HRA 12/12/1996 - 29793�
CITY OF FRIDLEY
HOUSING & REDEVELOPMENT AUTHORITY MEETING
DECEN�ER 12, 1996
CALL TO ORDER:
Chairperson Commers called the December 12, 1996, Housing and
Redevelopment Authority meeting to order at 7:30 p.m.
ROLL CALL:
Members Present: Larry Commers, Virginia Schnabel, John Meyer,
Jim McFarland (8:00 p.m.)
Members Absent: Duane Prairie
Others Present: William Burns, Executive Director
Barbara Dacy, Community Development Director
Grant Fernelius, Housing Coordinator
Rick Pribyl, Finance Director
Craig Ellestad, Accountant
Jim Furgason, 6381 Squire Street
^ Gordon Backlund, 5805 Arthur Street
Robert Van Nelson, Remodeling Counselor
Dave King, CEE
Chris Huber, Spring Lake Park Public Schools
APPROVAL OF NOVEN�ER 12, 1996, HOUSING AND REDEVELOPMENT AUTHORITY
MEETING:
MOTION by Mr. Meyer, seconded by Ms. Schnabel, to approve the
November 12, 1996, Housing and Redevelopment Authority minutes as
written.
UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON CONIl�RS DECLARED THE
MOTION CARRIED UNANIMOUSLY.
CONSENT AGENDA:
1. 1997 FRIDLEY EXECUTIVE CENTER/LAKE POINTE MAINTENANCE CONTRA.CT
2. RESOLUTION AUTHORIZING AN INCREASE IN COMPEN5ATION FOR FRIDLEY
HOUSING AND REDEVELOPMENT AUTHORITY EMPLOYEES FOR THE 1997
CALENDAR YEAR
3. REVENUE AND EXPENSES
Mr. Ellestad distributed copies of his memo dated December 12,
1996, listing additional revenues and expenses for approval.
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HOUSING � REDEVELOPT�NT AUTHORITY MTG., DECEN�ER 12, 1996 PAGE 2
MOTION by Ms. Schnabel, seconded by Mr. Meyer, to approve the
Consent Agenda as presented with the additional expenditures as
presented in the December 12, 1996, memo.
UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON CO1�RS DECLP,RED THE
MOTION CP,RRIED UNANIMOUSLY.
ACTION ITENlS •
4. CONSIDER APPROVAL OF SCHOOL DISTRICT TIF RETURNS
Mr. Ellestad stated this is an annual agreement and is payable
1997 only. There are no additional referendum levies. TIF
District #8 has been terminated. Otherwise, this is the same
last year.
Ms. Dacy stated staff recommends approval as presented.
for
as
Mr. Backlund, Chair of the Independent School District #14 School
Board, stated, on behalf of the board, they appreciate the support
in the past. It is meaningful to have the extra revenue. Times
are not always as they have been in the past. They are going
through the budget process and looking to have as much stability as
possible in their funding. He would appreciate the continuation of
the support. This support has been very helpful to the school
district.
Mr. Commers stated the estimated figures for 1997 are slightly
less. Is that because of the termination of one of the districts?
Mr. Ellestad stated yes. The district terminated in 1996 so it
will not be available for payment in 1997.
Mr. Commers stated it is true there is always a budget crunch. As
the HRA has reconstituted themselves in terms of economic
development and having started the focus of revitalization and
rehabilitation, this makes it financially difficult for the HRA as
well. As he has told the representative from the school district,
they must be careful because there are no assurances that these
funds will continue forever.
Mr. Backlund stated he appreciated that and agreed. The important
thing is to work together and to have an understanding of their
goals and objectives.
Mr. Meyer stated this payment is unique in the state and something
we have been doing for a number of years. We have returned HRA-
generated funds to our school districts.
^ HOUSING 6 REDEVELOPMENT AUTHORITY MTG., DECEN�ER 12, 1996 PAGE 3
Mr. Commers stated our position is unique. We may be one of only
one or two HRA's in the state who have been in the habit of
returning to the school districts some of the excess monies as
defined in the law and have been doing so for approximately five or
six years. As you can see, this has amounted from $250,000 to
$400,000 from the HRA. The HRA does want to be in partnership with
the school districts and recognizes the value.
MOTION by Ms. Schnabel, seconded by Mr. Meyer, to approve the 1997
School District Referendum Levy Return Agreements with Independent
School Districts 11, 13, 14, and 16, as presented in the agenda
packet.
UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON CONIl��RS DECLP,RED THE
1KOTION CP,RRIED UNANIMOUSLY.
Mr. Huber, Superintendent of Spring Lake Park, stated he would like
to share what these funds have provided in his district. He
thanked the HRA and stated the student and community appreciate
this support. This municipality has been the most consistent
municipality in sharing and providing support. It does make a
^ difference. This will provide for two teachers or five
paraprofessionals or provide for community services. He thanked
the HRA for their generosity.
INFORMATION ITENIS•
5. FRIDLEY EXECUTIVE CENTER UPDATE
Ms. Dacy stated MEPC is under contract to market the Fridley
Executive Center site to potential users. MEPC has made a number
of contacts. They are still meeting with a major office entity.
The Fridley site is part of the evaluation process. We should hear
about that after the first of the year. MEPC made another proposal
to another user for 80,000 square feet as recently as last week.
There is another smaller potential user looking for restaurant/
hotel sites. MEPC has no solid proposal at this time, but contacts
are being made.
Ms. Dacy stated the marketing brochure as prepared by Merrill Busch
is now in draft form, which Ms. Dacy presented.
Mr. Commers asked if this brochure addressed those core items about
which people had questions.
Ms. Dacy stated part of the mission of the brochure is to be able
to provide inserts to aim at those specific issues. One of those
� questions is the general impression that the area is more oriented
to manufacturing as opposed to corporate campus-type office parks.
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HOUSING & REDEVELOPMENT AUTHORITY MTG., DECEMBER 12, 1996 PAGE 4
The idea of the brochure is to get quotes from some of the major
companies in the City that have significant white collar types of
employment to convey the message that this would be a suitable site
for a corporate office user. Merrill Busch has succeeded in
getting some good quotes.
Ms. Schnabel asked who the target people are that this brochure
would go to.
Ms. Dacy stated the brochure would be used by MEPC to promote the
community in addition to promoting the site. Because of the
inserts, if someone has a specific question, we can tailor that
information accordingly. They are trying to keep the brochure
generic and the inserts would be focused toward the specific people
that they want to attract.
Mr. Commers asked if staff had asked MEPC about their other
development activities, specifically in Winter Park.
Ms. Dacy stated she did not obtain details on the development in
Winter Park.
Mr. Commers asked staff to inquiry about this development.
Ms. Schnabel asked when the HRA would make a review of MEPC.
Ms. Dacy stated a review would be conducted in August, 1997, which
is when the contract expires. If the HRA wishes to request MEPC to
attend a meeting, that is within your purview.
Mr. Commers stated it looked as if MEPC has some things moving. He
suggested they see if something comes to fruition in the next few
months.
Mr. Commers stated, regarding the intersection at I-694 and
University Avenue, with Home Depot helping with the design, there
will not be a big commitment required by the HRA.
Ms. Dacy stated this was correct. They hope to get that done this
year so there are no conflicts when it comes time to proceed with
Highway 65. Ms. Dacy reviewed the proposed design for the
intersection. MnDOT will be paying for the construction. Home
Depot will pay for the design.
Mr. Commers asked who would approve the final design.
Ms. Dacy stated, because the project is associated with the state,
� MnDOT will approve the design. The HRA does not have specific
input. The City Council will approve the plans.
HOUSING � REDEVELOPT�NT AUTHORITY MTG., DECEI�ER 12, 1996 PAGE 5
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6. 1996 HOUSING PROGRAM REVIEW
Mr. Fernelius provided a summary of the accomplishments of the
housing programs for the year.
Mr. Fernelius stated, in March, staff started working with CEE to
redesign the housing rehabilitation programs to offer "one stop
shopping" for residents to come in, meet with a loan
representative, and provide assistance as needed. In addition to
redesigning the programs, they established a housing hotline for
people to call at CEE to get information and submit applications
over the phone. CEE also has a staff person at city hall on
Tuesday evenings to answer questions, close loans, provide
applications, etc. This has worked quite well. The HRA hired a
home remodeling advisor to assist homeowners in evaluating home
improvement topics, work they would do to their home, hiring
contractors, etc. This has proven to be very popular. The HRA has
also provided funding support. The first Home Remodeling and
Garden Fair held in April was very successful.
^ Mr. Fernelius stated all this has produced some interesting
results. Year to date, CEE has processed 188 loan applications of
which 145 loans and grants have been issued for a total of $1.7
million. The remodeling advisor has received a number of phone
calls and has made 146 visits.
Mr. Fernelius stated staff has been evaluating the quality of
customer service with residents and both CEE and the remodeling
counselor have received very high marks. People have been
satisfied with the programs and the quality of the customer
service. At the remodeling fair, approximately 1200 to 1500 people
attended. Staff plans to hold another fair on April 5, 1997.
Mr. King provided a copy of his memo dated December 12, 1996, which
summarizes the Fridley Home Improvement Program. Rental properties
are not included in the information. Mr. King reviewed the
information. Both exterior and interior improvements were made as
part of this program.
Mr. King stated he did a brief interview with six borrowers in
preparation for the meeting. The main reason for their
participation was the interest rate. One interesting item was that
most people noted that with a$25,000 maximum loan, they could do
more work than they had expected to do. The average loan of
$14,000 in Fridley is more than twice the average of CEE's usual
loan so some substantial improvements are being done. All of the
� borrowers felt the program was successful and also noticed their
neighbors were doing work. CEE felt it was a success this year and
� HOUSING & REDEVELOPMENT AUTHORITY MTG. DECEI�ER 12, 1996 PAGE 6
enjoyed working with City staff. Staff facilitated CEE getting the
numbers that they did.
Mr. Commers asked how these numbers shaped up with Mr. King's
experience in other communities.
Mr. King stated CEE's most similar experience has been with the
Neighborhood Revitalization Program in the City of Minneapolis. In
Minneapolis, the terms are similar, but the dollars available are
different. The loans are of a smaller magnitude. CEE did some
marketing but did not market as heavily as they could have. The
marketing they did was very successful. If you were to talk to
most contractors, only 20% actually finance home improvements. By
doing this, you get those people who need the assistance to do the
work and those who do not need financing are encouraged to do work
also. CEE is very encouraged. CEE has never had much experience
working in a single community. Other cities are watching this
program and are impressed.
Mr. Meyer stated the Hyde Park area is an area of concern as far as
housing. Less than 10� of the total dollar amount went to this
^ area, but the value of the individual loans are only about half.
Are we reaching those people we want to reach in areas such as
this?
Mr. King stated one factor in the Hyde Park area was a$4,000 cap
per unit. The owner was required to match the HRA loan so they had
to get other financing for the match. There were some rental
properties that had loans larger than the average.
Ms. Dacy stated residents in the Hyde Park area could take
advantage of the 5� loan. In addition, the matching deferred loan
was an additional incentive program. The full array of programs
was available to residents in Hyde Park.
Mr. King stated CEE did use the 50 loan in conjunction with the
Hyde Park loan. They did a half dozen rental properties with
energy updates. There were some nice improvements made in Hyde
Park this year. Hopefully, we can do more intense marketing and
get the rental properties going better.
Mr. Commers stated 150 of the loans and 7.5� of the dollars went to
Hyde Park. In terms of priorities, he was wondering if staff
should try to build this up for 1997.
Mr. Fernelius stated staff are evaluating the Hyde Park program.
He, Ms. Dacy and Mr. King met last week to talk about that issue.
� They are concerned and know there is more work that needs to be
done there. They have some ideas that may help to promote the
� HOUSING 6 REDEVELOPIMENT AUTHORITY MTG. DECEMBER 12, 1996 PAGE 7
program and increase the amount of rehabilitation.
Ms. Dacy stated another part of the Hyde Park program is the
scattered site program. The area has three new homes and the HRA
has acquired four properties so there is a significant dollar
investment.
Mr. Commers stated this is a challenge that they need to focus on.
He would like staff to think about this over the next month or two
and come back with some specific ideas.
Mr. Meyer asked what controls are in place to insure that the work
has been done according to the loan requirements.
Mr. King stated there is a post-installation inspection. The
borrower has nine months to complete the work. Before the work is
completed, someone from their office will visit and verify the work
is done. They are working with staff to tighten up the program.
They release funds to the contractor at closing. Initially, they
tried to mirror the program after the Minnesota Housing Finance
Agency programs because HRA dollars were being used, it became
n evident that tighter controls were needed.
Mr. Fernelius stated that is an issue that will be evaluated.
Mr. Meyer asked if there is any control over the contractor
selected.
Mr, King stated they have found it best to let the borrower choose
the contractor they feel most comfortable with.
Mr. Meyer asked, in reviewing the work, how concerned are you with
the quality.
Mr. King stated everyone's level of satisfaction is different. It
is not our position to make that determination. We are there to
make sure the funds are used for the intended purpose. They rely
on the City inspector to grade the quality and correctness of the
work.
Mr. Meyer asked if staff had a list of approved contractors.
Mr. Dacy stated contractors have to be approved by the State of
Minnesota. They obtain the license and the permits.
Ms. Schnabel asked if the work could be done by the homeowner.
�--.� Mr. King stated yes. Roughly l00 of the projects are being done by
the owner. Their experience has been that it is generally 35°a to
� HOUSING & REDEVELOP�NT AUTHORITY MTG., DECEI�ER 12 1996 PAGE 8
40�.
Mr. Van Nelson stated the remodeling counselor service started this
past spring and runs independent of the housing program.
Homeowners, if interested, can contact him and set up a site visit
or ask questions. There is no obligation. Since spring, he has
received 394 inquiries for visits. Of those calls, he has visited
146 homes. A typical visit consists of an inspection of the home,
talking about specific project ideas and the work that needs to be
done, etc. Of those site visits, 44 homeowners have closed on a
loan through CEE which is a good sign that residents are interested
in the service. He is aware of several projects that are smaller
and work has been completed. Reasons for typical site visits can
include moisture in the basement to more initial planning for
something like an addition and find out what resources are
available. Residents also want to know how much an improvement
will cost, how it will affect the value of their home, options
available to them, selecting a contractor, the contractor's
responsibilities, etc. He does not recommend contractors, but he
does go over what to look for in a contractor. Mr. Van Nelson
showed some photos of projects before and after completion.
� Mr. Fernelius stated, for next year, staff are not planning to make
any substantial changes to the loan programs in terms of
eligibility, criteria, interest rates or loan amounts. Staff will
be evaluating a cap on loan volume. Staff will increase the
marketing efforts and promote the MHFA rental rehab programs.
Mr. Fernelius stated budget issues include continuing to look for
other financing including MHFA to help finance loans and secondly
using the City's loan to finance a portion of the program. The
budget will be presented in January, 1997, which will provide
additional details.
Mr. Fernelius stated administrative issues include implementing an
escrow procedure which will require the borrower to place their
loan funds in an account that would be managed by CEE until the
project is completed. He thought this is a good procedure, is
financially prudent, and will reduce the risks to the HRA.
Mr. Fernelius stated Mr. Van Nelson will be leaving his position as
remodeling advisor next week and thanked him for his service.
Mr. Meyer asked what the income cap must be for a homeowner to be
eligible for some of the programs.
Mr. Fernelius stated the maximum income is $58,658 per household.
�' Mr. Meyer expressed his dismay for using public funds for many of
� HOUSING � REDEVELOPMENT AUTHORITY MTG., DECEN�ER 12, 1996 PAGE 9
the projects seen here. Some projects are quite elaborate in terms
of adding space, improving the exterior, shifting a garage, etc.
He does not personally see why public money is being used for that
and why people with incomes of up to $58,000 cannot do this until
they get a 5� loan. He is sure that each of the properties is
improved, but is it appropriate for these types of uses? Some of
these are elaborate additions. He is more concerned about heating,
plumbing, electrical, deterioration of the house both on the
interior and exterior, etc., and to try to find ways to emphasize
those types of things. If a homeowner wishes to sell, the lending
agency demands an engineering analysis of these systems rather than
the number of bedrooms, shifting a garage, or making more light
come into the house. He felt in some fashion they are giving too
much emphasis for these types of improvements with public monies.
Mr. Commers stated to keep in mind that only 13 out of 352 that
resulted in additions to homes. There were 138 that consisted of
the types of things you are talking about. The comments are
certainly noted.
Mr. Meyer stated another issue that is rather interesting is that
^ the homeowner can have sweat equity. From a banker's standpoint,
if a homeowner wants a loan for an improvement, would a bank allow
a homeowner to do part of the work or must it be done by a
contractor?
Mr. McFarland stated the bank allows a homeowner to do the work on
the basis of trust that they would complete the work and that it
would be done properly. There was a time when they were more
restrictive but they are willing to go along with it.
Ms. Dacy stated, to clarify the exterior improvements, many are
directly related to code improvements. Updates in the interior are
also code requirements. $58,000 sounds like a lot of money.
However, the average household income is well below that. In a lot
of cases, 2/3 of that average household income of $43,000 is dual
income. Many also have children. This is affecting 145 units
which is a small part of the 10,000 units in the City. There are a
lot of private improvements being made.
Mr. Commers stated it looks like the program is doing well and
accomplishing a great portion of what we wanted it to do.
Congratulations to staff and CEE for that. He expressed
appreciation to Mr. Van Nelson for his help and expressed best
wishes to him in his future endeavors.
OTHER BUSINESS:
^ 6. MEMO REGARDING SUH CONDEMNATION:
� HOUSING & REDEVELOPMENT AUTHORITY MTG. DECEN�ER 12, 1996 PAC�E 10
Mr. Commers stated the agenda packet included a memo regarding the
Suh condemnation for information purposes.
7. MORTGAGE FINANCING PROGItAM:
Mr. Commers stated the agenda packet included a letter notifying
the HRA that Anoka County HRA is looking at a mortgage financing
program. He asked staff to make an analysis of that to see whether
it would be advisable to continue their own program or turn it over
to them. He asked to which program would this be similar.
Ms. Dacy stated Mr. Fernelius now orchestrates application to MHFA.
Under this proposal, they would participate with other communities
to participate in the Anoka County program.
Mr. Fernelius stated, this year, they had about $500,000 through
the program. He was not sure how many loans this included. This
is administered through a number of private banks. Staff only
provides information about the program to interested residents.
8. STREET LIGHTIATG:
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Mr. Commers stated the agenda packet include a memo regarding
street lighting as requested by Mr. Fitch and Mr. Schroer. He
asked if Ms. Dacy had anything more to add.
Ms. Dacy stated she will be following up.
8. DEMOLITION BIDS:
Ms. Dacy stated staff received confirmation on bids for demolition
of four properties acquired by the HRA and one property the City
acquired. This property will be paid for separately. Herbst &
Sons has the lowest bid. Staff recommends accepting their bid.
MOTION by Ms. Schnabel, seconded by Mr. Meyer, to approve the
demolition bid from Herbst & Sons for $22,500.
UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON CON�RS DECLARED THE
MOTION CARRIED UNANIMOUSLY.
ADJOURNMENT :
MOTION by Mr. Meyer, seconded by Ms. Schnabel, to adjourn the
meeting.
�--� UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON CONIl�RS DECLARED THE
MOTION CP,RRIED AND THE DECEN�ER 12, 1996, HOUSING AND REDEVELOPI�NT
� HOUSING & REDEVELOPN�NT AUTHORITY MTG., DECEN�ER 12, 1996 PAGE 11
AUTHORITY MEETING ADJOURNED AT 8:55 P.M.
Respectfully submitted,
�'1aV� ,
Lavonn Cooper
Recording Secretary
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