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HRA 12/08/1988 - 29659�� CITY OF FRIDLEY HOUSING & REDEVELOPMENT AUTHORITY MEETING, DECEMBER 8, 1988 _____..___.._____..,._..________.,..______-___,.______.,..__..___..__________ CALL TO ORDER• Vice-Chairperson Schnabel called the December 8, 1988, Housing & Redevelopment Authority meeting to order at 7:12 p.m. ROLL CALL• Members Present: Larry Commers, Virginia Schnabel, Duane Prairie, John Meyer, Members Absent: Walter Rasmussen Others Present: Jock Robertson, Executive Director to HRA William Burns, City Manager & Director of HRA Dave Newman, HRA Attorney Rick Pribyl, City Finance Director Barbara Dacy, Planning Coordinator Bill Fogerty, Winfield Development Wilbur porn, Dorn Law Firm - rep. Crosstown Bank Liv Horneland, Coldwell Banker Peter Bloch, Coldwell Banker � Shinjae Suh, 12 Island Road, St. Paul Bob Levy, 100 S. 5th St., Suite 1100, Mpls. Ed Chanin, Maslon, Edelman, Borman, & Brand Law Firm Cheryl Stinski, 1612 Berne Road Rollie Stinski, 1612 Berne Road Pat Fisher APPROVAL OF NOVEMBER 10. 1988. HOUSING & REDEVELOPMENT AUTHORITY MINUTES• MOTION by Mr. Meyer, seconded by Mr. Prairie, to approve the November 10, 1988, Housing & Redevelopment Authority minutes as written. UPON A VOICE VOTE, ALL VOTING AYE, VICE-CHAIRPERSON SCHNABEL DECLARED THE MOTION CARRIED UNANIMOUSLY. ].,, CONSIDERATION OF REDEVELOPMENT PROPOSAL FOR SOUTHWEST CORNER OF UNIVERSITY AVENUE AND MISSISSIPPI STREET: Mr. Robertson stated the developer is Tanurb, a major Canadian ,� -1- r"`� HOIIBING & REDEVELOPMENT AIITHORITY MEETING. DECEMBER 8, 1988 firm, who has developed Loehmann's Plaza, north of Rosedale. He stated the developer has been making substantial progress with the landowners, at least the two major landowners. He stated representatives of Coldwell Banker and the major landowners were at the HRA meeting to give the HRA a progress report and to answer questions. Mr. Bob Levy stated he represented Rice Plaza. They have fully negotiated a purchase agreement with Tanurb. The nature of the agreement allows Tanurb a period of time to negotiate a redevelopment contract with the HRA and allows or contemplates Tanurb to a.ssign its rights under that purchase agreement to the HRA in order to receive tax increment dollars. Mr. Levy stated the process they went through obviously had a slightly different objective than the HRA's process, yet it also had some parallels. They had a number of offers on the property, and price was not the issue. They wanted to distinguish which developer they felt had a proposal that had the most likelihood of happening and would be a development the property owners, the HRA, and the City could be proud of. The one difference was the property owners only have to look at the process for a period of months. The City has to look at the process on a long term basis. ^ Mr. Levy stated one of the main reasons for focusing on negotiations with Tanurb is because Tanurb, financially, is definitely the strongest of all the parties interested in the site. The only issue they can see that might keep Tanurb from making the project happen is if Tanurb cannot attract the tenant mix they want. He stated the property owners are very excited about the prospects of the development moving forward. Mr. Levy stated that within the next few days, a purchase agreement on their parcel and Mr. & Mrs. 5uh's parcel should be fully executed, and that will start the time period and contingencies during which Tanurb can start negotiating a contract with the HRA. Mr. Levy stated the property owners have been very concerned that they not usurp the HRA's powers or get in the HRA's way. They understand their purpose, which was to screen the developers, comes to an end at the time the agreements are signed. It was then up to the developer and the HRA to see if they can put a development package together. Mr. Meyer asked kind of development was possible. Mr. Levy stated Tanurb is a shopping center developer. They are not a multi-housing developer, and what Tanurb has in mind for this � -2- � � 8008ING & REDEVELOPMENT AIITHORITY MEETING DECEMHER 8, 1988 site is a mixed use retail type of shopping center development. Mr. Ed Chanin stated his law firm is representing Tanurb. He stated it is somewhat early to talk about who might be in the project and who might be the tenants at this time. He stated they have purchase agreements with two major property owners or expect to have those agreements within the next 4-5 days. They are interested in getting together with the HRA's legal counsel and City staff next week. One of the principals from Tanurb may travel from Toronto to attend an initial meeting to review the possibilities. Hopefully, the project will be to the City's liking. Mr. Peter Bloch, Coldwell Banker, stated he would be responsible for the leasing on this property on Tanurb's behalf. If the HRA or staff have any questions about how this is going to take place, they were to feel free to contact him. He stated Liv Horneland, his associate, had been implemental in marketing the project and bringing this to bear. Mr. Robertson stated staff had put together a tentative schedule which was included in his Dec. 1, 1988, memo to the HRA (agenda pages 1-lA). Mr. Commers stated the HRA members certainly looked forward to going forward with negotiations on the development. He stated the HRA was willing to assist as much as they could in the development of the property. 2. CONSIDERATION OF WINFIELD PROPOSAL ON 57TH PLACE: Mr. Robertson stated staff had given the HRA a rather complete outline of a tentative agreement reached on Nov. 23, 1988, with Winfield Development. There were two things that must happen in order to trigger the HRA's decision to proceed: (1) �2) An appraisal be received by the HRA; A commitment by the major anchor tenant, Crosstown Bank. Mr. Robertson stated staff received the appraisal earlier this week, and the commitment in the form of a letter from the anchor tenant was received the previous evening. That letter had been handed out at the meeting. Also, Mr. Lemley from Ashland Oil, Lexington, Kentucky, was at the meeting. Mr. Fogerty stated it has been difficult to get as far as they have in this process. They now own the duplex. They have put ^ -3- HOIIBING & REDEVELOPMENT AIITHORITY MEETING� DECEMHER 8, 1988 approximately $120,000 into this project. He stated they went into this project with the understanding that the HRA wanted a high quality development. He stated he was afraid his optimism oversold the proj ect in thinking the proj ect could happen within a timeframe that he now realized was unrealistic. They now have a tentative agreement with the anchor tenant, Crosstown Bank; however, there are several things that banks have to do before they can make a firm commitment. He stated he felt they have a quality development and he felt Winfield has pretty much accomplished what they set out to do. Mr. Wilbur porn stated he is the attorney for Crosstown Bank. He stated he would like to clarify some things for the HRA and make certain they are totally candid with the HRA in terms of their negotiations with Winfield Develoment. Mr. Dorn stated he would first like ta give a little history of CrosstoFan Bank. He stated the first bank was located in Cedar, Minnesota, and was known as Farmers' State Bank of Cedar. About 14 years ago, the bank was purchased by Dolphin, a major shareholder, and it has grown from a$2 million facility to a$50 million facility in that period of time, primarily through expansion geared to moving to different locations. ^ Mr. Dorn stated they are now seeking to expand their market and locate an additional detached facility somewhere in the 694 corridor, which is the southern end of their trade area. Fridley is the first choice for the Crosstown Bank. After two years of site evaluation, they narrowed the location down to three sites in Fridley: Lake Pointe development at 694/Highway 65/Central; 57th Place; and the Holiday Plus property in the vicinity of the Stewart Anderson Cattle Company restaurant. Mr. Dorn stated they eliminated the Holiday Plus as a permanent location, but are still negotiating for ground space for a temporary facility. They are very anxious to get a location and open a banking facility in 1989 in one of these areas. In evaluating the Lake Pointe site, it appeared that although the site has its advantages, development does not seem to be progressing with the degree of speed they need to enable them to open a facility in 1989. They also have not received the cost, figures, and data needed to make an intelligent decision, so they have determined to go with the Winfield site. Mr. Dorn stated there were a number of variables that can upset their plans. He stated they are subject to regulatory approval of the State Banking Commission for this location. This takes about 120 days. They have reached a basic agreement on most of the ^ -4- ''", HOIISING & REDEVELOPMENT AIITHORITY METsTING DECEMBER 8, 1988 provisions of the lease arrangement, but they have a lot of signage requirements with the City of Fridley they have not even started discussions on. There are also some parking questions. He stated he had talked to Mr. Newman about the correspondence to Mr. Bubany of Winfield from Mr. Dolphin of Crosstown Bank dated December 7, 1988. One point Mr. Newman raised which he felt should be addressed was the fact that the term of the lease was not yet determined. He stated Winfield has asked them to commit to a 15 year lease, but at this time they have declined to make any commitment. The reason for that, of course, is that they do not yet know enough about some of the other aspects of the project to make an intelligent decision. The signage will be critical, and there are some other variables as well. Mr. Dorn stated he has advised his client, Crosstown Bank (and they have basically agreed), to not consider the Lake Pointe site any longer unless things moved rather quickly soon. Mr. Larry Commers asked if the HRA could anticipate the lease being finally executed by April 1, 1989. Mr. Dorn stated it would probably be before that. The lease would be contingent upon Regulatory Commission approval, but he thought ^ the Winfield people are going to want a definite "yes" or "no" by April 1. Mr. Larry Commers asked Mr. Fogerty if Winfield was willing to go ahead with the lease based on that contingency. Mr. Fogerty stated, yes, they were. Winfield feels pretty confident that the project will go. Mr. Meyer asked why signage was so important. Mr. Dorn stated it is a one-owner bank, and it is the owner's philosophy to spend a lot of money on signage and advertising. The visibility factor has worked for them. It brings people into the bank, and the service has grown 25 times in the last 10 1/2 years. It is the owner's philosophy that without adequate signage, an ideal location becomes less attractive. On the Lake Pointe site, the bank could be seen from 694 and they would not need the same signage. Ms. Schnabel asked if Mr. Dorn had taken the opportunity to study the City's Sign Ordinance. Mr. Dorn stated, yes, he had. He had also met with members of the Planning Department on several occasions and reviewed the Sign � -5- � HOII3ING & REDEVELOPMENT AIITHORITY MEETING, DECEMBER 8, 1988 Ordinance. He stated they know what they want and what they can get. They might need some variances, but staff did not totally reject the signage they suggested. Ms. Schnabel stated she was concerned about signage because she helped draft the Sign Ordinance some years ago. She stated the same Sign Ordinance restrictions apply whether the bank is located on University Avenue or Highway 65. Mr. Meyer stated that if there was any possibility of the bank dropping out. For example, if polluted soil is found, how was the HRA protected? There should be some kind of statement in the agreement that protects the HRA. Mr. Larry Commers agreed. Where is the HRA in terms of protection if there is a cleanup problem or if, in fact, the Rapid Oil property comes in at a value double the amount of the appraisal? Mr. Newman stated those concerns were outlined on agenda page 2-B. There were definitely environmental concerns, and because of thase concerns, he had added the additional safeguard of requiring the developer to post a letter of credit of $125,000 before commencing condemnation. The site with the greatest environmental risk, of ,� course, is the Rapid Oil site. Mr. Larry Commers stated the HRA has to be prepared because in the condemnation process, there is the risk that the value could be found far greater than what the Winfield appraisal was. Mr. Newman stated he would anticipate that the HRA would bear the risk of the expenses of the infrastructure and demoliton. Since they are relying on the developer's appraisal, site acquisition would be the developer's risk. He was sure that when Mr. Casserly ran the numbers, he had put some flexibility into them. As far as issues, the approach is that once all the necessary steps have been met, the letter of credit has been posted, and assuming the lease is in place, they would begin the process of condemnation. He stated that under Minnesota State Statutes, once the City begins the condemnation process, they have the right to go on to the property to conduct certain tests, and they could do an environmental assessment at that time. If the soil tests come back indicating there is no problem, then they can proceed with the quick take action to begin acquisition. If the soil tests determine there is a problem on the site, then they would have to do an evaluation. It may be the case where if there is a minor problem on the site, the HRA might decide to go ahead and take care of the environmental problem with a reduction in the purchase price. If the HRA decides they do not want to proceed because of ^ -6- ,� � HOIIBING � REDEVELOPMENT AIIT80RITY MEETING� DECEMHER 8, 1988 the environmental problems, they can dismiss the condemnation action because of something they were not aware of and terminate acquisition. Mr. Joe Commers, The Commers Company, stated that as the competing developer for this project and running the risk of being redundant, he still believed he and his development team were the best qualified developer for this site. He stated he would like to comment on four things: 1. A viable project. He stated intent from Ashland Oil. They developer has. They provided that proforma, the HRA could would be able to go out and get being a viable project. they already have a letter of have everything the competing the HRA with a proforma and in see that Security Develoment a mortgage. All this is under 2. Aesthetically. He stated they gave a very nice proposal to the HRA in July. The HRA saw the architectural drawings. He knew there was some concern about Rapid Oil being a part of this project, and he was not sure if the HRA fully understood how they can incorporate Rapid Oil into the proj ect, Rapid Oil being only 80 of the total project. Mr. Ken Bureau, a citizen of Fridley who had a deep knowledge in develoment, made the comment to him that maybe the Security Development team really has not communicated to the HRA well enough how well Rapid Oil can be incorporated on the site. He stated they certainly tried to communicate that in July when they presented their proposal. 3. Cooperation. He stated they already have the cooperation of the two major parcels. They control 67% of the site--the two biggest parcels. The HRA was going through a lot of problems and a lot of dialogue with the competing developer, and there would not be any of that with the Security Development team. They already have that cooperation all the way to cooperating on soil tests and getting any contaminants out of there. 4. Management. He stated the members of their team have been involved in shopping center development for 15 years and have been involved in about 46 shopping centers around the seven state area. He stated the HRA has to think about long term in keeping a thriving shopping center going once it is built. They feel very confident that with their network, if a tenant moves out, they will have that space filled right away. Al1 the properties in his portfolio are all very thriving properties. ^ -7- � HOIIBING & REDEVELOPMENT AIITHORITY MEBTING� DECEMBER 8, 1988 Mr. Joe Commers stated that regarding signage, all of a sudden he was hearing that the entrance to the City of Fridley wil have a sign advertising Crosstown Bank. As the HRA remembered, when Security Development team made their presentation, they asked for no variances. Mr. Joe Commers stated it was confusing to him and the members of his development team when he comes back month after month to report what is happening and what is not happening. With their particular proposal, there seems to be a very minimal amount of complications. The risk is definitely greater with Winfield's proposal. He had said that back in July. He stated they could have started back in July and now they are already six months past that point. Mr. Joe Commers stated that in August, the HRA gave Winfield 60 days; then another 30 days were added to make it 90 days. He stated they were led to believe that everything would come to a head at the November HRA meeting. Then, the HRA gave Winfield an additional 20 days plus 10 days until the December meeting. At what point does the HRA make a decision and say they should look at Mr. Commers' development team's proposal? Mr. Joe Commers stated he realized there was a complication on the � part of the HRA, City staff, and the political people in Fridley about Rapid Oil, but he thought Rapid Oil has been a very responsible taxpaying corporation in the City. He stated if his development team could be given the opportunity for more dialogue, they could prove to the HRA that they could make this area very beautiful with Rapid Oil as part of the project. Mr. Larry Commers asked what the status was in terms of commitments that are being made in getting the executed lease with Crosstown Bank. Mr. Robertson stated they just have the information received from Mr. Dolphin on December 7, but he stated they have to get the executed lease before the January meeting. Mr. Jack Lemley stated he is the Condemnation Supervisor for Ashland Oil, Lexington, Kentucky. He stated at 10:00 a.m. he had a note on his desk that there was a second hearing at the HRA meeting to condemn the Rapid Oil property in Fridley. He stated he really had no idea what was going on. He stated Ashland Oil tries to be a cooperative citizen, and they would like to work with the City on this. Was it true that the HRA is going to take their property? Mr. Larry Commers stated two proposals were presented to the HRA ^ -8- ,� HOIISING & REDEVELOPMENT AIITHORITY MEETINa, DECEMBER 8, 1988 for the 57th Place redevelopment. One developer included Rapid Oil and one did not. The HRA gave tentative approval to the developer, Winfield Development, that did not include the Rapid Oil facility. As he understood it, the Rapid Oil people were involved in the competing project. He stated that at this time, there are no condemnation hearings. He stated City staff has talked to the Rapid Oil people about the possibility of moving to another site if one is available. That was one thing Mr. Lemley might want ta consider. Another thing Mr. Lemley might want to consider is whether or not he would be willing to allow the City to go onto the property to determine if there are any environmental problems. That might help solve a lot of these issues and might curtail this whole effort if, in fact there are environmental problems. Mr. Larry Commers also suggested Mr. Lemley meet with City staff to get more of the history of this developmemt. Mr. Lemley stated they are remodeling several Rapid Oil facilities in the metropolitan area, and remodeling was being planned for the Fridley facility in 1989. Mr. Lemley asked what action the HRA would be taking at this meeting. ^ Mr. Larry Commers stated nothing needed to be finalized at this meeting, other than whether or not the HRA is going to grant Winfield Development an additional extension of time to the January meeting. Mr. Newman stated it was staff's intention since the last meeting to present a concept of the agreement to the HRA at the December meeting and then obtain some direction from the HRA as to whether or not the HRA felt comfortable enough with the concept. If so, staff would prepare a development contract for the HRA's consideration at the January meeting. Mr. Lemley stated he would be more than willing to meet with someone from City staff. He stated he would like to work this out, and he would like Rapid Oil to stay on this site, if at all possible. Mr. Larry Commers stated the situation has now changed to the point where the HRA is starting to assume risks without assurances that the project is going to go. The agreement was for Winfield to bring in a firm commitment by this meeting. Now there is no firm commitment, only a contingent commitment, and it could be another 4-5 months before there is a firm commitment from the Bank. � -9- $OIISING & REDEVELOPMENT AIITHORITY MEETING, DECEMBER 8, 1988 �� Mr. Newman asked that if the HRA were to structure the development agreement such that they would not begin the acquisition process until the Bank had received State approval for a detached facility, would the Crosstown Bank still be interested, and would it impede their ability to obtain State approval? Mr. Dorn stated, yes, they would still be interested in the site; and, no, it would not impede their ability to obtain State approval. Mr. Joe Commers stated it was very disconcerting for him as the competing developer to have the rules changed in the middle of the game. His development team has done everything they have been asked to do over the past six months. They thought it was going to come to a head 30 days ago. Now they are 30 days hence, and the HRA is thinking about another 4-5 months before anything is finalized. Mr. Larry Commers stated that there was no question that the HRA preferred to have a bank as part of the development. As Mr. Joe Commers knew, that was one of the HRA's major issues when the proposals were made. He stated the question before the HRA now was: How far do they continue to go to try to get the project they � want on that site, or do they put a stop to it now? Mr. Newman stated he did not think the HRA was changing the rules. From past experiences, they should know that developments sometimes take more time than anticipated, and there had been progress on the part of Winfield. Mr. Larry Commers stated that was true, but for this development, the HRA had made it very clear that there were certain timeframes that had to be met or the development rights would be revoked, but the HRA has done just that. Mr. Newman stated it also should be pointed out that there are some regulatory procedures that have to be followed that any developer that included a bank would have to go through. Mr. Larry Commers stated that was true. Ms. Schnabel stated she felt Mr. Fogerty was probably correct when he said that perhaps his enthusiasm had oversold the project. She stated she still preferred the Winfield proposal; however, she could understand Mr. Joe Commers' frustration in dealing with the HRA. While it might take a little longer to get this development, if the end result gets them the development they want, then she was willing to give Winfield another 30 days, rather than cut it off � -10- $OUSING & REDEVELOPMENT AIITHORITY MEETING. DECEMBER 8. 1988 �� now and not get the development they want on that site. Mr. Prairie stated he agreed with Ms. Schnabel. It might take longer to get the project they want. Mr. Larry Commers stated he believed that has been the concensus of the HRA all along; however, he was a little concerned when the HRA starts assuming risks that were not anticipated and which are not necessary. Because of the length of time it might take to get construction under way and the project finished, they might be asked to assume certain risks they should not have to assume. Ms. Schnabel stated that besides the risks, she was also concerned about the Bank's position where certain things have to be done before they can make a firm commitment. She hoped it all worked out. She stated she was definitely concerned about the signage. It was the concensus of the HRA members to grant Winfield Development an additional 30 days until the January meeting and that staff continue to work with the developer. 3, CONSIDERATION OF STINSKI OFFICE PROPOSAL: ^ Mr. Newman stated that essentially what is being proposed to Ms. Stinski as far as HRA assistance is the same level of assistance the HRA provided in the past. They have raised the percentages slightly because of the quality of project proposed. Mr. Newman stated the City Council recently indicated to the HRA staff that their preference was for the HRA to utilize the mortgage approach because of the opportunity to obtain repayment of the assistance. Because of that, staff had proposed a higher percentage on the mortgage, 15� instead of 10�, to make it a more attractive alternative. Mr. Commers stated the HRA has always had, if not a direct policy, then an indirect policy since the Johnson Printing project, and they have always used those earlier guidelines when anyone has come in requesting assistance. All the information on the types of assistance they have given different projects should be made available at the next joint City Council/HRA meeting when they discuss this issue. Mr. Newman stated he believed this policy has been clearly communicated to Ms. Stinski, but Ms. Stinski has indicated that this level of assistance would make it very difficult for her to proceed with the project. � -11- �'�1 �'"1 HOIISING & REDEVELOPMENT AIITHORITY MEETING, DECEMBER 8, 1988 Mr. Robertson stated that at the last meeting, Mr. Fisher submitted three different financial proposals. It was at the time staff started reviewing those three proposals that they received recommendations from the City Council saying they did not want a major departure from the past assistance formula. He stated when they met with Mr. Casserly to review the three financial proposals, they found there was a legal question about whether the interest rate reduction program could even be done under State Law for a non-residential structure. They concluded last week that they should probably stay with the past assistance formula as recommended by the City Council until the HRA meets with the Council. Mr. Fisher stated they are asking for $600,000 in assistance. Mr. Fisher stated he met with Mr. Casserly at about 5:00 p.m. on December 7. They went through about five different financial proposals--two from last month that are still legal options and three additional options with the loan and grant. They found there are only three options that will really work--the two from last meeting and an additional one which is for the City to give the developer a 25% loan and a 10o grant. He should point out that no developer fees are being taken out for developing the project. Mr. Robertson stated that obviously they cannot take the time to do a detailed analysis of this most recent proposal at this time. Staff did need some policy direction from the HRA. Does the HRA want staff to consider the developer's options and do an analysis, or not? If not, they can stick with the standard formula until they do a more complete policy review. Ms. Schnabel stated the amount of assistance being requested just seemed too high and was higher than she would want the HRA to provide assistance. She was concerned about the proposal for the interest payback also. She did not like the idea of 10 years with no interest. They should either stay with the assistance they have given in the past, or they should see if another financial package can be put together. Mr. Stinski stated they are proposing a financial proposal which they know will work for this project. They have been working on this project since 1983, and Ms. Sti:nski has put many hundreds of thousands of dollars into the project. Mr. Meyer stated he agreed with Ms. Schnabel that proposal was beyond the HRA's guidelines and beyon assistance the HRA should extend to any developer. ^ -12- this financial d the amount of a'.'1 HOIIBING � REDEVELOPMENT AIITHORITY MEETING� DECEMBER 8, 1988 Mr. Newman stated Mr. Casserly was extremely impressed with the financial presentation made by Mr. Fisher. It was one of the most complete and thorough evaluations the developer has presented. He stated the developer is proposing a high quality building, maybe a higher quality than what the market can support, and that might be why the level of assistance being requested is so high. He stated the HRA members have to ask themselves: Is this particular project of such a benefit to the City of Fridley that they want to extend their present policy? Mr. Meyer stated he certainly had reservations about the level of assistance being requested. Mr. Commers stated apparently there are some issues the HRA should discuss with the City Council before they deviate from what they have done in the past. However, that meeting cannot occur until the end of January. Mr. Stinski stated that without HRA assistance, they cannot build anyway, so time really isn't an issue. He stated the HRA should realize that there will a substantial increase in taxes to the City from this building, and the developer will be paying back the loan. He stated it is a beautiful building and one that will be an asset � to the City of Fridley. MOTION by Mr. Meyer, seconded by Mr. Prairie, to table further discussion on the level of assistance for the Stinski office proposal until the HRA has discussed this with the City Council. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. Mr. Stinski stated it sounded like staff might recommend assistance at $400,000, and he was talking about an additional $200,000. That is $20,000 a year over a l0 year period and is not a lot of money to use as a reason for turning a project down. Ms. Stinski stated she would really appreciate it if this discussion with the City Council could be expedited as quickly as possible, because she has tenants who are waiting to sign a lease. Mr. Burns stated he would do his best to expedite this with the City Council. 4, CONSIDERATION OF 1989 MEETING SCHEDULE: MOTION by Mr. Prairie, seconded by Ms. Schnabel, to adopt the 1989 meeting schedule as written. �`` -13 - ,� HOIISING Se REDEVELOPMENT AIITHORITY MEETING� DECEMBER 8, 1988 UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSOAT COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. 5, CONSIDERATION OF OUTLINE F�OR 1989 ANNUAL REPORT: Mr. Commers stated staff has prepared a draft of this report. He would recommend the HRA members review the draft; and if they have any comments or suggestions for changes, they should contact staff by Friday, December 16. �. CONSIDERATION OF DRAFT INVESTMENT POLICY FOR THE FRIDLEY HOUSING & REDEVELOPMENT AUTHORITY: 7N Mr. Pribyl stated he has met with Mr. Rasmussen and three of Mr. Rasmussen's bank executives to review the draft investment policy. He stated the main comment was to add some local investing feature regarding possibly some local banks. Mr. Pribyl stated that at this time, the City does not have an investment policy. This particular document is his starting point for the City�s investment policy, which he hopes to bring to the City Council some time in 1989. The parameters by which this was prepared was in accordance with the Government Finance Officers' Association, and also there are some elements included in this from three other cities' investment policies. It is a key element with regard to governmental jurisdictions. It provides protection both on behalf of the Policy Investments Board in which they can provide guidance as far as the type of policies and procedures the Board wants and also provides some protection as far as the investing officer. The investing officer has directdion from the Policy Making Board as far as what he can invest in. Mr. Commers stated discussion should be continued until the January meeting when Mr. Rasmussen is present. CONSIDERATION OF FUNDING A SENIOR HOUSING NEED SURVEY: Mr. Robertson stated that the City Council requested a study to be made af Fridley residents 55 years and older to see what their housing preferences are in the City of Fridley. He stated he would like to introduce Barbara Dacy, the new Planning Coordinator, and have her make the presentation. She prepared the original policy paper received in the HRA Information Packet in November, and she has been working with Health Planning and Management Resources, Inc., who will conduct the study. Ms. Dacy stated that included in the HRA agenda, page 7-B, was an � -14- ,� HOIISING & REDEVELOPMENT AOTHORITY MEBTING, DECEMBER 8, 1988 outline of the Purpose, Objectives, and Proposed Study Method, and the cost estimates of this housing study. What the study is intended to do is determine the basic questions the City has: How many seniors are there in Fridley and what are their housing preferences? Ms. Dacy stated that as everyone grows older, the demographic indicators say that by the year 2000, a significant part of the population will be age 65 or over which does present some public policies to the City, State, and Federal governments. The City Council felt the City needed to get a better handle on what type of housing is needed for seniors in the City of Fridley. Ms. Dacy stated that since the preparation of the agenda, they have received a specific proposal from the recommended consultant. It is staff's recommendation that the HRA consider funding up to $10,000 for the study. Depending upon the number of households sampled in the mail survey, that will have an impact as to the cost. The outline on page 7-B shows that if 1,000 homes were surveyed, the total cost will be $10,500. That is the number of households recommended by the consultant for the survey. Mr. Schnabel stated it was her guess that the results of any survey � are going to show that people just want to stay in their own homes. Ms. Dacy stated Ms. Schnabel was right in that 800 of the elderly people do want to stay in their homes as long as possible, but the remaining 20% pose a need or desire for some assisted living accommodations. There is a waiting list of 43 people at Village Green with a 3-4 year wait. A typical subsidized housing project runs between 35-40 units. She thought there was enough information out there to indicate that a more detailed approach is necessary to find out the demand for senior housing before making any recommendations about assistance or any financial policies. Mr. Newman stated the City Council is considering a rapid increase in senior housing. Questions for the HRA to consider are: Is the demand the same as it was a few years ago? What are the types of senior housing? Amenities? Features? If they are going to provide assistance, they need more information so that housing could be designed to be more compatible with the seniors' needs. Mr. Commers asked if the City was willing to share in the cost of the survey. Mr. Burns stated that at this point, he did not know. It just seemed to be the type of study related to the HRA's purposes. �' -15- HOIISING & RTsDEVELOPMENT AIITHORITY MEETING. DECEMBER 8. 1988 '� - - MOTION by Ms. Schnabel to approve a senior housing study to be conducted by Health Planning & Management Resources, Inc., and that the HRA and City share 50/50 in the cost of the study, but the HRA's share shall not exceed $5,000. MOTION DIED FOR LACK OF A SECOND. Ms. Schnabel stated she did not know if federal financing was even still available as a tool. Ms. Dacy stated because Fridley already has an existing project in comparison to communities that do not, a HUD representative has said that it will be a factor in trying to decide between two projects. On the other hand, doing what they are doing is a good idea because if, through a study, they can show there is a real demand out there, unlike any other community, then maybe HUD should look at giving assistance for another project. Until this point in time, staff has never had any direct contact with the senior community, and part of the approach with this survey is to use the focus groups to recruit key seniors within the community and through the two additional sessions, there is a structured "question and answer and discussion" period which provides qualitative data to complement the quantitative data of the mail � survey. The focus groups will be used to explain the "how's" and "why's" of what the�seniors said in the mail survey. It could be a communication tool between the City and the seniors. Mr. Burns stated he thought the City Council wants to determine what level of commitment they will make to the seniors; but before they make that commitment, they want a study done--to find out more of what the need is and what the preferences of the seniors are in various housing categories. Ms. Dacy stated there are a number of opportunities, other than housing, where the survey can assist the HRA and the City. MOTION by Mr. Meyer that the HRA authorize the funding for the senior housing survey, the amount not to exceed $10,000. MOTION DIED FOR LACK OF A SECOND. MOTION by Ms. Schnabel, seconded by Mr. Meyer, to approve a senior housing study to be conducted by Health Planning & Management Resources, Inc., and that the HRA and City share 50/50 in the cost of the study, but the HRA's share shall not exceed $5,000. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. �� -16- HOIISING & REDEVELOPMENT AIITHORITY MEETING. DECEMBER 8, 1988 �� g, CONSIDERATION OF CHANGE ORDER NO. 6. LANDSCAPING, IRRIGATION. AND LIGHTING PROJECT NO. 168 - LAKE POINTE: Mr. Robertson stated this was the first change order asked for by Minnesota Valley Landscape. The previous change orders were directed by the City. He referred to the last two sentences from the letter dated 1Jov. 20, 1988, from Gene Ernst, Ernst Associates, to John Flora, which stated: "I feel with the delay on the project there are additional costs justified as outlined in Minnesota Valley's letter dated November 17, 1988. With the approval of this request, I do not feel that any future requests should be granted." MOTION by Mr. Meyer, seconded by Ms. Schnabel, to approve Change Order No. 6, Landscaping, Irrigation, and Lighting Project No. 168 - Lake Pointe. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. 9. CONSIDERATION OF RETURN OF SCHOOL DISTRICT REFERENDUM LEVIES: Mr. Pribyl stated that in some of the conversations with the HRA � regarding the 1988 tax increment amendments, the term used was "non-controversial" changes. He stated this topic is not new; it has been around for some time. As long as he could remember, the School District has come to the HRA trying to find a vehicle in which tax increment could be passed back to the School District. The counties have always been there trying to find out how to do it, and to some degree they have found some mechanisms through the statutes as far as dealing with service charges and things like that. The change in the Tax Increment Act that allowed referendum levies to be provided to the school districts is actually the first vehicle in which there is statutory authority to try and provide funding back to the school districts. To some degree the referendum levies are a windfall type of increment for the HRA, because in their planning processes, they did not anticipate these types of increments coming in. Mr. Pribyl stated MSA Section 469.177 has a new Subdivison No. 10 dealing with the referendum levies, and that is the first authoritative guideline that has provided a means for governmental jurisdictions to provide anything to the school districts. The application of this particular statute is somewhat complicated as to what can actually be turned back to the school districts. Two of the statute sections are mandatory and one is voluntary as long as there is an agreement written between the City and the school districts. � -17- HOIISING & REDEVELOPMENT AIITHORITY MEETING. DECEMBER 8, 1988 Mr. Pribyl stated one of the things they are attempting to do at this point, since this particular legislation was passed in 1988, is to try to facilitate the transfer of this money back to the school districts during this calendar year. The three areas that provide funding back to the school districts are: (1) When there are no outstanding bonds on May 1, 1988, to which increment from the particular district is pledged; or, (2) The referendum is approved after May 1, 1988, and there are no bonds that were issued before that May 1 date which are outstanding at the time of the referendum approval; or, (3) The referendum was approved after the most recent issue of bonds to which increment from the districts has been pledged. Mr. Pribyl stated the first two situations actually initiate more or less a mandatory return of referendum levy. The last one more or less is the voluntary one in which both the school district and the City have to enter into an agreement, and that is stipulated by state statute. Mr. Pribyl stated that regarding each of of these, one has to first look at the certification date of the district, the dates in which any bonds were sold, and the levy certificate dates in which that � referendum levy was actually passed. One has to take each of those levies and pass it through these three criteria to determine whether it is mandatory, voluntary, or not applicable at all. This compliaates things a great deal. Mr. Pribyl stated Mr. Jim O'Meara has been involved in this whole process, and they have discussed it at length. Initially when his December l, 1988, memo was written to the HRA, they were relying on a number of criteria gotten from either the County or the School District and had not gone through an elaborate investigation of all these different criteria. Mr. Pribyl stated currently they have actually had agreements drawn up, and the HRA members have those draft agreements. Those draft agreements spell out the terms in which the state statute is applicable in this situation and also within each school district, those particular districts that have levies that are applicable for refunds. It doesn't define dollars, but defines the actual district in which levies are passed back to the school district. They have not gotten any assistance from the County as far as the County providing absolute dates of certifications, so they are trying to get a certified copy from each of the school districts as far as when their Boards approved these levy referendums. Mr. Pribyl reviewed the numbers in the "School District Increment ^ -18- � HODBING & REDEVELOPMENT ADT80RITY MEETING. DECEMBER 8, 1988 Calculation". Mr. Pribyl stated Center City is a pre-1979 district. That was a district established under the old HRA statute and is referred to as existing projects under the new tax increment guidelines. It was certified prior to August 1, 1979. That particular date was the original effective date of the Tax Increment Financing Act. Unless specific actions are taken to include the pre-1979 districts, in any amendment to the original Tax Increment Act, they are not generally subject to the Tax Increment Act itself. That is also the case with the levy referendum issue. Mr. Pribyl stated the language in the 1988 amendment to the original Tax Increment Act did not specifically identify pre-1979 districts. Unless the HRA elects to proceed or deal with and wants to amend their districts that fall underneath the new guidelines, the staff would not recommend that option. By expanding the activity of the district after May 1, it would fall under the new guidelines. Those are the only ways Center City would fall within the new Tax Increment guidelines and have to be explicitly related to or in accord with any new amendments to that actd. In any legislative information that comes out, they will see that the language will read something.like "whether or not certified before � or after August 1, 1979". That type of term would be used to include the pre-1979. Mr. Pribyl stated this is all to some degree a judgement item. When they look at the language of the law, it appears as though the intent is to include pre-1979 districts. That is kind of where the school district is coming from, and the dates that are used is anything certified prior to May 1, 1988. The intent of the law is to include all districts, so if that is the case, then the District No. 1 or Center City, would also be included in those parameters. When he asked Mr. O'Meara if that specifically exempted, under state statute, Center City from this type of situation, it was Mr. O'Meara's professional judgement that it did. Mr. Pribyl stated when asked what would happen if the HRA then opted to actually pay those using that assessed value and the millage in Center City, Mr. O'Meara stated probably no one would argue that, and it would be an item that would possibly be debatable between attorneys but nothing more than that. It is something that is somewhat gray in the state statutes, and it is not specifically identified and dealt with. Mr. Commers stated why wouldn't they want to wait until they get further clarification that the Center City is out of the project. '"� -19- r`� HOIISING & REDEVELOPMENT AIIT80RITY MEETIN(3� DECEMBER 8. 1988 Mr. Pribyl stated from what he is hearing Mr. O'Meara saying, that would be the appropriate action. In talking to Mr. O�Meara, it is an item that can be debated; but if the HRA felt strongly about including Center City, that is a judgement decision the HRA would have to make. If Center City is excluded, there is about a$14,000 delinquency, and there would only be two different districts: the Moore Lake area and Johnson/Skywood. Mr. Pribyl stated that in th� Seeman (District 14), there levy. One was to continue � levy referendum actually is of return of levy. So, 9 approved apart, it appears a Then, in 1989, it goes back new referendum. a information he had received from Mr. were three pieces to the referendum i 6.5 levy, and the old five year 6.5 exempt from this particular situation .n pulling that referendum that was s only 9 mills in applicable in 1988. up to the 15.5 mills because it is a Mr. Commers stated this was a very new, complex, and complicated issue, which was very difficult to understand. He stated he felt they had to be guided by their bond counsel, Jim O'Meara. Mr. Pribyl stated that on Friday, he would meet with Mr. Seeman to discuss and verify their levy referendum, so that, based on the � HRA's action, the City Council can take formal action at the Monday, December 19th meeting. MOTION by Mr. Meyer, seconded by Ms. Schnabel, to approve the f igures recommended by the bond counsel , Jim O' Meara, and send them on to City Council and that the City Council be excluded from the referendum process at this time. UPON A VOICE VOTE, COMMERS, SCHNABEL, MEYER, VOTING AYE, PRAIRIE ABSTAINING, CHAIRPERSON CONIlKERS DECLARED THE MOTION CARRIED. 10. INFORMATION ON PROPOSED METAL-TEK FACILTY AT THE ATORTHEAST CORNER OF 79TIi AVENUE & MAIN STREET: Mr. Robertson stated Metal-Tek has been in business in the City of Fridley for about ten years. They employ about 30 skilled workers. The company serves businesses all the way from the immediate area to Fort Wayne, Indiana, and Detroit, Michigan. The business is outgrowing its present leased space, and the owners would like to build a new 28,000 sq, ft. facility in the immediate neighborhood. There is also the possibility that a new Metal-Tek facilty will attract a new 20,000 sq. ft. facility by one of Metal-Tek's major customers. Mr. Robertson stated he has discussed with Ernie Paulson, part- '� -20- � � HOIISING & REDEVELOPMENT AIITHORITY MLETIN(�. DECEMBER 8, 1988 owner, the current types of grant programs and loan programs the HRA has provided to businesses in the past. Mr. Paulson has in turn talked to fellow owners, and they have expressed an interest. Mr. Robertson stated he has talked briefly with Mr. Paulson's attorney. He stated staff is recommending that staff be directed to proceed with a draft development agreement with Metal-Tek and to bring it back to the January meeting. Mr. Commers asked if the site where Metal-Tec intended to build had any soil problems. Mr. Paulson stated, yes, the project will require quite a bit of soil correction. Mr. Commers stated support these types to meet with staff out. it was clear that the HRA has always tried to of business in this area. He asked Mr. Paulson to see what type of assistance can be worked 11. _CLAIMS (1836 - 1845) : MOTION by Ms. Schnabel, seconded by Mr. Meyer, to approve the check registered as submitted. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. Mr. Robertson stated that included in the HRA packet was a letter from Jim Casserly detailing his services for the HRA. He had indicated what assistance he will provide, what his rates are, and under what conditions he will perform without expressed prior authorization from the HRA or HRA staff. MOTION by Mr. Meyer, seconded by Mr. P=airie, to approve the Casserly contract for rendering of services to the HRA. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON CONIlKERS DECLARED THE MOTION CARRIED UNANIMOUSLY. 12. OTHER BUSINESS : Ms. Schnabel stated that regarding the policy as far as HRA assistance to developers, she would recommend that the HRA put together some kind of HRA handbook which includes the HRA's policy statements and the procedures. As changes were made, they could be inserted in the handbook. She stated her reason for suggesting this was because every time they discuss assistance, they have �"� -21- HOIISING & REDEVELOPMENT AIITHORITY MELTING. DECEMHER 8, 1988 difficulty remembering what they have done in the past. With a handbook, they would be able to have access to that information and could answer questions more intelligently. Mr. Commers stated he agreed with Ms. Schnabel. A handbook could be a very useful tool for the HRA. Mr. Robertson stated it was an excellent idea. It could be coordinated with the Northern Mayors' Association so it would be consistent with other cities. ADJOURNMENT• Chairperson Commers declared the December 8, 1988, Housing & Redevelopment Authority meeting adjourned at 11:15 p.m. Respectfully submitted, �- , �s Ly e Saba Re ording Secretary /'� ^ -22-