monitoring activity at a cost of
$70000.
5. Special Issue
The committee established an Industrial Development Bond Task Force to plan
for implementation of yet to be passed federal tax legislation affecting
revenue bonds. Because at this point it is premature to develop specific
legislation, the committee requests that the NAHRO board reserve a place on
Its legislative agenda for future action on this issue. The committee
recognizes that a separate request for contributions will likely be needed to
finance sponsorship of legislation. Further, it agrees that bill sponsorship
will be recommended only if the task force can reach a consensus on the bill's
provisions. Finally, the committee requests that the NAHRO board meet to
F-
Legislative Committee Recommendations
Page 4 of 4
consider sponsorship as soon after bill language is drawn up because the
Legislature will have to act very quickly once the federal tax bill is
settled.
Janus ry 13, 1984 HOUSING AFFAIRS
LETTER
TAX- EXEMPT BONDS
Page 4
' MORTGAGE AND MULTI BONDS FACE HARD FIGHT
Speakers
anticipated for 19839 source tells us, and
"are continuing
• at a high level. Most
at conference here see many is- parries have substantially
sues to be
. resolved before Congress will
pass a tax bill allowing further
increased
loss reserves, including MGIC."
sales of Underwriting loss figures above include,
1- family mortgage revenue bonds (MRBs). And in addition
if such a bill passes, it may contain new
to payouts, premiums earned ane
administrative
costs.
restrictions on multifamily industrial de- MGIC, on Jan. 6
velopment bonds (IDBs).
sults for second quarter 1983, & $1.2 mil-
No tax bill at all this year is possible lion profit, down 94Z from S1'2 mil -
but
not likely, says Council of State Hous- profit in second $21.3 million
ing Agencies exec. quarter 1ld Figures
v -p Thomas White, be-
cause of strong lobbying efforts for
were out late because of Baldwia'a prob-
lems. But
the
MRBs, as well as for insurance firm and
fringe benefit
second quarter underwriting re-
sults were available publicly by late
tax changes, all in HR 4170, source says. Aug.,
the
tax bill now pending before the House
Mules Committee.
FREDDIE MAC TO SELL CMO TO
White says Nat'l Assns of Realtors and
COVER OLD LOANS
Fed'1 Home Loan Mor tgage Corp. will sell
Home Builders will likely softpedal opposi_ collateralized mortgage obligations (CMOs)
for
lion to some changes on multi IDBs, in mak-
about $500 million to finance its pur-
ing all -out push to lift MRB "sunset."
chase last month of $625 million face value
Rep. Frost (D -Tex.) tells Nat'l Real Es_ of old, low rate home loans. (HAL 12/16p9)
This
tale Development Center group that, while
CMO will be in denominations of
$1,000, "providing
House Ways 6 Means Committee Chairman Ros-
the first real opportu-
nity for individual
tenkowski (D -Ill.) has resolved issues
investors to invest in
Freddie Mac
on multifamily bonds, Rostenkowski is still
far from agreement
mortgage securities," FHLMC
president Kenneth Thygerson
with IDB advocates on
says.
nonhousing bonds.
John Salmon, Ways & Means
SEARS STARTS PROGRAM WITH FIXED RATE LOANS
chief counsel,
a says Rostenkowski will try to bring HR 4170
Sears Mortgage Securities Corp. of San
Francisco begins buying
to House floor in mid -Feb.
loans from retail
home lenders, taking 15-
Nancy Granese of Kutak, Rock b Huie law
firm here, and representative
and 30 -year fixed.
rate mortgages on 30-, 60- and 90 -day com-
of Assn of
Local Housing Finance
mitments.
Agencies, says Senate
Finance Committee Chairman Dole (R -Kan.)
Maximum loan amount is $500,000.
Firm,
31so wants new limits on IDBs. She notes
a subsidiary of Sears, Roebuck, is
"working on" an adjustable
there will be only 90 legislative days when
Loth houses
rate mortgage
(ARM) program, says marketing director John
of Congress are in session, in
1984, and warns that if
Holmgren. But firm intends to sell all
tax bill doesn't
i)ass by mid - April, it
mortgages purchased as mortgage- backed se-
may not pass at all.
curities, and an ARM security is "hard to
structure," Holmgren says.
PRIVATE LOAN INSFINANCE3.
Standard b Poor's investment rating
PREMIUMS _
AND LOSSES -- HIGHER THAN EXPECTED
gradesewithoutorestrictti nseonrneiativep
All the major private home loan insur-
ors, buffeted
amortization and frequency of g
g
by homeowners' continuing fi-
nancial problems, had losses
justments, he says. Without top ygrades,
on underwrit-
ing (not counting profits on investments)
securities need expensive pool insurance to
get favorable interest
:or the 9 months ended Sept., a source fa-
:::iliar with
rates, he adds.
"There's not exactly a developed market
the firms in the industry says.
The largest 3- r.�ont.
�' h loss,
for an ARM security," he notes.
$23 million,
-its at Mortgage Guaranty Insurance Corp.,
Dean Witter Reynolds, brokerage subsidi-
ary of Sears, and Sears Mortgage
Securities
Pi c ^` PGiC Investment, in turn part of are also working to package and sell to in-
troubled Baldwin- United
Corp. Among 4 vestors collateralized mortgage obligations
other high volume firms in industry, PMI backed by Gov't Nat'l
Mortgage Assn secu-
.)::d United Guaranty had losses of $2 mil- rities.
:ion or less, and Verex and Ticor had loss -
.:5 in $10 -11 million range.
premium income rises dramaticall at
all
a
Claim payouts "were far beyond" amounts rof�insurancesnewly
volume written virtually
a
3
���► IIII
U league of minnesota cities
January 16, 1984
Congressman Jerry Sikorski
414 Cannon Office Building
Washington, DC 20515
Dear Congressman Sikorski:
The League of Minnesota Cities actively supports continuation of authority for
city governments to issue tax - exempt industrial bonds. The LMC policy
statement on this subject is enclosed for your information.
I.MC is convinced that the responsible use of IDBs has played a significant
role in the continued economic vitality of many communities throughout the
state. Unwarranted restrictions on the use of IDBs would present serious
difficulties for Minnesota cities. Imposition of a state allocation system
or limitation on the issuance of IDBs on the basis of a per capita collar
amount would make it extremely difficult for cities to continue to respond to
local needs.
It would also be difficult to design a mechanism which would equitably
allocate IDB authority among 855 cities in the state. Therefore, LMC is
opposed to such soliciting on the authority for cities to issue IDBS.
Local government officials are, of course, aware of the diversity of opinion
regarding industrial bond financing. A committee of local. officials has
produced a proposed listing of limits on the uses of such financing that might
be considered in conjunction with federal legislation further regulating IDBs.
That list is also enclosed for your information.
No useful purpose can be served by inserting, state government into the
decision - making process in this area without establishing an additional system
of cumbersome delays and potentially controversial reallocation decisions. In
1982, Congress established a number of new restrictions on IDBs. Those
restrictions only became effective in 1983; LMC thinks that Congressional
review of the impact of those provisions should precede any action on
proposals to add new restrictions.
X rely,
Bruce Nawrocki
Mayor, Columbia Heights
Enclosure
BN:DAS:lw
1 B3 university avenue east, st. paul, minnesota 55101 (612)227-5600
INDUSTRIAL DEVELOPMENT BONDS
The League supports the continued availability of small issue industrial
development bonds to cities after December 31, 1986. Industrial development
bonds are useful tools which allow cities to take an active role in fostering
a diverse range of economic development or redevelopment projects. They are
also the primary means by which cities can provide employment opportunities
within the city. Due to federal program cutbacks, the -need for locally
controlled development tools is greater than ever before.
The League questions the assumption that the volume of tax - exempt debt is
a significant factor in determining interest rates on general obligation
bonds. Many factors may reduce the demand for bonds and force interest rates
to rise. To attribute the high municipal bond interest rates to the
availp.bility*of small issue industrial development bonds ignores the
complexity and volatility of the present economy.
Furthermore, large issues IDBS (over $10 million) take up a much larger .
percentage of the tax - exempt market than do small issues. In the first -
quarter of 1983, large electric and gas issues accounted for 11.3% of the
market, whereas small issue IDBS accounted for only a small portion of the
market.
Finally, the League believes any prohibition or cap on the volume of
small issue IDBS is an unwarranted attach on the capability of cities -
particularly small cities - to effectively promote economic development.
While large cities may utilize small issue IDBs, the have many more economic
development tools available to them than do small cities.
The League recommends, however, that any issuer should be required to
adopt and follow local guidelines ensuring that projects be part of an overall
economic and physical development plan.
SITUATION PAPER
Congressional Action on Proposed Restrictions on
Issuance of Industrial Development Bonds
In October, the House Ways and Means Committee reported an omnibus package of
tax amendments. Included in the package were a number of provisions affecting
industrial development bonds.
1. The bill established a $150 per capita of state population limit for
the issuance of IDBs effective January 1, 1984.
2. The legislation also provided that the $150 limit would be allocated
50 percent to the state government and 50 percent to local
jurisdictions on the basis of population (the governor and the
legislature would have the authority to revise the allocation
system).
The per capita limit covered, not only small issue industrial development
bonds, but also public utility power system bonds, pollution control bonds,
and a number of state level bonds, including student loans. Observers
speculated that either the state or several of the larger local issuers above
could consume the entire Minnesota allotment using the per capita system.
The tax bill also contained other provisions which would have extended the
authority of city government to issue revenue bonds for housing projects
(which ended on December 31, 1983). It also contained comprehensive
amendments to insurance tax laws, and a number of other provisions, generally
supported by the interests of those affected by the legislation.
The Chairman of the House Ways and deans Committee, Congressman Rostenkoski,
requested a rule from the House Rule Committee to govern the way this
comprehensive tax bill would be considered on the floor by the full House of
Representatives. He asked that the IDB portion of the bill be closed to
amendments, i.e. that the House must reject the whole bill in order to defeat
the section dealing with IDBs. Initially, the Rule Committee resisted
granting the rule requested by the Ways and Means Committee Chairman, but
pressure from the House Speaker, Tip O'Neil and the offer of a compromise on
other aspects of the legislation, resulted in the Rules Committee finally
granting a rule which allowed no amendments to the IDB cap section of the
bill.
The House received the proposed rule and deliberated adopting this means of
governing consideration of the bill. Even in the face of strong pressure to
approve a tax bill as well as pressure from those interests favorably affected
by the aspects of the legislation, the House defeated the rule by a slit sip:
vote margin.
The tax bill, therefore, was not considered before the Christmas recess and
was returned to the House Ways and Means Committee.
Situation Paper on IDB Issuance
Page 2
The fact that this tax bill still exists and could be enacted with an '
uncertain limitation on the volume of industrial development bonds since
January 1 has raised legal questions regarding the continued issuance of IDBs.
Essentially, it is not possible to guarantee the tax- exempt status of IDBs
covered by the proposed bill after its proposal date (January 1, 1984). What
response the House Ways and Means Committee may have to the defeat of the
proposed rule remains to be seen.
DAS:lw