HRA 11/08/1990 - 29615�
CITY OF F1tIDLEY
HOUSING & REDEVELOPMENT AIITHORITY MEETING, NOVEMHER 8, 1990
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CALL TO ORDER•
Vice-Chairperson Schnabel called the November 8, 1990, Housing and
Redevelopment Authority meeting to order at 7:05 p.m.
ROLL CALL•
Members Present: Virginia Schnabel, Duane Prairie, John Meyer
Members Absent: Larry Commers, Walter Rasmussen
Others Present: Jock Robertson, Executive Director of HRA
Jim Casserly, Development Consultant
Jim Hoeft, Assistant City Attorney
Paul Hansen, Accountant
Mike Schrader
APPROVAL OF OCTOBER 11. 1990. HOUSING & REDEVELOPMENT AUTHORITY
MINUTES•
n MOTION by Mr. Prairie, seconded by Mr. Meyer, to approve the
October 11, 1990, Housing & Redevelopment Authority minutes as
written.
UPON A VOICE VOTE, ALL VOTING AYE, VICE-CBAIRPERSON BCffiJABEL
DECLARED THE MOTION CARRIED IINANIMOIIBLY.
APPROVAL OF AGENDA:
Mr. Robertson added the following item to the agenda under Action
Items:
Agreement Regarding Confidentiality of Lake Pointe
Negotiations
Mr. Robertson stated that before discussion of the agenda items,
he needed to tell the HRA that he is resigning from the City of
Fridley for personal and family reasons. He stated it has been a
difficult decision to make, and words cannot express how much he
has enjoyed working with the HRA members as their Executive
Director. They are a wonderful group of people.
Ms. Schnabel stated each member of the HRA will miss Mr. Robertson
tremendously. They have enjoyed working with him and certainly
appreciate all the work he has done for them over the years.
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� HOIISING & REDEVELOPMENT AIITHORITY MTa., NOV. 8, 1990 PAGE 2
Mr. Meyer and Mr. Prairie expressed their regret and stated they
wished Mr. Robertson a lot of luck for the future.
1. SALE OF LAND RECEIVED FROM CITY TO FRIDLEY AUTO MALL:
Mr. Robertson stated that his memo on agenda page 1 outlines the
proposed schedule for the sale of excess property to Al Schrader.
The Council had already approved, by resolution, the transfer of
the land to the HRA. The letter has gone to the County asking for
the County's approval for this change. The next step is to get the
same letter of approval from the State Commissioner of Revenue.
The Council will then pass an ordinance declaring the land surplus
and deeding it to the HRA. They will then need simultaneous
approval of a purchase agreement between A1 Schrader and the HRA
and an agreement between the City and the HRA for the HRA to
reimburse the City for money received in the transaction. At the
closing, the HRA will transfer title from the HRA to A1 Schrader,
collect the money from Al Schrader, and, subsequently, transfer the
money back to the City as per the agreement.
Mr. Robertson stated staff is recommending the HRA approve the
above procedure.
Mr. Schrader stated he is at the meeting to answer any questions
i"� the HRA might have. He stated he has been in contact with Mr.
Herrick, City Attorney, regarding this procedure. It is a somewhat
convoluted, but necessary, procedure. In order to utilize this
piece of land for their proposed development, this is the way it
has to work.
Mr. Meyer asked what interest, vested or private, would potentially
have a stake in this in terms of raising a question of any kind to
this whole procedure. Should they expect a potential conflict from
another source?
Mr. Robertson stated that is a good question, and he does not have
an answer to it. As the law stands, this is an exception to the
normal procedure where the City by law must give the land to the
state and then purchase it back from the state. But, the law
allows the one option where the City can give it to an HRA. The
law does not specify what the HRA must do with the land.
Mr. Schrader stated he has not handled this form of transaction
himself, but, given the changes in staff and personnel, he thought
it would be a one-step-at-a-time approach. The land is unbuildable
given the setbacks and the way it is set up, and will work nicely
with their project once the transaction is completed and the land
is replatted into one piece for frontage. Given the fact that the
land is in a redevelopment district right now and the City has
� given its blessing that there are no other uses within the City's
_ design for it, he did not see that the Commissioner of Revenue
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would have to pursue those avenues as vigorously as they may have
given other pieces of property.
Mr. Hoeft stated the only other possible avenue he would consider
is if the routine is followed and the property would go back to
the state, and then the HRA would purchase it back from the state.
The only potential there is that the state would have the option
when they received the property to place it out for bid. Since the
state would be agreeing, by this letter of approval to the
Commissioner of Revenue, that this is acceptable, he did not see
any other problems. And, as Mr. Schrader has said, this land, the
way it is situated, is really not of any use to anyone else.
Mr. Schrader stated that since the Council approved the procedure
last week, they are working quickly to finalize the leasing and
financial commitments.
MOTION by Mr. Meyer, seconded by Mr. Prairie, to approve the
concept for the sale of excess property to A1 Schrader for the
proposed Fridley Auto Mall as proposed by staff.
IIPON A VOICE VOTE, ALL VOTING AYE, VICE-CHAIRPER80N BCHNAHEL
DECLARED THE MOTION CARRIED IINANIMOIIBLY.
!� 2. AGREEMENT REGARDING CONFIDENTIALITY OF LAKE POINTE
NEGOTIATIONS:
Mr. Robertson stated that Mr. Utley has been hired by Lake Pointe
to represent them in some negotiations. He stated it is quite
common to have a confidentiality agreement when undertaking
negotiations so that it is held in confidence and cannot be used
in court.
Mr. Robertson stated he talked to Larry Commers about this the day
before. Mr. Commers thought one sentence should be added and that
he would call in the change to Mr. Robertson. He stated he did not
receive any call from Mr. Commers, and he believed that meant that
Mr. Commers did not think the change was significant enough to make
the amendment. The change had something to do with the use of the
material that would be developed during discussion.
Mr. Robertson stated that this agreement has been reviewed by Mr.
Casserly and Mr. Herrick. After the HRA's approval, the Mayor and
Larry Commers will sign it.
Mr. Casserly stated staff has been reluctant to have any more
discussions until this agreement is reached. What this agreement
does is that when there are discussions to solve the problem, those
discussions cannot be admitted later in court.
� Mr. Robertson stated the MPCA has revoked the Indirect Source
Permit. Woodbridge Properties paid the $400 for the extension of
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the Indirect Source Permit, and staff is recommending that fee be
refunded back to Woodbridge Properties.
MOTION by Mr. Prairie, seconded by Mr. Meyer, to authorize the
execution of an agreement regarding confidentiality of Lake Pointe
negotiations.
IIPON A VOICE VOTE, ALL VOTING AYE, VICE-CHAIRPER80N 8C8NABBL
DECLARED TH$ MOTION CARRIED IINANIM0�8LY.
MOTION by Mr. Meyer, seconded by Mr. Prairie, to approve the return
of $400 to Woodbridge Properties because of the revocation of the
Indirect Source Permit by the MPCA.
IIPON A VOICE VOTE� ALL VOTING AYE, VICE-CBAIRPERBON SCffiJABTsL
DECLARED THE MOTION CARRIED ONANIMOIIBLY.
3. CONCEPT OF PROPOSED TIF ECONOMIC DEVELOPMENT DISTRICT FOR NEW
RMS PLANT•
Mr. Robertson stated that at the time City staff was approached by
RMS Company, they asked specifically about the creating of a tax
increment district. He spoke with Mr. Casserly about this, and Mr.
Casserly stated it can be done. It meets the statutory
/"� requirements for an economic development district; however, there
would be LGA penalties to the City. Subsequently, Mr. Herrick and
he met with the buyers and the sellers and determined there was a
total of about $100,000 of outstanding special assessments. The
HRA would essentially agree to pay for half of that. Then it would
be up to the buyer and seller to negotiate how to pick up the rest
of it. They had previously negotiated an agreement whereby the
buyer was going to pay $27, 000 of the special assessments which was
on the books at the beginning. What happened was the new special
assessments were added to the tax rolls after they took a casual
look at the outstanding assessments when they first started
negotiations. After they had covered the agreement that the
$27,000 was going to be picked up, the buyer's attorney discovered
there was another $75,000 that had been added.
Mr. Robertson stated staff feels it is in the City�s best interest
for the HRA to split the assessment half and half with the private
parties. The buyer and seller will then have to negotiate how to
pay the other half. It is an easy way to keep this industry in the
City.
Mr. Casserly stated it is not impossible to create this kind of
economic development district. It is just that the amount is so
small that he did not think it is worth going through all the time
and expense.
� Ms. Schnabel asked what it would cost the HRA to create the
district.
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Mr. Casserly stated it would probably run between $2,000-2,500 to
create the district, and then for assurance that the company is
going to proceed, they should have a simple development agreement
which would cost $1,500-2,500. Overall total costs would probably
be around $4,000-5,000.
Ms. Schnabel stated the HRA's costs would then be $4, 000-5, 000 plus
the $27,000 of LGA penalties, for a total of $31,000-32,000. She
had a hard time understanding why the HRA should split the special
assessments and pay $50,000, when they can create the economic
development district and pay $32,000 maximum. She had a hard time
being very sympathetic to people who do not thoroughly research the
tax situation on a real estate deal.
Mr. Casserly stated he had the same question. It was the attorney
who was representing the purchaser who, before he allowed his
client to sign the purchase agreement, decided to doublecheck. It
was one of those things that when they originally started
negotiations, these special assessments were not pending.
Ms. Schnabel asked about option #1 as listed in Mr. Robertson's
memo dated October 29, 1990: The HRA, the buyer, and the seller
could split the additional special assessments three ways.
Mr. Robertson stated that option was offered to the company, and
it was not acceptable.
Ms. Schnabel stated she wondered if it is appropriate for the HRA
to take discretionary funds to pay for special assessments on
property 60 days before a scheduled closing.
Mr. Casserly stated the use of discretionary funds for this purpose
is completely appropriate because they are furthering their
development program and are spending the funds on site related
expenses.
Mr. Hoeft stated he sensed that Ms. Schnabel is concerned about
setting a precedent. That is a valid concern, but he thought it
would be unlikely that another buyer and seller would come in with
this situation, because of the fact that the assessments were not
pending at the time negotiations were begun and were assessed
thereafter. This type of situation does not happen very often.
Ms. Schnabel stated her point is that there is still 60 days until
closing, and there is still time for the buyer and seller to work
out their differences.
MOTION by Mr. Meyer, seconded by Mr. Prairie, to approve option #2
� as outlined in Mr. Robertson's October 29, 1990, memo that the HRA
and the private parties could split the assessment half and half.
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HOIISING & REDEVELOPMENT AIITHORITY MTG.. NOV. 8, 1990 PAGE 6
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IIPON A VOICE VOTE, MEYER AND PRAIRIE VOTING AYE� BCHNASLL VOTIN(3
NAY, VICE-CHAIRPERSON BCHNABEL DECLARED T8E MOTION CARRIED BY A
VOTE OF 2-1.
4. ESTIMATES:
a. The Kordiak Company (Rice Plaza
b. Talberg Lawn & Landscape (Lake Pointe Maintenance)
MOTION by Mr. Prairie, seconded by Mr. Meyer, to approve the
estimate for The Kordiak Company in the amount of $260.34 and
the final estimate for Talberg Lawn & Landscape in the amount
of $6,100.70.
IIPON A VOICE VOTE� ALL VOTING AYE� VICE-CBAIRPERBON BCHNABEL
DECLAR�D THE MOTION CARRIED IINANIMOIIBLY.
5. CLAIMS:
MOTION by Mr. Prairie, seconded by Mr. Meyer, to approve the check
register dated November 8, 1990, as submitted.
IIPON A VOICE VOTE, AI,L VOTING AYE, VICE-CBAIRPER80N 8CffiJABEL
DECLARED THE MOTION CARRIED IINANIMOOSLY.
6. STATUS OF THE CORRECTIVE ACTION AT 57TH PLACE:
Mr. Robertson stated that at the October HRA meeting, staff was
asked to find out whether the clean-up equipment could be placed
in the side yard of a new development project so that redevelopment
could proceed without waiting for the completion of the clean-up
action which may take several years.
Mr. Robertson stated that when he telephoned Art Newby, he was told
that Jack Lemley of Ashland Oil was requesting that all calls from
the City of Fridley be referred to him. He then contacted Mr.
Lemley who said he would have to talk to his attorney before
responding. At this time, Mr. Lemley has not yet responded to this
request.
Mr. Robertson stated this is for the HRA�s information.
7. STATUS OF RIGHT-OF-WAY ACOUISITION FOR MISSISSIPPIf UNIVERSITY
INTERSECTION IMPROVEMENTS IN 1991:
Mr. Robertson stated the City Council has petitioned the County to
complete the intersection improvements in 1991. In order to do
that, the City will have to furnish some right-of-way from both
Kiffe's Auto and Rice Plaza, both of which the HRA own. Ho�ever,
� they do not own the Dairy Queene
o.\ 80IISING & REDEVELOPMENT AIIT80RITY MTG., NOV. 8, 1990 PAGE 7
Mr. Robertson stated he contacted the City's appraiser and asked
him to prepare an outline of an appraised value so that they can
meet with Mr. Fitch of the Dairy Queen and negotiate an agreement.
He is following the direction of the City Council for this, and he
will bring a progress report and possibly a proposed settlement for
HRA action at the next meeting.
Mr. Robertson stated that in connection with this, he had mailed
to the HRA some supplemental material entitled "Mississippi Street
Improvements". Does the HRA and the City Council wish to make a
commitment to the pedestrian improvements, the landscaping, and
decorative lighting at this time? These are things they had in the
long range plan for University Avenue and which the HI2A put on hold
at a joint meeting with the City Council about 1 1/2 years ago
(minutes included in the material). At that time, he believed it
was the policy direction that rather than doing the two
demonstration sections of the Corridor, they would put those in
hold and concentrate on the North Gateway area, with the idea that
once they got a project in the North Gateway area, they would
complete the public improvements with that.
Mr. Robertson stated that 1 1/2 years later, they now have the
opportunity to do that same thing with Mississippi Street. If the
County is going to make the improvements, now is the time to put
� the NSP lines underground, put in the decorative lighting and
pedestrian improvements. He stated he believed this would be
consistent with that policy direction made 1 1/2 years ago.
Mr. Robertson stated that in this case, however, the City Council
has said they want to give the HIZA policy direction and they are
discussing this at their meeting that same evening. The HRA should
be aware that with the cost of all the improvements, it could be
about $700,000 for everything.
Mr. Robertson stated he had discussed this with Mr. Commers. Mr.
Commers had commented that they should definitely put in the
underground utilities and probably at least the underground wiring
for the decorative lighting. He felt strongly that they should do
the pedestrian improvements and move the traffic signals so the
whole intersection becomes pedestrian friendly. If they could
defer something, he thought it could be the actual plant materials.
Mr. Robertson stated that when the City Council discussed this at
their November 5, 1990, meeting, their main concern was that with
the median extending further back on the west side, it would
prevent the frontage road between the Dairy Queen and Riffe's from
having full movement. The Council has asked John Flora to prepare
plans for a temporary connection for the frontage road.
Mr. Robertson stated that at this meeting, he is asking the HRA to
^' be aware of the costs and then they will have to wait for input
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HOIIBIN(3 & REDEVELOPMENT AIIT80RITY MTa.. NOV. 8, 1990 PAGE S
from Council before proceeding. This will be discussed again at
the December HRA meeting.
Mr. Meyer stated it might be interesting to revisit some of the
concepts they discussed in the past. For instance, he would like
to review the lighting as a number of things have changed since
their last discussion.
Ms. Schnabel agreed. She stated she has very strong feelings about
some of the lighting. Some of the lighting that has been done in
the City is excessive.
Mr. Robertson stated Terri Mau, owner of the beauty salon and
tanning salon in the Rice Plaza Building, approached him two months
ago with an offer. She wanted to trade some of her rent for her
future relocation entitlements. Now that Target is no longer
interested in the southwest quadrant, she is still interested in
moving across to the Fridley Town Square development at the 10,000
Auto Parts site.
Mr. Robertson stated Ms. Mau will not be able to move for a year.
She has 2- 2 1/2 years outstanding in leases. He did think it
would be appropriate to tell Ms. Mau that if she is still in
business at that time, the HRA would forgive the rest of the lease.
This would save a Fridley business by putting it into a new
location. Ms. Mau needs a commitment from the HRA before the end
of the month. Of course, if the Fridley Town Square does not go,
then this will be moot.
Ms. Schnabel stated she did not like the concept of doing that,
because she is afraid of it setting a precedent for other
businesses in that Rice Plaza building. She would prefer that the
HRA not make a commitment. However, if the HRA must make a
commitment, she would reluctantly agree to forgive the balance of
Ms. Mau�s lease to the HRA, if she agrees that when she moves, she
will move from Rice Plaza to the Fridley Town Square development
project and nowhere else.
MOTION by Mr. Prairie, seconded by Mr. Meyer, to forgive the
remaining lease to Ms. Mau, with the stipulation that when she
moves, she moves to the Fridley Town Square development.
IIPON A VOICE DOTE, ALL DOTING AYE, VICE-CHAIRPER80N 8CffiJABLL
DECLAR�D THE MOTION CARRIED IINANIMOIISLY.
8. STATUS OF TARGET AND FRIDLEY TOWN SOUARE PROPOSALS FOR CENTER
CITY REDEVELOPMENT:
� Mr. Robertson stated that on October 19, 1990, Target informed the
City that they had decided not to proceed with the projected
combined NOC/CPC office space project on the southwest quadrant of
,r,� 80II8ING & RED�VELOPMENT AIITHORITY MTa., NOV. 8, 1990 PAdE 9
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University/Mississippi. Target explained that it was a short range
financial consideration in which the corporation wished to make
most of its capital investment in new retail facilities while
taking advantage of the very favorable office space lease market
in the Twin Cities and continue leasing space for the CPC in
Brooklyn Center.
Mr. Robertson stated that regarding the Fridley Town Square
project, Mr. Scott Erickson feels there is a 90% plus probability
that the project will proceed as proposed. He has gotten a
preliminary commitment on a construction loan from Miller Schroeder
within the last couple of days.
Mr. Casserly stated Miller Schroeder has given Fridley Town Square
Associates an oral commitment, but the partnership has asked for
a little larger loan amount. He stated he believed the project has
about a 75� chance to proceed.
Mr. Casserly stated he will be coming back to the next meeting with
another concept for assistance for the Fridley Town Square project.
He stated he truly believes that if the HRA does not assist this
project, it will not succeed.
9. OTHER BUSINESS:
a. North Gateway Plan
Mr. Robertson stated the City Council reviewed the North
Gateway scenarios for different housing as an alternative to
57th Place/Winfield Development. The Council has asked staff
to explore some ways of enhancing the financing, which would
be different from a straight TIF district.
Mr. Robertson stated he would like a consultant, Bill
Schlatslein, to prepare a proposal for more creative ways to
finance that project. He stated he will bring this proposal
back to the HRA at their December meeting.
b. Tax Increment Revenue Return to the School Districts
Mr. Robertson stated that, at the HRA's direction, Paul Hansen
and Rick Pribyl have prepared the school TIF turnback
proposal.
Mr. Hansen stated that at the October meeting, the HRA
requested him to come back with some information regarding
the tax increment revenue return to the school districts. At
the election on November 6, School District #13 was the only
school district that passed a referendum. He used the 1990
^ estimates and added in the portion that applied to the new
referendum which is approximately $33,770. So, the total
^ HOUBIN(� & REDEVELOPMSNT AIIT80RITY MT(�., NOV. 8, 1990 PAaE 10
refund amount for 1991 is $295,569. That is $33,770 more than
in 1990.
Mr. Pribyl stated this will come back to the HItA for formal
action at the December meeting. Because there is the possible
windfall to School District #13, he may recommend not
returning the $33,770 levy to School District #13, if they
participate in half the penalties and interest on the Skywood
Mall project.
ADJOURNMENT:
MOTION by Mr. Prairie, seconded by Mr. Meyer, to adjourn the
meeting. Upon a voice vote, all voting aye, Vice-Chairperson
Schnabel declared the November 8, 1990, Houaing and Redevelopment
Authority meeting at 9:15 p.m.
Resp ctfully sub itted,
.,
�
yn Saba
Recording Secretary
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