HRA 10/10/1996 - 6269HOUSING & REDEVELOPMENT AUTHORITY MEETING
THURSDAY, OCTOBER 10, 1996
7:30 P.M.
PUBLIC COPY
(Please return to Community Development Dept.)
HRA RESOLUTION NO. 21 - 1996
A RESOLUTION RELATING TO THE DECERTIFICATION
OF A PORTION OF PARCEL 03- 30 -24 -23 -00003
WHEREAS, the Board of Commissioners (the "Board ") of the Housing
and Redevelopment Authority in and for the City of Fridley,
Minnesota (the "Authority ") approved and forwarded to the City
Council (the "Council ") of the City of Fridley (the "City ") the
establishment of Housing Replacement District No. 1 on September
14, 1995, pursuant to and in accordance with Laws of Minnesota
1995, Chapter 264, Article 5, Sections 44 through 47, inclusive,
as amended, and as may be supplemented from time to time.
WHEREAS, the Authority has proposed decertification of the
portion of parcel 03- 30 -24 -23 -0003 located within the Housing
District and described on Exhibit A attached hereto.
NOW, THEREFORE, BE IT RESOLVED, by the Board of the Authority
that decertification of the portion of parcel 03- 30 -24 -23 -0003,
as described on Exhibit A attached hereto, be approved and
forwarded to the Council of the City for review and approval.
PASSED AND ADOPTED BY THE FRIDLEY HOUSING AND REDEVELOPMENT
AUTHORITY OF THE CITY OF FRIDLEY THIS 10TH DAY OF OCTOBER, 1996.
LAWRENCE R. COMMERS - CHAIRPERSON
ATTEST:
WILLIAM W. BURNS - EXECUTIVE DIRECTOR
Page 2 - HRA Resolution No. 21 - 1996
Exhibit A
The southeasterly 20 feet of Lots 52 and 53 and the southeasterly
15 feet of Lot 54 all in Block E, Riverview Heights, Anoka
County, Minnesota.
CITY OF FRIDLEY
A G E N D A
HOUSING i REDEVELOPMENT AUTHORITY MEETING
THURSDAY, OCTOBER 10, 1996 7:30 P.M.
---------------------------------- - - - - --
LOCATION: Council Chambers, Fridley Municipal Center
CALL TO ORDER
ROLL CALL
APPROVAL OF MINUTES:
CONSENT AGENDA:
September 12, 1996
Revenueand Expenses . . . . . . . . . . . . . . . . 1 - 1C
Consider Approval of Agreement for . . . . . . . . . 2 - 2Q
Administrative Services for HOME Program,
CEE
Approve Resolution to Decertify Portion. . . . . . . 3 - 3D
of Property Located at 533 Janesville
Street NE
ACTION ITEMS:
Consider Proposal for Payment of Tax . . . . . . . . 4 - 4J
Increment Note; Rylund Properties
INFORMATION ITEMS•
Discuss Scattered -Site Acquisition . . . . . . . . . 5
Appraisal Process
Fridley Executive Center Update . . . . . . . . . . 6 - 6A
OTHER BUSINESS:
ADJOURNMENT
CITY OF FRIDLEY
HOUSING 6 REDEVELOPMENT AUTHORITY MEETING
SEPTEMBER 12, 1996
CALL TO ORDER:
Chairperson Commers called the September 12, 1996, Housing and
Redevelopment Authority meeting to order at 7:35 p.m.
ROLL CALL:
Members Present: Larry Commers, Virginia Schnabel, John Meyer,
Duane Prairie
Members Absent: Jim McFarland
Others Present: William Burns, Executive Director
Barbara Dacy, Community Development Director
Jim Casserly, Financial Consultant
Robert Van Nelson, Remodeling Counselor
Craig Ellestad, Accountant
Frederic Knaak, City Attorney
David Wiger, 901 Rice Creek Terrace
APPROVAL OF AUGUST 8 1998 HOUSING AND REDEVELOPMENT AUTHORITY
MEETING•
Mr. Commers stated page 15, paragraph 2, the last sentence should
read, "Staff will be talking to the City Council about this on
August 19."
MOTION by Mr. Meyer, seconded by Mr. Prairie, to approve the
August 8, 1996, Housing and Redevelopment Authority minutes as
amended.
UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON CONNERS DECLARED
THE MOTION CARRIED UNANIMOUSLY.
CONSENT AGENDA:
1. REVENUE AND EXPENSES:
Mr. Ellestad distributed copies of additional expenses for
approval.
2. CONSIDER PROPOSALS TO ADMINISTER HOME IMPROVEMENT GRANT
PROGRAM:
3. CONSIDER APPLICATION TO MHFA FOR COMMUNITY REHABILITATION
FUND:
HOUSING & REDEVELOPMENT AUTHORITY MTG., SEPTEMBER 12, 1996 PAGE 2
4. ACQUIRE 5813 - 2 1/2 STREET, 5925 MAIN STREET, AND 5857 MAIN
STREET:
5. APPROVE RESOLUTION AUTHORIZING EXECUTION OF LOAN DOCUMENTS
WITH THE FAMILY HOUSING FUND:
Mr. Meyer stated he had questions regarding item #4 and requested
this item be removed from the consent agenda.
MOTION by Ms.. Schnabel, seconded by Mr. Meyer, to approve Revenue
and Expenses including the additional expenses as outlined in Mr.
Ellestad's memo of September 12, 1996; Consider Proposals to
Administer Home Improvement Grant Program; Consider Application
to MHFA for Community Rehabilitation Fund; and Approve Resolution
authorizing execution of Loan Documents with the Family Housing
Fund.
UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED
THE MOTION CARRIED UNANIMOUSLY.
ACTION ITEMS•
6. CONDUCT PUBLIC HEARING TO AWARD SALE AND APPROVE RESOLUTION
AUTHORIZING EXECUTION OF DEVELOPMENT AGREEMENT REGARDING
6431 JACKSON STREET N.E.:
MOTION by Mr. Prairie, seconded by Ms. Schnabel, to open the
public hearing.
UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED
THE MOTION CARRIED AND THE PUBLIC HEARING OPEN AT 7:38 P.M.
Ms. Dacy stated, on July 11, 1996, the HRA authorized staff to
solicit proposals for the purchase and rehab of the property at
6431 Jackson Street. At the last meeting, the HRA approved the
proposal from Mr. Wiger and authorized preparation of the
proposed sale and development agreement. A public hearing is
required prior to conveying the property and executing the
development agreement.
Ms. Dacy stated the proposed development agreement states Mr.
Wiger agrees to purchase the property for $40,500 via a purchase
money mortgage. Mr. Wiger also agrees to complete the rehab
improvements in six months or by the end of March, 1997. The
details of the improvements were adopted as part of the
development agreement. Staff has received a letter of credit for
$48,440 to insure completion of the improvements in their
entirety. A summary of the improvements is as follows:
HOUSING i REDEVELOPMENT AUTHORITY MTG. , SEPTEMBER 12 1996 PAGE 3
1. Constructing a 12 foot x 12 foot addition off the rear of
the home to create a four season porch.
2. Replacing all of the windows in the home.
3. Replacing the plumbing, electrical and heating systems.
4. Installing new interior trim, millwork, and doors.
5. Installing new flooring and carpeting.
6. Finishing the upper level bathroom (completely gutted at
this time).
7. Re- building the front porch.
8. Re- siding and re- roofing the entire home and attached
garage.
9. Landscaping the yard.
Ms. Dacy stated staff recommends that the HRA conduct the public
hearing, receive comments, close the public hearing, and move to
approve the resolution authorizing execution of a sale and
development agreement. The contractor is at the meeting if
anyone has any questions.
Mr. Prairie asked if this covered the items previously discussed.
Ms. Dacy stated yes.
Mr. Meyer stated he wanted to re- iterate his concerns with the
bidding process.
Ms. Schnabel stated she understood Mr. Wiger had met with some of
the neighbors. She would like to hear the neighbors' reaction to
the plan.
Mr. Wiger stated most of the neighbors are in favor of and
enthused about the plan. They want to see action. He knows some
of the neighbors, and they were in favor of the work.
Ms. Dacy stated Mr. Fernelius had received a phone call also in
favor of the proposal.
Mr. Commers stated it seemed that the decision to go forward
appears to be appropriate.
Mr. Wiger stated he had talked with staff and he has no
additional questions.
HOUSING i REDEVELOPMENT AUTHORITY MTG., SEPTEMBER 12, 1996 PAGE 4
MOTION by Ms. Schnabel, seconded by Mr. Prairie, to close the
public hearing.
UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED
THE MOTION CARRIED AND THE PUBLIC HEARING CLOSED AT 7:45 P.M.
MOTION by Ms. Schnabel, seconded by Mr. Prairie, to adopt a
resolution awarding the sale of the property, and authorize
execution of a development agreement.
UPON A VOICE VOTE, WITH MS. SCHNABEL, MR. COMMERS AND MR. PRAIRIE
VOTING AYE, AND MR. MEYER VOTING NAY, CHAIRPERSON COMMERS
DECLARED THE MOTION CARRIED BY A MAJORITY VOTE.
7. CONSIDER RESOLUTION AUTHORIZING THE ISSUANCE AND PROVIDING
FOR THE REPAYMENT OF A GENERAL OBLIGATION TAX INCREMENT
NOTE:
Ms. Dacy stated, on July 11, the HRA authorized a resolution for
the levy and initiated the revolving loan program. That request
was sent to the City Council to issue the loan. During the
August meeting, the City Council agreed to the levy and made the
corresponding action to issue the loan. While we did not discuss
a note per se, it is the means to implement the revolving loan
program and repay the City.
Mr. Casserly stated this is the $1.5 million loan that the City
Council agreed to that would provide some assistance. That
originally started with the discussion on the Southwest Quadrant.
In further discussion, it seemed to make more sense to tie it in
with the housing plan and with the adoption of a levy which would
be available as a source of repayment.
Mr. Commers stated his only concern is the extent that this is
another obligation on all of the tax increment districts. The
question is what kind of restriction this puts on the HRA in
terms of doing anything within the existing districts.
Mr. Casserly stated what we want to do is pledge all available
increment for eligible expenses. Repayment of this debt would be
an eligible expense. The levy can be used for more activities.
Mr. Commers stated, since the HRA now is going to have increment
pledged to this, will that interfere with the HRA's ability to
use that for other things.
Mr. Casserly stated this will not interfere if there are revenues
available. What we are pledging in this resolution is increment,
assets or anything the HRA has available for repayment.
HOUSING i REDEVELOPMENT AUTHORITY MTG. , SEPTEMBER 12t 1996 PAGE 5
Mr. Commers stated this is then not a priority pledge. This
would not come before other activities or uses that the HRA would
want to make of the tax increment money.
Mr. Casserly state no. All the HRA is pledging is that there
will be enough at the time that you make the payments. This is a
general obligation of the HRA. All assets available can be used
to repay this obligation. One of the concerns we have is that we
have identified adequate eligible expenses. That has not been a
problem in recent years. You are going to have revenues coming
in in the future which will be available to pay this note.
Mr. Prairie asked if this uses up any part of the purse that the
HRA has.
Mr. Casserly stated no. The other side of this is that the HRA
has authorized a levy which the City Council has consented to
which will bring in about $168,000 per year. The annual payments
on the note are about $142,000.
Mr. Commers stated the levy is not dedicated to this. When you
call this a general obligation tax increment note, it seems to
mean the HRA has some kind of blanket liability for all of the
pool of funds. Section 6 says that, in the event there is not
sufficient tax increment, the finance officer will pay such
principal or interest from the general fund. What does that
mean?
Mr. Casserly stated the HRA has a general fund where all the
revenues are and which is invested. The HRA issues two kinds of
debt. One is revenue obligations which is secured by tax
increments from projects. When the City Council sells bonds in
the HRA's behalf, such as for Lake Pointe, the HRA pledges tax
increment. The City Council is the only one that can provide the
general obligation levy for the property in the City. Another
obligation is a general obligation of the HRA. When the HRA
issues their own general obligation, you cannot pledge property
taxes, but you can pledge all of the other assets. That is what
this is saying.
Mr. Commers asked what other notes such as this does the HRA have
outstanding.
Mr. Casserly stated the HRA has one note outstanding that was
issued about 10 years ago. This helped finance the improvements
in the City Center. The only revenue obligation or general
obligation of the HRA was refinanced in 1984 which was a general
obligation bond which was converted into a revenue bond. That is
an obligation of the HRA only. The HRA has done this type of
thing before. This is worded very carefully because, if we have
HOUSING is REDEVELOPMENT AUTHORITY MTG., SEPTEMBER 12, 1996 PAGE 6
the ability, we will always use tax increment first because those
are the funds that have the most restrictions. Any other assets
available will not have the restrictions that tax increment has.
Ms. Schnabel asked the status of the other $4 million bond.
Mr. Ellestad stated the tax increment refunding bond from 1985
has a balance of approximately $1.2 million. That bond issue was
an advance of the refunding of three other issues. It is a tax
increment revenue refunding bond.
Ms. Schnabel asked if there was another bond from 1990 that was
also out.
Mr. Casserly stated that was the 1985 bond that was refunded in
1990 which is structured to be paid off in the next decade. In
addition to the Lake Pointe bond, the HRA has approximately $11
million out.
Mr. Commers asked, when the HRA did the refunding, the underlying
bond stayed in place and the refunding is just that the bond is
pledged against the underling bond. Is that correct?
Mr. Casserly stated those early general obligation bonds were
refunded by the revenue bond in 1984 or 1985.
Mr. Commers stated, technically, this is the only one we have.
Mr. Casserly stated it is a little bit of nomenclature. When you
say you are issuing a revenue bond of the HRA, the actual pledge
agreement is essentially what this is.
Ms. Schnabel stated Section 5.2, the dollar amount should read
$1,500,000.
Mr. Casserly stated this was an error which will be corrected.
MOTION by Ms. Schnabel, seconded by Mr. Prairie, to approve a
Resolution Authorizing the Issuance and Providing for the
Repayment of a General Obligation Tax Increment Note, Series
1997, in the Principal Amount of $1,500,000.
UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED
THE MOTION CARRIED UNANIMOUSLY.
8. CONSIDER APPEAL OF COMMISSIONER'S DETERMINATION REGARDING
CHERRYWOOD APARTMENTS:
Mr. Knaak stated he had sent a letter to Mr. Burns summarizing
the history of the proceedings and the result of commissioners
HOUSING & REDEVELOPMENT AUTHORITY MTG. , SEPTEMBER 12 1996 PAGE 7
report, a copy of which was provided with the agenda. This has
to do with the Southwest Quadrant and a portion of the condemned
property, specifically the Cherrywood Apartments. This case was
unusual for the length of time it took to complete. The
commissioners decision was $1,557,814 which is approximately
$374,000 higher than estimates projected. It is also $317,000
less than the value advanced by the owners appraisers at the time
of the hearing. It appears that the commissioners took the two
positions and went down the middle. The report has now been
filed and was filed on September 3, which gives the parties 40
days in which to appeal.
Mr. Knaak stated the review with the appraisers for the City as
well as his discussions with the commissioners leads him to
believe that the City's prospects are reasonably good. There are
no assurances. There is a substantial difference between the
amount advanced by the City and the value as determined by the
commissioners. When appealing, you are getting a trial for the
purpose of determining the valuation of what was taken. In this
instance, he believes, the analysis done on behalf of the City
was thorough and would serve as a very good basis to make a case
to a jury for a lesser determination than that decided on by the
commissioners.
Mr. Knaak stated there are drawbacks. It is not just that you
will end up with a lower award. The jury can consider testimony
but also the testimony of the owners. It is possible that the
award that a jury would make could also be higher. As a
practical matter, that does not tend to happen. Usually, the
greatest concern he has is that it would be more along the line
with the commissioners determination. If that adheres, the jury
may make an independent determination. There might be some
possibility that the commissioners would be effective in their
testimony. The commissioners had gone through the trouble of
visiting comparable sites and asking the managers on site about
rents received at the time. Those commissioners that Mr. Knaak
spoke with stated they had done a thorough job in making an
analysis and studying the market, and in making their own
independent determination.
Mr. Knaak stated there are some risks. If you proceed to appeal
and if the jury hearing the testimony would be persuaded by the
testimony of the three commissioners that the value was $1.5+
million, he would suggest that the other commissioners he spoke
with felt the testimony by the owner was not particularly
credible. It was their opinion that the owner would take the
award that we had offered. Given that fact, he would suspect the
owner would be offering additional testimony of the commissioners
with the objective of sustaining the commissioners determination.
It comes down to the testimony of the commissioners, the
HOUSING 6 REDEVELOPMENT AIITHORITY MTG., SEPTEMBER 12, 1996 PAGE 8
estimates by the owner as to the original valuation, estimates of
condemnation blight and the arguments that the amount should be
higher which might have an effect on a jury as opposed to the
City's testimony, which he believes is substantial. He thought
the appraiser for the City did an exhaustive job.
Mr. Knaak stated, while he did not want to scare the HRA off, he
believes the City's case is a strong one. He wants the HRA to be
aware of the fact that there is also a chance that the City, if
they appeal, will not prevail. He would suspect, however, that
after a trial the figure would be less.
Mr. Commers stated, based on the 10.5 capitalization rate, are
you able to determine from the award what would have been the
income they were capitalizing.
Mr. Knaak stated he has asked Mr. Bjorklund to make that
calculation. He has not yet received that information.
Mr. Commers asked how many units were there.
Mr. Knaak stated there were 53 units.
Mr. Commers asked what that comes out to be per unit. Is there
anything else in the $1.5 million award in the value such as
fixtures?
Mr. Knaak stated he believed nothing else was included in the
award.
Ms. Dacy stated the value per unit comes out to be $29,392.
Mr. Commers asked what the figure is if they take the award times
the capitalization rate of 10.5.
Mr. Casserly stated the amount if $163,566.
Mr. Prairie stated they are talking about $6,000 to $8,000. They
could end up with a number that is $1.4 million, $1,3 million,
etc.
Mr. Knaak stated theoretically that is correct. He did not think
they would see anything higher than their appraisal. The down
side could be a loss of up to $323,000. The positive side is
that they could also gain $370,000 or more.
Mr. Knaak stated, given what Mr. Hennessey indicated as the
City's other consultant and what he heard from two of the
commissioners, he would not be surprised to see the cap rate
somewhat lower than what the City's position was. He would
HOUSING is REDEVELOPMENT AUTHORITY NTG. SEPTEMBER 12 1996 PAGE 9
anticipate that most of the focus of a trial would be what were
comparable units. He visited some of the sites and rejected
them. He believed the comparables provided by the City were ones
for which they had different figures as to the income. The
City's analysis was based on independent studies and the market
studies in the area at that time. He would suspect, if this is
the case and even if the cap rate was adjusted somewhat, the
City's case would be very strong.
Mr. Commers stated he believed that $29,000 figure is a high
number for those units, and he could not believe the income would
justify the award.
Mr. Prairie asked if the commissioners had those figures.
Mr. Commers stated Mr. Knaak is saying the commissioners did not
give him an exact idea of what they used for an income figure for
those units. That is what they capitalized. That is a very
crucial number. That might be the place where there would be the
potential for change.
Ms. Schnabel asked if they see or subpoena the books of the
owners for the income figures.
Mr. Knaak stated the owners figures were provided.
Mr. Commers stated they try to find comparable buildings and use
that for a fair market value.
Ms. Schnabel asked if the value was based on the income or the
fair market value.
Mr. Knaak stated the value is based on the income. The City's
appraisal used the approach where a different method was weighted
and utilized. The commissioners decided to use the income
approach exclusively because this kind of property is purchased
for a gain. That resulted in this type of property having a
somewhat higher figures. When a commissioner was asked about how
they arrived at the figure, they mentioned that to arrive at this
kind of number they would have taken an income analysis per unit
which was much higher than the City in their comparable study.
Mr. Commers asked if Mr. Knaak believed the units would average
approximately $500 per month.
Mr. Knaak stated he believed the units would rent for the mid -
$5001s. The owners were saying the rents were $585 to $595 which
is what they would have received if they had been able to
complete their improvement plan.
HOUSING i REDEVELOPMENT AUTHORITY MTG -, SEPTEMBER 12, 1996 PAGE 10
Mr. Knaak stated he would anticipate the commissioners would
defend their position by saying they went to comparables of their
choosing, talked to the managers at those places, and received
figures on rents based on what was posted at the time. For the
purposes of this analysis, the numbers are not higher but
similar.
Mr. Prairie stated, if the commissioners did split the
difference, you would then need to have compelling information to
get them to move.
Mr. Knaak stated he thought the commissioners had made their
decision and were prepared to be asked to testify. The position
taken so far was that this was cautious and defensible.
Ms. Schnabel stated, when talking before about the cost to the
HRA to appeal, there would be the legal fees and the witness
fees. Are there any other costs?
Mr. Prairie thought the associated costs could be $15,000 to
$20,000.
Mr. Knaak stated he thought that would be realistic. It could be
less.
Mr. Meyer asked, if we assume the commissioners did split the
difference and also assume the same case goes to a jury who knows
less about this than the commissioners, what makes us think they
will give us any different judgment.
Mr. Knaak stated one cannot predict what will happen. If we got
that kind of admission from the commissioners, it would be good
for us. He thought the City's facts were very strong because of
the analysis done by Bjorklund and Associates. If this is
presented as apples versus apples, a layperson can understand a
like comparison. That is a good argument to be making. The
problem he has is that more we peel information from the
commissioners, the more they are able to defend an independent
analysis and what they concluded.
Mr. Commers stated it seems that the risk is that it is going to
be harder for them to exceed the commissioners decision than it
is for us to try to get it lower. It could end up to be the
same. We would spend money to find out it is the same.
Mr. Prairie stated, if we could present the best case of ours and
they present the best case of theirs, then you are back to the
middle.
HOUSING i REDEVELOPMENT AUTHORITY MTG., SEPTEMBER 12, 1996 PAGE 12
Mr. Commers stated he would expect the HRA would save more than
the cost. A lot depends on what the commissioners used to arrive
at income. We do not know, but we will find out. From a legal
point of view, he thought the other commissioners should decide
what is in the best interest of the City.
Mr. Meyer stated, in hearing this testimony, he didn't think he
as a layman would change the award too much and he would be
inclined to split the difference. Perhaps at the end of the
trial, they may have saved $50,000. It would be nice to have a
guarantee, but we do not have that.
Mr. Prairie asked, for the benefit of history, what happened to
Dairy Queen.
Ms. Dacy stated the commissioners came down to $167,000. The
other side appealed. The City ended up with about $200,000.
That was concluded through negotiations.
Mr. Casserly asked if Mr. Knaak recalled the capitalization rate
used by the City.
Mr. Knaak stated the rate was 11.5.
Mr. Casserly stated he reviews projects such as this
periodically. A 10.5 cap rate on the project seems low. The cap
rate is a function of what kind of risk people feel is in a
project. The higher the cap rate, the greater the risk. The
higher the cap rate, the lower the value. As an example, if you
divide $100,000 by 10.5 you get a different number than if you
divide that amount by 11.5. The a cap rate of 10.5 and given the
age, the history, the repairs, etc., these are the kinds of
elements that go into determining the cap rate. He does not know
how the 10.5 figure was arrived at. If he were reviewing this,
he would be looking for 11.5 or 12. Just an adjustment in that
number moves the figure by $50,000 for every 1/2 percent. You
could have a reasonable argument over the cap rate. That is a
judgment call. Rents can be verified but the cap rate represents
the risk you want to take. If you can bring a different
viewpoint to that issue, it may well be worth the investment to
do that. This is a valid issue.
Ms. Schnabel stated it seems that the cost to appeal as a
percentage of the total is about 1 %. It is not all that much to
invest in taking the chance that we may come out better than
where we are now. It can go both ways. From what she is
hearing, there is a likelihood it could go in our favor. She is
feeling at a crossroad. She could go in either direction.
HOUSING is REDEVELOPMENT AUTHORITY MTG. , SEPTEMBER 12 1996 PAGE 13
Mr. Meyer stated, let's say the commissioners are knowledgeable,
did their job as best they saw it, and came up with what they
did. This now comes before a jury where some of this terminology
and concepts are foreign territory. Why would a jury come up
with a different view than that of the commissioners?
Mr. Knaak stated the jury would be the one making the decision.
It would be the City's responsibility to persuade the jury that
the analysis the City has done is the right way. The
Commissioners perhaps did not pay attention to certain factors.
It is a tougher argument to make and it depends on your analysis
and the strength of the position. If the City's original
analysis is correct, is it good enough to be put in such a
position so an unbiased fact finder would agree?
Mr. Commers stated that is why the worst you will have is the
same number. The commissioners are guarded and defensive about
what they use for comparables. There is the chance that the
commissioners were not thorough in their appraisal.
Mr. Meyer asked how the facts as presented to the commissioners
differ from the facts given to a jury.
Mr. Knaak stated a jury is presumably operating under the same
set of facts. The juries are held to the evidence presented to
them. The commissioners go out and find out on their own. We
cannot control that. If they are not accurate, they can skew a
decision. A commissioner also has more expertise. We would have
to basically lay out all the information point by point and
educate the jury. That can make it almost easier.
Mr. Burns stated he thought from the discussions the one thing
that did not come out in the commissioners report was taking
apart the other parties appraisal. We were not given the
opportunity to attack their appraisal.
Mr. Knaak stated, on the assumption they would offer us that
appraisal, he would say yes. We were able to make this argument
in the brief. We were not given an opportunity to cross examine.
The benefit of a jury is, if you effectively contradict the key
witness during cross examination, that can convince the jurors
that the party is not providing reliable information.
MOTION by Mr. Meyer, seconded by Ms. Schnabel, to authorize the
HRA Attorney to proceed with the appeal of the Commissioners
determination.
UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED
THE MOTION CARRIED UNANIMOUSLY.
HOUSING is REDEVELOPMENT AUTHORITY MTG., SEPTEMBER 12, 1996 PAGE _14
Mr. Knaak stated he would keep the HRA informed.
9. ACQUIRE 5813 - 2 1/2 STREET 5925 MAIN STREET AND 5857 MAIN
STREET:
Ms. Dacy stated these three acquisitions are part of the program.
All of the letters sent out in the last three to four months have
been in the Hyde Park area. There is more older housing in that
area. Of the ten letters sent out, staff received interest from
five and three of those five have agreed to acquisition. Two of
the three properties are buildable lots.
Mr. Commers asked what would happen to the lot which is not a
buildable lot.
Ms. Dacy stated, as you drive down that street, the lots are very
small with small homes. The HRA would have to retain ownership
of this lot until we can put it together with another lot to make
one buildable parcel. Until we can get adjacent lots put
together, we will have to continue to own the property.
Mr. Commers asked what was built to either side of 5813 - 2 1/2
Street.
Ms. Dacy stated those lots contain structures that are very
similar in size.
Ms. Schnabel asked the width of the lot.
Ms. Dacy stated the lots are usually 40 feet wide. The City
requires 75 feet for a new home. On Hugo Street, two or three
lots were put together there to get a buildable lot. On this
particular block, there are a number of small lots in a row.
When staff conducted focus groups, the comment was made that the
HRA should take a look at this block.
Mr. Commers asked if this was the block being considered for the
potential multiple family structures. He thought the
neighborhood objected to that.
Ms. Dacy stated the multiple family proposal taken to the
neighborhood was for the Frank's Used Cars site. Staff did not
discuss any additional multiple family housing at this time.
Mr. Meyer stated his main concern is the price. In looking at
the prices and reading the descriptions, he is appalled by the
price proposed to purchase property of this size and in this
condition. He did not know from where the figures come. One
property is very small and has only one bedroom in the basement
HOUSING 6 REDEVELOPMENT AUTHORITY-MTG., SEPTEMBER 12 1996
__PAGE 15
which may be illegal, and we are talking about paying $56,500.
He thought this was excessive.
Mr. Prairie asked if there were examples of what other similar
properties have sold for.
Ms. Dacy stated all acquisitions for the same area with buildings
of similar square footage have been from $40,000 to $55,000, and
the process has not changed.
Mr. Prairie asked how this compared top private purchases.
Ms. Dacy stated for every acquisition an appraisal is done. The
appraiser does comparables. Staff's direction has historically
been to negotiate within 10% above or below, and staff has not
strayed from that. About half of the price is the land itself.
Comparable properties are listed on the appraisal. She reviewed
the figures for a number of properties.
Mr. Prairie asked if the owners were elderly.
Ms. Dacy stated it is a mixture, and all are owners of the
properties. 5925 Main Street is the highest price but the other
two are very similar to all our other acquisitions. 5925 Main
Street is also a buildable site.
Mr. Meyer stated the City assessor is to take comparable actual
sales and judge on that basis. He has not heard that we are
dealing with actual sales.
Ms. Dacy stated she would speak with the appraiser if the HRA so
wished. Information regarding the assessed value was included in
the agenda packet.
Mr. Meyer asked why they did not come into a house such as this
and condemn the property.
Mr. Casserly stated condemnation would result in $10,000 to
$15,000 in relocation expenses along with other activities that
will enter into it. If you can negotiate a purchase, you are
farther ahead than going through any kind of condemnation.
Mr. Meyer asked if they could deny the owner access to a bedroom
in the basement.
Ms. Dacy stated the City does not have a housing maintenance code
for single family homes. We do have statutes on hazardous
buildings. While this is not appealing, it is not bad enough to
qualify under the hazardous building statute.
HOUSING i REDEVELOPMENT AUTHORITY MTG., SEPTEMBER 12, 1996 PAGE 16
Mr. Commers stated the worst they could do is tag them and not
let the owner use the basement as a bedroom.
Ms. Dacy stated the program is voluntary and the owner allows the
appraiser to walk through the home. The City cannot go into a
single family home unless we receive a complaint.
Mr. Prairie asked if the home owners had seen the numbers.
Ms. Dacy stated they have not. We try to make an offer of 10%
below and negotiate from there.
Mr. Meyer stated, if we get the house and eventually make it an
80 -foot lot but on either side are more similar small houses,
what type of house would be built in this kind of area.
Ms. Dacy stated the Remodelling Counselor came up with a list of
homes that were in the worst condition. The others are better.
These lots would be added to the scattered site inventory and do
as we have done already. As part of the scattered site program,
we now have three newer homes in similar situations. It is a
systematic way to try to get rid of a bad house and put in a new
house, and a way of getting others to improve their property.
Ms. Dacy stated this is an expensive program. These lots would
be put in a tax increment financing area and produce enough
income to cover about one -third of the costs. Some costs are
also covered through the sale of the lot.
Mr. Meyer stated he is concerned that others will wait and end up
taking advantage of the HRA.
Ms. Dacy stated this is a valid point, but the law says for every
HRA acquisition, staff must prove the homes meet the statutory
definition of blight. These properties meet the definition. If
some wants to take advantage of the program, they must meet the
requirements. We are within the guidelines on these sites and
within the budget.
Mr. Meyer stated, when he recently added to his home, the
inspector required them to add smoke detectors for each of their
bedrooms. This has nothing to do with the addition to the home.
Those are the powers that the City has to do various things.
When an assessor goes into a house, can he /she report conditions
such as these?
Mr. Commers stated the City is now working on an ordinance that
would allow staff to do that.
HOUSING & REDEVELOPMENT AIITHORITY MTG. SEPTEMBER 12 1996 PAGE 17
Ms. Dacy stated there is the home inspection. When applying for
a building permit, the inspector can then go in and enforce the
Uniform Building Code. Another issue is having the assessor
enter a property and see items that may not meet code. Does the
assessor have cause to contact the building inspector and state
he saw deficiencies at a particular property? We are trying to
evaluate that via two ordinances.
Mr. Meyer stated he felt these are outrageous prices for property
in this condition. He is appalled by what they are paying to get
rid of blight. Is there no other way to challenge or renegotiate
these prices?
Ms. Dacy stated she thought the assessed value was very close.
She did not know individual mortgage situations. The owners may
not be making money from the acquisition. Staff have negotiated
within the HRA guidelines. The only other option is not to
pursue the acquisition.
Mr. Meyer stated another choice is to try for condemnation.
Mr. Burns stated a condemnation must also rely on the appraisal.
Ms. Schnabel stated the property at 6431 Jackson was purchased
for $40,500 from HUD. These are considerably higher and not on a
buildable lot. That house was also larger. While the
circumstances are different, it does not seem consistent.
Mr. Burns stated homes from HUD are below market value.
Mr. Commers stated it is difficult and he was not sure it was
worth getting down to value. Perhaps the appraiser could come
and explain how he evaluates property to determine the value. We
can then ask him specific questions as well. He was not sure
they can buy a house for less than $50,000 anywhere.
Mr. Meyer stated he would welcome the opportunity to have the
appraiser talk with them. He thought they should put a hold on
purchasing these three properties until they can talk with the
appraiser. We would continue to set a precedent of paying good
prices for property that is in poor condition.
Ms. Dacy stated the status of these properties are not eligible
for the hazardous building statute. There are people who would
say this is legitimate affordable housing. These properties do
hold some value. If the issue is how we get to that value, it
may be time well spent with the appraiser. If condemning, we
would use the hazardous building statute. We are doing that for
a duplex in the Hyde Park area.
HOUSING i REDEVELOPMENT AUTHORITY MTG., SEPTEMBER 12, 1996 PAGE 18
Mr. Commers stated, since they have done the work, he would like
to go forward on these three properties but talk to the appraiser
before they continued. We have not spent a lot. They spent
$147,000 on the first three. These will be under budget. They
will be getting $20,000 to $25,000 back from the sale of the lot
for each property. He thought it was important to know the
criteria. It seems that it would be a reasonable approach. They
have talked about these things in the past and have authorized
acquisitions last year.
Mr. Meyer stated he would agree. Perhaps they could use these
properties as an example. He has no objection to going ahead
with these properties. He would however like to know more about
it.
Mr. Commers asked staff if this could be part of the agenda for
the next meeting.
Ms. Dacy stated she would work to do that.
Mr. Meyer asked if there was little difference between the
assessed value and the appraised value.
Ms. Dacy stated they are very close. The assessed value is
within 95% of the market value.
MOTION by Ms. Schnabel, seconded by Mr. Prairie, to authorize the
Chair and Executive Director to enter into purchase agreements
for 5813 - 2 1/2 Street, 5925 Main Street and 5857 Main Street.
UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED
THE MOTION CARRIED UNANIMOUSLY.
INFORMATION ITEMS•
10. MONTHLY HOUSING REPORT:
Mr. Commers stated the Monthly Housing Report was provided for
their information.
Mr. Prairie stated he found the information on the type of repair
very interesting. He thought it would be interesting to have the
dollar amounts as well.
Mr. Commers stated the average cost for the repair may be good
information in terms of the appropriateness of the program.
HOUSING is REDEVELOPMENT AUTHORITY MTG. I SEPTEMBER 12 1996 PAGE 19
11. CONSIDER REQUEST FOR STREET LIGHTS ALONG OSBORNE ROAD:
Ms. Dacy stated Mr. Schroer and Mr. Fitch are requesting that the
HRA install double ball light standards at the Osborne Road and
University Avenue intersection. The maintenance on these
standards is very low. Other than bulb replacement, the actual
electricity for the string along Mississippi Street is less than
$1,000 per year for 20 standards. The replacement of the
standards, however, is rather expensive.
Mr. Commers asked what the costs were on Rice Creek.
Ms. Dacy stated she thought the costs were the same. The major
cost issue is installation because the standards are $3,000 to
$4,000 each. If you have lights on both sides of the street, it
will be more expensive. If you were to put lights from the
railroad tracks near East River Road and proceed along Osborne to
University Avenue or go up the service road to Kennedy
Transmission with lights on one side of the road, about 16
standards would be required for a cost of $48,000 to $64,000.
Ms. Dacy stated she talked with Mr. Schroer. He wanted the HRA
to initiate the cost and the expenses. Ms. Dacy told him there
are other items of priority. She asked if the property owners
would be willing to be assessed for the project costs. Mr.
Schroer stated he would talk to them. He asked if there was a
possibility of cost sharing.
Mr. Prairie asked what was done along Moore Lake Drive.
Ms. Dacy stated the costs there were assessed. Along
Mississippi, the HRA helped with the purchase of the standards.
Mr. Prairie suggested lighting along Osborne from University to
Main Street. That would reduced the cost to about $20,000.
Mr. Meyer thought going around Bob's Produce and perhaps around
the corner would make more sense than going toward East River
Road. What is there that they would want to draw attention to?
Ms. Schnabel stated they are getting a bunch of lights here and a
bunch of lights there. She did not know the purpose that would
serve.
Mr. Commers stated they would address it as it comes to the them.
Mr. Prairie asked if there was a possibility of cost sharing.
Ms. Dacy stated she would talk to the owners and see what they
can come up with.
HOUSING i REDEVELOPMENT AUTHORITY MTG., SEPTEMBER 12, 1996 PAGE 20
Mr. Burns asked about the other side of the street. He thought
they should be prepared to do this on both sides of the street.
12. REVIEW PROPOSED FAIR HOUSING ORDINANCE:
Mr. Commers asked if most communities have an ordinance like
this.
Ms. Dacy stated it is typical for central cities such as
Minneapolis and St. Paul to have an ordinance like this. She did
not know if suburbs have such ordinances. The City of
Minneapolis has an ordinance such as this and has staff available
to enforce the ordinance.
Mr. Commers stated it incorporates into the local laws that there
can be no discrimination with respect to rental housing
practices.
Ms. Dacy stated there is a list of real estate including selling
and renting.
13. RAO EASEMENT
Mr. Commers stated there are additional expenses to acquire the
permanent easement along the RAO property for purposes of
installing a sidewalk along Mississippi Street. The County wants
the HRA to acquire the easement at a cost of approximately
$2,500.
Ms. Dacy stated this is for the extension of the sidewalk from
University to the River Road. The Mississippi Street pavement
was widened and pushed the pavement into the RAO site. The
additional easement is needed for the sidewalk to be replaced as
a result of the widening.
Mr. Commers asked why the County did not acquire the easement.
Ms. Dacy stated the County process is longer. They requested the
HRA do this so they can continue working on the project and so
the work can be completed. If the County paid the costs, it
would still be applied to the cost of the project. It is just a
timing issue.
Mr. Commers asked if the County assessed that cost.
Ms. Dacy stated it is essentially a municipal project. The
County did agree to put in more funds as did the Holly Center.
Mr. Commers asked if the land owner had agreed to $2,500.
HOUSING is REDEVELOPMENT AUTHORITY MTG., SEPTEMBER 12, 1996 PAGE 21
Ms. Dacy stated that is the maximum. We have put forth an offer
that is half that. The owner has not agreed to the amount
offered, so we are negotiating.
MOTION by Mr. Prairie, seconded by Mr. Meyer, to authorize staff
to acquire a permanent easement from RAO Manufacturing and
authorize a check to RAO Manufacturing for easement acquisition
for not more than $2,500.
UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED
THE MOTION CARRIED UNANIMOUSLY.
14. ACQUISITION REQUEST FOR 19 - 77TH AVENUE N E :
Mr. Commers stated members received in their agenda packet a
letter from Mr. Burns to Mr. Krall regarding acquisition of this
property and his statement that we are not interested in the
property at this time.
15. OCTOBER MEETING WITH CITY COUNCIL:
Mr. Commers stated, while the HRA is receptive to a meeting with
the City Council, he was not sure that this should be scheduled
at this time. Perhaps they should wait until after the election
because there may be different people on the Council at that
time. He would suggest a joint meeting be scheduled after the
election and to also allow an opportunity for those who are new
to get to know what is transpiring.
Ms. Dacy stated she would reschedule this meeting at a later
date.
ADJOURNMENT:
MOTION by Ms. Schnabel, seconded by Mr. Prairie, to adjourn the
meeting.
UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON CONNERS DECLARED
THE MOTION CARRIED AND THE SEPTEMBER 12, 1996, HOUSING AND
REDEVELOPMENT AUTHORITY MEETING ADJOURNED AT 10:10 P.M.
Respectfully submitted,
Lavonn Cooper r
Recording Secretary
S I G N- I N S H E E T
HOUSING AND REDEVELOPMENT AIITHORITY MEETING, September 12, 1996
Name { Address /Business
TO: FRIDLEY H.R.A
FROM: CITY OF FRIDLEY
RE: BILLING FOR ADMINISTRATIVE AND OPERATING EXPENSES
SEPTEMBER 1996
SEPTEMBER 1996:::
ADMINISTRATIVE BILLING:
ADMINISTRATIVE PERSONAL SERVICES
ADMINISTRATIVE OVERHEAD
COMPUTER OVERHEAD
(For Micro 8 Mini computers)
TOTAL ADMINISTRATIVE BILLING:
OPERATING EXPENSES:
HOLIDAY — HYDE PARK PICNIC
US WEST — PHONE SERVICE
BENEFITS EXPENSES:
CITY OF FRIDLEY — HEALTH INS
CITY OF FRIDLEY — DENTAL INS
CITY OF FRIDLEY — LIFE INS
Account #'s for
HRA's Use
Account #'s for CR
City's Use Code
19,800.75 101 - 0000 -341 -1200 H1
275.85 101 - 0000 - 336 -3000 HA
200.25 101 - 0000 - 336 -3000 HA
460- 0000 -430 -4107 20.276.85
.I off•
.� 1.1Ce I c
TOTAL OPERATING EXPENSES:
262 -0000- 219 -1001
262 -0000- 219 -1100
262 -0000 -219 -1200
TOTAL BENEFITS EXPENSES
254.21 236- 0000 - 336 -3000 HA
14.35 236 - 0000 - 336 -3000 HA
268.56
353.45 236 -0000- 219 -1001 11
42.09 236 -0000- 219 -1100 12
10.50 236 -0000- 219 -1200 13
406.04
TOTAL EXPENDITURES — SEPTEMBER 1996 $2Q951 45?
File: \123DATA \HRA \TIF\9661LL.wk1 Details
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1C
DATE: October 4, 1996
MEMORANDUM
HOUSING
AND
REDEVELOPMENT
AUTHORITY
TO: William Bums, Executive Director of HRA 4VIJ1111*,
FROM: Barbara Dacy, Community Development Director
Grant Femelius, Housing Coordinator
SUBJECT: Consider Agreement with Center for Energy Environment (CEE)
to Administer Home Improvement Grant Program
This item was previously discussed at the September 12, 1996 meeting.
This agreement covers the Home Improvement Grant Program, specifically the portion
of the program using Anoka County HOME funds. In previous years, the HRA
executed similar agreements with Anoka County CAP ( ACCAP). As outlined in the
September 6, 1996 memo, the switch from ACCAP to CEE will not only consolidate
administration under one roof, but will also result in a significant cost savings to the
HRA. Customers will also be better served in that they can work with one agency
from the start and receive quicker service.
The agreements has the following provisions:
Term runs from October 15, 1996 to December 31, 1997.
2. CEE will administer all facets of the program, including application in -take, file
processing, inspections, work write -ups, assisting homeowners in collecting
and evaluating bids, monitoring the rehabilitation work, conducting interim and
final inspections and issuing payment to the contractors.
3. The budget for the program is $75,000 of which $60,000 will come from the
Anoka County HOME program. The HRA will provide a 25% match equal to
$15,000. Up to 5% of the total budget or $3,750 can used for administration.
2
Memo Regarding CEE Agreement
October 4, 1996
Page 3
4. CEE will be paid $875.00 for each grant issued.
A copy of the administrative services agreement with CEE is attached. The City
Council will consider a separate agreement for the CDBG portion at their October 14,
1996 meeting.
Recommendation
Staff recommends that HRA approve an agreement with the Center for Energy
Environment (CEE) to administer the Home Improvement Grant Program.
GF/
M -96 -461
2A
AGREEMENT FOR ADMINISTRATIVE SERVICES
between
CENTER FOR ENERGY AND ENVIRONMENT, INC.
and
HOUSING AND REDEVELOPMENT AUTHORITY
IN AND FOR THE CITY OF FRIDLEY
(1996 HOME Program)
THIS AGREEMENT, made this day of 1996, the date of the
signatures of the parties herein notwithstanding, by and between the Housing and
Redevelopment Authority in and for the City of Fridley, a body corporate and politic
existing under the laws of the State of Minnesota (the "Authority "), and the Center for
Energy and Environment, Incorporated, a 501(c)(3) non - profit corporation, with its
offices at Butler Square Building, 100 North 6th Street, Suite 412 A, Minneapolis,
Minnesota 55403 -1520 (the "Contractor").
WITNESSETH THAT:
WHEREAS, The HOME Investments Partnership Act (the "HOME Program ") provides
assistance to state and local governments to strengthen public - private partnerships to
provide more affordable housing; and
WHEREAS, the Authority has submitted an application to Anoka County for HOME
Program funds; and
WHEREAS, said application has received approval by Anoka County and the United
States Department of Housing and Urban Development for the expenditure of funds,
in part, to deliver the Fridley Home Improvement Grant Program (the "Program "); and
WHEREAS, the Contractor has agreed to administer said Program for the Authority,
which proposal has been accepted by the Authority.
NOW, THEREFORE, in consideration of the mutual covenants contained herein, the
parties agree as follows:
1. TERM
The project to be accomplished by the Contractor hereunder shall run from October
15, 1996 to December 31, 1997 unless earlier terminated as provided herein, or until
all obligations set forth in this Agreement have been satisfactorily fulfilled, whichever
occurs first.
1
AGREEMENT FOR ADMINISTRATIVE SERVICES
Fridley HRA / CEE
10 -2 -96
2. SERVICES TO BE PROVIDED
A. The Contractor shall provide the following services to administer the
Program:
(1) Coordinate marketing efforts with the Authority and answer
questions from interested parties concerning the Program. In
addition, the Contractor shall maintain up -to -date application
materials including, but not limited to, application forms, program
brochures and related literature.
(2) Receive applications from interested parties and determine
eligibility status with regard to household income, amount of
assets, ownership status, type of property and other criteria as
specified by the Authority.
(3) Notify applicants in writing within 10 business days of receipt of
application as to their eligibility status. If an application is
incomplete, the Contractor shall notify the applicant within the 10
day period to request additional information.
(Applicants which qualify for the Program are defined as "Program
Recipients ".)
(4) Verify property title records to determine whether applicant has
good title to the property; confirm in writing that the applicant is
current on property taxes and mortgage payments and that there
are no unsatisfied judgements or liens. In addition, Contractor
shall prepare the necessary Repayment Agreement to be signed
and recorded prior to the start of the rehabilitation work.
(5) Within 30 business days of receipt of application, the Contractor
shall schedule and conduct an inspection of the applicant's
property. Said inspection shall be conducted by qualified
personnel of the Contractor who are trained and experienced in
housing rehabilitation. Said inspection shall be used as the basis
of preparing a scope of work and related project specifications.
The Contractor and Authority will meet to review minimum
rehabilitation standards, eligible improvements, minimum product
quality, work write -up format, and bidding procedures. Said
2C
AGREEMENT FOR ADMINISTRATIVE SERVICES
Fridley HRA / CEE
10 -2-96
scope of work shall be completed and returned to the Program
Recipient within 60 days of receipt of application.
(6) Contractor shall provide guidance to the Program Recipients on
obtaining and evaluating estimates. Program Recipients shall
have 30 days to obtain estimates.
(7) Meet with Program Recipients to review estimates and assist them
in selecting a remodeling contractor per the Program
requirements.
(8) Contractor shall submit complete file with all original documents
to the Authority for review and approval. Upon Authority
approval, the Contractor shall schedule and conduct a pre -
construction conference with the Program Recipients and the
remodeling contractor prior to commencement of the work.
Contractor shall review the responsibilities of each party,
procedures for payment and any other pertinent details. Finally,
both parties shall execute a contract to secure performance of the
project and Contractor shall issue a Proceed to Work Order.
(9) Contractor shall insure that the successful remodeling contractor
complies with the applicable HUD and County regulations. In
addition, Contractor shall monitor performance of the rehab-
ilitation work and assist Program Recipient in resolving disputes
with the remodeling contractor, as necessary.
(10) Conduct interim and final inspections and prepare the necessary
documents to process payment to the remodeling contractor.
B. In addition to the processing steps outlined above, the Contractor shall
provide the following services:
(1) Comply with the Housing Rehabilitation Procedures Guide, as
amended from time to time.
(2) Provide the Authority with monthly reports on the status of
Program applications.
491
AGREEMENT FOR ADMINISTRATIVE SERVICES
Fridley HRAI CEE
10 -2 -96
(3) Make payments to remodeling contractors on a timely basis, in
compliance with the Federal "three -day rule".
(4) Obtain mechanic's liens from all remodeling contractors,
subcontractors, and material suppliers, prior to release of any
payments.
C. The Contractor shall proceed with the administration of the Program as
contained in the Program Budget, attached as Exhibit A and made a
part of this Agreement by reference, representing Contractor's minimum
responsibilities to the extent that said proposals have not been
accomplished prior to the date of this Agreement as entered into and to
the extent said proposals do not contradict the standards and
requirements referred to above.
D. It shall be the responsibility of the Contractor to meet all standards and
satisfy all requirements expressed in Title I of the Housing and
Community Development Act of 1974 as amended and the HUD
Implementary Regulations at 24 CFR, Part 570, and any other applicable
federal statutes, rules, or regulations established now or hereafter, and
any applicable statutes, rules, regulations, or guidelines established now
or hereafter by the State of Minnesota or any of its agencies. Should it
appear to the Contractor at any time during the course of implementing
said project, that the work to be done has not been explained or
described in sufficient detail, or with sufficient clarity, or should it appear
that any plan, proposal, or other material conflict with any standards or
requirements imposed by statute, regulation, or HUD, the Contractor
shall promptly contact the Authority's Housing Coordinator or other
designated representative. In no event shall the Contractor proceed with
administration of said project in uncertainty. The Contractor shall
comply with the following requirements and standards of OMB Circular
No. A -122, "Cost Principles for Non Profit Organizations" or OMB Circular
No. A -21, "Cost Principles for Educational Institutions ", as applicable,
and with the following Attachments to OMB Circular No. A -110:
(1) Attachment A, "Cash Depositories ", except for paragraph 4
concerning deposit insurance;
(2) Attachment B, "Bonding and Insurance ";
4
2E
AGREEMENT FOR ADMINISTRATIVE SERVICES
Fridley HRA / CEE
10 -2 -96
(3) Attachment C, "Retention and Custodial Requirements for
Records ", except that in lieu of the provisions of paragraph 4, the
retention period for records pertaining to individual HOME
activities starts from the date of submission of the annual
performance and evaluation report, as prescribed in 570.507, in
which the specific activity is reported on for the final time;
(4) Attachment F, "Standards for Financial Management Systems";
(5) Attachment H, "Monitoring and Reporting Program Performance ",
paragraph 2;
(6) Attachment N, "Property Management Standards", except for
paragraph 3 concerning the standards for real property, and
except that paragraphs 6 and 7 are so modified so that
(i) In all cases in which personal property is sold, the
proceeds shall be program income, and
Personal property not needed by the subrecipient for
HOME activities shall be transferred to the recipient for the
HOME program or shall be retained after compensating the
recipient; and
(7) Attachment O, "Procurement Standards ".
3. PROJECT METHODOLOGY AND PROCEDURE
The Contractor, in providing the services described in Section 2 of this Agreement,
shall employ methods and procedures that are deemed to be appropriate, reliable,
and professional by individuals, firms, and associations regularly engaged in work of
a similar nature. The methods and procedures employed shall include those required
by the sources of authority specified in Section 2, herein, but shall not necessarily be
limited to such methods and procedures.
4. PROJECT EVALUATION AND ACCEPTANCE
In order that the Authority may be kept informed of the Contractor's progress and
properly evaluate the success of the Contractor in achieving the Agreement goals, the
Authority may make suggestions, criticisms, and recommendations to the Contractor
E1
2F
AGREEMENT FOR ADMINISTRATIVE SERVICES
Fridley HRA / CEE
10 -2 -96
and the Contractor shall on a monthly basis and at other times upon request by the
Authority, send a written progress report to the Authority's Housing Coordinator. Said
report shall a) summarize the activities and progress of the Contractor to date, b)
detail special problems or difficulties that have arisen during the course of the project
which need to be brought to the attention of the Authority and c) summarize any
other information, problems, or proposals which the Authority needs to know in order
to properly evaluate the actions of the Contractor in working towards the Agreement
goal. The Contractor shall thoroughly and conscientiously implement the proposals,
recommendations, and criticisms of the Authority or its designated representative, in
writing, before proceeding further with the implementation of the program so that the
goals of this Agreement may be met to the satisfaction of the Authority.
Any deviations from the goals, standards, and requirements of the project as
determined by said designated representatives of the Authority shall be corrected by
the Contractor before proceeding further with the implementation of said project.
5. PROJECT ADMINISTRATION, PERSONNEL AND RECORDS
A. The Contractor shall engage in the implementation of the Program, such
individuals as are necessary for its proper completion. The Contractor
warrants and represents that all of its employees shall be properly
trained, competent and qualified to perform the tasks assigned to them.
The Contractor shall provide the Authority with such information
regarding the qualifications of said individuals as required by the
Authority to verify that present and subsequent services are being
rendered by competent and trained people. All individuals engaged by
the Contractor to perform services under this Agreement must receive
express approval of the Authority before commencing any services
under the Agreement. Any or all of said individuals may be regular
employees of the Contractor or may be specifically employed by the
Contractor as independent contractors to work on the implementation of
said project. However, the Contractor shall not subcontract with any
other firms, associations, consulting agencies, or other organizations for
the implementation of the Program, without the expressed written
approval of the Authority.
B. The Contractor shall maintain records on all individuals employed by it
in the implementation of the Program. Said records shall show the
name and qualifications of each such individual, the hourly rate of pay
R
2G
AGREEMENT FOR ADMINISTRATIVE SERVICES
Fridley HRA 1 CEE
10 -2 -96
B. Program Benefit
The Contractor shall not discriminate against any resident or Program
recipient by denying benefit from or participation in any block grant
funded activity on the basis of race, color, sex, or national origin. (Civil
Rights Act of 1964, Title VI; Civil Rights Act of 1968, Title VII; Section
109, Housing and Community Development Act of 1974).
C. Fair Housing
The Contractor shall take necessary and appropriate actions to prevent
discrimination on the basis of Minnesota State law or federal law in
federally assisted housing and lending practices related to loans insured
or guaranteed by the federal government. (Civil Rights Act of 1968, Title
VII; Executive Order 11063; Minnesota Statutes Chapter 363).
D. Employment
1. In all solicitations under this Agreement, the Contractor shall state
that all qualified applicants will be considered for employment.
The words "equal opportunity employer" in advertisements shall
constitute compliance with this section.
2. The Contractor shall not discriminate against an employee or
applicant for employment in connection with this Agreement
because of age, marital status, race, creed, color, national origin,
sexual orientation, or the presence of any sensory, mental, or
physical handicap, except when there is a bona fide occupational
limitation. Such action shall include, but not be limited to the
following: Employment, upgrading, demotion or transfer,
recruitment or recruitment advertising, layoff or termination, rates
of pay or other forms of compensation, and selection for training.
(Executive Order 11246 as amended and Minnesota Statutes
Chapter 363.)
3. To the greatest extent feasible, the Contractor shall provide
training and employment opportunities for lower income residents
within the area served by block grant assisted projects (Section 3,
Housing and Community Development Act of 1968, as amended).
0
2H
AGREEMENT FOR ADMINISTRATIVE SERVICES
Fridley HRA / CEE
10 -2 -96
E. Contractors and Suppliers
1. No contractor, subcontractor, union, or vendor engaged in any
activity under this Agreement shall discriminate in the sale of
materials, equipment, or labor on the basis of age, sex, marital
status, race, creed, color, national origin, sexual orientation, or the
presence of any sensory, mental, or physical handicap. Such
practices include upgrading, demotion, recruiting, transfer, layoff,
termination, pay rate, and advertisement for employment.
(Executive Order 11246 as amended and Minnesota Statutes
Chapter 363).
2. All firms and organizations described above shall be required to
submit to the Agency certificates of compliance demonstrating
that they have, in fact, complied with the foregoing provisions;
provided, that certificates of compliance shall not be required
from firms and organizations on contracts and /or yearly sales of
less than $10,000.
3. To the greatest extent feasible, the Contractor shall purchase
supplies and services for activities under this Agreement from
vendors and contractors whose businesses are located in the
area served by block grant funded activities or owned in
substantial part by project area residents. (Section 3, Housing
and Community Development Act of 1968, as amended.)
F. Notice
1. The Contractor shall include the provisions of the appropriate
subsections A, B, C, D, and E of this section in every contract or
purchase order for goods and services under this Agreement and
shall send to each labor union or representative of workers with
which it has a collective bargaining Agreement or other contract
or understanding a notice advising the said labor union or
worker's representative of the commitments made in these
subsections.
2. In advertising for employees, goods, or services for activities under this
Agreement, the Contractor shall utilize minority publications in addition
to publications of general circulation.
0
21
AGREEMENT FOR ADMINISTRATIVE SERVICES
Fridley HRA / CEE
10 -2 -96
8. EARLY TERMINATION
This Agreement may be terminated by the Authority at any time, with or without
cause, upon 30 days written notice, delivered by mail or in person, to the Contractor.
This Agreement may be terminated by the Authority immediately upon the receipt by
the Authority of notice of the loss of federal funding for the HOME Program . For
purposes of giving notices hereunder, the address of the Contractor is The Butler
Square Building, 100 North 6th Street, Suite 412 -A, Minneapolis, Minnesota 55403-
1520. Upon termination, the Contractor shall be entitled to receive as compensation,
payment for work actually performed to the date of termination as determined by the
schedule of payment referred to in Section 10 (Compensation).
9. DEFAULT AND REMEDY
A. Any of the following constitutes a default on the part of the Contractor:
(1) Failure to proceed with the implementation of the Program at a
pace reasonably calculated to implement such program within the
time limits stated herein;
(2) Failure to conscientiously abide by the directions of the Authority.
(3) Failure to abide by any other term or condition of this Agreement.
B. In the event of default, the Authority shall have the option of terminating
this Agreement upon written notice of termination sent to the Contractor
at its address written above. Termination shall be effective immediately
upon receipt of notice of termination by the Contractor, or at such later
date as the written notice shall state. Upon termination, the Authority
may recover from the Contractor any and all damages directly or
consequently arising out of the breach of this Agreement or failure to
perform the same by the Contractor.
10. COMPENSATION
A. Administrative Services
As compensation for the services to be performed hereunder by the
Contractor, the Contractor shall be paid a fixed fee of $875.00 per grant
10
2J
AGREEMENT FOR ADMINISTRATIVE SERVICES
Fridley HRA / CEE
10 -2 -96
made. The Contractor shall invoice the Authority for services rendered
after the grant has been approved and a Proceed to Work Order has
been issued by the Authority. The Contractor may submit one invoice
per month, which shall cover the grants made during that month. The
Authority shall provide the Contractor with the appropriate forms and
documents to submit for reimbursement.
B. Rehabilitation Assistance
The Contractor shall submit a separate invoice for each grant made.
The invoice shall state, at a minimum, the name of the Program
Recipients, their address, and the full amount of grant. Within 15 days
of receipt of the invoice, the Authority shall remit to the Contractor a
check for the amount of the grant. Said funds shall be deposited into
an interest - bearing checking account, held in trust for the Authority. The
Contractor shall issue payment to the remodeling contractors as work is
completed. Before issuing payment to a remodeling contractor, the
Contractor must do the following:
(1) Inspect the work to ensure that it has been completed
satisfactorily.
(2) Obtain a signed lien waiver from the contractor, subcontractor
and /or material suppliers for the amount of the work.
(3) Obtain the signatures of the homeowner and the remodeling
contractor.
(4) Verify with the Authority that a permit has been obtained for the
work performed and that the remodeling contractor is properly
licensed.
11. INDEPENDENT CONTRACTOR
The relationship of the Contractor to the Authority is that of an independent
contractor. Nothing in this Agreement shall be construed so as to deem any
employee or agent of the Contractor an employee of the Authority for any purpose.
11
421
AGREEMENT FOR ADMINISTRATIVE SERVICES
Fridley HRA/ CEE
10 -2 -96
12. GOODS AND SERVICES NOT PROVIDED FOR
No claim for goods or services furnished by the Contractor not provided for by the
terms of this Agreement, or by duly authorized alterations or modifications of this
Agreement, will be honored by the Authority.
13. CHANGES IN THIS AGREEMENT
The Authority shall notify the Contractor in writing at least five days before any change
in this Agreement is to take effect.
14. ASSIGNMENTS AND SUBCONTRACTING
A. The Contractor shall not assign any portion of this Agreement without
the written consent of the Authority, and it is further agreed that said
consent must be sought by the Contractor not less than thirty (30) days
rior to the date of any proposed assignment.
B. Any work or services assigned or subcontracted hereunder shall be
subject to each provision of this Agreement and proper bidding
procedures contained therein. The Contractor agrees that it is as fully
responsible to the Authority for the acts and omissions of its
subcontractors and of their employees and agents, as it is for the acts
and omissions of its own employees and agents.
15. INDEMNIFICATION
The Contractor agrees to indemnify, defend, and hold harmless the Authority
(including its board members, officers, and employees) from all claims, losses, or
damages which they, or any of them shall be legally obligated to pay as a
consequence of any negligent act or omission, any intentional tort, or any violation of
the terms of this Agreement, by the Contractor (including its officers, employees, and
agents) in the performance of its services that are the subject of this Agreement.
16. REVERSION OF ASSETS
Upon the expiration or termination of this Agreement, the Contractor shall transfer to
the Authority any HOME funds on hand or in the accounts receivable attributable to
the
ON
2L
AGREEMENT FOR ADMINISTRATIVE SERVICES
Fridley HRA / CEE
10 -2 -96
use of HOME funds. In addition, at the expiration or termination of this Agreement,
any real property under the Contractor's control that was acquired or improved in
whole or in part with HOME funds in excess of $25,000.00 shall be disposed of in a
manner which results in the agency being reimbursed in the amount of the current fair
market value of the property less any portion thereof attributable to the expenditures
of non -HOME funds for acquisition of, or improvement to, the real property. Such
reimbursement shall not be required if the conditions of 24 CFR State Statute
570.503(b)(8)(i) are met and satisfied.
17. DISPOSITION OF PROGRAM INCOME
Upon the expiration or termination of this Agreement, program income shall be
returned by the Contractor to the Authority.
18. INSURANCE
The Contractor shall comply with the following insurance requirements:
A. Public Liability Insurance
The Contractor shall obtain and maintain continuously during the term of
this Agreement general liability insurance of an amount not less than
One Million and no /100 ($1,000,000.00) Dollars which covers bodily
injury and property damage and an umbrella excess liability policy of
Three Million and no /100 ($3,000,000.00) Dollars and provide proof of
Worker's Compensation Insurance pursuant to the Statutes of the State
of Minnesota. The general liability insurance policy and umbrella excess
liability policy shall name the Authority as an additional insured.
B. Proof of Insurance
The Contractor shall provide certificates of insurance required under this
section, or, upon request of the Authority, duplicates of the policies as
evidence of the insurance protection afforded. Such insurance policies
shall not be reduced or cancelled without sixty (60) days prior written
notice to the Authority.
19. ENTIRE AGREEMENT /REQUIREMENT OF A WRITING
It is understood and agreed that the entire Agreement of the parties is contained
13
2M
AGREEMENT FOR ADMINISTRATIVE SERVICES
Fridley HRA / CEE
10.2 -96
herein and that this Agreement supersedes all oral agreements and negotiations
between the parties relating to the subject matter hereof as well as any previous
Contract presently in effect between the Authority and the Contractor relating to the
subject matter hereof. Any alterations, variations, modifications, or waivers of the
provisions of this Agreement shall be valid only when they have been reduced to
writing and duly signed by the parties.
20. EXHIBITS
The following attachments listed below are hereby incorporated in this Agreement and
made a part hereof:
Exhibit A - Program Budget
Exhibit B - Certification
Exhibit C - 24 CFR 85; Contracting with small and minority firms, women's business
enterprise, and labor surplus area firms.
IN WITNESS WHEREOF, the parties hereunder set their hands as of the date written
below:
HOUSING AND REDEVELOPMENT
AUTHORITY IN AND FOR THE
CITY OF FRIDLEY
By—
Its—
Date
By—
Its—
Date
14
2N
CENTER FOR ENERGY AND
ENVIRONMENT, INC.
so
Date
Date
AGREEMENT FOR ADMINISTRATIVE SERVICES
Fridley HRA / CEE
10 -2 -96
Source
1996 HOME Allocation
HRA Match
Uses
Home Improvement Grants
Program Administration
EXHIBIT A
15
20
Amount
$75,000
$71,250
$3,750
$75,000
AGREEMENT FOR ADMINISTRATIVE SERVICES
Fridley HRA / CEE
10 -2 -96
EXHIBIT IBIT B
CERTIFICATION
The Undersigned, on behalf of the Agency, certifies, to the best of his or her knowledge and
belief, that:
(1) No Federal appropriated funds have been paid or will be paid, by or on behalf of the
undersigned, to any person for influencing or attempting to influence an officer or employee of
any agency, a Member of Congress, an officer or employee of Congress, or an employee of a
Member of Congress in connection with the awarding of any Federal contract, the making of any
Federal grant, the making of any Federal loan, the entering into of any cooperative agreement,
and the extension, continuation, renewal, amendment, or modification of any Federal contract,
grant, loan, or cooperative agreement_
(2) If any funds other than Federal appropriated funds have been paid or will be paid to any
person for influencing or attempting to influence an officer or employee of any agency, a Member
of Congress, an officer or employee of Congress, or an employee of a Member of Congress in
connection with this Federal contract, grant, loan, or cooperative agreement, the undersigned
shall complete and submit Standard Form -LLL, °Disclosure Form to Report Lobbying," in
accordance with its instructions.
(3) The undersigned shall require that the language of this certification be included in the
award documents for all subawards at all tiers (including subcontracts, subgrants, and contracts
under grants, loans, and cooperative agreements) and that all subrecipients shall certify and
disclose accordingly_
This certification is a material representation of fact upon which reliance was placed when this
transaction was made or entered into. Submission of this certification is a prerequisite for making
or entering into this transaction imposed by section 1332, title 31, U.S_ Code_ Any person who
fails to file the required certification shall be subject to a civil penalty of not less than S10,000 and
not more than S100,000 for each such failure.
AGENCY
0
Date
By
Its
Date
16
2P
AGREEMENT FOR ADMINISTRATIVE SERVICES
Fridley HRA / CEE
10 -2 -96
EXHIBIT C
(24 C FR 85)
Administrative Requirements for Grants and
Cooperative Agreements to State, Local & Federally
Recognized Indian Tribal Governments
Fhusiness C anrroe:Jng Wrrn smol /and
ri _v firms. women -s busines s
prise and labor surplus orea fi=,s.
e grantee and subgrantee will take
ces- -i:y affirmative steps to assue
inority firms. women's business
rises. and labor surplus area firms
ed when possible.
Afnt tative steps shall include:
lacing qualified small and
ity businesses and women's
ess er.terp. ses on solicitation lists:
(ii) Ass-ring that small and minority
businesses. and women's business
enterprises are solicited whenever they
are potential sources:
(iii) Dividing total requirements. when
economically feasible. into smaller tasks
e: quantities to permit maximum
pa.- :icipat_on by smaII and r..inortr
business. and womer.'s business
eaterp ises:
(is) Establishing deliver_.-scaecules-
- -here the req i= perm.ts. w tic..
e�cc .-asze aarticipatic : by s::al; a :c
m :nority business. anc women
business e . :erp ses:
(.'. Us: ^�: the se.-v:ces and PSSlstc.'.
c :: ;e S—.-Z:, Business �cmi�istrat _.
i
ar_ the N! ; =.itv B_s =Hess Deveioore -:
f ge�c -re De7a.- :- 727, ; -o:
coht :acts.--
ubcort.-a = is are :c oe let_ tc take t e j
:;i- aatite
Ste 95 listed if-, pa :agrzr..s Ij
of this secuor.-
17
20
DATE: October 4, 1996
MEMORANDUM
HOUSING
_E
REDEVELOPMENT
AUTHORITY
TO: William Bums, Executive Director of HRA��1
FROM: Barbara Dacy, Community Development Director
Grant Femelius, Housing Coordinator
SUBJECT: Resolution to Decertify Portion of Property Located at 533
Janesville St. ( #03- 2424 -23- 0003).
In October 1995, the HRA adopted the Housing Replacement Program and identified
8 parcels for Phase I, including 533 Janesville St. In December 1995, the HRA
agreed to sell a portion of 533 Janesville St. to two adjoining property owners. The
remaining piece of property was retained by the HRA and later sold to Four Diamond
Builders for construction of a new home. A location map is attached.
In September 1996 the County realized that the portion of property which was sold
was still included in the Housing Replacement Program District. To correct the
matter, the County is requesting that the HRA decertify the portion that was sold.
This action does not adversely impact the program. The City Council must also
approve a separate resolution.
RECOMMENDATION
Staff recommends that the HRA approve the attached resolution to decertify a portion
of 533 Janesville St. ( #03-24 -24-23 -0003) from the Housing Replacement Program
District.
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+6128851298 CASSERLY MOLZAHN 837 P02 OCT 03.96 12:32
HOUSING AND REDEVELOPMENT AUTHORITY
IN AND FOR THE
CITY OF FRIDLEY
COUNTY OF ANOKA
STATE OF MINNESOTA
RESOLUTION NO.
A RESOLUTION RELATING TO THE DECERTIFICATION OF
A PORTION OF PARCEL ##03- 30 -24 -23 -0003
WHEREAS, the Board of Commissioners (the "Board ") of the
Housing and Redevelopment Authority in and for the City of
Fridley, Minnesota (the "Authority ") approved and forwarded to
the City Council (the "Council") of the City of Fridley (the
"City ") the establishment of Housing Replacement District No. 1
on September 14, 1995, pursuant to and in accordance with Laws of
Minnesota 1995, Chapter 264, Article 5, Sections 44 through 47,
inclusive, as amended, and as may be supplemented from time to
time.
WHEREAS, the Authority has proposed decertification of the
portion of parcel #03- 30 -24 -23 -0003 located within the Housing
District and described on Exhibit A attached hereto.
NOW, THEREFORE, BE IT RESOLVED by,the Board of the Authority
that decertification of the portion of parcel ##03- 30 -24 -23 -0003,
as described on Exhibit A attached hereto, be approved and
forwarded to the Council of the City for review and approval.
Adopted by the Board of the Authority this day of
, 1996-
ATTEST:
Executive Director
Chairman
+6128851298 CASSERLY MOLZAHN 837 PO3 OCT 03196 12:33
CERTIFICATION
I, William A. Champa, the duly qualified City Clerk of 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 Housing and Redevelopment Authority of the City of
Fridley on the day of , 1996.
City Clerk
3C
+612eeS129e CASSERLY MOLZAHN e37 PO4 OCT 0319G 12.33
EXHIBIT A TO RESOLUTION NO.
The southeasterly 20 feet of Lots 52 and 53 and the southeasterly
15 feet of Lot 54 all in Block E, RIVERVIEW HEIGHTS, Anoka
County, Minnesota.
3D
MEMORANDUM
HOUSING
• _C
REDEVELOPMENT
DATE: October 4, 1996
AUTHORITY
TO: William Bums, Executive Director of HRA 444--�
FROM: Barbara Dacy, Community Development Director
SUBJECT: Consider Proposal for Payment of Tax Increment Note;
Rylund Properties
Background
On June 22, 1994, the HRA entered into a Contract for Redevelopment with Rylund
Properties to provide pay -as- you -go tax increment financing assistance of $32,000.
The developer was to construct a 13,000 square foot building with a minimum market
value of $357,988. The project was to be completed by December 31, 1995.
The developer completed construction of the building as specified in the development
contract. The current market valuation on the property is $392,600. The subject
property is located in Tax Increment District No. 9.
Tax Increment Note
As part of the development contract, the Authority agreed to pay $32,000 together
with 8% interest via a limited revenue tax increment note upon successful completion
of the project (16 payments at $3,089 or $49,424). Payment on the note is to begin
on August 1, 1996. The payment is based on receiving the "available tax increment"
as defined in Article 5, Section 5.1 of the development contract, which states as
follows:
"(a) For the duration of the note in which the real estate tax payments reflect the
market valuation of the completed minimum improvements, 90% of the tax
increment (the available tax increment) shall be pledged and appropriated for
the payment of the note.
N
Rylund Properties
October 4, 1996
Page 2
(b) If the available tax increment is not adequate to pay any installment of the note,
such unpaid portion shall carry forward and be paid in any subsequent year in
which there is available tax increment. Upon the maturity date of the note, any
unpaid portion shall be deemed to have been paid in full, shall not be a debt
or obligation of any kind of the City or the Authority, and shall not constitute a
default under the terms of the note."
Tax increment from the Onan district was generated in 1992 and 1993; however, in
1994, and in subsequent years, the tax capacity of the district dropped below the
original tax capacity. The reason for the decline in tax capacity was a parcel owned
by Onan was devalued to zero dollars to prevent the parcel from going tax forfeit.
This coupled with the general decline of commercial /industrial market values caused
a valuation decrease in the district of approximately $1,500,000. Therefore, even
though the Rylund development is producing tax increment at this time, the district
overall is not producing increment.
Legal Obligation
The contract does not legally obligate the HRA to make payments on the note;
however, the developer has met his obligation of the contract and is producing tax
increment. It has been determined that approximately $21,000 of tax increment was
received in 1992 and 1993, the amount of which would satisfy note payments until
2000.
The valuations in the district as a whole appear to be back on the rise, and it is
hoped that increment will be received in the year 2000. The status of the financial
health of the district should be revisited at that time. If the district is not producing
increment, the HRA can easily borrow funds from other districts to continue payments
on the note (about $28,000).
Recommendation
Staff recommends that the HRA authorize staff to initiate payment on the tax
increment note as agreed to in the 1994 redevelopment contract up to $21,000 or
2000, whichever comes first. At that time, if the district is generating increment, the
payment on the note will continue as stipulated in the contract. If the district is not
producing increment, the HRA can borrow funds from other districts to complete the
note payments.
•� .
Casserly Molzahn & Associates, Inc.
Suite 1100 Southpoint Office Center • 1650 West 82nd Street • Minneapolis, Minnesota 55431
Office (612) 885 -1298 • Fax (612) 885 -1299
M E M O R A N D U M
TO: City of Fridley
Attention: Barbara Dacy
FROM: Mary E. Molzahn
James R. Casserly
RE:
Available
Tax
Increment for the Rylund Revenue Note
DATE:
September
24,
1996
As you know the original and current tax capacities for TIF
District #9 (the "District ") for 1995/1996 are $941,465 and
$872,057, respectively. Because the current tax capacity is less
than the original, no tax increment is generated from the
District for the year payable 1996. In talking with Dick
Sivanich at Anoka County and Ed Hervin at the City, we have
tracked the tax capacities for the past several years in an
effort to determine why no tax increment is being generated.
Listed below is a summary of those discussions.
The tax capacity of the District steadily decreased from
1991/1992 through 1994/1995; in 1995/1996 and 1996/1997 the tax
capacities began to increase.
Assess Year/
Tax
Tax
Payable Year
Capacity
Increment
1991/1992
$1,000,000
$13,000
1992/1993
978,000
8,000
1993/1994
867,000
1994/1995
858,000
1995/1996
872,057
1996/1997
889,422
Tax increment was generated in 1992 and 1993, however, in 1994
and in subsequent years the tax capacity of the District dropped
below the original tax capacity. According to Dick Sivanich, the
decline was due to an overall collapse in market values
throughout the County. This particular District was further
impacted by decreasing the market value of the Onan Company
parcel containing the creosote pit to $0 in an effort to avoid
Rfl
the parcel going tax forfeit. As a result of this parcel's value
at $0 and the general decline of commercial industrial market
values, the surrounding Onan parcels further decreased almost
$1.5 million in value.
Although values are beginning to increase, the 1995/1996 tax
capacity is still below the original tax capacity and will be
again in 1996/1997. The adjusted original tax capacity for
1996/1997 is estimated at $943,902 compared to an estimated
current tax capacity of $889,422. The end result is, there will
be no tax increment generated next year from this District.
If the Rylund Properties development ( "Rylund ") were its own
district, the project would generate approximately $6,242 semi
annually in 1996, and the tax increment would increase to
approximately $8,063 semi annually in 1997. (See Assumptions and
Cash Flow Analysis attached.) These semi annual tax increment
receipts would be more than sufficient to make the $3,089 semi
annual payments on the Revenue Note issued to Rylund.
While the Authority is not legally obligated to make these
Revenue Note payments because the District as a whole is not
currently generating tax increment, even though the individual
project would be if treated as its own district, the Authority
should consider the option of making the Revenue Note payments
from the approximate $21,000 received in tax increment from the
District in 1992 and 1993. In addition, it appears that the tax
capacities are trending upwards and that tax increment may be
generated by 1999/2000. If the District incurs a deficit, it may
borrow from other districts and repay when future tax increment
is received.
During the two years prior to the inception of Rylund's project
the District generated tax increment. Additionally, Rylund has
provided even greater value then promised in its Contract with
the Authority. It is our recommendation that the Authority pay
Rylund's Revenue Note from past tax increment and, if necessary,
borrow any shortfall from existing districts that should be
repaid with future tax increment.
Please advise if there is anything further we can provide.
4C
CITY OF FRIDLEY, MINNESOTA
RYLUND PROPERTIES — ASSUMPTIONS
Original Market Value
12- 30 -24 -24 -0011
12- 30 -24 -24 -0012
12- 30 -24 -24 -0013
12- 30 -24 -24 -0044
Original Tax Capacity
1994/1995 Estimated Market Values
12- 30 -24 -24 -0049
12- 30 -24 -24 -0050
12- 30 -24 -24 -0051
1994/1995 Estimated Tax Capacity
1995/1996 Estimated Market Values
12- 30 -24 -24 -0049
12- 30 -24 -24 -0050
12- 30 -24 -24 -0051
1995/1996 Estimated Tax Capacity
1996/1997 Estimated Market Values
12- 30 -24 -24 -0049
12- 30 -24 -24 -0050
12- 30 -24 -24 -0051
1996/1997 Estimated Tax Capacity
Certified Tax Rate
Admin /Program Expenses
3.000% 4.600%
12,300
6,200
9,100
75,000
100
55,200
47,300
100
68,500
311,600
100
68,500
392,600
0.977560
10.000%
102,600
3,120
102,600
3,120
380,200
15,889
461,200
19,615
LUND PREPARED BY CASSERLY MOLZAHN & ASSOCIATES, INC. 24— Sep -96
4D
CITY OF FRIDLEY, MINNESOTA
RYLUND PROPERTIES - CASH FLOW ANALYSIS
Date
Original
Tax
Capacity
Estimated
Tax
Capacity
Captured
Tax
Capacity
Estimated
Tax
Increment
Admin/
Program
Expenses
Available
Tax
Increment
06/01/94
3,120
3,120
0
0
0
0
12/01/94
3,120
3,120
0
0
0
0
06/01/95
3,120
15,889
0
0
0
0
12/01/95
3,120
15,889
0
0
0
0
06/01/96
3,120
19,615
12,770
6,242
624
5,617
12/01/96
3,120
19,615
12,770
6,242
624
5,617
06/01/97
3,120
19,615
16,496
8,063
806
7,256
12/01/97
3,120
19,615
16,496
8,063
806
7,256
06/01/98
3,120
19,615
16,496
8,063
806
7,256
12/01/98
3,120
19,615
16,496
8,063
806
7,256
06/01/99
3,120
19,615
16,496
8,063
806
7,256
12/01/99
3,120
19,615
16,496
8,063
806
7,256
06/01/2000
3,120
19,615
16,496
8,063
806
7,256
12/01/2000
3,120
19,615
16,496
8,063
806
7,256
06/01/2001
3,120
19,615
16,496
8,063
806
7,256
12/01/2001
3,120
19,615
16,496
8,063
806
7,256
06/01/2002
3,120
19,615
16,496
8,063
806
7,256
12/01/2002
3,120
19,615
16,496
8,063
806
7,256
06/01/2003
3,120
19,615
16,496
8,063
806
7,256
12/01/2003
3,120
19,615
16,496
8,063
806
7,256
125,361 12,536 112,825
LUND PREPARED BY CASSERLY MO' ALIKI & ASSOCIATES, INC. 24- Sep -96
4E
ARTICLE V
Tax Increment
Section 5.1 Tax Increment Certification. Pursuant to the
Tax Increment Plan, the Authority has pledged and shall
appropriate the Tax Increment to the payment of the principal of
and interest, if any, on the Note, said payment to be made in
accordance with the terms and provisions as stated in the Note
except as provided below:
(a) For the duration of the Note in which the real estate
tax payments reflect the market valuation of the completed
Minimum Improvements, 90% of the Tax Increment (the "Available
Tax Increment ") shall be pledged and appropriated for the payment
of the Note.
t
(b) If the Available Tax Increment is not adequate to pay
any installment of the Note, such unpaid portion shall carry
forward and be paid in any subsequent year in which there is
Available Tax Increment. Upon the maturity date of the Note, any
unpaid portion shall be deemed to have been paid in full, shall
not be a debt or obligation of any kind of the City or the
Authority and shall not constitute a default under the terms of
the Note.
Section 5.2 Real Property Taxes. The
all real property taxes payable with respect
Property as if the Authority never owned any
Redevelopment Property.
11
4F
Redeveloper shall pay
to the Redevelopment
portion of the
SCHEDULE D
$32,000
UNITED STATES OF AMERICA
STATE OF MINNESOTA
COUNTY OF ANOKA
THE HOUSING AND REDEVELOPMENT AUTHORITY
In and For
THE CITY OF FRIDLEY
LIMITED REVENUE TAX INCREMENT NOTE
RYLUND PROPERTIES
The Housing and Redevelopment Authority in and for the City of
Fridley (the "Authority "), hereby acknowledges itself to be
indebted and, for value received, promises to pay to the order of
Rylund Properties, a Minnesota partnership (the "Registered
Owner "), or its registered assigns, solely from the source, to the
extent and in the manner hereinafter provided, the principal amount
of this Note, being Thirty Two Thousand Dollars ($32,000) (the
"Principal Amount "), together with interest thereon from August 1,
1994 at a rate of eight percent (8.0%) on the dates (the "Scheduled
Payment Dates ") as set forth on the Payment Schedule attached as
Exhibit A hereto and in the amounts stated thereon (the "Scheduled
Payments "). This Note shall be payable in semiannual installments
commencing on August 1, 1996, and on the 1st day of February and
August thereafter until and including February 1, 2004.
Upon 30 days' prior written notice from the Authority to the
Registered Owner, the Principal Amount is subject to prepayment at
the option of the Authority in whole or in part on any Scheduled
Payment Date.
Each payment on this Note is payable in any coin or currency
of the United States of America which on the date of such payment
is legal tender for public-and private debts and shall be made by
check or draft made payable to the Registered Owner and mailed to
the Registered Owner at its postal address within'.the United States
which shall be designated from time to time by the Registered
Owner.
The Note is a special and limited obligation and not a general
obligation of the Authority, which has been issued by the Authority
pursuant to and in full conformity with the Constitution and laws
of the State of Minnesota, including Minnesota Statutes, Section
469.178, Subdivision 4, to aid in financing a "project ", as therein
defined, of the Authority consisting generally of defraying certain
public redevelopment costs incurred and to be incurred by the
Authority within and for the benefit of its Redevelopment Project
No. 1 (the "Project Area ").
23
4G
THE NOTE IS NOT A GENERAL
AUTHORITY OR THE STATE OF MINN
CITY, THE AUTHORITY, THE STATE
THEREOF SHALL BE LIABLE ON THE
OUT OF ANY FUNDS OR PROPERTIES
AS DEFINED BELOW.
OBLIGATION OF THE CITY, THE
ESOTA (THE "STATE "), AND NEITHER THE
NOR ANY POLITICAL SUBDIVISION
NOTE, NOR SHALL THE NOTE BE PAYABLE
OTHER THAN AVAILABLE TAX INCREMENT,
The Scheduled Payment of this Note due on any Scheduled
Payment Date is payable solely from and only to the extent that the
Authority shall have received as of such Scheduled Payment Date,
"Available Tax Increment" which is defined in the Contract for
Private Redevelopment between the Authority and the Registered
Owner (the "Agreement ") as tax increment received as of a Scheduled
Payment Date with respect to certain real property described in the
attached Exhibit B (hereinafter referred to as the "Redevelopment
Property ") which real property is located within the City's Tax
Increment Financing District No. 9.
The Authority shall pay on each Scheduled Payment Date to the
Registered Owner the lesser of the Available Tax Increment and the
Scheduled Payment due hereon on that date. To the extent that on
any Scheduled Payment Date the Authority is unable to make the
total Scheduled Payment due on such date as a result of its having
received as of such date insufficient Available Tax Increment, such
failure shall- constitute a default under this Note and any such
deficiency or unpaid portion shall be paid on any subsequent
Scheduled Payment Date from the Available Tax Increment. On
February 1, 2004, the maturity date of this Note, any unpaid
portion shall be deemed to have been paid in full.
This Note shall not be payable from or constitute a charge
upon any funds of the Authority, and the Authority shall not be
subject to any liability hereon or be deemed to have obligated
itself to pay hereon from any funds except the Available Tax
Increment, and then only to the extent and in the manner herein
specified.
The Authority makes no representations or covenant, express or
implied, that the revenues described herein will be sufficient to
pay, in whole or in part, the amounts which are or may otherwise
become due and payable hereunder.
The Authority's payment obligations hereunder shall be further
conditioned on the fact that there shall not at the time have
occurred and be continuing an Event of Default under the Agreement,
and, further, if pursuant to the occurrence of an Event of Default
under the Agreement the Authority elects to terminate the
Agreement, the Author -ty shall have no further debt or obligation
under this Note whatsoever. Reference is hereby made to the
provisions of the Agreement for a fuller statement of the
obligations of the Redeveloper and of the rights of the Authority
thereunder, and said provisions are hereby incorporated by
24
a■i
reference into this Note to the same extent as though set out in
full herein. The execution and delivery of this Note by the
Authority, and the acceptance thereof by the Redeveloper, as the
initial Registered Owner hereof, shall conclusively establish this
Note as the "Note" (and shall conclusively constitute discharge of
the City's obligation to issue and deliver the same to the
Redeveloper) under this Agreement.
The Registered Owner shall never have or be deemed to have the
right to compel any exercise of any taxing power of the Authority
or of any other public body, and neither the Authority nor any
director, commissioner, council member, board member, officer,
employee or agent of the Authority, nor any person executing or
registering this Note shall be liable personally hereon by reason
of the issuance or registration hereof or otherwise.
IT IS HEREBY CERTIFIED AND RECITED that all acts, conditions,
and things required by the Constitution and laws of the State of
Minnesota to be done, to have happened, and to be performed
precedent to and in the issuance of this Note have been done, have
happened, and have been performed in regular and due form, time,
and manner as required by law.
This Note may be assigned but upon such assignment the
assignor shall promptly notify the Executive Director of the
Authority at the offices of the Authority by registered mail, and
the assignee shall surrender the same to the Authority either in
exchange for a new fully registered note or for transfer of this
Note on the registration records for the Note maintained by the
Authority. Each such assignee shall take this Note subject to the
foregoing condition and subject to all provisions state or
referenced herein.
The Authority has elected to issue this Note as a non -tax
exempt obligation and accordingly does not anticipate that the
interest on this Note is or will be generally exempt from federal
or state income taxes, and the Authority makes no representation or
covenant with respect to any such exemption.
IN WITNESS WHEREOF, the Authority has caused this Note to be
executed by the manual signatures of its Chairman and Executive
Director and has caused this Note to be dated ,
1994.
Chairman
This instrument was drafted by:
Casserly Law Office, P.A.
215 South 11th Street
Minneapolis, Minnesota 55403
2
41
Executive Director
DATE
August 1, 1996
February 1, 1997
August 1, 1997
February 1, 1998
August 1, 1998
February 1, 1999
August 1, 1999
February 1, 2000
August 1, 2000
February 1, 2001
August 1, 2001
February 1, 2002
August 1, 2002
February 1, 2003
August 1, 2003
February 1, 2004
EXHIBIT A
PAYMENT SCHEDULE
27
61
PAYMENT
$3,089.00
3,089.00
3,089.00
3,089.00
3,089.00
3,089.00
3,089.00
3,089.00
3,089.00
3,089.00
3,089.00
3,089.00
3,089.00
3,089.00
1:• 11
1:• 11
DATE: October 4, 1996
MEMORANDUM
HOUSING
AND
REDEVELOPMENT
AUTHORITY
TO: William Bums, Executive Director of HRAX' -
FROM: Barbara Dacy, Community Development Director
Grant Femelius, Housing Coordinator
SUBJECT: Follow -Up Regarding Scattered Site Acquisition Program
At the September 13, 1996 HRA meeting several issues were raised by the
Commissioners concerning the Scattered Site Acquisition Program. The issues
included how the properties are appraised and whether the City could use code
enforcement/condemnation procedures to address substandard housing.
Staff is currently in the process of researching these issues and will be meeting with
both Ed Hervin, City Assessor and Richard Erickson, Appraisal Engineering Bureau,
prior to the HRA meeting on October 10th. Mr. Erickson has also agreed to attend
the October meeting and answer questions concerning the appraisals.
Additional information will be presented at the meeting
GF/
M -96 -459
5
MEMORANDUM
HOUSING
EAW IJ
REDEVELOPMENT
AUTHORITY
DATE: October 4, 1996
TO: William Burns, Executive Director of HRA
FROM: Barbara Dacy, Community Development Director
SUBJECT: Fridley Executive Center Update
Meetings with Medtronic Onan and Target
Bill Burns, Dave Jellison, and Merrill Busch met with representatives from Target,
Medtronic, and Onan over the last month in order to gather information from Human
Resource professionals in the community about the ability of companies in Fridley to
attract quality employees. Dave and Merrill had previously heard negative comments
about Fridley's ability to attract jobs to the community, especially upper level white -
collar professionals. All three companies reported that if there are recruitment
problems, they relate to the ability to find specialized talent as opposed to a
geographic disadvantage. Medtronic, however, did indicate that the higher level
professional usually wants to live and work in the suburbs in the west and southwest
metro area. In general, however, the Fridley location is better than downtown
because of the excellent transportation access to the site.
Dave Jellison and Bill Bums also met with Roger McCombs of Medtronic. Medtronic
currently has enough space for the next three years; Medtronic recently bought a
used facility in Shoreview. Medtronic is willing to collaborate with the City regarding
the need for hotel space and conference facilities. Medtronic agreed to provide
information regarding their demands for these types of facilities.
Merrill Busch is still working on the brochure authorized by the HRA at its August
meeting. It is hoped that a draft of the brochure will be submitted sometime during
the week of October 7, 1996.
D
Fridley Executive Center Update
October 4, 1996
Page 2
Intersection Update
John Flora, Public Works Director, has been successful in convincing MnDOT staff to
assume the cost for not only the upgrade of the Highway 65 intersection, but also the
modifications to the access ramps from 1-694 to Highway 65. Written confirmation is
forthcoming from MnDOT; however, the HRA responsibility will only be to pay for the
preparation of plans and design which would approximate between $200,000 -
$300,000. This is less than the share that was originally contemplated via the ISTEA
grant proposal. The total project cost was $1,900,000; ISTEA fund would pay for
$1,500,000, leaving the HRA with a share of $400,000.
As you recall, the HRA has a small contract pending with SEH to continue the design
work on the intersection. More information will be provided at the November meeting
regarding the next steps, but the previous contract may be voided so that another
larger contract can be approved to initiate the design of the intersection and transmit
the plans to the State for their processing.
No action is needed by the HRA on these items
BD /dw
M -96 -456
• u