HRA 04/13/1995 - 6287HOUSING & REDEVELOPMENT AUTHORITY MEETING
THURSDAY, APRIL 13, 1995
7 :30 P.M.
PUBLIC COPY
CITY OF FRIDLEY
A G E N D A
HOUSING & REDEVELOPMENT AUTHORITY MEETING
THURSDAY, APRIL 13, 1995 7:30 P.M.
Location: Council Chambers
Fridley Municipal Center
CALL TO ORDER
ROLL CALL
APPROVAL OF MINUTES: March 9, 1995
CONSENT AGENDA:
SOUTHWEST QUADRANT BUDGET INFORMATION . . . . . . . . 1
MONTHLY HOUSING REPORT . . . . . . . . . . . . . . . . 2 - 2A
REVENUE AND EXPENSES . . . . . . . . . . . . . . . . . 3 - 3B
ACTION ITEMS:
CONSIDER OFFER BY TOLLEFSON HOMES TO BUY . . . . . . 4 - 4B
VACANT LOTS AT 539 AND 547 GLENCOE STREET
AND 677 HUGO STREET
CONSIDER DEVELOPMENT CONTRACT WITH . . . . . . . . . 5 - 5A
TOLLEFSON HOMES ON CONSTRUCTION OF NEW
HOMES
CONSIDER RESOLUTION AUTHORIZING BIDS FOR. . . . . . . 6 - 6G
DEMOLITION OF THE SOUTHWEST QUADRANT
CONSIDER DEVELOPMENT CONTRACT WITH ACCAP. . . . . . 7 - 7U
FOR REHABILITATION OF THREE APARTMENT
BUILDINGS IN HYDE PARK
CONSIDER REQUEST FOR TIF ASSISTANCE, DAVE . . . . . . 8 - 8H
HARRIS
INFORMATION ITEMS:
UPDATE ON LAKE POINTE MARKETING . . . (verbal update) 9
UPDATE ON SOUTHWEST QUADRANT . . . (verbal update) 10
DEVELOPMENT PLAN -1:1-
UPDATE ON GUNDERSON ACQUISITION . . . . . . . . . . . 11 - 11D
OTHER BUSINESS•
ADJOURNMENT
III
Community Development Department
HOUSING AND REDEVELOPMENT AUTHORITY
City of Fridley
DATE: April 7, 1995
TO: William Burns, Executive Director of HRA r►�i
FROM: Barbara Dacy, Community Development Director
SUBJECT: Request for Tax Increment Financing Assistance by
Dave Harris
Background
On May 13, 1994, the office building owned by Brookview
Investment located at 6279 University Avenue NE was destroyed by
fire. Arson was the cause of the fire. The name of the building
is the Rice Creek Office Building. The facility had been
occupied by dentists, orthodontists, real estate appraisers, and
other professional services.
A significant amount of damage to
owner has concluded negotiations wi
reports that the insurance coverage
The owner reports that this amount
of reconstruction of the building t
destroyed.
Proposed Request
the interior occurred. The
th the insurance company and
is approximately $265,000.
essentially pays for the cost
o its state before it was
Because the building was originally constructed in 1969, it does
not have the current fire protection code requirements as is now
required. In order to receive an occupancy permit, the building
must now be sprinklered, and it must contain a hard wired fire
and heat detection system. The additional costs for these two
improvements is $27,500. The owner in his letter dated March 20,
1995 is requesting a grant for $27,500 (see attached letter and
application) .
Jim Casserly has analyzed the ability of the property to generate
tax increment. Because the property was built prior to the
creation-:of the Center City Tax Increment Financing District #1,
the increment generated from the building is as a result of
inflation on the property taxes.
S
TIF Assistance Request by Dave Harris
April 7, 1995
Page 2
Because of the nature of this request, a loan instead of a grant
is more appropriate.
Policy Implications
The HRA has prioritized its discretionary funds for the housing
program, major redevelopment projects (i.e. Lake Pointe and the
SW Quadrant), and loans for economic development requests. The
proposed request is not a typical expenditure, since the HRA does
not have a program in place for a loan program for commercial
property rehabilitation.
Although the proposed request is not one of the priorities for
expenditures, consideration should be given for the loan request
because it is necessary as a result of an emergency situation and
secondly, it would accomplish needed code compliance repairs to
the building.
The size of the request meets the HRA's guidelines since it is
about 8% of the total project cost of $308,500.
Terms of the approval of this request should be based soley on
the necessity of the improvement as a result of an emergency, and
also that it is for a small amount. It is not the intent at this
time to create a separate program by the HRA for commercial
rehabilitation. Until the HRA decides to change its priorities
from the housing program and redevelopment projects, specific
criteria could be developed.
Recommendation
Staff recommends that the HRA authorize the Executive Director to
negotiate loan terms with Brookview Investment subject to the
following criteria:
1. The amount of the loan shall not to exceed $27,500.
2. The terms and conditions of the loan will be approved by the
HRA at its May 1995 meeting.
3. The purpose of the loan is for fire protection and code
compliance.
4. The loan is to provide assistance as a result at an
emergency situation.
BD /dw
M -95 -228
00
ti
APPLICATION FORM FOR TAX INCREMENT FINANCING
Business Name:
Address:
Type (Partnership, etc.) : PARTNERSHIP
Representative:
zs
Telephone:
Name of Counsel: RARM GUZY AND STEFFEN .
Name and Telephone of Accountant: GERALD CAPUTA 571 -8494
List of Financial References: Name /Address /Contact /Telephone
FRIDLEY STATE BANK BILL BERRY
571 -2200
FIRST NATIONAL BANK OF ELK RIVER
DICK GONGOL 441 -2200
Other Comments Pertinent to Your Application:
SEE ATTACHED
Have You Ever Filed for Bankruptcy?
If Yes, provide details on separate sheet �'— No X _
Have You Ever Defaulted on any Loan Commitment? Yes
If Yes, provide details on separate sheet No X
Location of Proposed Development: vYya
REHAB 6279 UNIVERSITY AVE. N.E. (Attach a Drawing)
Nature of Proposed Business:
OFFICE BUILDING
s
Principal Business or Product of the Company?
OFFICE BUILDING
Is the Proposed Project a New Facility' or Rehabilitation and /or
Expansion of Existing Facility?
REHABILITATION •
Industrial /Commercial /Residential : Mrv►MFQr• rnr
•.What is, the Present Employment of Your Firm: non
What is Your Estimate of Employment-One Year After Completion of
Project: 25 -30
What is Your Estimate of Employment Five Years After Completion of
Project: AS ABOVE
Total Estimated Project Cost: - -- $265,000. -
-Total Estimated Construction Costs: PLUS TENANT IMPROVEMENTS
Potential Other Use of Proposed Development:
N/A
HELP Will this Development E Other Related 8U
�
Yes X No
How? Upgrading the facility will maintain the of tha
area
What Types?
the Current Zoning Status of the Project Site?
COMMERCIAL
In Rezoning, will Zoning Variances or Conditional Use Permits be
Required in Connection with the Project?
N/A
_y_
r�
-s
Is the Property Properly Subdivided for the Proposed Use?
YES
Has Site Approval been Obtained for this Project? YES
If So, When? 1968
By Planning Commission? 1968
By City Council? 1968
Have You Applied for Conventional Financing for the Project?
Yes No X
If Yes, Provide Details on Separate Sheet, "H. Information to
Attach"
If No, Why Not? INSURANCE SETTLEMENT TO PROVIDE-MAJOR PORTION-0F CONSTRUCTION
FINANCING
INFORMATION TO ATTACH
Please include:
State Public Purpose
Description of Project - REHAB OFFICE BUILDING
Schematic Drawing of Project - AS IN PLACE
Breakdown of Project Costs - SEE ATTACHED SHEET
Amount of Subsidy Request - $27,500.
Construction Schedule - UNDER CONSTRUt
Legal Description - (Include PIN's) 14 -30 -24-34 -0002 SOUTH 159 OF NORTH
259 FEET OF AUDITOR'S SUBDIVISION NO. 59 AND THAT PORTION OF LOT 2
Other Pertinent Information
SEE ATTACHED SHEET
Deposit
-3-
March 20, 1995
On May 13, 1994 Arsons destroyed the interior of the Rice Creek Building located at 6279 University
Avenue NE . This facility had been occupied by Dentists, Orthodontist, Real Estate Appraisal and
other profession services.
Since the fire approximately twenty five people have been displaced and unfortunately a substantial
portion of these employees have had to leave the City of Fridley for lack of comparable space.
After five months of negotiation we were able to reach an agreement with the insurance company.
This has enabled us to start the building rehabilitation. Upon completion this building should again
attract a number of profession services.
Prior to the fire the building adequately served the needs of the tenants, customers and dents.
Unfortunately, we cannot replace the interior of the building as approved by the City of Fridley when
the initial building permit was issued New code updates not covered by insurance have made it
necessary for us to apply for this grant.
The major areas not covered by insurance are the bathroom facilities, sprinkling system and the fire
and heat detection system. The bathrooms have to be enlarged to cover handicap access. This requires
removing all wall and floor tile so that the interior walls can be moved Also this requires a consider-
able amount of additional plumbing changes to accommodate the room size increase. Because it is
impassible to salvage any wall or floor We this must be replaced as new The cost for each of the
four bathrooms is in excess of $4,000.00 each.
The code update requires this building to be sprinkled The cost for this improvement is $14,000.00
for sprinkling within the building, $8000.00 to go into the University Avenue service drive and
bring into the building a 6" waterline (presently the 2" line in place is adequate for the other water
needs of the building). Repair to the street after this construction is $1,500.00. The total amount of this
upgrade is $23,500.00.
In addition the City of Fridley has required a hard wired fire and heat detection system. The price
for this system is $3,200.00 and the installation is $ 800.00. The total amount for this upgrade is
$4,000.00.
These major expenditure strictly dedicated to code updates totals $43,500.00. We feel that a grant
that would cover the sprinkler system and the alarm system ($27,500.00) would help make this a viable
project and would minimize the financial hardship.
We have received three bids on all major items, including the three area's previously mentioned It
has been our objective to rehabilitate the building and be very prudent with the available funds.
In our opinion, this is a realistic request, and we are asking your help in returning this building to
the tax rolls.
A 'vely submitted,
eve
uell�
CITY OF FRIDLEY
ASSESSOR'S OFFICE
MENORAMDUM
To: Barb Dacy, Director of Community Development
From: Leon Madsen, City Assessor
Subject: Your memo of 3 -15 -95 re: Harris office bldg.
Date: March 15, 1995
$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$
The fire took place on May 13, 1994. The bldg. was damaged to such an extent that
is was unoccupiable for the balance of 1994. To date, it remains in this condition.
Minn. State Statutes provide for the abatement of taxes paid, on a disaster damaged
property, for the duration of the property's inability to function in it's intended capacity,
for the balance of the year in which the damage occured and for the following year
only, or until the property is sold.
The total tax bill payable in 1994 amounted to $17040.76, based on a market value of
$332,400, and including a $259.72 solid waste management charge. Our records indicate
that the 1994 taxes are delinquent. The owners are eligible to have 7 months or 7/ 12ths
of the taxes payable in 1994 abated, however, they must be paid first before they may
be abated. It is my understanding that the owners have, in fact, applied to the County
Board of Commissioners for this abatement. Additionally, the owners will be allowed
to abate the taxes payable in 1995 for how ever many months the property remains in
its present condition or until it is sold. The 1995 taxes are $17,404.28, incl. SWMC,
and again, based on the same $332,400 EMV.
For taxes payable in 1996, I have established a market value of $150,000 for the
property as it existed as of 1 -2 -95. The taxes due, on the payable '96 assessment will
NOT be eligible for an abatement due to the fire damage. I estimate the pay '96 taxes
to be approx. $6,700, exclu. SWMC.
It is not clear to me what kind of impact the abated taxes will have on the tax
increment. I would assume that the increment will be shorted by what ever amount is
abated. I am also not sure whether the solid waste management fee is abatable. My
guess is that it is not. The delinquent 1994 taxes have accrued penalties and interest of
$2891.86 to date. This in addition to the $17,040.76 originally owed.
ag
B
612 554 3382
612—:3:34—=822 c_:i= S = :EPL•.r P OLZAHN
Casserly Molzahn & Associates, Inc.
215 South 11 th Street, Suite 300 • Minneapolis • Minnesota 55403
Office (612) 342 -2277 • Fax (612) 334 -3382
M E M O R A N D U M
TO: City of Fridley
Attention: Barbara Dacy
FROMt Mary E. Molzahn
James R. Casserly
RE: Harris Office Building
DATE: March 22, 1995
In response to your March 15, 1995 memo concerning Dave Harris's
request for TIP assistance, we have determined the following:
1. His office building at 6279 University Avenue NE was
constructed in 1969. TIP District #1 (Center City), in
which his property is located, was created in May, 1979.
This property has not generated any tax increment for the
Distract except through inflation.
2. If a grant or loan is made, the City /HRA will not realize
any increase in tax increment for this TIF District since
these improvements do not add any considerable amount of
additional market value, which in turn generates additional
tax increment.
3. The request for $27,500 is to reimburse Mr. Harris for the
installation of a smoke /heat alarm system and a sprinkler
system in order to bring the building up to code.
4. Because these costs are not tax increment eligible, with the
exception of the public improvements in the right -of -way,
any grant or loan would have to be made from non -tax
increment dollars.
S. The City /HRA should be aware of -any precedent that may be
established through assistance in this situation.
6. As Leon Madsen noted in his 3/15/95 memo, Mr. Harris is
eligible for a tax abatement for taxes payable 1994,
f-. 8 G
612 534 3332
r
612-334-3392 _ OS _:ER L-Y MOLZHHN G42 RO:E3 f- PR 07,95. 09:15
assuming he first pays those taxes. Based on $16,781 in pay
1994 taxes (excluding the SWMC of $259.72 and accrued
penalties and interest of $2,891.86), the 1994 tax abatement
approximates $9,789, or about one -third of the assistance
requested.
In addition, Mr. Harris is also eligible for a tax abatement
in pay 1995. Assuming he is eligible through June, he can
abate approximately another $8,572, for a total of $18,361,
or if the restoration goes through September, potentially
another $12,858 for a total of $22,647.
Since the building was in place at the time the TIP District
was certified, the base of the TIP District should be
adjusted to reflect the reduced market value so that the
same amount of tax increment is generated.
7. In theory at least, the sprinkler and alarm systems should
reduce the cost of insuring the property.
8. While the amount is small, the City or HRA might consider
absorbing the costs associated on the public right -of -way
with the 6" waterline.
9. While the HRA certainly has the authority to establish a
loan or grant program to respond to the above circumstances,
the problem will be finding a source of non -tax increment
funds.
8H
Community Development Department
D HOUSING AND REDEVELOPMENT AUTHORITY
City of Fridley
DATE: April 7, 1995 yy
TO: William Burns, Executive Director of HRA
FROM: Barbara Dacy, Community Development Director
SUBJECT: Update on Gunderson Home Acquisition
Background
The HRA authorized staff to pursue acquisition of the Gunderson
property at 5707 West Moore Lake Drive NE in 1994. The purchase
agreement was executed to acquire the property on April 14, 1995.
Subsequent to the HRA direction, Ms. Gunderson has found a new
home in Forest Lake but requested closing on May 1, 1995.
Arrangements are being made to close on the property on May 1,
1995.
Impact on Neighboring Property at 5719 West Moore Lake Drive NE
The owners of the property at 5719 West Moore Lake Drive NE
notified staff last Fall about the concern of the removal of the
home and the impact of noise on the sale of their home. The
owners, Kathy Jo and Joseph Fahey, wrote a letter on October 12,
1994 regarding these impacts (letter was included in October's
HRA packet). Since October, they have had their house on the
market for sale, and although they have had interest, they have
not been able to close a sale.
On November 2, 1994, a letter was sent to the Fahey's that the
valuation of some type of noise barrier would be appropriate
since it would have to be installed as a result of the
intersection improvement (copy of letter attached). I obtained
two quotes for work from sound and noise consultants to identify
the noise levels at the property and to advise us as to a type of
noise barrier which would be appropriate. The lowest quote
submitted was by Huntingdon Engineering and Environmental Inc.
for approximately 8 - 10 hours of work at $875.00. Huntingdon is
now completing the work and recommendations.d it is
anticipated by the end of April.
I visited the Fahey's at their home last Fall and stood out on
their deck to the rear of the property. They do receive a
11
Gunderson Home Acquisition
April 7, 1995
Page 2
significant amount of noise from Highway 65. Their contention
was that after the Hedman home was removed, the amount of noise
from Highway 65 increased. They have a similar concern with
removal of the Gunderson home.
No action is needed by the HRA at this time. I will report back
to the HRA once the results on the noise analysis is returned.
The amount of the contract is easily accommodated in the 1995
budget. There is a "Non- Program Study" line item in the
Professional Service budget of $25,000.
BD /dw
M -95 -229
11A
I
CIiYOF
FRIDLEY
FRIDLEY MUNICIPAL CENTER • 6431 UNIVERSITY AVE. N.E. FRIDLEY, MN 55432 • (612) 571 -3450 • FAX (612) 571 -1287
November 2, 1994
Mr. & Mrs. Joseph B. and Kathy Jo Fahey
5719 W. Moore Lake Drive
Fridley, MN 55432
Dear Mr. & Mrs. Fahey:
Thank you for your letter dated October 12, 1994. I have forwarded a copy of your letter to the
HRA in its October 24, 1994 packet. You have requested a copy of the plan for the realignment
of the West Moore Lake Drive intersection with Highway #65. I have enclosed a copy of a
concept plan of the realigned intersection.
According to your letter and phone ells, you have indicated an increase in noise from Highway
#65 as a result of the removal of the Hedman house, which was originally located at 5701 West
Moore Lake Drive. As you know, I visited your home on Friday, October 28, 1994, and walked
out on your rear deck to observe these conditions.
I have discussed this issue with the City Manager. We agree that upon removal of the Gunderson
home at 5707 West Moore Lake Drive next spring, that some type of noise barrier should be
installed. I am in the process of contacting a sound consultant to advise us as to the best options
available to address this issue. The costs for the sound consultant and the noise barrier must be
approved by the Housing & Redevelopment Authority. At this point in time, I do not have a
detailed plan or a cost estimate, but I will keep you apprised of our research. It is my hope to
recommend these expenditures as part of the 1995 budget.
Should you need any information or assistance while you attempt to sell your home, I would be
happy to meet with your realtor or prospective buyers.
Thank you once again for your letter, and I will be contacting you in the near firture.
Very truly yours,
Barbara Dacy, A.I.C.P.
Community Development Director
cc: William W. Burns
11B
C -94 -287
October 12, 1994
Barb Dacy
City of Fridley
Administrative Offices
6431 University Avenue N.E.
Fridley, MN 55432
Dear Ms. Dacy:
I would like to reiterate the concerns that I expressed in our
phone conversation that we had today and several that I have
expressed to you over the past year.
Our home address is 5719 West Moore Lake Drive. As you know the
first home on West Moore Lake Drive was removed this last February
without forewarning to us. I had spoken with you the day of the
move to find out the details. At that time you made me aware of
the possibility in the future of the second being removed also. As
you know we are the third home in that line on the lake.
Since the removal of the first home the noise level has increased
significantly as well as visibility to the traffic on Highway 65.
This level of noise and openness has increased to the point that we
are unable to have our windows open in the back at dinner time to
hear ourselves speak at a normal volume. Basically, we are unable
to have them open at all; our sleep is even distrubed by passing
trucks. It is no longer pleasant to sit out on our deck in the
evening and enjoy the lake with its ducks and geese. With the
increase in the noise level we began contemplating selling our
home. This was a very difficult decision as we have made this our
home for the past eleven years and put many loving changes and
updates to it. We have also brought two children into this world
within that home. Suffice to say this is not a house to us but a
home.
In August a tree trimming group came through and informed me that
you were eminently dealing with my next door neighbor, Mrs.
Gunderson, in the purchase of her home for removal. I again
contacted you and found out the possible time frames when the
removal would occur. That was basically the last piece of
information that we needed to put our home on the market. With the
noise level already beyond what we could cope with and the
anticipated -!icsase, not to mention the bareness of being the
first home, multiplied by the fact that we have two little boys
that do not need to be closer to a busy intersection, we have
chosen to sell.
11C
s
page 2 of 2
October 12, 1994
Barb Dacy
Our home was placed on the market on September 5th. Since that
time the prospective buyers that have viewed our home have also
remarked about the noise level, unbeknownst to them of the
impending removal of the second house. We are now beginning to
suspect that we will have a very difficult, if not impossible time
of selling our home at its market value, or even less. With the
impending removal of Mrs. Gunderson's home it will probably become
impossible.
Suffice to say we are not happy with the situation.. At this point
if we are unable to sell at our market price or not at all we will
need to discuss this situation in much greater detail to work
towards a solution.
We thank you for your openness and cooperation from the past and
hope that we will be able to continue to work together in this
manner. We are now aware that you will be sharing this
communication with the different agencies that govern this issue.
We await your response.
Regards,
Joseph B. and Kathy Jo Fahey
11D
a �
CITY OF FRIDLEY
HOUSING & REDEVELOPMENT AUTHORITY MEETINGS MARCH 9, 1995
CALL TO ORDER:
Chairperson Commers called the March 9, 1995, Housing and
Redevelopment Authority meeting to order at 7:40 p.m.
ROLL CALL:
Members Present: Larry Commers, Virginia Schnabel, Duane
Prairie
Members Absent: Jim McFarland, John Meyer
Others Present: William Burns, Executive Director
Barbara Dacy, Community. Development Director
Jim Casserly, Financial Consultant
Grant Fernelius, Housing Coordinator
Craig Ellestad, Accountant
Tom Stanek, 7035 Willow Lane
Bert McElrath, Norway Pine Builders
APPROVAL OF FEBRUARY 9 1995 HOUSING AND REDEVELOPMENT AUTHORITY
MINUTES•
MOTION by Ms. Schnabel, seconded by Mr. Prairie, to approve the
February 9, 1995, Housing & Redevelopment Authority minutes as
written.
UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED
THE MOTION CARRIED UNANIMOUSLY.
CONSENT AGENDA:
1. AUTHORIZE 1995 HOME FUND APPLICATION TO ANOKA COUNTY AND
AUTHORIZE HRA MATCHING FUNDS
2. CONSIDER ACQUISITION OF THREE SCATTERED -SITE PROPERTIES:
6200 - 2nd Street
540 Hugo Street
533 Janesville Street
3. CONSIDER APPROVAL OF RESOLUTION AND MEMORANDUM OF
UNDERSTANDING WITH NORTHEAST STATE BANK TO PARTICIPATE IN
MHFA / FRIDLEY HOME IMPROVEMENT PROGRAM
4. CONSIDER ACQUISITION OF ANOKA COUNTY PROPERTY AT 6765 EAST
RIVER ROAD
5. MONTHLY HOUSING REPORT
HOUSING & REDEVELOPMENT AUTHORITY MEETING, MARCH 9, 1995 PAGE 2
6. REVENUE AND EXPENSES
MOTION by Ms. Schnabel, seconded by Mr. Prairie, to authorize the
1995 Home Fund Application to Anoka County and authorize HgA
matching funds; to authorize the Executive Director to proceed
with acquisition of three scattered site properties located at
6200 - 2nd Street, 540 Hugo Street, and 533 Janesville Street; to
approve a Resolution Authorizing the Execution of a Memorandum of
Understanding By and Between the Housing and Redevelopment
Authority In and For the City of Fridley and the Northeast State
Bank of Minneapolis; to authorize acquisition of Anoka County
property located at 6765 East River Road; to receive the Monthly
Housing Report; and to check register #25434 through #25464 as
submitted.
UPON A VOICE VOTES ALL VOTING AYES CHAIRPERSON COMMERS DECLARED
THE MOTION CARRIED UNANIMOUSLY.
ACTION ITEMS•
7. CONSIDER AWARD OF BIDS FOR SCATTERED -SITE PROPERTIES
Mr. Fernelius stated staff contacted 15 builders to solicit
interest in bidding on the lots. Two parties submitted bids for
the properties. A summary of the bids was distributed. The two
bidders are Tollefson Homes and Norway Pine Builders. Mr.
McElrath, Norway Pine Builders, has submitted some additional
materials about the company. Staff's recommendation is for the
HRA to authorize the sale of the lots located at 6409 East River
Road, 8280 East River Road and 187 Longfellow Street to Tollefson
Homes. Staff does not recommend that the bid be awarded for the
last two properties. Staff makes this recommendation based upon
the fact that Norway Pine Builders does not want to enter into a
development contract as required. Norway Pine Builders is
essentially offering a cash offer for the lots and would not
enter into the development agreement or provide a letter of
credit. They would be buying the properties and constructing
homes on those lots. The HRA would have essentially no means of
insuring that homes are actually constructed. Therefore, staff
is recommending awarding the bid to Tollefson Homes who would
agree to enter into a development contract. Staff feels the
offer made for 677 Hugo Street and 539 and 547 Glencoe Street is
not adequate.
Mr. Commers asked why there were such low bids for 677 Hugo
Street and 539 and 547 Glencoe Street.
Mr. Fernelius stated he could not explain the rationale.
Ms. Dacy stated Mr. Brad Dunham, on behalf of Tollefson Homes,
called and stated the reason for the bids as they are is because
a
HOUSING & REDEVELOPMENT AUTHORITY MEETING, MARCH 9, 1995 PAGE 3
they work backwards in their calculations to construct homes on
those lots. They felt the asking price for homes in these areas
would be $69,900 to $70,000 which left the remaining land price.
Despite that answer, in talking to Mr. Burns and Mr. Fernelius,
staff feels that this is too low. We did not feel good about
making a recommendation to award those lots.
Mr. Prairie asked if the lots were similar in size.
Mr. Fernelius stated 6409 East River Road and 8280 East River
Road are approximately 15,000 square feet. 187 Longfellow Street
and 677 Hugo are approximately 8,000 square feet. He believed
the rationale for the lower bid for the Glencoe Street property
from Norway Pine is that they were going to remove the buildings
and bear that cost themselves.
Ms. Schnabel asked if staff had any idea of the value of those
lots would be when cleared.
Mr: Fernelius stated, in his opinion, the value would be
somewhere close to the value of the other properties. There is
some concern on the part of one of the bidders that the values of
the homes in that area may not support as high a home value and,
therefore, their bid was lower. The value of the land for tax
purposes is included on the summary of bids.
Mr. Commers stated there is no relationship between the bids and
the assessor's value.
Ms. Dacy stated staff could come back next month and talk about
how to sell these lots. The HRA could hire a realtor to sell the
properties to the general public. Tollefson Homes has done
business in Fridley as has Norway Pine Builders. For the HRA the
key issue is control and the development contract. One bidder is
willing to go by the rules, and there is an alternative offer. A
representative from Norway Pine Builders is present to answer any
questions.
Mr. Prairie asked if the first bidder was willing to go with
three properties.
Ms. Dacy stated yes.
Mr. Commers asked the representative from Norway Pine Builders
what their objection was to entering into a development contract.
Mr. McElrath stated, with interest rates going up, to put up five
houses right away is risky. He has been in business since 1988
and plans to continue in the business. He has a concern about
building five houses. He has never done that.
HOUSING & REDEVELOPMENT AUTHORITY MEETING, MARCH 9, 1995 PAGE 4
Mr. Commers asked if he was concerned that, when building on
speculation with rates going up, he may not be able to sell the
homes.
Mr. McElrath stated yes. When constructing, the interest on the
loans starts immediately.
Mr. Commers stated it also seems risky to be willing to put up
cash.
Mr. Stanek stated he was the realtor for Norway Pine Builders.
The package they put together would comply with what the HRA is
asking for as far as size and the features of the home. He felt
the price was fair and allowed them to make a modest profit.
Mr. McElrath stated his goal was to make a profit on the home and
not on the lot. He has a purchase money mortgage which is
included in the package. The HRA would not be cashed out
immediately but would be cashed out in one year or as soon as a
house is sold.
Mr. Stanek stated they can put up one house now. They have a
buyer for one home. Their bid was lower for the Glencoe Street
properties because they would be taking down the buildings. The
prices as stated are based on a package.
Mr. McElrath asked if these properties were on the flood plain.
Mr. Fernelius stated he would have to check on this.
Mr. McElrath stated he would be willing to make an offer for
properties in a flood plain. They can get insurance to cover the
house. Buyers stay away from lots requiring flood insurance. He
would look at offering buyers two to three years worth of
reserves in escrow to help pay for the flood insurance for that
period of time to help move the lots.
Mr. Stanek stated the bid is priced to keep the price of the
homes where they should be. The Hugo Street lot is tough unless
it is part of a package because of the existing homes in that
area. The lots on East River Road is across from a new
development and is easier to get an appraisal.
Mr. McElrath stated in December he closed on a new home in that
area. They bought the lot for $17,900. Another lot was $17,900
in that neighborhood. He did not think there is a problem in
selling these. The problem is the line of credit.
Mr. Prairie asked if the risk on five properties was less than
the risk on one or two.
HOUSING & REDEVELOPMENT AUTHORITY MEETING, MARCH 9, 1995_ PAGE 5
Mr. Stanek stated they could do that on one or two lots, but they
could not do that on the Hugo lot because the type of home
required and the price of that lot would be overpriced for the
area.
Mr. McElrath stated he was interested in looking at it. He did
not think it fair that the other bidder be given the prime lots
and they be given the two more difficult properties. They would
prefer to go with the package. They are confident they can sell
the homes.
Mr. Stanek stated, in the price range that these homes will be
in, there is no competition. The price will not exceed $100,000.
They would have a nice home valued from upper $80,000's to upper
$90,000's for the first three properties and about $10,000 less
for the last two properties. He did not understand the appraised
values as listed for these properties.
Mr. Prairie asked the total square footage for the lots on
Glencoe Street.
Mr. Fernelius stated the combined total would be approximately
10,000 square feet.
Mr. Commers asked what the requirement was for the letters of
credit.
Mr. Fernelius stated the bidder is to provide a letter of credit
on the value of the improvements to the property.
Mr. Commers asked if this is the value of the improvements when
they are built.
Mr. Fernelius stated this is prior to construction but it would
be part of the development contract.
Mr. Commers asked if they expected that all would be built right
away or over a period of time.
Mr. Fernelius stated ideally the construction would be
simultaneously. Realistically, these would likely be phased in
over time.
Ms. Dacy stated the development contract has a timeline.
Mr. Stanek stated all five properties are very marketable. He
knows the market well. For this package price, they could get
affordable homes constructed; although, without a letter of
credit, they could have all sold by early summer. There are
first time home buyer programs out there that fall into this
category. There is little available. Lots are getting harder
HOUSING & REDEVELOPMENT AUTHORITY MEETING, MARCH 9, 1995 PAGE 6
and harder to find. Not everyone wants to be located in the
outer areas in order to build a home.
Ms. Dacy stated, while she respects what is being said, she wants
to advise the HRA that there are different issues.
Mr. Commers stated his concern is that all the lot are sold and
that the HRA is not left with the least desirable lots, that the
HRA also has a problem with the last two lots and there is a
difference in the price for these lots. The HRA has already
approved the rules under which we are going to do this.
Mr. Prairie stated the HRA has to have a development contract.
Mr. Stanek stated the letter of credit to put up all the houses
at once is where they have a problem. They have to keep their
doors open as well.
Mr. Prairie asked if it was a total letter of credit.
Mr. Fernelius stated the letter of credit is for the value of the
improvements and this will depend on what they propose.
Mr. Stanek estimated the value of the homes to be approximately
$90,000 each for the first three lots and $80,000 each for the
last two lots. That is over $400,000.
Mr. Fernelius stated those estimates would have to include the
land price. The letter of credit is not for the cost of the
land. The letter of credit is just for the improvements so, with
the estimate as provided, the letter of credit would be
approximately $360,000.
Mr. McElrath stated the other issue is putting up the houses in
the time period designated. As the interest rates go up, the
market goes down.
Mr. Prairie asked if Tollefson Homes would be able to provide a
letter of credit.
Ms. Dacy stated, from what she understands, Tollefson is
affiliated with a builders mortgage company. To provide a
comparison between the two bidding firms, Tollefson probably has
a larger base to work from so the letter of credit is perhaps not
an issue.
Mr. McElrath stated he knows Mr. Stanton and talked to them about
a letter of credit and he stated he would not provide a letter of
credit. There are other companies out there as well.
f
HOUSING & REDEVELOPMENT AIITHORITY MEETING, MARCH 9, 1995_ PAGE 7
Mr. Dacy stated she spoke with a representative from Tollefson
who stated they would sign a development agreement and letter of
credit. They had a lower bid. Staff had to evaluate and advise
the HRA of our recommendation. Her information is that they will
comply. If they do not, staff will certainly bring this back.
Ms. Schnabel asked what the expectations are if they do not
follow instructions.
Mr. Commers stated we have to follow the instructions. That is
the problem.
Mr. Stanek stated, given the fact that Mr. Fernelius contacted 15
builders and two submitted bids, it is because of the way the
offer was presented. Every builder wants to get a good lot and
to get a good price on that lot. On these bids, a builder could
afford to build and make some money. If the terms were a little
different, there would have been more bids. A full line of
credit minus the land is why this is down to two bidders. He
understands this is written as it is for a reason.
Mr. Commers stated it is different dealing with a public entity
rather than another type of land owner.
Ms. Dacy stated the reason is that the properties have been
blighted. The intent is to sell them, get a new house in the
neighborhoods and start to get the tax dollars as soon as
possible. It depends on what the HRA wants to do in terms of
control and how soon they want to see a house on these
properties.
Mr. Commers stated the HRA does want control and wants to see
something as soon as possible but also wants to make sure they do
this wisely. It seems as if you could go back and put on a
reasonable value.
Ms. Dacy asked if they wanted staff to meet with Tollefson and
evaluate their offer on the two lots in question.
Mr. Commers stated it would be good to get the whole package to
go, but we have to have more on those two lots. It is difficult,
and he did not know if there was anything they could do to
overcome the fact that one bidder cannot comply with the
requirements.
Mr. McElrath stated it is not that he cannot do this but it is.
too risky for this business.
Mr. Commers stated, even if their price was higher and they
wanted to give Norway Pine the bid, their hands are tied on that.
HOUSING & REDEVELOPMENT AUTHORITY MEETING, MARCH 9, 1995 PAGE 8
Once the HRA requested bids and the development criteria, there
is nothing much more they can do.
Mr. Casserly stated, for this part, the HRA has laid down the
arrangements to be followed. The first round is a learning
experience unless you want to open it up again and redo the
requirements.
Mr. McElrath stated they have a potential buyer who is showing an
interest and is leaning toward 8280 East River Road.
Mr. Casserly stated, if for some reason, it did not work out with
Tollefson Homes, he would hope staff could be authorized to talk
again with Norway Pine Builders to see if something could be
worked out. His observations of the discussion is on the letter
of credit. They are saying it is unusual to require a letter of
credit for the value of the structure.
Ms. Schnabel stated, if Tollefson Homes has any question or doubt
and wants to back out, at that point we would reevaluate the
process and start over rather then negating our process. Perhaps
we don't want to put all the lots together at once. At this
point, she did not see that the HRA could do anything but accept
Tollefson Homes' bid based on their willingness to comply.
Mr. Commers suggested staff talk to them to see if they are
willing to come up on the last two lots.
Mr. Prairie stated staff could also check on the numbers for the
last lot. If you look at the assessed value and the appraised
value, this lot is higher than the others.
Ms. Dacy stated, in this case, there were two land values because
they were two separate nonbuildable lots. The assessor's number
is higher because to establish a land value the two assessed
values were added together.
Mr. Prairie stated, if they would take a square foot average, the
value should be less than the first two.
Ms. Dacy stated the values are accurate if one considers that the
two separate values were added together. However, if the HRA
prefers another appraised value for the one combined lot, staff
could do so.
Mr. Prairie stated he would like staff to come up with another
number.
Mr. Commers stated at this time there are two lots in question
and it looks like, since Tollefson Homes is willing to comply,
the HRA will have to go forward with them. He expressed his
HOUSING & REDEVELOPMENT AUTHORITY MEETING, MARCH 9, 1995 PAGE 9
appreciation to Norway Pine Builders for their willingness to
submit a bid and come in to talk with the HRA. The decision is
not based on any other factors.
Mr. Stanek asked if the HRA had a plan for the lots on Hugo
Street and Glencoe Street.
Mr. Commers stated he would ask staff to talk to Tollefson Homes
about those two lots. If they are not going to do anything, the
HRA would need staff's recommendation at the next meeting on what
to do with those two lots.
Ms. Dacy asked if the HRA was comfortable in awarding the bid for
the first three lots and possibly all five lots to Tollefson
Homes if they are willing to raise their bid on the last two
properties.
Mr. Prairie asked if this was put out as a package.
Mr. Fernelius stated no. In the bid package, staff outlined that
each lot would be considered individually. We could have had
five different bidders on each lot.
Ms. Schnabel stated the HRA can in fact reject the bid for the
lots on Hugo Street and Glencoe Street.
Mr. Prairie stated, if they did that, there would be two lots
next time.
Mr. McElrath asked what would happen if the other bidder does not
comply with the letter.
Mr. Fernelius stated staff would have to come back to the HRA for
a decision.
Ms. Schnabel stated the input from Mr. McElrath and Mr. Stanek
has been very helpful.
Mr. Casserly stated the letter of credit is to insure
performance. The question then becomes whether you are really
looking for a performance bond. What level of security do you
need to insure performance? You could have a $15,000 letter of
credit and could probably have the same result. A more
fundamental question is do you want to sell the lots at all.
They had a higher bid by about $20,000. This does not need to be
bid. This is a redevelopment contract.
Mr. Prairie asked if it would be better to get a performance
bond. A letter of credit has to come out of the borrowing base.
HOUSING & REDEVELOPMENT AUTHORITY MEETING, MARCH 9, 1995 PAGE 10
Mr. Commers stated this would be built into the cost of the home.
Mr. Fernelius stated Mr. Hoeft could not attend the meeting. In
discussion with him, he has worked on a similar project.in;
Columbia Heights with a similar requirement. The requirement
worked there, and staff used it as a basis to try in Fridley. As
Mr. Casserly mentioned, it is a means of providing some security
that the work will be performed. A performance bond was
considered. Mr. Hoeft stated that a performance bond is
sometimes expensive for the contractor to obtain. A letter of
credit might be easier to get.
Mr. Casserly stated a letter of credit uses up the credit line
and takes away the ability to finance.
Mr. Prairie stated this was his biggest objection to the letter
of credit.
MOTION by Ms. Schnabel, seconded by Mr. Prairie, to authorize the
sale of the properties located at 6409 East River Road, 8280 East
River Road, and 187 Longfellow Street to Tollefson Homes and to
reject their bid for 655 Hugo Street and 539 and 547 Glencoe
Street.
Mr. Fernelius stated he wanted to make it clear that this is
contingent upon Tollefson Homes executing a development contract.
Should they refuse, the process would start over.
Mr. Prairie asked what would happen to the properties on Hugo and
Glencoe.
Ms. Dacy asked if the HRA would like staff to talk to Tollefson
Homes about these properties.
Mr. Casserly stated it is fine for staff to talk to them.
Otherwise, the HRA can hold the properties and look at
alternatives.
UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED
THE MOTION CARRIED UNANIMOUSLY.
8. CONSIDER RESOLUTION AUTHORIZING HOUSING REPLACEMENT PLAN
LEGISLATION
Mr. Casserly stated staff recommend the HRA adopt a resolution
which supports the legislation to establish a pilot housing
replacement program: The memo included in the agenda packet
describes the program. A copy of the resolution was distributed.
Mr. Casserly stated the legislation is drafted and ready to be
introduced. It allows the cities of Fridley and Crystal to
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HOUSING & REDEVELOPMENT AUTHORITY MEETING, MARCH 9, 1995 PAGE 11
establish a pilot program where they can select 50 sites over a
period of nine years. On those sites, the taxes that the land
pays will go to the taxing jurisdiction as is done now. The
taxes that the structures pay will go to the HRA housing
replacement fund. That will be for a period of 20 years and can
only be used for housing replacement activities. This is one of
the few programs where the HRA cannot lose.
Mr. Casserly stated the program allows the HRA to select sites
where the houses have already been taken down. Because the HRA
is not trying to sell these homes to low and /or moderate markets
but rather in the range of $90,000 to $110,000, it does not fit
into a housing program. It does not fit anywhere. This is a
program which is why the HRA may want to have a different
approach for empty lots. One option is to sell to the people who
will commit to the highest value structure on the site. The goal
of the program is to work in areas that have stabilized or
declined and try to get as high a market rate home as possible in
those areas. For example, the HRA may consider giving away the
property in order to have a higher value home in an area. If the
neighborhood homes are valued at $80,000 and a home is built
worth $90,000, the area will be upgraded. The HRA may want to
look at whether they want to sell the land at all. If the
legislature adopts this program, these places will have higher
valuation, and the HRA will capture some of this valuation.
Ms. Schnabel asked if anyone had run the figures out on what it
costs to acquire these properties.
Mr. Casserly stated the costs will not be recaptured. This is
only a small way to recover the costs and have a revolving fund.
He hopes, as the program develops and by adding three or sites
per year, that the HRA will get more interest and higher value
homes going into these areas.
MOTION by Mr. Prairie, seconded by Ms. Schnabel, to approve a
Resolution Requesting the Legislature and Governor of the State
of Minnesota to Pass and Sign into Law Special Legislation for
the Fridley Housing Replacement Program.
UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED
THE MOTION CARRIED.
9. CONSIDER APPROVAL OF 1995 HRA BUDGET
Ms. Dacy stated staff maintained the same format in the budget.
The budget summary memo provides an overview of the budget. The
cash flow and projection of annual cumulative balances is similar
to previous years. For 1995, staff has added a column called
"Projects ".
HOUSING & REDEVELOPMENT AUTHORITY MEETING, MARCH 9, 1995 PAGE 12
Ms. Schnabel questioned the expense for banners for Mississippi
Street and did not recall that the HRA had authorized that
expense.
Ms. Dacy stated the HRA had not authorized that expense. This is
an item yet to be discussed. Other communities, such as Columbia
Heights and Minneapolis, use banners. The type of banners staff
is evaluating are cloth banners that hang from the light posts,
for example along Mississippi Street, from 5th Street across the
intersection. Staff have received costs from some contractors.
This is an aesthetic issue to dress up the intersection now that
the redevelopment is almost done. For the cost, the City could
get three different sets of banners - perhaps one set for the 49-
er Day event; one with a holiday design; and perhaps a special
design that would feature the downtown area specific to that
intersection. This is a way to dress up the street. The cost
would be less than $10,000 for the three sets of banners.
Mr. Commers stated he was not sure this was a cost that should be
the HRA's.
Ms. Schnabel agreed.
Mr. Prairie referred to the operating budget summary and asked
why the 1995 budget for professional services was so much higher
than that allocated for the previous year.
Ms. Dacy stated the increase was because of the services
associated with the Southwest Quadrant including relocation and
with Lake Pointe.
Mr. Commers asked if there was anything they could do about that.
This is a very expensive proposition.
Ms. Dacy referred to the detail page of the operating and
outlined the expenses included under professional services. All
of these costs have been presented to the HRA to this point.
Mr. Commers thought these costs seemed high and asked if there
was a way to control some of these costs.
Ms. Dacy reviewed the professional services by item.
Mr. Prairie stated the increase for the services contracted non-
professional looks to be mostly demolition. The other is harder
to see where the figures are. Everything else must be new.
Ms. Dacy stated the costs for the environmental audits are less
than projected. There is a remediation problem at the fast lube
site which has not yet been budgeted for. The actual expense of
doing monitoring or whatever the plan calls for will be
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HOUSING & REDEVELOPMENT-AUTHORITY MEETING, MARCH 9, 1995 PAGE 13
reimbursed up to 900. Staff will have to budget up to the
$50,000 figure provided by the consultant. Also, there is also
the possibility of minor contamination at the Lake Pointe site.
Again, that expense should be reimbursed up to 90 %.
Ms. Schnabel stated the statement in the memo that the level of
contamination has been checked in the 8 -acre area at Lake Pointe
near Highway 65 where the former bus company was located. She
asked when that bus company was located there.
Ms. Dacy stated there was a bus company in the early 1940's.
Ms. Schnabel asked how far back can one go on the contamination.
Mr. Commers stated the real issue is liability. The HRA can go
back to the sellers on the liability. He thought they should be
put on notice.
Ms. Dacy stated she had checked on the purchase agreement on the
fast lube property. There is a statement in the purchase
agreement that the HRA accepts liability for the possible
contamination. On the Lake Pointe site, there may be a question
of liability.
Mr. Commers stated he would like to have someone look at that to
see how binding that is.
Mr. Prairie stated it would be helpful under professional
services to have a Southwest Quadrant group and a Lake Pointe
group.
Mr. Ellestad stated the Southwest Quadrant part of this budget
section is $198,691 and the Lake Pointe portion is $32,000.
Ms. Schnabel asked if they had talked about the payments to the
school district and possibly having to stop doing this
temporarily.
Mr. Prairie stated the only conversation he recalled is that this
is one year at a time. He had not-heard discussions about
cutting.
Mr. Commers stated the HRA is now talking about being in a
position where the HRA may have to levy an assessment or put out
another bond. It gets to be a situation where, on one hand, the
HRA may have'to do more debt financing and, on the other hand,
the HRA is giving money back.
Mr. Prairie stated the HRA has passed this through since 1988 or
1989.
HOUSING & REDEVELOPMENT AUTHORITY MEETING, MARCH 9, 1995 PAGE 14
Ms. Dacy stated staff included those expenses in the cash flow.
Again, this is a conservative cash flow.
Mr. Commers stated in years 1995, 1996 and 1997 the HRA has a
$2.5 million, $1.3 million, and $1 million deal. In those years,
they may have to reconsider returning money to the schools.
Someone needs to look at the budget and give the HRA advise on
what to do. He asked if there was a conflict.
Mr. Burns stated there is a strong philosophical issue in turning
the funds back -to the schools. It is money that was not
anticipated at the time of creating the tax increment district.
The money was created by referendum. As he understands it, there
is an effort to make this mandatory.
Mr. Commers stated the HRA is financing the schools. If we had
extra, that would be one thing. If we have to start borrowing to
complete projects, what the HRA is really doing is financing the
school district.
Mr. Prairie stated he philosophically agreed. If they have done
this six years out of seven, however, does not change the
thinking.
Mr. Commers asked if they should have to put a $150,000
assessment on the people and should they have to put a $1.5
million bond out there with $50,000 a year in expense in order to
give the schools $300,000 or whatever back. Somehow, this does
not sound right.
Mr. Burns stated he understood the point. The school board can
make a good case for their right to recover that money, and from
a community relationship standpoint it would be disastrous not to
pay the money to the schools. Governments have enough trouble
keeping good public relations without fighting among themselves.
Mr. Prairie stated the HRA has been careful to tell them all
along the situation. Otherwise, there would be no need to
discuss it.
Mr. Burns stated the other issue is that the school districts are
much more limited in what they can do financially than are the
cities and HRA's. The school can only keep a fund balance not
exceeding 100 of the operating budget. That does not apply to
cities and HRA's. Anything we take away from them is lost in
terms of teachers and school. On the other hand, our cash flow
picture does show that the HRA is doing very well. Overall, the
fund balance is staying up.
Mr. Commers stated it looks as if the HRA may have to go out to
the market to raise additional monies on a cash flow basis.
HOUSING & REDEVELOPMENT AUTHORITY MEETING, MARCH 9, 1995 PAGE 15
Mr. Burns stated this may be correct. He thought they should
borrow as long as the financial advisors feel the time is right.
Mr. Commers stated he was not sure that they, as a governmental
body, should be leveraging as much as possible. This adds
additional risk and adds justifiable criticism.
Mr. Casserly stated the school district issue may resolve itself.
There is proposed legislation stating that any tax increment paid
by the Authority to the school district will need to be reported
to the Department of Revenue. The theory behind that may be
that this amount will be deducted from the aid to the school. It
will be interesting to see how this comes out. This topic will
be revisited.
Mr. Casserly stated the funds are a significant assistance to the
school district. This is voluntary on the HRA's part. If the
legislation passes, there is very little reason to continue to
make this contribution.
Mr. Commers asked if approval of the budget meant they had
approved the stated amounts for Frank's Used Cars and for the
banners.
Ms. Dacy stated yes.
Mr. Commers stated he did not like to do this without discussing
or having input.
Ms. Dacy stated this is authorizing the budget to account for
those expenses. Mr. Burns is still negotiating on the Frank's
Use Car property and staff will have to come back for approval of
the purchase agreement. For the purpose of the budget, staff
tried to outline as many expenses as possible for the coming
year.
Mr. Commers stated the bottom line amount may be fine, but he
does not want that to indicate that the HRA has agreed to spend
funds for banners without bringing it before the HRA for
discussion.
Ms. Dacy stated the intent is not to force expenditures through.
This is a means to try to anticipate expenses.
Mr. Commers stated the HRA has agreed on the Gunderson property
and the Dairy Queen taxes, but he did not know about other items.
He did not recall discussion about the plaza area tree
replacement.
Mr. Burns stated a Phase I audit has been done for Frank's and
staff has a report. The report looks better than that for Gary's
HOUSING & REDEVELOPMENT AUTHORITY MEETING, MARCH 9, 1995 PAGE 16
Automotive. There is a well that needs to be capped and there
are some underground tanks that need to be pulled. Petrol funds
would apply. In the negotiations with the heirs of the estate,
staff has stated the heirs are expected to cover the
environmental costs for Phase II. Staff shared the report with
the heirs and have allowed them to discuss with the consultant
how to go about getting petrol fund monies. At this time, there
is not a written purchase agreement. Mr. Burns has terms drafted
in letter form.
Ms. Dacy referred to the budget pages for Housing Programs 1995.
The expenditures are separated between Hyde Park and citywide.
This represents a departure from what was done before. In the
redevelopment plan distributed in December, the recommendation
was to try to focus on neighborhoods at risk, preferably one or
two per year. The first is Hyde Park. Next week, the focus
groups will start. As a result of these focus groups, staff will
be coming back with suggestions to meet the needs. One new
program is the Last Resort Housing Rehab Fund. This program is
for homeowners who are unable to qualify for an existing home
rehabilitation program. The effort and the direction of the
Council is to make a significant impact in one area. The HRA
will be seeing more about Hyde Park in the future.
Ms. Schnabel asked where the relocation costs for the apartment
tenants was included in the budget.
Mr. Ellestad stated these costs were included in the section
titled Land.
Mr. Commers referred to attachment 9B, Southwest Quadrant
Expenses, and asked what the $2.1 million as budgeted for the
apartments was for.
Mr. Burns stated this was the acquisition costs for the four
apartments that was budgeted.
Mr. Commers asked what the HRA's status was in the arrangement
with the City.
Ms. Dacy stated, as she recalled, they would wait until they got
some better numbers on the acquisition and relocation and, at a
later time, process the loan agreement with the HRA and the City.
Mr. Burns stated previously discussed was a $3.2 million net cost
after revenues--were received from the land sale. The HRA would
provide $1.6 million and the City would lend $1.6 million at 5%
interest for the life of the district.
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HOUSING & REDEVELOPMENT AUTHORITY MEETING, MARCH 9, 1995 PAGE 17
MOTION by Ms. Schnabel, seconded by Mr. Prairie, to adopt the
1995 budget with the additions, changes, and /or corrections as
outlined.
UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED
THE MOTION CARRIED UNANIMOUSLY.
10. SATELLITE LANE APARTMENTS
Ms. Dacy stated a meeting had been held with the tenants from the
Satellite Lane apartments. An article with comments from that
meeting will likely appear in next issue of the Focus.
Ms. Dacy stated she had received a call from a woman from the
Cherrywood Apartments who stated a number of tenants were
confused and upset with some of the information received from the
relocation consultant. She stated the tenants had contacted a
tenants union to represent them. They were going to try to have
a weekly meeting and she listed concerns about the information
given them on the process and how much tenants would be given for
relocation.
Ms. Dacy stated she went to a meeting with the tenants.
Approximately 30 tenants were at the meeting. She listened to
and listed approximately 28 concerns. In summary, the tenants
are upset about the time frame that they have to move out because
of their income status. They wanted to receive some of their
relocation monies up front in order to enable them to pay the
security deposit. Tenants are confused about what they are
eligible for and how much they can receive.
Mr. Commers asked if those tenants would get back their security
deposit.
Ms. Dacy stated yes, but there may be reason to believe that some
of the owners may not be cooperative on that issue. This is a
concern of the tenants. Staff has reason to believe that one of
the owners is still having apartments rented and that tenants are
still moving in. There is a whole mix of issues occurring at
this time.
Ms. Dacy stated there are two issues they wanted to discuss.
Staff would like to executive checks on a weekly basis in order
to meet the demands of the relocation claims. To adhere to the
typical monthly cycle creates an imposition for the tenants. The.
HRA must abide by the Uniform Relocation Act (URA) which requires
documentation of how much the tenants receive. Another issue was
whether the tenants could get a portion of the relocation costs
up front. Mr. Schnitker has assured Ms. Dacy this is possible
and.has been done in other relocation projects.
HOUSING & REDEVELOPMENT AUTHORITY MEETING, MARCH 9, 1995 PAGE 18
Ms. Dacy stated staff is requesting authorization to execute the
relocation payments on a weekly basis and to provide the monies
in advance but withhold between $200 -$300 until the tenant is
relocated.
Mr. Commers stated he thought this was fine, but he requested a
letter from Mr. Schnitker stating this is an acceptable thing to
do.
Ms. Schnabel asked what their guarantee would be, if someone
takes relocation money and moves out, that the owner will not
rent that same apartment and that tenant would also receive
relocation money.
Ms. Dacy stated, according to the URA, tenants must be in the
unit 90 days before the date that negotiations were initiated for
acquisition on the property. This process started in December.
If someone moved into an apartment in December, they would not be
eligible for the relocation payment but they are eligible for
moving expenses.
Ms. Schnabel stated they used to post a billboard on property
when it was to be rezoned. Is there anything that can be posted
on the apartments knowing we are in the process of acquiring
them? This may resolve some of the problems with new tenants
moving in.
Ms. Dacy stated she thought this had been discussed with the
attorney's office. She will get clarification on that. As she
recalled, the direction was it would not be legally possible.
Mr. Prairie asked what the total number of tenants were in the
apartment buildings.
Ms. Dacy stated there is a total of 76 units. She did not know
the actual number of tenants per unit. The relocation consultant
has met with 40 of the 76 households and will continue to work on
that list.
Ms. Dacy stated another issue was the matter of the application
fees. Some people are having to apply to two or three apartment
buildings. In order to get a credit check as part of the
application can cost from $20 -$35. If they apply to two, that is
an expenditure out of their pocket and, because of their incomes,
they just do not have the money. She talked to Mr. Schnitker and
Mr. Herrick who stated it is not required by the URA but, if the
HRA wanted-to provide the additional service, they could
reimburse up to a maximum of $50 per household strictly for the
application fee. She did not think all households would take
advantage of this. On the other hand, the Cherrywood Apartments
is where more of the lower income families are located.
_ d
HOUSING & REDEVELOPMENT AUTHORITY MEETING, MARCH 9, 1995 PAGE 19
Mr. Commers stated, over and above moving expenses, what do
tenants get for relocation.
Ms. Dacy stated, depending on income, relocation can range #from
just moving expenses plus a housing replacement payment based on
income and the difference between the rent currently paid and the
rent in the new location multiplied by a factor of 42. If a
tenant has a higher income, they may get $0 plus moving expenses.
If a family is very low income, they could receive anywhere from
$2,000 to $10,000.
Ms. Schnabel stated one question asked was why face -to -face
meetings were required and if the tenants were being judged. Is
this a concern with the relocation person?
Ms. Dacy stated she thought tenants do not trust the process and
they do not understand it. She tried to explain that this is the
only way for staff to get the information. She also felt the
tenants did not understand that the URA is based on income
requirements. She got the sense that some tenants feel income
should not be an issue but rather all tenants should receive a
flat reimbursement.
Ms. Schnabel asked if it would be helpful to call someone at the
tenants union and tell them that we are concerned and want to
reassure these tenants.
Ms. Dacy stated she would be doing that. The city attorney
recommended she contact them and that we are trying to respond to
the concerns addressed at the meeting.
Mr. Burns stated a part of the problem that he saw with the
relocation process is that it is not black and white in all
cases. He advised staff to send letters out advising tenants of
the impending acquisition and condemnation process. This was
before talks began with the owners. Owners resent contacting
tenants before they are contacted. The law does not require a
letter, but practice seems to dictate this be done.
Ms. Schnabel stated she thought the tenants are feeling
dispossessed and scared. We have an obligation to try to work
with them as much as we can within the framework of the law.
Mr. Burns agreed. He thought the proposal for application fee
reimbursement was worth the few additional dollars to treat these
people as well as possible and to recognize that they do have
cash flow problems.
MOTION by Ms. Schnabel, seconded by Mr. Prairie, to authorize
staff to issue partial payments on a weekly basis and that the
HRA agrees, over and above the required relocation expenses, to
L
HOUSING & REDEVELOPMENT AUTHORITY MEETING, MARCH 9, 1995 PAGE 20
reimburse up to $50 per household for confirmed application
expenses.
UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COM ORO DECLARED
THE MOTION CARRIED UNANIMOUSLY.
Mr. Commers stated he was concerned about the relocation
consultant and the publicity.
Mr. Prairie stated, when something like this happens, they could
expect some adverse publicity as normal.
Ms. Dacy stated she thought the tenants union is knowledgeable
about the URA, that they could work out the issues and then
report back to the tenants. The HRA must also be careful not to
advise tenants.
ADJOURNMENT
MOTION by Ms. Schnabel, seconded by Mr. Prairie, to adjourn the
meeting.
UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON,COMMERS DECLARED
THE MOTION CARRIED AND THE MARCH 9, 1995, HOUSING & REDEVELOPMENT
AUTHORITY MEETING ADJOURNED AT 9552 P.M.
Respectfully submitted,
it
Lavonn Cooper
p r
Recording Secretary
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TO: FRIDLEY H.R.A
FROM: CITY OF FRIDLEY
RE: BILLING FOR ADMINISTRATIVE AND OPERATING EXPENSES
MAR 1995
ADMINISTRATIVE BILLING:
ADMINISTRATIVE PERSONAL SERVICES
ADMINISTRATIVE OVERHEAD
COMPUTER OVERHEAD
(For Micro & MIM computes)
TOTAL ADMINISTRATIVE BILLING:
OPERATING EXPENSES:
POSTAGE BY PHONE — POSTAGE
POSTAGE BY PHONE — POSTAGE
US WEST — TELEPHONE SERVICE
BENEFITS EXPENSES:
CITY OF FRIDLEY — HEALTH INS, MAR
CITY OF FRIDLEY — DENTAL INS,
CITY OF FRIDLEY — LIFE INS, MAR
Account #'s for
HRA's Use
460 -0000 -430 -4107
262- 0000 - 430 -4332
460- 0000 -430 -4332
460- 0000 -430 -4332
TOTAL OPERATING EXPENSES:
262 -0000- 219 -1001
262 -0000- 219 -1100
262 -0000 -219 -1200
TOTAL BENEFITS EXPENSES:
TOTAL EXPENDITURES —
F": %12WATMHRAX'nP0IWNO.wM Details
3
MAR 1995
Account #'s for
City's Use
14,967.25 101 - 0000 - 341 -1200
267.63 101 - 0000 - 336 -3000
194.42 101 - 0000 -336 -3000
15.429.50
76.13 236- 0000 - 336 -3000
19.86 236 -0000- 336 -3000
13.40 236- 0000 - 336 -3000
109.39
192.00 236 -0000- 219 -1001
0.00 236 -0000 -219 -1100
425 236 -0000- 219 -1200
96.25
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Community Development Department
HOUSING AND REDEVELOPMENT AUTHORITY
City of Fridley
DATE: April 7, 1995 JA
TO: William W. Burns, Executive Director of HRA,,A
FROM: Barbara Dacy, Community Development Director
Grant Fernelius, Housing Coordinator
SUBJECT: Consider Offer by Tollefson Homes to Buy
Vacant Lots at 677 Hugo Street and 539/547
Glencoe Street
At the March HRA meeting we received two offers to purchase these
properties along with several other scattered sites. The HRA
rejected the offer made by Tollefson Homes because they felt the
bid was too low. The second offer, from Norway Pine Builders,
was also rejected due to the contractor's unwillingness to
execute a development agreement.
The HRA directed Staff to talk with Tollefson Homes and see if
they would reconsider their offer. In our discussions with the
builder he has expressed concerns over the housing values in the
.neighborhood and the prices that can charged for a new home.
Although, he envisions similar designs and construction costs for
most of the sites, the selling prices will vary considerably.
Therefore, he can't pay as much for these sites as for the other
lots. He did, however, increase his offer from $3,000 to $7,000
for both properties. Brad Dunham from Edina Realty who
represents Tollefson Homes, has submitted a letter outlining
their concerns; a copy of his letter is attached.
We have discussed the offer at the Staff level and feel that it
is acceptable for the following reasons:
1. The HRA is continuing to incur expenses on these properties
(i.e. real estate taxes, insurance, maintenance, etc.) and
will continue to do so if the lots are not sold.
2. The design standards and emphas -sLran quality will in the
long run provide greater benefit than a few more dollars in
lot price.
2
Offer by Tollefson Homes
April 7, 1995
Page 2
3. The special legislation that is currently under
consideration by the state legislature would allow the HRA
to recoup a portion of the taxes on each site and therefore
help off -set a reduced lot price.
In addition, the trade off may be to our advantage since a
higher valued home will generate more tax increment. We
should also point that this legislation has a "sunset" and
the sooner we get the homes constructed the sooner we can
start collecting the tax increment.
4 Since the program is in the developmental stage we feel it
is critical to start constructing homes and making a
positive impact on the neighborhoods.
We did consider the possibility of selling the lots through a
realtor, but deemed this approach impractical due to the
commissions that would be paid.
Tollefson would develop the homes in accordance with our standard
development contract. However, construction would not begin
until later in the summer. As a result, these two sites would be
covered under a separate development agreement.
Brad Dunham will be at the HRA meeting on April 13th to answer
any questions about their offer.
Recommendation
Staff recommends that the HRA accept the offer by Tollefson Homes
to purchase the lots located at 677 Hugo St. and 539 and 547
Glencoe St. for a total of $7,000, subject to Tollefson Homes
entering into a development contract with the HRA by the May 1995
HRA meeting.
GF/
M -95 -226
;N
_ _Ii.b
Edina.,
_A F—ity Tradition Sin— 1955'"
North Central
Office
1900 Silver Lake Road
New Brighton, MN
55112
Office Dear Grant,
(612) 636 -2299
FAX Please be advised that after much discussion regarding the
(612) 638 -8752 Hugo and Glencoe sites, we are prepared to offer $3,500 for
each site assuming the same terms and conditions as the
previous bid. Grant, we are certainly aware that these bids
may be less than the HRA's expectations.
The problems with these two sites are the fact that the
market value of the new home will be substantially
suppressed by surrounding neighborhood values between
$40,000 - $75,000. The new home building cost will range
between $68,000 - $72,000, and our expectations for resale
are only low to mid 80's and from that, we would have our
selling and financing expenses. This just doesn't allow
much for lot price. Grant, we do intend to try to build
what we believe the HRA is looking for and also hope to
build the type of relationship in which we can work together
in future projects.
Thanks for your consideration.
Sincerely,
Brad Dunham
A McoopoHm FmwzW aw*wy
4B ®MU>,
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Community Development Department
HOUSING AND REDEVELOPMENT AUTHORITY
City of Fridley
DATE: April 7, 1995
TO: William W. Burns, Executive Director of HRAe��
FROM: Barbara Dacy, Community Development Director
Grant Fernelius, Housing Coordinator
SUBJECT: Consider Development Contract with Tollefson
Homes on Construction of New Homes
Tollefson Homes has agreed to build three single homes to be
located at 6409 East River Rd., 8280 East River Rd. and 187
Longfellow St. In the last month Staff has met with builder to
discuss the details of the project and negotiate a development
contract.
Jim Hoeft has prepared a development contract which contains a
number of provisions, including:
1. The developer will construct the homes this summer, but must
have them completed by no later than August 13, 1995.
2. In exchange for a quit claim deed, the developer will
provide a mortgage on each site. The mortgage will be in
the amount of the lot price and must be paid by August 13,
1995.
3. The developer will also provide a Letter of Credit (LC) in
the amount of the construction costs for each home. The
developer has the option of requesting a reduction in the
amount of the LC if significant progress is made on each
home.
4. The HRA has a number of options to ensure performance by the
developer, including foreclosing on the mortgage and using
the LC to finish construction.
A copy of the development contract will be distributed at the
meeting on April 13th. To- expedite the process, the developer
will also present house plans- for the HRA to consider. Brad
Dunham who represents the builder, will be available to answer
questions.
Development Contract with Tollefson Homes
April 7, 1995
Page 2
Recommendation
Staff recommends that the HRA approve the development contract
with Tollefson Homes and authorize the HRA Chair and Executive
Director to execute the necessary documents.
GF/
M -95 -225
5A
a°
0
Community Development Department
HOUSING AND REDEVELOPMENT AUTHORITY
City of Fridley
DATE: April 7, 1995 I n ,
TO: William Burns, Executive Director of HRA 1—
FROM: Barbara Dacy, Community Development Director
SUBJECT: Resolution Authorizing Bids for Demolition of the
Southwest Quadrant of Mississippi Street and
University Avenue
In order to accomplish the redevelopment schedule such that the
property is prepared for conveyance to the developer in the Fall,
the demolition process must be initiated as soon as possible.
Because of the size of
was done with the Rice
resolution authorizing
attached for the HRA's
being prepared. The s]
meeting for review.
the project, a formal bidding process as
Plaza demolition must be completed. A
the Executive Director to solicit bids is
approval. The specifications are now
?ecifications will be distributed at the
In general, it is proposed that the demolition occur in the
following manner:
1. The commercial buildings including the Fridley Fast Lube,
car wash, strip mall, and Burger King be demolished at the
end of May, 1995.
2. The apartment buildings and garages would be demolished
beginning at the end of June, 1995.
3. The liquor store site would be demolished in the Fall.
4. The frontage road north of Satellite Lane and south of
Mississippi Street will be the last to be removed and
demolished in July.
All asphalt surfaces, concrete curbing, and all overhead
utilities will be removed. Staff is now working with—the.-
developer regarding the removal of the temporary 3rd Street
connection. Because the developer may use this site for
temporary construction access, we are proposing that the
developer remove 3rd Street but be reimbursed by the HRA (in
V
SW Quad Demolition Bid
April 7, 1995
Page 2
accordance with the Contract for Exclusive Negotiation).
Further, keeping the 3rd Street connection for the developer for
construction purposes will also provide temporary access to the
neighborhood from Mississippi Street (there may be a short time,
however, when access may not exist).
Recommendation
Staff recommends that the HRA approve the attached resolution as
presented.
BD /dw
M -95 -223
HRA RESOLUTION NO. - 1995
RESOLUTION AUTHORIZING PREPARATION OF
SPECIFICATIONS AND ADVERTISEMENT FOR BIDS FOR
THE DEMOLITION OF THE COMMERCIAL AND
RESIDENTIAL BUILDINGS IN THE SOUTHWEST
QUADRANT
WHEREAS, the Housing & Redevelopment Authority has initiated a
redevelopment project at the southwest corner of University Avenue
and Mississippi Street; and
WHEREAS, demolition of the commercial and residential buildings in
the project area is necessary to accomplish the redevelopment; and
WHEREAS, the Housing & Redevelopment Authority reserves the right
to award the contract for demolition after bids have been received;
and
NOW, THEREFORE, BE IT RESOLVED THAT, the Housing & Redevelopment
Authority of the City of Fridley, Anoka County, Minnesota,
authorizes the preparation of specifications for the Southwest
Quadrant Demolition Project.
BE IT FURTHER RESOLVED THAT, after review and approval of the plans
and specifications by the Housing & Redevelopment Authority, the
Executive Director of the HRA or his designatee is authorized to
seek bids based upon the specifications.
BE IT FURTHER RESOLVED THAT, upon receipt and opening of the sealed
bids, the Housing & Redevelopment Authority will review the bids
and give its approval for the successful bidder and award the
contract.
PASSED AND ADOPTED BY THE HOUSING & REDEVELOPMENT AUTHORITY OF THE
CITY OF FRIDLEY THIS DAY OF , 1995.
LAWRENCE R. COMMERS - CHAIRMAN
ATTEST:
WILLIAM W. BURNS - EXECUTIVE DIRECTOR
M_
c� a
REQUEST FOR PROPOSAL
DEMOLITION MANAGEMENT SERVICES
SOUTHWEST QUADRANT
AND SIX SINGLE FAMILY HOMES
SIZE OF PROJECT:
1. Five commercial buildings (Fridley Liquor Warehouse, Fridley
Fast Lube, Car Wash, Strip Mall, and Burger King).
2. Four apartment buildings on Satellite Lane (155 -175, 195, 201,
221) .
3. University Avenue frontage road from Satellite Lane north to
Mississippi Street.
4. Three single family houses at 6000 2nd Street, 540 Hugo
Street, 683 Glencoe Street (garage only), 539 Glencoe Street.
547 Glencoe Street, and 533 Janesville Street.
PERTINENT DOCUMENTS:
1. Phase I and II Audits of commercial buildings; completed.
2. Appraisals of fixtures in commercial buildings; completed.
3. Phase I and II Audits of apartment buildings; to be completed
by May 15, 1995.
4. Remediation plan for Fridley Fast Lube; in progress.
SCOPE OF WORK OF REQUESTED SERVICES:
1. Review pertinent documents.
2. Meet with asbestos specialist from Bruce A. Leisch and
Associates, and other environmental agencies about all
buildings as appropriate.
3. Obtain all necessary EPA permits for flourescent ballasts and
bulbs.
4. Arrange for licensed asbestos contractor to begin work May 22,
1995 for removal of asbestos containing materials. Also,
arrange for licensed supervisor during demolition and insure
that'workders are properly licensed.
5. Write the specifications (from form provided) by noon
Thursday, April 13, 1995 with the following as separate jobs
within the bid spec:
a. Demolition of four commercial buildings to begin Monday,
May 22, 1995:
Fridley Fast Lube
Car Wash
Strip Mall
Burger King
b. Demolition of four apartment buildings to begin June 26,
1995.
c_. Demolition of Fridley Liquor Warehouse to begin October
1, 1995.
d. Remove frontage road when demolition of apartment
buildings is completed.
e. Demolition of three single family homes to begin May 22,
6C
1995 and to continue into June as acquisitions are
completed.
Reserve the right for the HRA to award the bid on lowest
cumulative bid. Dates for demolition of apartment buildings
may depend on whether all tenants have vacated the building.
6. Prepare and submit public notices to Fridley Focus and
Construction Bulleting by noon, Tuesday, April 11 for three
weeks of publication on April 18, April 25, and May 2.
7. Act as main contact for all bidders and arrange for
inspections and holding of bid bonds and documents.
8. Arrange for bid opening on May 3, 1995 at 11:00 am.
9. Open bids, identify lowest bidder, check references.
10. Prepare written memorandum recommending bidder and submit to
Barbara Dacy by 5 pm, Thursday, May 4, 1995.
11. Organize pre - demolition meeting with utility companies and
successful bidder prior to work.
12. Establish regular meetings with bidder, environmental
consultants, and City staff.
13. Coordinate environmental inspections for all properties and
inspect site(s) on an as needed basis.
14. Review invoices for services and recommend for processing to
city staff.
15. Provide bi- weekly reports to city staff.
16. Maintain files of all documents and submit to staff when
completed.
POSSIBLE SALVAGING ACTIVITIES:
1. Arrange for sale of any fixtures within the buildings one week
before demolition. Review all proposed sales with city staff.
2. If required, arrange for auction of items including
publication of notices, coordinate and staff auction, submit
documentation of items sold and remittances for items.
Auctions to be held as necessary one week prior to demolition.
SUBMISSION REQUIREMENTS:
1. Three references.
2. Information about the company.
3. Potential draft contract with the
Redevelopment Authority.
4. Insurance information.
5. Hourly rate plus a quote for the
not to exceed" basis.
City of Fridley Housing and
entire project, on a "cost
B.A. LIESCH ASSOCIATES, INC. 1340015TH AVE. N. MINNEAPOLIS, MN 55441 612/559 -1423 FAX: 612/559 -2202
MEMORANDUM
TO: Barbara Dacey, City of Fridley
FROM: Genevieve McJilton, B. A. Liesch Associates, Inc.
DATE: April 5, 1995
RE: Environmental Protection Agency (EPA) National Emission Standards for
Hazardous Air Pollutants (NESHAP); 40 CFR Part 61 Section 145; Asbestos
NESHAP Revision; Final Rule; Standard for Demolition and Renovation,
Clarification of Intent
The following are clarifications of the EPA NESHAP regulations for demolition/renovation
projects in regards to asbestos. In addition to EPA NESHAP regulations there are additional
EPA regulations, OSHA and MPCA regulations and MDH rules for asbestos related activities
that must be followed. Please call me at 559 -1423 with any questions.
Inspection
Prior to the commencement of the demolition or renovation, the owner or operator shall inspect
the affected facility or part of the facility where the demolition or renovation operation will
occur for the presence of asbestos, including non - friable asbestos - containing materials (ACM).
The inspection shall be conducted by an accredited asbestos building inspector as defined by
EPA; Asbestos School Hazard Abatement Reauthorization Act (ASHARA); Asbestos Model
Accreditation Plan; Interim Final Rule. In addition to maintaining this accreditation some states
require additional licensing. At this time, Minnesota does not require addition licensing.
However, it is anticipated this will be changing within the coming year.
Notification Requirements
The owner or operator of a demolition or renovation activity shall provide the EPA with written
notice of intention to demolish or renovate. The notification must be postmarked or delivered
at least 10 working days before asbestos abatement activities and/or demolition operation takes
place. If the start date changes, the EPA shall be notified by telephone as soon as possible
before the original start date and provided a written notice of the new start date. The
notification will also need to be updated when the amount of asbestos affected changes by a least
6E
Page 2
April 5, 1995
20 percent. Minnesota Pollution Control Agency (MPCA) is the EPA representative for the state
of Minnesota and also requires a 10 working day notification and copies of an amended
notification. Minnesota Department of Health (MDH) also requires notification for asbestos
abatement projects greater than 260 linear feet, 160 square feet. MDH requires a five calendar
day wait for renovation projects and a 20 calendar day wait for demolition projects.
Procedures for Asbestos Emission Control
Remove all ACM from the facility or affected area being demolished or renovated before any
activity begins that would break up, dislodge or similarly disturb the material or preclude access
to the material for subsequent removal. ACM need not be removed before demolition if:
• It is Category I non - friable ACM that is not in poor condition and is not friable,
• It is on a facility component that is encased in concrete or other similarity hard material
and is adequately wet during demolition or
• It is not accessible for testing and is not discovered until after demolish begins and as a
result cannot be safely removed. If not removed for safety reasons, the exposed friable
or potentially friable ACM and any asbestos - contaminated debris must be treated as
asbestos- containing waste material and adequately wet at all times until disposed of at any
EPA approved landfill that accepts asbestos waste (not a demolition landfill).
For facilities were ACM is left in place as described above adequately wet the portion of the
facility that contains the ACM during the demolition operation.
• During periods when wetting operations are suspended due to freezing temperatures
(when the temperature at the point of wetting is below 0° C or 32° F); i) the owner or
operator must record the temperature in the area containing the ACM at the beginning,
middle and end of each workday and keep daily temperature records available for
inspection by the EPA during normal business hours at the demolition site, and, ii) the
owner or operator shall retain the temperature records for at least two years.
On -Site Personnel During Demolition
If ACM remains in place during demolition at least one on-site representative, who is an
accredited asbestos abatement contractor /supervisor, must be on site throughout the demolition
to oversee remaining ACM does not become friable, adequate water is used and emissions are
controlled. Evidence that the required training has been completed shall be posted and made
available for inspection by the MPCA at the demolition site. If the demolition contractor does
not have any one on staff with the required training, an appropriately trained Ilesch
representative can be on-site, if not already on-site in conjunction with the asbestos abatement
activities.
B.A. LIESCH ASSOCIATES, INC. 1340015TH AVENUE NORTH MINNEAPOLIS, MINNESOTA 55441
6F
Page 3
April 5, 1995
If ALL ACM, including Category I non - friable ACM, is removed from the facility prior to
demolition, the on-site representative shall be a competent person in accordance with OSHA
regulations and one able to recognize ACM and asbestos hazards. If ACM is discovered during
the course of demolition, work will need to be stopped and Liesch contacted (if not already on-
site) so appropriate steps are taken. This material will need to be kept wet until a decision is
made.
Disposal
Category I non friable ACM may be disposed with demolition debris. The landfill accepting the
demolition debris must be notified prior to Aisposal that Category I non - friable ACM is mixed
in the demolition debris. The landfill is not required to accept the waste. If the landfill accepts
the waste they may have special handling procedures and may charge additional fees to handle
the waste. McLoud Landfill, between Hutchinson and Glenco, Minnesota has accepted
demolition debris with asbestos in the past and has a tracking system in place for all asbestos
waste.
All friable and potentially friable ACM removed by the asbestos abatement contractor or
discovered during demolition will be disposed of at a landfill approved by the EPA to accept
asbestos- containing waste.
SA/61645 /memoacm495.wp
B.A. LIESCH ASSOCIATES, INC. 1340015TH AVENUE NORTH MINNEAPOLIS, MINNESOTA 55441
6G
a° 0
Community Development Department
HOUSING AND REDEVELOPMENT AUTHORITY
City of Fridley
DATE: April 7, 1995
TO: William Burns, Executive Director of HRA .A
FROM: Barbara Dacy, Community Development Director
SUBJECT: Approval of Resolution Authorizing Execution of
Development Contract with Anoka County Community
Action Program (ACCAP)
Background
The HRA considered a
number of properties
1994. At the August
assistance up to 500
$90,000 for rehabilk
1/2 Street, and 6008
request for rehabilitation assistance at a
proposed for acquisition by ACCAP in August,
meeting, the HRA authorized rehabilitation
of the rehabilitation costs to a maximum of
tation work at 5908 - 2 1/2 Street, 5916 - 2
- 2nd Street.
The HRA agreed to provide the rehabilitation assistance in a
$45,000 grant and a $45,000 low interest low (50 over 30 years).
The two buildings on 2 1/2 Street are each seven unit buildings.
The building on 2nd Street is a four -plex. ACCAP intends to
operate these buildings as a "leasehold cooperative ". State
Statute permits nonprofit agencies like ACCAP to operate
apartment properties as a cooperative under certain conditions.
One of the conditions requires public financing including public
financing provided by a "local government" to be used for the
acquisition or rehabilitation of the building. The Statute also
permits ACCAP to request a homestead tax treatment instead of the
typical tax treatment for an apartment building. The savings
from the homestead tax treatment, however, must be used to
provide affordable rents or to be used for rehabilitation to the
building. The City Council acts on the tax issue, not the HRA.
The purpose of the HRA consideration last August was to determine
the HRA's interest in assisting the project. The HRA agreed in
convep to the rehabilitation. ACCAP obtained funding for the
acquisition and other aspects of this project from several other
sources, including the Minnesota Housing Finance Agency (a
deferred zero percent 30 year mortgage), HOME funds from the
7
r
Development Contract with ACCAP
April 7, 1995
Page 2
Federal government, and a grant from the Federal Home Loan Bank
Board (see attached list of funding sources).
Homestead Tax Treatment
After MHFA approved funding for the project and after ACCAP
closed on the properties, ACCAP submitted a request to the City
Council for adoption of a resolution to submit to the County
Attorney's office to request homestead tax treatment (approval by
the HRA is not required on this item). A public hearing was
conducted in January of 1995, and a neighborhood informational
meeting was conducted in December of 1994. The Hyde Park
neighborhood residents identified a number of concerns about the
proposal at the hearing.
Subsequent to the public hearing in January, the ward
Councilperson, Ann Bolkcom, established a five person
subcommittee to work with ACCAP on the neighborhood issues. The
committee met twice, staff completed additional research, and
another neighborhood meeting was conducted on March 23, 1995 to
review the solutions to the concerns identified by the
neighborhood.
In order to achieve many of the concerns from the neighborhood,
it is recommended that these requirements be included in the
development contract with ACCAP as part of the development
contract. The significant concerns are as follows:
1. Compliance with the City's rental code (Chapter 220),
including its requirements on tenant behavior;
2. Completing tenant screening on all tenants;
3. Submission of annual progress reports on the operation of
the cooperative;
4. More restrictive occupancy standards than currently enforced
by the rental ordinance;
5. More restrictive parking requirements than is currently in
place;
6. Use of longer term leases versus a month -to -month lease; and
7. Tenants must receive one form of rental assistance. E - --
Development Contract
The key issue for the neighborhood is accountability. ACCAP must
7A
Development Contract with ACCAP
April 7, 1995
Page 3
provide MHFA with a number of financial reports as a condition of
the MHFA loan. Compliance with the MHFA loan requirements is
also a provision of the development contract.
One of the requirements is to submit operating budgets to MHFA
and operating audits at the end of each year.
It is estimated that the change in tax status from nonhomestead
to homestead would result in a minimal amount of tax loss to the
City; however, staff has developed a proposal to recapture some
of the tax loss and to accomplish payment to the HRA for purchase
of a lot to the south of the four -plex.
One of the recent scattered -site acquisitions was at 6000 - 2nd
Street, a nonconforming, nonbuildable single family rental
property located south of the four -plex at 6008 - 2nd Street. It
is proposed that ACCAP purchase this property from the HRA in
order to eventually construct a garage and to create some type of
a play area for the children that may live in the building (this
is also in response to a neighborhood concern).
The repayment is based on excess cash flow from operation of the
building. If a savings occurs, Casserly has proposed a higher
interest rate which must be paid on the loan and the difference
from the original loan term produces the additional payment.
Again, it is conditioned upon the operation of the building;
however, ACCAP must submit annual audits to MHFA which will be
reviewed by City staff.
Request for Additional Assistance
More detailed estimates on the rehabilitation of the property has
been submitted on the buildings by ACCAP. The rehabilitation
costs for the seven unit apartment buildings is $162,152 and the
cost for the four -plex is $66,000. The total improvement cost is
approximately $228,152. ACCAP would like the HRA to consider
increasing its assistance from the maximum of $90,000 to
$115,000.
Remember in August a request for rehabilitation assistance was
also made for a four -plex on 57th Place. ACCAP has indicated
that assistance from the HRA is no longer needed on that project
because they have obtained another source of financing from MHFA
which does not require the HRA's assistance. The HRA at its
August 1994 meeting-;also approved a similar request on that four -
plex not to exceed $25,000.
Authorizing an increase from $90,000 to $115,000 would be
appropriate if the additional funds are split between the grant
and the loan as originally contemplated. In other words, instead
tL
Development Contract with ACCAP
April 7, 1995
Page 4
of a $45,000 grant and a $45,000 loan, proposed would be a
$57,500 grant and a $57,500 loan.
The rehabilitation of these properties constitutes a signal to
the neighborhood of the City's commitment to stabilize property
values and maintain neighborhood vitality. Hyde Park has been
identified as a "focus area ". The proposed contract is a "win -
win" for the City by improving the neighborhood.
Recommendation
Staff recommends the HRA approve the resolution authorizing the
Executive Director and the Chair to execute the development
contract. The development contract is in the packet for your
review.
BD /dw
M -95 -230
7C
Q
HOUSING AND REDEVELOPMENT AUTHORITY
IN AND FOR THE
CITY OF FRIDLEY
COUNTY OF ANOKA
STATE OF MINNESOTA
RESOLUTION NO.
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 FRIDLEY AND ANOKA
COUNTY COMMUNITY ACTION PROGRAM, INC., INC.
BE IT RESOLVED by the Board of Commissioners (the
"Commissioners ") of the Housing and Redevelopment Authority in and
for the City of Fridley, Minnesota (the "Authority ") as follows:
Section 1. Recitals.
1.01. It has been proposed that the Authority enter into a
Contract For Private Redevelopment (the "Contract ") with Anoka
County Community Action Program, Inc., (the "Redeveloper ").
Section 2. Findings.
2.01. The Authority hereby finds that it has approved and
adopted a development program known as the Modified Redevelopment
Plan for its Redevelopment Project No. 1 (the "Redevelopment
Program ")pursuant to Minnesota Statutes, Section 469.001 et sea.
2.02. The Authority hereby finds that the Contract
promotes the objectives as outlined in its Redevelopment Program.
Section 3. Authorization for Execution and Delivery.
3.01. The Chairman and the Executive Director of the
Authority are hereby authorized to execute and deliver the Contract
when the following condition is met:
Substantial conformance of a Contract to the Contract
presented to the Authority as of this date.
Adopted by the Board of Commissioners of the Authority this
day of , 1995.
ATTEST:
Executive Director
7D
Chairman _ _ I-
512 334 3382
G12- . 773-4 - -3 CA 'SERI -Y MOLZi:iHN 6:39 P02 APR 06r 95 16:25
Casserly Molzahn. & Associates, Inc.
215 South 11 th Street, Suite 300 • Minneapolis • Minnesota 55403
Office (612) 342 -2277 • Fax (612) 334 -3382
M E M O R A N D U M
TO: City of Fridley
Attn: Bill Burns, City Manager
Barbara Dacy, Community Development Director
FROM: James R. Casserly
Mary E. Molzahn
RE: Contract for Private Redevelopment By and Between the
Housing and Redevelopment Authority in and for the City
of Fridley and Anoka County Community Action Program,
Inc.
DATE: April 6, 1995
Enclosed you will find the April 4, 1995 draft of the above
Contract. The Contract includes the issues the parties have
negotiated over the last several months. Those issues have been
incorporated as Representations and Warranties in Section 2.2 of
the Contract and in the Note. Subparagraphs (j) -(p) of Section
2.2 address the topics of using Section 8 Certificates, progress
reports, occupancy standards, parking requirements, lease
duration and so forth.
Article 3 of the Contract provides for the payment of a $45,000
grant and the loan at the time of the Redeveloper's initial
closing with the Minnesota Housing Finance Agency.
Article 5 describes the Events of Default and includes the
provision that any Event of Default by the Redeveloper in its
building loan agreement with the Minnesota Housing Finance Agency
shall be an Event of Default in this Contact. Additional Events
of Default are the nonpayment of taxes and the foreclosure of any
mortgage. An Event of Default that is not remedied will allow
the Authority to accelerate its Note and commence foreclosure
proceedings on its mortgage.
The Note is designed to provide the Authority with an additional
$1,000 a year if there is that much cash flow from the property.
The additional $1,00o a year is described in the Note as a
supplemental installment. The minimum annual installment will be
$2,927.31. The supplemental installment, if cash flow allows,
will be $998.48. The supplemental installment represents the
potential loss of taxes to the City from the reclassification of
7E
r' 512 334 3382
612- - ;34---773821 Cl=iff- -REF L-Y MOL-ZPHN 639 PO1 APR 06'95 16:25
the property.
The balance of the Contract is identical to contracts the
Authority has executed over the last several years.
JRC /MEM /kh
Encl
7F
s EF
GNOF
FRIDLEY
FRIDLEY MUNICIPAL CENTER • 6431 UNIVERSITY AVE. N.E. FRIDLEY, MN 55432 • (612) 571 -3450 - FAX (612) 571 -1287
August 23, 1994
Ms. Kathryn Hadley
Commissioner
Minnesota Housing Finance Agency
400 Sibley Street
Suite 300
St. Paul, MN 55155
Dear Commissioner Hadley:
I am writing this letter in support of the Anoka County Community Action
Program's (ACCAP) application for funds under the Affordable Rental Investment
Fund. The proposal is to purchase one four -unit and two seven -unit apartment
buildings to provide low income housing in Fridley.
The apartment buildings are located in a neighborhood in Fridley known as Hyde
Park. The Hyde Park neighborhood was identified in the City's comprehensive
plan as a "primary focus neighborhood." A recent 1991 market study completed
by the Maxfield Research Group also identified this area as in need of
rehabilitation and redevelopment. ACCAP's proposal to acquire, rehabilitate and
manage these buildings is consistent with the City's comprehensive plan and
housing program.
City support of this project will be provided in the following ways:
1. On September 6, 1994, the Fridley City Council will be asked to
approve a resolution endorsing the tax status ofe .properties as
"leasehold cooperative" properties. Those properties are taxed at a
rate which is equivalent to the homestead rate. The tax savings will
help ACCAP to provide affordable housing.
7G
f C
Ms. Kathryn Hadley
August 23, 1994
Page Two
2. At the August 11, 1994, Housing and Redevelopment Authority
meeting, rehabilitation assistance was authorized for this project. The
Fridley HRA will provide a grant of $45,000 and will also provide a
$45,000 low interest loan (5 percent over 30 years). The HRA's
participation represents about 50 percent of the rehabilitation costs.
Anoka County continues to have a serious shortage of low income housing
options, including low cost rental housing. The purchase of these apartments
would allow the needs of individuals and families for decent, low cost housing to
be met.
The City of Fridley has worked cooperatively with the Anoka County Community
Action Program. ACCAP is an effective provider of housing. I very strongly
encourage the award of grant funds to this project.
Sincerely,
William W. Burns
City Manager /Executive Director of HRA
:rsc
7H
MAR -2= -19957 14 =41 F 021
Darwin Lindahl
Architect
STATEMENT OF PROBABLE CONSTRUCTION COST
Hyde Park SRO
5908 & 5916 - 2 1/2 Street N.E.
File No: 9501
March 17, 1995
The following is a breakdown of the estimated construction cost for the recommended
improvement/maintenance items.
A. Replacement of windows
1. TYPICAL LIVING UNIT IMPROVEMENTS
460.00
A.
Replacement of unit entry door /frame
4,600.00
1,100.00
B.
Replacement of unit interior doortframes
$30.00
C.
Bathroom renovation
1,750.00
D.
Kitchen renovation
970.00
790.00
E.
Replacement of carpet & vinyl flooring
F.
[replacement of closet shelving
130.00
G.
Replacement of smoke detectors
50.00
Total estimate per living unit
$4850.04
Total number of living units
$ 67,900.00
Total cost estimate for living units
2. INTERIOR COMMON SPACES IMPROVEMENTS
$1,450-00
A.
Replacement of corridor/stairs carpet
13,
Replacement of interior door /frames
860 00
C.
Install vinyl tile in laundry room
650.00
D.
E.
Replacement of interior lighting
Replacement of electrical breaker panels
900.00
168 .00
Total estimate per building
$ 5,540.00
Total number of buildings
2
$ 11
Total cost of interior common spaces
,080.00
3. BUILDING EXTERIOR IMPROVEMENTS
$ 11,800.00
A. Replacement of windows
3,2,00.00
S. Re- roofing
C. Augment attic insulation
780.00
D. Re- dashing stucco
4,600.00
1,100.00
E. Aluminum siding at front elev. of #5916
1(612)535 -3007
3836 Hampshire Avenue N.
Minneapolis, MN 55427
71
6
FlAP -23 -1995 14:41
F. Install gutters and downspouts
G. Install aluminum fascia/soffits
H. Replacement of building entrance door /frames
1. Install intercom entry system.
Total estimated exterior improvements
Total number of buildings
Total estimated cast of exterior improvements
4. SITE IMPROVEMENTS
A. Trash enclosure
B. Landscaping
C. Parking lot improvements
Total estimated site improvements
Total estimated construction cost
General conditions (5 %)
Contractor's overhead and profit (10 (/'*)
Total Estimated Project Construction Cost
7J
500.00
1,150-00
1,000.00
1.500.00
$ 25,260.00
2
$ 3,000.00
2,000.00
5.150.00
P. O-D
$ 51,260.00
$ 10,150.00
$ 140,390.00
7,020.00
14.740.00
$ 162.150.00.
MAR-23-1995 14:41
I- - n
Darwin Lindahl
Architect
STATEMENT OF PROBABLE CON 'TRUCTION COST
Hyde Park Apartments
6008 Second Street N. E.
Fridley, MN
File No:9502
March 15, 1995
The following is a breakdown of the estimated construction cost for the necessary
improvement/maintenance items.
1. UNIT #1
A.
Replace unit entry doors (front and back)
$ 920.00
B.
Replace unit interior doors as required
900.00
C.
Renovation of Kitchen
845.00
D.
Renovation of Bathroom as required
11850.00
E.
Replacement of carpet and vinyl flooring
1,200.00
F.
Replace light factures as required
150.00
G.
Miscellaneous radiation cover repairs
300.00
H.
Replace smoke detector
50.00
I.
Replace wood floor base in Bedroom #2
60.00
Total estimated cost for Unit #1
2. UNIT #2
A.
Replace unit entry doors (front and back)
$ 920.00
B.
Replace unit interior doors as required
600.00
C.
Renovation of Kitchen
845,00
D.
Renovation of Bathroom as required
975.00
E.
Replacement of carpet and vinyl flooring
1,200.00
F.
Replace light fixtures as required
0.00
G.
Miscellaneous radiation cover repairs
100.00
H.
Replace smoke detector
50.00
Total estimated cost for Unit #2
3. UNIT #3
A. Replace unit entry doors (front and back) $ 920.00
B. Replace unit interior doors as required 600.00
C. Renovation of Kitchen 845.00
D. Renovation of Bathroom as required 1,450.00
l(WS)535-3W
3836 Hampshire Ave. N_
Minneapolis, MN 55W
7K
L14
$ 6,275.00
e
E. Replacement of carpet and vinyl flooring
F. Replace light fixtures as required
G. Miscellaneous radiation cover repairs
H. Replace smoke detector
Total estimated cost for Unit #2
4. UNIT #4
A.
Replace unit entry doors (front and back)
B.
Replace unit interior doors as required
C.
Renovation of IGtchen
D.
Renovation of Bathroom as required
E.
Replacement of carpet and vinyl flooring
F.
Replace light fixtures as required
G.
Miscellaneous radiation cover repairs
H.
Replace smoke detector
Total estimated cost for Unit #2
5. BUILDING EXTERIOR
A. Window Replacement
B. Entry door Replacement ( front and back)
C. Re- roofing
D. Augment attic insulation
E. Re-dash stucco
F. Replace gutters and downspouts
G. Aluminum fascia/soffit
1. Intercom system at front door
Total estimated cost for buikfing exterior
6. SITE IMPROVEMENTS
1,200.00
100.00
100.00
50.00
$ 920.00
400.00
850.00
845.00
1,200.00
50.00
100.00
50.QQ
P.05
$ 5,265.00
$ 4,415.00
$ 10,600.00
1,000.00
2,600.00
500.00
2,100.00
1,800.00
975.00
500.00`
$ 20,075.00
A. Trash enclosure $ 2,800.00
B. Landscaping 1,000.00
C. Parking lot overlay 3.500.00
Total estimated cost of site improvements $ 7.300.00
Total estimated construction cost
General conditions (15 %)
Contractor's overhead and profit (1010/6)
Total Estimated Project Construction Cost
page 2 of 2
7L
1 f1
IN : Ili
ANOKA COUNTY COMMUNITY ACTION PROGRAM, INC.
1201 89th Avenue NE • Suite 345 • Blaine, MN 55434 • Phone 783 -4747 • FAX 783 -4700 • TTY 783 -4724
ON-
A United Way
y
February 9, 1995
Ms. Barb Dacy
Community Development Director
City of Fridley
6431 University Avenue N.E.
Fridley, Minnesota 55432
RE: Summary of Meeting with Hyde Park Committee, January 26, 1995
Dear Ms. Dacy:
In follow-up of our meeting of February 6, 1995, I am writing to respond to some of the issues
we discussed. These are limited to the major points we discussed and are in order as shown on
your memo.
2. We are prepared to decline Section 8 subsidy on these units as significant other subsidy
has been used to make these units affordable. We have no strong position on this issue.
3. ACCAP uses Rental Research for tenant screening comparable-to other building owners.
We do not rent to individuals deemed to be extremely high risk tenants.
7. ACCAP is a United Way Agency. ACCAP's mission is to promote economic self
sufficiency for our clients. (See attached.) United Way does provide a small portion of
our Agency's budget but we meet all of their administrative and fiscal requirements.
9. We will open our books to the City of Fridley on an annual basis to substantiate the
investment of the tax savings into this project. We will not maintain the leasehold tax
status if it becomes unnecessary to support the project.
14. We propose the following maximum number of individuals in a one (1) bedroom.
Maximum number of adults 2
Maximum number of individuals in a two (2) bedroom 5
Maximum number adults 3
Maximum cars per unit 1
15. We will agree , to a one , (1) year lease' if it is recommended by the neighborhood. ` This
may delay. our ability, to remove problem tenants and could add to our operating
�7
Mr
AN EQUAL OPPORTUNITY EMPLOYER
expenses. A month to month lease is not intended to convey as short term of occupancy,
it is only relevant as to the notification period for moving.
16. If this tax status is not granted, ACCAP will return the NWA commitment, dramatically
scale back the renovation, attempt to secure conventional financing, and attempt to
operate the units in their current condition. If this is not viable, we will be required to
look into the sale of these properties.
18. ACCAP can not prove itself and then ask for a tax break. This is not the process
provided for in the law. The tax status and savings must be needed to complete the
project.
20. ACCAP has no proprietary interest in the name of the co-op or the project. We would
work with the Committee to select a suitable name.
26. ACCAP is committed that the co-op will be a viable organization. We expect that it will
take some time to develop this organization but we are committed to this effort.
I will be in attendance at your next meeting. I hope I can answer any remaining questions and
begin to establish the trust that is needed to make this project successful. If you have any
questions, feel free to call me at 783 -728.
Sincerely,
f k McFazland
Executive Director
PWch
Enclosure
ANOKA COUNTY COMMUNITY ACTION PROGRAMANC: ''
FUNDING SOURCES
SOURCE
MHFA
(Minnesota Housing
Finance Agency)
CITY OF FRIDLEY HRA
CITY OF FRIDLEY HRA
TYPE AMOUNT
Loan $260,000
Loan $ 45,000
Grant $ 45,000
ANOKA COUNTY HOME Grant $103,000
FEDERAL HOME LOAN Grant $ 67,000
TOTAL $520,000
USES OF FUNDING
Acquisition $3459000
Construction/Rehab $175,000
$520,000
* Actual Bids Now Being Received
70
TERMS
0 %, 30 Yr.
4.5 %, 30 Yr.
0 %, 30 Yr.
c,
a°
r,
Mr. Commers asked staff to see what they could negotiate nd
update the Commission at the September meeting.
10. UPDATE DN nRMnT.TMTnW nF ennmmFV�n_�Tmr onnnc ��
Mr.'Commers. stated the•information included i the agenda
mentions the problem of damage to propertie as a result of
scavenging. If there anything that can b done about the damage
when properties are acquired?
Mr. Burns stated the City could try o go after the vandals but
it is probably more trouble than at it is worth. He suggested
shortening the time between the ime when the property is vacated
and the time when it is torn own. The Fire Department burned
one property but there was delay during which people broke into
the home. Having the Fir Department burn a property does not
really save any money.. contractor must still be.brought in to
haul away debris.
Ms. -Dacy stated Fire Department tries-to schedule�.training:at.
certain times d ing -the years. - This may or may not 'coincide-
with what sta wants to do. Other things-can also come up to -
cause delay She and;Mr..Fernelius are working to try to close
in- coming cquisitions within days of each other and also get.
quotes r demolition to occur about the-same time.
Mr ommer stated_ciemolitions - :increasing - costs, signit4icantly... .... .
. Dacy stated demolition has been-accounted for in the budget.:
11. CONSIDER PARTICIPATION IN ACCAP ACQUISITION AND
REHABILITATION PROJECTS
Ms. Dacy_stated-ACCAP would like to purchase.and rehabilitate
properties located at 5908 and 5916 - 2 1/2 Street, . -6008° - 2nd
Street, and 6501 and-6513 Channel Road and is requesting
participation from the HRA.
Ms..Dacy stated the first properties are located at 5908-and 5916
-2 1/2 Street -and 6008 - 2nd Street. The buildings on.2 1/2
Street have seven-one - bedroom units in each building. Thee
building on.2nd Street is a four -plex. ACCAP monitors.nw
records and HUD housing to q'et market opportunities as -they come
available. These properties have been one the market for 8 to 9
months. The 2nd Street property is being-foreclosed. All
buildings are in a di,strersazl condition. ACCAP wants to own the
buildings, rehabilitate them, and rent out the units. The
remaining properties are located.at--6501..and 6513 Channel Road.
which is east of Highway 65�and. north of Mississippi - Street.
These two buildings are four - plexes.
7P
HOUSING & REDEVELOPMENT AUTHORITY MTG., AUGUST 11 1994 PAGE 14
Ms. Dacy showed slides of the properties showing what
improvements are necessary. The property on 2nd Street is•vacant
and is non - conforming. The windows need replacing as well as
extensive interior work. The properties at 2 1/2 Street are
occupied. The owner is currently trying-to sell the buildings.
The properties on Channel Road are in better condition. These
buildings have three - bedroom units. Seven out of eight units
have Section 8 tenants.
Mr. Commers asked by Section 8 does not require the buildings to
be rehabilitated.
Ms.- Dacy stated Section 8 has minimum housing quality standards.
On Channel Road, the tenants have -been there a long time but
Section 8 will not recommend they go to properties where they see
deferred maintenance. These buildings are in fairly good
condition and are in a nice area next to a.single family
neighborhood.
Ms. Dacy stated ACCAP wants to acquire the Hyde Park property,
own and manage these apartments. They -want to provide these
units -for low income people and are proposing.a. single room
occupancy project.- They do not want to carry a mortgage on the
property. They .are asking for - MHFA. dollars to-fund a significant.
part of the acquisition. ' They are asking Anoka County for.
.$130,000 in HOME. funds.. The HRA is being.. asked ..for .participation
in the -rehab costs °p To acquire and .rehab the buildings .h42 a
Park will cost a total of $538,0001 -assuming a.. maximum•of,,$10,00.0
per unit for rehab. .For the properties on Channel Road,:ACC'P.•
wants -to continue"to provide affordable family housing keeping
the three - bedroom units: This project would support a- mortgage.
Acquisition and-rehab costs . are -estimated to -be. $5,000 per_ unit,-.
perhaps less: i
,Ms. Dacy stated ACCAP is asking for rehab assistance-from the HRA
and wants the Council to look at a leasehold- cooperative tax
status. This is an intermediary step between renting-and owning.
In this case, the tenants will not own a share as in a-
cooperative; the tenants will-lease a share and ACCAP will own
the-unit. The advantage is that this is a lower tax-status., The
HRA does not have to- discuss tax status issue. This is more-for
the City Council. The HRA_is-asked to look at the-options for
rehab assistance. ACCAP wants to put.together-an application to
MHFA for monies to-accomplish the project and, with local.
participation, their chances will be increased-to receive
funding.
Ms.-Dacy-stated staff-has come. up with: four options. -Option-1
would be:to do.nothing.• ACCAP.states they will have a better
chance of funding if the HRA participates but they -could
conceivably do the project without-HRA assistance and by just
70
R
A,
HOUSING & REDEVELOPMENT AUTHORITY MTG. , AUGUST 11 1994 PAGE 15
getting the tax status changed. Option 2 would be.to use the
typical loan policy on a rental rehab program. Money is
allocated in the budget but have had no requests for assistance.
The amount of assistance for the Hyde.Park area buildings would
be $11,200 or approximately.2% of•the total cost. For the
Channel Road buildings needing less rehab would also be 20 of the
total cost. Option 3 would be to provide a deferred loan. In
the case of a deferred loan, the formula could be used for up to
50% of the rehab costs or up to $90,000, but the loan is due on
sale of the property. This represents 17% of the total cost. On
Channel Road, the loan would be $20,000 or 6% of the total cost.
Option 4 is a combination of a deferred loan with some type of.
pay back over, for example, --a 30 -year period to get some of the
money returned to the HRA. By doing this,-the rehab can be done
and the HRA gets the money back.
Ms. Dacy stated staff's recommendation is to get the.HRA's
authorization for staff to negotiate with ACCAP to start with, in
the Hyde Park area, with a deferred loan and mortgage. For
Channel Road, start with the current method which would be to
provide $800 per unit and-have the option of a deferred loan.
Staff believes strongly that 18 units is a lot of.units•in the
Hyde Park area. ACCAP is a good owner with a good track record
Cr and - should achieve some stability in that area. This is a high
.priority area. Their funds are leveraged. The damage done to
these properties warrants a higher.participation by the.J,HRA...
This isan opportunity to provide :,unique affordable houses . On
g ..
Channel Road, ACCAP.plans to finance-with a first mortgage, and
HRA would take the second position... By-participating with ACCAP
on this project, it will help to stabilize the area and
preventing it from turning into something worse. If the owners
of the Hyde Park properties came to the City -and asked for
assistance,.the Housing Coordinator would work•with,_fihem. There•
is.justification for going beyond that. The buildings' have been
on the market for some time, and she did not think the owners
would rehab to the level the HRA would insist.
Ms.-Dacy stated $110,000 was-allocated in the 1994 budget which
has not been expended at this-time. •It•was to be'granted for
matching funds for-multiple family - rehab. Any amount decided
upon would be within the budget.
Mr.. Commers stated, if we have a due on sale arrangement, the HRA
will not know when that will come back.
Ms. Dacy stated this was correct.
Mr.. Commers asked if,.there_was_Minnesota Housing Finance Rehab
Funds for the properties -on Channel Road.
7R
M
HOUSING & REDEVELOPMENT AUTHORITY MTG., AUGUST 11 1994 PAGE 16
Ms. Dacy stated her understanding is that the rehab funds came
from a Federal funding source which no longer exists_ There are
no grants.
Mr. Commers stated he did not understand why we don't go to the
owner and make them do the rehab.
Ms. Dacy stated this was a good point. The City has been
operating its rental inspections on a complaint basis. She
thought the HQS addresses exterior deterioration very minimally.
Their primary concerns are interior and real safety issues.
Mr. McFarland asked the value of the properties.
Ms. Dacy stated she thought the value of the Channel Road
properties-to be $163,000. each and are selling for $165,000. The
owner" has been talking to ACCAP. and are willing to. go lower down
to perhaps $158,000. In this case, there is a motivated seller.
Mr. McFarland asked if the appraisal is based on income,.
Ms.. Dacy stated the County did the appraisal, and she did not
have the details.
Mr. McFarland asked how they establish-the value of the four -plex
apartment properties. s
Ms. Dacy stated the County had the apartment property valued at
$98,000 and ACCAP was working on a purchase agreement -for`,
$90,000. She did not know how they arrived at that figure.
Mr. Commers stated staff is recommending a combination for the
Hyde Park properties and asked what-that meant.
Ms, Dacy.stated ACCAP wanted what amounts to.a grant. Mr..Burns
and Ms. Dacy are suggesting a 50/50 approach.- 50% in.the form of
a deferred loan and 50% amortized over some term to be negotiated
and -see.if.ACCAP. will agree -to a monthly-payment. She has asked
ACCAP for their proposed cash flow analysis,' operation and
maintenance, tax allocations, and their proposed rental.rate
return at $250 per month per unit.
Mr. Commers stated he did not-see much difference between $45,000
approval and -one amortized over 30 years other than the HRA
receives some minor payments.
Mr. Casserly asked if staff was suggesting a $90,000 low <but
$45,000 be deferred.
Mr. Burns stated yes. In essence, half the amount is -a grant and
half is a loan.
7S
C
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HOUSING & REDEVELOPMENT AUTHORITY MTG., AUGUST 11, 1994 PAGE 17
Mr. Casserly stated half is a loan being amortized over 30 years
.and the other . half is due on sale of the property_
Mr. Commers asked from which program these funds were coming.
Ms. Dacy stated the funds were from the multiple family program.
The HRA has two accounts for 1994 - $142,500 for the 1994 rental
rehab program and $110,000 to be allocated toward the grant
application which was not approved. Staff proposes using the
$110,000 in that "grant" account.
Ms. Dacy stated ACCAP is putting together an application to MHFA
which must be completed by August 26. ACCAP is asking for a
letter from the Executive Director providing conceptual approval
for rehab assistance and participating in the project; and, if
the HRA' wishes to commit to some type of terms, to indicate those
terms. Staff recommends starting with a negotiating approach.
Mr. Burns stated staff recommends starting with a mixed approach
and ending with the $90,000 deferred loan.
Mr. Commers asked
objections to the
The Commission rm
Mr. Commers asked`.
this point.
the Commission members if they had any
concept.
nbers concurred. They had no objections.
1f members wished to get °into more detail at
Mr. McFarland recommended going forward on the basis of
negotiating for the best the HRA can get.
Mr. Meyer agreed. ,
Mr. Commers stated the HRA had consensus for.the Executive
Director. write a letter to ACCAP- to do as recommended using the
combination for the Hyde Park properties.
Mr.. Commers asked what staff had intended for the properties on
Channel Road.
Mr. Burns stated staff would like the latitude to go to $20,000. _
They would start at $6,400 and it may go as high as $20,000.
That brings the total to $110,000 if we go to the extremes of our
bargaining powers. .
Commission members concurred.
ADJO
7T
HOUSING & REDEVELOPMENT AUTHORITY MTG., SEPTEMBER 8 1994 PAGE 12
UPON A VOICE VOTE, ALL VOTING AYE, C ON COMMERS DECLARED
THE MOTION CARRIED UNANIMOUSLY.
GPI
Ms. Dacy stated the Fe por is provided for informational
purposes. These num will change as we proceed through the
program with the ap cants.
7. UPDATE OF ACCAP PROJECTS
Ms. Dacy stated ACCAP will not be acquiring the Channel Road
apartments. Staff is requesting authorization for a similar
approach on another four -plex for a separate application on the
transitional housing. This building is located at 380 - 57th
Place. They have entered into a purchase agreement for
approximately $92,000 with estimated rehab costs of $52,000.
From the - exterior, the building looks to be in very bad
condition. Staff is recommending up to 500 of the costs be
approved with half of that financed and the other half due on
sale. That would match our budget.
Mr. Commers stated it is his understanding that on 57th Place the
HRA gets everything back. Half the amount is with interest and
the remainder is payable on sale.
Ms. Dacy stated this was correct. The City Council - approved -a
resolution for a tax break on the Hyde Park buildings. The four -
plex is a transitional housing project and will pay taxes.
The Commission consensus was to authorize staff to go ahead.
8. UPDATE ON DESIGN PROCESS FOR SOUTHWEST OUADRANT /
Ms. Dacy stated staff had prepared the scope o ork and had
reviewed this with the architect and site p nner. This was also
reviewed at the Planning Commission meet' g on September 7, 1994.
She received an estimated contract co from Mr. Hargans from
Close and Associates and Mr. Gair om McCombs, Frank, Roos and
Associates. These gentlemen wer recommended to staff by Mr.
Dave Newman, chairperson of t Planning Commission. Ms. Dacy
contacted them, reviewed t scope of work with them, and the
estimated contract costs ould be $12,000 for each. She would
like to have the HRA a luate whether the scope of work is
appropriate and aut rite staff to-execute the contract with the
architect and sit planner.
Mr. Co 7gnnii�to ated the scope of work seems all right. When
talkins amount of money for the architect and site planner,
do we get a bid from someone else?
7U