HRA 06/11/1987 - 6532HOUSING & PMEVEIDRIENI' AUTHORITY MEETING
THURSDAY, JUNE 11, 1987 7 :00 P.M.
Nasim Qureshi
Director of HRA
and Official Copy
City of Fridley
AGENDA
HOUSING & RE"ELOPMEN''I' AUTHORITY MEETING MURSDAY, JUNE 11, 2987 7:00 P.M.
Location: Council Chamber (upper level)
CALL TO ORDER:
ROLL CALL_•
APPROVAL OF MINUTES:
Housing & Redevelopnent Authority Minutes: May 14, 1987
ADOPTION OF AGENDA:
OUNSIDERATION OF LOU LUNDGREN' S LETTER OF CREDIT . . . . . . . . . 1
a. Consideration of Sunde Engineering Staking and
Inspection Change Orders . . . . . . . . . . . . . . . . 2
b. Consideration of Lot Combination for Hathaway Lane
Realignment. . . . . . . . . . . . . . . . . . . . . . 2A
c. Receive Sumnmy of Enebak Arbitration . . . . . • • • • • • • . 2B
CLAIMS . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
OTHER BUSINESS:
�a
CITY OF FRIDLEY
HOUSING & REDEVELOPMENT AUTHORITY MEETING, 14AY 14, 1987
CALL TO ORDER:
Chairperson Commers called the flay 14, 1987, Housing & Redevelopment Authority
meeting to order at 7:10 p.m.
ROLL CALL:
Members Present: Larry Commers, Duane Prairie, John Meyer
flenbers Absent: Virginia Schnabel, Walter Rasmussen
Others Present: Jock Robertson, HRA Director
Nasim Qureshi, City Manager
Dave Newman, HRA Attorney
Rick Pribyl, Finance Director
June & Louis Lundgren, 1140 Minnesota Bldg., St. Paul
APPROVAL OF APRIL 9, 1937, HOUSING & REDEVELOPMENT AUTHORITY MINUTES:
MOTION by Mr. Meyer, seconded by Mr. Prairie, to approve the April 9, 1987,
Housing & Redevelopment Authority minutes as written.
Upon a voice vote,all voting aye, Chairperson Commers declared the motion
carried unanimously.
1. CONSIDERATION OF LOU LUNDGREN'S LETTER OF CREDIT:
Mr. Lundgren said that approximately 60 days ago, he had presented the
HRA with a market feasbility study for the project done by Maxfield Research
group. Mr. Lee Maxfield had attended the HRA meeting to make the presentation.
At that time, Mr. Lundgren stated he had also told the HRA that they were
having Mr.Maxfield do the study on the senior building at the sane tine.
He stated that as the HRA members might know, the market for senior buildings
in the metropolitan area in general was felt to be overbuilt. There was no
question of the need, but there was a question of the timing and the exact
quantity. He stated he now had a rough draft of the senior building study
and he would give some highlights of that report. He stated he hoped this
information would give the HRA, as it did him, a feeling of some assurance
for that phase of the project.
Mr. Lundgren stated the report gave the demographic data and indicated the
numbers of seniors that need housing in this study area and gave some indica-
tion of the units that are ready to be started and the units that are on
somewhat of a hold situation.
Mr. Lundgren stated the study indicated that their market interviews of
demographic research indicated that the younger seniors would be the primary
I-,,-
HOUSING & REDEVELOPMENT AUTHORITY MEETING, MAY 14, 1987 PAGE 2
market for this development, especially in the absence of a health care
sponsor for the developer of the project. They recommend that the building
be positioned for a "young" senior project with no services intially planned
for persons age 55 -75 years old. The building should have less common space
than is typical in a building marketed for older seniors, but yet allow for
the space to provide those services in the future as the residents age.
Unit rents should be similer to the general market-rents with slightly smaller
unit size compensating for the extra common areas not found in the genearl
market building.
Mr. Lundgren stated he had met with Mr. Maxfield on Tuesday to go over the
final points of the draft. He stated they were proposing to leave in most
of the large common areas, but in the economic income study they would not
count on the extra services that would be there. The possible future resi-
dent in touring the building would see all the facilities shown in the sketch
plan. According to Mr. Maxfield, it would make quite a marketing difference.
Mr. Lundgren said the study stated that rents ranging from 75t per sq. ft.
were recommended in 1987 for units of 650 -750 sq. ft. for one bedroom units,
and 825 -1,000 sq. ft. for one bedroom /den and two bedroom units. He stated
they have always been at the two bedroom and one bedroom /den size.
Mr. Maxfield's recommendation was for about 10% larger and they intend to
modify their plans according to those recommendations.
Mr. Lundgren stated the study stated that based on the market demand, location,
demographic trends, and the recommended development concept, they estimate
an absorption time of approximately 15 -18 months once the building was availa-
ble for occupancy. This assumed a strong marketing effort beginning at the
tirae of the ground breaking and an aggressive leasing agent to meet this
market.
fir. Lundgren stated fir. Maxfield had also suggested that, based on his
experience, this building should be about 25 -33% leased at the time the
construction was completed.
Mr. Lundgren stated this report should be available within a week, and he
would get that to Staff.
Mr. Lundgren stated Mr. Maxfield had recommended that between 100 -120 units
be built. That was a little less than he had talked about, but he was pleased
about that range in terms of financing. When projects are below 100 units,
then they have to go with a different kind of lender. So, he thought this
would be compatible, and in dollars and cents, it would be about the same
dollars as the other building which, including all the soft costs, would be
about $10 million.
Mr. Lundgren stated it might be desirable to pursue the senior_ building
very rapidly after the first building. They are looking hopefully at starting
the second phase yet in 1987. They would be pursuing the third phase as soon
as all conditions have been met.
S
HOUSING & REDEVELOPMENT AUTHORITY MEETING, MAY 14, 1987 PAGE 3
Mr. Commers asked Mr.. Lundgren how he was progressing with the funding for
Phase I.
Mr. Lundgren stated he had had two meetings with Winfield Development Co.
Winfield was quite interested in the commercial aspects of the total project,
but was not too interested in the residential portion. As a result of these
meetings with Winfield, he has written them that he would be willing to
enter into a joint venture, and he had laid out some broad terms. Generally
speaking Winfield was still pursuing this joint venture. He should know
within a week if there was going to be any kind of joint venture.
Mr. Lundgren stated they are still pursuing the possibility of using tax
exempt bonds for both phases which would mean the pricing of the units have
to be different.
Mr. Commers asked about the other lending groups that had expressed an
interest in the development.
Mr. Lundgren stated he was still working with Steinberg Financial Co. and
Rothschild Financial Corp. He stated Murray Savings & Loan in Dallas, Texas,
was going ahead with a project in Bloomington and was not going to make
any more investment in the metropolitan area, so that was a "no" from Murray
Savings & Loan.
Mr. Lundgren stated they still have three alternative financing plans. They
are pursuing Winfield, not excRusively, but concurrently with the other two.
He stated he was not coming to the HRA with a story of success or a story of
failure but was giving a report of what was happening and what they think is
going to happen.
Mr. Commers stated that at the last meeting, Ms. Cherry Lundgren had said
that within two weeks, they hoped to be back with an actual development
agreement with a lender and a financing package already in place. She had
also talked about a construction date of July 1, 1987.
Mr. Lundgren stated that was an accurate statement and reflected their
particular feelings at that time. He stated he was still talking about a
July 1 construction date.
Mr. Commers stated that at the last meeting, Mr. Qureshi had said the
project looked better than it had for the last couple of months, and had
thought there was no harm in delaying the drawing of the letter of credit
for another month or two.
Mr. Qureshi stated that for a number of months, Mr. Lundgren had basically
made no progress. Then, last month, at least, he came with a different set
of options that he was pursuing. There was a general feeling at that time
by the HRA that it was the most optimistic report they had received. He
stated he was kind of disappointed about Lundgren not fulfilling the state-
ment made last month that they would
HOUSING & REDEVELOPMENT AUTHORITY MEETING, MAY 14, 1987 PAGE 4
actually have a development agreement and would be submitting that to the
HRA for approval at this meeting. It looked like none of the 5 -6 options
had panned out at this time. He stated his level of optimism was much lower
now than it was one month ago.
Mr. Commers stated the HRA had three alternatives at this meeting: (1) call
the letter of credit; (2) leave the item on the table and do nothing; and
(3) set a deadline for calling the letter of credit which was suggested at
the last meeting.
Mr. Meyer stated he felt that Mr. Lundgren was working hard to put the
project together. He was actually working for the HRA because he was the
only developer at this time. If they draw on the letter of credit, from a
practical standpoint, then it was the end of the project. He thought the
HRA should continue to encourage Mr. Lundgren in his efforts.
Mr. Commers stated there have been a lot of inquiries but not a lot of other
interest as far as another developer for this area.
Mr. Commers stated that since there was no action taken by the HRA, this item
would remain on the table for another month.
Mr. Commers cautioned Mr. Lundgren that Mr. Lundgren should not continue to
rely ppon the fact that the HRA has not taken any action on the letter of
credit. He explained to Mr. Lundgren that the HRA might at any time call the
letter of credit.
Mr. Lundgren stated he fully understood that.
2. CONSIDERATION OF BARTON - ASCHMAN AGREEMENT.-FOR UNIVERSITY AVENUE PLAN:
Mr. Robertson stated that at the last meeting, the HRA had approved a budget
with Barton - Aschman for an amount not to exceed $23,300 to, 'cover the
University Avenue Corridor detail design. Mr. Meyer had brought up the
concern that Barton - Aschman had no provisions for field observation for
the work done by them.
Mr. Robertson stated that in his memo dated May 8, he had concluded that
Mr. Meyer had correctly identified the problems inherent in "design by
committee" and had diagnosed a need for one prime consultant to be directed
by one accountable staff project engineer. After thinking about that, he
thought there might be some problems, so he went back to Barton - Aschman
to tell them the City needed one new set of working drawings. In the HRA's
packet was a revision of that and the basic budget went from $23,300 to
$28,800. He also asked Barton - Aschman to add some options, and these options
totalled $15,800. The breakdown of those options are as follows:
$3,600 - proposed intersection improvements
4,200 - different treatments of the median
8,000 - field observation
HOUSING & REDEVELOPMENT AUTHORITY MEETING, 11AY 14, 1987 PAGE 5
Mr. Robertson stated that if they added the $15,800 to the $28,800, it gave
them a total potential budget of $44,600.
Mr. Robertson stated Barton - Aschman was recommending supplemental field
observation by city staff under their supervision. This would increase
actual field supervision effectiveness and would reduce the City's cost by
an estimated $2- 3,000. Barton - Aschman estimates that if they do the field
observation alone, it would cost $7- 8,000. He stated he would recommend that
the HRA go along with Barton- Aschman's recommendation for supplemental field
observation by city staff. If the HRA was in agreement with that, a supple-
mental agreement would be drawn up.
Mr. Meyer stated the principle he saw in this situation was that they want
Barton - Aschman to be able to tell them under the usual understanding of this
type of work that the work has been properly done. The HRA does not want
Barton- Aschman to say if something happens that it was because the city staff
were messing around with Barton- Aschman's responsibility and they cannot take
the "usual" responsibility entailed in field observation. However, the City
is not demanding a higher standard of field observation than is usual, and
that should be made clear to Barton - Aschman. If Barton - Aschman can guarantee
that they will take total responsibility even with city staff under their
supervision, then it was o.k. If not, then his vote would be to give Barton -
Aschman the total contract.
Mr. Prairie stated he would not be too concerned either way. Two thousand
dollars did not seem to be a very big savings to the city.
Mr. Commers stated maybe it was better for the city to stay out of it, so
Barton - Aschman was accountable.
It was the consensus of the HRA to let Mr. Robertson work out an agreement
with Barton - Aschman, keeping in mind that they want to be sure that if city
staff is working with Barton - Aschman that Barton - Aschman clearly is assuming
the supervisory responsibility for the staff person(s).
3. LAKE POINTE STATUS REPORT:
a. Consideration of Street Easement for Union 76 at TH 65
Mr. Robertson stated Mr. Flora had gotten a preliminary telephone
agreement from the local representative for UNOCAL that $5,000 for the
street easement and relocation of the sign would be acceptable. This
now has to go on for final approval by UNOCAL personnel. He stated he
needed approval from the HRA that if they reach a final agreement with
UNOCAL for $5,000 that City Staff can go ahead and complete and expedite
this right -of -way agreement.
MOTION by Mr. Meyer, seconded by Mr. Prairie, to authorize Staff to
negotiate with UNOCAL Service Stations for the acquiring of 1,253 sq. ft.
of easement area for a price not to exceed $5,000.
Upon a voice vote, all voting aye, Chairperson Commers declared the
motion carried unanimously.
HOUSING & REDEVELOPMENT AUTHORITY MEETING, MAY 14, 1987 PAGE 6
b. Consideration of S.E.H. Amendments
Mr. Robertson stated they have asked S.E.H. to give a detailed accounting
of work that has actually been done before the HRA authorizes payment
of the contract. S.E.H. has done that and it was in the agenda. Last
month the HRA approved an additional $8,270 toward the design of
Highway 65, and there was another $20,000 previously authorized that the
HRA had never received an accounting for.
Mr. Commers asked what the total cost of the contract was with the
amendments.
Mr. Robertson stated the total contract was $83,822 (including $8,270,
$20,052.15, and $5,500).
NOTION by Mr. Prairie, seconded by Mr. Robertson, to approve the authori-
zation of the increased expenditures in the S.E.N. contract including
the $8,270, $20,052.15, and $5,500.
Upon a voice vote, all voting aye, Chairperson Comers declared the
motion carried unanimously.
c. Consideration of Earthwork Change Orders
Mr. Newman stated they do want to make an attempt to settle the claim
made by Enebek. He had hoped to have some numbers for the HRA at this
meeting, but had not yet received them. Once he had those numbers, he
would like to poll the HRA by telephone and get a concensus of what kind
of range they should settle with Enebek.
Mr. Robertson stated that as stated in Mr. Flora's letter of May 7,
there might be a need for the City to initiate some change orders in
order to allow the construction to proceed without delay, and Mr. Flora
would like the HRA to authorize the City to execute any change orders
to the contract that are deemed necessary by the City and the City's
consulting engineers.
Mr. Newman stated what Mr. Flora was talking about was all the contractors
with the Lake Pointe project. Staff had some concern that if the City
had to wait a month to get authority from the HRA for a change order,
it could cause some difficult delays. The contracts were actually entered
into between the City and the contractors and because of Staff's desire
for a quicker process to review these change orders, he would recommend
that perhaps the best way would be to have the City Council approve the
change orders since they meet twice as often as the HRA.
Mr. Prairie stated that if Staff brings the change orders to the City
Council fully researched and the City Council does meet more often than
the HRA, he had no problem with Mr. Newman's suggestion.
HOUSING & REDEVELOPMENT AUTHORITY FLEETING, MAY 14, 1987 PAGE 7
MOTION by Mr. Pleyer, seconded by Mr. Prairie, to authorize the City
Council to approve any change orders for all four basic contractors
for the demolition and site grading of the Lake Pointe project as deemed
necessary by Staff and the consulting engineers. The aggregate of said
change orders shall not exceed $50,000 without further approval by the
HRA.
Upon a voice vote, all voting aye, Chairperson Commers declared the
motion carried unanimously.
Mr. Robertson stated the procedure for any work concerning Lake Pointe goes
to the attorney before it is distributed. After the agenda went out,
he had received a change order from Sunde Engineering for additional
staking and inspection. Staff and the attorney have reviewed it. The
amount was for $7,500 for additional staking and inspection which repre-
sented about a 5% change out of the $150,000 contract with Sunde Engineer-
ing. It was up to the HRA whether they wanted to approve that change
order at this meeting or review and discuss it at the next meeting.
Mr. Commers asked Staff to give the HRA a report on why this was done
and who authorized the additional work for their next meeting.
4. CLAIMS (1595- 1604):
MOTION by Mr. Prairie, seconded by Mr. tleyer, to approve the check register
as presented.
Upon a voice vote, all voting aye, Chairperson Commers declared the motion
carried unanimously.
ADJOUR14MENT :
MOTION by Fir. Prairie, seconded by Mr. Meyer, to adjourn the meeting. Upon
voice vote, all voting aye, Chairperson Commers declared the May 14, 1987,
Housing & Redevelopment Authority meeting adjourned at 8:55 p.m.
Respectfully subm'tted,
Lynn Saba
Recording Secretary
(�'tictf
I
Ba)SING & REOMMOPMENT AUTRORITY
MEMORANDUM
MEND 20: Nasim Qureshi, Director of BRA
MEW FRC14: Jock Robertson, Executive Director rf HRA 2
MEMD DATE: June 5, 1987
REGARDING: Lou Lundgren's Letter of Credit
As the BRA agenda goes to press at 2:00 p.m. today we have not yet received
the letter Mr. Lundgren promised by, 12: 00 noon giving an update of his
activities attempting to oompl.ete his financial package. Mr. Lundgren had
indicated to me by phone earlier today that he will attend the Meeting to
give a verbal report.
M-87 -130
CI7YOF
f Rl DLEY
ad 0 i °i %.& i %.F U-S s-.% r ■ o
ore
PUBLIC WORKS
MEMORANDUM
M: Jock Robertson, Executive Director - HRA
FRONT: John G. Flora,tPublic Works Director
DATE: June 5, 1987
SUBJECT: Sonde Engineering Change Order #1
IW87 -174
Based upon the contract agreement executed between the HRA and Sunde
Engineering, the construction inspection and staking on the projects were
estimated at $421,700 and $36,800 respectively and annotated that these
estimates would be billed based on time and expense at the normal rates
established in the agreement.
On April 10, 1987, Sunde Engineering reviewed the cost of construction
inspection and staking completed to that date and projected the anticipated
cost for the remainder of the project and identified a need to increase the
inspection by $2,300 and staking by $5,200 for a total amount of $7,500.
These increases are a result of the controversies associated withn the
Enebak soil and work issues plus the need to provide controls for the
partial construction of the water, sewer, storm and bikeway systems as the
work progresses.
A change order was provided to the HM for* their May meeting. In order to
provide for an orderly progression of the work, recommend Change Order #1
to Sunde Engineering for $7,500 be approved.
In addition to the actual construction costs, I anticipate we will be
receiving bills f rom Sunde and Subterranean Engineering regarding the
arbitration costs incurred by both contractors. As a result, these costs
will also have to be approved and incorporated either into the individual
contracts or charged against the bnebak earthwork contract Project #163.
JGF /ts
oo'0
2
rfl,
CITYOF
FRiDLCY
DIRECTORATE
OF
PUBLIC WORKS
MEMORANDUM
TO: Jock Robertson, Executive Director - HRA PW87 -172
FROM: John G. Flora,llublic Works Director
DATE: June 5, 1987
SUBJECT: Hathaway /Hillwind Right -of -way
On June 241, 1987, the Planning Commission will be hearing the Lot Split
request and property combination for the Ann Williams/Diane Fleten property
transactions associated with the realignment of Hathaway / Hackman
intersection and Old Central.
The HRA purchased Lot 4, Block 1 of the Parkview Manor Second Addition for
the road intersection. Of that parcel, 2,938 square feet to the northeast
are excess to the intersection needs and are proposed to be combined with
Lot 3, Block It Parkview Manor Second Addition (Duane Fleten) as well as
154 square feet from the southwest corner of Lot 61, Block It Parkview Manor
Second Addition (Ann Williams) . When these items are processed f rom the
Planning Commission to the City Council, it will be necessary to pay Ann
Williams $400 for her 154 square feet as originally agreed and executed the
necessary deed for recording.
This triangular portion frcam Lot 6 was required to provide driveway access
to the revised garage on Lot 3.
In addition to this action, I have received notice f rom George Knox of
UNOCAL, owner and operator of the 76 Gas Station, indicating that their
Board has approved the execution of the right -of -way easement for the
Hathaway /Hillwind improvement at a cost of $5,000.
Upon receipt of the easement and their certificate of title, we will record
the easement and then send UNOCAL their $5,000.
When the improvement is finally initiated, we will have to relocate the 76
sign unless they remodel their site prior to that time.
Recommend the HRA approve the Lot Split and Combination actions and the
property purchases so that they may be executed and processed through the
City Council.
JGF /ts
®. ICZ
w
CITY OF FRIMEY
HQ7SING & Rmw&OBENT w7HORITY
MEMORANDUM
MEMO TO: Nasim Qureshi. Director of HFR -5i
MEND FROM: Jock Robertson, Executive Director of EM
MEND DATE: June 5, 1987
REGARDING: Arbitration of Enebak Contract
On May 27, 1987 and May 28, 1987 the American Arbitration Association tried the
complaint by Enebak Construction against the City of Fridley and the Housing &
Redevelopnent Authority. A decision is due within 30 days.
Enebak's case was summarized as follows:
a. There was a total breach of contract by the City, therefore the contractor's
emit price bid of $.90 per cubic yard is voided.
b. Excess moisture occured throughout the site.
c. Sunde Engineering was unable to conclusively demonstrate why his projected sand
requirements and estimated additional costs are lower than Enebak.
d. On -site sand will be inadequate to complete the project and it will be
impossible to get a change order from the City Engineer.
e. The plans for the project should be changed or the time of the contract
extended for one month.
f. If the arbitration were delayed until the end of the job it would take an
additional six months for a final award and the contractor would lose
additional money.
g. The City's stone - walling of Enebak's claims by pointing out a contract was a
Jump sum contract was an outrageous procedure and there is a need for
compassion for Embak in this case.
The City's case was summarized as follows:
a. The City conceded that Enebak was entitled compensation for an additional 1,550
cubic yards of muck that was not revealed by the soil tests and for the related
dewatering.
b. The law is clearly on the site of the contractor and therefore there is a
potential for abuse.
c. These changes were minor and the contractor took advantage of than.
d. The charges were not significant enough to warrant a change order while the
contract was in force.
e. Calculation of damages must be by the unit prices in the contract because the
contract was still in force. The Special Conditions should take precedence
over the General Conditions.
f. The contract is not a lump sum contract. Extra work was quoted by unit prices,
otherwise the arbitration panel would have to rewrite the contract which it
cannot do.
g. The difference in on -site soil moisture was not that significant. The
contractor was able to mix the soils differently so as to achieve the required
compaction.
JLR/dm
M-87 -128
9?
CLAIMS
1605 - 1610
3
1
FRIDLEY HOUSING AND REDEVELOPMENT AUTHORITY
FRIDLEY, MINNESOTA
FINANCIAL STATEMENTS
r DECEMBER 31, 1986
i
FRIDLEY HOUSING AND REDEVELOPMENT AUTHORITY
ANNUAL FINANCIAL REPORT
YEAR ENDED DECEMBER 31, 1986
TABLE OF CONTENTS
Page
Organization
1
Auditors' Opinion
2
Combined Financial Statements
Combined Balance Sheet - All Fund Types and Account Group
3
Combined Statement of Revenues, Expenditures
and Fund Balance - All Governmental Fund Types
5
Notes to Financial Statements
6
Combining and Individual Fund Financial Statements
Special Revenue Fund
Comparative Statement of Revenues, Expenditures
and Fund Balance
11
Capital Projects Funds
Combining Balance Sheet
12
Combining Statement of Revenues, Expenditures
and Fund Balance
14
Debt Service Fund
Comparative Balance Sheet
16
Comparative Statement of Revenues, Expenditures
and Fund Balance
17
Agency Fund
Statement of Changes in Asset and Liability
18
Comparative Statement of General Long -Term Debt
19
FRIDLEY HOUSING AND REDEVELOPMENT AUTHORITY
Commissioners
Larry Commers - Chairman
Walter Rasmussen
John Meyer
Virginia Schnabel
Duane Praire
M"
n
FRIDLEY, MINNESOTA
ORGANIZATION
DECEMBER 31, 1986
1
- GMHCo
Board of Commissioners
Fridley Housing and
Redevelopment Authority
'— Fridley, Minnesota
GEORGE M. HANSEN COMPANY. P.A.
4 Profrs.em al Co►ponaram of Cr►nfied Fuhh, 4 .... tman:.
AUDITORS' OPINION
r-, We have examined the combined financial statements of the Fridley Housing and
Redevelopment Authority in and for the City of Fridley, Minnesota as of and
for the year ended December 31, 1986 as listed in the table of contents. Our
examination was made in accordance with generally accepted auditing standards
n and, accordingly, included such tests of the accounting records and such other
auditing procedures as we considered necessary in the circumstances. The
financial statements present only the funds related to the operation of the
Fridley Housing and Redevelopment Authority in and for the City of Fridley,
Minnesota and are not intended to present fairly the financial position and
results of operations of the City of Fridley, Minnesota in conformity with
generally accepted accounting principles.
In our opinion, the combined financial statements referred to above present
fairly the financial position of the Fridley Housing and Redevelopment
Authority in and for the City of Fridley, Minnesota at December 31, 1986 and
the results of its operations for the year then ended, in conformity with
generally accepted accounting principles applied on a basis consistent with
that of the preceding year.
Our examination was made for the purpose of forming an opinion on the combined
financial statements taken as a whole. The combining and account group
financial statements listed in the table of contents are presented for
purposes of additional analysis and are not a required part of the combined
financial statements of the Fridley Housing and Redevelopment Authority in and
�^ for the City of Fridley, Minnesota. Such information has been subjected to
the auditing procedures applied in the examination of the basic financial
statements and, in our opinion, the information is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole. Our examination did not include the supplemental information listed in
the table of contents.
May 21, 1987
14» UTICA AVENUE SOUTH. SUITE 175 MINNEAPOLIS. MINNESOTA SS416 612/546 25
2
FRIDLEY HOUSING AND REDEVELOPMENT AUTHORITY
FRIDLEY, MINNESOTA
COMBINED BALANCE SHEET - ALL FUND TYPES AND ACCOUNT GROUP
Assets
Cash
Cash in escrow
Investments
Receivables:
Accounts
Taxes -
Unremitted
Delinquent
Interest
Due from other governments
Amount available in debt
service fund
Amount to be provided for
retirement of general
long -term debt
Total assets
Liabilities and Fund Balance
December 31, 1986
Fiduciary
Governmental Fund Types Fund Types
Special Capital Debt
Revenue Projects Service Agency
$ $ 6,161 $ 2,154 $
9,434,609 537,613 1,784,222
362,903
117,881
112,752
11,771
$ -0- $10,046,077 $539,767 $1,784,222
Liabilities:
Accounts payable $
Deposits payable
Deferred revenue
Due to other governments
Bonds payable
Total liabilities
Fund balance:
$ 4,551 $ 1,213 $
1,784,222
117,881
103,663
-0- 226,095 1,213 1,784,222
Reserved for construction 5,774,379
Reserved for debt service 4,045,603 538,554
Unreserved, undesignated
Total fund balance -0- 9,819,982 538,554 -0-
Total liabilities and
fund balance $ -0- $10,046,077 $539,767 $1,784,222
See Accompanying Notes to Financial Statements
3
l
Account
Group
General Totals
Long -Term (Memorandum Only)
Debt 1986 1985
$ $ 8,315 $ 2,065
11,292,009
11,756,444 2,047,760
4,331
362,903 1,410
117,881 6,779
112,752 21,680
11,771 61,009
538,554 538,554 502,353
13,396,446 13,396,446 15,117,647
7 $ $ 5,764 $
1,784,222 10,850
117,881 6,779
103,663 113,086
r pl- 13,935,000 13,935,000 15,620,000
13,935,000 15,946,530 15,750,715
5,774,379 8,748,247
4,584,157 4,547,956
_ 10,125
-0- 10,358,536 13,306,328
4
FRIDLEY HOUSING AND REDEVELOPMENT AUTHORITY
FRIDLEY, MINNESOTA
COMBINED STATEMENT OF REVENUES, EXPENDITURES AND FUND BALANCE
ALL GOVERNMENTAL FUND TYPES
Year Ended December 31, 1986
See Accompanying Notes to Financial Statements
5
Totals
Special Capital
Debt
(Memorandum Only)
Revenue Projects
Service
1986
1985
Revenues:
^
Tax increment
$ $ 858,253 $
$ 858,253
$ 566,686
State credits
9,119
9,119
7,260
Sale of land
120,043
120,043
60,000
Interest on investments
777,770
92,944
870,714
126,846 ^
Rental
52,150
52,150
26,764
Miscellaneous
10,850
10,850
657
Total revenues
-0- 1,828,185
92,944
1,921,129
788,213 ..,
i
Expenditures:
Professional services
557,473
79,634
637,107
241,138
Land purchase
981,484
981,484
5,402,513
Site improvement
631,997
631,997
98,500
Principal payment
180,000
180,000
85,000
Interest expense
652,322
652,322
230,923 ^
Agent fees
138,789
138,789
552
Miscellaneous
4,719
4,719
9,193
Total expenditures
-0- 2,175,673
1,050,745
3,226,418
6,067,819
Deficiency of revenues
over expenditures
-0- (347,488)
(957,801)
(1,305,289)
(5,279,606) _
Other financing sources (uses):
Bond proceeds
9,935,119
76,825
10,011,944
17,407,887
Operating transfers in
1,884,188
985,158
2,869,346
233,295 ^
Operating transfers out
(10,125)(2,791,240)
(67,981)
(2,869,346)
(233,295)
Remittance to escrow agent
(104,447)
(104,447)
Defeasance of debt
(11,550,000)
(11,550,000)
Total other financing
sources (uses)
(10,125)(2,626,380)
994,002
(1,642,503)
17,407,887
Excess (deficiency) of
^
revenues and other
financing sources over
expenditures and other
^
financing uses
(10,125)(2,973,868)
36,201
(2,947,792)
12,128,281
Fund balance January 1
10,125 12,793,850
502,353
13,306,328
1,178,047 ^
Fund balance December 31
$ -0- $9,819,982 $
538,554 $10,358,536
$13,306,328
See Accompanying Notes to Financial Statements
5
n
FRIDLEY HOUSING AND REDEVEIAPMENT AUTHORITY
FRIDLEY, MINNESOTA
'11 NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1986
1. Summary of Significant Accounting Policies
The Fridley Housing and Redevelopment Authority (HRA), Fridley, Minnesota was
established in 1980 by the City Council of Fridley, Minnesota under the
Statutes of the State of Minnesota to complement and account for any public
redevelopment and housing projects undertaken within the City which would fall
under the statutory authority of the HRA.
7
r
The Housing and Redevelopment Authority is a component unit of the City of
Fridley and an integral part of the City.
The accounting policies of the HRA conform to generally accepted accounting
principles. The following is a summary of the more significant policies:
A. Fund Accounting
The accounts of the HRA are organized on the basis of funds and account
group, each of which is considered a separate accounting entity. The
operations of each fund are accounted for with a separate set of
self- balancing accounts that comprise its assets, liabilities, fund
equity, revenues and expenditures. Resources are allocated to and
accounted for in individual funds based upon the purposes for which they
are to be spent and the means by which spending activities are controlled.
The various funds are grouped, in the financial statements in this report,
into four generic fund types within two broad fund categories as follows:
Special Revenue Fund - The Special Revenue Fund is used to account for the
proceeds of certain specific revenue sources that are restricted to
expenditures for specified purposes.
Capital Projects Funds - Capital Projects Funds are used to account for
the acquisition of property or construction of improvements set forth by
the Housing and Redevelopment Authority.
Debt Service Fund - The Debt Service Fund is used to account for the
accumulation of resources for, and the payment of, general long -term debt
principal, interest and related costs.
FIDUCIARY FUND
Defeasance Agency Fund - The Defeasance Agency Fund is used to account for
deposits held by the City on behalf of the First Trust Company, Inc. of
St. Paul, the escrow agent for the defeased 1985 General Obligation Tax
Increment Bonds. Funds will be transferred to the escrow agent as debt
service payments come due.
B. Fixed Assets and Long -Term Liabilities
The accounting and reporting treatment applied to the fixed assets and
long -term liabilities associated with a fund are determined by its
measurement focus. All governmental funds are accounted for on a spending
6
FRIDLEY HOUSING AND REDEVELOPMENT AUTHORITY
FRIDLEY, MINNESOTA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1986
I. Summary of Significant Accounting Policies (Continued)
B. Fixed Assets and Long -Term Liabilities (Continued)
or "financial flow" measurement focus. This means that only current
assets and current liabilities are generally included on their balance
sheets; accordingly, their reported fund balance is considered a measure
of "available spendable resources." Governmental fund operating
statements present increases and decreases in net current assets.
Accordingly, they are said to present a summary of sources and uses of
"available spendable resources" during a period. Land was acquired by the
HRA and later sold at a loss. This is considered a cost of the program.
Therefore, the HRA has no fixed assets.
C. Basis of Accounting
Basis of accounting refers to when revenues and expenditures or expenses
are recognized in the accounts and reported in the financial statements.
Basis of accounting relates to the timing of the measurements made,
regardless of the measurement focus applied.
All funds of the HRA are accounted for using the modified accrual basis of
accounting. Their revenues are recognized when they become measurable and
available as net current assets.
Expenditures are generally recognized under the modified accrual basis of
accounting when the related fund liability is incurred. Exceptions to
this general rule are principal and interest on general long -term debt
which is recognized when due.
D. Total Columns on Combined Statements
Total columns on the combined statements are captioned "Memorandum Only"
to indicate that they are presented only to facilitate financial analysis.
Data in these columns do not present financial position, results of
operations, or changes in financial position in conformity with generally
accepted accounting principles. Neither are such data comparable to a
consolidation. Interfund eliminations have not been made in the
aggregation of the data.
E. Assets, Liabilities and Fund Equity
1) Cash and Investments
Cash balances from all funds are combined and invested to the extent
available in certificates of deposit, U.S. government securities and
other securities authorized by State Statute. Earnings from such
investments are allocated to the respective funds on the basis of
applicable cash balance participation by each fund. Investments are
stated at cost which approximates market.
7
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FRIDLEY HOUSING AND REDEVELOPMENT AUTHORITY
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FRIDL.EY, MINNESOTA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1986
1. Summary of Significant Accounting Policies (Continued)
E. Assets, Liabilities and Fund Equity (Continued)
2) Cash in Escrow
The December 31, 1985 balance of cash in escrow represents the net
proceeds after issuance costs, from the sale of $11,550,000 Variable
Rate Demand General Obligation Tax Increment Bonds, Series 1985. The
proceeds were held in escrow by Manufacturers Hanover Corporation
under an investment agreement until a permanent bond rating was issued
by Standard and Poors Corporation. The rating was issued in 1986 and
the proceeds were transferred to the City.
3) Annual Leave
The accrued liability for vacation pay and other employee benefits is
recorded in an internal service fund of the City. The HRA funds have
no liability for employee benefits at December 31, 1986.
F. Revenues and Expenditures
r Tax Increment (Property Taxes) - Revenue is recognized in the year of
collection, with amounts due from the County and received early in the
following year set up as receivable (unremitted receivables). Uncollected
(delinquent) taxes receivable are fully offset by deferred revenue as they
are not available to finance current expenditures.
i
Interest on Investments - Interest is recorded as revenue in the year
earned.
2. Fund Deficits
The following funds had deficit fund balances at December 31, 1986:
Construction
Moore Lake Area $ 1,353
University Industrial Park/North Area 1,326
Lake Pointe 96,989
Area Wide 4,171
7 8
FRIDLEY HOUSING AND REDEVELOPMENT AUTHORITY
FRIDLEY, MINNESOTA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1986
3. Cash and Investments
Cash and investments at year end consist of the following:
U.S. Government securities $ 1,152,828
Commercial paper 8,162,221
Certificates of deposit 851,949
Repurchase agreements 1,589,446
11,756,444
Demand deposits 8,315
911.764.759
In accordance with applicable Minnesota Statutes, the Housing and
Redevelopment Authority maintains deposits at depository banks authorized by
the Housing and Redevelopment Authority Commission.
Minnesota statutes require that all deposits be protected by insurance, surety
bond or collateral. If collateral is pledged as protection for the deposits,
the market value of the collateral must, at a minimum, be 110% of the deposits
not covered by insurance or bonds (140% in the case of mortgage backed
collateral). Repurchase agreements are intentionally overcollateralized at
105% to insure that the safety of investment principal is attained and losses
do not occur from rapid overnight deterioration.
State statutes authorize the Housing and Redevelopment Authority to invest in
all the types of instruments shown above and due care is taken to insure the
safety of principal.
The carrying value, market value and credit risk (as defined by GASB Statement
No. 3) of the investments held by the Housing and Redevelopment Authority at
year end are as follows:
Carrying
Valna
Credit Risk Category 1 $ 3,360,264
Credit Risk Category 2
Credit Risk Category 3 8,404,495
Market Value S11.764.759
The Housing and Redevelopment Authority's investments are categorized above to
give an indication of the level of risk assumed at year end. The level of
risk is defined by the following criteria set out by the governmental
accounting standards board within statement #3. Category 1
9
7
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FRIDLEY HOUSING AND REDEVELOPMENT AUTHORITY
FRIDLEY, MINNESOTA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1986
3. Cash and Investments (Continued)
includes investments that are insured or registered for which the securities
are held by the Housing and Redevelopment Authority or its agent in the
Housing and Redevelopment Authority's name. Category 2 includes uninsured and
unregistered investments for which the securities are held by the brokers or
dealers trust department or agent in the Housing and Redevelopment Authority's
name. Category 3 includes uninsured and unregistered investments for which
the securities are held by the broker or dealer, or by its trust department or
agent but not in the Housing and Redevelopment Authority's name.
The Category 3 securities consist of the various investment types shown above
which are held by Merrill Lynch in street name.
The carrying value and market value of the investments are considered equal.
4. Long -Term Debt
The following is a summary of long -term debt transactions of the Housing and
Redevelopment Authority for the year ended December 31, 1986:
Bonds payable
at January 1, 1986 $15,620,000
Bonds issued 10,045,000
Bonds paid (180,000)
Bonds defeased (11,550,000)
Bonds payable
at December 31, 1986 $13,935,000
Bonds payable at December 31, 1986 are comprised of the following individual
issues (in thousands of dollars):
$4,070,000 Tax Increment Revenue Refunding Bonds of 1985 due in
varying annual installments of $180,000- 460,000 through February
1, 1999; interest at 5.50% -9.00% $ 3,890
$10,045,000 General Obligation Tax Increment Refunding Bonds due
in varying installments of $230,000 - 2,095,000 through February
1, 2000; interest at 7.00% $10,045
$13,935
The Tax Increment Revenue Bonds are payable solely from increment revenue that
is generated from the related increment district. The General Obligation Tax
r Increment Refunding Bonds are payable primarily from tax increment revenue
with any deficiency to be provided by general property taxes.
There are a number of limitations and restrictions contained in the various
bond indentures. The City is in compliance with all significant limitations
and restrictions.
r 10
FRIDLEY HOUSING AND REDEVELOPMENT AUTHORITY
FRIDLEY, MINNESOTA
HOME OWNERSHIP SPECIAL REVENUE FUND
COMPARATIVE STATEMENT OF REVENUES, EXPENDITURES AND FUND BALANCE
Year Ended December 31, 1986
With Comparative Amounts for Year Ended December 31, 1985
Revenues:
Interest on investments
Total revenues
Other financing uses:
Operating transfers out:
Revolving Fund
Total other financing uses
Deficiency of revenues over other
financing uses
Fund balance January 1
Fund balance December 31
11
1986 1985
$ $ 1,129
-0- 1,129
(10,125)
(10,125) -0-
(10,125) 1,129
10,125 8,996
$ -0- $10,125
FRIDIXY HOUSING AND REDEVELOPMENT AUTHORITY
FRIDLEY, MINNESOTA
CAPITAL PROJECTS FUNDS
vecemoer Jt, 1700
With Comparative Totals for December 31, 1985
Assets
Cash
Cash in escrow
Investments
Receivables:
Accounts
Taxes -
Unremitted
Delinquent
Interest
Due from other governments
Total assets
Liabilities and Fund Balance
Liabilities:
Accounts payable
Deposits payable
Deferred revenue
Due to other governments
Total liabilities
Fund balance (deficit):
Reserved for construction
Reserved for debt service
Total fund balance
Total liabilities and
fund balance
North Area/
Center Moore Univ. Ind.
Revolving City Lake Area Park
$ $ 6,161 $ $
9,230,033 204,576
362,903
117,881
112,752
11,771
$9,835,340 $210,737 $ _ -0- $ -0-
$
$ 705
$
$ 127
117,881
3,670
1,353
1,199
117,881
4,375
1,353
1,326
5,671,856
206,362
(1,353)
(1,326)
4,045,603
9,717,459
206,362
(1,353)
(1,326)
$9,835,340
$210,737
$ -0-
$ -0-
12
Johnson Lake Area Totals
Skywood Pachske Pointe Wide 1986 1985
$ $ $ $ $ 6,161 $ 1,112
11,292,009
9,434,609 1,536,235
4,331
362,903 1,410
117,881 6,779
112,752 21,680
$ -0- $ -0- $ -0- $ -0- $10,046,077 $12,924,565
$ $ $ 1,175
$2,544
$ 4,551
$
10,850
117,881
6,779
95,814
1,627
103,663
113,086
-0- -0- 96,989
4,171
226,095
130,715
(96,989)
(4,171)
5,774,379
8,748,247
4,045,603
4,045,603
-0- -0- (96,989)
(4,171)
9,819,982
12,793,850
$ -0- $ -0- $ -0-
$ -0-
$10,046,077
$12,924,565
13
FRIDLEY HOUSING AND REDEVELOPMENT AUTHORITY
FRIDLEY, MINNESOTA
CAPITAL PROJECTS FUNDS
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND FUND BALANCE
Year Ended December 31, 1986
With Comparative Totals for Year Ended December 31, 1985
14
North Area/
Center
Moore
Univ. Ind.
Revolving
City
Lake Area Park
Revenues:
Tax increment
$ 858,253
$
$
$
State credits
9,119
Sale of property
119,786
257
Interest on investments
749,456
28,313
^
Rental
50,940
1,210
Miscellaneous
10,000
850
Total revenues
1,797,554
30,630
-0-
-0-
Expenditures:
Professional services
51,118
36,380
8,581
Land purchase
269,424
^
Site improvement
Interest expense
Miscellaneous
365
250
210 ^
Total expenditures
-0-
320,907
36,630
8,791
Excess (deficiency) of
revenues over expenditures
1,797,554
(290,277)
(36 , 630)
(8,791)
Other financing sources (uses):
Bond proceeds
9,935,119
^
Operating transfer in
132,536
42,981
Operating transfer out
(2,736,809)
(54,431)
Remittance to escrow agent
(104,447)
^
Defeasance of debt
(11,550,000)
Total other financing sources (uses)
(4,323,601)
-0-
42,981
(54,431)
Excess (deficiency) of revenues
^
and other financing sources
over expenditures and other
financing uses
(2,526,047)
(290,277)
6,351
(63,222) ^
Fund balance (deficit) January 1
12,243,506
496,639
(7,704)
61,896 ^
Fund balance (deficit) December 31
$9,717,459
$206,362
$(1,353)
$(1,326)
14
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^
^
^
Johnson
Lake
Area
Totals
Skywood
Pachske
Pointe
Wide
1986
1985
^
$
$
$
$
$ 858,253
$ 401,577
9,119
7,260
^
120,043
60,000
777,769
123,136
52,150
26,764
10,850
657
7
-0-
-0-
-0-
-0-
1,828,184
619,394
29
46,529
391,754
23,082
557,473
241,138
13,500
698,560
981,484
5,402,513
631,997
631,997
98,500
3,712
105
105
3,624
59
4,718
9,193
134
60,134
1,725,935
23,141
2,175,672
5,755,056
^
(134)
(60,134)
(1,725,935)
(23,141)
(347,488)
(5,135,662)
^
9,935,119
17,407,887
211
60,211
1,629,279
18,970
1,884,188
45,830
^
(2,791,240)
(233,295)
(104,447)
(11,550,000)
^
211
60,211
1,629,279
18,970
(2,626,380)
17,220,422
I
77 77 (96,656) (4,171) (2,973,868) 12,084,760
(77) (77) (333) -0- 12,793,850 709,090
$ - -0- $ -0- $ (96,989) $(4,171) $9,819,982 $12,793,850
^
7
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15
FRIDLEY HOUSING AND REDEVELOPMENT AUTHORITY
Assets
Cash
Investments
Total assets
FRIDLEY, MINNESOTA
DEBT SERVICE FUND
COMPARATIVE BALANCE SHEET
December 31, 1986 and 1985
Liability and Fund Balance
Liability:
Accounts payable
Fund balance:
Reserved for debt service
Total liability and fund balance
16
1986 1985
$ 2,154 $ 953
537,613 501,400
$539,767 $502,353
$ 1,213 $
538,554 502,353
$539,767 $502,353
n
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FRIDLEY HOUSING AND REDEVELOPMENT AUTHORITY
FRIDLEY, MINNESOTA
n
DEBT SERVICE FUND
COMPARATIVE STATEMENT OF REVENUES, EXPENDITURES AND FUND
BALANCE
Years Ended December 31, 1986
and 1985
,—
1986
1985
Revenues:
$
$165,109
Tax increment -
92,944
2,581
Interest on investments
Total revenues
92,944
167,b90
Expenditures:
Professional services
79,634
Debt Service -
85,000
Principal payment
652,322
652,322
227,
Interest expense
138,789
55
55 2
Agent fees
^
Total expenditures
1,050,745
312,763
Deficiency of revenues over
(957,801)
(145,073)
expenditures
Other financing sources:
Bond proceeds
76,825
Transfer from Revolving Fund
917,177
187,465
Total other financing sources
994,002
187,465
r
Excess of revenues and other financing
sources over expenditures
36,201
42,392
Fund balance January 1
502,353
459,961
Fund balance December 31
$ 538,554
$502,353
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17
FRIDLEY HOUSING AND REDEVELOPMENT AUTHORITY
FRIDLEY, MINNESOTA
DEFEASANCE AGENCY FUND
STATEMENT OF CHANGES IN ASSET AND LIABILITY
YEAR ENDED DECEMBER 31, 1986
Balance Balance
January 1 Additions Deletions December 31
Asset
$
$1,784,222
$
$1,784,222
Investments
Total asset
$
-0- $1,784,222
$
-0- $1,784,222
Liability
Deposits payable
$
$1,784,222
$
$1,784,222
Total liability
$
-0- $1,784,222
$
-0- $1,784,222
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FRIDLEY HOUSING AND REDEVELOPMENT AUTHORITY
FRIDLEY, MINNESOTA
COMPARATIVE STATEMENT OF GENERAL LANG -TERM DEBT
December 31, 1986 AND 1985
Amount available and to be provided for
the payment of general long -term debt
Amount available in Debt Service Fund
Amount to be provided by future taxes
Total available and to be provided
i
General long -term debt payable
General obligation tax increment
refunding bonds
Tax increment revenue refunding bonds
Total general long -term debt payable
19
1986 1985
$ 538,554 $ 502,353
13,396,446 15,117,647
e,n ni.c nnn S11 55n_000
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