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HRA 03/12/1987 - 29330• CITY OF FRIDLEY HOUSING & REDEVELOPMENT AUTHORITY MEETING, MARCH 12, 1987 CALL TO ORDER: Chairperson Commers called the March 12, 1987, Housing & Redevelopment Authority meeting to order at 7:09 p.m. ROLL CALL: Members Present: Larry Commers, Virginia Sdhnabel, Duane Prairie, John Meyer, Walter Rasmussen Members Absent: None Others Present: Jock Robertson, HRA Executive Director Nasim Qureshi, City Manager Dave Newman, HRA Attorney Rick Pribyl, Finance Director Julie Burt, Asst. Finance Officer Louis & June Lundgren, 1140 Minnesota Bldg., St. Paul R. Trocke, 244 Mississippi St. R. Schoneman, 246 Mississippi St. APPROVAL OF FEBRUARY 12, 1987, HOUSING & REDEVELOPMENT AUTHORITY MINUTES: • MOTION BY MR. RASMUSSEN, SECONDED BY MS. SCHNABEL, TO APPROVE THE FEB. 12, 1987, HOUSING & REDEVELOPMENT AUTHORITY MINUTES AS WRITTEN. UPON A VOICE VOTE, ALL VOTING AYE,, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. 1. CONSIDERATION OF A RESOLUTION AMENDING THE REDEVELOPMENT PROJECT NO. 1 AND MODIFYING BY ENLARGEMENT REDEVELOPMENT PROJECT NO. 1 AND THE MODIFIED REDEVELOPMENT PLAN RELATING THERETO PURSUANT TO THE PROVISIONS OF MI14NESOTA STATUTES, SECTIONS 462.411 TO 462.716, INCLUSIVE: Mr. Robertson stated Staff had provided the HRA with a timetable of the steps required to enlarge the redevelopment district as suggested by the City Council in January. At the last meeting, the HRA had directed Staff to begin the procedure. The first step was to adopt this resolution. Mr. Robertson stated Item 3 in the resolution had been modified by the Bond Counsel; and in the agenda packet handed out at the meeting, the HRA members had received a revision of this resolution in which the HRA was giving preliminary approval subject to Planning Commission review, City Council approval, and subject to final HRA approval after the necessary documentation has been furnished by City Council. Jim O'Meara has said he will have the final documents to the City sometime within the next week. When those docu- ments are ready, that will start the review process. n U • HOUSING & REDEVELOPMENT AUTHORITY MEETING, MARCH 12 1987 PAGE 2 MOTION BY MS. SCHNABEL, SECONDED BY MR. RASMUSSEN, TO APPROVE RESOLUTION NO. HRA 3 -1987, A RESOLUTION AMENDING THE REDEVELOPMENT PROJECT NO. 1 AND MODIFYING THE ENLARGEMENT REDEVELOPMENT PROJECT NO. 1 AND THE MODIFIED REDEVELOPMENT PLAN RELATING THERETO PURSUANT TO THE PROVISIONS OF MINNESOTA STATUTES, SECTIONS 462.411 TO 462.716 EXCLUSIVE. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. 2. CONSIDERATION OF DRAWING ON LOU LUNDGREN'S LETTER OF CREDIT: Mr. Lundgren stated he had just received the final document of the feasibility study on the six -story apartment building. He stated this study was done by the Lee Maxfield Research group, and Mr. Maxfield was at the meeting to give a presentation and answer any questions from the HRA.. Mr. Lundgren stated he had gotten the draft of the document on Monday. He then met with Mr. Qureshi and Mr. Robertson on Tuesday to briefly go over the document and discuss some aspects of it. The document was an integral part of the presentation to the lenders, although the initial package to the lenders went out about two days ago. All the preliminary presentations were now in the mail. There were six lending groups who were looking at the package. They will be responding within 7 -12 days concerning whether or not they have an interest in the project. As soon as he receives the first affirmative response, they will be meeting with City Staff; and at that time, will try to work out whatever agreements are necessary to make the project go. At the next HRA meeting,he should have a proposed agreement for the first stage of the project. Mr. Lundgren stated that in addition to the first stage, the financial package did include some preliminary information about stages II, III, and IV. He described the various phases of the project: Phase I - six -story apartment building, 124 units Phase II - apartment building (height of number of units will be responsive to the need as indicated by the feasibility study) Phase III - about 60,000 sq. ft. of retail area Phase IV - five -story office building Mr. Lundgren stated the feasibility study for the retail and. the office hasnot been done yet, but will be commissioned as soon as they—get over the first hump. Mr. Lundgren stated he was very optimistic about the project. He hoped to get this package in order; and if he was able to do that, he felt confident that he could proceed yet this summer with Phase II and possibly Phase III. Mr. Lundgren stated he would like to have Mr. Maxfield give a brief presenta- tion of what he has done and what he thinks of the market for the project. Mr. Lee Maxfield stated that for the last 18 years he has been involved in market research, predominately in the Twin Cities but also throughout the country. In the last four years, they have worked on about 15,000 apartment HOUSING & REDEVELOPMENT AUTHORITY MEETING, MARCH 12, 1987 PAGE 3 units in the Twin Cities. They have also been involved in .l5 - 20 senior housing projects. The next phase they are looking at for Mr. Lundgren was the senior building. Mr. Paxfield stated they were asked to look at the market for the 124 apart- ment midrise building. As part of their analysis, they looked at the site to determine how they felt the site would appeal to the marketplace and the adequacy for housing. He felt, given the location on University, the shopping area, the civic center, and the community facilities across University, and the residential character of the neighborhood behind it, it offered a very good site for housing. He would call it a more urban infill site. They also looked at the growth in the community and the demographics in the area to identify where the market would be for this building. In looking at the growth in the area, although Fridley's grotith was not significant compared to other _ communities, there was a significant household base in the area today. There were a number of rental units that were dated that were older and one of the strong markets they have seen for housing was providing updated, more modern, more contemporary housing, so they do see a market that could.be attractive to people who like the idea of living in new units with more amenities that are supplied in a new building that might not be found in an older building. Mr. Maxfield stated that also in looking at the demographics of Fridley, they saw a large "empty nester" market - -a market that was not seniors, but in the . 50 -55 and older age group with children who have grown up and left home, and they find they no longer need all the space in their home and want to simplify their life style. Based on those demographics, they feel the building in question would stron ly appeal to this market. This offered several things for the community: ?1) Provided the ability for people to stay in Fridley; (2) Freed up more affordable housing for younger families; and (3) Benefitted the City and the School District by bringing younger families into the community. Mr. Maxfield stated there a number of development projects for office space going in along University Avenue, and that type of development brought in a large number of professionals who are looking for housing which more Befits their lifestyle. A new more contemporary building appealed to that market where an older 15 -20 year old building might not. Mr. Maxfield stated that in looking at the projections they have made for housing, they would project in the market area which included Fridley, Coon Rapids, Columbia Heights, and New Brighton, that there would be a need for 1,600 -1,800 new rental units between now and 1990 based on the growth in the area. A large number of the units would be attributed to Coon Rapids where the major share of development was found; however, he felt infill sites had a very strong potential. Mr. Maxfield stated that in the analysis of buildings in Fridley in the imme- diate area, they found vacancy rates that were 3 -4% across the board. Also, in looking at information in the Apartment Guide (a regional company that keeps • track of vacancies throughout the Metropolitan area), they found they are showing vacancy rates at the 3 -4% range for this entire market. He stated they always look at a market, if it is below 5 %, as an opportunity to-start new construction. • HOUSING & REDEVELOPMENT AUTHORITY MEETING, MARCH 12,`1987 PAGE 4 Mr. Maxfield stated one other factor they found in an inventory of what was coming on the market, there are about 1,500 units planned, including the 124 units in Mr. Lundgren's project, as well as 165 or so units in the senior building. Most of the units being proposed in Coon Rapids or the apartment complex in the northern part of Fridley (a different building product entirely- - a smaller scale building and more affordable ho sing) he did not see as being directly competitive with this project simply b5ause of the building type and appearance of the building. Mr. Maxfield stated if they are looking at 1,600 -1,800 units for being a potential market, 1,500 which are proposed right now, and with vacancy rates below 5 %, all things indicated to him that there was still a good market in this area to build additional housing. This type of building would be the only one like it in the area. Mr. Maxfield stated again that the target market identified was more toward professional couples, singles, and empty nesters, as well as some older people who do not want to retain their homes any longer. This project was not for the young singles or the roommate situation that are found in a lot of other projects. Mr. Maxfield stated that in looking at the project, they came in later in the process, so they had not had any input into how they felt the building should be built. However, in reviewing the floor plans, they did not have any major concerns about the amenities proposed, the unit mix, and unit sizes. They had suggested that one of the one bedroom units be made larger and there were a couple of units they felt were too large. These were deficiencies that could easily be made by rearranging the floor plans. They also made some projections on what they felt were appropriate rents, and did a major reshuffling of the rent schedules that had been proposed. They tried to bring the rents more in line with other units in the project as well as competitive buildings in the area. They were recommending the following rents: One bedroom units - $525 - 595, depending on size of unit Two bedroom units - $675 - 850, depending on size of unit Mr. Maxfield stated at this point he felt very comfortable in saying they think there is a market for this building, given some of the recommendations they have made and changes in floor plans, unit sizes and rearranging rents. Mr. Commers asked Mr. Maxfield if he had done any market analysis with regard to Phase II. Mr. Maxfield stated they were in the process of doing that, but they wanted to get Phase I done first. A lot of the information presented pertained to the second phase. One of their concerns in the second phase was the number of units; however, he was more optimistic that there was a market for senior housing in this area than in other areas (Richfield, St. Louis Park, Minnetonka) • where there were a substantial number of units still available. In this northern suburban area, there really was not a supply like that found in other communities. • HOUSING & REDEVELOPMENT AUTHORITY MEETING, MARCH 12, 1987 PAGE 5 Mr. Qureshi asked what the financial viability of this project was in relation to other projects. Mr. Maxfield stated that from meetings they have attended, HUD in particular and many of the lenders, are nervous when they see vacancy rates go up to 15 -20%. HUD has put a "soft market" stamp on the west suburban areas from Plymouth to Eagen (the whole southwest suburban area), and they will not look at or consider any more rental projects in those areas because they are looking at a 3 -4 year supply of units coming on the market. Mr. Maxfield stated the northern market appeared to be a different market, as they do not see the large number of high vacancy rates, and thkele was"not a lot of housing construction in the area. He thought the lenders would look much more favorably on this market than they would in most any other market in the Twin Cities. Mr. Meyer stated that regarding Mr. Maxfield's comments on the suggested floor plan revisions and rent revisions, were those acceptable to Mr. Lundgren? Mr. Lundgren stated Mr. Maxfield has made those comments in the draft market analysis, and he did not feel it would be very difficult to accommodate those suggested revisions. He felt all the suggestions made by Mr. Maxfield were well taken, he agreed with all of them, and he intended to use them. He did Mnot believe in paying good money for good advice and then not paying any attention to that advice. Mr. Lundgren stated that in response to the question about the senior building, he felt Mr. Maxfield would be ready with that report within the next 2 -3 weeks. Mr. Lundgren stated they hoped to be back to Staff'vrithin two weeks so that he can come back to the next HRA meeting with a proposed agreement for the HRA's review and discussion. Mr. Commers stated that hearing no motions, this item would remain on the table and the letter of credit was not called upon at this time. 3. CONSIDERATION OF A MASTER LEASE OF RICE PLAZA SHOPPING CENTER: Mr. Robertson stated he would direct the HRA's attention to the memo dated March 6, 1987, he had written to Mr. Qureshi. At the direction of the HRA at their February meeting, Staff made a compromise proposal to Mr. Levy, cutting the length of time for the option from five years to four years. That compromise proposal was sent to Mr. Levy, and Staff had not received any response. 4. CONSIDERATION OF A RESOLUTION AUTHORIZING THE INITIATION OF CONDEMNATION ACTION FOR THE RIGHT-OF-WAY P PER Y LOCATED OW H UNION 76 SERVICE S TION AT THE INTERSECTION OF HIGHWAY 65 /WEST MOORE LAKE ROAD-AND OLD CENTRAL: Mr. Commers stated that in the agenda were a letter from John Flora to George Knox of UNOCAL dated March 10, 1987, and a resolution. HOUSING & REDEVELOPMENT AUTHORITY MEETING, MARCH-1-2,1987 PAGE 6 Mr. Robertson stated the project was tentatively scheduled to begin in June. They were now going through the steps. The Public Works Department has been corresponding with the corporate headquarters of the Union 76 station. The local regional branch was in agreement with the proposal for a provision of additional right -of -way for the construction of the inter- section; however, there were some agonizinq delays with the corporate head- quarters in authorizing,an easement or a sale. The purpose, of the resolution was to proviae the City with a back -up plan which could be enacted to help consummate the willing seller /willing buyer situation. MOTION BY MR. RASMUSSEN, SECONDED BY MR. PRAIRIE, TO APPROVE RESOLUTION NO. HRA 4 1987, RESOLUTION AUTHORIZING THE INITIATION OF CONDEMNATION ACTION FOR THE RIGHT -OF -WAY PROPERTY LOCATED ON THE UNION 76 SERVICE STATION AT THE INTERSECTION OF HIGHWAY 65 1WEST MOORS LAKE ROAD AND OLD CENTRAL. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. 5. UPDATE ON LAKE POINTE CORPORATE CENTER DEVELOPMENT PROJECT: Mr. Newman stated they have retained the law firm of Popham -Haik to work with them in representing the HRA. Mr. Ray Haik has indicated to the Lake Pointe's attorney that the HRA was not prepared to propose any modifications to the Development Contract. Mr. Haik did indicate that, of course, the HRA would listen to any proposals which the Developer might wish to make. At this time, they have not received any response from Lake Pointe's counsel. Mr. Commers stated that about two years a909 Mr. Sid Inman provided the HRA with a copy of the insurance binder that covered the HRA members under the City's insurance policy, He k0 d like Staff to again provide a copy of -that to the newer HRA members who h6d'n6t received "it "in the past, 6, CLAIMS (1582 - 1588): MOTION BY MR. PRAIRIE, SECONDED BY MR. MEYER, TO APPROVE THE CHECK REGISTER DATED 3111187 AS PRESENTED. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. 7. OTHER BUSINESS: a. Plaza Parking Ramp Mr. Qureshi stated that discussion has been held a number of times ahout the inadequate amount of parking space for the office building and City u HOUSING & REDEVELOPMENT AUTHORITY MEETING, MARCH 12, 1987 PAGE 7 0 Hall. It was Staff's initial recommendation to prepare a feasibility study and when that study becomes available, they will present it to the HRA for review and discussion. ADJOURNMENT: MOTION BY MR. RASMUSSEN, SECONDED BY MR. PRAIRIE, TO ADJOURN THE MEETING. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MARCH 12, 1987, HOUSING & REDEVELOPMENT AUTHORITY MEETING ADJOURNED AT 8:20 P.M. Respectfully submitted, ym—�� Q... Lft ATe Saba Recording Secretary U r 0 �j