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HRA 08/09/1984 - 293610 CITY OF FRIDLEY HOUSING & REDEVELOPMENT AUTHORITY MEETING AUGUST 9, 1984 CALL TO ORDER: Chairperson Commers called the August 9, 1984, Housing & Redevelopment Authority meeting to order at 7:03 p.m. ROLL CALL: Members Present: Larry Commers, Elmars Prieditis, Carolyn Svendsen, Duane Prairie Members Absent: Walter Rasmussen Others Present: Nasim Qureshi, HRA Director Sid Inman, City Finance Director Dave Newman, City Attorney Jim Casserly, Miller & Schroeder Municipals, Inc. APPROVAL OF JUNE 27, 1984, HOUSING & REDEVELOPMENT AUTHORITY MINUTES: MOTION BY MR. PRAIRIE, SECONDED BY MR. PRIEDITIS, TO APPROVE THE JUNE 27, 1984, HOUSING & REDEVELOPMENT AUTHORITY MINUTES AS WRITTEN. Mr. Commers stated the only comment he had related to the question discussed at the last meeting about the dirt problem with Target. Had this been discussed with Target? Mr. Qureshi stated he had discussed this with Target. He stated it has been the City's and the HRA's position that they will level the ground to Target's speci- fications for the building. If there is any shortage of material, that is the responsibility of Target. He was assuming Target was handling the situation as Target has not come back to the HRA asking for any assistance. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. 1. HEARTLAND REALTY INVESTORS, INC. REGARDING SNYDER'S DRUG STORE: Memo from Mr. Qureshi to HRA dated July 27, 1984; Letter from Snyder's Drug Store to Project 61 Corp. dated May 2, 1984) Mr. Commers stated that in Mr. Qureshi's memo, he had met with Mr. Bill Walters of Heartland Realty regarding the need of Snyder's possible expansion into the present City liquor store space. He asked if there had been any change in Snyder's position regarding that expansion. . HOUSING & REDEVELOPMENT AUTHORITY MEETING, AUGUST 9, 1984 PAGE 2 Mr. Qureshi stated he had talked to Mr. Walters again that day, and Mr. Walters assured him they are planning to expand into the present City liquor store space. Mr. Qureshi stated he has told Mr. Walters that the City needs a firm commitment by August 23, 1984 and'Mr. Walters said they are working on that deadline. If the City gets a firm commitment by Aug. 23, it is their hope to move into the hardware building sometime in October. If the City does not get a firm commitment by the Aug. 23 deadline, it becomes impractical for them to try to move into the hardware store building and be geared up for the Christmas season. 2. HEARTLAND LETTER REGARDING PHILLIPS PETROLEUM COMPANY - PURCHASE OF GAS STATION: Mr. Qureshi stated the purchase price of the gas station previously was $120,000. Phillips has had a new appraisal done on the property, and they are now recommending a purchase price of $90,000. Mr. Qureshi stated that at an earlier meeting, he had mentioned that the City has been working with the Holly Shopping Center to improve the facade and landscaping. Heartland has applied for a low interest HUD loan of $100,000 at 5% if they match it with the market rate. So, that would be $200,000 to be used for improving the Center. HUD has put on some more restrictions, and they have been working hard to clear the loan. Mr. Qureshi stated that assuming they can package everything and Heartland does get the loan, it is the City's hope to basically do all the new facade, lighted signs along the front, landscaping, and a remodeled approach into the Center. The City felt it would not be a good idea to have the gas station right in front. If the structure could be removed, it would open up more exposure to Holly Center. Mr. Qureshi stated Heartland Realty has negotiated the price with Phillips Petroleum, and they are willing to consider contributing one -half of the funds required to purchase the gas station property. Mr. Qureshi stated it was his feeling that if they can get a firm commitment that Heartland is going to put one quarter million dollars into the center, maybe a commitment of $45,000 by the HRA to just improve the corner might be-.reasonable. Mr. Qureshi stated that at this time, if the HRA felt comfortable with this, he would like some indication from the HRA that City Staff should proceed to work out a preliminary agreement with Heartland Realty. Mr. Prairie stated his only concern was if Heartland would ask for further assistance from the HRA. Mr. Commers stated his only concern would be that the City retain some kind of easement rights over that parcel in case of a major improvement to the intersection. 0 HOUSING & REDEVELOPMENT AUTHORITY MEETING, AUGUST-9,'1984 PAGE 3 Mr. Qureshi stated they are acquiring quite a bit of additional property. They are proposing three lanes and redoing the sidewalk, so they are making some provisions for sufficient public right -of -way. Mr. Commers stated the City has wanted to take that gas station out of there and would have had to do it at some time anyway. If Heartland is going to help and, in addition, there is a big improvement to the Center, it seemed to him that $45,000 was a minor contribution to make. It was to the City's benefit anyway: Mr. Prieditis stated it would improve the site visually. He was also in agreement with Mr. Commers' concern about whether City Staff was looking at trying to predict any future improvements to the intersection, and was there a plan for that purpose? Mr. Qureshi stated they have already done some, but they could certainly retain some additional property to ensure there are no problems later on. MOTION BY MR. PRIEDITIS, SECONDED BY MS. SVENDSEN, THAT THE TENTATIVE PROPOSAL DISCUSSED AT THIS MEETING OF A CONTRIBUTION BY THE HRA OF APPROXI- MATELY $45,000, CONTINGENT UPON HEARTLAND REALTY INVESTORS, INC., UPGRADING THE HOLLY SHOPPING CENTER, WAS, IN CONCEPT, APPROVED AND ADOPTED BY THE HRA, AND STAFF WAS DIRECTED TO TRY TO IMPLEMENT THIS PROPOSAL. ' is UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMBERS DECLARED THE MOTION CARRIED UNANIMOUSLY. 3. RECEIVE INFORMATIONAL BROCHURE FOR PROMOTING CENTER CITY DEVELOPMENT: Mr. Qureshi stated this was a brochure Staff had put together over the last couple of months. He stated they are trying to project an image that Fridley is a viable, growing, and developing community, and that they are definitely promoting development. IHe stated their hope is to use this introduction in any material they send to potential developers and hope it projects a good image of the City of Fridley. Mr. Qureshi stated Staff has also worked out a rough outline of an insert which was an invitation for developer interest. They hope this will promote interest among developers. Mr. Qureshi stated he was open to suggestions or comments from the members of the HRA. Mr. Commers asked what the City's of IDB's for use on the southwest Mr. Qureshi stated this year they As of Dec. 31, 1984, everything i! • new state legislation will be for is fairly active, they will have a funds than other communities. position was regarding the availability quadrant. still have about $8 million available. off, and then it will depend on what the next year. They feel that if the community better chance at more of a share of the • HOUSING & REDEVELOPMENT AUTHORITY MEETING, AUGUST 9,'1984 PAGE 4 Mr. Commers stated that if the City wants to attract a major development into the southwest quadrant, they are going to need to have some funds available. He would hope there was some coordination between the HRA and the City Council so the City Council would not approve those bonds for a lot of projects and then funds would not be available for a developer that might come in. The City should make sure it is in a position to secure as much as they can for next year. Mr. Qureshi stated they will be aggressive in pursuing the maximum alloca- tion they can. He was sure that if the HRA had a viable project, the City Council would give that a preference. Mr. Prieditis stated that, regarding the brochure, he was certainly in agreement that in today's world with so many other things going on, there was a need for the City to have a good quality brochure. He stated he thought the brochure was very nicely done. It was the concensus of the HRA members that they were satisfied with the brochure and were in agreement with material being sent to try to excite some developer interest. Mr. Comers stated that it was his understanding that last year the HRA had • made a commitment to present some kind of annual report to the citizens of Fridley. Had anything been done in that regard for this year? Mr. Qureshi stated an annual report was prepared last year in October just before the Plaza grand opening. Mr. Comers stated he did not think the report would have to be as elaborate as the one done last year, but he did think the HRA had made a commitment that perhaps each Oct., they should publish a little report so information could be made available to the public. It would prevent misinformation from being discussed. Mr. Prairie stated he agreed. Ms. Svendsen stated she definitely felt they should publish an annual report. It was in the HRA's best interest to get accurate information out to the community, and this was probably the best way to do it. She stated she had received quite a few favorable comments about the report last year. It was the concensus of the members of the HRA to ask Staff to put together an annual report for 1984, to be brought back to the HRA at their next meeting. 4. FINANCIAL REPORT: MOTION BY MR. PRAIRIE, SECONDED BY MS. SVENDSEN, TO ACCEPT THE FRIDLEY HRA FINANCIAL REPORT AS OF AUG. 8, 1984, AS PRESENTED. • UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. 0 HOUSING & REDEVELOPMENT'AUTHORITY MEETING, AUGUST 9, 1984 PAGE 5 5. CHECK REGISTER: MOTION BY MR. PRIEDITIS, SECONDED BY MR. PRAIRIE, TO APPROVE THE CHECK REGISTER DATED AUG. 3, 1984, AS PRESENTED. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. 6. RECEIVE INFORMATION REGARDING HRA BONDING FOR CENTER CITY: Mr. Commers stated the HRA had received a report from Jim O'Meara at O'Connor & Hannan regarding what the HRA might do to restructure their projects in Center City in that it was required that the funds they had available had to be used to pay back the bond interest. There were no other alternatives to make those funds available for other types of expenses. Mr. Commers asked Mr. Inman to first define the problem. Mr. Inman stated at the time the original $2.2 million bond was issued, due to the conservative approach of both the City and the HRA, resolutions were authorized that guaranteed that every increment generated in the Center City area in the future would go into that debt service fund. The net effect was that the only thing the HRA could use that money for was for the payment of • the debt service and the reissuing of bonds. It also eliminates the HRA's ability to take money out of the Center City and give it to other areas, since Center City is generating their major increment, and it also eliminates the HRA's ability to turn back any excess increment to any of the taxing jurisdictions. Mr. Inman stated the other question the HRA had asked was regarding the proper timing with regard to Target. He stated that what Mr. Casserly was going to explain to the HRA was of particular interest because it changed the concept of tying Target increment to another project. Mr. Inman stated that in Mr. Richard Ehlers' letter of May 30, 1984, Mr. Ehlers stated that in order to make the refunding process work, they have to tie up the entire Target increment which does not allow it to be used for other bonding. That would basically set them at ground zero in terms of future bonding. Mr. Inman stated he would not recommend this approach. Mr. Inman stated he then talked to Jim Casserly who is now with Miller & Schroeder. Mr. Inman stated this will involve action by the HRA and the City Council so before they spend any time working out the numbers, he had asked Mr. Casserly to come to the HRA meeting to discuss the benefits of a tax increment revenue bond refunding. He stated that if the HRA approves of this conceptual idea, they will then start working on firm numbers. Mr. Jim Casserly handed out copies of a memo he had written to the City Manager and Finance Director of the City of Fridley dated Aug. 6, 1984. He • stated that last year the HRA redesigned their project areas, so they now have one project area for the City and that is where they are directing their development activity. Inside that project area, the HRA had created three 0 HOUSING & REDEVELOPMENT AUTHORITY MEETING, AUGUST 9, 1984 PAGE 6 tax increment districts, and then last year they created a new tax increment district. The real reason for doing that was to integrate eventually all their revenues into all of their planning on a city -wide scope, and then look at what they need for their redevelopment program. He stated the statutes allow them to do that, but their bond indenture on bonds that were issued for the Center City area all prohibit them from using any increments for anything else other than payment of debt service on bonds only inside Center City. The result of that can be extremely negative, because even if they had excess increment, they couldn't take the excess increment even if they had a project inside Center City unless they went through the ruse of issuing a bond and then paying it off next year. So, the indenture itself has prohibited them from doing what the statutes allow them to do. And, the reason for having gone through the restructuring was to allow for this ability to move funds in the plan. Mr. Casserly stated the refunding would be the next step in'that exercise. When they refund the issues, what they are actually doing is putting into escrow funds and securing with the U.S. Government Obligations the monies needed to pay the bonds when due that -are outstanding. This is called a defeasance. The bonds are not called, because they can't call them until 1990 -91, but they can defease them. They get the money for a defeasement by issuing refunding bonds. And, if they reissue refunding bonds, it doesn't cost them anything more but they then use their increment and income available to pay the new bonds. The proceeds from the new bond issue are locked by federal government securities -- locked in an escrow fund and the new trustee has no alternative. The trustee is directed to pay the other bonds as they come due. Even though these bonds are defeased, it has the unusual effect of making them a Triple -A rated bond. Mr. Casserly stated this was not an uncommon device in the general obligation bond area at all. What makes this device a little bit unique is that what he is suggesting is they use a tax increment revenue bond and not a tax increment general obligation bond. He stated Fridley is in a wonderful position to do this. Not many cities are. Minneapolis is doing it, and Shakopee is doing it. Mr. Commers stated that in the proposal Mr. Casserly was putting forth, in order to free up some of the funds they have in the Center City project, Mr. Casserly is suggesting they purchase some repayment bonds which are secured by government securities, and that is put in a fund that guarantees the payment of those bonds so the indenture requirements they had are eliminated. They can then freely transfer Center City project funds to other areas. He asked what the cost was of acquiring or purchasing these new repurchase bonds. Mr. Casserly stated by the time they got done, it would be between 22 -32% of the bond issue. r� HOUSING & REDEVELOPMENT AUTHORITY MEETING, AUGUST 9, 1984 PAGE 7 Mr. Casserly stated the memo he had written showed them some of the options they start having available to them. It was a lot of reasons why Minneapolis is looking at this and why other cities are looking at doing this. It really allowed for a lot of flexibility. Mr. Qureshi stated that if the HRA is comfortable with this concept, they will run some numbers and bring them back to the HRA at their next meeting. At that time, if the HRA wants to go with it, they can give their formal approval. It was the concensus of the HRA members that Staff continue to explore the tax increment revenue bond refunding. Mr. Comers thanked Mr. Casserly for his presentation. ADJ011RNMFNT MOTION BY MR. PRAIRIE, SECONDED BY MR. PRIEDITIS, TO ADJOURN THE MEETING. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE AUGUST 9, 1984, HOUSING & REDEVELOPMENT AUTHORITY MEETING ADJOURNED AT 9;00 P.M. • Respectfully su fitted, Lyfint Saba Recording Secretary n