HRA 12/10/1987 - 29647QTY OF FRIILEY
P-10100 I n i" b, * -.3 5i•
CALL Chairperson Conners called the Dec. 10, 1987, Housing & Redevelop-
ment meeting to order at 7:10 p.m.
MEMBERS, Mv-w: Larry Commers, Virginia Schnabel, Duane Prairie, John Meyer
MEMBERS ABSENT: Walter Rasmussen
OTHERS PRESENT: Jock Robertson, Executive Director of HRA
Rick Pribyl, Finance Director
Julie Burt, Asst. Finance Off ioer
Dave Newman, HRA Attorney
Lou & June Lundgren, 343 Kellogg Blvd. #, St. Paul
Alan Rouse, 1786 Hennepin Ave. S. , Mpls.
Gerald Paschke, 7960 Ranchers Rd.
FlU • ZA1! ui= ., ilRj IFF" P o-DgL • Dui_ �r !4� • 5. hi �rM�l�1)4
by Mr. Prairie, seconded by Mr. Meyer, to approve the Nov. 12, 1987,
Housing & Redevelopment Authority minutes as written.
UEON A VOICE VOTE, ALL VOTM AXE, SON COMERS DECLARED THE MOTION
(NRRIED UNANIMOUSLY.
Mr. Lundgren stated the following day he would be meeting with the
Carnegie Evans group in Greerwich, Connecticut, on this project. They
will be voting on the amount of the commitment that the Carnegie Evans
group is going to take.
Mr. Lundgren stated he had a tentative arrangement with the contractor,
J. L. Thompson, whose net worth was $60 million and whose largest job
has been about the sane amount. Mr. Thanpson has been in business for 30
years. He is going to put up letters of credit for the difference
between what the commitment is and the amount of money needed, so they
will have 100% financing. The arrangements are being made for Phase I
and Phase II. He stated he expected to hear late Friday afternoon on the
exact amount of the cannitment. The actual application commitment would
probably not be available until the following Wednesday or Thursday.
Mr. Lundgren stated he was still working, hopefully and optimistically,
on closing yet this year. He realized that was slightly more than two
weeks away. Whether they would be able to do that or not remained to be
seen. The people they are dealing with are used to making decisions
quickly.
Mr. Lundgren stated he believed the construction loan would also come
from the same group backed by the ommitment and the letters of credit
for the difference.
Mr. Lundgren stated he had given this information to Mr. Robertson that
morning, and he would keep Mr. Robertson informed of any further
developments.
Mr. G=mers asked Staff what the expiration date was on Mr. Lundgren's
letter of credit.
Mr. Newman stated Mr. Lundgren's letter of credit expired on Feb. 1,
1988.
W. Lundgren stated there was another alternate commitment he was
supposed to hear from next week, but it was not a commitment with a
contract and with the equity; it was a commitment only for the mortgage.
Hearing no motions, Chairperson Comers declared the item remained on the
table for further consideration. '
Mr. Cciimmers stated this project was tentatively approved in the past. He
stated it was his understanding it was still contingent upon the City
Manager making the determination of the proper location for the satellite
fire station.
Mr. Prairie asked if this would affect any other property owned by the
BRA in this area, because a couple of times in the past, they had people
interested in development in that area. Would this make future
development not feasible?
Mr. Robertson stated the City does own property south of this property on
Rice Creek Road. The property in question was a piece the HRA considered
a year ago as part of the townhouse proposal by Mr. Mochinski. At that
r.., time, the rezoning was turned dawn by the City Council for a residential
project in that area.
Mr. Newman stated the neighborhood has been totally opposed to a rezoning
for any residential in this area. The neighborhood would prefer to keep
it commercial zoning.
Ms. Schnabel asked if there should be a public hearing for the type of
thing.
Mr. Newman stated it was not a legal requirement. As long as the
construction of the satellite fire station was consistent with the
zoning, a public hearing was not required.
Ms. Sc hnabel stated that, as she remembered, there were a lot of soil
problems in this area.
Mr. Robertson stated that, undoubtedly, there would have to be some soil
correction.
Mr. Commers stated he would presume that this property would be used for
the satellite fire station. if the property was not going to be used
that way, then this action would be null and void.
Mr. Newman asked the HRA if they would want the deed to restrict the use
of the property.
Mr. Co miners stated he did not think they should do that, but if the City
should decide not to use the property for a satellite fire station, then
the HRA should have control of the property again. He was concerned,
because the HRA does own land there; and if the City doesn't use the
property for a fire station, then the land should not be used for
anyt3hinq else and the BRA should aet the ixonerty back.
Mr. Newman stated the HRA could approve the resolution but direct Staff
not to deliver the deed until the City is actually ready to proceed with
the construction of the fire station.
by Nr. Meyer, seconded by Ns. Schnabel, to approve Resolution No.
BRA 9 -19871, A Resolution (1) Authorizing Construction of a Satellite Fire
Station; (2) Requesting Transfer of Property from the Fridley HRA; and
(3) Retain Professional Services to Prepare Plans and Specifications for
the Fire Station.
UEON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON OOMMERS DECLARED THE
MDTION CARRIED UNANIMOUSLY.
Mr. Newman stated it was his understanding that Mr. Duane Prairie would
not be participating in this discussion.
Mr. Prairie stated that was correct.
Mr. Robertson called the Commission's attention to a letter addressed to
Mr. Paschke fran Jim Robinson dated Nov. 3,1987, a response from Mr.
Paschke to Jim Robinson dated Dec. 8, 1987, along with a soil report and
two estimates on soil correction.
Mr. Robertson stated that in his letter, Mr. Paschke was responding to
some of the code questions raised by Staff. This was regarding an
office/warehouse development on the corner of Main St. and 79th Ave. It
was originally thought to be a 40,000 sq. ft. building, but it has now
been downsized to 34,000 sq. ft. with 80 parking stalls. It will
require some parking easements and some easements on the drainage pond
property directly to the north as shown on page 6D of the HRA agenda.
Mr. Robertson stated Mr. Paschke has agreed to most of the code questons
raised in the letter from Mr. Robinson. There was one outstanding issue,
and that was item (e) , a proposed layout for overhead doors f acing 79th
Ave. Staff asked Mr. Paschke to incorporate the doors on the northeast
side, and Mr. Paschke stated he could not, but recognizewd that the doors
have to be thoroughly screened from the ric it -of—ay on 79th.
Mr. Paschke stated he would listen to any suggestions Staff had on
screening. He did not know how a 12 x 12 door could be screened. He
stated this was M-2 zoning, and it was common throughout this entire area
that every building has at least a 12 x 12 door facing 79th Ave. He
failed to understand the problem with a 12 x 12 door on that side.
Ms. Schnabel asked Staff why the HRA was involved in this kind of
discussion concerning code. Wasn't this something that should go to the
Appeals Commission or Planning Commission?
�.. Mr. Robertson stated that in the past the HRA has considered consistency
of projects where the quality was above the average -type quality. 7he
quality question was involved here, both in the landscaping, screening,
and the type of material for the building itself. He staged Mr. Paschke
was proposing to come to the HRA with a request for assistance with the
project, and in the past the appearance of the project has been one of
the first criteria considered by the HRA.
n
Mr. Robertson stated he thought the issue here was whether this was going
to be an above average project or just a project that simply meets the
minimum of the code.
Mr. Comers asked the cost of the project.
Mr. Paschke stated the project would be around $1 million.
Mr. Comers asked how much assistance Mr. Paschke was requesting.
Mr. Paschke stated he did not know at this time and was looking to the
HRA for that. He stated the land cost was $165,000. That price was firm
and not negotiable. Shen he had to add the cost of soil correction.
Mr. Commers asked what the lot size was.
W. Paschke stated he believed the lot size was around 2.4 -2.5 acres, but
the owner of the property was not basing the price on the usable land.
It was based on other than that; but, again, the price was not
negotiable.
Mr. Meyer stated it bothered him that in the arrival at an agreed -upon
price between a buyer and seller, somewhere along the line, the condition
of the land was not taken into account. In this day and age, it seemed
as though everyone knew that when there is land with poor soil, the price
would have to be dropped in order to make it attractive on the market.
Mr. Paschke stated he had no objection to what the owner of the property
thought the land was worth. The owner was not actively trying to sell
the property, but he was actively trying to buy it.
Mr. Comers staged what he heard Mr. Paschke saying was that it might not
be feasible to construct a $1 million building on that property with the
soil correction that was necessary unless the HRA gives him some
assistance.
W. Paschke stated that was absolutely correct. She land cost under the
building was excessive without HRA assistance. It was his understanding
that the reason the tax increment district was created in this area at
the time was because some of the land was going to need correction and
some of it was going to be overly expensive to deal with. So, on an
overall basis, they were not going to look at one particular piece of
property and say it was too expensive to correct and should be left with
nothing built on it. If they said that, then it completely defeated the
purpose of the tax increment, and it was not fair for the increment to be
there. He stated he has created a tax base in this area now of millions
of dollars.
W. Comers stated all the HRA was saying was that the owner of the
property probably should carry a little bit of the burden also.
le� Mr. Paschke stated the owner cf the property was not willing to do that.
She owner of the property has other uses for the ground, so the property
was worth $165,000 to him. Mr. Paschke stated that he was a willing
buyer if he could feasibly work out a project. He stated he has picked
over all the ground in that area now that he could build on with very
little assistance from the HRA, compared to the taxes that have been
brought in.
Ms. Schnabel asked if the ground under the other existing buildings that
are out there now had the same poor soil conditions as this particular
piece of property, or did this property have different soil conditions?
Mr. Paschke stated three of the buildings had the same poor soil
conditions. He asked for assistance on those three buildings. He
received $10,000 for each of two buildings and was supposed to receive
$40,000 for the third building— $30,000 was funded to him but there are
still some arguments over the other $10,000 which he has never received.
So, for millions of dollars in tax base, he has received only $50,000 in
assistance.
Ms. Schnabel asked how much the soil correction costs were for one site
or all three sites.
Mr. Paschke stated he could not give Ms. Schnabel those figures. The HRA
had the bids at the time for the properties the HRA assisted with. There
are some pieces of ground that are uncorrectable, and they did not
attempt to correct those areas. On one piece, they created a pond.
Mr. Commers stated that in the past, the City has tried to set a
percentage for the amount of assistance in relation to the overall value
of a project. Did Staff recall what that percentage was?
Mr. Robertson stated he believed that second mortgages were 10- 15 %.B081
Ms. Schnabel asked what Staff's recommendation was regarding this
proj ect.
Mr. Robertson stated that with all due respect to Mr. Paschke, he felt
they do have a consistency problem between the quality of construction
the HRA has assisted with in the past and the quality of construction
being proposed by Mr. Paschke.
Mr. Paschke asked if staff was saying that in order to get assistance, a
developer has to build superior standards over the building codes? If
that was the situation, then there was something wrong with the building
codes. He did not think that was a fair statement. This was M-2 zoning,
Fridley's heaviest zoning. He has put up 70 buildings in Fridley in 20
years, and he has been successful with his projects. What he was
proposing for his building was very nice looking. He showed the
Oomissioners some pictures of the type of facade he was proposing for
the building. Architecturally, it meets or exceeds any of the standards
set by the City of Fridley, either now or in the past. He did not think
brick construction was a qualifying factor in the City of Fridley, nor he
did not think it ever had been.
Mr. Paschke showed the HRA the building plans.
Mr. Commers stated there were some things here that were real
premature --in terms of the HRA determining what to dD.
Mr. Paschke stated that before he goes ahead and spends a lot more money,
he needed to have some indication from the HRA that they would be willing
to give him some assistance. If it was not feasible, he wanted to know
that.
Mr. Commers stated it was hard for the HRA to make that determination at
this time. It was something Mr. Paschke would have to work out with
Staff and then Staff should come back with some kind of recommendation
and the basis for that recommendation.
Mr. Meyer stated that if the HRA's guideline is to contribute 10% to the
cost of the soil correction, would that be enough assistance?
Mr. Paschke stated that was what he needed to know. If everything is
agreeable to both the City and himself, he would like to know what the
maximum was that the HRA would contribute.
Ms. Schnabel stated she felt they should get a dollar figure and get that
settled ahead of time so they do not run into some of the same problems
they have had with the Lake Pointe Project. She was not opposed to
!� providing some type of assistance to Mr. Paschke, but she would like to
see the finalized plans and have some figures generated.
Mr. Paschke stated he would get _together with Staff and come up with
something reasonable.
Mr. Commers stated the HRA was willing to try to participate in some
meaningful manner, but since this was the first time they had heard about
this project, it was difficult to put a dollar amount on the assistance
at this time. He would recommend Mr. Paschke work with Staff between now
and the January meeting, and then Staff can give the HRA an update at the
next meeting.
Mr. Robertson stated that at the October meeting, the HRA had asked Staff
to give the HRA some background information on this. No action was
required at this meeting. The HRA could consider staying with the HRA's
policy as indicated in Mr. Newman's letter dated May 6, 1986, or they
could change the policy.
Mr. Commers stated that Mr. Robertson had indicated in his memo to the
HRA dated Dec. 4, 1987, that there were still seven homes with
outstanding mortgages. He felt there were more than seven homes left.
�... He thought they had had between 10 -15 homes at one point under this
program. What has happened to the other homes he did not know, but he
knew they have not made any other concessions.
Ms. Schnabel stated that of the homes that might have been sold, could
they have been sold before the ten year period was up?
Mr. Newman stated the only way they could find out would be by checking
the County records. He supposed a home could have been sold without the
City knowing it.
Ms. Schnabel stated that over the 10 year period of time, what happens if
a house was "trashed" so the value goes way dam? Does the HRA have any
control over that kind of thing?
Mr. Newman stated, no, the HRA would have no control over that.
NOTI by Mr. Meyer, seconded by Mr. Prairie, to reaffirm the policy made
by the HRA with respect to the Large Family Home Assistance Program.
UEON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE
NDTION CARRIED UNANI DUSLY.
5.
IMMM= ON P mFNrIAT. RECOW_RV OF CHANGE ORDER COSTS FOR DARE POINTE
CORPORATE CENTER; —
Mr. Commers stated that in the HRA agenda was a letter to the HRA from
Jock Robertson regarding this item.
Mr. Commers stated the issue was whether a claim should be made against
Subterranean at this time for what might be considered negligence on
their part in their initial reports and the initial way they did the job.
Mr. Meyer stated he was satisfied with the explanations on the part of
the various people from Sunde Engineering on whether they have kept
things separate, and even Subterranean' s, except for this last point.
There seemed to be a lot of other things involved besides Subterranean's
testimony.
Mr. Prairie stated Subterranean might have done an unsatisfactory job,
but he would hesitate their pursuing this with a lawsuit. He did not
think that was a meaningful way to solve a lot of things. ?he best
solution might be just not to use the services of Subterranean anymore.
Mr. Meyer stated he would agree with that.
Ms. Schnabel stated the fact that there already has been an arbitration
board involved has a tremendous impact on what the HRA's chances would be
in a lawsuit.
W. Comers asked if Staff had approached Subterranean regarding these
mistakes and asked whether Subterranean could accommodate the HRA in some
manner.
�..,
W. Robertson stated they had not.
W. Prairie stated that might be a good thing to do.
Mr. Meyer stated that as he had stated at the last meeting, he was
concerned that both Sunde Engineering and Subterranean Engineering are
submitting a lot of invoices, and to what extent are these invoices
reflecting the fact that they had to backtrack and spend time repairing
damage of their erroneous reports? Are they billing the HRA just
"willy- nilly" for everything? He hoped they were not. Maybe this
questions should be asked of Subterranean.
Mr. Comers stated Staff should discuss everything with Subterranean
openly and directly, tell them what information the HRA has received, the
questions that have been raised by the HRA about the bills, and request
that these questions be answered.
9be HRA members were in agreement.
Mr. Robertson stated this was an informational item. Just that
afternoon, he had received a proposal from Business Development Services,
Inc. He stated he had not yet had time to analyze the prposal nor had
Mr. Neuman. Depending in what happens with the Lundgren project, they
might decide to proceed with this.
we UI: P5 Ville)
by Mr. Prairie, seconded by Ms. Schnabel, to approve the check
register as submitted by Staff.
UFON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON CDWERS DECLARED THE
MDTION CARRIED UNANI DUSLY.
1�lQr].Q�T by Mr. Prairie, seconded by Ms. Schnabel, adjourn the meeting. Upon a
voice vote, all voting aye, Chairperson Commers declared the December 10,
1987, Housing & Redevelopment Authority meeting adjourned at 9:15 p.m.
Respectfully submitted,
I
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... Recording secretaiT