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HRA 09/23/1986 JOINT - 29336I• CITY OF FRIDLEY HOUSING & REDEVELOPMENT AUTHORITY AND CITY COUNCIL SPECIAL JOINT CONFERENCE MEETING SEPTEMBER 23, 1986 The meeting convened at 7:35 p.m. HRA Members Present: Larry Commers, Virginia Schnabel, Duane Prairie, John Meyer HRA Members Absent: City Council Members Present: Walter Rasmussen Mayor Nee Bob Barnette Ed Fitzpatrick Dennis Schneider Brian Goodspeed Others Present: Nasim Qureshi, City Manager Rick Pribyl, Finance Director Bill Hunt, Asst. to the City Manager Samantha Orduno, Management Assistant Jock Robertson, HRA Director Julie Burt, Asst. Finance Officer Dave Newman, HRA Attorney DEVELOPMENT OF POLICY FUNDING ASSISTANCE TO DIFFERENT PUBLIC IMPROVEMENTS TO ENCOURAGE AND'FACILITATE'DEVELOPMENT' R REDEVELOPMENT: Mr. Qureshi stated the HRA and City Council members had been provided with some information which essentially laid out some of the areas where direction was needed from the HRA and possibly some input from the Council. Mr. Qureshi stated the HRA was reactivated in the latter 1970's. Since then, the HRA has been successful in developing and helping a number of major projects. A good example was around City Hall. It was a very typical and good example of what HRA's can do to change the shape of an area. Some of the major projects were the Fridley Plaza Clinic, the office building and plaza, Northern Operations Center, the Holly Center renovation, Skywood Mall, Johnson Printing, and now Lake Pointe Corporate Center. Mr. Qureshi stated the first district that was created by the HRA was in 1979, District No. 1, Center City. This redevelopment district was created for 25 yrs., and it was under the old rules that provided a lot of lattitude. (The whole area was also an increment district.) The HRA will be collecting increments on all of this area for 25 years since its creation. C� . HRA AND CITY COUNCIL SPECIAL.,JOINT CONFERENCE MEETING, SEPTEMBER 23, 1986 PAGE 2 Mr. Qureshi stated that later the HRA created the Moore Lake District, District No. 2. When that was created, the State had changed the rules and provided a lot of restrictions- -there was the redevelopment district and then a portion which was included in an increment district. -The State imposed the restriction that unless thb HRA does some actual improvements to these parcels included in increment areas, they will lose their increment after a certain number of years. Mr. Qureshi stated the HRA then created District No. 3 and Increment District No. 3 which were kind of contiguous. The same restrictions were imposed that they could only capture the increment for 4 -5 years, depending on when the district was created, unless they do improvements parcel by parcel. Mr. Qureshi stated smaller redevelopment districts were created after that: Districts 4, 5, 6, and 7. Mr. Qureshi stated that because of District No. 2, the City received a letter from Anoka County dated June 26, 1986, asking the City if it has complied with state law. This was the first official communication of this type. He stated he wrote the County on July 25 stating the City has complied because they have done some parcel by parcel improvements. Mr. Qureshi stated that both District No. 3 and District No. 4 were getting to the stage where they are maturing and the HRA has to make a determination on whether or not in the future they want to realistically continue to capture the increments in these districts. If the answer is yes, then the HRA has to take positive steps to say they are going to take the increments and spend the increments on- -improve- ments that could be on -site or adjoining -- public improvements (water, sewer, street, signalization, safety improvements,,drainage, etc.). Mr. Qureshi stated he had provided information on the dollars. Source of revenue was the increments, and the HRA had already pledged a certain portion of the increments for the bonds they have sold for a number of projects. The HRA has sold $11.550 million in bonds for improvements for projects which are underway such as Lake Pointe and other miscellaneous projects, for which $3.4 million is available and has to be expended in the next two years, or it has to be given back. Mr. Qureshi stated that in a joint. meeting on May 8 between the City Council and the HRA, there was a discussion regarding setting °priorities for the use of $3.4 millidn.m.iscellane as project funds. They came up with a list of pct, § -i le..projects which included soil correction, intersection improvements at ,°Jest Moore Lake Drive and Old Central, Mississippi Street improvements of T.H. 65, ".6ore -Lake water quality, University Avenue Corridor, Senior Houisng, totalling $3,750,000. Mr. Qureshi stated if the HRA chose to receive all the increments and fulfilled all its obligations, by 1993, they would have a balance of $6.8 million. He would like to see some type of policy put together that said how that money could logically be spent. He stated the HRA has to take come positive action to retain those parcels . in the increment districts. Unless they do that, the money is not collected so they have to show they are actually doing something with the money, or have plans for it, and that those properties have been positively affected by some improvements that have been done. • HRA AND CITY COUNCIL SPECIAL JOINT'CONFERENCE MEETING;'SEPTEMBER 23 ;1986 PAGE 3 Mr. Qureshi stated one way to continue to retain the money was through public improvements, and these public improvements have to be in the general area and have to show a direct impact on the parcels. The reason the HRA provided help in the past in some of these areas was because they felt the district could not develop by itself because of poor soil conditions, drainage problems, etc. Mr. Qureshi gave some examples of road improvements, drainage improvements, and signalization improvements in the North Area that would help development in that area. Mr. Qureshi showed an overview of some examples of improvements the HRA has already done. Mr. Qureshi asked what level of help did the HRA want to provide. If they want to continue to retain these parcels in the increment district, they have to provide help. If the HRA provides a high level of help, then a lower level of help comes from the City and the developers. That was what made a development more feasible. Mr. Qureshi showed an overview of the "Improvement Investment Policy for Excess Increment Funds ". . Mayor Nee stated that the City's ability to finance things from the general revenue was increasingly limited. This year for the first time in history, the City's budget went down, and there were a number of reasons for it. He stated that unless it was fairly easy to establish an assessment benefit, a lot of these improvements were going to be difficult for the City. Typically, the City does not pay its share of a signal out of an assessment. It has been done only once at 69th Ave. Because of the tax readjustment of the assessment formulas and the levy limits and the slowing down in the development of tax base, partly due to fiscal disparities, the City's ability to do some of these things was going to be less and less. There were two choices in which the HRA could contribute to that revenue: 1. To take over some of the projects they agree ought to be done in the way of public improvements. 2. To release the tax base and let the City get an increasing share of it. The problem with releasing the tax base and the City getting a share of it was that the City's share was 14 %- If the HRA gets 100% and can do what the City thinks ought to be done, that was a much better choice. Mayor Nee stated he felt there were some advantages to having the HRA maintain the productivity of the increment districts at least for the next ten years until some of the basic infrastructure needs are met. If they are in agreement that these are infrastructure improvements that someone ought to make for the benefit of the community, he felt the HRA was the best body to do that. • Councilman Barnette stated he felt Mayor Nee had stated the City Council's position pretty clearly. • HRA AND CITY COUNCIL SPECIAL JOINT CONFERENCE MEETING, SEPTEMBER 23, 1986 PAGE 4 Councilman Fitzpatrick agreed that the Mayor's concerns were also the Council's concerns. The City needs as much help as it can get if these projects are aoirg to be done. Councilman Goodspeed stated he has looked at many flooded basements in the past year because of water problems from the communities upstream from Fridley. Fridley is not being responsible for its water. For example, every time someone builds a garage in Coon Rapids, that is another car that goes through Fridley twice a day generating more traffic, road maintenance, traffic problems, etc., problems that are caused by people outside Fridley. He felt it was appropriate to use this funding from outside Fridley to correct some of the problems inside Fridley. Councilman Schneider agreed. When the HRA first started, the Commission was very careful and very conservative about capturing the increments so that nothing would backfire, but there was always that risk. It did work and it seemed to make sense to solve some of the problems with the money that was captured, doing it reasonably and conservatively. If they have the opportunity and it makes good financial sense to make some of these improvements, they should do it while the money is there. Mr. Qureshi stated one of the reasons the City's budget was as low as it was this Year was because of substantial cutbacks in state aid and federal revenue- sharing. • Mr. Qureshi stated they have to recognize that this tool was available today and they are under the assumption that this took will be available for several years, but it might not be available 2 -5 years from now. Mr. Prairie stated the City's budget has been pinched as has the school district budget. He felt everyone would agree that the possible projects if they were done would help make the City look better. He hoped they could at some time give the School District an idea when some of these things might be coming. Councilman Barnette stated the School District was funded with a per pupil unit which was about $3,000 /pupil. Giving the money back to School District didn't mean the money would go directly to the School District. It goes back to the State, and he did not know if that meant the School District would get more money per pupil. Councilman Schneider asked how much money the School District was saying it needed because of what it was losing because of the increment districts. Mr. Qureshi stated the dollar numbers were fairly small. He felt it was an issue that could clearly be resolved with the School: District. He had told Mr. Prairie at the last meeting that they would work on it and see if there was a way for the School District to get back 'some of what it was losing. Mr. Commers asked Mr. Pribyl to check with the School District regarding the dollar numbers. HRA AND CITY COUNCIL SPECIAL JOINT CONFERENCE'MEETING;'SEPTEMBER 23; 1986 PAGE 5 Mr. Qureshi stated the HRA still had to make a decision whether or not they wanted to capture the increment. Otherwise, they would lose it. He wanted some general guidance that the projects listed were the projects the HRA wanted to fund. Mayor Nee stated that, as a matter of principle, the City would rather have control over the tax base than the HRA, but as a practical matter, when it was added up right, it was better for the City to forego access to that tax base. Ms. Schnabel stated that the projects listed by Mr. Qureshi pretty much related to public improvements, nothing was specified towards private property development. How do the citizens perceive this when the HRA is expending a lot of money into public uses versus private development? Does the public get a negative feeling towards this or a positive feeling? Mr. Qureshi stated he felt if the public improvements are explained to the people properly, it can be shown how these improvements are helping everyone. Mr. Commers stated all the public improvements they have made so far have been pretty much tied to specific projects. The question now was whether or not the HRA felt comfortable using this to make purely public improvements which was not what it was intended for. Councilman Schneider stated it was how the people perceived public improvements. He has talked with people who ask him why the City was helping private developers; whereas, they rarely question the improvement when it is a road which appears to be helping everyone. Councilman Barnette stated he also gets the question of why the City is helping a private developer make more money. But, when it is explained to them that some of the money (using Lake Pointe as an example) will be used to develop a better inter- section, then people think it is a good idea. The perception he was getting was that if the City can show that these kind of improvements benefit the citizens, then the improvements are a good idea; but, people do not want to see the City helping private developments that would probably happen anyway. Ms. Schnabel stated she felt it was an issue the HRA should definitely be sensitive to. Councilman Fitzpatrick stated they really do not know what the public reaction is going to be because they have not done the improvements yet. Mr. Commers asked how the HRA was going to know when an improvement was necessary or appropriate or when the community wanted it done. Mr. Qureshi stated the HRA would have to make that judgement. Mayor Nee stated the HRA will have to use good judgement regarding these improve- ments; however, some of the improvements seem to be self- evident. HRA- AND-CITY COUNCIL • SPECIAL JOINT CONFERENCE MEETING! SEPTEMBER 23,- 1986 PAGE 6 Mr. Commers stated he would like to hear the City C ounci1's opinion about the issue that now exists where the property owner of Rice Creek Plaza was threatening the HRA with an inverse condemnation suit if the HRA does not purchase the property at this time and where there is a potential dollar value agreed upon between the owner and the Citv. Mayor Nee stated the owner was saying that the public action by the HRA had damaged the property. He felt the public action had, in fact, added value to the property. He did not think the HRA should react to the inverse condemnation suit, but to what the public interest might be. Councilman Barnette stated whether the HRA owned the property or Mr. Levy did not make any difference to the tenants. The tenants are still going to be on a month- to-month or year -to -year basis. He did not think the City should be in the real estate business on a long term basis, but they also know a project will go in on this property eventually. He stated he would not have any objection to the HRA purchasing the property, but he did not think they should do it under the cloud of a lawsuit. Councilman Schneider agreed with Councilman Barnette. Ms. Schnabel stated she still had a strong philosophical problem with the HRA owning a piece of property for any length of time unless they have a firm project. They decided at the last meeting to table any further consideration until the next meeting, hoping to know whether or not Mr. Lundgren's project is going to proceed. She had the feeling that if the Lundgren project does not go that certain HRA members, herself included, will not be interested in the purchase; and that, until they know they have a developer with a concrete development, they will not be interested in becoming landlords of the property with all its inherent problems. Ms. Schnabel stated the tax laws are getting worse as far as encouraging develop- ment, and she saw that as a real problem. She did not know if the HRA should tie themselves into something if they do not have a developer. Mr. Meyer stated he had also expressed the concern that because of a change in the tax laws, the HRA was faced with the decision of giving more help to another development, while Mr. Lundgren's project was floundering, and maybe they should indeed be "sweetening the pot" for Mr. Lundgren's project which is an important project. Mayor Nee stated he felt the southwest corner was a priority area the City has to resolve. If Mr. Lundgren's project was the right project, maybe they should give him a little more help. Mr. Qureshi stated he felt the HRA had to make a statement that it was their general policy to do improvements on site and public improvements to continue the increment. Mr. Commers stated it did seem foolish to give up the increment at this point. • Ms. Schnagel stated that from the statements she had heard at this meeting, if they assist the City by doing these improvements, then maybe it was in the City's best interest to continue what the HRA has been doing, at least for the time being. HRA AND CITY COUNCIL SPECIAL JOINT CONFERENCE MEETING, SEPTEMBER 23, 1986 .. PAGE 7 Mr. Qureshi stated they have to look at it from the perspective that this is needed to foster future quality development. Mr. Commers stated he felt the HRA members were in favor of that. Ms. Schnabel stated that regarding the University Ave. Corridor project, what she has seen so far of the plan was exciting and high quality. She felt it was good to change the image if it was done as it is being proposed, but it is going to be fairly costly. The thing that bothered her the most was that most of the improve- ments are cosmetic improvements. Councilman Barnette stated the perception people get coming into Fridley was not good. They see the used car lots, motor homes, fast food restaurants, and empty spaces. He did not think they could necessarily change all that, but he felt the cosmetics were important. The cosmetics will improve the image of Fridley, and that is what the people will see. Mayor Nee stated that every time he goes door to door campaigning, the comments get better and better in terms of the investments the citizens have made as individuals on landscaping and beautification activities the City now does, so the cosmetics are important. Councilman Goodspeed stated that every developer who wants to develop in Fridley is required by the City to put extra money into the project for landscaping and amenities. The City also has an obligation to live up to the same standards they require for the businesses. Mr. Qureshi stated the HRA seems to have agreed they want to retain the increment. Now, what level of commitment of public improvements did they want to make? He stated they need to develop some general guidelines from those listed for the HRA. Mr. Commers asked Staff to put together a list of things they have done in the past with some criteria and specific facts, so the HRA can look at it. He would also like Staff to put together some kind of schedule or timetable on each project so they know when the monies have to be expended. Ms. Schnabel stated that as time goes by, the members of the HRA or City Council could change, and maybe it was a good idea for the HRA to have a plan they should follow so they do not end up in the middle of a project with a changeover in members with different ideas. Mr. Qureshi stated that as he understood it, it was the general direction of the HRA to capture the increment, and Staff was asked to lay out a timetable that showed the projects they can logically do with the money coming in. OTHER BUSINESS: Mr. Qureshi stated he would like the HRA to approve the second billing from Barton- Aschmann. The first billing was approximately $3,000. HRA AND CITY COUNCIL SPECIAL JOINT CONFERENCE MEETING, SEPTEMBER 23, 1986 PAGE 8 MOTION BY MS. SCHNABEL, SECONDED BY MR. MEYER, TO APPROVE THE BILLING TO BARTON- ASCHMANN DATED SEPT. 2, 1986, IN THE AMOUNT OF $9,470.57. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. ADJOURNMENT: The meeting was adjourned at 10:29 p.m. Respectfully submitted, Ly ye Saba Recording Secretary