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HRA 11/12/1992 - 29636�, CITY OF FRIDLEY HOIIBIN(3 � REDEVELOPMENT AIIT80RITY MEETINGr, NOVEMBER 12� 1992 �_�_����..����__....��....��.,.���..�_�������..�_���������������..����_����� CALL TO ORDER• Chairperson Commers calTed the November 12, 1992, Housing & Redevelopment Authority minutes to order at 7:30 p.m. ROLI� CALL: Members Present: Larry Commers, Virginia Schnabel, John Meyer, Duane Prairie, Jim McFarland Members Absent: None Others Present: William Burns, Executive Director of HRA Barbara Dacy, Community Development Director Rick Pribyl, Finance Director Paul Hansen, Accountant Jim Casserly, Consultant � APPROVAL OF OCTOBER 8. 1992, HOUSING & REDEVELOPMENT AUTHORITY MINLTTES : � MOTION by Mr. Prairie, seconded by Mr. Meyer, to approve the October 8, 1992, Housing & Redevelopment Authority minutes as written. IIPON A VOICE VOTE, ALL VOTING AYE, CHAIRPER30N COMMERS DECLARED THE MOTION CARRIED UNANIMOIIBLY. 1. CONSIDER SCHOOL DISTRICT #13 TIF TURNBACK: Mr. Commers stated that at the last meeting, there was some discussion relating to the fact that there had been some penalties assessed to the assessments in School District #13. Mr. Pribyl stated that staff is now recommending that the HRA approve the turnback to School District #13. He stated they still do not know what the County's position is going to be as far as the abatement of penalties or possible reduction in market value. But, in the past, staff has really not taken this kind of thing into consideration. This particular return will not hamper or impair any future debt service payments. MOTION by Ms. Schnabel, seconded by Mr. McFarland, to approve the agreement returning tax increment to School District #13 in the estimated amounts of $27,308.37 for 1992 and $26,564.71 for 1993. �, i"'� ,� 0 � HOUBING & REDEVELOPMENT AIITHORITY MTa.. NOV. 12. 1992 PAGE 2 IIPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON CONII�RB DECLARED THE MOTION CARRIED IINANIMODSLY. 2. CONSIDER APPROVAL OF PLEDGE AGREEMENT FOR THE ISSUANCE OF A GENERAL OBLIGATION TEMPORARY TAX INCREMENT BOND: Mr. Commers stated the HRA has received at the meeting from. Mr. Pribyl a resolution approving and authorizing execution of a pledge agreement for the issuance of a general obligation temporary tax increment bond that is being issued to assist the HRA in the reacquisition of Lake Pointe. Mr. Casserly stated the bonds are temporary.because they are for no more than three years. They are general obligation bonds because the general taxing authority of the City supports them. The HRA has to pledge tax increment because the purpose of them is to assist with a redevelopment function. Mr. Casserly stated that all the agreements have been executed with Lake Pointe, and they closed earlier that day. Mr. Meyer asked if maybe the HRA should put together a generalized summary on the Lake Pointe acquisition to notify the public of what the HRA has been doing with this property. Mr. Commers stated there might be a positive�way of informing the public that the HRA has acquired the Lake Pointe property and that the HRA intends to move ahead with a new development. Mr. Casserly stated it might be best to wait on the publicity until after all the bonds are closed and the deeds are transferred. MOTION by Resolution Agreement Bond. Mr. McFarland, seconded by Ms. Schnabel, to approve, No. HRA 7-1992 authorizing execution of the Pledge for the $4,030,000 Obligation Temporary Tax Increment IIPON A oOICE VOTE � ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THS MOTION CARRIED IINANIMOIIBLY. Ms. Schnabel asked if the HRA is going to continue to call this property "Lake Pointe" or if the HRA should consider a name change. Mr. Commers stated that is a good suggestion, and the HRA should give that some thought. 3. CONSIDER EASEMENT FOR ELECTRICAL CONTROL BOXES FOR NSPt MOTION by Mr. Prairie, seconded by Mr. Meyer, to approve the easement for electrical control boxes for NSP and authorize the Executive Director to execute the easement. � HOUSING & REDEVELOPMENT AIITHORITY MTG., NOV. 12, 1992 PAaE 3 IIPON A VOICE VOTE � ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED IINANIMOIISLY. 4. 5. CLAIMS• a. Check Register (2256-2265) MOTION by Ms. Schnabel, seconded by Mr. Prairie, to approve the check register dated November 6, 1992. UPON A VOICE VOTE, ALL VOTING AY'E, CHAIRPERBON COMMERS DECLARED THE MOTION CARRIED IINANIMOIISLY. HOUSING PROGRAM UPDATE: Ms. Dacy stated she will review the recommended programs starting with the overall budget amount, and she would welcome any questions the HRA members might have. . Ms. Dacy stated the reason for discussing the housing program at this meeting is to receive some conceptual approval from the HRA on four of the five primary programs that staff recommended the HRA and Council consider earlier in the year. Those four prograins are: ^ 1. Single family rehab program 2. Rental inspection program 3. Scattered site acquisition program 4. MHFA/HOME programs %"�, Ms. Dacy stated that for each of these four programs, there are a series of implementation steps and a checklist of what is needed to be done.� Budqet Ms. Dacy stated that in September 1992, they had looked at an amount of about $505,000 for the proposed housing program. That budget is as follows: Rehabilitation program $160,000 Rental inspection program 110,000 Scattered site acquisition program 225,000 MHFA/HOME applications 10,000 Neighborhood land use planning process -0- $505,000 Since that time, staff has reallocated some of that monies in each program. For example, they reallocated monies so that they are putting more money toward the Fridley housing rehab program. The rental inspection program remained the same. The amount for scattered site acquisition was reduced. The N�iFA/HOME programs remained the same. The cost for the neighborhood land use planning ,� 80IISING & REDEVELOPMENT AIITHORITY MTG.. NOV. 12, 1992 PAGE 4 process that was recommended will be absorbed in the Community Developmeni� Department budget. Then, they created a line item called "Administration" to which they allocated $85,000. Rehabilitation program Rental inspection program Scattered site acquisition program NIIiFA/HOME applications Neighborhood land use planning process Administration $200,000 110,000 110,000 1Or000 -0- 85.000 $505,000 Ms. Dacy stated about half the cost for "Administration" will be used to hire a housing coordinator on a contract basis. A staff person is needed to coordinate the four housing programs. A job description for the housing coordinator was included in the HRA agenda. Other administrative costs would include costs to administer the other programs. Ms. Dacy stated it is going to take people to conduct these.rental unit�inspections. Mr. Meyer asked how many units are inspected each year. ,,� Mr. Dacy stated that prior to this past year, the City did rental inspections on a complaint basis only so there was no proactive program. Then last year, Jon Thompson from the Engineering Department acted as a housing inspector durinq the winter season from January to April, and he inspected 13� of the rental units. There are 4,000 rental units, so that amounted to about 520 rental units that were inspected.. Mr. Meyer asked what kind of violations did Mr. Thompson find. Were the•things he found things that would justify them going into a program that would inspect all units every two years? Ms. Dacy stated that on the average, most of the rental units did not have any significant problems and the property owners were able to comply. There were one or two units that were very bad. Mr. Meyer asked if staff feels the program of inspecting all units every two years is more for preventative maintenance, rather than for finding a lot of code violations. Ms. Dacy stated she would agree with that. However, there are problem buildings in Fridley. Mr. Meyer stated that of the violations that were found, were those tenant-caused violations or were they property owner-carelessness type violations? � ,� � � 80IIBING & REDBVELOPMENT AIITHORITY MTa., NOV. 12, 1992 PAaE 5 Ms. Dacy stated she did not know the answer to that question. She would have to ask Mr. Thompson. Ms. Dacy stated another aspect of the administrative.budget under the rental inspections is that with the amount of inspection work proposed to be conducted, staff is recommend•ing the setting up of a computer system (HTE software) to record the inspections, provide a tickler system for the next follow-up inspection, and be able to track the progress of the violations and infractions. Ms. Dacy stated that at the Council meeting, the Council questioned the cost of the HTE software. The Council has asked staff to research this in more detail and to come back with recommendations for alternative software and costs. Council prefers that the staff use a PC-based software system. Ms. Dacy stated that regarding the scattered site acquisition program, with a$100,000 budget, realistically they can only acquire 2-3 properties per year, so they estimated some potential costs based on actual cases they had in the last two years for appraisal, title, and legal costs. Ms. Dacy reviewed the goal, program components, budget, and implementation steps for each of th.e four recommended programs. Fridley Housinq Rehabilitation proqram Ms. Dacy stated the Rehabilitation Program is broken into the following components: a. Fridley Middle Income Rehabilitation $150,000 b. MHFA Fix-up Fund -0- c. CDBG -0- d. Assistance for Non-qualifiers 50,000 $200,000 Ms. Dacy stated the intent of setting up the program into these four levels is to be able to use state money, MHFA money, and federal money. She reviewed a matrix for each of these four components in terms of type of assistance, borrower income limit, maximum number of units, owner occupancy, mortgage required, interest rate, maximum and minimum loan, and maximum term. Mr. Meyer stated that he is looking at the Fridley Middle Income Program and why is the HRA is worrying about the person who can qualify for a$120, 000 loan and giving that person a loan break under this program? Ms. Dacy stated the purpose of the program is to update the housing stock and to do any type of code work that is needed. ^ 80IISING & REDEVELOPMENT AIITHORITY MTa.. NOV. 12, 1992 PAGE 6 Mr. Meyer stated here they are trying to help people who are of a lower income and whose houses are deteriorating and it is good to help them out. But, then they are worrying about the people who want to make improvements to�their homes and have the money to do it by themselves, but are applying for public assistance. It just doesn't make sense, and he wondered if it is a proper use of public monies. Mr. Prairie asked if this .program was patterned after the Minneapolis program. Ms. Dacy stated it was. Mr. Prairie stated the homes in Minneapolis are a great deal older than Fridley's homes. Rehabbing an older home in Minneapolis is a lot different than rehabbing an older home in Fridley. Mr. Casserly stated that in this particular program, Minneapolis' emphasis was more on a middle income approach in order �o rehabilitate the older homes and to have an attractive program to encourage people to stay in the city. This is one of the least expensive programs because the City of Minneapolis doesn't have to fund it themselves or sell bonds to do it. ,� Mr. Meyer stated it is fine for the City of Minneapolis and St. Paul to help their middle income people rehab their homes. Minneapolis and St. Paul have terrible problems in their housing stock that Fridley doesn't have. Mr. Burns stated he and Ms. Dacy have been discussing something similar to the Minneapolis and St. Paul programs. That is that during the first six months of their programs, they earmarked two- thirds of the money for people who were at median income or below. So, during the first six months, only one-third of the money could go to people above the median income. In Fridley�s case, that is about $50,000. So, they could give peopl� money in the $50,000- 76,000 income range, but only one-third of the total money could go to that category of people. That is something the City of Fridley might want to do. Mr. Meyer stated that is an interesting concept. He stated they have to be frugal with this program. Mr. Commers asked if the HRA wants staff to look closer at income levels, size of loans, and eligibility improvements. Mr. Meyer stated he would like to see them establish a more precise priority system on how this money can be used under "Eligible Improvements". Then, he would suggest that they try to structure this so that the median income is lower than what is being proposed � via a market eligibility benchmark of some kind. � n /'� HOIISING & REDEVELOPI�ENT AIITHORITY MTG., NOV. 12, 1992 PAGE 7 Mr. McFarland stated that under the Fridley Middle Income Program, the borrower income limit is 150a of inedian income or $76,500. He stated $76,500 seems kind of high, and maybe it should be closer to $50,000. Ms. Dacy stated Mr. Casserly is still doing some legal research on this. At some time, the HI2A will need to approve a resolution that will formally adopt the program structure and there will be agreements that the HRA will have to execute with the banks to make sure the programs are administered to the standards that the HRA established. However, before this can be done, they have to find a bank or mortgage company that is willing to administer the Middle Income Program. Once that is secured, staff would like to finalize the job description for a housing coordinator, hire this person, and start the ball rolling to get the other three program elements in place. Mr. Commers stated he did not think the HRA has any problem with staff trying to find a bank that is willing to administer the program. Maybe staff can come back with some suggestions and other options based on the HRA's discussions of these issues. However, in the meantime, there is no reason why staff cannot go ahead in looking for a bank. Mr. Burns stated before they can negotiate a contract with the bank, the HRA will need to define what the terms will be. Rental Inspection Program Ms. Dacy stated the goals of the Rental Inspection Program are to improve the quality of the rental housing stock, to avoid receiving displaced problem tenants, and to interrupt the cycle of deferred maintenance. She stated some of the adjacent communities are more aggressive than Fridley in inspections. Ms. Dacy stated one component of this program is to conduct inspections in 2,000 units per year. They are looking at two full- time staff people for rental inspections. One of the housing coordinator's first tasks would be look at existing Chapter 220 which requires inspections. They would like to adopt the HUD Section 8 minimum housing standards. Ms. Dacy stated the housing coordinator and the HRA would need to decide how the inspections would be conducted. Part of the $110,000 cost would be for the equivalent of two full-time inspectors plus one full-time clerical person to input inspection results on the computer, schedule inspections, and follow-up correspondence. Ms. Dacy stated that for future approvals before the program gets started,.staff is recommending that the housing coordinator meet with the rental property owners about the proposed program and � 80II8IN(� &�REDEVELOPMENT AIIT80RITY MTC,., NOV. 12, 1992 PAGE 8 rental fee increase, the City Council will need to adopt an ordinance to.increase the fees as well as adopt any amendments to Chapter 220. Then, the housing coordinator would prepare the RFP for rental contract inspectors and establish the program. Staff would also like to acquire HTE software. ' Ms. Dacy stated the City Council inquired if some funds, either now or in the future, could be reserved by the HRA for multiple family rehab or, in some cases, multiple family acquisition to eliminate the problem of certain buildings in the community. It is an option for the HRA; however, the option is more costly. Ms. Dacy stated that staff's recommendation is that it is very important to start the rental inspection program first and, as they proceed, other options can be evaluated. There may be other agencies better able to acquire buildings than the HRA. Mr. Meyer refer�ed to 1.b. under "Goals" which states: "To avoid receiving displaced problem tenants." He asked what that means. Ms. Dacy stated she recently had a meeting with the Executive Director of ACCAP and two meinbers of the police department. What they are finding is that problem tenants seem to be moving around from community to community. They usually end up in buildings � where, because of high vacancy rates, the owners are not careful about screening the tenants and tend to negotiate leases that are very loose. So, what they are trying to do is impress upon the . property owners that the City is serious about this inspection program and that these units need to be well maintained. The other strategy is that they would like to form a coalition of rental property owners where owners get together and talk to one another. Mr. Meyer stated he did not think that phraseology was very appropriate under "Goals". This phra�eology could easily be misinterpreted by someone. He did not think there is any relationship or link between (b) and the rental program. They are not going to keep out drug dealers, car thieves, etc., because the rental unit's kitchen has a new coat of paint. Mr. Commers stated his objection is that this is far toa aggressive a problem without a real solution. The fact that the City is going to inspect 2,000 units every two years is not going to solve any problems. It is going to cause more problems than it is worth. The City needs to know what kind of problems are out there, and if they find major problems, they need to have a solution for how those things are going to get done. The way the economy and market is today, those apartment owners are not going to be able to comply. When you have bankers running real estate, it is a deteriorating situation also. So, this really doesn't answer the problem. It is good to keep the buildings up so that you hope to �"`� get better tenants, but that doesn't solve the crime or drug problems. Those people can come in and pay the highest of rents. � HOIISING � REDEVELOPMENT AIITHORITY MTG., NOV. 12, 1992 PAGE 9 What it does is hurt the low income people that cannot find a place. It is true that problem tenants do move from community to community. But, to spend $100,000 for two inspectors to inspect every unit every two years does not make any sense to him at all. Staff doesn't even have an identifiable problem. If they have two or three units that are problems, then the Mr. Thompson should get over there and solve those problems. But, they don't need to spend $100,000 worth of inspectors every two years to do that. Ms. Dacy stated that they also cannot wait until there are major problems. Mr. Commers stated that they should then spend the money on getting the coalition of rental property owners together and talk to them and educate them. That would be the positive approach. Ms. Schnabel stated she did not know that by doing that, they would be able to get the property owners to spend a lot more money to comply with violations unless they are forced to do it. Mr. Commers stated they will do it, but the City has to have a program in place to assist them, because the economics are such today that they cannot do it on their own. The economics today are that most of those buildings are financed far greater than their � market values, and those people will walk away from it. That is what is causing the deterioration in housing stock. Ms. Schnabel stated she did not know how they are going to know the problems unless they have inspectors who are looking for the problems. Ms. Dacy stated that maybe �inspecting 2,OOQ per year is too aggressive. Right now, staff is inspecting about 130 of the City's rental units. But, may3�e they can scale back the cost of the program by increasing the inspections to 25-30%. Maybe they should focus more on problem buildings and try to couple that with the MFHA programs or other programs; or, the HRA may want to allocate some of the $500,000 for multiple family rehab. Staff feels strongly that it is not prudent to let go of the inspections entirely. They have to make more inspections than what they are doing now. Mr. Meyer stated he shared Mr. Commers' concerns about these inspections. He did not know if they need to inspect every unit every two years. Maybe it should be every six years. They should be more selective, i.e., make random inspections. They should be hitting the.buildings where they know there are code violations. Mr. Commers stated usually a renter will complain, but not always. One of the problems today is. that some of the newer units are in � worse condition than the older units because of the poor quality �, HOUSING & REDEVELOPMENT AIITHORITY MTG.� NOV. 12. 1992 PAGE 10 materials that were used to build them. There are major issues relating to multiple housing. Ms. Dacy asked if it is the consensus of the HRA to first meet with the multiple family owners and then restructure the inspection program for something other than 2,000 units per year. Mr. Commers stated that is his opinion. Mr. Meyer stated he believed they should be inspecting the buildings where they know there are code violations. Mr. McFarland agreed with Mr. Meyer. They should focus on�the violators and not on the property owners who take pride in their possessions. Mr. Co�mers stated he believed they should certainly have some minimum housing standards. The ordinance does not provide for that now, but it seems reasonable to use the Section 8 standards which are public health and safety issues. There is no reason that any building should not meet those kind of requirements. If the goal is to clean up a lot of under code units in the City of Fridley, the City has to have some kind of solution as to how those violations are going to get corrected. The solution is going to ^ have to be broader and larger than just an inspection; otherwise, they may be taking on a greater job than they think they are. Scattered 83te Aaquisition Ms. Dacy stated the goals of Scattered Site Acquisition are to remove blighted and abandoned homes and to provide new housing construction. Staff is proposing a budget of $100,000 for property acquisition and about $9,000 for administrative costs. Ms. Dacy stated every year the Council and the HRA would review a potential list of properties, and the housing coordinator would use a rating system to identify those properties that should be acquired first. They are looking at acquiring abandoned as a first priority, then vacant residential parcels and potential redevelop- ment sites. She reviewed the purposes of acquisition activity and approvals necessary for scattered site acquisition. MHFA/HOME Applications Ms. Dacy stated the goals of the MHFA/HOME applications are to obtain as much state and federal funds as possible to supplement the City's housing programs such as scattered site acquisition, rehabilitation, or redevelopment projects and to preserve local financial resources as much as possible. ,� Ms. Dacy stated the $10,000 budget is for any type of application fees that might be necessary. Also, at this time, there is no bank � HOIISIN(� & REDEVELOPMENT AIITHORITY MTG.. NOV. 12. 1992 PAGE 11 in Fridley that administers NII3FA program. They would prefer to have a Fridley bank, and Fridley State Bank is looking into it. other Possible Proqram Add3tions Ms. Dacy stated other possible program additions are a Truth-in- Sale Ordinance, a Nuisance Abatement Ordinance, developing a local source of money for rental rehab, establishing a multi-family owner/ landlord coalition, preparing a"how to" rehab handbook, and adopting an ordinance on mobile home code requirements. Ms. Dacy stated that included in the HRA agenda were two memos from Steven Barg,. Planning Assistant, one on the Truth-in-Sale of Housing Programs and one on Nuisance Abatements. Mr. Meyer stated a T�uth-in-Sale Ordinance is very important. Mr. Meyer stated that in establishing a multi-family owner/landlord coalition, he thought the City and the HRA should be very careful so that the instant they feel th�is coalition is being used by anyone to practice exclusionary policies towards anyone or any group, the City and the HRA should get out immediately. Otherwise, the City and HRA could get involved in some lawsuits. � Mr. Meyer stated that regarding the list of qualifications for a housing coordinator, in light of the discussion at the meeting and the fact that some of the programs might be reworked, staff might want to hold that in abeyance for now. They might want a housing coordinator who has a little more background and knowledge of what an inspector must know to do these inspections. Mr. Commers asked staff if the HRA could get some statistical information on what type of violations are being found in current rental inspections. Ms. Dacy stated she would be happy to get that information for the HRA. Her only reservation is that she did not think the PC software being used by the Fire Department tracks anything more than the building address and the property owner's address. She stated they might have to go to the hard copies to get that information. She will check into that. However, Jon Thompson and Dick Larson, Deputy Fire Chief, may be able to tell her what kinds of violations they have seen in their inspections. 6. RICE PLAZA UPDATE: This was an information item only. n � � � HOII$IN�3 � REDEVELOPMENT AIIT80RITY MTd., NOV. 12, 1992 PAaL 12 7. PROPOSED ADVERTISEMENT FOR JANUARY CORPORATE REPORT: Ms. Dacy� stated this is an information item only. The HRA authorized this half-page advertisement in Corporate Report at its April 8, 1992, meeting. ADJOURNMENT• MOTION by Mr. Meyer, seconded by Mr. Prairie, to adjourn the meeting. Upon a voice vote, all voting aye, Chairperson CoYnmers decla,red the motion carried and the November 12, 1992, Housing & Redevelopment Authority meeting adjourned at 9:55 p.m. Re pectfully s mitted, Ly Saba Re rding Secretary