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HRA 08/10/1995 - 6290HOUSING % REDEVELOPMENT AUTHORITY MEETING THURSDAY, AUGUST 10, 1995 7 :30 P.N. PUBLIC COPY f CITY OF FRIDLEY A G E N D A HOUSING & REDEVELOPMENT AUTHORITY MEETING THURSDAY, AUGUST 10, 1995 7:30 P.M. Location: Council Chambers Fridley Municipal Center CALL TO ORDER ROLL CALL APPROVAL OF MINUTES: July 17, 1995 CONSENT AGENDA: CHANGE ORDER TO PROJECT NO. 281 TO PERMIT DEMOLITION . . . 1 - 1C OF 533 JANESVILLE STREET, 540 HUGO STREET, 6000 - 2ND STREET, AND 5924 - 2ND STREET MONTHLY HOUSING REPORT . . . . . . . . . . . . . . . . . . 2 - 2B REVENUE AND EXPENSES . . . . . . . . . . . . . . . . . . . 3 - 3B SOUTHWEST QUADRANT BUDGET UPDATE . . . . . . . . . . . . . 4 ACTION ITEMS: PUBLIC HEARING TO CONSIDER TEMPORARY ACQUISITION OF . . . 5 - 5E 6765 EAST RIVER ROAD N.E. CONSIDER APPROVAL OF RESOLUTION AUTHORIZING A . . . . . . . 6 - 6Y COMPREHENSIVE REHABILITATION PROGRAM IN HYDE PARK CONSIDER RESOLUTION AUTHORIZING ANOKA COUNTY HRA . . . . . 7 - 7N SPECIAL BENEFIT LEVY FOR 1996 CONSIDER TAX INCREMENT FINANCING ASSISTANCE FOR AGRO -K. . . 8 - 8E INFORMATION ITEMS: LAKE POINTE UPDATE. . . . . . . . . . . (verbal update) . . 9 SOUTHWEST QUADRANT UPDATE . . . . . . . (verbal update) . . 10 HOUSING REPLACEMENT PROGRAM UPDATE . . . . . . . . . . . . . 11 - 11M UPDATE ON NORTHCO DEVELOPMENT . . . . . (verbal update) 12 OTHER BUSINESS: ADJOURNMENT CITY OF FRIDLEY JOINT CITY COUNCIL WORK SESSION AND HOUSING & REDEVELOPMENT AUTHORITY MEETING JULY 171 1995 Chairperson Commers convened the meeting at 6:34 p.m. ROLL CALL: Members Present: Mayor William Nee, Councilmembers Steve Billings, Ann Bolkcom, Nancy Jorgenson, and Dennis Schneider, Chairperson Larry Commers, and Commissioners Virginia Schnabel, Jim McFarland, John Meyer, Duane Prairie Others Present: William Burns, Executive Director Barbara Dacy, Community Development Director Jim Casserly, Financial Consultant Jim Hoeft, HRA Attorney Grant Fernelius, Housing Coordinator Craig Ellestad, Accountant Merrill Busch, Busch and Partners Fridley Focus News 1. PRESENTATION BY POTENTIAL DEVELOPERS Mr. Burns stated the purpose of the meeting was to reach a consensus on a developer for the Lake Pointe property and to resolve the issues of density and access for the Southwest Quadrant. Mr. Burns stated included in the agenda packet was an evaluation criteria worksheet that could be used to help in identifying the first choice for the Lake Pointe developer. He had talked with Mr. Merrill Busch, who will be speaking about the process, the market, and the proposals received. Mr. Busch stated he was retained about 18 months ago to bring Lake Pointe to the business community and the real estate development community. The property had not been marketed for a time and perhaps people had forgotten it existed. When he began marketing, it seemed early in the cycle. At the time 18 months ago, there was still a surplus of office space. There was not a tremendous enthusiasm about the direction of the market and the economy. Things have changed and have changed in favor of the City. His company packaged the site by creating a market brochure, direct mail campaign, and magazine advertising to begin the process of reintroducing the site to a wide audience. Targeted were major real estate development companies and real estate brokerage firms in the metro area who specialize in JOINT CITY COUNCIL WORK SESSION AND HOUSING & REDEVELOPMENT AUTHORITY MEETING -- JULY 17, 1995 PAGE 2 marketing office /commercial space. They started an aggressive program with those elements primarily targeting brokers and firms with.a strong corporate relationship with a major corporation, emerging companies, people who had continuing need for headquarter space, research space and /or high tech space that also needed a signature site if appropriate. They have characterized Lake Pointe as the last great corporate site. He thought the market has come around to recognize that this is a highly desirable site. It is ready to go, which is rare in this market. A number of factors have come into service in the last 18 months including the market has strengthened, the economy has improved, and there is a demand for office space. In addition, rental rates are rising. If you are a landowner or have land for development, you are in a good position. Mr. Busch stated, during this period, a lot of development organizations that have cooled on development have come back to the table and are now willing to begin to develop again.. Financing is available again. There are a lot of things working that are favorable to Lake Pointe. Mr. Busch stated, out of the process of re- exposing Lake Pointe on a broad basis, the other group they contacted were other corporate users. These would include major corporations with headquarters needs as well as emerging companies. Other factors that have changed, in addition to the shortage of space, is that there is increasing interest in the north metro area. Business pays attention to the bottom line. They pay attention to cost which must be affordable. This area has a labor supply. All these things are coming to together simultaneously. Out of this process, some of the firms contacted did not feel this location was an appropriate office location. They view the site as a retail site or an office showroom but did feel they could do an office development. Others are committed to existing commitments. There were others who found the prospect of developing this site exciting. Three are here tonight. These three are the most interested and well qualified, meet the criteria, are strong firms financially, have the required market skills and have a wide number of corporate contacts. The City has an unusually fine selection to choose from all with a good reputation both locally and nationally. He thought each could do an excellent job. A. United Properties Mr. Glowa, Senior Vice President of Development, stated he oversees the development activities. He provided an overview of United Properties, which owns and manages 14+ million square feet of office, industrial and retail space, most of which is in the Twin Cities and approximately 1.5 million square feet in the JOINT CITY COUNCIL WORK SESSION AND HOUSING & REDEVELOPMENT AUTHORITY MEETING -- JULY 17, 1995 PAGE 3 Milwaukee market. Their parent company is The Northland Company which is made up of three sister companies - an insurance company called Northland Insurance Company, a mortgage banking company called Northland Financial Corporation, and United Properties which is the real estate division. United Properties is mainly a developer, marketer, and manager of commercial real estate. The company favors a team approach to marketing assignments. Mr. Glowa stated the team for this project would include Lloyd Stouffer, president of the organization and a developer, who could not attend the meeting; Rick Martens, who is new to this company but with 20 years experience, who did the Edinborough project in Edina which is a large mixed use development and would assume the lead role in this project; Mr. Glowa himself would help in any way he can and has 19 years experience with 11 years at United Properties; and Mike Ohmes and Tom Stella would be the marketing team and are active in the northern suburbs. Mr. Ohmes and Mr. Stella have collectively leased 1.5 million square feet of office space mostly in the northern suburbs. Also a part of the team is George Burkhardt, a land sales specialist, who has been with United Properties for 17 years. Not here are the others in the company who will supplement this team and who will take ownership in the project. They take pride in our assignments and want to make sure it is successful. Mr. Glowa stated United Properties is a locally based company, has extensive development experience, has the financial strength for the project, will take a flexible approach, and has the in- house resources with the people in -house capable of doing the job. The company has land sales capability. United Properties is experienced in mixed use development and is one of the leading build -to -suit developers in the Twin Cities. The company has an in -house real estate market service. Mr. Ohmes stated they are aware of nearly everything that is taking place in the area. They have an active data base. He and Mr. Stella are responsible for the northern suburbs and they track the market continuously. They publish a quarterly listing of all properties they have for sale or lease which goes to all brokers in the Twin Cities. They also publish semi - annually a market/ office study which tracks the office properties available in the area. Mr. Martens stated he felt this was an excellent opportunity. Lake Pointe is a critical mass of land with a prime location. They would work with the City to understand their goals and objectives and then create a master development plan. They recommend the creation of a public /private group to direct the planning and approval process for this development. They would develop some master plans and establish a development schedule. JOINT CITY COUNCIL WORK SESSION AND HOUSING & REDEVELOPMENT AUTHORITY MEETING -- JULY 17- 1995 PAGE 4 A mixed use development must have uses that are synergistic. It is better to market space with a master plan that includes other uses that must work together. They would implement a comprehensive marketing plan including land sales, built -to- suits, and users as multi- tenant developers. They would initially focus on the phase 1 office development. Mr. Martens stated they would create a community integrated project, create a public /private body, and work hard to meet the financial goals and objectives. They suggest an informal agreement that, if they do not perform, the City is not obligated to a long term. They will undertake the marketing, the master planning, and create new marketing materials to make this happen. Mr. Schneider stated Mr. Martens had mentioned a public /private group. Does that extend to the community around the development? There are homes in that area and it would seem that the developer would have to work with the neighborhood. Do you have experience in doing that? Mr. Martens stated they did a project in Edina with a condominium association beside it. They worked to design the building to work with the community. To the extent that this makes sense and you feel is necessary, they would be open to doing that. Mr. Schneider asked what they thought the time frame would be for this project. Mr. Martens stated they would work toward a 1996 implementation for phase 1. The market is coming to us in terms of this site and things are happening in the northern suburbs. Beyond that, it would depend on the market. Projects like this can take five years or longer to complete. Having a mixed use will help that. Ms. Jorgenson asked what they envisioned for Highway 65. Mr. Martens. stated they did not have enough knowledge. The traffic issues are something to address. Mixing uses will help the traffic. From a parking point of view, you can combine other parking with the office buildings. It would depend upon how this is planned. Ms. Schnabel asked what they envisioned on the property besides office space. Mr. Martens stated the possibilities could include various types of office space - corporate, professional, medical; specialty retail space - restaurants, banks, cinemas, etc. There may be a potential for hotel use which is gaining market. There might be a high density residential component. There might also be public e 6 b JOINT CITY COUNCIL WORK SESSION AND HOUSING & REDEVELOPMENT AUTHORITY MEETING -- JULY 17, 1995 PAGE 5 uses and public spaces. You will see more public spaces integrated into private facilities. Mayor Nee stated they had received, as part of the RFP, something that indicates the compensation requested. The land sale commission would be 8 %. Is this split with the brokers and how much of our basic expenses would be covered? Mr. Martens stated, if the commission is 8 %, he would budget another 1/2% to It for the closing transactions. The commission should cover 850 -90% of the total costs for closing a transaction. United Properties would pay all the brokers. They would market aggressively to the outside brokerage community. If someone else brings in a prospective client, they would fully cooperate and split the commission with them. Mayor Nee asked if there were any other front end costs for marketing materials, etc. Mr. Martens stated United Properties would absorb those costs. They would incur the expense of the marketing materials and the master plan. The only other expense incurred should be staff time. Mr. Schneider asked if United Properties would actually acquire the property. Mr. Martens stated no. If United Properties elects to build an office building, they would design the office building to fit into this marketplace. As they get lease agreements, they would then start construction of the building. Prior to that happening, they would buy the land. Mr. Schneider asked if the land price would then be negotiated. Mr. Burns stated they have not yet worked out those details. Mr. Schneider asked what United Properties considered as their weak point. Mr. Glowa stated he was sure there are things as every . organization has problems. He firmly believes United Properties is right for this assignment. This one hits on all of the resources this company provides. Mr. Burns stated he-had asked the City Manager from Mendota Heights for a reference for United Properties. He recommended them very highly. They have built quality projects in Mendota Heights and they have been easy to work with. Mr. Gordon Hughes from Mendota Heights also had good things to say. JOINT CITY COUNCIL WORK SESSION AND HOUSING Sc REDEVELOPMENT AUTHORITY MEETING -- JULY 17, 1995 PAGE 6 Mr. Schneider stated one concern is that there be continuity in staff. Would there be some assurance of continuity? Mr. Martens stated he has made a commitment to get back into development with United Properties. He sees them as a quality, professional group that he wants to be a part of and feels committed to the project. B. MEPC Mr. Jellison introduced the following staff: Dave Sullivan, attorney; Jim Fant, Vice President in charge of Investments from the Dallas office; Bill Dressen, Regional Vice President in charge of Property Management for Minneapolis /St. Paul regional office; Leslie Jowich, Leasing Manager; and Norma Jaeger, Leasing Specialist. Mr. Jellison stated MEPC is a London stock company with offices in many parts of the world. MEPC American Properties headquartered in Minneapolis until 1980 when they moved to Dallas with a regional office in Minneapolis. They run all of their properties out of the Minneapolis West Business Center. They have two office parks in the Twin Cities - the Normandale Center and Minneapolis West Business Center. At Minneapolis West, MEPC basically owns everything in the southwest quadrant except the bank and tennis club. They envision Lake Points as being similar to Minneapolis West with a full service office park with different buildings and a variety of services. They presented a video showing the Minneapolis West Business Center. Mr. Jellison stated they had experienced road construction in that area for a number of years. MnDOT was good at working through the details with MEPC. Mr.. Rick Wygren, in charge of development in the eastern half of the U.S., worked with MnDOT to limit the problems during construction. Mr. Jellison stated MEPC does not lease or manage for anyone else's property. Their goal is to take their developments and spend all their time with it. They work with tenants, visit with them to find out what they can do to get more of their business in their parks. MEPC is probably one of the hardest landlords to get tenants away from. Mr. Fant is here to discuss how projects are funded. Mr. Fant stated, in the mid- 19801s, the company took a different direction in their financing programs. MEPC looked to the corporate structure for financing. They looked to Wall Street and created some public forums for them to fund projects. They are now using a commercial paper program. MEPC is a rated company. As an owner, they have never defaulted on a loan and V JOINT CITY COUNCIL WORK SESSION AND HOUSING & REDEVELOPMENT AUTHORITY MEETING -- JULY 17, 1995 PAGE 7 have never handed the keys back on any building they have owned. Mr. Jellison stated they work as a team. Once they lease a building, they must take care of their tenants. Mr. Dressen takes care of the tenants and parks. Dairy Queen was in the same location for 25 years. They left because we did not have room for them to grow. Mr. Dress en stated he has been in the business for over 20 years. He had previously worked downtown and then came to MEPC. They have about 25 full -time and 10 part-time employees with probably a cumulative total of 400 years of experience. Many of the engineers have 15 -25 years of experience. The staff is a long- term group of people. They also keep their staff up on their jobs and hit heavily on the service side. They work as a group to get the job done. On a development, they work with the team from the plans on up to make sure they have the input they need to make sure the building can be properly run after it is built. If you come to an MEPC property, you will see a plaque which in essence states that the tenants come first, that they will maintain the highest standards in property management and maintain the highest quality construction. Mr. Schneider asked what MEPC was proposing to do. Mr. Jellison stated MEPC would be the developer of record to develop an office park and amenities such as they have at Minneapolis West Business Center. They would envision putting services on the outlots. Their goal is to find out what the market needs. They know the City wants to have office space. They would look at what kind of office space to build and then find the tenants. They envision owning and developing the park and putting in the amenities. Mr. Fant stated they would not turn someone away if a tenant wanted to own their own project. Mr. Schneider stated the video suggested that MEPC would own and control of the bulk of the property for consistency. Mr. Jellison stated the advantage of continuity of ownership is the ability to move tenants around to suit their needs. Mr. Schneider asked what they saw as the time frame. Mr. Jellison stated the real market has been on its knees. There are not many real estate developers left. It has been a difficult time. The time frame will be driven by demand. You must first find the users and then make the project work. They hope by 1996 to have an office building underway. If the economy JOINT CITY COUNCIL WORK SESSION AND HOUSING & REDEVELOPMENT AUTHORITY MEETING -- JULY 17, 1995 PAGE 8 goes into a recession, it could slow that down. Before building, they would put together a focus group of users of real estate to find out what they are looking for. Mr. Burns asked who would be the "point man" for marketing the site. Mr. Jellison stated he would work with Ms. Jowich and Ms. Jaegar. Ms. Jowich would be the main contact person. Mr. Meyer asked the methods used to look for tenants and their contacts in the community to attract tenants. Mr. Jellison stated they advertise in the Monday section of the newspaper and take testimonial ads, copies of which were provided. Their job is to call on real estate users to see what their needs are and to let them know what we have going on. MEPC has had Norman Center for 22 years and it has always been full. At one time they lost two large tenants. They put together an advertising campaign. They found every user in the marketplace that was 10,000 square feet and larger and did a four -part series mailing. After 18 months, they had leased the space. They sponsor a legislative breakfast and give out promotional items. MEPC sponsors a golf outing for the tenants. The tenants are asked to invite their friends which provides an opportunity to discuss their real estate needs. They try to see all of their major accounts in their home town once per year. They want to solve any problems directly. Mr. Burns asked who would be providing the development experience. Mr. Jellison stated Mr. Rick Lieble would oversee the development. Mr. Lieble is in Dallas but he would be in charge. He would spent a lot of time here when they get to that point. Mr. Schneider asked if MEPC envisioned coming up with a master plan. Would.MEPC be willing to work with the neighborhood that is in that area? Mr. Jellison stated they would have a master plan. In Golden Valley, across the street from a development, is an extensive condominium development. They made a presentation to the residents. They try to make the residents feel comfortable. Mr. Schneider asked what they thought was their weak point. Mr. Jellison stated he would like to do more. They are a conservative company for which he is thankful. The company is run by CPA's but they are very conservative and very careful with the numbers. He would like to take more risks, but in the long A V JOINT CITY COUNCIL WORK SESSION AND HOUSING & REDEVELOPMENT AUTHORITY MEETING -- JULY 17, 1995 PAGE 9 run they have never defaulted on a mortgage. Mr. Burns stated he contacted Mr. Grimes from Golden Valley who had favorable remarks and who said the staff had been very cooperative. Mr. Burns was impressed by the trip to Denver. Mr. Jellison stated they have mentioned the site to two restaurant operators who have expressed an interest. He distributed copies of brochures, a magazine about the company, financial reports, a brochure on Minneapolis West Business Center, the presentation and samples of promotional items. C. Galbreath Mr. William Hoeg introduced his associates - Mr. Mike Denney, Vice President of Griffin Companies; Larry Franzine, Chairman, and Steve Cheerhart. Mr. Hoeg distributed copies of a booklet outlining their presentation and a brochure on the Galbreath Company. He also passed around pictures of their projects in the Twin Cities area. Mr. Hoeg stated their goals are very basic. The first project would be a minimum of a three -story Class A office building. That will enhance the ongoing credibility of Lake Pointe. The goals underlying that is to maximize the density. They have no plan to compromise the master plan as it is now. As time goes on, everyone may concur to make changes. They plan to break ground for a construction project during the next construction season. They want to minimize the City's exposure to risk. Mr. Hoeg stated Galbreath Company is one of four of the largest real estate companies in the world. In the Twin Cities, Galbreath is just now getting into the marketplace. Galbreath being a developer and financial company were able to align with the local expertise Griffin. Galbreath works with more than 300 of the Fortune 500 companies. Within the company, staff has construction, engineering, and legal expertise. Mr. Denney stated he viewed this as a partnership with the City. They have been able to bring some qualified deals to the City without a formal relationship. They want to get a project going on this site. The market is good. The planning and platting has already been done. Once they get a company willing to commit to the site, they can use that as a first step and then figure out how the rest of the project should develop. That will create synergy for companies to see activity and want to come to the site. Their job will be to bring the City to decision points. They will canvas the market, bring opportunities to a team they would put together, and decide on the best approach. They have been actively working on this project bringing in opportunities 4 JOINT CITY COUNCIL WORK SESSION AND HOUSING & REDEVELOPMENT AUTHORITY MEETING -- JULY 17, 1995 PAGE 10 and company representatives to see the site. Mr. Hoeg emphasized the importance of the first project for Galbreath when entering the market. All of the offices they have opened in the last ten years have been successful. They bring the vice president and chairman to visit the site. They try to pinpoint where they see opportunities and focus on them. They focus on one site and go with it. That is a different type of approach. Mr. Denney stated he and Mr. Hoag will be the people involved to get that first project off the ground in 1996. Mr. Denney stated financing was available. Some companies think their own financing is a benefit, but it can be a hindrance. They have a wide variety of sources throughout the country. They can qualify a broader range of prospects for the site. Mr. Denney stated Griffin is a marketing company. There is a radius of about 20 -30 miles of users that need to be targeted for this site. That is what they would do. Galbreath has a national data base. Griffin brings in more local users. The people here tonight have had experience in all areas. Mr. Meyer asked what the relationship was between Galbreath and Griffin. Mr. Hoag stated Galbreath and Griffin are affiliated on several projects. Griffin has the local marketing expertise. Galbreath has the financing, background and national base. Mr. Meyer asked what assurances they would have that the company will stay together. Mr. Hoag stated they have a healthy long -term working relationship. They have known each other for a long time. Mr. Schneider stated they had stressed the importance of getting something going. What will it take to get the first part going? What is the next step? Mr. Denney stated, as soon as they have a formal agreement, they would immediately target a select group of users. For example, they would call on Medtronic, talk to them about this being good campus, find out their requirements, and discuss the options. Mayor Nee stated their RFP was somewhat different on the compensation issues. He asked them to describe this and why it is good for the City. 1 � JOINT CITY COUNCIL WORK SESSION AND HOUSING & REDEVELOPMENT AUTHORITY MEETING -- JULY 17, 1995 PAGE 11 Mr. Hoag stated one strategy is that, as a real estate broker, you tie up land and show properties. With that strategy, the broker does not care where the user ends up. They do not charge for their services. They are willing to focus in, make a commitment, and assign principles to the project. Any fees they incur will be paid by the project. Overall, they are proposing an 18 -month contract with an $8,000 a month retainer of which $4,000 would be paid in cash and $4,000 would accrue. Upon success of a project, they would fund back those monies and be paid a $1 /foot brokerage fee. Mayor Nee asked who pays for the marketing. Mr.'Hoag stated their company would pay for the marketing. Mr. Billings asked if there was a way to relate that $1.00 to an 8% or a 6% commission. Mr. Hoag stated he did not know how to relate it. Mr. Billings stated, if someone builds a 60,000 square foot building, we would owe them $60,000. How much space does it take to build a 60,000 square foot building? Mr. Hoag stated it would take about 240,000 square foot of land at approximately $3.00 per foot. Mr. Billings stated they have to look at what it will cost to get this expertise. Mr. Burns stated Galbreath has signed purchase agreements for two 12 -acre parcels and have an office building there. How does this project compete with the Lake Pointe project? Mr. Hoag stated they will close on this project on Thursday so they will no longer have an interest after that time. Mr. Burns stated they have focused primarily on marketing skills and marketing plan. Another piece is the development. Who would be doing the development portion? Mr. Hoag stated he would be doing that. That is his background. Mr. Schneider asked if they would be willing to work with the neighbors. Mr. Hoag stated this is a must. There must be neighborhood meetings. If you do not do that, you will have problems. S a e JOINT CITY COUNCIL WORK SESSION AND HOUSING & REDEVELOPMENT AUTHORITY MEETING -- JULY 17, 1995 PAGE 12 Mr. Schnabel asked if they had talked about other public services or other kinds of things other than office buildings. Mr. Hoag stated they had talked to staff building. They have not done anything fi would tend more toward support services. first office product going. After that, a day care center, perhaps a convenience what the neighborhood wants. less about a medical srther than that. This The focus is to get the they have potential for store. It depends on Mr. Denney stated they would target quality users to define the park. They are trying to think for the long term. The larger buildings will be a determining factor in what would go into the other parts of the development. Mr. Meyer asked, if we would enter into a development agreement with you and then in the process you bring in a prospect we decided we did not want, do you then go back and find someone else. Mr. Hoag stated yes. Their job is to bring decisions to the City to evaluate. They will call in real estate brokers and developers. Their policy is full disclosure. Mr. Schneider asked what they would consider their weak point. Mr. Franzine stated they are human and that is why they partner. The.biggest mistake they could make is to think they have all the answers. Mr. Burns stated Mr. Hoag and Mr. Denney have shown an intense interest in the Lake Pointe site. Their contacts have been constant and their interest has been there for sometime. He looked at their references which have been positive. He gave them credit for bringing in three projects. 2. EVALUATION OF DEVELOPERS AND SELECTION OF SUCCESSFUL COMPANY Mr. Burns stated he would like to reach a consensus on the developer. He has provided information to make a decision. No matter which of the three is chosen, you will have a good developer. A lot of screening has gone into this. He is very concerned about the market. The office market goes in cycles and is now on the upswing. He thought it important to get someone in soon to get the work started. Mr. Schneider stated he did not disagree, but they spend three or four meetings on the budget or 20 -25 hours discussing that. Here we are making a multi - million dollar decision with 40 minutes of presentation with three developers. a ' d JOINT CITY COUNCIL WORK SESSION AND HOUSING I REDEVELOPMENT AUTHORITY MEETING -- JULY 17, 1995 PAGE 13 Mr. Burns stated he would like to try to try to get to a decision. If not, staff can come back. He did not think the information would be any fresher than now. He has asked Mr. Casserly and Mr. Busch to answer questions and offer their insight. Ms. Bolkcom asked who had investigated these companies other than the references. What more do we know about them? Mr. Burns stated they know United Properties has been a player in the Twin Cities market for a long time and one of the largest developers and brokers for real estate in the entire metro area. MEPC has a worldwide presence. They have a good track record on maintaining and keeping full what they have. They have a good relationship with Golden Valley and St. Louis Park. Galbreath is a relatively new entity but we know that Mr. Hoag and Mr. Denney enjoy good reputations in the development community. Mr. Commers stated he thought all were capable. All are major holders but they have different philosophies. Mr. Schneider stated the thing he noted was that the MEPC proposal has one developer to develop the property and maintain. If they would do what they say, we would have a planned development with one source of maintenance. The other two seem to have a piecemeal approach where they would get something going and then re- evaluate the plan. Mr. Burns stated MEPC makes their money primarily from building, leasing, and managing properties. United Properties and Galbreath make their money from development of property. Mr. Schneider asked, if they can all do what they say are going to do, are we better off with one entity to deal with or are we likely to do better going piecemeal. Mr. Burns stated he would put MEPC on one end with the primary interest in owning, managing and operating property. United Properties has property that they own and manage and they are willing to do that. They will also build -to -suit. Galbreath is probably more into build -to -suit. They are likely more interested in providing a project for the market and then getting out. Ms. Dacy referred to the comment regarding references and track records. Staff could have brought in ten companies. She thought these were the best companies based on the focus of the corporate campus. MEPC and United Properties are local. As far as their track records, staff has not been able to detect anything negative. They know a bit less about Galbreath because they are i JOINT CITY COUNCIL WORK SESSION AND HOUSING & REDEVELOPMENT AUTHORITY MEETING -- JULY 17, 1995 PAGE 14 based out of town. In terms of track record, she did not think there was a need for concern. Mr. Busch stated the kind of developer the City first dealt with no longer exists. The ones who survived have deep pockets, long standing reputations, and strong corporate relationships that they continue to serve. These three companies have good reputations, are very strong, have wide corporate contacts, and strong corporate relationships. Ms. Schnabel stated she had a concern. It appears to her that their ability to finance is solid. What are they expecting from the City and the HRA in terms of dollars? That to her is the bottom line. What is it going to cost us? How speculative are those figures? Mr. Burns stated he thought the proposals are subject to negotiation. MEPC indicates there is no charge. United Properties is charging an 8% real estate commission plus the costs for the marketing plan. Galbreath is asking $4,000 per month plus $4,000 accrued at the end of 12 months plus $1 per square foot of space. Ms. Schnabel stated she understood that. Where are we making or not making money? Mr. Burns stated we are making money on the tax increment that is created from this project. Because of the density requirements, he would expect the City to write the land down to practically nothing for any developer. For the density, we would need to build parking ramps which greatly increases the cost of development. In order to make the price acceptable to the marketplace, the land must be written down. We need the tax increment that would be generated through 2009 to replenish what was spent. Ms. Schnabel stated we have spent $7.5 million. MEPC would require no further money from us. The other two developers have proposals that we will pay out more understanding that money will come back to us. Mr. Burns stated yes. Ms. Jorgenson stated MEPC wants the City to furnish unencumbered land and /or subsidize ramps due to final density requirements and provide any necessary infrastructure changes due to final site plans. Are they talking about the intersection? Mr. Burns stated he thought they were. Staff have pretty much said that the City would be responsible for intersection a JOINT CITY COUNCIL WORK SESSION AND HOUSING & REDEVELOPMENT AUTHORITY MEETING -- JULY 17, 1995 PAGE 15 improvements. Ms. Schnabel stated, until she can get see what the costs will be for each of the developers, she is not comfortable with making a decision at this time. Mr. Casserly stated we are not going to know what the costs will be until we start to develop the property. The original concept is still valid today. That idea was to provide assistance to help with a parking ramp in order to increase the density. It is very difficult in suburban areas to charge for parking. The greater the density on the site, the greater the parking costs. If we cannot get the density we want, we will not have the parking costs, and we will probably be able to sell the land for more. If we could get 750,000 square feet, we may have to give the land away but we will generate a couple million dollars per year in tax increments. It is difficult to figure out the compensation, not based on the property sold, but based on the number of square feet. This has to progress far enough to figure all those elements. Mr. Burns stated we don't know any more about the costs than what is shown. If a developer is selected, staff can then negotiate a development agreement to define those costs. Staff cannot negotiate until someone is selected. Ms. Schnabel asked if they could take a figure of so many square feet and apply that to what each developer has proposed. Mr. Burns stated Mr. Billings was working on something similar to that and he thought the numbers from Galbreath were similar to those from United Properties. The numbers they are talking about are not a major part. We need to look at and decide on the approach. Then identify a developer. Staff will then work through a negotiating process to get the best financial arrangement. He did not think the financial basis should be driving the choice. He would look for the best team that matches the goals. Mr. Schneider stated, if finances were not an issue, we could develop the site as a park. There is an expectation of a minimum amount of value to generate a certain amount of tax increment. Mr. Burns stated with any of the developers the City would get a minimum amount of value. They would not accept anything less than Class A office space, a three -story development, and tier parking. As a rule of thumb, we would not accept any development of less than 5000000 square feet of office space. JOINT CITY COUNCIL WORK SESSION AND HOUSING & REDEVELOPMENT AUTHORITY MEETING -- JULY 17, 1995 PAGE 16 Mr. Schneider, if using a phased approach, we may have to wait 20 years. Mr. Burns stated we probably cannot expect everything to happen in this cycle. The office market runs in cycles and we may only get some in the first cycle. Ms. Jorgenson asked if they can hit those cycles while they are still in the increment district. Mr. Burns stated they may not be able to get all of it. He did not know. Ms. Jorgenson stated two of the presenters said they would be talking to Medtronics and some of the others that we at the City have already spoken with. What is going to make them more successful then we were? Mr. Burns stated he did not think they would be any more successful with Medtronics other than the timing. Mr. Prairie stated he thought this company was just a good example. Mr. Burns thought where the developers will be successful is with contacts that the City does not know. Mr. Schneider asked what the pros and-cons were of the different approaches and why not choose to go with a MEPC -type proposal where one group, one company will do the development, manage and maintain it. Mr. Billings stated, with that approach, you run the risk that another company will want their own space. MEPC will want to hold onto as much of the land as possible because they make their money by leasing. On the other hand, someone interested in selling all of the property may not be able to move it as fast because they are not going to build unless they have a buyer. There are two distinct concepts, each with advantages and disadvantages. Mr. Meyer stated it seems that the key thing to a successful development is the first tenant. The quality of that first tenant will drive everything else that happens on that site. Galbreath's idea was interesting in that they say they would focus. If United Properties or MEPC put their sign on a number of properties, they are offering sites around the area. Galbreath stated they focus because they do not have competing sites. No matter what their reason, the net result is that, if they do as they say, they focus and we have veto power. This a t w a JOINT CITY COUNCIL WORK SESSION AND HOUSING & REDEVELOPMENT AUTHORITY MEETING -- JULY 17, 1995 PAGE 17 seems to indicated that they may have more success bringing in that first quality person into the site. Mr. Burns stated staff assessment seemed to be that Galbreath may be the first to get a building in there. Mr. Schneider asked if any had committed to a schedule. Mr. Burns stated no. Mayor Nee stated that is the reason the compensation may become a dynamic. He talked to these people and they all were impressive. United Properties impressed him the most. They have creativity in their approach and the strength. Compensation of 8% for the total project is a fairly conventional number. Any of the three have a lot to recommend. In going to their developments, MEPC is very competent but quite pedestrian. We would however be proud to have them here. Galbreath representatives did not inspire confidence. If you look at United Properties' products, they are very inventive and very.nice. Mr. Burns stated the references for United Properties are very strong. One concern was that they would delegate the project to the two young gentlemen and the project leadership would fall to Rick Martens. Mr. Casserly knows Mr. Martens well and speaks highly of him. He was not sure with United Properties how much of Dale Doyle's attention and expertise that we would get. If he is who we would have, we will have a good deal. United Properties has the best strength in the development market and have more know how in putting together a project. Mr. Billings stated the numbers for Galbreath as provided are only for a phase 1 and nothing for a phase 2. There was no discussion about compensation for anything beyond that first building. This could be just a one building plan and that could be the end of the relationship. Mr. Casserly stated he thought they were trying to show that it was important that they bring in something that you could accept on the first round. They are gambling that they can come up with a product that we will accept and, as a result, go on with a multi -year arrangement. Mr. Burns stated United Properties is the strongest player. The downside is that they are likely to delegate some tasks, and they are also spread out a bit with their competing projects. He personally leans toward Galbreath but felt all three were very strong. i JOINT CITY COUNCIL WORK SESSION AND HOUSING & REDEVELOPMENT AUTHORITY MEETING -- JULY 17, 1995 PAGE 18 Ms. Bolkcom asked if this would be the one and only project if Galbreath were chosen. Mr. Burns stated the danger with Galbreath is that there is more than just office development and Galbreath is trying to create a presence and make money. They will be looking at retail and industrial use. The concern there would be the amount of time diverted to do the industrial and retail. Last week, Galbreath assured us that, when the retail and industrial component takes off for them, they would bring in more people. Mayor Nee stated the competitive issue applies to all three. Griffin has land all over the Twin Cities as do the others. He did not know what property United Properties had in this area. Mr. Busch stated they represent 80 acres at Northland Park. Mr. Burns stated, regarding MEPC, Mr. Jellison is a very class individual, a good marketer, a good salesman. Mr. Burns was impressed with the way Mr. Jellison markets property and thought he would be a strong salesman for the Lake Pointe site. Mr. Meyer stated MEPC would take over the property, build and maintain. That is a very important approach to consider. He was impressed by them and by the fact that maintenance is very important to them and they brought their maintenance person to speak to us. Mr. McFarland stated the fact that MEPC has tenants for years also says something. Ms. Schnabel stated the fact that have a well maintained piece of property and long term tenants says something. Ms. Bolkcom stated the property at I -394 and Hwy. 100 has not been there long enough to speak to their level of maintenance. Mayor Nee stated he did not think MEPC had the dynamics to move the property. If you want a good image, he thought they would want UnitedProperties. Mr. Billings stated, not having the opportunity to visit the projects and based on the information presented, he felt that Galbreath probably presents the greatest risk from the standpoint that they do not have a track record as a conglomerate. The individual players have good track records. At the same time, they represent the greatest possibility of having a building on that site within a year because they don't have as many pieces of property that they are dealing with and we will be dealing with the principals rather than someone delegated. M J JOINT CITY COUNCIL WORK SESSION AND HOUSING & REDEVELOPMENT AUTHORITY MEETING -- JULY 17, 1995 PAGE 19 Ms. Bolkcom asked if they would have the contacts to do that. Mr. Schneider stated this is a cut throat business and staff may change jobs. How dependent are we on those staff? Mr. Busch stated Galbreath has a good range of contacts. They have been in the market a long time. The organization that Mr. Hoag and Mr. Denney came from was a model for every other real estate company in the Twin Cities. Their style is iconoclastic. United Properties is very similar. MEPC is conservative, professional, and perhaps a bit slower to move. What they do is deliberate. Galbreath is more free wheeling, inventive approach is indicated through their enthusiasm and imagination. That is the style of that company. Ms. Jorgenson asked who would be the strongest financially to put a project together. Mr. Casserly stated MEPC has the ability to proceed immediately. They may be in the strongest financial position. He would suspect that Galbreath and United Properties would not proceed unless they can get financing. MEPC is building for themselves. When they decide they have enough commitment to build, they can finance and build quickly. Given the amount of investment capital that appears to be in the market, it should not be a problem getting financing if the tenants are there. He did not think that financing in the next few years would be much of a factor and he thought any of these developers would be able to do reasonably well. Mr. Busch stated the window in the market also applies to financing. It may last one year or perhaps 18 months. Now financing is not a problem. There are now companies looking around to see what they can do. Most of them are credit quality tenants. Ms. Jorgenson stated, when speaking of the window of opportunity, of the three presenters MEPC is the most conservative and would probably be the slowest to move. They want a 70% pre -lease commitment before building. Is it going to take weeks to get a project through their office? Mr. Busch stated, when they have a deal, it all happens very quickly. Mr. Commers stated none would develop until they have the first building 70% pre - leased. He did not see a difference. Mr. McFarland asked if a performance bond or letter of credit was out of the question. JOINT CITY COUNCIL WORK SESSION AND HOUSING & REDEVELOPMENT AUTHORITY MEETING -- JULY 17, 1995 PAGE 20 Mr. Busch stated he would say so. The approach to development has changed. Much is now driven by the financial institutions. Most developers would build with a 50% commitment. Banks don't want to go through what they did before and they now want 70% pre - leasing. The cost of money is virtually the same for everyone. The plans are similar for everyone. Very few developers today will commit themselves to buying land to hold. Those who did previously suffered in the last five or six years. Mr. McFarland stated, on the criteria for the developers, United Properties lists the cost as reimbursement for the land and marketing plus 8% sales commission on land sales. If the land will be going for nothing, how can there be a commission? Mr. Burns stated this should be reimbursement for land marketing. They want some reimbursement for their marketing plus a commission. Mr. Burns asked if members felt they were ready to make a decision. Mr. Billings stated he thought the first question was whether this was the direction they wanted to go and if we wanted to work with one of these developers. Mr. Commers stated the issue is which one addresses the most factors that we think are favorable. All are capable and can do the job. Mr. Schneider asked if the splitting of the property into parcels would have benefits as opposed to having one owner /developer/ maintainer of the property. Ms. Dacy stated, if evaluating the three under that particular item, she personally would tend toward MEPC or United Properties. They take a master plan concept and go to the user. Someone else may think it important to get a building in as soon as possible. Mr. Schneider stated he was not keen on throwing out the plan they have to the first one who comes along with plans for an office building. Ms. Bolkcom stated she was impressed with United Properties in that they were interested in what the public and private sector had to say. Mr. Schneider stated, if he were to rate the developers based on his impressions, he would rate United Properties first, MEPC second, and Galbreath third. JOINT CITY COUNCIL WORK SESSION AND HOUSING & REDEVELOPMENT AUTHORITY MEETING -- JULY 17, 1995 PAGE 21 Mr. Burns stated he would not hesitate to recommend United Properties. Mr. Casserly knows Mr. Martens and Mr. Burns asked for his insight. Mr. Casserly stated Mr. Martens had his own development company for some time. Mr. Martens did a very nice project in New Brighton some years ago which worked out favorably. Mr. Casserly worked with him on a project in Edina and found Mr. Martens to be extremely careful. He was not aware of any project on which he has lost money. He ended up getting involved with another person who needed some watching and Mr. Martens ended up pulling out of several deals. He does have a high level of integrity and knows financing extremely well. Development is picking up. Mr. Casserly would suspect United Properties and Mr. Martens sought each other out. If Mr. Martens is told that there is a certain plan that you want designed, he will study that and get all the nuances. He is detail oriented, steady, and a very honorable person. That speaks well for United Properties. Ms. Schnabel thought it interesting that United Properties touched on including residents in the development where she did not get that impression from the others. Mr. Commers stated United Properties turned back some projects. Mr. Busch stated he thought they, like other developers, had some projects that they deeded back during the recession. They were heavily into development during the 1980's and, he believed, they are still part owners in half of the properties they represent. They play a fairly significant role as owners. Many good developers had to give some things back that were not profitable. There was a time when values dropped very rapidly. Mr. Billing stated he would cast his vote for MEPC. Ms. Jorgenson stated it is a difficult decision. She liked United Properties' willingness to work with the neighborhood, but it scared her when they said cinemas. The neighbors have said they want something that operates from 9 a.m. to 5 p.m. She kind of liked MEPC also. She liked the idea of one company having control over what is going to happen there and they will be maintaining the property. She is concerned with the amount of retail space at Minneapolis West because there is a lot of restaurant space. They have catered to people coming off I -394 in the area. She does not want to see many restaurants at Lake Pointe. Ms. Bolkcom stated she liked United Properties. JOINT CITY COUNCIL WORK SESSION AND HOUSING & REDEVELOPMENT AUTHORITY MEETING -- JULY 17, 1995 PAGE 22 Mayor Nee preferred United Properties. He did not think the structure of MEPC would make it move quickly. There is no reason why they should make it move. Mr. Meyer preferred United Properties. They have a strong presence in the Twin Cities including properties they manage in Minneapolis and St. Paul. They know the territory. He knows of several buildings they have done and they are A -1 operators on those properties. Regarding MEPC, he is not opposed to them, but thought they should have more discussion on their mode of operation. MEPC has a different operation. He did not feel that strongly about it. For those that favor MEPC, are you looking at the personality of the company or the method of controlling the property as more important. Mr. Prairie and Mr. McFarland preferred MEPC. Mr. Schneider stated his first preference was United Properties. Ms. Schnabel preferred MEPC. Mr. Commers stated, while anyone could do the project, he would support MEPC. Mr. Burns stated, in on leasing and ownin4 operating which is a flexible with owning small staff here and St. Louis Park area. response to Mr. Meyer, MEPC is more focused j. They are more interested in building and slower approach. United Properties is more or building to suit. MEPC has a relatively have a commitment to building a tower in the This may be something to consider. Mr. Commers stated the answer seems to be to put them on a short time frame. If they don't have anything done in nine months or a year, we walk away. We run the risk that the market may change. It just depends on what happens in the next year. We know that the market is under - developed at this time and will continue to be under - developed because there are no big projects on the board. Nothing will be built until 1996. He was not sure what the risk would be if nothing can be built until 1997. The solution is to put everybody on a short leash and, if they don't produce, you have to move on. Mayor Nee stated the problem is what drives them and how it shuts out 80% of the deals that are going to be made. United Properties and Griffin have access to just about every deal that is going to be cut. While MEPC may have contacts, they do not have the kind of contacts that brokerage firms have. With that kind of structure, you are cutting access to a large part of what might happen. He is uncomfortable with having one board of directors calling the shots on this project. r Y JOINT CITY COUNCIL WORK SESSION AND HOUSING & REDEVELOPMENT AUTHORITY MEETING -- JULY 17, 1995 PAGE 23 Ms. Bolkcom asked if they would accept a shorter agreement. Mr. Burns stated he was not sure they would. They have said, if they are going to invest what they say they will, they want two years. Mr. Commers felt it was all a matter of negotiations. Ms. Jorgenson stated the City needed some type of escape clause in the development contract so we can get out if the developer is not performing. Mr. Burns stated he was hearing the group stating a preference for MEPC. He suggested staff put together a rough outline of a counter proposal which includes performance incentives and an escape clause. We can come back and look at this at a separate meeting. Mr. Casserly stated there are many different ways to approach. Everyone has hit on the fundamental issue which is whether you are comfortable with having one company to build for tenants or are you going to have someone who has multiple options and multiple users. Ms. Bolkcom asked how long MEPC had been marketing the other tower. Mr. Busch stated he thought they had come to the market in the last eight months. Mr. Burns stated he would come back with a plan before negotiating. Mr. Casserly stated they would put together a concept for approval and draft an agreement around those concepts. 3. CONSIDERATION OF DENSITY AND STREET LOCATION ISSUES AND IMPACT ON COST OF SOUTHWEST QUADRANT Ms. Dacy stated the first issue is to look at three options for the northeast corner of the development site. These options are: 1. Maintain the 48 units of senior condominiums at an additional cost to the HRA of $885,839. 2. Eliminate the senior housing and add 24 additional townhome units. There would be no additional cost to the HRA. 3. Substitute an 80 -unit market rate senior apartment building in place of the 48 condominiums. There is an additional $277,073 required for this option. JOINT CITY COUNCIL WORK SESSION AND HOUSING & REDEVELOPMENT AUTHORITY MEETING -- JULY 17, 1995 PAGE 24 Ms. Dacy stated she tried to identify important criteria to consider including the total number of units, project density, total amount of taxes to be generated, the taxes per unit, the project value, and the net cost to the HRA. Option #1 with a density of 146 is consistent with the original plan for owner occupied units. Because of the construction costs of the condominiums, it will add to the costs for the HRA. Option #2 produces the lowest density, the highest taxes per unit, and is also the cheapest alternative. The units proposed would be two - story. Ms. Jorgenson asked the cost of a one -story unit compared to the two -story townhome. Ms. Dacy stated the one -story would cost approximately $90,000 to $110,000 compared to $120,000 to $130,000 for the two - story. Mr. Commers asked why there was such a difference in the costs for the rental apartments versus the condominiums. Ms. Dacy stated there are several factors in the cost. The design of the condominium building is such that there are six units per floor accessing off of one hallway as opposed to an apartment building where there are double the number of units accessing off of one hallway. With apartments, you can amortize the construction costs over a greater number of units. Also, the size of the condominiums are bigger than what you would find in the marketplace. The costs came back such that, if they were to market these at $80,000 to $100,000, this price would be the same as the cost to build the units. In order to get the usual mark up, they would have to sell each unit for $110,000 to $120,000. In order to write down the cost, the land would end up being conveyed to them for no cost. Ms. Bolkcom asked why this had not been checked before. Ms. Dacy stated, because of the design and size of the units and having two separate building, she thought Rottlund simply did not anticipate those costs. This is a new housing type for them. She thought Rottlund still believed in the condominium market but that they under estimated the costs. Mr. Meyer asked if the City had requested some amenities that increased the cost. Ms. Dacy stated the only additional element beyond the original design guidelines was for more brick in the facade. She did not think the design elements were the issue. r. r JOINT CITY COUNCIL WORK SESSION AND HOUSING & REDEVELOPMENT AUTHORITY MEETING -- JULY 17, 1995 PAGE 25 Mr. Commers asked if Rottlund could reduce the size to a smaller condominium. Ms. Dacy stated the other option Rottlund looked at was having one 32 -unit building which, in terms of economics, would fall between option 1 and 2. There still will be additional costs. Staff has presented the above three options because they express continuum of the original concept which is the direction requested in discussion with the City Council. Mr. Meyer stated one key question to him is what to do about seniors in the development. Option 2 eliminates them. Option 1 does one thing and option 3 does something a bit differently. What do we want for our seniors? If we want them included, do we want rentals or condominiums? Ms. Dacy stated staff recommended the senior element is important and the market demand was there for either condominiums or rentals. The interest has been in the empty nester townhomes and the senior element. Ms. Bolkcom asked if staff had checked to see if seniors were willing to pay rents of $500 to $600 per month. Several elderly people stated to her that they were not interested in renting. Mr. Schneider asked why the townhomes could not be single level for seniors. Ms. Jorgenson stated that would also get into the size of the units as well. Ms. Dacy stated one issue is density and another is to address the housing issue. The one -story need has been addressed. If there are to be additional one -story in the northeast corner, it drives the economics and the figures may go up. Single story townhomes may mean a lower density. Ms. Schnabel asked who would own the senior rental building. Ms. Dacy stated Rottlund would still be the main player in the development agreement but the building would probably be sold eventually to another company. Mr. Casserly stated Rottlund would be the overall developer. Common Bond is a non - profit entity would be the owner /operator/ manager. Ms. Jorgenson stated the Maxfield study identified some additional senior housing that was needed. Was that fair market or subsidized housing? 11 JOINT CITY COUNCIL WORK SESSION AND HOUSING & REDEVELOPMENT AUTHORITY MEETING -- JULY 17. 1995 PAGE 26 Mr. Dacy stated, as she recalled, there was an overall unit demand of 200 -400 in the immediate five years. The study was written in 1991. There was no differentiation between subsidized or market rate. We could build subsidized low income housing and there will be a market. Ms. Jorgenson stated she thought there was a market for senior housing that is market rate. Mr. Commers stated there is a big market there, and he did not see how they could not do a senior housing project of some kind. Mr. Prairie stated that, instead of 76 rental units, 48 would be the same as option 1. Would that work? Ms. Dacy stated they could build a smaller number of rental units but staff were trying to maximize the density on the site. Mr. Prairie asked, if the density was 146, what would be the additional cost. Ms. Dacy stated it would be wise to maximize the density in order to maximize the taxes. At 76 rental units, the net deficit is still $277,000. With fewer rental units, this number would go up. Mr. Meyer stated the density in the detached townhome area will still be less. Option 1 may be desirable. The original plan has two four -story buildings. A four -story building drives up the cost but we get some lower density in the rest of the development. He is concerned that, if you try to pack this corner with units, you may be creating a modern slum down the line. Something that gives more graciousness will enhance this project in the long run. Construction requirements for four story buildings are different that for three story buildings. Mr. Billings stated one reason for the additional cost for the condominiums is the size of the units as they were designed. What would happen if these units were redesigned to be a bit smaller? Mr. Casserly stated there is the issue of the underground parking space required to maintain the units. There was some logic behind the size of the units. Ms. Schnabel asked what would happen if, instead of 48 condominium units, they went to 36. Basically, this is taking off one floor. Going to four floors boosts the cost of construction. What would this do the project financially? JOINT CITY COUNCIL WORK SESSION AND HOUSING & REDEVELOPMENT AUTHORITY MEETING -- JULY 17, 1995 PAGE 27 Ms. Dacy stated there are an infinitive number of options. If you want to keep the condominiums but want something less than what was in the original plan, staff would have to go back to them. Mr. Commers asked if the proposal under option #3 could not be done as a condominium approach. Mr. Casserly stated the numbers were arrived at by trying to work with the sales prices and the amount of tax _increment generated for the life of that district. In order to build rental units, they wanted $78,000 per year in tax increment assistance. For us to compare that with options 1 and 2, they took the present value of $78,000 for the life of the district and brought it back into 1996 dollars. Under option 3, one of the additional uses of funds is about $530,000 for tax increment assistance. That represents the amount of money they said they needed over a period of time so they could build the rental units. That is how they arrived at $277,073. That cost may not exist at the beginning. It would come out of the taxes generated on the site. Each option is trying to compare the cost at some moment in time. Mr. Casserly stated apartment financing is a complex mechanism. These are apartments that will rent from $525 to $625 with a per unit cost of over $60,000 per unit. This will not work so subsidies are built in to bring down the rents to that level. Assuming you can get all that financing put together, it is certainly a doable project. It works for seniors because many will qualify for the low to moderate guidelines which must be met to qualify for financing. On this particular site, we will be looking at seniors only. Ms. Jorgenson asked if there was a law that you could not strictly limit this to seniors. Mr. Casserly stated you can limit to 55 and older and there is a mechanism where it can be opened up. There is enough demand where this is not an issue. Ms. Dacy referred to the question of looking at 36 units and what that would do. Staff can take a look at that. Staff are trying to present options. She is hearing a preference to look at what it would take to keep the original plan. The price tag to do that is $885,000 +. If this is not acceptable, then you must look at options. There was also comments about increasing the density which is the rental option. If you want to look at an option in between, staff can do that. It just comes down to the cost. Mr. Meyer stated he personally wants a lower density. JOINT CITY COUNCIL WORK SESSION AND HOUSING & REDEVELOPMENT AUTHORITY MEETING -- JULY 17, 1995 PAGE 28 Mr. McFarland stated there is a difference of approximately $500,000. How long would it take to repay the HRA? Ms. Casserly stated the HRA would not recover this. Part of the package worked because the City Council suggested making a low interest loan to the HRA for some of the costs. Adjusting that interest rate will adjust some of the option costs. Mr. Casserly stated there may be an element of a windfall. If you pursue option 1 or a variation, there will be people who will be buying condominiums for $90,000 whose costs are $115,000 to $120,000. What happens over a period of time if the market improves? There should be an opportunity for the HRA to recover some of the investment. He thought Rottlund had a grand idea and wanted to do what they said, but he did not know if they had ever built a condominium building. That is the crux of the problem. Ms. Dacy stated where the money comes from may be a policy issue. There are park fees that could be evaluated by the City Council and SAC fees that could also be evaluated. There are savings that could be wrapped back into the development costs. Ms. Jorgenson asked if the City Council had ever waved these fees for any other development? She did not want to set a precedent. Ms. Dacy stated she thought this was a policy issue that the City Council needed to establish. Mr. Commers asked, if Rottlund does not have a lot of experience on this, did they think the City should consider someone else. Mr. Casserly stated Rottlund is acting -as a master developer. They are doing all the site preparations, installing the public improvements, and putting in the amenities. They are responsible for the entire site development. He would like to keep them responsible to insure the development on this site. Ms. Schnabel asked if they could try something to reduce the dollar amount. Ms. Dacy stated they can do that. Another factor is the timing and how fast you want to market. Rottlund has indicated, if the cost issue is not there, they can go with the 48 condominium units. They felt the size of the unit at the $80,000 range fit the market, but they felt uncomfortable marketing the unit at a higher price. They feel the design of the one -story units will drive a higher cost and a different type of market. Mr. Burns suggested staff go back and look at a three - story, 36 unit building and try to stay within a $500,000 deficit. The 1`„ ... .... ... . ... .... . . ... . . ..,.. ...,Y,•.,'h.>:i. ,. ,.. ,.hwiY:YA:781 .. .. .. , . ,..... .. .. .....,..... ... ....... ...,.h.......'•.i : ti2<:i : ijC{ ;:.. ,. .,. ,.... ,. .. .. , .. .... o ti JOINT CITY COUNCIL WORK SESSION AND HOUSING & REDEVELOPMENT AUTHORITY MEETING -- JULY 17, 1995 PAGE 29 buildings can still be condominiums. It is reasonable to try to work in that direction. Mr. Commers stated, if you do that, it will cut down on the taxes. What would 12 less units do? It seems that cutting units will keep the deficit high. Ms. Dacy stated what you are gaining by reducing the units is that you are getting some of the land sales back. The deficit may not go up. Mr. Casserly stated they need to have made clear what the cost savings would be for a three -story structure. Mr. Burns stated it seems clear that this group does not want a senior highrise rental. He is hearing objections to addition single family townhomes. It seems like we are back trying to make the condominiums work. We do not have all the information we need on 36- units. He thought, for lack of something better, that is a reasonable parameter for staff to work within. Ms. Schnabel stated she did not think they really knew whether the senior preferred rental units or to buy. Mr. Prairie stated he thought there were both. He did not think that was a problem. Mr. Burns stated staff will try to obtain as many units between 32 to 48 with a $500,000 limit and see what that will do for us. Mr. Casserly stated it would be good to go back to Rottlund to maximize the units with the lowest subsidy. Ms. Jorgenson stated the City Council has a public hearing next week and we don't know what we are doing yet. Ms. Dacy stated it sounds you know what you are not doing. You are not doing the single townhome units or the senior rental. You want a senior housing element and an owner- occupied element. Mr. Casserly stated that portion of the site can be reserved for senior condominiums. The question is how many can be put there. Whatever the number, we can work to the best advantage. Ms. Dacy stated the next issue is the design of the 3rd Street intersection on Mississippi. These costs have been included in the options previously discussed. She will identify the pros and cons of the keeping the existing intersection or to shift the intersection 35 feet to the east and shift the Holly Center driveway 35 feet to the east as the developer has proposed. In 11 JOINT CITY COUNCIL WORK SESSION AND HOUSING & REDEVELOPMENT AUTHORITY MEETING -- JULY 17, 1995 PAGE 30 order to do what the developer wants, Anoka County will require a number of improvements to the Mississippi Street right -of -way costing approximately $162,000. Ms. Dacy stated, if you eliminate costs as an issue, the proposed alignment does meet as many safety and design criteria as possible. It also aligns the intersection for the long term. It aligns the intersection for a possible future traffic signal. Despite the costs, staff feels the proposed alignment will be the safest in the long run. Mr. Meyer asked how one would make a left turn into the development travelling west on Mississippi. Ms. Dacy stated the left turn lane and lane into the Holly area is a wide area improvements, there However, the County 2nd Street. If the Street, there would developer would have to create a protected would have to construct a protected left turn Center as well. The County is saying this of pavement and, with no protected is the potential of an unsafe intersection. does not feel improvements are necessary at road into the development shifted to 2nd be no need for improvements. Mr. Commers asked what the difference would be in cost. Ms. Dacy stated the costs would be none at 2nd Street versus $162,000 for the proposed alignment of 3rd Street and Holly Center. In the budget, $115,000 had been allocated for the construction of 3rd Street, but Rottlund is proposing to construct 3rd Street and then the street would then be dedicated as a public street. Mr. Meyer asked why the City is being charged for the protected turn lane. He felt the County should have done this when the street improvements were made. Ms. Dacy stated, when the reconstruction took place in 1991 -92, the City showed 3rd Street coming out further west. The County also had gotten comments from residents living to the north of that intersection. From the County's perspective, they saw the long term street to the west and the current 3rd Street as temporary to service the liquor store in its current location. Mayor Nee asked if there was any documentation on the quid pro quo when the City gave the County the land. He understood the City had a written agreement that the County would pay for a signal there when the City was ready to install a traffic light. Ms. Dacy stated she was not aware of that. The County is saying they will not pay for a stop light unless the warrants are there. JOINT CITY COUNCIL WORK SESSION AND HOUSING & REDEVELOPMENT AUTHORITY MEETING -- JULY 17, 1995 PAGE 31 She will check further on that. There is on file a joint powers agreement and there was no commitment on the County's part. Ms. Schnabel asked if Holly Center would pay for some of the costs. Ms. Dacy stated yes. She also thought that Rottlund and Holly Center would share some of the costs. Mr. Burns stated staff is asking to agree with the design. If we go with the realignment requiring the County improvements, we will try to get Holly Center, Rottlund and the County to share the costs. Ms. Jorgenson asked how the neighbors felt about the realignment. Ms. Dacy stated residents attending the Planning Commission public hearing expressed preferences for the intersection at both the 2nd Street and the proposed locations. The Planning Commission reviewed a number of options along with the comments and decided on the realignment as is being presented. Both neighborhoods have been notified. Ms. Dacy stated the next issue is the concern expressed by the City Council that persons approaching this intersection would perceive this street as a short cut rather than a connection to the neighborhood to the south. Staff looked some options with the developer. They talked about cutting the street in half, calling the streets private streets. The simplest solution seems to be creating an elevated barrier at Satellite Lane and 3rd Street to force traffic to make several turns in order to go through the development. The other suggestions would bring traffic through other housing areas. Therefore, staff looked further at this design keeping in mind access for fire and emergency vehicles. The City could post a sign that says "Not a Through Street ". Ms. Jorgenson stated that one of the things talked about at the NLC conference was similar to this fire lane option where other communities put a up a gate where emergency vehicles can tap it and it opens. Unfortunately, when people become aware of this, they will also tap it and the gate will open anyway. They had a number of options of how to handle fire lane options. Staff may want to look at some of those materials. Mr. Burns stated there are pavers they can use which are blocks with holes in it where the grass can grow through. Ms. Schnabel asked, if using pavers, would there be a noise from driving over it that would be irritating to adjacent homeowners. JOINT CITY COUNCIL WORK SESSION AND HOUSING & REDEVELOPMENT AUTHORITY MEETING -- JULY 17, 1995 PAGE 32 Mr. Billings stated this should only be emergency vehicles driving across that area. Another option would be to make 3rd Street a one way street north bound only from Satellite to Kasota Court. Mr. Commers asked if the object was to keep people from going through there. Ms. Dacy stated yes, and also to reduce speed. Staff is asking for authorization to look at this as an option to create some type of a dead end at 3rd Street and Satellite and still maintain emergency access. Ms. Bolkcom stated she thought they should listen to what the public has to say at the public hearing before making a decision. This is impacting others besides this development. Ms. Dacy stated she agreed. This would be fully discussed during the public hearing. It is on the agenda to get input from both the City Council and HRA in terms of costs of the intersection and because this is an item of concern. Mr. Meyer asked what options were there to get people in an out. If the intersection is moved to the west, then the houses toward the west are isolated from the others and you have a thoroughfare coming through the development. He did not see a lot of choice. Ms. Jorgenson agreed that they needed to talk with the residents before going further. Mr. Billings stated, if it was up to the developer, there would be no access to Sylvan Hills. The reason there is an access to Sylvan Hills is that the residents have said they need to get out of their neighborhood to go north. The people on the south end of Sylvan Hills are not happy because trucks now use Sylvan Hills as a short cut to get to Main Street. We are trying to find a way for the people who live on the north edge of Sylvan Hills to be able to get in and out of the neighborhood to the north. It will have to be circuitous in order to appease the people to the south to reduce traffic. Ms. Dacy stated there is also the option of shutting off the southbound ramp. Ms. Dacy stated the options would be presented at the public hearing along with the recommendations of the Planning Commission. The City Council can then provide feedback and make a final decision. JOINT CITY COUNCIL WORK SESSION AND HOUSING A REDEVELOPMENT AUTHORITY MEETING -- JULY 17, 1995 PAGE 33 Mr. Meyer stated he thought a left turn lane was needed for people coming in to the development and there should be a left turn lane into Holly Center for traffic coming from the west. Who pay for it is secondary. Mississippi Street collects a lot of traffic east of University. Mississippi is a main east /west road. Ms. Schnabel stated it seems that people living in the development will access Holly and will want to get back and forth across the intersection. She thought the alignment was safest for that access. She would like to see a signal there. Mr. Commers asked if there was any objection to leaving the decision up to the City Council after the public hearing. To him, the worse scenario with this is the cost. Ms. Dacy stated the difficult part is the fact that this. development will generate less traffic than the traffic that is there today. In spite of the fact that the traffic would be decreasing, the City is being required to add improvements. Mr. Commers stated the consensus of the HRA is to give the City Council authority to spend up to $167,000 for the intersection improvements if necessary. 4. CONSIDER ACQUISITION OF 380 - 57TH PLACE FOR TRANSITIONAL HOUSING SERVICES. AND CONSIDER MANAGEMENT AGREEMENT WITH ACCAP TO MANAGE AND OPERATE TRANSITIONAL HOUSING SERVICES Mr. Commers stated the issue with this item is the ownership. Mr. Burns stated they have eliminated any costs associated with ownership. We are a vehicle allowing this source of funding to take place without any cost or obligation. Mr. Commers stated there is a legal obligation and there could be liability, unless ACCAP wants to indemnify the HRA if something happens on property. Ms. Dacy stated the agreement include indemnification and the insurance requirements. Mr. Hoeft has reviewed the agreement. Mr. Casserly stated ACCAP has agreed to indemnify the HRA. This is a very broad indemnification statement. The limits of their coverage can be investigated. Mr. Billings stated the County is not interested in owning this building, but they will do it. At the June meeting of the County HRA Advisory Committee, he brought up the fact that the City was not keen on having the County own because of the possibility of JOINT CITY COUNCIL WORK SESSION AND HOUSING & REDEVELOPMENT AUTHORITY MEETING -- JULY 17, 1995 PAGE 34 being subject to a special levy that the County HRA might do. He was told the County had no intention of doing a levy. At the next meeting, the subject of the levy was on the agenda. This is one of the concerns of the City Council. If the County HRA is active in the City, then the City would be subject to a levy. Ms. Dacy stated staff recommended the County own the building. ACCAP has now taken away some of the financial risks. They are willing to pay the real estate taxes, provide insurance, and be responsible for filling the gap if we had to sell the property in the future between MHFA approval and the sale price. This also adds affordable housing units. Mr. Commers stated the HRA is not responsible for ad valorem real estate taxes. HRA property is not subject to tax. They are supposed to collect taxes from the user of the property as personal property tax. Mr. Billings stated ACCAP will pay the City the City's portion of the taxes. The County and the school district will not get their taxes because it is tax exempt property. Mr. Commers requested approval subject to ACCAP increasing their insurance limits and subject to City Attorney approval. OTION by Ms. Schnabel, seconded by Mr. McFarland, to approve the acquisition of 380 - 57th Place for transitional housing services, and approve the Property Management Agreement with ACCAP to manage and operate transitional housing services, subject to ACCAP increasing their insurance limits and subject to City Attorney approval. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. CONSENT AGENDA: 1. Approval of Minutes: June 8, 1995 2. Authorize Acquisition of 5924 - 2nd Street N.E. 3. Establish Public Hearing for Disposition of Lot 4, Block 1, Scherer Addition 4. Consider Amendment to Contract with Whitney Homes 5. Service Contract with ACCAP for Administration of HOME Rehabilitation Program . • • •.� • • i.i �.� • • .. • •.• .. .. .. .. ......, i• . i..• � • .... i i.i • i.- i.i.i "C i ir; •.. n.� —. . • 0 0 y ". �.wi itr. •. �. �. �. �. ..• .... .. �.� JOINT CITY COUNCIL WORK SESSION AND HOUSING & REDEVELOPMENT AUTHORITY MEETING -- JULY 17, 1995 PAGE 35 Mr. Fernelius stated this item would approved by resolution. 6. Monthly Housing Report 7. Revenue and Expenses Mr. Ellestad provided copies of additional expenses. MOTION by Mr. McFarland, seconded by Mr. Prairie, to approve the HRA minutes of June 8, 1995; to authorize acquisition of 5924 - 2nd Street N.E.; to establish a public hearing for disposition of Lot 4, Block 1, Scherer Addition; to approve an amendment to the contract with Whitney Homes, to approve a Resolution Authorizing a Service Contract with ACCAP for Administration of the Home Improvement Grant Program; to receive the Monthly Housing Report; and to approve check register #25577 through #25633 plus additional expenses as contained in the July 17, 1995, memo from Mr. Ellestad for a total of $3,689.02. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. ADJOURNMENT: NOTION by Ms. Schnabel, seconded by Mr. McFarland, to adjourn the meeting. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED AND THE JULY 17, 1995, HOUSING AND REDEVELOPMENT AUTHORITY MEETING ADJOURNED AT 12:26 A.M. Respectfully submitted, Lavonn Cooper Recording Secretary I _ .. "' ... ... ... .... .. . Community Development Department HOUSING AND REDEVELOPMENT AUTHORITY City of Fridley DATE: August 4, 1995 TO: William Burns, Executive Director of HRA FROM: Barbara Dacy, Community Development Director Grant Fernelius, Housing Coordinator SUBJECT: Change Order to Project No. 281 to Permit Demolition of Four Homes Over the course of the last several months, we have acquired four homes under the scattered site program which are now ready for demolition. In an effort to get these homes down as quickly as possible, staff is recommending that the sites be incorporated into the Southwest Quad demolition project via a change order. The contractor, Herbst and Sons, Inc., has agreed to complete all demolition work, site grading and seeding for the price of $19,300. Herbst has indicated that they will be working on the Southwest Quad project and will have equipment within close proximity to the home sites. The contractor's quote equates to a charge of $3.48 per square foot, a price which compares very favorably to previous house demolition projects. A cost comparison summary is attached. By law, the HRA may approve a change order up to 250 of the initial-project cost ($194,200 x .25 = $48,550) without seeking formal bids. This request would fall within the 250 limitation. We should also point out that the change order costs would be charged to the Housing Coordinator fund and not the Southwest Quad project. Staff recommends that the HRA approve a change order in the amount of $19,300 for Project No. 281 with Herbst & Sons and authorize the Chair and Executive Director to sign the necessary documentation. GF/ M -95 -431 CITY OF FRIDLEY ENGINEERING DEPARTMENT 6431 UNIVERSITY AVENUE N.E. FRIDLEY, MN 55432 July 25, 1995 Herbst & Sons Construction Company, Inc. 2299 County Road H New Brighton MN 55112 SUBJECT: Change Order No. 1, Southwest Quadrant Demolition, Project No. 281 Gentlemen: You are hereby ordered, authorized, and instructed to modify your contract for the Demolition Project No. 281 by adding the following work Addition: Provide necessary equipment and perform all work in accordance with the contract and specifications on file in the office of the demolition coordinator and the "special provisions" contained herein for 2. 3. 4. 5. 6. 7. Demolition and disposal of all buildings, footings, foundation walls, basement floors, debris and all contents, including outside stored materials, located at 540 Hugo Street, 533 Janesville, 5924 2nd Street and 6000 2nd Street, Fridley, Minnesota. The removal and disposal of driveways and all concrete slabs located within the parcels mentioned above. Fill material, grading, topsoil, mulch and seed after demolition of structures, concrete basements and slabs, and bituminous driveways. Preserve trees in existing condition where at all possible. Work with City hired contractor to expose well locations (if any) in order to cap and seal. Assume responsibility for the security of all buildings located on above parcels from the date of beginning of demolition through completion of work Perform all work according to the following schedule or as approved or revised by the HRA. Demolition Address 540 Hugo Street 533 Janesville Street 6000 2nd Street 5924 2nd Street Begin Date August 21 August 21 August 21 September 25 a Completion Date August 25 August 25 August 25 September 28 10 ... _. Southwest Quadrant Demolition Project No. 281 Change Order No. 1 Page 2 Total Change Order: Original Contract Amount $194,200.00 Contract additions - change order. 540 Hugo Street $4,000.00. 533 Janesville Street 6,000.00 6000 2nd Street 4,000.00 5924 2nd Street 5.300.00 Total Additions: 19.300.00 Revised Contract Amount $21a-50 0-00 Submitted by Clyde Moravetz, project coordinator, on the 25th day of July, 1995. 1 LL -. I . Approved and accepted this�day i Clyde oravetz, Project dinator Approved and accepted this day of . 1995 by JC. CITY OF FRIDLEY - HOUSING & REDEVELOPMENT AUTHORITY William W. Bums, Executive Director HRA Larry Commers, Chairman HRA E � e e O `l O O n Ua �a a Ua Um 00 0 � 0 ny F� DU H t]U 1� 08 03 s w 'Cf'r(0 0) 0(00(0 (of� NN CA 0) N Omf�OIO 0 y NC91�Ch a) (0 0(00(0 v0 hOhl O r Orl 8� CO C) IOCO to hf- IW /b r'. 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X w N $s N ed W a O N �+ b «-I N O V N V --I a0 >i 0 a V ft;] R -rf O -r4 -r4 U 4J Vr-iZ -4-i w .q a w °�•d O 0 O r-i N V 0 Id 0 -A N U V N V AO-HN rq U 0 0 V4 � 4) m m'xobl N b+Cd00 C V Fl ON 0 -r� 0 • .0 Zrar)4) Q I c, co - 4J dw -rl r4 co � 4) fA U H b+ -ri b e .ry c+ N 0 h N O O A N N ri r♦ -r� 3 w Ni O -rl V b U O .--I ra � Rf � L� ON ON � W •• Q z V.. z !~ N m w ON Id O i71 0 O f1 a a z e .ry c+ N 0 h N O O A N N ri r♦ -r� 3 w Ni O -rl V b U O .--I ra � Rf � L� ON ON � W •• Q z V.. z Scattered Site Acquisition / Housing Replacement Program 07/13/95 Status Report Buildable Lots Address 1 6409 East River Rd. 2 8280 East River Rd. 3 539 Glencoe St ( *) 4 547 Glencoe St ( *) 5 677 Hugo St 6 187 Longfellow St. 7 540 Hugo St ( *) 8 550 Hugo St ( *) 9 533 Janesville 10 5924 2nd St 11 530 Hugo St Non — Buildable Lots Address 1 6000 2nd St 2 683 Glencoe St Acquired Demolished 7/94 8/94 6/94 8/94 2/95 5/95 11/94 5/95 9/94 11/94 4/94 8/94 5/95 Pending 9/94 11/94 5/95 Pending Pending Pending Appraised Acquired Demolished Pending Pending 9/94 5/95 Sold Builder /Owner Yes Whitney Homes Yes Whitney Homes Yes Whitney Homes Yes Whitney Homes Yes Whitney Homes Yes Whitney Homes No HRA No HRA No HRA No HRA e Sold Builder /Owner Pending ** HRA No HRA Notes: * — Lots will be combined. ** — Property will either be sold or leased to ACCAP which owns a fourplex next door. Site may be re —used for additional parking spaces and /or garage. 2B .,.,`w'.•:•u•.`t2`•th,.;,r`:`th ...� p.•.; •` •w c•itc`t •�` "`••:`:ti :`.,..,.,a,`.•.` `.`...;,>..,•.•.t . t,•,t.... `•`,�: ti.!.`. ?. ?.?� ?. ?,!; ?... ... .,.,.,.. ......... , , .. ,,,,.t.., . , � ...........�. .... ... ... ?.�...`.t..........�....t.•. t. `,`"R?.�?...... �. w•: h. t:u� .t•....,, t, t.th... ... ... ....... .. . ♦ � •.. w ..�... .. t.. t ?�h!..t`1R?`. :![t.:. :`C`: `:;its TO: FRIDLEY H.R.A FROM: CITY OF FRIDLEY RE: BILLING FOR ADMINISTRATIVE AND OPERATING EXPENSES JULY 1995 ................... ............................... JUt Y''9 ................... ............................... ................... ............................... ADMINISTRATIVE BILLING: ADMINISTRATIVE PERSONAL SERVICES ADMINISTRATIVE OVERHEAD COMPUTER OVERHEAD (For Micro & Mini computers) TOTAL ADMINISTRATIVE BILLING: OPERATING EXPENSES: POSTAGE BY PHONE — POSTAGE POSTAGE BY PHONE — POSTAGE US WEST — TELEPHONE SERVICE COPIER ALLOCATION, JAN —JUNE INSURANCE ALLOCATION, JAN —DEC DIMAGGIOS — DINNER BENEFITS EXPENSES: CITY OF FRIDLEY — HEALTH INS CITY OF FRIDLEY — DENTAL INS CITY OF FRIDLEY — LIFE INS Account #'s for HRA's Use 460- 0000 -430 -4107 262- 0000 - 430 -4332 460- 0000 - 430 -4332 460 -0000- 430 -4332 460 -0000- 430 -4335 460 -0000- 430 -4336 460 -0000- 430 -4337 TOTAL OPERATING EXPENSES: 262 -0000- 219 -1001 262 -0000- 219 -1100 262 -0000 -219 -1200 TOTAL BENEFITS EXPENSES: TOTAL EXPENDITURES — JULY 1995 File : X123DATA\HRA \11FXBILUNG.wkI Detells 3 14,967.25 267.83 194.42 15.429.50 Account #'s for City's Use 101 - 0000 -341 -1200 101 - 0000 -336 -3000 101 - 0000 -336 -3000 68.22 236 -0000- 336 -3000 18.03 236- 0000 - 336 -3000 13.39 236- 0000 - 336 -3000 494.20 236- 0000 -336 -3000 9,267.00 236- 0000 - 336 -3000 57.19 236- 0000 -336 -3000 9.918.03 384.00 236 -0000- 219 -1001 41.06 236 -0000- 219 -1100 0.00 236- 0000 - 219 -1200 425.06 .............................. in co 1 Q I 1 C7 0 pO 1 W I a-.m a x I w : . 0. z 1 0$.-- i z 0 I .-. 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N• h1�I�1�1�t�t�1.I. t. 1�1�m00000o00ao000o00e00o0o00000o00a0 K�- co W CO Z W CL x W H Z a tr a ryD V H N W D O co O Y CO � p �p m f- O) O (O OD (O M n (MO 40 N N N O S O N (n t0 O aD v 1 N n� � v C (O tp M� N O A 0 (O O fl fa (O (p M (o V 0) 0) 0) U) _ r O) 1M p r, (0 4a N O N (n 6 M 00 v (A to t- - N A 40 fA 4 40 a N fa s lA o a vv to to S I I O I4a I � U I � I � I I I 40). > I O I Z 1 I I O v 1 fa O 1 I 1 I � m I � I I 1 I 403, � 1 a I I 1 (D CO Opp eo} ao 1 N (°ii_aD n I ONo M 1 n I � I � Op C N 0 ((0 M �.°i W) 00 O t w In N (O N O C N (O M 1 p) '7 N N N N N� N •-• I v I Op Cli M O O o to n (O n OD co O n 0 N I (O 1 N C Nt0 W r 1 n 1 ro I c is o a °o vv 188 ° 0 � to w � o I rn `o o m o In Iq v_ co co to U) co i 00 Q In to O N N W O M ' (O 14a O O h O O O O co v .U. O NLO 000 O (00 coo I v C 2 M N (°n Iri I ci c a I CL m O m to co 0 CD to lL C%j N N M n I N m 1-- I CL o U C (on (n 1 to O 7 O N m 0 co N a N W 'V I n M N a M 1 C m 1 0 I U �o 0 c 00 O W Oo(O O O 00 000 sQ OQ 1 P aN Ow 0 8((8- 15Z 10 $gad ("'o o d Ogg � 'gv'_C�w�Ng a32S �XNNi �(°c�_ o� 3 Itl fa fa � to N (A fa N fA fa N N fa W O yS rl— c fa fA N N fa 4& fA N K 4S cm N 13) C (A Ci m fA I I m I U Z C (7 m i O WY 2 f'Y O Y IL ° �t C1 , 1 Qa1! (3� y 3 �C O m o m E &0 'D Z aaa� a a v a Ic S - R����¢�3$v�a��oaaaa�� U. r � Community Development Department HOUSING AND REDEVELOPMENT AUTHORITY City of Fridley DATE: August 4, 1995 TO: William Burns, Executive Director of HRA FROM: Barbara Dacy, Community Development Director Grant Fernelius, Housing Coordinator SUBJECT: Public Hearing to Consider the Temporary Acquisition of 6765 East River Rd. This hearing is required by law before the HRA can convey real property. We have provided an outline for the HRA to use when conducting the hearing. Hearing Outline 1. HRA Chair to request motion to open public hearing. 2. Staff presentation. 3. HRA Chair to ask for comments from HRA Commissioners. 4. HRA Chair to ask for comments from general public. 4. HRA Chair to request motion to close public hearing. Background This parcel was acquired by Anoka County several years ago for a road improvement project and has remained vacant and tax - exempt for some time. The neighbor who lives to the south of the site, Roberta Moore, expressed interest in buying the site from the County for the purposes of expanding her home and possibly building a garage. Anoka County has told her that they cannot sell the land directly to her, but instead could sell it to the City or HRA and then convey the land to her. This item was presented to the HRA for concept approval at the March 9, 1995 meeting. A copy of the minutes are attached. 6765 East River Road August 4, 1995 Page 2 The property is legally described as Lot 4, Block 1, Scherer Addition and is considered non - buildable due to an overhead power line easement which runs across the middle of the site. Terms and Conditions Anoka County has established a price of $6,800 for the lot with a provision that the property have no direct access to East River Rd. Ms. Moore has agreed to this price and will pay any expenses incurred by the HRA, including legal expenses, recording fees, and publishing costs. All of these expenses would be paid in cash prior to conveyance of the site by the HRA. Recommendation If there is no adverse public comment, Staff recommends that the HRA approve the attached resolution. GF/ M -95 -430 5A 44 HRA RESOLUTION NO. A RESOLUTION TO APPROVE THE TEMPORARY ACQUISITION AND SALE OF REAL PROPERTY. WHEREAS, Anoka County is the owner of a vacant parcel of land legally described as Lot 4, Block 1, Scherer Addition, Anoka County, Minnesota (the "Property "); and WHEREAS, Anoka County has declared the Property as excess and not usable for County purposes; and WHEREAS, Anoka County has been contacted by Roberta L. Moore, 6755 East River Rd., Fridley, Minnesota (the "Buyer ") regarding possible purchase of the Property for private use; and WHEREAS, Anoka County is prohibited from selling the Property directly to the Buyer; and WHEREAS, Anoka County has contacted the Housing and Redevelopment Authority in and for the City of Fridley, Minnesota (the "Authority ") about facilitating a transaction with the Buyer; and WHEREAS, the Authority has determined that the Property is not suitable for construction of a new and further the Authority believes it would be in the best interest of the City to return the Property to the tax rolls. NOW, THEREFORE BE IT RESOLVED BY the Housing and Redevelopment Authority in and for the City of Fridley, Minnesota as follows: 1. The Chair and Executive Director are authorized to execute documents for the purchase of the Property from Anoka County for the sum of $6,800. 2. The Chair and Executive Director are authorized to execute a purchase agreement with Roberta L. Moore for the sale of the Property for $6,800, plus closing costs, legal expenses and other transaction costs incurred by the Authority . PASSED AND ADOPTED BY THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF FRIDLEY THIS DAY OF , 1995. ATTEST: WILLIAM W. BURNS a�l LAWRENCE R. COMMERS I i Community Development Department HOUSING AND REDEVELOPMENT AUTHORITY City of Fridley DATE: March 3, 1995 TO: William W. Burns, Executive Director of HRA 44 FROM: Barbara Dacy, Community Development Director Grant Fernelius, Housing Coordinator SUBJECT: Consider Temporary Purchase of Vacant Lot from Anoka County On February 8th staff was contacted by Mike Kelly from the Anoka County Highway Department about a vacant parcel they own along East River Road just north of the Locke Lake dam. Kelly indicated that they were contacted by-the homeowner immediately to the south of the site concerning their interest in buying the parcel. The County apparently has.no need.for the property (it was acquired several years fora road project and the home was removed) and doesn't want to continue to- maintain it. Roberta Moore who lives south of the site, has expressed interest in buying the property (see attached letter) and enlarging her yard. Under state law, the County.is unable to convey the property directly to a private party, but can.convey it to another governmental body such as an HRA. In essence, the County would sell the property to the HRA for an agreed upon price and then the HRA could turn around and sell it to a third party. We did consider the lot as-a potential new home site, but have concluded that it may be difficult to market due to its location along East River Road. Unless otherwise directed, Staff will proceed with negotiations on the purchase and conveyance of the lot with the understanding that the HRA will not bear any expenses in the transaction. GF/ M -95 -143 CITY OF FRIDLEY HOUSING & REDEVELOPMENT AUTHORITY MEETING, 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 5D - c HOUSING & REDEVELOPMENT AUTHORITY MEETING, MARCH 9, 1995 PAGE 2 r 6. REVENUE AND EXPENSES MOTION by Ms. Schnabel, seconded by Mr. Prairie, to authorize the 1995 Home Fund Application to Anoka County and authorize H$A 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 VOTE, ALL VOTING AYE, 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 f 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, y: <' called and stated the reason for the bids as they are is because 5E _ J a� Community Development Department HOUSING AND REDEVELOPMENT AUTHORITY DATE: August 4, 1995 City of Fridley TO: William Burns, Executive Director of HRA FROM: Barbara Dacy, Community Development Director Grant Fernelius, Housing Coordinator SUBJECT: Consider Approval of Resolution Authorizing a Comprehensive Housing Rehabilitation Program in Hyde Park After several months of research and discussion, we are pleased to present our recommendations for a comprehensive housing rehabilitation program for the Hyde Park neighborhood. We feel this is an exciting opportunity to make a noticeable impact and help to stabilize and improve Hyde Park. If successful, this plan could serve as a model for use in other neighborhoods throughout the City. This memo will provide background information on Hyde Park, an overview of the program and the. impact on the budget. Background Last. fall, at the direction of the City Council, a housing condition study of the entire City. TI study was to evaluate the exterior conditions of property and to help identify potential areas in attention. As a result the study, several areas as the most in need for rehab including the Hyde Addition and Riverview Heights neighborhoods. staff conducted he purpose of the all residential need of were identified Park, Plymouth In order to generate the most interest in rehab activity and to maximize neighborhood improvement, we recommended concentrating a majority of the emphasis on a target neighborhood rather than working in all of the neighborhoods simultaneously. Our first recommendation is to begin in the Hyde Park area for the remainder of this year and part of 1996 and then move on to the next area. In addition to the housing condition study, this winter we began work on a-two -part housing focus group study. Housing Rehabilitation Program; Hyde Park August 41 1995 Page 2 The purpose of this study was: housing it both 1, To examine the effectiveness households who received ness of our existing programs by meeting assistance and those who did not• d concerns in Hyde Park by 2. To examine housing and neighborhood meeting with homeowners, tenants and landlords. coups were quite interesting and a The results of the focus groups packet which discusses the t separate memreater de il.inin general, there was strong results in great in following areas: 1. Remodeling assistance, both financial and counseling assistance. " e house" inspection and moicslni in there meetings 2. A whol with homeowners on ineaotoolnl library was some neighborhood Although, each group 3. Both homeowners and mlortant priority. thOl is clear improvement as an imp I were somewhat critical toward are concerned about equity and however, that both group fairness in terms of help from the City. H de Park Proctram Rehabilitation Program is The Hyde Park Comprehensive Housing intended to offer financial assistance and incentives o inters The plan includes the homeowners, landlords and tenants. following components: and 1. Working in cooperation with the ,sterea wide array d ofsingle Environment to markerr and multiple family rehab programs, •n HgA funds in a way which allows borrowers MHFA 2, Leveraging funds, This flexibility allows the match the investment with their o loan, or a private flex meets their borrower to decide d which financing needs and budget- de park 3. Expands the rehab programs too include 550 U per year. homeowners with incomes up r r M Housing Rehabilitation Program; Hyde Park August 4, 1995 Page 3 4. Helps those households who can't qualify for a loan or a grant by providing a deferred - payment loan up to $10,000 for code repairs. 5. Maintains fairness and equity between homeowners and landlords by offering deferred - payment loans on the same terms and conditions. 6. Ensures that program funds are used wisely and appropriately by helping homeowners identify needed repairs via a free building analysis and home energy audit. 7. Recycles funds by requiring all loans to be repaid upon sale of the property, plus accrued interest. A summary sheet of the programs to be offered is attached. In addition to housing rehabilitation, efforts will continue to redevelop the Franks Used Car site, Custom Mechanical site and scattered lots throughout the area. We are also researching the possibility of obtaining a voluntary right of first refusal to buy some of the smaller, run down homes as they become available. Budget Impact For the most part, funds for this program were programmed into the 1995 budget. As you can see from the attached sheets, we did budget $1,245,000 for the housing program. Of this amount, $430,000 was to be used for single- family rehab; $500,000 for multiple - family rehab; and $315,000 for scattered site acquisition. Of the total housing coordinator budget, $930,000 was programmed for Hyde Park. Our comprehensive program would require an additional $500,000 to help fund single - family deferred loans. We should point out that in the budget discussions, we had programmed $525,000 in 1996 for the Hyde Park area. As a practical matter because this program will run into 1996, we don't anticipate expending beyond our 1995 budget. Recommendation Staff is recommending that the HRA approve the attached resolution which provides for the following: 1. Establishes the Hyde Park Comprehensive Housing Rehab Program. 2. Establishes the area of operation. Z� ♦ th'.h•.`.h 1',h `.•� hti` "C`:`(ti `,`i i`t `; `:`:`ih`t`t `t`i `.,.. �•�,• � ,.f. -`, `,` `.h . `. •.h`.` .;: •Y.;:Y:;. �, hr, ,t t .., .,;•;; ,h``h. ;q; 'j'h, iZ tYi;.Y Kh . t,.Y.h . •.hh . , Y�: ?r � .,..;Y.2;•�iY =.�...>.,`Y,,`;•h; fit:......, , .:�ti:�... . , .... Housing Rehabilitation Program; Hyde Park August 4, 1995 Page 4 3. Provides for the delegation of certain powers and duties. 4. Authorizes the execution of consulting agreement with the Center for Energy and Environment. GF/ M -95 -429 6C •:� •t - '4'`t: t:K •1'+iKK +: +:+. Kti "+P:K t t +iti�+t+t tt� •tk:kt;t•t;c;t ;:;+�.� .ty. • - -7 e,� +ry+.;ty+'Kkt 'kw.+'t+7ti�: •.$�. ..`+^. ',`„�;•� °+. '`fifi+"J;'P.a�;:;i•.wp; :•k+k +:�ti2it•:�. •'+.. .:,, .Z+.t :F +�. wi:+.+ +,�.� ...... ........+.. ..�,......kRitt:...,..... +..,., +...,... +. +.,, +.. ,•..... .., ... .... . +..kik. RESOLUTION NO. A RESOLUTION ESTABLISHING A COMPREHENSXVE HOUSING REHABILITATION PROGRAM FOR THE CITY OF FRIDLEY'S HYDE PARK NEIGHBORHOOD; ESTABLISHING THE AREA OF OPERATION; PROVIDING FOR THE DELE AUTHORIZING CERTAIN F CONSULTING HOUSING AND AGREEIMSBNT BY AND BETWEEN THE REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF FRIDLEY AND THE CENTER FOR ENERGY AND ENVIRONMENT. BE IT RESOLVED by d Redevelopment ce A (the of the Housing an "Authority"), as follows: Fridley, Minnesota (the Section. 1. Recitals- 1.01. The Authority has established a Comprehensive Housing Rehabilitation Program for l ft s 'Hyde Park Neighborhood ( ti o r m) f r the residents o the City of Fridley's Hyde Park neighborhood. 1.02. It has been proposed that the Authority enter into the necessary agreements to implement the Program by executing a Consulting Agreement (the "Agreement") with the Center for Energy and Environment (the "CEB "). Section 2. Fini.nas. 2,07.. The Authority hereby finds that its area of operation in which to implement the Program is the area within the territorial boundaries of the City as provided for in Minnesota Statutes, Section 469.002, Subd. 8 but that the Program will be limited to the residents of. the Hyde Park neighborhood. 2.02. The Authority hereby finds that the adoption of the Program promotes the purposes of the Authority as those purposes are defined in Minnesota Statutes, Section 469.001, et seg. (the "Act ") . 2.03. The Authority hereby finds that the Program will assist in the alleviation of shortages of decent, safe and sanitary residential housing available City to persons and families of low ormoderat inme asdescribed therein. 2.04. The Authority hereby finds that preservation of the quality of life in the City is dependent upon the maintenance, provision, and preservation of an adequate housing stock; that accomplishing this is a public purpose in that there are many residences in the Page 2 - Resolution No. City which require rehabilitation; that a need exists to provide in a timely fashion affordable housing to persons of low and moderate income as described in the Act and herein residing and expected to reside in the City; that many owners, would -be purchasers or providers of residences are unable to obtain mortgage credit for rehabilitation of residences under current market conditions; and that in establishing its Program the Authority is acting in all respects to benefit the citizens of the City and to serve a public purpose in improving and otherwise promoting their health, welfare and prosperity. Section 3. Authorization of Program. 3.01. The Authority hereby approves and adopts the Program as described in the Description and Guidelines on Schedule A attached to this Resolution. Section 4. Delegation of Power and Duties. 4.01. In accordance with the Act, specifically Minnesota Statutes, Section 429.012, Subd. 1(3), and in accordance with the Description and Guidelines, the officers, agents and employees of the Authority are hereby authorized to take such actions as may be necessary to implement the Agreement and operate the Program. 4.02. The Executive Director or Housing Coordinator are hereby authorized to execute all documents relating to the approval and closing of any loans provided for in the Program. 4.03. The Executive Director or the.Chairman are hereby authorized to approve payments for Program loans and any costs or tees incurred as a result of implementing the Agreement. Section 5. Authorization for Execution of the Origination ,Agreement. 5.01. The Authority hereby approves the Agreement substantially in the form presented to the Authority and authorizes its Chairman and Executive Director to execute the Agreement on behalf of the Authority with such additions and modifications as those officers may -deem desirable or necessary as evidenced by the execution thereof. 6E m Page 3 - Resolution No. PASSED AND ADOPTED BY THE FRIDLEY HOUSING AND REDEVELOPMENT AUTHORITY OF THE CITY OF FRIDLEY THIS DAY OF , 1995. LAWRENCE R. COMMERS - CHAIRPERSON ATTEST: WILLIAM W. BURNS - EXECUTIVE DIREC'T'OR 6F CERTIFICATION 1, William W. Burns, Executive Director of the Housing and Redevelopment Authority in and for the City of Fridley, County of Anoka, Minnesota, hereby certify that the foregoing is a true and correct copy of Resolution No. passed by the Authority on the - I day of —, 1995. WILLIAM W. BURNS - EXECUTIVE DIRECTOR 6G Rti'Z i'ititi`8KKKK•i• "titi•i`C'.!. `::•:`: :'iN`1 •:`, "•i!i• "•iti "titij,•t , ^M t• ice, "^� tiR"`i•i•,`: i,;,,:i i`i, '•,'2:g;: ; :;ti.;:;�.'��t;i;,';.,'St;�,,'�, _ �'' �ih'`, i;. �'''. u`, � ''�:wfiti?.a`.�t:i.>,•,>,>,.,..., v:;,., , . �.•..:`.? a.: �.> ..u,+t�R�i..,.,.,.:±.?:i.Z;:.�. ,a'``',8,,.,,ZE.�i2��.o, , , ....> , v......,.. ,.. , :rti: < ............ . ................... . ?. SCHEDULE A DESCRIPTION AND GUIDELINES COMPREHENSIVE HOUSING REHABILITATION PROGRAM FOR THE CITY OF FRIDLEY'S HYDE PARK NEIGHBORHOOD L Matching Deferred Loan Program (Single Family) A. Loan Description Deferred payment loan up to $4,000. Loan will be issued at 1% (simple interest) and must be repaid upon sale of the home. Loan may be prepaid, in whole or in part (with accrued interest) by borrower prior to selling their home. B. Funding Source Deferred Loan will be funded by the Authority. C. Program Administrator Center for Energy and Environment. D. Qualifications Income Limits: $55,000 Underwriting: Borrower's shall grant permission to the Fridley HRA and its duly authorized Program Administrator to conduct credit checks. Owners must be current on their real estate taxes and mortgage payments for the property to be improved. In addition, the borrower may not have any unpaid judgements or liens. Equity: The Deferred Loan will be secured to the borrower's residence by a separate mortgage. The Deferred Loan when combined with other indebtedness against the property may not exceed 115% of the Combined Loan-to- Value ratio. Property Type: Owner - occupied, 1 to 4 unit residential properties located in the Hyde Park neighborhood 6H SCHEDULE A Page 2 E. Program Specifics The Deferred Loan must be matched on a dollar- for -dollar basis by the borrower. In any case, the Deferred Loan shall not exceed $4,000. The borrower may not receive more than $4,000 (aggregate) in assistance while residing in the property to be improved. F. General Requirements This program is available to any homeowner in the Hyde Park neighborhood with an income up to $55,000 per year. For purpose of this Program, income shall be defined as the average adjusted gross income for the two most recent years as shown on the borrower's federal income tax return Borrower's must provide copies of their income tax returns with their applications. G. Improvements Borrower's may use funds under this program to make permanent repairs and improvements to their properties. Eligible and ineligible improvements shall be limited to those defined in the most current version of the MHFA Home Improvement Loan Program Procedural Guide. II. Matching Deferred Loan Program (Multiple Family) A. Loan Description Deferred payment loan up to $4,000 a unit; maximum $44,000 per building. Loan will be issued at I% (simple interest) and must be repaid upon sale of the Property- Loan may be prepaid, in whole or in part (with accrued interest) by borrower prior to selling their property. B. Funding Source Deferred loan will be funded by the Authority. C. Program Administrator Center for Energy and Environment. 61 SCHEDULE A Page 3 D. Oualifications Income Limits: None. Underwriting: Borrower's shall grant permission to the Fridley HRA and its duly authorized Program Administrator to conduct credit checks. Owners must be current on their real estate taxes and mortgage payments for the property to be improved. In addition, the borrower may not have any unpaid judgements or liens. Equity: The Deferred Loan will be secured to the borrower's property to be improved by a separate mortgage. The Deferred Loan when combined with other indebtedness against the property may not exceed 120% of the Combined Loan-to-Value ratio. Property Type: Non owner - occupied, residential rental property with one or more units. E. Program Specifics The HRA Deferred Loan must be matched on a dollar-for-dollar basis by the borrower. In any case, the HRA Deferred Loan shall not exceed $4,000 per unit or $44,000 per structure. The borrower is limited to an aggregate loan amount of $4,000 per unit while in ownership of the property, or as otherwise restricted by the Authority. F. General Requirements This program is available to any rental property owner in the Hyde Park neighborhood. Owners will be required to provide a cashflow statement on the property and a personal financial statement. G. Improvements Borrower's may use funds under this program to make permanent repairs and improvements to their properties. Eligible and ineligible improvements shall be limited to those defined in the most current version of the NEUA Rental Rehabilitation Loan Program Procedural Guide. �efI .............. ........... .. .. .... .........n asstss tsistp: �. �actstaRRRi: as!.?: �t? s.• stsish :Q:attiisast:,aci:;iia.,....... ...::iij,.,, ...'ilia... `�j�j f � SCHEDULE A Page 4 M. Last Resort Housing Program (Single - Family Only) A. Loan Description Deferred payment loan up to $10,000. Loan will be issued at 2% (simple interest) and must be repaid upon sale of the home. Loan may be prepaid, in whole or in part (with accrued interest) by borrower prior to selling their home. B. Funding Source Deferred Loan will be funded by the Authority. C. Program Administrator Center for Energy and Environment. D. Oualifications Income Limits: $55,000 Underwriting: This is a last resort program. Applicants may be selected for this program only if they are unable to qualify for financing from any one or combination of programs offered under the Hyde Park Comprehensive Housing Program. The Authority and Program Administrator shall work in cooperation to identify all resources possible before an applicant can be considered for this program. Equity: HRA loan will be secured to the borrower's. residence by a separate mortgage. Property Type: Owner- occupied, 1 to 4 unit residential properties located in the Hyde Park neighborhood. E. Program Specifics The HRA Last Resort Loan is designed specifically for homeowners in the Hyde Park who can't qualify for a loan or a grant. Acceptable criteria include: a) Borrower's who have existing debt -to-mcome ratios which exceed normal bank underwriting standards and therefore limit their ability to obtain credit. 6K CONSULTING AGREEMENT This CONSULTING AGREEMENT ( "Agreement ") is made this _ day of , 199, by and between the HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF FRIDLEY, with offices at 6431 University Avenue Northeast, Fridley, Minnesota 55432 ("FRIDLEY"), and CENTER FOR ENERGY AND ENVIRONMENT (a Minnesota nonprofit corporation), with offices at 100 Sixth Street North, Suite 412A, Minneapolis, Minnesota 55403 ( "CEE "). RECITALS A. FRIDLEY has a need for certain professional services and desires to retain CEE to provide said services, all subject to the terms and conditions contained in this Agreement. B. CEE is qualified to provide the desired professional services and desires to provide said services for FRIDLEY, all subject to the terms and conditions contained in this Agreement. NOW, THEREFORE, in consideration of the foregoing and the mutual promises contained in this Agreement, the parties agree as follows: 1. Services /Scope of Work 1.1 CEE shall develop and deliver a Comprehensive Housing Rehabilitation Program for the City of Fridley's Hyde Park Neighborhood (hereinafter the "PROGRAM"). All activities delivered under the PROGRAM shall be coordinated with FRIDLEY's designated program manager. 1.2 CEE shall market the PROGRAM and assume all marketing related costs necessary to achieve the highest level of program participation. Marketing efforts shall include but are not limited to community workshops, direct mail, telephone contact and personal contact. CEE shall insure that FRIDLEY "s sponsorship of the program is a prominent part of any marketing effort. 1.3 CEE shall complete a "Comprehensive Building Analysis" upon request for any potential PROGRAM participant. The "Comprehensive Building Analysis" shall identify and prioritize rehabilitation opportunities eligible for financing. 1.4 CEE shall originate low interest matching deferred loans for single and multiple family property and last resort deferred loans for PROGRAM participants approved for eligibility by FRIDLEY. 6M ti 1.5 CEE shall develop a personalized financial package for each eligible borrower that coordinates financing from the Minnesota Housing Finance Agency (MHFA) Fix -up Fund, MHFA Home Energy Loan Program, CEE's Rental Loan Fund, MHFA Rental Rehabilitation Program, FRIDLEY's Single - Family Matching Deferred Loan Program, Multiple - Family Matching Deferred Loan Program or when no other option is feasible the Single -Family Last Resort Deferred Loan Program (collectively know as the "FRIDLEY PROGRAM") 1.6 CEE shall verify that all funds are used for eligible purposes by completing an on -site "Installation Verification" performed by a CEE housing technician. The "Installation Verification" shall not substitute for any required code or permit inspection performed by FRIDLEY. 2. Compensation FRIDLEY shall compensate CEE for the Services as follows: 2.1 Fridley shall pay CEE for services provided under this agreement according to the following schedule: Building Analysis $130.00 Installation verification $60.00 Single -Family Matching Deferred Loan Originations $225.00 Multiple -Family Matching Deferred Loan Program $225.00 Single -Family Last Resort Deferred Loan Originations $225.00 FRIDLEY shall compensate CEE only for services completed. Compensation under this agreement shall not exceed $40,000.00 and of this amount no more than $9,750.00 may be paid for Building Analysis charges.. 2.2 CEE shall submit to FRIDLEY, on a bi- weekly basis, an invoice with an itemized breakdown of each FRIDLEY PROGRAM loan made, the principal amount of said loan, the origination Fee, and Building Evaluation and Installation Verification fees and the total amount requested for payment. FRIDLEY shall pay each properly submitted invoice within fifteen (15) days after submission of the invoice by CEE. 3. FRIDLEY's Obligations 3.1 If requested by CEE, FRIDLEY shall make reasonable efforts to obtain information and or permission for access from FRIDLEY's clients which may be necessary for CEE to provide the services under this Agreement. 3.2 FRIDLEY shall assist CEE in obtaining names, addresses, phone numbers and _ building characteristics of potential PROGRAM participants and eligible 2 6N PROGRAM structures. Whenever possible, FRIDLEY shall provide this information to CEE on an IBM compatible computer diskette. 3.3 FRIDLEY shall assist in PROGRAM marketing efforts by authorizing the use of City of Fridley or other city agency logos and letterheads to CEE for use on marketing literature. All PROGRAM marketing materials used by CEE to promote this PROGRAM shall be approved in advance by FRIDLEY. 3.4 FRIDLEY shall provide funds sufficient to finance FRIDLEY PROGRAM loans. FRIDLEY shall determine the amount of funds allocated to the PROGRAM. 3.5 FRIDLEY shall establish eligibility for the FRIDLEY PROGRAM and shall provide these criteria in writing to CEE prior to commencement of any marketing efforts. 3.6 FRIDLEY shall provide in advance to CEE all necessary loan documents and related forms for CEE to originate FRIDLEY PROGRAM loans. 3.7 FRIDLEY shall make reasonable efforts to respond promptly to requests from CEE for information and approvals regarding the services to be provided under this Agreement. 4. CEE's Obligations 4.1 CEE shall use its best efforts to provide services under this Agreement in a professional manner consistent with the care and skill used by reputable members of CEE's profession. 4.2 CEE, and all of its employees or agents, shall comply with all statutes, ordinances, rules, regulations and other laws applicable to the provision of services under this Agreement. 4.3 CEE shall secure all permits and licenses required for performance of the services under this Agreement. 4.4 CEE shall not engage in discriminatory employment practices against any employee or applicant for employment and shall in all respects comply with all federal, state and local laws, regulations and orders, including without limitation, Chapter 363 of the Minnesota Statutes, as amended from time to time. Failure to comply with the provisions hereof shall be deemed a material default under this Agreement. 5. Term and Termination l 5.1 Unless earlier terminated as provided in the following paragraphs, this Agreement shall become effective on August 15, 1995, and continue through December 31, 1996. 5.2 This Agreement may be terminated by either party, for any reason or no reason, immediately upon written notice to the other party. In the event this Agreement is terminated by CEE prior to the expiration of the term set forth in paragraph 5. 1, FRIDLEY shall compensate CEE for all services delivered up to the date of termination and CEE shall provide FRIDLEY with such information as FRIDLEY may request regarding the status of the PROGRAM. 5.3 Any termination of this Agreement shall not release either parry from their respective obligations under sections 7 and 8 of this Agreement. 6. Insurance 6.1 During the term of this Agreement, CEE shall obtain and maintain the following insurance coverage: • Workers' Compensation Insurance at the statutory requirement for the State of Minnesota • Commercial General Liability Insurance with a $1,000,000 limit each occurrence and a general aggregate limit of $2,000,000 • Business Auto Insurance with a combined single limit of $1,000,000 each accident 6.2 Upon execution of this agreement, CEE shall provide FRIDLEY with a certificate or certificates of insurance relating to the insurance required pursuant to paragraph 6.1. 7. Liability and Indemnification 7.1 CEE represents that the services to be provided under this Agreement are reasonable in scope and that CEE has the experience and ability to provide the services. 7.2 CEE acknowledges that FRIDLEY cannot control the conditions at any site where the services may be provided, and, accordingly, FRIDLEY is not liable for any claim, damage, loss, injury or expense of any type which CEE may suffer as a result of providing the services under this Agreement. 7.3 CEE warrants that any services provided hereunder shall be done in a professional and workmanlike manner. 7.4 CEE shall indemnify, defend and hold harmless FRIDLEY and its officers, directors, employees and agents from and against any and all claims, damages, 1 00� Z':... W losses, injuries and expenses (including attorneys' fees and damages for death, personal injury and property damage) which FRIDLEY may incur as a result of any act or omission by CEE in providing services under this Agreement. 7.5 FRIDLEY shall indemnify, defend and hold harmless CEE and its officers, directors, employees and agents from and against any and all claims, damages, losses, injuries and expenses (including attorneys' fees and damages for death, personal injury and property damage) which CEE may incur as a result of any act or omission by FRIDLEY in discharging its duties under this Agreement. 8. Confidentiality Unless otherwise agreed by FRIDLEY in writing, CEE shall maintain in confidence and not disclose to any third parry any information obtained regarding FRIDLEY and/or any of FRIDLEY's clients for which CEE is providing services; provided, however, that this obligation to maintain confidentiality shall not apply to: a. Information in the public domain at the time of disclosure; b. Information which becomes part of the public domain after disclosure through no fault of CEE; or C. Information which CEE can demonstrate was known by it prior to the date of this Agreement. 9. Relationship of Parties CEE will provide services as an independent contractor under this Agreement. Neither CEE, nor any of its employees or agents, shall be considered employees of FRIDLEY for any purpose, and neither shall CEE be eligible for any compensation or benefits which FRIDLEY may provide to its employees from time to time. CEE shall be solely responsible for all employment and other taxes applicable to providing services hereunder, and FRIDLEY will not withhold any taxes or contributions from the compensation payable to CEE under this Agreement. If any governmental authority (federal, state or other) claims that FRIDLEY owes taxes or contributions which allegedly should have been withheld or made, then, to the extent permitted by law, CEE shall pay FRIDLEY the amounts claimed to be due, plus reasonable attorneys' fees and any other costs which FRIDLEY may incur in defending such claim, whether or not a lawsuit is commenced. 10. Notices All notices, requests, demands and other communications required to be given in writing under this Agreement shall be given to the other party in person or by mail as provided in this section. If delivered personally, notice shall be deemed to have been 60 duly given on the date of delivery. If delivered by mail, such notice shall be sent via first class U.S. mail, postage prepaid, to the address set forth at the beginning of this Agreement or such other address as a party may otherwise request by written notice, and notice shall be deemed duly given three (3) business days after mailing. 11. Assignment This Agreement shall be binding upon and inure to the benefit of the parties and their respective heirs, successors and assigns; provided, however, that neither party shall assign or transfer in any manner, this Agreement or any portion hereof without the prior written consent of the other party, and any attempt to assign or transfer without prior written consent shall be void and of no effect. 12. Governing Law This Agreement shall be governed by and construed in accordance with the laws of the State of Minnesota. 13. Miscellaneous 13.1 Headings and captions used in this Agreement are for convenience only and shall not affect the meaning of this Agreement. 13.2 This Agreement contains the entire agreement of the parties and supersedes all prior agreements, discussions and representations, written or oral, concerning the subject matter hereof. 13.3 No waiver by FRIDLEY of any term or condition of this Agreement or any document referred to herein shall, whether by conduct or otherwise, be construed as a waiver or release of any other term or condition of this Agreement. 13.4 This Agreement may only be amended in a written agreement signed by both parties. 13.5 Except as expressly set forth in Section 7, the rights and benefits under this Agreement shall inure solely to the benefit of FRIDLEY and CEE, and this Agreement shall not be construed to give any rights, benefits or causes of action to any third parry. 13.6 The invalidity or partial invalidity of any provision of this Agreement shall not invalidate the remaining provisions, and the remainder shall be construed as of the invalidated portion shall have never been a part of this Agreement 13.7 This Agreement may be signed in any number of counterparts, each of which shall be deemed and original and one and the same instrument. 6 6R S J IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF FRIDLEY By: Lawrence R Commers Its: Chair By: William W. Burns Its: Executive Director CENTER FOR ENERGY AND ENVIRONMENT By: Sheldon Strom Its: Executive Director Federal Tax Identification Number: 41- 1647799 F:\DATA\101\CGNTRACT\1995\605-FRID.DOC 08 /01/95 9:25 AM 7 6S t+ Housing Programs 1995 Home Improvement "Gap" Loans Loans to fill gaps in loan requests on a case —by —case basis. Loan repayment is deferred until the home _is sold. The maximum loan is $3,750. Home Mortgage Assistance Loans Loans to assist borrowers with down payment and closing costs associated with buying or refinancing and fixing —up a home. The maximum deferred loan is $6,000. Southwest Quad Homebuver Assistance Special fund designed to assist first —time buyers in purchasing a townhome in this development Money' could be used for entry costs such as the down payment and closing costs. The maximum deferred loan is $6,000. Rental Rehabilitation "Matching" Loans Loans to assist owners of rental property; program would be combined with MHFA funds. The maximum matching loan would be the lesser of $4,000 per unit or.$20,000 per building. Last Resort Housing Rehab Fund Deferred loans to homeowners who are unable to qualify for one of the existing -home rehabilitation programs. Program would be limited to code repairs_ and loan would not exceed $10,000. city Hyde Wide Park $25,000: $25,000 $40,000 $40,000 $0 $0 $0 $500,000 $0 _ $300,000 $65,000 $865,000 C� co W U -Z a m W U J a z z a lL 0 Z O F. W 3 O or CL ad LL Q U cr O O O O O -- — — N N N N N N N N N N N N N N N �:iiW;::: :::::: ::::'.JI�17•�� W po c.� N O 9 vi n 10 (D P O M N a (•- " :::: �`• - co O W .- t0 O 0N t6 - ::i::: e G1 t0 tp M (n0 N 1��NN Im N m co 1� .M- N 1^O_ 1W0� t0 N N Co co N •-- M N /N7 fW� O/ Ol IA O O W f0 b (D et W •• :• :'''!!�'; O tO t4 l0 - •�- l7 l+J V ^OJ C% 'N7�(^p_QI l+J Nl l9 lh l7 ��laN7aN9O^t^O_ t0 q V' M N 'i a) M l9 M N N N .- c� g g g :'•`-:'}- �`++.:f pip CD CD OD N .0s} N N N U) �O t��p app 1Ap app " U >:;0 ::'•.' ?•:.• to(ririMa+Saai ai Maid(oriao00 .+ +..'�;;;;:: c9 a9 03 t9 c9 M c9 to e7 03 (9 ao n1f)- O O 0000000000"', ::•,.q G 10 M CND C1I OoN G al a� jCj ^ OOOOOOOOOO : :r• ar i a03 1� 9 •`! : =: N l� lN7 W Opf W 9 •.'•. ' NE � N N sN}N (14 .(N� MN l0 /0 t0 t0 N n1h11���1q��1pq ��pjMCVj�rj. ((O to • b n co ^ po p �pp�c�MMMM� CD f l'7� l� C7 10 f� 1� e} �• 0 0 , ��pp ��pp AA AA 0 p� N N N N N .- :^.: o �cpp n p� 1Q t0M O) O .:::::: O '�::•': %:':Kvsl%:'c::::::: •.�:.;.�.�y. .•.•.•:.•.:U.;� � N N 019! N N W cD fD CD cD °aS °aS °aS °aS N N N 1 CD M °aS uZ�• a� a� a� a� 1 N 0.0)Of W O! Of OO O0/01 -m 0;0 ; -a 0: - - 1 .'�' ^`- • ••• N N N N N N NdI�� 0000; NS DNO N N N N N N 7— ap C n O g O ts bl 516mm 0430 fiCL � :P 4N j E { Y I - 7 t0. �-tR � 4D N O VE IL m m a gig � m . O r o� ° o E ` m m Off' a M m ro m ok 32 0E `o ° � «4 0's Es Ja � im m _ ° V 7 QQ C;% zs O N N ° S CO 44 0 ca I`'S p � A d e W O) w Z J W a m A 0 w ... . . . . . . . . . ..... . . PROJECTS Assumption: N.E. Quad vwll pay for itself. (1) 150,000 Frank's Used Cars 88,000 Gunderson Home 10,670 P - laza Area Tree Replacement 10,000 Banners for Mississippi St 4,500 2 Spare DecomtIve Lights 2,550 DO Taxes — last year $265,720 File :*Xl2MATAkHFIAXTIFPROWVRWEM.wki Zfl/M Linked To: CASHFLOW.wki 6V A Nf V 2,665,720 iggs 1995 2,400,000 265.720 1996 (Net) 525,000 787,500 (1) 1,312,500 1996 1997 826,875 826,875 1997 1998 1999 0 1998 0 1999 2000 1,900,000 1,900,000 2000 2001 Ontersec&m) 0 2001 2002 2003 0 2002 2004 0 2003 2005 0 2004 2006 0 2005 2007 0 2006 2008 0 2007 2009 0 2008 2010 0 2009 2011 0 2010 2012 0 2011 2013 0 2012 2014 0 2013 $2 400 000 $525000 1 -nml *-1 0 1 $6,705,095 2014 Assumption: N.E. Quad vwll pay for itself. (1) 150,000 Frank's Used Cars 88,000 Gunderson Home 10,670 P - laza Area Tree Replacement 10,000 Banners for Mississippi St 4,500 2 Spare DecomtIve Lights 2,550 DO Taxes — last year $265,720 File :*Xl2MATAkHFIAXTIFPROWVRWEM.wki Zfl/M Linked To: CASHFLOW.wki 6V Assumption is that these are all expenses, however some amounts are deferred loans due upon the sale of the property. Fffe:%123DATAXHRA%TIFPRO95XtiOUSiN(3.wki 2/2(95 Linked To: cAsHFLowwki VI 6W .. ... . . ...... ... .:.........:::::: ?::i.... . .... .... ...... .................. . . . . . . . . . . . . . . . 1995 430,0=00 315,000 500,000 1,245,000 1995 1996 451,500 330,750 525,000 1,307,250 1996- 1997 474,075 347,288 551,250 1,372,613 1997- 1998. 497,779 364,652 578,800 1,441,231 1998 1999 522,668 382,884 905,552 1999 2000 548,801 402,029 950,830 2000 2001 576,241 422,130 998,371 2001 2002 605,053 443,237 1,048,290 2002- 2003 635,306 465,398 1,100,704 2003 2004 667,071 488,668 1,155,740 2004 2005 0 2005 2006 0 2007 0 2007 2008 0 2008 2009 0 2009 2010 0 2010 2011 0 2011 2012 0 2012 2013 0 2013 201 1 4 0 2014 $5,408,4941 $3,962,0361 $2.155 OSC I 0 11 $11 525 Assumption is that these are all expenses, however some amounts are deferred loans due upon the sale of the property. Fffe:%123DATAXHRA%TIFPRO95XtiOUSiN(3.wki 2/2(95 Linked To: cAsHFLowwki VI 6W a is Budget Impact of Hyde Park Housing Programs Fridley HRA Single— Family Last Resort Program Fridley Matching Fund Deferred Loans Multifamily Properties Fridley Matching Fund Deferred Loans Leverage Potential HRA Other Target Maximum Budget Number of Risk Programs Market Assistance Impact Loans High No Moderate $10,000 $300,000 * 30 High Yes Large $4,000 $500,000 125 High Yes Notes: * — Included in 1995 HRA budget. Large $4,000 $500,000 per unit Total $1,300,000 Budgeted $800,000 Add'I Funds Needed $500,000 6X 125 a. C) >.M r= E (oil C 2 to o �, SO i 0 & IN < 09 e CL 0. 0. 0 E LL: LL M. E r fig 0 WO* ffi 0 >0 >1 D a CL cy d) In .0 ; § CL CL CL CL Ch tq .9 7. LV a IL LL LL 2 CL CL LL g (a 0 19 . (L , t;L m ! 1 4) U. cr >. 0 LL iiio a .. .... .... L le I • 5 a • Community Development Department HOUSING AND REDEVELOPMENT AUTHORITY City of Fridley DATE: August 4, 1995 TO: William Burns, Executive Director of the HRA FROM: Barbara Dacy, Community Development Director SUBJECT: Resolution Authorizing Anoka County HRA Special Benefit Levy for 1996 Chairperson Paul McCarron in a letter dated July 19, 1995 sent the recently- completed draft Anoka County Housing Study to each of the City Council members and Housing & Redevelopment Authority members. The cover letter also explained that the Anoka County HRA "...believes that increased County investment in housing will enable our communities to maintain the value of their property, will slow the progress of urban blight, and will make the County a better and safer place to live." To that end, Anoka County is proposing a special benefit levy for taxes payable in 1996. The County anticipates that the additional tax burden would be approximately $6.42 for a home valued at approximately $72,000. The anticipated revenue from Fridley is $145,122. Options Both the City Council and the Housing & Redevelopment Authority must pass a resolution authorizing the levy. If one body authorizes the resolution and the other does not, the levy would not, according to County policy, be implemented in the City. Further, both the City Council and the HRA must "opt in" on an annual basis if the levy is to be collected. This also means that if the City chooses to "opt out ", it can do so on an annual basis. The three options available to the City Council and the HRA are as follows: 1. Approve the resolution authorizing the special benefit levy (the levy will appear on property owner's tax statements under the category of "other ".) 2. Pass a resolution of intent to consider the levy with final determination to be decided by December 1, 1995. _ .. ,., , , ............ , ......... .. .... .... . ... .>. �. >.`IYt.,•,>,a.•,>.SL!i!A.>..,.. ,'�:�.;�`; pig.:... _ .. .. .�.. .... ... _.. .....,. ... E � Anoka County HRA Special Benefit Levy for 1996 August 4, 1995 Page 2 3. Pass a resolution specifying that the City does not want a County HRA levy. Remember, however, that the City was going to consider passing a levy of its own for HRA activities for taxes payable in 1997. Timing In order to implement the levy for 1996, the County HRA needs to pass a budget and certify the levy prior to September 15, 1995. It therefore needs to know which communities would be "opting in" for the levy. The final deadline, however, for implementation of the levy is December 1, 1995. The County is willing to allow cities to pass a resolution of intent, but with final determination to occur prior to December 1, 1995 (option #2). This will enable the County to complete the administrative work to implement the levy, and at the same time, permit the cities to complete additional study. The County has just recently completed a housing study compiled by its consultant in cooperation with the communities, staff and councilmembers. The study identifies 11 issue areas to address in the County, the first-two of which are proposed for initial implementation. The timing of the levy is difficult, since Fridley, like other communities, is in the midst of its budget process for 1996. The City Council has not yet determined whether or not there will be an increase in taxes for the upcoming year. Further, the study has been reviewed only on a preliminary basis by member communities; however, there has not been a significant amount of time by staff to review the contents and outcome of the study with the Planning Commission, HRA, and City Council. The City Council will be considering its resolution on the levy at its August 14, 1995 meeting. Housing Needs One of the two issue areas proposed for initial implementation with the levy is housing rehabilitation, both single family and multiple family. The second issue area is senior housing development. Because of the progress the City of Fridley has made on providing senior housing in the community, it is more appropriate for the City to consider participation in the rehabilitation committee. Anoka County proposes to establish two committees; one for each issue area. If the City elects to opt Wi Anoka County HRA Special Benefit Levy for 1996 August 4, 1995 Page 3 in and choose the housing rehabilitation committee, then staff members from all of the communities who chose to opt in become members of the rehabilitation committee and would compile a recommendation for the member communities as to how to spend the funds. The advantage of this proposal puts accountability and responsibility of using the funds squarely in the hands of the member community as opposed to Anoka County. Further, the County stresses that they do not intend to use the tax levy to hire more staff, but to provide a mechanism where the member communities can use the funds generated from its community on a dollar for dollar basis. The County does indicate, however, that over the first two years of the levy, about $150,000 needs to be recovered for the County expenses in completing the study and other administrative expenses to -date. Fridley's prorata share would be about $18,800 of the $145,122. The County housing study indicates that approximately 14% of the housing units in the County are substandard. In Fridley, using the County's definition, about 2,211 units out of 11,029 units are substandard. The recent housing condition study completed by staff showed about 1,500 units needing rehabilitation, but our study was based on exterior conditions only. The County's estimate appears to be a good goal to work toward. Further, the County believes that MHFA is willing to leverage any funds generated from the tax levy. Attached is correspondence from Tim Yantos dated July 28, 1995 which outlines proposed scenarios for leveraging the tax dollars in a housing rehabilitation program. Further, federal funding via the Community Development Block Grant program is threatened on an annual basis. If the CDBG program would be eliminated, the tax levy could be used as a means to replace that program. In the meantime, an additional source of revenue could be generated and used by the City to address multiple family or single family housing needs. Review Process Anoka County has been preparing the study over the last six months. They established a technical advisory committee composed of city staff members from County communities, and an intergovernmental advisory committee composed of councilpersons from County communities. Councilmen Billings and Schneider are the councilpersons representing Fridley. To -date, the levy-was not discussed in detail because the focus was on preparation of U� 1.-- 1,,...,. r Anoka County HRA Special Benefit Levy for 1996 August 4, 1995 Page 4 the housing study. The details on the levy was presented at the June and July respective meetings. At the most recent intergovernmental committee meeting on August 2, 1995, Councilman Billings stated that there is interest on behalf of some communities to pursue option #2, where the cities would pass a resolution of intent to consider the levy with the final decision to opt in or out to be made prior to December 1, 1995. Councilman Billings is prepared to make a recommendation to pursue option #2 to the HRA and to the City Council in order that the City can further analyze and determine if the proposed levy would be worthwhile for City consideration. Councilman Billings also stated that his preference for use of the funds would be for multiple family rehabilitation. Conclusion The City Manager /Executive Director of the HRA is very concerned about the timing of a potential tax levy during the timeframe that the City Council is evaluating the 1996 budget. Although the purpose of the levy may be well founded, it comes at a time prior to the City's decision on whether or not to pursue its own levy and when it is unclear as to the total tax impact to the residents for the 1996 tax year. Further, the County is requesting the cities to act on a resolution in a fast timeframe when the advantages or disadvantages of the levy are not clearly defined. Passing a resolution to refuse to opt in to the tax levy may be in order if the City Council and HRA is uncomfortable with the speed and timing of the proposed request. These concerns, however, were identified without knowledge of the outcome of the most recent intergovernmental committee meeting on August 2, 1995. Councilman Billings believes that option #2 addresses the Manager's concerns and will help the City Council and HRA make an informed decision by December 1, 1995. Action The HRA can condition its action pending City Council action at the August 14, 1995 meeting. Whatever option the HRA chooses, the attached resolution will be amended to reflect the HRA's decision. The County is requesting a response from each city by August 18, 1995. BD /dw M -95 -433 7C ANOKA COUNTY HRA Special Benefits Levy 1996 Schedule 6 -21 Technical Committee discussion begins 6 -27 ACHRA discussion 7 -12 Intergovernmental Committee discussion 7 -18 ACHRA selects option. Request cities with HRA to opt into special benefits levy for 1996 - 8 -18 30 -day opt -in period ends 8 -22 ACHRA adopts budget and proposed special benefits levy for 1996 9 -12 County Board approves budget and proposed special benefits recommendation 9 -15 Certify special benefits levy to county auditor 7D HRA RESOLUTION NO. - 1995 RESOLUTION AUTHORIZING ANOKA COUNTY HRA SPECIAL BENEFIT LEVY WHEREAS, the City of Fridley has an established HRA; and WHEREAS, the Anoka County HRA has adopted a policy that, prior to adopting an annual special benefits levy, that such municipality and its HRA must affirmatively resolve their approval for Anoka County HRA exercising its taxing powers within their jurisdiction; and WHEREAS, the HRA has determined that housing needs in the municipality would benefit by being included in the area of operation of the Anoka County HRA during 1996 for the purpose of the special benefit levy. NOW, THEREFORE, BE IT RESOLVED THAT, the HRA consents to the Anoka County HRA exercising its authority to levy a special benefit tax in the amount of up to .0131 percent of all taxable property within the jurisdiction of the City of Fridley. PASSED AND ADOPTED BY THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF FRIDLEY THIS DAY OF , 1995. LAWRENCE R. COMMERS - CHAIRMAN ATTEST: WILLIAM W. BURNS - EXECUTIVE DIRECTOR 7E SPECIAL LEVY FOR HRA 1. Authority : Minnesota Statutes 469.033 2. Maximum Levy: Up to .0131 percent of taxable market value 3. Impact on residential property with $72,000 TMV. $6.42 Municipality 1995 TMV Maximum HRA Le BURNS. 105,082,200 13,765 COLUMBUS 141,808,400 18,576 LI NWOOD 121,962,900 15;977 ANDOVER 679,429,100 89,005 ANOKA 490,042,400 64,195 BETHEL 10,462,000 1,370 BLAINE 1,225,239,800 160,546 CENTERVILLE 65,533,900 8,322 CIRCLE PINES 152,250,300 19,944 COLUMBIA HEIGHTS 545,217,200 71,423 COON RAPIDS 1,825,153,800 239,095 EAST BETHEL 261,265,400 34,225 FRI DLEY 1,107, 803,400 145,122 HAM LAKE 328,362,300 43,015 HILLTOP 10,357,900 1,356 LEXINGTON 48,765,300 6,388 LINO LAKES 435,100,000 56,998 OAK GROVE 192,334,200 25,195 RAMSEY 499,131,000 65,386 SPRING LAKE PARK 201,567,000 26,405 ST. FRANCIS 70,385,700 9,220 Total 8,575,254,500 1,115,558 * An additional amount of up to .0013 percent of Taxable Market Value may be levied for informational services and relocation assistance. This essentially Increases the numbers shown above by 10 %. 7F f , ANOKA COUNTY HOUSING AND REDEVELOPMENT AUTHORITY Paul McCarron, Chairman Dave McCauley, vice Chair Dennis D. Berg Margaret Langfeld Dan Erhart Dick Lang Jim A. Kordiak July 19, 1995 The Honorable William J. Nee Mayor, City of Fridley 219 Logan Parkway N.E. Fridley, MN 55432 Dear Mayor Nee: The Anoka County HRA has been working with elected officials and technical staff from your communities to develop a program which will address housing needs identified in the enclosed draft Anoka County Housing Study. Over the last nine months, our joint efforts have shown us that there is a need to do more to improve the quality of housing in Anoka County. The Anoka County HRA believes that increased County investment in housing will enable our communities to maintain the value of their property, will slow the progress of urban blight and will make the county a better and safer place to live. Anoka County recognizes that many municipalities and local HRAs and EDAs have undertaken efforts to address local housing needs. The Anoka County HRA believes, however, that it is now time for us to work together to leverage our resources in order to enhance our abilities to make the necessary investment in our future. The Anoka County HRA draft Housing Study identified two priority housing needs in the county. These priority areas are senior housing development and housing rehabilitation, which includes both single - family and rental housing. Approximately 14% of the housing units in the county (13,307 out of 97,006 units) are substandard. Although the county and the municipalities have used CDBG and other funding over the years to rehabilitate our housing stock, the enormity of this problem greatly outweighs our current ability to address the issue. Further, over the next 10 years, the number of persons 65 years and older living in Anoka County will increase by 55 %, and already there are waiting lists for senior housing in the County. It is clear that the rapid rate of growth will outstrip the ability of current projects to provide adequate housing for our elderly population. The benefit that the Anoka County HRA can offer is the ability to levy a special benefit tax that can then be leveraged to bring up to four times the amount of the revenue received through the levy. Thus, the Anoka County HRA is considering exercising its statutory authority for a special benefit levy. It is the policy of the Anoka County HRA, however, that it will not exercise any levy authority in any municipality which has an existing HRA or EDA with HRA authority, unless both the municipality and the HRA/EDA approve. Telephone: (612) 323 -5680; Fax: 323 -5682; TDD/TTY: 323 -5289 Government Center, Administration Office, 2100 3rd Avenue, Anoka, MN 55303 -2489 7G July 19, 1995 Page 2 At its meeting of July 18, 1995, the Anoka County HRA approved a motion requesting that municipalities with an HRA/EDA consider consenting'to the special benefit levy for 1996. If the Anoka County HRA determines that it will exercise its levy authority, it must certify the levy to the County Auditor by September 15. Thus, we request you seriously consider and respond to this request no later than Friday, August 18, 1995. At the August 22, 1995, meeting of the Anoka County HRA, the Board will determine whether or not it will exercise its levy authority and will adopt a proposed budget based on the level of participation. We anticipate that the amount of County HRA tax collected in your community would be approximately $145,122. It is our intention to use the proposed levy for the development of senior citizen housing and the rehabilitation of single - family and rental housing in the county. It is further our intention to establish committees of the participating communities to work with the County HRA on the implementation of these programs. We recognize the importance of ensuring that contributing municipalities benefit from the levy. In 1996, it is our intention to ensure that all of the revenue collected in a municipality be spent to benefit that municipality. In order for the Anoka County HRA to exercise its levy authority in your community, we must have a resolution stating your consent. A draft resolution is attached for your convenience. If you have any questions, or would like any additional information, please contact Tim Yantos at 323 -5692. Approved resolutions should be sent to Mr. Yantos' attention no later than Friday, August 18, 1995. Thank you for your careful consideration of our request. Sincerely, Paul Paul McCarron Chairman /bje Enclosures cc: City HRA/EDA Board Members City HRA/EDA Directors City Councilmembers City Administrators /Managers /Clerks Anoka County HRA Intergovernmental Advisory Committee Anoka County HRA Technical Advisory Committee Anoka County HRA Board 7H ANOKA COUNTY HOUSING AND REDEVELOPMENT AUTHORITY Paul McCarron, Chairman Dave McCauley, vice Chair Dennis O. Berg Margaret Langfeld Dan Erhart Dick Lang Jrm A Kordlak July 28, 1995 MEMO TO: HRA Technical Advisory Committee FROM: Tim Yantos, Executive Director SUBJECT: Examples Regarding Distribution of Special Benefit Levy to Housing Rehabilitation and Senior Housing Program Please find enclosed examples, which we have reviewed in past HRA Technical meetings, on how the special benefit levy could be distributed between the Housing Rehabilitation and the Senior Housing Programs. The basic assumption throughout all these examples is that there is enough participation from interested communities and funding available to pay for the Anoka County HRA administrative cost which is approximately $75,000 for 1995 and $75,000 for 1996, or a total of $150,000. The attached examples do not show the minimum amount of funding needed to move the program forward, but we used a selected number just to give you an idea of how the funding may Impact each program. The example for the Housing Rehabilitation Program is fairly straight forward. In this example, we selected a levy of $250,000 to $500,000 over and above the $150,000 needed for the two years of Anoka County HRA Administration. Our discussions with MHFA indicate a willingness on their part to perhaps provide a leveraga of $2- to $3 for each $1 of lovy money. We also looked at the opportunity of providing $4 to our $1 for a loan program: Scenario 1 and Scenario 2 Identifies the number of rehabs that could be possible with the various funds available. The Senior Housing Program example, again, selects an arbitrary 100 units for construction. This also is not a minimum but just an example. We would need the $150,000 for the two years of Anoka County Administration as stated above. The example identifies cost per unit between $55,000 and $65,000, depending on the amenities. Each scenario identifies amenities, the total cost of the overall project and the number of years of commitment based on the annual contribution that would be necessary to make each of those scenarios work. Finally, each of those scenarios identifies how much the monthly rent would be. Telephone: (612) 323 -5680; Fax: 323 -5682; TDD/TTY: 323 -5289 Government Center, Administration Office, 2100 3rd Avenue, Anoka, MN 55303 -2489 71 July 28, 1995 Page 2 As we discussed, Senior Housing and Housing Rehabilitation Committees could be developed for those communities that wanted to participate in one or both programs. These committees could be established to recommend the administration and operations of the program. A community can belong to one or both of these committees if they so desire. Committees would begin meeting in September 1995 and will be coordinated by the Anoka County HRA. We have identified some of the activities that each committee will be responsible for. As you are aware, each year, those communities with HRAs or EDAs with HRA authority will have the option to opt -in or not participate in the program. There will be an understood commitment, however, in those communities participating in the Senior Housing Programs which will require their commitment to contribute their levy for more than one year, depending on the scenario selected. I hope this information will be helpful. Please share it with your elected officials and administrators. If you should have any questions on the operations of the program, please do not hesitate to contact me at 323 -5692 or Tom Durand at 323 -5700. For any technical questions, please contact Steve Griesert at (507) 645 -6044. e Tim Yant Executive Director TY :bje Enclosures cc: Anoka County HRA Board Jay McUnden, County Administrator Tom Durand, Governmental Services Div. Mgr. Alyce Osborn, Community Development Manager Steve Griesert, Community Partners, Inc. 7J EXAMPLE SENIOR HOUSING AND HOUSING REHABILITATION COMMITTEES 1. Anoka County HRA to consider: a. Senior Housing Committee and Housing Rehabilitation Committee b. Municipalities that selected the respective options will be members of the committees. 2. Committee Activity Senior Housing Committee • Recommend municipalities' senior housing needs • Recommend number of units for each municipality • Recommend selection of architect, sites, designs, prepare a project program evaluate financing options, determine how to maximize tax levy, etc. • Recommend award or bids, construction • Oversee construction Housing Rehabilitation Committee • Recommend methods to leverage tax levy funds (MHFA, Federal Home Loan Bank, Met Council, etc. • Recommend allocation of funds (by municipality, by rent and single family owner occupied) • Recommend guidelines for administrating funds, select ad and who will administer the Housing Rehabilitation Programs. 7K :t.,..,. ... .. .... .. .... EXAMPLE ANOKA COUNTY HOUSING REHABILITATION PROGRAM Assumptions: - Anoka County HRA special benefit levy of municipalities participating will total $250,000 to $500,000 for housing rehabilitation • Average rehabilitation project is $10,000 • Levy can be leveraged 2 -3 to 1 with grant funds • Levy can be leveraged 4 to 1 with loan funds Scenario 1: HRA Tax Lew Leverage with Grant Funds $250,000 $500,000 Scenario 2: $250,000 4500,000 $500,00041,000,000 HRA Tax Lew Leverage with Loan Funds $250,000 $500,000 $1,000,000 $2,000,000 No. of Total Rehabs $500,000- $750,000 50-75 $1,000,00041,500,000 100 -150 No. of Total Rehabs $1,250,000 125 $2,500,000 250 *Grant and Loan Funds (MHFA, Federal Home Loan Bank, Metropolitan Council, Private Financial Institutions) *Loan Funds may create an "ongoing' Revolving Loan Fund 7L .. ..,'ate.... ,� .............., ....., , .... ,.... ,., ,.,...,., ,z :x>:.,...,.,.. ., .. , ....•a:�:.. , . ,.. , .. .. ...,... .. , . ,., . ,. ,,, ... ....... , ..... ., .. .. , . a EXAMPLE ANOKA COUNTY SENIOR HOUSING PROGRAM ASSUMPTIONS • 100 units of market rent housing • $55,000 to $65,000 per unit cost (includes all construction and soft costs exclusive of land) • $65,000 units - Many amenities including underground parking • $55,000 units - Less amenities; no underground parking • $175.00 per unit average monthly operating expense • Total Project Costs - $5,500,000 to $6,500,000 • Annual Anoka County HRA special benefit levy of municipalities participating will total $200,000 for senior housing SCENARIO NO. 1 • Many amenities including underground parking • $6,500,000 total cost • 7 year commitment of $200,000 annual contribution • $450.00 monthly rent 7M T I SCENARIO NO. 2 • Many amenities including underground parking • $6,500,000 total cost • 5 year commitment of $200,000 annual contribution • $550.00 monthly rent SCENARIO NO. 3 • Less amenities; no underground parking • Total project cost - $5,500,000 • 3 year commitment of $200,000 annual contribution • $450.00 monthly rent SCENARIO NO. 4 • Less amenities; no underground parking • Total project cost - $5,500,000 • 2 year commitment of $200,000 annual contribution • $500.00 monthly rent 7N Casserly Molzahn & Associates, Inc. Suite 1100 Southpoint Office Center - 1650 West 82nd Street - Minneapolis, Minnesota 55431 -1447 Office (612) 885 -1298 - Fax (612) 885 -1299 M E M O R A N D U M TO: City of Fridley Attn: William Burns Barbara Dacy FROM: James R. Casserly Mary E. Molzahn RE: Tax Increment Assistance for Agro -K Corporation DATE: July 21, 1995 INTRODUCTION Agro -K Corporation is a research and development company involved in the manufacturing and marketing of environmentally compatible products in agricultural markets throughout the world. The company is currently located at 36 -37th Avenue N.E. Its principal shareholders are Dr. A.H.J. Rajamannan and Concie Rajamannan. The Rajamannans reside at 2120 Argonne Drive N.E. The company's lease expires November 1 of this year and they are actively seeking a site to build a larger facility for their growing business. The company is hoping to construct a 30,000 square foot building on a site that will allow at least a 20,000 square foot expansion. The company employs 14 people at its current site and 20 overall. It anticipates an increase of at least five employees within the next 15 months. Currently its five warehousemen are salaried.at $32,000 per year. The new jobs would be in warehousing, accounting and sales. THE PROBLEM While the company has looked at several sites in Fridley and Columbia Heights, the site that would be most suitable for their current and future needs is located 81st Avenue and Main Street N.E. This site, however, has serious soil problems. Even though the company would purchase the site for approximately 75 cents per square foot, the estimate to correct the soils to allow construction of the proposed building is $150,000. The company has approached the City and has asked if there is any program that would assist them with the development of the site and the expansion of their business. �• A SOLUTION The site is located in the City's Tax Increment Financing District No. 3, which terminates in June 2007. Because of the low value of the site, a 30,000 square foot multi - purpose building would generate tax increment in excess of $34,000 a year (see Cash Flow attached for tax increment analysis and assumptions). The HRA could anticipate receiving $361,213 over the remaining life of TIF district if this project were constructed. The total project costs are approximately $1.5 million. The company is seeking a level of assistance that would cover its site correction costs of $150,000. This money is needed upfront. The HRA guidelines suggest a grant of 5 percent of the project costs ($75,000) or a loan of 15 percent of the project costs ($225,000). However, these are guidelines principally used for the establishment of economic development districts. This site is already in a redevelopment district which was established partly to address the existing soil deficiencies. The HRA has assisted businesses in the past with the correction of soil deficiencies. Our recommendation is that you assist the company with a $75,000 grant and a $75,000 loan. The $150,000 falls between the grant and loan guidelines and would be used for customarily eligible expenses. The loan would be structured in much the same manner as your recent loans, that is, no payments for two years with the deferred interest added to principal and then the balance amortized over a set number of years as shown on the loan repayment schedule attached to this memorandum. (The HRA loan cannot be for a period shorter than the SBA guaranteed loan, which is 20 years; however, the interest rate can be increased substantially after ten years. In other communities we have suggested increasing the rate to 5 percent above prime to encourage the payoff of the loan). FINANCING The company has received approval from Twin City Federal, which is acting as the construction lender and which will supply approximately one -half of the permanent financing (Kurt Schrupp or Rick Larson are the company's contacts at TCF Bank). Bridgewater Financial Group is packaging the loan request to the SBA. Deborah Gustafson, president of Bridgewater Financial, has extensively reviewed the company's financial statements and is confident that the SBA will accept and approve the loan. While the company's sales during calendar years 1992, 1993 and 1994 have been consistent, approximately $2.5 million, they have increased substantially in 1995 (as of July 17 of this year sales exceeded $2 million) and additional increases in sales are projected for the next three years. Deborah Gustafson has w1k provided us with a cash flow analysis which indicates that the new debt service of over $118,000 would be offset by rent savings of almost $93,000 so that there is a projected cash flow coverage ratio of $1.65. In short, there seems to be more than adequate cash flow to cover the increased building expense. While the HRA's security is a mortgage which is in third position, after the bank and the SBA, there seems to be adequate cash flow to make the annual debt service payments. CONCLUSION The 81st and Main Street site has apparently never been developed. The site requires extensive soil corrections before it is useable. This growing local company offers a good opportunity to develop this site. Assuming that the $75,000 loan is amortized over 18 years at 5 percent, the loan repayments would be almost $127,000. When combined with the approximately $361,000 of potential tax increment the total return to the authority for its $75,000 grant and $75,000 loan would be approximately $488,000. This number does not include any additional increment generated by the company expanding. Given the problems with the site, the duration of the district., the bank and, presumably, SBA approval, and the potential of the company, we recommend that the authority make a $75,000 loan and a $75,000 grant. JRC /MEM /kh v ..} .,. v.vhv �. �.... � � . v .. .... � } ?CtiK, .,+,� }. �. .`F}1}.}. �... �� ti��. nom: }. �} .....h..}. }, .}.....�. �.♦..�:~ }� .�... }. v •. v�: K��. .. ) ?�.• ::! �� � � v ..... ��' }ij1 3 CITY OF FRIDLEY, MINNESOTA AGRO - K PROJECT TAX INCREMENT AND PRESENT VALUE ANALYSIS 361,213 36,121 325,092 200,794 200,794 ARG01 PREPARED BY CASSERLY MOLZAHN & ASSOCIATES, INC. 12- Jul -95 ORIGINAL ESTIMATED ESTIMATED LESS: AVAILABLE 8.000% PV RATE TAX TAX TAX ADMIN TAX SEMIANNUAL CUMULATIVE CAPACITY CAPACITY INCREMENT FEES INCREMENT BALANCE BALANCE 12/01/95 3,327 3,327 0 0 0 0 0 06/01/96 3,327 31,673 0 0 0 0 0 12/01/96 3,327 31,673 0 0 0 0 0 06/01/97 3,327 31,673 17,201 1,720 15,481 13,762 13,762 12/01/97 3,327 31,673 17,201 1,720 15,481 13,233 26,995 06/01/98 3,327 31,673 17,201 1,720 15,481 12,724 39,719 12/01/98 3,327 31,673 17,201 1,720 15,481 12,235 51,953 06/01 /99 3,327 31,673 17,201 1,720 15,481 11,764 63,717 12/01/99 3,327 31,673 17,201 1,720 15,481 11,311 75,029 06/01/2000 3,327 31,673 17,201 1,720 15,481 10,876 85,905 12/01/2000 3,327 31,673 17,201 1,720 15,481 10,458 96,363 06/01/2001 3,327 31,673 17,201 1,720 15,481 10,056 106,419 12/01/2001 3,327 31,673 17,201 1,720 15,481 9,669 116,088 06/01/2002 3,327 31,673 17,201 1,720 15,481 9,297 125,386 12/01/2002 3,327 31,673 17,201 1,720 15,481 8,940 134,325 06/01/2003 3,327 31,673 17,201 1,720 15,481 8,596 142,921 12/01/2003 3,327 31,673 17,201 1,720 15,481 8,265 151,186 06/01/2004 3,327 31,673 17,201 1,720 15,481 7,947 159,133 12/01/2004 3,327 31,673 17,201 1,720 15,481 7,642 166,775 06/01/2005 3,327 31,673 17,201 1,720 15,481 7,348 174,123 12/01 /2005 3,327 31,673 17,201 1,720 15,481 7,065 181,188 06/01/2006 3,327 31,673 17,201 1,720 15,481 6,793 187,981 12/01/2006 3,327 31,673 17,201 1,720 15,481 6,532 194,513 06/01/2007 3,327 31,673 17,201 1,720 15,481 6,281 200,794 361,213 36,121 325,092 200,794 200,794 ARG01 PREPARED BY CASSERLY MOLZAHN & ASSOCIATES, INC. 12- Jul -95 C>-o;2 C: i:i Zt"Zi G i:i:..;.;..., . , , . ........ �....., ... ... .. .... . . ......... . ....... ..... .. . , . CITY OF FRIDLEY, MINNESOTA AGRO - K PROJECT ASSUMPTIONS PIN 03- 30 -24 -41 -0002 ORIGINAL MARKET VALUE ORIGINAL TAX CAPACITY 3.000% 4.600% ESTIMATED CONSTRUCTION COSTS ESTIMATED MARKET VALUE 24.11 /SF BLDG 30,000 SF 80.000% LAND ESTIMATED TAX CAPACITY 3.000% 4.600% ESTIMATED TAXES 1.28 /SF PAY 1995 TAX RATE 1.21360 ADMIN FEES 10.000% PV RATE 12/1995 8.000% INFLATION 0.000% CONSTRUCTION 1995 VALUATION 1996 TAXES PAYABLE 1997 ARGOT PREPARED BY CASSERIJr"iN & ASSOCIATES, INC. 8D 720,000 3,327 107,100 3,327 900,000 723,327 31,673 38,438 12- Jul =95 CITY OF FRIDLEY, MINNESOTA AGRO -K PROPOSAL PAYMENT SCHEDULE BEGINNING ACCRUED PRINCIPAL INTEREST TOTAL ENDING BALANCE INTERET PAYMENT PAYMENT PAYMENT BALANCE 0.0 75,000 0 0 0 0 75,000 0.5 75,000 1,875 0 0 0 76,875 1.0 76,875 1,922 0 0 0 78,797 1.5 78,797 1,970 0 0 0 80,767 2.0 80,767 2,019 0 0 0 82,786 2.5 82,786 1,445 2,070 3,514 81,341 3.0 81,341 1,481 2,034 3,514 79,860 3.5 79,860 1,518 1,997 3,514 78,342 4.0 78,342 1,556 1,959 3,514 76,787 4.5 76,787 1,595 1,920 3,514 75,192 5.0 75,192 1,635 1,880 3,514 73,557 5.5 73,557 1,675 1,839 3,514 71,882 6.0 71,882 1,717 1,797 3,514 70,165 6.5 70,165 1,760 1,754 3,514 68,404 7.0 68,404 1,804 1,710 3,514 66,600 7.5 66,600 1,849 1,665 3,514 64,751 8.0 64,751 1,896 1,619 3,514 62,855 8.5 62,855 1,943 1,571 3,514 60,912 9.0 60,912 1,992 1,523 3,514 58,920 9.5 58,920 2,041 1,473 3,514 56,879 10.0 56,879 2,092 1,422 3,514 54,786 10.5 54,786 2,145 1,370 3,514 52,642 11.0 52,642 2,198 1,316 3,514 50,443 11.5 50,443 2,253 1,261 3,514 48,190 12.0 48,190 2,310 1,205 3,514 45,880 12.5 45,880 2,367 1,147 3,514 43,513 13.0 43,513 2,427 1,088 3,514 41,086 13.5 41,086 2,487 1,027 3,514 38,599 14.0 38,599 2,549 965 3,514 36,050 14.5 36,050 2,613 901 3,514 33,437 15.0 33,437 2,678 836 3,514 30,758 15.5 30,758 2,745 769 3,514 28,013 16.0 28,013 2,814 700 3,514 25,199 16.5 25,199 2,884 630 3,514 22,314 17.0 22,314 2,957 558 3,514 19,358 17.5 19,358 3,030 484 3,514 16,327 18.0 16,327 3,106 408 3,514 13,221 18.5 13,221 3,184 331 3,514 10,037 19.0 10,037 3,263 251 3,514 6,774 19.5 6,774 3,345 169 3,514 3,429 20.0 3,429 3,429 86 3,514 (0) 7,786 82,786 43,732 126,518 PRINCIPAL 75,000 INTEREST RATE 5.000% TERM (YEARS) 18 AGROPAY PREPARED BY CASSERLY. MOLZAHN &ASSOCIATES, INC. 21- Jul -95 JO*A (•i ••: '`iti`' a ^'`i`G`s^i � i`C "� S "`a^ "i`, "`s :`"''`� � "C`, G�i`a 'K ^^^i`i`i . 2C K2C...�:ti G: a a a . , . a ...�i .. ... ...,.. a: 72 >i.a...,�ti;.;�;::::,,�'`;.,.�, �>.i.raR� ''.` ��..`. �b. �R�. �``..: �ti; a. 7: i' rhv`. �;,: i; i�^.• �,; F;: ?t�. s`'' t�•:>:. �.` �' 9.' R. �. �.`.}' 4' R.' �^ 2." ��e'.'``.'' �."+ .:?.`i.i'.�R?2�.�....,.. ....... .......::�::.......... ... � Community Development Department HOUSING AND REDEVELOPMENT AUTHORITY City of Fridley DATE: August 4, 1995 TO: William Burns, Executive Director of HRA FROM: Barbara Dacy, Community Development Director Grant Fernelius, Housing Coordinator SUBJECT: Update on Housing Replacement Program Jim Casserly has prepared the first draft of the Housing Replacement Program, a copy of which is attached. The plan itself is modeled after a typical tax increment financing plan and incorporates many of the same elements. Over the course of the next few weeks staff will work to obtain additional information needed for the plan, such as estimated project costs, identification of parcels for Phase I, and creating a boundary map. No action is needed by the HRA at this time, however we will be requesting their approval and adoption of the program at the September meeting. GF/ M -95 -428 ..�. -•,�.. .:,..>., ....,... < : ...:_. ;:;�,y;cc2,::�:;oc; ;:a;a > <: >, .. ,. .. ...... .. ,.. .. ... ..,. i #,,�,i;i ;tii:i:; :2',.Z ;f:•::.� >:2Ci:i:i :.. ...... ...... ...., . ,......... . a Casserly Molzahn & Associates, Inc. Suite 1100 Southpoint Office Center • 1650 West 82nd Street • Minneapolis, Minnesota 55431 -1447 Office (612) 885 -1298 • Fax (612) 885 -1299 MEMORANDUM TO: City of Fridley Attention: Barbara Dacy William Burns ,,Grant Fernelius FROM: Mary E. Molzahn James R. Casserly RE: Housing Replacement Program DATE: July 27, 1995 Enclosed please find a draft of the Housing Replacement Program (the "Program") for the City's Housing Replacement District No. 1 (the "District "). Please review the Program and advise of any additions, deletions or comments. Also enclosed is a proposed Chronology for the adoption of the Program and the creation of the District. The HRA should receive a copy of the draft Program for review in its August 10, 1995 packet. It will then be asked to approve the Program at its September 14th meeting. Additional information we need for the Program includes the following: 1. the parcels to be included in this Phase I 2. the current market value and tax capacities of those parcels 3. the estimated market values of those parcels after their redevelopment /rehabilitation 4. the pay 1995 tax rate of the City, County, affected School District and "other jurisdictions" 5. the Pay 1996 tax capacity of all property within the City of Crystal, Hennepin County and affected school district (also the identifying number of the school district) 6. specific development you anticipate on these parcels - i.e., development of vacant parcels, demolition and redevelopment of blighted parcels and why they are blighted, rehabilitation of structures, etc. - M/mil +... . a e s 7. estimated project costs for the expenditures listed on Exhibit I -A -1 for this first Phase - based on these figures, we will estimate project costs for the entire District 8. a map indicating the parcels to be included in the District at this time If you have any questions, please give a call. 11B CITY OF FRIDLEY CHRONOLOGY FOR ADOPTION OF HOUSING REPLACEMENT PROGRAM CREATION OF HOUSING REPLACEMENT DISTRICT Thursday, August 10, 1995: Thursday, September 14, 1995: Friday, September 22, 1995: Monday, October 2, 1995: Monday, October 2, 1995 or Monday, October 16, 1995 HRA Meeting: review of Housing Replacement Program HRA Meeting: approval and adoption of Housing Replacement Program and creation of Housing Replacement District Notice of public hearing published in City's official newspaper (not less than 10 nor more than 30 days prior to public hearing) Public Hearing: City Council review of Housing Replacement Program City Council Meeting: City Council approval and adoption of Housing Replacement Program and creation of Housing Replacement District 11C `K`C'h ^Cti `i�""`C`,'`iti1 �"'G!: `:ti ti`i '1ti t•c �c "i`t• '`i`Ch i. .Ri',^ih^'`, "` "titi`i`i -'._ ..,...,..,.,,?<>,.;1 1K00 0i>i)C`CtitiT:.,.,.,.i>i ?,:,.,. QQ,.,.,ti;i;i: i:i •::, ` >: +•,`.., '�a8;`•'L�� w±n:r's, .. >,., ....., ...,..........,., :�,...,.,.,....,�,...n�,';.:c ,... , .crate ... .. .. �.,�,:.;., :�.... , .., , , ., .. ,...... , , .. >. ----------- - - - - -- - -- - --- - - - - -- HOUSING REPLACEMENT PROGRAM FOR HOUSING REPLACEMENT DISTRICT NO. 1 THE HOUSING AND REDEVELOPMENT AUTHORITY In And For THE CITY OF FRIDLEY, MINNESOTA OCTOBER , 1995 Prepared by: Casserly Molzahn & Associates, Inc. Suite 1100 Southpoint Office Center 1650 West 82nd Street Bloomington, MN 55431 -1299 ID r..' w• �e�: �l,; wn: w` ist: c;t�i2i2i:w•wi�:�C)C>G`C`iti!C1i ti!wtiti: i.`i2tii: i2iM.`i::!,",•,:�:ti '�•tia, •ti 4 •�; •� 1 j:(: -`i •i`G�`i•:`i�:�i - - "N"';3 -•� i` -`i ."ti -�:`i :•i.- l.:'ti •:)s •:1 ..; ..; ..;,; ... , a,...'>.^ 32. i.. wi;> ..a'i!.'`�^>.Ri2i2whZ:2.32�.titi; 2.. �•''.�.,,..ri, ,,,.i ;.;:iW�,ti��:.;.,t,,FF 3t3+ `1.'h,:.•,l:w•KFtiz:?:r; >:�2 >:!; �..,>, ?., ;h;: . . ... .. .. . ... 1 , 1 MUNICIPAL ACTION TAKEN Based upon the statutory authority provided by Laws of Minnesota 1995, Chapter 264, Article 5, Sections 44 through 47, the Housing Replacement Program was approved and Housing Replacement District No. 1 was created. The following municipal action was taken.in connection therewith: October _, 1995: The Housing Replacement Program, including Phase I, was adopted. 11E ikb :,. �, .�^�R�w ��."-10.4~ ~is -^K:, aK.: 1 y . TABLE OF CONTENTS This Table of Contents is not part of the Housing Replacement Program; it only for convenience of reference. PAGE ARTICLE I. HOUSING REPLACEMENT PROGRAM Section 1.1. Definitions Section 1.2. Statement of Objectives Section 1.3. Statement of Compliance 1 - 3 Section 1.4. Criteria for Inclusion in the District 1 - 3 Section 1.5. Conditions for Acquisition 1 - 3 Section 1.6. Proposed Development Activity 1 - 3 Section 1.7. Estimated Project Costs 1 - 3 Section 1.8. Estimated Sources of Revenue 1 - 3 Section 1.9. Estimated Impact 1 - 4 Exhibit I -A Estimated Project Costs I -A -1 ARTICLE II. PHASE I Section 2.1. Specific Development Activity 2 - 1 Section 2.2. Estimated Project Costs 2 - 1 Section 2.3. Original Tax Capacity 2 - 1 Section 2.4. Estimated Captured Tax Capacity 2 - 1 Section 2.5. Original Tax Capacity Rate 2 - 1 Section 2.6. Estimated Tax Increment 2 - 1 Section 2.7. Duration Limits 2 - 1 Section 2.8. Identification of Parcels 2 - 1 Exhibit II -A Boundary Map II -A -1 11F ...... ,......... ,..�, ..,..... , , . ,..., ..,....,. , .. ..... • , ..,.. ......., . I@ ......... . ..._,......, .. , .., ,... .... ::x;�;?::.,...1:;,'::;a:: ?. ,.t ?;?t ?:., . S; ?ti.... �•;::i,.:';:;th{.?::rt ,. t:Kt:;a,: ........: <:?bN � s ARTICLE I HOUSING REPLACEMENT PROGRAM 1.1. Definitions. The terms defined below shall, for purposes of this Housing Replacement Program, have the meanings herein specified, unless the context otherwise specifically requires: "Act" means the Laws of Minnesota 1995, Chapter 264, Article 5, Sections 44 through 47. ' "Authority" means the Housing and Redevelopment Authority in and for the City of Fridley, Minnesota. "City" means the City of Fridley. "Comprehensive Plan" means the City's Comprehensive Plan. "District" means Housing Replacement District No. 1, created October _, 1995, and as it may be subsequently modified. "Market Rate Housing" means housing that has a market value that does not exceed 150 percent (150%) of the average market value of single- family housing in the City. "Phase" means the parcel(s) identified for inclusion and development as part of the Program. A Phase may include a single parcel, but may not include more than ten (10) parcels in a calendar year. Phases are designated with Roman numerals. "Program" means the Housing Replacement Program adopted October _, 1995, and as it may be subsequently modified. Section 1.2. Statement of Objectives. Housing is essentially the determining factor by which a city is initially judged, and as a result, it reflects the character of that city and the characteristics of its resident population. The Housing and Redevelopment Authority in and for the City of Fridley (the "Authority ") has determined that there are certain areas within the City of Fridley (the "City ") which may negatively reflect its character and that of its residents. These areas are potentially more valuable, more productive and more stable than is currently realized because they contain parcels that are vacant, under- utilized or blighted, due to poor planning and subdivision and zoning practices, and to structures, which because of dilapidation; obsolescence; overcrowding; faulty arrangement or design; lack of ventilation, light and sanitary facilities; inadequate land coverage; obsolete layout; or any combination of these and other factors, are detrimental to the safety, health, 1 - 1 11G ,: �•: • •:w�• xti ; •;w •: ..w., . ,,. ..;,.:w�,�,•.w ww �.�, w ,�, w , . ,w t•:+c�t tw-ti ,� ..... .. .... ... .. >:.,. ,. ,. ,. ,. ,. ,.,.,. ,. ,. ,. ,.. . ..•,.:w'ti�2ti;,,,.,ti!.. ti:titt2 ........ .................... ,. .. ,., ,. � , ..,.,.,.,.,., ...,...,.,, +,,;,h.,w.....,.,.,. ,.:�,. ,.:w.,. :w.,1..,. 7.?,3;,w......L` . , .... ,. ,. ,. ,., ,. ,. ,. ,. ,. ,. ,. ,. ,. ,. ,. ,. ,., ,. ,., , , , , , . morals and welfare of the community. Consequently, the Authority has further determined that it is in the best interests of the City to initiate a program to assist in creating viable environments which would upgrade and maintain housing stock, maintain housing health and safety quality standards, and maintain and strengthen the character of individual neighborhoods. To achieve this goal the Authority has adopted a Housing Replacement Program (the "Program ") and created a Housing Replacement District (the "District "), within which the Program may be implemented, all pursuant to the Act. This multi -year, multi - phased Program will strive to achieve the Authority's and the City's sole objective of acquiring blighted, undeveloped or underdeveloped parcels for redevelopment or rehabilitation and for ultimate resale as Market Rate Housing. Additional public purpose goals that will be realized include: restoration and improvement of the residential tax base; - realization of comprehensive planning goals; - revitalization of property to create a safe, attractive, comfortable, convenient and efficient area for residential uses; - creation and maintenance of a healthy and safe environment; encouragement of infill development /redevelopment that is compatible in use and scale with surrounding neighborhoods; recreation and reinforcement of a sense of residential place and security which creates neighborhood cohesiveness through City investment in neighborhood infrastructure and public improvements, including landscaping, park improvements, local street modifications to reduce traffic impacts, repaving streets, replacing curbs and gutters and updating street lighting; - stimulation of private activity and investment to stabilize and balance the City's housing supply; - rehabilitation of existing housing stock and preservation of existing residential neighborhoods where possible; removal of non - conforming land uses; 1 - 2 IIH l , demolition and new construction, where necessary, of aging residential buildings to preserve neighborhoods; removal of substandard structures, as defined in Minnesota Statutes, 469.174, Subd. 10; and elimination of code violations and nuisance conditions that adversely affect neighborhoods. Section 1.3. Statement of Compliance. The Authority has reviewed the Program and determined that it conforms to the Comprehensive Plan of the City'and affords maximum opportunity consistent with needs of the City as a whole. Section 1.4. Criteria for Inclusion in the District. At the time of Program approval, the Authority cannot identify all parcels that will ultimately be included in the District. As a result, the Authority has set forth the following criteria to be used in selecting future parcels for inclusion in the District. The proposed parcel must comply with the City's public purpose goals and must satisfy one of the following criteria: (1) be a vacant site; (2) contain a vacant house; or, (3) contain a house deemed structurally substandard pursuant to Minnesota Statutes, 469.174, Subd. 10. Section 1.5. Conditions for Acquisition. The Authority may acquire and reconvey parcels subject to the following conditions: (1) The Authority may acquire property by gift, dedication, condemnation or direct purchase from willing sellers in order to achieve the objectives of the Program; and (2) Such acquisition will be undertaken only when there is assurance of funding to finance the acquisition and related costs. Section 1.6. Proposed Development Activity. The Authority intends to acquire a maximum of fifty (50) parcels over a period not to exceed ten (10) years in order to achieve the Program's goals. The specific parcels and the development activity anticipated for those parcels are included in the description of the applicable Phase. Section 1.7. Estimated Project Costs. The estimated project costs associated with the District are listed on Exhibit I -A. Section 1.8. Estimated Sources of Revenue. Project costs may be financed through the annual collection of tax increments 1 - 3 111 ati nnt:t.;.""':; s• '�.'S.'RSm '- fw:f:t.^..': .. . . . I I Z I,'. ... . I . ... .I , i I, ........... . r ` r ` and a local contribution equal to a minimum of twenty -five percent (25U of project costs payable from (i) its general fund; (ii) a property tax levy; or, (iii) other unrestricted monies. Section 1.9. Estimated Impact. Exhibit I -B reflects the estimated impact of the proposed District on other taxing entities assuming that the development would have occurred without the creation of a District. If the development is a result of the creation of the District, the impact is $0 because the development would not have occurred without the assistance of the Authority. 1 - 4 11J a EXHIBIT I -A ESTIMATED PROJECT COSTS TOTAL DISTRICT PROJECT COSTS AS OF OCTOBER 1 1995 Site Acquisition $ Relocation $ Demolition $ Site Preparation $ Pollution Abatement $ Public Improvements $ Administrative Expense $ Total District Project Costs $ PHASE I PROJECT COSTS AS OF OCTOBER , 1995 Site Acquisition $ Relocation $ Demolition $ Site Preparation $ Pollution Abatement $ Public Improvements $ Administrative Expense $ Total Phase I Project Costs $ I -A -1 11K ? fl Fl; aT. �D. 4RLSr7 £K3w'K1�)ilC!C'�,'i.�:ti?i �C`i •: •i ti•G�iTYh M1!t.•ihli K:i`wA �`i.•i�:i�w`i.`i1i21 •f 3ii.•iC1i>f)�i�`i(1fi VKI VI'T::.•.0 n11.`i .i.` 1 i. `llpiii l Z.i.i, I!i`i)t>(•i>5`i i i. •, i. ..i .. i,•. •. .{�) ARTICLE II PHASE I Section 2.1. Soecific Development Activity. As of October 1995, the Authority intends to enter into the following proposed development activities for this Phase: Section 2.2. Estimated Proiect Costs. The estimated project costs for this Phase are listed on Exhibit I -A. Section 2.3. Original Tax Capacity. The original tax capacity for this Phase, as most recently certified by the Commissioner of Revenue on January 2, 1994, is estimated to be Section 2.4. Estimated Captured Tax Capacity. The estimated captured tax capacity of this Phase, upon completion of the proposed development activities on January 2, 199_, is estimated to be $ Section 2.5. Original Tax Capacity Rate. The Pay 1995 tax capacity rate is Section 2.6. Estimated Tax Increment. Tax increment for this Phase has been calculated at approximately $ assuming a static tax capacity rate and a valuation increase of zero percent (0 %) compounded annually. Section 2.7. Duration Limits. Tax increment from this Phase is payable to the Authority for fifteen (15) years from the date of receipt of the first tax increment. Assuming the first tax increment is received in 199_, this Phase will terminate in 200. Section 2.8. Identification of Parcels. The parcels to be included in this Phase include: and are illustrated on the attached Exhibit II -A. 2 - 1 '11L ... ... - , ... •.. ,., ,... .. ,. ... ........... ..... ty,:4 , :R.h;cS; <:c:c;tt�. ? i, ttctRS;:; ita.; aZi; qt:- h'; t;;; ia; t;. ;tLR+:Ritctt;it�t:i2ihTwre4i!.? SIB.` t° tiw 'cw:iti2t!itwwi2c!t:itt2.'tii: a.. , . , . t. . . EXHIBIT II -A BOUNDARY MAP [ATTACH MAP] II -A -1 11M