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HRA 11/18/1993 - 29566� �. �� C��+�'����������_�� HOIIBIN(3 & REDEVELOPMENT AIITHORITY MEETIN(�� NOVEMHER 18� 1993 -------------------..____________________________________.,________ CALL TO ORDER• Vice-Chairperson Schnabel called the November 18, 1993, Housing & Redevelopment Authority minutes to order at 7:35 p.m. ROLL CALL: Members Present: Members Absent: Virginia Schnabel, John Meyer, Jim McFarland Larry Commers, Duane Prairie Others Present: William Burns, Executive Director of HRA Barbara Dacy, Community Development Director Grant Fernelius, Housing Coordinator Craig Ellestad, Accountant Jim Casserly, Consultant Dr. Dennis Rens, School District #14 Rebecca Keenan, School District #14 APPROVAL OF OCTOBER 14. 1993. HOUSIIJG & REDEVELOPMENT AUTHORITY MINUTES• MOTION by Mr. Meyer, seconded by Mr. McFarland, to approve the October 14, 1993, Housing & Redevelopment Authority minutes as written. IIPON A VOICE VOTE� ALL VOTIN(� AYE� VICE-CHAIRPER80N SCHNABEL DECLARED THE MOTION CARRIED IINANIMOIISLY. 1. PRESENTATION BY DR. DENNIS RENS AND MS. REBECCA KEENAN. FRIDLEY SCHOOL DISTRICT #14: Ms. Keenan stated that she and Dr. Rens were at the meeting to acknowledge the HRA's financial support over the last few years. It has really helped everyone involved in the school district to know that the community does care. She stated that children are always told to say "thank you", but as busy adults of a busy organization, they do not always take the time to stop and thank the other organizations who do things for them. The HRA is one of those organizations. Ms. Keenan stated the School Board members decided they would like to thank the HRA for its foresightedness and for the dollars it has directed to the Fridley schools. The HRA has recognized a long term investment and that is not always an�easy or fun thing to do. She stated the HRA's support has allowed the education of School District #14 to survive during these difficult financial times. ,� HOIISING � REDEVELOPMENT AIITHORITY MTG., NOV. 18, 1993 - PAGE 2 - She would add that being creative with their limited resources has been the School District's strong point these past few years. Dr. Rens stated he also wanted to thank the HRA. Over the past number of years, the HRA has allowed tax increment financing revenues generated through a past levy referendum to flow through to the school districts. This has amounted to about $240,000 to• School District #14 in the last couple of years. In School District #14, that $240,000 buys about eight teachers. Dr. Rens stated that over the last four years, the State Legislature has not changed the pupil formula in school districts. In most districts, that has had a negative impact on class sizes. School District #14 has been able to maintain reasonable class sizes because of the dollars the HRA has turned over to the school district. If, for example, they were to eliminate the eight teaching positions this money has been able to fund, it would have a negative impact across each level of the school district. Dr. Rens stated he believed that if the students were aware of where these resources are coming from, they would also be at this meeting to thank the HRA. Dr. Rens stated the School District has a Youth Advisory Committee ^ that interacts with the School Board its perception of what is happening in the schools. Recently, the School Board met with those students, and those students spent a lot of time talking about class size. Each student made it very clear that they learn more and get more individual help from teachers in classes that are smaller. They made a plea to the School Board to keep class sizes small, so he is before the HRA to thank the HRA for helping the School Board do that. This is one specific example of how those dollars have helped them. Dr. Rens stated another example is that the School Board has been able to be proactive in terms of developing a Five Year Strategic Plan in moving forward and meeting the demands of the new world. One thing listed in the Mission Statement is that they want to create a nurturing environment for kids. One way they have helped create a nurturing environment is stated in Strategy 6 under "Strategies and Objectives": "We will develop and implement programs that help students care for themselves and others and improve school climate." Dr. Rens stated they see and hear a lot about violence and about how people solve problems and resolve conflict. In the schools, they are now beginning to teach students to mediate conflict and resolve conflict through peaceful means through discussion and through negotiations. They are training students to be peer mediators to mediate conflicts between other students. In order r"'� to get that program started, they have invested one full staff member, part-time, in training students and staff in peer mediation HOIIBINa & REDEVELOPMENT AIITHORITY MTG., NOV. 18, 1993 - PAGB 3 � techniques. These dollars from the City are helping them to do this and to achieve their mission in a proactive manner. Ms. Keenan stated her reason for coming was not only as a School Board member, but also as a parent, to say that there are thousands of students who have benefitted from this financial support. It also gives the School Board the ability to keep their programming current and to be an innovative and creative school district. She thanked the IiRA for their time. Ms. Schnabel thanked Ms. Keenan and Dr. Rens for coming. She stated their remarks were very much appreciated, and she was very sorry that the other two HRA members could not be here to hear these nice statements. 2. CONSIDER RESOLUTION TO AUTHORIZE EXECUTION OF DEVELOPMENT CONTRACT, ECO FINISHING: Ms. Dacy stated that at the October meeting, the HRA authorized staff to prepare a development contract to provide a$125,000 loan to ECO Finishing to assist them in the construction of a 29, 000 square foot plating facility at the northwest corner of 51st Way and Industrial Boulevard. Staff recommends that the HRA approve the resolution and authorize the chairperson and executive director to execute the development contract. The HRA should note that Victor Rosenblum is defined as the redeveloper so he alone is responsible for repayment of the loan. MOTION by Mr. McFarland, seconded by Mr. Meyer, to adopt Resolution No. HRA 10-1993 "A Resolution Authorizing Execution and Delivery of a Contract for Private Redevelopment By and Between the Housing and Redevelopment Authority in and for the City of Fridley and Victor Rosenblum". IIPON A VOICE VOTE, ALL VOTING AYE, VICE-CHAIRPERSON BCHNABEL DECLARED THE MOTION CARRIED ONANIMOIISLY. 3. DISCUSS SCATTERED SITE AC4UISITION: Mr. Fernelius stated that at the HRA's October meeting, staff presented the recommendation to divide the pool of funds budgeted for the scattered site acquisition program in half; 50� to be allocated to properties for general acquisition activities, and 50% to be allocated for properties identified through the housinq rehab program. Those would be properties that were not feasible to rehabilitat�e. Mr. Fernelius stated staff identified several properties they thought would be good candidates to acquire. The HRA members had some questions about what to do with the properties once they are ,� acquired. Both properties (560 Hugo Street and 513 Fairmont) are considered non-buildable sites, because they do not meet the HOIIBINa � REDEVELOPMENT AIITHORITY MTa.. NOV. 18, 1993 - PAG$ 4 � - minimum lot area requirements so it would be very difficult for someone to purchase those properties and build on the lot without a variance. Essentially, the HRA would be acquiring sites that would be difficult to reuse, and there would be some costs involved in holding on to those properties. Mr. Fernelius stated staff would like the HRA to take another look at the goals of the scattered site acquisition program. One potential goal of the program is to acquire properties that are buildable lots so there is the potential for some type of return as far as land sale incomes. On the other hand, there is the ability to acquire properties which are definitely blighting influences on the neighborhood and are difficult for the owners to sell based on their current conditions. Mr. Fernelius stated staff believes that for the dollars that are allocated, the scattered site acquisition program would really be serving the greatest public good by acquiring those sites. The only other option would be to do nothing and let the problems continue. By acquiring the sites, they are eliminating the blighting influence. There is the possibility to divide the lots and sell to the adjacent property owners. Staff continues to believe that properties in the second category should be the primary objective of the program; however, they wanted to get the ^ HRA's input and concurrence. Ms. Dacy stated the HRA had a lot of questions at their October meeting, and staff wanted to confirm whether or not the HRA believed the goals of the program are to remove deteriorated homes or if they would prefer to acquire properties that may have deteriorated homes but were also buildable lots. Ms. Schnabel stated there seems to be a lot of variables in this program. There might be a property with a house that can be rehabilitated, and there might be a property with a house that cannot be rehabilitated. Ms. Schnabel stated that if the HRA buys an unbuildable site, they also incur the cost of demolition. What happens if they go through all those expenses and then find out that the neighbors on either side of the property are not interested in purchasing half of the property? Mr. Fernelius stated staff wanted to identify the site first to determine the HRA's interest; however, before they would actually move forward to acquire a site, they would make sure that the adjacent property owners were interested in purchasing half of the property and had the ability to do so. Mr. Burns stated there is an economic incentive for the adjacent � property owners to purchase the lot because it would make their properties conforming and easier to sell. HOIIBINa � REDEVELOPMENT AIITHORITY MTa.. NOV. 18. 1993 - PA�E 5 n Mr. Meyer stated that if they are trying to rid a neighborhood of blighted housing, that should be the HRA's primary objective. He believed they should not turn away from purchasing a property and getting rid of a blighted property because of a few thousand dollars up or down. It should not matter if no one purchases the property, because they have then accomplished the major goal which is getting rid of the blight. Getting rid of a dilapidated house on a nonconforming lot should be a priority over getting rid of a dilapidated house on a conforming lot. He believed they should purchase the properties at 560 Hugo Street and 513 Fairmont Street and demolish the houses regardless of whether or not they have buyers on the adjacent lots. Ms. Schnabel stated that if they purchase a property and the neighbors are not willing to purchase half the property, who is responsible for maintenance of the property and the taxes? Mr. Burns stated the HRA would be responsible for maintenance; however, they could probably get the property tax exempt. Mr. McFarland asked if there is a prohibition against transferring nonconforming properties. ^ Ms. Dacy stated there is no prohibition against transferring nonconforming properties. Mr. McFarland asked how the City has evaluated the properties. Ms. Dacy stated they have been using the assessed value from the Assessor�s office. At the last meeting, the HRA asked staff to check on the current mortgages recorded against the properties and staff will do that. Staff's original concern was what type of procedure the HRA wanted staff to take on these type of a programs. Whether buildable or nonbuildable, the HRA will not be making money. Staff wanted to hear the HRA's priorities and discuss the consequences of what they would do with the properties until they could potentially be split between the two adjacent property owners. Another option would be to wait to purchase these properties until they have solid buyers. Mr. McFarland asked the approximate purchase price for a lot. Ms. Dacy stated most of the lots range between $25,000 and $40,000, based on estimated market value for tax purposes. Mr. McFarland stated he did not want to see the HRA get bogged down with the dollars. He believed they should be interested in making the property conforming; and even if they had to split the property and give it to the adjacent property owners, it would be better to � get the properties off their hands. n, � 80IIBING & REDEVELOPMENT AIITHORITY MTa., NOV. 18. 1993 - PAGE 6 Mr. McFarland asked if it would make sense to condemn some of these properties first and then purchase them. Mr. Burns stated the City Council's general direction to staff has been to not condemn residential properties; however, the Council might have a different attitude toward condemnation of blighted properties and there may be some benefit in discussing this with the City Council. Mr. Meyer stated he agreed with Mr. McFarland that if they purchase a property and cannot sell it, it is better to give each adjacent property owner half of the property than to hang onto it and have to maintain it. He also cannot see allowing the value of the property to become a deal breaker. If they really believe they should spend public monies to get rid of blight, then they should go ahead and acquire the properties and not worry about the cost of a lot. They have to keep their eye on their goal, and that is getting rid of blighted properties. Mr. Fernelius stated he believed staff is pretty clear on the direction the HRA would like to go. He believed the recommenda- tions staff developed fall in line with the HRA's objectives. Staff will proceed to research the two properties in question, but will not do anything before coming back to the HRA. Ms. Schnabel asked if the HRA members wanted to pursue the issue of condemnation with the City Council at this time. Mr. Meyer stated he believed the HRA should wait until they have more information. Ms. Schnabel stated that her concerns are two-folds 1. How are the taxpayers going to view the use of public monies to purchase blighted properties? Is the HRA going to receive criticism for taking City funds to buy blighted housing or substandard lots, and then turning them over to adjacent property owners? 2. If people hear about the HRA doing this, will there be a tendency by some property owners to not maintain their property because they know the City is going to come in and purchase it? Mr. Burns stated there are limited funds, and they will have to go at it very slowly. This gets back to the question: How much leveraging does the HRA want staff to do? If the HRA wants staff to leverage, then maybe they should acquire developable properties and work on those first to build a fund. Mr. Meyer stated that regarding Ms. Schnabel's concern about the taxpayers, he agreed it is a risk. However, he believed the HRA n HOIIBINa & REDEVELOPMENT AIITHORITY MTa., NOV. 18. 1993 - PAG$ 7 has made a strong point in trying to get rid of blighted properties in the City, and they will have to explain it to the public. Ms. Schnabel stated she agreed it is worth it to try it with these two properties and see how the program works. Mr. Burns stated he has not heard any public criticism of the City's rehab programs. He is more afraid that if they do not keep the momentum going and get things accomplished, the criticism will be more in the direction of why isn't the City doing more? 4. CONSIDER APPLICATION FOR MHFA COMMUNITY REHABILITATION FUND PROGRAM• Mr. Fernelius stated that in the last month, staff received notice from the Minnesota Housing Finance Agency (MHFA) of a new program called the "Community Rehabilitation Fund Program". This is a$2 million initiative by MHFA to help cities with various neighborhood preservation and improvement activities. It is a tremendous program, because it allows the City to identify its own needs, design its own programs, and then bring in the dollars to accomplish the objectives. Mr. Fernelius stated the funds are issued from the state to the � cities in the form of a grant. The cities can, in turn, use those dollars for such activities as acquisition, demolition, rehabilitation, permanent financing, gap financing, and a number of different options. Cities would essentially do that by either making loans or grants in turn to eligible mortgagors. Mr. Fernelius stated the City has the opportunity to apply for up to $350,000 in funds. Staff is requesting authorization to prepare an application to submit to the state in the amount of $350,000. The idea staff would like to present is to use the dollars to expand the City�s existing rental rehabilitation loan program. Under the current MHFA regulations for the rental rehab loan program, only natural persons are allowed to apply and receive loans. Corporations, partnerships, and non-profits are not eligible. Based on this requirement, there are owners in Fridley who would not be able to apply. So, staff is proposing to use these dollars to make loans to those individuals and use the same terms and conditions used under the existing program. Mr. Fernelius stated the funds need to be targeted in specific neighborhoods. At some future date, the Council will need to adopt by resolution the actual neighborhoods that would be targeted. The Housing Committee has identified several neighborhoods in the City that would ultimately benefit most by these program funds. On Monday, November 22, 1993, staff will present this program to the Council and recommend that the Council identify these � neighborhoods. HOII8IN�3 & REDEVELOPMENT AQT80RITY MTG.. NOV. 18. 1993 - PA�3E 8 � Mr. Fernelius stated staff recommends that the HRA authorize staff to prepare an application to MHFA in the amount of $350,000 for use with the existing rental rehabilitation loan program. The application is due on December 6, 1993. MOTION by Mr. 1�IcFarland, seconded by Mr. Meyer, to authorize staff to prepare an application for the MHFA Community Rehabilitation Fund Program in the amount of $350,000. IIPON A VOICE VOTE, ALL VOTIN� AYE, VICE-CHAIRPER80N BCHNABEL DECLARED THE MOTION CARRIED QNANIMOIIBLY. 5. CLAIMS AND EXPENSES: MOTION by Mr. Meyer, seconded by Mr. McFarland, to approve the check register, checks #2446-2471. IIPON A VOICE VOTE, ALL VOTINa AYE, VICE-CBAIRPERBON BCHNABEL DECLARED T8E MOTION CARRIED IINANIMOIISLY. 6. RICE PLAZA UPDATE: Ms. Dacy stated the remaining tenant, Hong Kong Kitchen, will be moving to Holly Center in December. In January, staff will be �..� asking for authorization to receive demolition bids. In February, the HRA will receive and award the demolition bid to a contractor. In the meantime, the Fire Department has requested use of the building for fire training exercises. � Ms. Dacy stated she has been working with the Engineering Department to prepare the specifications for the bids. She has also worked with the MPCA on requirements for the disposal of any hazardous materials. Mr. Meyer asked if any direction will be given in the specifi- cations for how the property is to be finished. Ms. Dacy stated that because the demolition will probably be done in February, the contractor will fill the hole and regrade it. She is then hoping to work with the Public Works Department to spread seed on the property in the spring. 7. FRIDLEY TOWN SfaUARE UPDATE: Ms. Dacy stated she has not received any more information from Lowell Wagner. Apparently, Walgreen's is reconsidering its interest in the site. Although she has not seen a revised site plan, a revised plan puts Walgreen's on the west side and the Dairy Queen on the east side. She also has not heard from Don Fitch; however, Mr. Fitch is pursuing acquisition of the Amoco property at the intersection of Osborne Road and University Avenue. At this � �� HOIIBINa & R1�DEVSLOPMENT AIITHORITY MTG., NOV. 18, 1993 - PAGE 9 �- point, staff will just wait until they hear from either Mr. Fitch or Mr. Wagner. 8. WESTMINSTER UPDATE: Ms. Dacy stated staff is still working on the development agreement with Westminster Corporation. Mr. Casserly stated he hoped the development agreement will be ready for the December HRA meeting. 9. MEETIPTG DATES FOR DECEMBER 1993 THROUGH MAY 1994: � Ms. Dacy stated that because of a conflict Mr. Burns has with the HRA meetings on the second Thursday of the month for the months of December through May, staff is proposing that the HRA meet on the third Thursday of December and then the first Thursday of the month for January through May 1994. MOTION by Mr. McFarland, seconded by Mr. Meyer, to approve the following meeting dates for December 1993 and all of 1994: December 16, 1993 (third Thursday) January 6, 1994 (first Thursday) � February 3, 1994 (first Thursday) March 3, 1994 (first Thursday) April 7, 1994 (first Thursday) May 5, 1994 (first Thursday) June 9, 1994 (second Thursday) July 14, 1994 (second Thursday) August 11, 1994 (second Thursday) September 8, 1994 (second Thursday) October 13, 1994 (second Thursday) November 10, 1994 (second Thursday) December 8, 1994 (second Thursday) IIPON A VOICE VOTE, ALL VOTING AYE, VICE-CBAIRPER80N SCHNABEL DECLARLaD T8E MOTION CARRIED IINANIMOIISLY. 10. HEDMAN ACOUISITION UPDATE: Ms. Dacy stated that after the October meeting, she contacted David Hedman and he agreed upon an acquisition price of $68,000. The closing will be on Wednesday, December 1, 1993. Ms. Dacy stated that ACCAP is interested in leasing the home on a temporary basis until next spring. She also contacted three movers. Apparently, movers maintain lists of people who are interested in houses and match buyers with houses. One mover gave her a verbal quote that they would move the house, remove the ,� foundation, dispose of the block, refill the hole and grade the - property, and give the HRA $1,500. HOIIBIN(3 & REDEVELOPMENT AIITHORITY MT(3., NOV. 18, 1993 - PAGB 10 � Ms. Dacy stated she needs direction from the HRA on whether to lease the house to ACCAP on a temporary basis until next spring and then move the house off the property or remove the house as soon as possible. She stated it is staff's recommendation that the house be removed as soon as possible. MOTION by Mr. Meyer, seconded by Mr. McFarland, to suthorize the Community Development Director to execute the necessary documents to dispose of the Hedman house as soon as possible. IIPON A VOICE VOTE� ALL VOTING AYE, VICE-CSAIRPLR80N SCHNABEL DECLARED THE MOTION CARRIED IINANIMOIISLY. Ms. Dacy stated that Sadie Gunderson has agreed to extend the option agreement for an additional year. 11. DISCUSS REOUEST BY PARSON'S ELECTRIC: Ms. Dacy stated the City has received correspondence from Parson's Electric that is now occupying the former Simer Pump building on Main Street, just north of Sheet Metal Connectors. This request is definitely unique because Parson's purchased the building and started the remodeling and rehabilitation work. Parson's is � identifying a cost to rehabilitate the building at approximately ' $1 million. In her memo dated November 10, 1993, she outlined the information as it was given to her regarding the original purchase price and the contract for deed. Ms. Dacy stated Parson's Electric would like the HRA to provide them with a$500,000 loan over a 5-6 year term at a 5� interest rate. Ms. Dacy stated she has discussed this request with Mr. Casserly and Mr. Burns. The parcel is not in a tax increment district or redevelopment proj ect area, and the HRA would not be able to create a TIF district because Parson's has already started work on the improvements. The HRA could establish a project area with the same approach done for Sheet Metal Connectors. However, staff's concern is two-fold: 1. Staff believes the HRA would be subject to criticism from the standpoint that the project is already under way and that undermines the intent of TIF statute under the "But For" test. 2. The amount of $500,000 is beyond the HRA's guidelines. Parson's seems to be a solid company and could guarantee the loan and the HRA would be making interest on the $500,000 loan, but this would be very difficult to �'1, justify in terms of past requests. HOIIBINO & REDEVELOPMENT AIITHORITY MTa.. NOV. 18, 1993 - PAGE 11 � - Ms. Dacy stated that in terms of a redevelopment project area, staff is recommending that the HRA deny this request. However, if the HRA wants to pursue some type of revolving loan fund program for industrial rehabilitation projects, that is always an option. Ms. Schnabel stated that since the HRA does not have the mechanisms in place to provide loans for commercial or industrial rehabili- tation, she would be in favor of not providing any assistance to Parson's Electric. Mr. McFarland and Mr. Meyer agreed that the HI2A not pursue any further negotiations with Parson's Electric. ADJOURNMENT: MOTION by Mr. McFarland, seconded by Mr. meeting. Upon a voice vote, all voting Schnabel declared the motion carried and Housing and Redevelopment Authority meetin Re ectfully s mitted, �� vK�2- � Ly e Saba r„� Re rding Secretary � Meyer, to adjourn the aye, Vice-Chairperson the November 18, 1993, g adjourned at 8:55 p.m.