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HRA 12/11/1986 - 29333. CITY OF FRIDLEY HOUSING & REDEVELOPMENT AUTHORITY MEETING, DECEMBER 11, 1986 ............ ............................... CALL TO ORDER: Vice - Chairperson Schnabel called the Dec. 11, 1986, Housing & Redevelopment Authority meeting to order at 7:20 p.m. ROLL CALL: Meribers Present: Virginia Schnabel, Duane Prairie, John Meyer Meribers Absent: Larry Commers, Vial ter Rasmussen Others Present: Jock Robertson, HRA Executive Director Nasim Qureshi, City Manager Dave Newman, HRA Attorney Rick- PriByl, Finance Director Julie Burt, Asst. Finance Officer John Flora, Public Works Director Samantha Orduno, Management Assistant Mayor Bill Nee Councilperson Dennis Schneider Councilperson Ed Fitzpatrick Councilperson -elect Nancy Jorgenson Bob Levy, 100 S. 5th St. Richard Diamond, 100 S. 5th St. Harry Yaffe, 2300 Archers Lane, Minnetonka Sherrill Kuretich, Larkin, Hoffman, Daly & Lindgren June Lundgren and Louis Lundgren, The Lundgren Associates APPROVAL OF NOVEMBER 13, 1986, HOUSING & REDEVELOPMENT AUTHORITY MINUTES: MOTION BY MR. PRAIRIE, SECONDED BY MR. MEYER, TO APPROVE THE NOV. 13, 1986, HOUSING & REDEVELOPMENT AUTHORITY MINUTES AS WRITTEN. UPION A VOICE VOTE, ALL VOTING AYE, VICE- CHAIRPF,RSON SCHNABEL DECLARED THE MOTION CARRIED UNANIMOUSLY. 1. CONSIDERATION OF A RESOLUTION APPROVING THE AMENDMENT TO THE MODIFIED REDEVELOPMENT PLAN FOR REDEVELOPMENT PROJECT NO 1'AND AMENDING THE TAX INCREMENT FINANCING PLANS FOR TAX INCREMENT DISTRICTS NOS. 2 -8: Mr. Robertson stated this was a housekeeping action required due to the construction of the University Associates apartment building in this district. It was necessary to modify the redevelopment plan and the tax increment financing plans for tax increment districts 2 -8 to include the • increased project costs. • HOUSING & REDEVELOPMENT AUTHORITY'MEETING, DECEMBER 11, 1986 PAGE 2 MOTION BY MR. MEYER, SECONDED BY MR. PRAIRIE, TO APPROVE RESOLUTION NO. HRA- 21 APPROVING THE AMENDMENT TO THE MODIFIF,D REDEVELOPMENT PLAN FOR REDEVELOPMENT PROJECT NO. I AND AMENDING THE TAX INCREMENT FINANCING PLANS FOR TAX INCREMENT DISTRICTS NOS. 2 -8. UPON A VOICE VOTE, ALL VOTING AYE, VICE - CHAIRPERSON SCHNABEL DECLARED THE MOTION CARRIED UNANIMOUSLY. Mr. Robertson stated that along with this development, the HRA was required to set a public haring date for the development agreement for Jan. 8, 1987, the HRA's regularly scheduled meeting. MOTION BY MR. PRAIRIE, SECONDED BY MR. MEYER, TO SF,T THE PUBLIC HEARING DATE FOR THE DEVELOPMENT AGREEMENT FOR JAN. 8, 1987, AT 7:00 P.M. UPON A VOICE VOTE, ALL VOTING AYE, VICE - CHAIRPERSON SCHNABEL DECLARED THE MOTION CARRIED UNANIMOUSLY. Mr. Newman stated that regarding the University Associates apartment project, it was his recollection from the last meeting that there were some final items the HRA wished for Staff to continue to negotiate with the developer. It was the developer's intention to close on the property later this month, even though the HRA will not have formally executed the development agreement until the public hearing in January. He stated he would like to have the opportunity to review the latest changes to make sure the Staff has the [IRA's concurrence and so the developer has the HRA's assurance before they close on the property later this month. Mr. Newman stated that as the [IRA recalled, it has been proposed to do a second mortgage of $850,000 at 8% interest. There would not be any, interest for the first three years; and although interest would begin to run in the fourth year, interest payments would not actually begin until the sixth year and would run years 6 -15. What they are doing during that period is they are making all the interest that accrues currently, taking years 4 -5 interest and dividing that into ten interest installments, so they would he making 1 /10 installment on the prior interest, plus they would amortize the principle so that at the end of 15 years, the installments will have reduced the principle from $850,000 to $425,000. Then in the 15th year, there is a balloon payment- -that is interest for that year plus remaining principle and the balance which is $425,000. Mr. Newman stated it was the HRA's concern that interest for years 4 and 5 be paid as installments over the balance of the mortgage. In the revision, they are requiring the developer to post a letter of credit in an amount equal to the interest. That letter of credit can be carried until the project is completed (1990). Mr. Newman stated that in the packet received at the meeting, there were two guarantees that have been reviewed with the developer. One guarantee to be signed by each of the general partners would personally guarantee the payment of the tax increment in the event the project itself doesn't pay the taxes. That will also continue until the project is completed, when the facilities are up and on line. io HOUSING & REDEVELOPMENT AUTHORITY MEETING, DECEMBER 11, 1986 PAGE 3 Mr. Newman stated the second guarantee was a personal guarantee of the payment of mortgage payments. That guarantee will continue until the mortgage has been paid in full. It will also provide that in the event the net worth of this development collectively is less than $10 million, the HRA then has the right to require additional securities in order to secure an interest in that second mortgage. Mr. Newman stated other changes in the agreement were technical language changes. Mr. Newman stated he felt comfortable with these changes. He had tried to take the IIRA's comments and concerns from the last meeting and come to some concensus of what they were look-ing for. He stated he wanted to get the HRA's conceptual agreement with the document with the changes. This was the document that would be presented to the HRA at their January meeting. 1s. Sherrill Kuretich stated 11r. Newman had done a good job of summarizing the changes to the document. She added that there was going to be a substantial larger letter of credit posted to the City as required by the City to assure the completion of the site improvements. That letter of credit would remain in place until the project was completed. She thought that letter of credit was somewhere around $700- 800,000. Ms. Schnabel stated it was the concensus of the Commissioners present that the changes outlined by Mr. Newman reflected the concerns expressed by the Commissioners at their last meeting. 2. TABLED: CONSIDERATION OF APPROVING ACTION TO DRAW ON LOU LUNDGREN'S $200,000 LETTER OF CREDIT PER'SECTION 4.5 OF THE JUNE 1986 DE ELOPME AGREEMENT: Mr. Qureshi stated Staff's position was the same as that presented at the last meeting, essentially that there was an agreement and one of the reasons why the HRA requested the letter of credit was it showed that the developer was serious about the development. Mr. Qureshi stated there was now no longer a valid agreement with the developer, and in the agreement they had, it provided that if the developer did not perform by a certain date, the HRA could draw on his letter of credit. That time has long come and gone. Mr. Qureshi stated the argument could be made that Mr. Lundgren is still exploring other possibilities of putting the package together. However, if the developer comes up with a package acceptable to the HRA and they have not made a commitment to anyone else, the HRA could still review that package and enter into another agreement with him. Mr. Qureshi stated it was Staff's recommendation to draw on the letter of credit. • Mr. Qureshi stated Mr. Lundgren and his legal representative were in the audience. HOUSING & REDEVELOPMENT AUTHORITY MEETING. DECEMBER 11, 1986 PAGE 4 Ms. Kuretich stated they now think they can make some progress on working out the finances for this project. She certainly understood Staff's concern and the HRA's concern. This letter of credit would remain in place until June 1987; and up until that point, the letter of credit can he drawn upon at any time. She stated that if the letter of credit was draw upon at this time, Mr. Lundgren would be called upon by the bank to immediately reimburse the bank for the amount of that letter of credit. That was likely to make moving forward with this project totally impossible because it would be taking funds necessary to proceed with the project and applying it to a payment to the HRA. Ms. Kuretich stated they have begun working with a local mortgage lender, Meritor Mortgage Corporation - Central, formerly the old !Northland Mortgage Company.Housing Development Division. These people are very sophisticated mortgage brokers, and they feel it will be much easier to work with a local lender. They are meeting with fleritor Mortgage on Tuesday morning to look at this project in terms of doing both the market rate rental and the elderly housing in one phase instead of two. They think that might make the project considerably more viable. Ms. Kuretich stated Meritor Mortgage has received the projections from Mr. Lundgren with respect to the project and are analyzing these numbers now. Hopefully, by the January meeting, Meritor will be able to provide some type of letter to the HRA indicating whether or not the project is feasible. Although it will be difficult because of the holidays, they will attempt between now and the January meeting to have some preliminary meetings with the local HUD office. They are still looking at the possibility of FHA insurance for the project. They are moving forward to explore feasible alternative methods of financing this project. They are asking the HRA's indulgence and that the HRA not draw on Mr. Lundgren's letter of credit at this time. Mr. Meyer asked Mr. Lundgren to review the expenditures he has already made on this project in terms of real costs. Mr. Lundgren stated he has invested in excess of $500,000 on this project, not counting the letter of credit, so with the letter of credit, it was over $700,000 in total. fie would not be able to proceed with the project if the HRA cashes the letter of credit. He felt they do have special resources in order to proceed with the project in an expeditious fashion, and he believed that by the January meeting, they could have not only a letter from Meritor describing the feasibility of the project, but also a timetable for what has to be done. The project has completed specifications and working drawings so the processing with a local lending office as opposed to the one they had before should be much more rapid, not only because of the convenience of the location,but because the work has essentially all been done. Ms. Schnabel stated that with the addition of doing elderly housing at the onset, was Mr. Lundgren's position of obtaining mortgage money enhanced over what it has been previously? HOUSING & REDEVELOPMENT AUTHORITY MEETING, DECEMBER 11, 1986 PAGE 5 Ms. Kuretich stated doing this as a single phase made it much more difficult for the project cash flow and, in fact, was impossible unless they can use tax increment financing. When the Tax Reform Act was passed, they believed and still believe it is impossible to do the first phase of this project without tax exempt money because there are not enough units for the low income units to be subsidized by the market rate (if it was only one phase). By doing the two phases together, they believe tFiey can make the project's cash flow by using tax exempt bonds after all. Also, tFiere will be cost savings involved in terms of internal per unit expenses, thereby increasing the money available to pay the debt service for the financing on the project. Ms. Kuretich stated she felt the biggest impact was the fact that they had more market rate units to support the units that would have to be set aside to meet the rent restrictions under the tax reform. She wanted to emphasize that they were not talking about a reduced quality in the project. Ms. Schnabel asked how many units there would be in each of the buildings. Mr. Lundgren stated this was still subject somewhat to HUD's review, but there should be 165 elderly units and 124 market rate units. However, that number might vary. It was the concensus of the HRA members present to not exercise their option and to not take any action on Mr. Lundgren's letter of credit at this meeting, and that the item remain on the table. Ms. Schnabel stated she would ask that this item be placed on the January agenda so the HRA can make another determination at that time. 3. CONSIDERATION OF ENTERING INTO A TOASTER LEASE FOR THE RICE PLAZA SHOPPING CENTER: Mr. Robertson stated that as a result of a long discussion on both the pros and cons of acquiring this property at the last HRA mtg., a letter was received from Richard Diamond dated Nov. 28, 1986. This letter outlined the concept of a master lease. Staff would like to keep the HRA reactions to this concept and some direction as to how to proceed. Mr. Newman stated the letter from Mr. Diamond was on page 3 of the HRA agenda. He had not really had much of a chance to discuss this with Mr. Levy and Mr. Diamond, other than briefly on the telephone. After the last meeting, Mr. Diamond and he had talked about whether there was another way that the issue of the acquisition of the Rice Plaza Center could be resolved. The issue of a master lease had been briefly discussed with Mr. Levy last spring, and he had raised the subject with Mr. Diamond. Mr. Diamond had talked to his clients, and this letter was their original proposal. Mr. Newman stated the approach that has been taken is to try to find a vehicle that would be beneficial to both parties. Obviously, the HRA would like to idevelop the property,and he believed that the HRA, from a policy standpoint, felt very uncomfortable buying property when they do not have an in -hand development. With the master lease concept, if the HRA did decide to acquire 0 HOUSING & REDEVELOPMENT AUTHORITY MEETING, DECEMBER 11, 1986 PAGE 6 the property, as leases expired, they would have the option of not renewing those leases; thereby avoiding the cost of relocation expenses. Mr. Newman stated that the owner's greatest concern was he did not want the value of his property to be reduced because it is in a redevelopment district. The property owner was also concerned that not only was he unable to obtain tenants, but he did know whether he should be making any capital improvements. Because of the threat of possible condemnation, he was unable to obtain the quality of tenants he desired. That affected his incomes and also the value of his property. Mr. Newman stated that under the master lease approach, the HRA would have an option to purchase the property within a specified time period, and as Mr. Diamond had said in his letter, they would like it to not be any longer than three years. During that three year period, Rice Plaza would continue to maintain, operate, and lease the property, the HRA would have the right to exercise its option to purchase the property, and at the end of the three - year period, the HRA would either purchase the property or opt to take the property out of the redevelopment district. Mr. Newman stated that in the proposal, if Rice Plaza cannot lease the property within 60 days and there was a vacancy, the HRA could step in and begin making the rent payments. In a discussion he had indicated to Mr. Diamond that he felt it was necessary to have some economic incentive for Rice Plaza to make its best efforts to keep the spaces rented so the HRA could look to Rice Plaza to rent the property and collect the rents. Some verbage would have to be put into an agreement to provide for that economic setup. They have to discuss further with Staff the possibility that instead of subsidizing 100% of lost rent, that the HRA subsidize some percentage of that. This has not been discussed yet in any detail. They had wanted to bring the concept of the master lease to the HRA first before proceeding any further. Another concern of Staff's was that if they had a floor purchase price and the market values dropped 2 -3 years from now unrelated to the threat of condemnation, would the HRA still be committed to this pre- determined purchase price? Ms. Schnabel stated she would also be concerned about the purchase price. If they are going to be obligated to pay market rents (if vacancies occur and are not filled within 60 days) plus 50% of real estate tax, or other costs, what happens to the purchase price? She felt some of these considerations had to be reflected in the negotiations to arrive at a purchase price. She agreed with Mr. Newman's concern that an incentive had to be built into any agreement to ensure the property continues to be rented, so the property does not deteriorate or stand empty during that three year period. Mr. Qureshi stated the key questions With the master lease concept were: What was the purchase price? What kind of carrying costs would the HRA have? Mr. Prairie stated he thought they should pursue the master lease concept. It did seem to be a compromise. He would like to see the time period longer than three years. Other than that, the concept seemed like something they should pursue. HOUSING & REDEVELOPMENT AUTHORITY MEETING, DECEMBER 11, 1986 PAGE 7 Mr. Meyer stated that in light of this proposal, he was still trying to decide whether the HRA would be as well off or better off than if they just cleanly purchased the property. There was a potential escalation of some kind if they did not purchase tre property 6y the end of the year. When vacancies occur, whether the HRA owns the property and the vacancies occur, or whether Rice Plaza was leasing the property when the vacancies occurred, either way the HRA would be out definite dollars. At the end of 1 -2 years, 95% of the property could be vacant. 11hat does the HRA really gain with this proposal? Shouldn't they just make a clean break one way or the other? Mr. Qureshi outlined some positive aspects of the master lease concept: 1. The biggest advantage would be that if the tenants leave by their own volition, the HRA would have no relocation costs. 2. Once the lease was over, the tenants know they have to make other arrangements. Depending on the leasing schedule, they would have time to plan ahead. 3. It was a compromise situation between the HRA and the property owner. 4. The HRA was still not liable for managing the property. Mr. Qureshi stated the negative aspect was: what was the carrying cost? That was what they would have to negotiate. Mr. Qureshi stated that if the numbers were reasonable, this master lease arrangement would give the HRA reasonable flexibility and would also give the owner a little more room to maneuver than he has now. Mr. Meyer stated he had some major concerns about the master lease concept, but he was not opposed to having Staff pursue some type of proposal for the HRA to review. Mr. Prairie stated the concept gave the HRA the flexibility for a number of years, and it probably helped the property owner a little bit by helping offset some of the rent. It was telling the property owner that the HRA was still interested in the property. He felt the master lease concept had possibilities. Mr. Richard Diamond stated that after last month's HRA meeting, they were a little frustrated about exactly where they were going on this particular project. One of the things they wanted to look into was the possibility of going forward with some kind of creative approach. When the concept of the master lease came up again, they took it upon themselves, in consultation with Mr. Newman, to put something into writing. He staffed they have not really had a chance to consider all the details of this concept. Mr. Diamond stated that until this meeting, they had been assuming there was not necessarily a viable development proposal that existed for this property. Wh,at they had heard at this meeting during agenda item #2 was somewhat encouraging, because they were familiar with the people Mr. Lundgren was now 0 HOUSING & REDEVELOPMENT AUTHORITY MEETING, DECEMB FR 11, 1986 PAGE 8 dealing with. They believe the people Mr. Lundgren is dealing with now are appropriate people for the financing of this project, and they are encouraged that Mr. Lundgren seemed to be taking a step in the right direction. If that was the case, and Mr. Lundgren did proceed with the project in an orderly fashion, they believed the HRA would be in a position where they will want to buy the property in less time tFian the three years they are talking about. Mr. Diamond stated they also want to be clear in talking about specific prices and specific terms. The concept of the master lease, as they conceive it at this point, basically had two alternative elements: 1. The [IRA wants to be in the position of saying in advance now that they will, in fact,take that poperty at some time in the future. The issue was to decide now the terms and conditions of how that was going to happen. 2. The HRA wants the option of saying they know they are going to have to make a decision some time in the future and they would rather have an option and leave themselves some.more flexibility in the future. Mr. Diamond stated that if the second alternative was something seriously considered by the HRA, then, from the owner's perspective, what does the owner do if the option is not exercised at the end of "x" number of years? Three years was not a magic period, but the question was: What does the owner do? What they have proposed at this point, basically for discussion purposes, was to consider taking that property out of the redevelopment district so the owner then does not have any threat or reduction of value that comes as a result of being in the district. That has really been the problem for the last six years with this property. Mr. Diamond stated one thing that has to he stated and stated very strongly was that from the owner's point of view, they cannot realistically conceive of the possibility of this particular project depreciating in value. If they are talking about setting the purchase price now for the future, they believe that price would probably be a higher price. That was not to say it would not be a fair price. The question of whether there would be a ceiling price had been raised, and that was certainly an issue that could be negotiated. Certainly the possibility of adopting some kind of formula that would serve everyone's needs was negotiable. Fie was sure they could address those kinds of things to make everyone fairly satisfied. Mr. Diamond stated that, obviously, if this property was going to ultimately be acquired, they feel the cleanest way of doing it was to acquire it now at what has to be a lower price than it is ever going to be in the future. The second cleanest way was to enter into a master lease type of agreement. Mr. Diamond stated right now for informational purposes, there was one vacant space in the Rice Plaza Center. There were people who have recently 0 HOUSING & REDEVELOPMENT AUTHORITY MEETING, DECEMBER 11, 1986 PAGE 9 expressed an interest in that space. Most of the leases now do not run out for 3 -4 years. They were short term leases, but in terms of what might happen on that property in the next year or two, the advantages of waiting 1 -2 years were probably not great from a factual perspective. Mr. Diamond stated what was attractive to them in dealing with the master lease type of agreement was it put some predictability into the whole process sometime in the future. Mr. Diamond stated he wanted to re- emphasize the fact that the easiest, safest, cleanest, and he believed, the least expensive, arrangement for both parties involved was to take the property now in 1986. Ms. Schnabel stated that in view of the fact that two of the HRA memhers were not at the meeting, the chance. of entering into a purchase agreement before the end of 1986 was very minimal, as she was sure both Mr. Levy and Mr. Diamond could understand. On that basis, she would ask Staff to see if some conclusions could be agreed upon with Mr. Diamond and Mr. Levy in terms of the master lease plan and then bring something back to the HRA for their review at the next meeting. Mr. Newman stated he felt they should be able to put together an outline with some specifics by the next meeting. Mr. Qureshi stated that if Mr. Lundgren comes back to the next meeting with a definite project, there was no question but that Staff would recommend that the HRA buy the property. But right now, they have no use for the property, and they absolutely do not want to acquire property unless it is usable. He stated he felt they should give t`iis another 60 days in order to see if Mr. Lundgren has gotten his package together. He thought the February meeting was more realistic. Mr. Diamond agreed with Mr. Newman that they could put something together by the next meeting so they could at least have an outline of where they were going. 4. CONSIDERATION OF A RESOLUTION APPROVING AN AMENDED DEVFLOPMENT AGREEMENT 'H A AND THE FRIDLEY BUSINESS PLAZA LIMITED PAR NERSHIP: Mr. Robertson stated this was a minor housekeeping item. In August, the HRA approved a resolution authorizing the execution of a contract for private redevelopment with Winfield Development, Inc. The name was now being changed from Winfield Development, Inc., to Fridley Business Plaza Limited Partnership, so the only action needed by the HRA was to approve the amended development agreement with the name change. MOTION BY MR. MEYER, SECONDED BY MR. PRAIRIE, TO APPROVE RESOLUTION NO. HRA --_2,2,- 1986, RESOLUTION OF THE BOARD OF COMMISSIONERS OF THE FRIDLEY HRA APPROVING AN AMENDED DEVELOPMENT AGREEMENT BETWEEN THE HRA AND THE FRIDLEY BUSINESS PLAZA LIMITED PARTNERSHIP. HOUSING & REDEVELOPMENT AUTHORITY MEETING, DECEMBER 11, 1986 PAGE 10 UPON A VOICE VOTE, ALL VOTING AYE, VICE- CHAIRPERSON SCHNABEL DECLARED THE MOTION CARRIED UNANIMOUSLY. Vice - Chairperson Schnabel declared a ten - minute recess at 8:50 p.m. The meeting was reconvened at 9:00 p.m. 5. CONSIDERATION OF GIVING CONCEPTUAL APPROVAL TO A BUDGET AND AN IMPLEMENTATION PROGRAM FOR IMPROVEMENTS RELATED TO THE UNIVERSITY AVENUE CORRIDOR: Mr. Robertson stated the interest and impetus for this project actually began about a year ago with some businesspeople with establishments along the north end of the University Avenue corridor. There had been some repeated requests and interest for making improvements along the corridor. Last spring, the HRA evaluated various consultants and picked Barton- Aschman with the understanding there would be an advisory committee set up consisting of technical people from the state, county, and city and citizens from Fridley representing businesses and residents along the corridor. Mr. Robertson stated the committee went through a planning process which was summarized in the draft report. Recommendations derived from that planning process were informally presented to the HRA and City Council in October. Based on the HRA and City Council comments in October, the consultant put together a draft final report incorporating the suggestions. Mr. Robertson stated that the draft final report did not include recommendations for priorities in implementing the various components of the plan, sequence of implementation and implications for maintenance costs. The draft report did include cost sheets and estimates based on the capital improvements involved; it would have been a very theoretical exercise to try to estimate maintenance costs until the HRA and City Council indicated a direction for priorities and implementation.. Mr. Robertson stated that since this draft report was received, Staff had done several things: (1) had tried to troubleshoot all the recommendations in this report to try to debug any potential technical, legal and safety questions that might not have been covered by the process; (2) anticipating that the HRA might ask Staff for recommendations, Staff had put together some suggested implementation sequences or phases; (3) had proposed some priorities; and (4) had estimated a budget which reflected these recommendations. Mr. Robertson referred to the one -page summary "University Avenue Corridor Plan" handed out at the meeting. (.See Exhibit A). He stated that when people on the Technical Advisory Committee were asked what some of the problems were that needed to be addressed, they responded with the following: unkept condition, unsightly fence south of 69th- Avenue, rural ditches north of 69th Avenue, visual lack of order, and lack of pedestrian facilities. Mr. Robertson stated Staff wished to emphasize that the overall objective was keeping Fridley competitive with what was going on in the metropolitan area and throughout the nation. We are now experiencing a shift from being a manufacturing suburb to more of an office -type suburb. Fridley is HOUSING _& REOEVELOPMENT AUTHORITY HEETING, OECEMBER 11, 1986 PAGF 11 0 in competition with other communities in the metropolitan area and with this type of development,_ developers are looping for an attractive community entrance and surroundings. The City has a long range financial interest in attracting private investment dollars which translate ultimately into property tax dollars and an expanding tax base. The'City should look at this as a city investment in terms of creating a pleasant community to attract private development dollars which will help keep tax rates low. Mr. Robertson stated there were actually seven different components of the University Avenue Corridor Plan that Barton - Aschman addressed in the draft report, but these ,components could be summarized into three basic elements: A, Planting and screening (including reforestation, trees, grass, and doing something about the deterioration of the fence) B. Intersection improvements (there were 8 major intersections and 3 minor intersections a including brick paving, curbs, sidewalks, overhead and lighted signs, - street furniture, etc.) C. Street lighting Mr. Robertson stated these 3 elements were listed at the bottom of the one -page summary. To the right of each of the elements were the recommendations for priorities in terms of decreasing amounts of the implementation budget. If they were to decide on the full package, it would cost $2,667,000, the next column was $1,994,000, the third column was $1,431,000, and the last column was $1,069,000. Mr. Prairie asked what improvements were included in the priority column totalling $1,431,000. Mr. Robertson stated that for planting and screening, it would include the turf and the trees, but would leave out the fence. For intersection improve- ments, it would be just the intersection treatment with the curb, gutter, sidewalk and bricks. There would not be any monumentation that the consultant was recommending at the entrance on the north and the south, special monu- mentation at the City Center, or street furniture. For street lighting, it would be lighting for the commercial frontage roads plus the intersecT tions, both in the north /south and east /west directions, but not the entire corridor. Mr. Robertson stated Barton- Aschman had outlined two alternatives for street lighting -- either median lighting or• frontage road lighting. Of the two, the Technical Advisory Committee liked the idea of the frontage road lighting because it opened up the corridor visually at night and provided more visual access at night to the adjacent businesses. The $990,000 figure for street lighting was Staff's estimate for a compromise between those two alternatives ... to provide lighting,rather than down the median, along the HOUSING & REDEVELOPMENT AUTHORITY MEETING. DECEMBER 11,1986 __ PAGF_12 shoulder continuously on the traveled way, northbound and southbound lanes. In addition, smaller standards would be placed along commercial frontage roads. Ms. Schnabel stated that regarding "entrance walls ", she had read in the Addendum that Staff wanted the opportunity to restudy that concept. She thought that was a good thing to do. She had liked the idea when it was first presented, and she still felt there were some nice parts about it, but she had been getting some feedback from people who felt it might present a visual berrier instead "of a welcome. Mr. Robertson showed some slides of planting plans, lighting, intersection details, monumentation, and some things done in other communities. Mr. Robertson stated that with the alternatives they had before them, he would like the HRA to give Staff some direction on how they wished the Staff to proceed - -how much and what amount of time? Did the HRA like these elements? Councilperson Schneider stated he agreed that the corridor needed improvement. He liked and supported the concept of doing some improvement along the corridor, but he had a little trouble with a $2,667,000 proposal. Mr. Prairie agreed, and that was why he was inclined to look more at the Is $1,431,000 figure. That amount of money over a 3 -year period could make the corridor look pretty good, and they could increase the amount at any time. Ms. Schnabel stated they had to keep in mind that University Avenue was not the only street in Fridley that needed upgrading. If they spend money here, they should not forget there are other roadways that also need improvement and to be cautious about the kinds of things they want to do. Councilperson Fitzpatrick agreed that University Avenue was not the only street in town, but he stated the problem on University was very real and long - standing. He would like to see something done along the corridor. He liked the dollar amount Mr. Prairie had suggested, because it would seem they would get the optimum in each of the components. Mayor Nee stated he did not think the fence or the ditches were that big of a problem. The real problem that bothered him was the junk cars at the entrance to the city. He stated the HRA had the power to do something about that by finding a public use for property that had a marginal use. Mr. Qureshi agreed that people coming into Anoka County and Fridley on Highway 47 and Highway 65 get a very bad image of Fridley, especially with the used car lot and not very attractive businesses. It would be very helpful to have an attractive entrance into the city. He stated the HRA could address the concern raised by Mayor Nee. The HRA did have the power to desig- nate these areas as economic development or redevelopment areas and take • positive steps to acquire properties and develop plans for these properties. HOUSING & REDEVELOPMENT AUTHORITY HEETING, OECE "1DER 11. 1986 P/!Gr 13 Mr. Qureshi stated that at this time, Staff was requesting some direction from the HRA as to what areas they felt had the greatest importance. Ms. Schnabel stated that because this opened up a new door that she had not thought of before,in that the HRA had the power to make some improvements in the 57th and University Ave. area, she would like to see the HRA explore that avenue in more detail. She personally favored the planting and screen- ing element and personally favored the high figure in that element. She thought they got a lot for their money in terms of reforestation, turf re- establishment, and a good maintenance program on behalf of the city. Ms. Schnabel stated that in terms of the intersection improvements, she could see at this point getting some kind of modification. In the City Center part, there was maybe a need and a good argument for doing some more work on the University /Mississippi intersection. She was willing to sacrifice the gate- way part for the time being on 57tfi and 85th because those two areas are unknowns right now, as far as developmentis concerned. Ms. Schnabel stated she would like to see the City talk about picking up some of the costs on lighting. She saw it partly as the City's obligation and partly as the Highway Department's obligation to provide lighting on University Ave. itself. She would like the City to think about making an expenditure in Is that area. Maybe, with these suggestions, Staff could come up with a modified dollar package. Ms. Schnabel stated to summarize what she had just said, she would take the $614,000 figure for planting and screening, the $500,000 figure on intersec- tion improvements, and put a hold on street lighting until they had a clear idea where they were at, and then she would add to that a plan or program to acquire properties on the southern end of University. Mr. Qureshi stated his rationale was that they already have some plantings along the highway. It does need some maintenance and upgrading, but if they did the reforestation, it was not going to make a drastic change from what they have now because it takes time for plants and trees to grow. If they adopt a plan all the way along, every time a new development comes, it might be possible that a sizeable portion of the funding could come from new development. He felt the best and most cost - effective approach would be to do the intersection improvements for safety reasons and visual impact and movement of traffic. Second would be lighting in the public areas and along the commercial properties. Maybe something could be worked out with the property owners, too, for the cost of that lighting. Ms. Schnabel stated this was a piecemeal approach, and she was not sure it was what the members of the Technical Advisory Committee wanted. Mr. Prairie stated he would still recommend the HRA go with the $1,431,000 cost figure (3rd column) on the University Avenue Corridor Plan. It was 40 approximately one -half the maximum cost, and it could always be increased. He also thought they should work hard at cleaning up the properties they don't think make the City look very good. 0 HOUSING &_REDEVELOPMENT AUTHORITY' HEETING, DECEMBER 11, 1986 PAGE 14 Mr. Meyer stated he agreed with Mr. Prairie. Ms. Schnabel stated she would also agree with Mr. Prairie. She stated she would like to see Staff put together some type of timetable, keeping in mind the HRA would like to look at the possibility of the acquisition of properties on the south end of University. MOTION, by Prairie, seconded by Meyer, to adopt the third column plan on the one -page staff summary. UPON A VOICE VOTE, ALL VOTING AYE, VICE- CHAIRPERSON SCHNABEL DECLARED THE MOTION CARRIED UNANIMOUSLY. 6. UPDATE ON LAKE POINTE CORPORATE CENTER: Mr. Robertson stated construction was shut down for the winter. The earth- work contractor has notified the City he wants to arbitrate certain things on the fixed price contract, and the City has not yet been notified of that hearing date. There was a new alignment of Lake Pointe Drive, and the plat had not yet been filed. Mr. Nevnnan stated Woodbridge is attempting to exercise their right to place a mortgage on the property. The problem the City had with that was the $1 million in escrow that has not been released from escrow yet. In accordance with the Agreement made a couple of months ago, fir. Weir has instructed the escrow agent to release the Metes and Bounds Deed for the Phase I Parcel to be released for filing. Apparently, for a couple of reasons, the County has rejected that for recording. Mr. Nevanan stated he wanted to discuss with Mr. Qureshi and Mr. Robertson some of the options they can seriously consider in working with Woodbridge to get the Metes and Bounds Deed in a recordable form so it can be recorded. When that happens, the $1 million will be released to the HRA in cpmplete payment for the land. Mr. Newnan stated the original agreement entered into with Woodbridge last December stated that Woodbridge would be entitled to all the land on Jan. 1, 1987. Once the HRA has the $1 million in hand, that will, in fact, occur. Probably at that point, it was Staff's feeling they should just wait and see where Woodbridge goes from there. He felt it was their primary concern at this time to get the $1 million in hand. Mr. Oureshi stated that Lake Pointe Drive will be constructed so as to connect West Moore Lake Drive and Highway 65. This road right -of -way has reduced the area originally identified for Woodbridge Building A. Because of this encroachment, Woodbridge has requested the City provide the Highway 65 turn - back property in order to provide additional space for construction and land- scaping. If this vacation takes place, it would add 33,000 sq. ft. of land which. would become part of the development. The City Council will be con- sidering this vacation at a public hearing at their next meeting. 40 0 HOUSING & REDEVELOPMENT AUTHORITY MEETING; DECEMBER 11, 1986 PAGE 15 Mr. Qureshi stated the City was trying to cooperate the best way they can in minimizing Mr. Weir's concerns. 7. CONSIDERATION OF AUTHORIZING THE -CITY TO PROCEED WITH PROPERTY ACQUISITION 11 7- - v Q v S 7 TS t rz r Mr. Qureshi stated this item was for the HRA's information. Mr. Qureshi stated that associated with the intersection improvement at highway 65 /West Moore Lake Drive /Old Central, there was also the redesign of the Hathaway /Hackmann /Hillwind /Old Central intersection. The HRA purchased the corner residential lot in the -area in order to provide for this inter- section improvement. In addition, it appeared to be necessary to relocate the garage access at 5755 Old Central because of its proximity to the new intersection to provide access off Hathaway Lane. The garage doors would have to be changed from front to rear and a new driveway constructed from the rear of the property. This driveway would have to cross a part of 5760 Hathaway Lane. The person who owns 5760 Hathaway Lane has indicated a desire to sell the property, a triangular piece about 24 ft. long by 28 ft. deep. 8. CONSIDERATION OF APPROVING A CONCEPTUAL PLAN FOR FUTURE IMPROVEMENT EXPENDITURES Mr. Qureshi stated that information regarding the $3,400,000 in available funds from the 1985 $11,550,000 G.O. Tax Increment Bond sale had been brought to the HRA's attention at the May 8, 1986 HRA meeting. At that time, conceptual approval was given by the HRA to spend the available $3.4 million for several proposed projects within Redevelopment Project No. 1. At the September 23, 1986 meeting of the HRA, staff advised the HRA members of the approximately $6.8 million in projected increment within Redevelopment Project No. 1 which will have been generated by the year 1993. It had been the concensus of both the HRA and the City Council that the HRA continue to collect increment generated within Project Area No.1. Staff was requested to prepare a timeline of proposed projects and expenditures which could be funded with the $6.8 million in available increment. Mr. Qureshi stated that staff has prepared a Conceptual Plan which addressees the projects, expenditures and the timeframe for the expenditures. This Conceptual Plan is included herein as- Exhibit B. On the overhead projector, Mr. Qureshi displayed 2 graphs, explaining that increment generated from increased values of development projects is used in the following ways: 1. To retire bonds the HRA has sold, as increment is pledged f irst to pay off such bonds. 2. Additional bands maybe sold to fund other development projects within the Project Area. 3. To fund projects directly, using available increment which is not committed to the repayment of bonds. HOUSING & REDEVELOPMENT AUTHORITY MEETING, DECEMBER 11, 1986 PAGE 16 Mr. Qureshi noted that last December, the HRA requested the City to sell $11,550,000 in G.O. Tax Increment Bonds. All but $3.4 million from this bond issue was committed to specific projects within the Project Area: funds for the southwest quadrant development and utility and road improvements for the Lake Pointe Development. The $3.4 million was committed for "general project activities" within the Project Area. Noting that state statute required these committed funds to be spent within 3 years from the date of the bond sale, Mr. Qureshi stated that by 1988 the funds from the bond sale will be spent according to the guidelines the HRA approved in May. He further explained that there were also restrictions placed on the $6.8 in available increment generated from all the City's tax increment districts. According to state law, any increment which exceeds the amount necessary to pay the costs authorized by the tax increment financing plan must be used to retire bonds or be returned to the county for dispersal to the taxing jurisdictions. Consequently, it is necessary for the HRA to consider the proposed projects and expenditures in the Conceptual Plan as all of the proposed projects are consistent with the Redevelopment Plan for the Redevelopment Project Area and each of the tax increment districts and also meets stale requirements for Winding available increment. - -_ _ -- The Conceptual Plan was placed on the overhead projector an Mr. Qures i explained that the $6.8 million in available increment could fund various projects within the Project area over a 7 year period, beginning in 1987. Mr. Qureshi stated that in the past, the HRA has used available increment in two ways: 1. Direct development assistance 2. Public improvements The Conceptual Plan divided the proposed project expenditures into these two categories and outlined projects in Center City, Moore Lake and the North Area. Mr. Qureshi explained that what was needed of the HRA was approval of this overall Conceptual Plan for future project improvement expenditures. The Plan addresses project expenditures consistent with the statutory requirements regulating use of increment. With the approval of the Plan, the specifics of each project and its cost can be determined by the HRA as the project becomes a reality. Mr. Qureshi noted that the $6.8 millicn figure was conservative, as staff had used existing development and had not ccnsidered the values of developments to be constructed within the next 7 years; also, no allowances had been made for inf lation. MOTION BY MR. MEYER, SECONDED BY MR. PRAIRIE, TO APPROVE THE CONCEPTUAL PLAN FOR POTENTIAL PROPOSED IMPROVEMMrS AND DEVELOPMENT ASSISTANCE IN THE CENTER CITY AREA, MOORE LAKE AREA AND THE NORTH AREA. UPON A VOICE VOTE, ALL VOTING AYE, VICE - CHAIRPERSON SCHNABEL DECLARED THE MOTION CARRIED UNANIMOUSLY. HOUSING & REDEVELOPMENT AUTHORITY MEETING; DECEMBER 11, 1986 PAGE 17 9. CONSIDERATION OF ENTERING INTO A JOINT POWERS AGREEMENT FOR THE IMPROVEMENT OF THE INTERSECTION OF MISSISSIPPI STREET ND UNIVERSITY AVENUE WITH HF ANOKA 1 SIG EPA IE : PT fir. Qureshi stated he would recommend that the HRA approve the improvements of the intersection of Mississippi and University by the Highway Dept. and recommend that the City Council enter into a Joint Powers Agreement with the Highway Dept. for this cost. MOTION BY MR. MEYER, SECONDED BY MR. PRAIRIE, TO APPROVE THE IMPROVEMENT OF THE INTERSECTION OF MISSISSIPPI ST. AND UNIVERSITY AVE. WITH THE ANOKA COUNTY HIGHWAY DEPARTMENT AND TO RECOMMEND THAT THE CITY COUNCIL ENTER INTO A JOINT POWERS AGREEMENT WITH THE ANOKA COUNTY HIGHWAY DEPARTMENT FOR THIS IMPROVEMENT. UPON A VOICE VOTE, ALL VOTING AYE, VICE -c-.1JIAIRPERSON SCHNABEL DECLARED THE MOTION CARRIED UNANIMOUSLY. 10. PRESENTATION OF THE 1985 FINANCIAL STATEMENT: Item continued until the next meeting. 11. CONSIDERATION OF APPOINTMENT OF AUDITOR FOR FISCAL YEAR 1986 (GEORGE H. HANSEN CO.): Mr. Pribyl stated he would recommend the HRA again appoint George M. Hansen Co. as the HRA's Auditor for Fiscal Year 1986. MOTION BY MR. PRAIRIE, SECONDED BY MR. MEYER, TO APPOINT GEORGE M. HANSEN CO. AS THE HRA'S AUDITOR FOR FISCAL YEAR 1986. UPON A VOICE VOTE, ALL VOTING AYE, VICE- CHAIRPFRSON SCHNABEL DECLARED THE MOTION CARRIED UNANIMOUSLY. 12. CLAIMS: MOTION BY MR. MEYER, SECONDED BY MR. PRAIRIE, TO APPROVE THE CHECK REGISTER DATED DECEMBER 11, 1986, AS PRESENTED BY STAFF. UPON A VOICE VOTE, ALL VOTING AYE, VICE- CHAIRPERSON SCHNABEL DECLARED THE MOTION CARRIED UNANIMOUSLY. AR10IIR11MFNT- Vice- C4airperson Schnabel declared the December 11, 1986, meeting adjourned at 11:20 p.m. Respectfully submitted, i Ly Saba Recording Secretary , a, 4 mio ME 6 i i aad,�tx� &) .100 S, Z3oot ss� �fi �,n/�' `i�.t QLIM� -. lXM7�U^ lef�4'� n�r�sS C: W-iY? EXHIBIT A UNIVERSITY AM3a MIUR PLAN December 11, 1986 A. CITIZEN CONCERNS: - UNKEPT ODNDITION - UNSIGHTLY FENCE SOUTH OF 69TH - RURAL DITCHES NORTH OF 69TH - VISUAL LACK OF ORDER - LACK OF PEDESTRIAN FACILITIES B. KEEPING FRIDLEY CO KTITIVE: - SUBURBAN SHIFT TO OFFICE DEVELOPMENT 0 - DEVELOPERS DESIRE FOR ATTRACTIVE ENTRANCE AND SURROUNDINGS - PRIVATE INVESTMENT $ = PROPERTY TAX $ r A. PLANTING AND SCREENING 61W 522K 522K 16CK W/0 FENCE I INTERSECTION PLANTING B. I NTERSECT I oN IMPROVB4ENTS 1.053K 1.063K 500K ( 5OCK BRICK 8 CURB, C. STREET LIGHTING 990K 409K , 409K I 409K INTERSECTION I & FRONTAGE I Fwd MUCH? 1$1,431K $1,059K $2,667K $1,994K L .._. ...I EXHIBI B • Page 2 CONCEPTUAL (12/10/86 Fi FUNDS AVAILABLE FROM pXESS INaM ENp . . . . . . . . . . $6,800,000 TIMEFRAME OF FUND. . . . 0 0 . . . 1987 To 1993 POSSIBLE PROJECTS ESTIMATES 1987 1 1993 I. PUBLIC I 187 '88 189 190 191 '92 '93 CENTER CITY $1,900,000 250,000 400,000 250,000 1,000,00 University Ave. Corridor Mississippi St. Upgrade Public Ramp & Interconnections §RE L,NM 800,000 100000 300,000 400,000 Drainage into Moore Lake W. Basin Drainage into Moore Lake E. Basin Rice Creek Rd. /Central AREA 700,000 350,000 200,000 150,000 Storm Sewer Drainage & Ponding 83rd Ave. & Main St. Upgrade 83rd Ave. & Univ. Traffic Signals II. DEVEEDPNW ASS=V= ti'FR CITY 1,600,000 800,000 200,000 400,000 200,000 SW Quadrant NE Quadrant Moon Plaza Redevelop v Columbia Park Properties Expansion NORM ARFA 1,150,000 850,000 200,000 1000,000 North Estates Apts. Osborn Rd. 81st & Main MOQtE LAKE 650000 2500,000 150,000 250,000 Shorewood Shopping Area Old Central Hillwind Area TOTALS 6,800,000 850,000 950,000 1,10,000 750,000 950,000 -- 1,100,000 ---� 1.100,001 EXfOB17 B CONCEPTUAL PLAN FOR PR0JBCT /IMPR0VBMENT EXPENDIIURE'S RIMS AVAILABLE FROM BM PROCEEDS . . . . . . . .$3,400,000 Dec. TO BE SPEND BY . . . . . . . . . . . . . • . . . . . . . . . . . . . . . . . . . Dec 1988 .,ZIBLE PROJB= EMMATES YEAR 1987 1988 I. PUBLIC -- ZrImil"b University Avenue Corridor Hwy 65 /Moore Lake Drive West Moore Lake/old Central Mississippi Street Laprovements Moore Lake Water Quality II. = ASSISTANCR_ Soil Correction Senior Housing TOTALS $ 750,000 750000 11000000 11000000 600,000 6000,000 500000 500,000 500,000 WOW 250000 MAW 150,000 150,000 $3,750000 $3,000,000 750,000 0 -- 1 (12/10/86 Final)