HRA 07/02/1998 - 6300CITY OF FRIDLEY
HOUSING & REDEVELOPMENT AUTHORITY MEETING
THURSDAY, JULY 2, 1998, 7:30 P.M.
AGENDA
LOCATION: Council Chambers (upper level), Fridley Municipal Center
CALL TO ORDER
ROLL CALL
APPROVAL OF MINUTES
June 4, 1998
CONSENT AGENDA
Appointment of Chairperson and Vice - Chairperson............ 1
Claims and Expenses .... ............................... 2-213
ACTION ITEMS
Public Hearing to Consider Sale of HRA Vacant Lots........... 3-1
Consider Approval of Redevelopment
Contracts for Scattered Site Program ....................... 47
Consider Acquisition of 5839 - 3rd Street ..................... 5-
Consider Acquisition of 621 Lafayette Street .................. 6-
Consider Acquisition of 5845 - 2% Street .................... 7-
Ratification of Actions by HRA at -its Emergency Meeting
of June 26, 1998, and other Actions Consistent Therewith....... 8-
INFORMATION ITEMS
TIF Request for Penk/Peterson Property on Main Street........ 9 -
OTHER BUSINESS
ADJOURNMENT
CITY OF FRIDLEY
HOUSING & REDEVELOPMENT AUTHORITY MEETING
JUNE 4, 1998
•' • •-9
Chairperson Commers called the June 4, 1998, Housing and Redevelopment Authority
meeting to order at 7:34 p.m.
Members Present: Larry Commers Virginia Schnabel, John Meyer, Duane Prairie,
Jim McFarland,
Others Present: Barbara Dacy, Community Development Director
Jim Casserly, Financial Consultant,
Dave Jellison, MEPC
David Sellergren, Doherty, Rumbe and Butler
Chairperson Commers noted a correction to Page 1 of the minutes. The Vote should
be changed to read "UPON A VOICE VOTE, ALL VOTING AYE, VICE - CHAIRPERSON
SCHNABEL DECLARED THE MOTION CARRIED UNANIMOUSLY.
MOTION: by Ms. Schnabel, seconded by Mr. Prairie to approve the May 7, 1998,
Housing and Redevelopment Authority minutes as amended.
UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED
THE MOTION CARRIED UNANIMOUSLY.
to 1
A list of additional expenses for HRA approval was distributed:
MOTION by Ms. Schnabel, seconded by Mr. Meyer to approve the Consent Agenda.
UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED
THE MOTION CARRIED UNANIMOUSLY.
PRESENTATION:
2. CERTIFICATE OF APPRECIATION FOR DUANE PRAIRIE:
Chairperson Commers took this opportunity to present a Plaque from the City of Fridley
HRA to Duane Prairie, acknowledging the City and HRH's appreciation of his many
years of service on the Housing and Redevelopment Authority. The HRA members and
staff thanked Mr. Prairie for his input and the perspectives that he has brought to the
HRA.
ACTION ITEMS:
ae -
Mr. Commers noted the memo to the HRA from Barbara Dacy, dated May 29, 1998, in
regard to this matter. He explained that MEPC's sale of its office real estate portfolio
will require the HRA to execute a new redevelopment contract with Duke Realty.
Mr. Casserly stated Resolution No. HRA 6 -1998 will authorize execution of the
redevelopment contract with Duke Realty. The contract essentially remains the same
with a change to the name and to a few dates in the contract. June 23, 1998 will be
the target date to have a new title commitment prepared and to provide a survey.
Mr. Dave Jellison, MEPC, provided a brief history of Duke Realty Investments, Inc. He
explained that they have been a long term holder of real estate. At this time, they are
the 15th largest real estate trust company in the nation. The company started as a
construction company and in 1992 they became a real estate trust company. They
have an approximate $3 billion asset value. Duke Realty will take over all of the MEPC
holdings and continue to develop. His goal as Vice President/General Manager of the
Minneapolis office will be to develop more and more office and high -tech buildings.
Mr. Commers asked what type of properties Duke Realty generally invests in.
Mr. Jellison stated that they have very little retail property (5 %). They hold a larger
percent of industrial (approximately 65 %) and office (approximately 30 %). He will be
working to expand the office property. Duke Realty is a long -term holder of real estate
which manages, leases, and develops its own projects. He stated they presently do not
have their own construction company, but sees this as a real possibility within the near
future.
MOTION by Ms. Schnabel, seconded by Mr. Prairie to approve Resolution No. HRA 6 -
1998, Authorizing the Execution and Delivery of a Contract for Private Redevelopment
By and Between the Housing and Redevelopment Authority in and for the City of
Fridley and Duke Realty Investments, Inc.
Mr. Meyer stated he would like to see the language in the resolution "tightened up ".
He stated he has concerns with the words "substantial conformance" on Page 3D of the
Resolution. He felt the identical contract should be signed as was originally signed
between the HRA and MEPC.
Mr. Casserly explained that the resolution is a traditional resolution which has been
used before to allow adjustments in contracts. The only changes between the previous
contract and the new contract are the names and some date changes to reflect the
execution of the contract.
Mr. David Sellergren of Doherty, Rumble and Butler stated that no further significant
changes are anticipated. If any significant changes should occur, they would be
required to be brought before the HRA for consideration.
Mr. Meyers stated the HRA has been working with MEPC and has gained the HRA's
confidence. He is concerned that the HRA would have no recourse if there were
significant changes to the contract once the resolution was approved. Again, he stated
his concern as to the language "Substantial conformance" in the resolution, noting that
this could also refer to the construction quality.
Mr. Casserly explained that "substantial conformance" does not refer to the developer
substantially conforming to the contract, but rather that the contract is substantially the
same when it is executed. He noted that if the HRA wishes, a period could be added
after the word "Contract" under Section 3.01 of the Resolution, deleting all following'
language..
MOTION TO AMEND by Ms. Schnabel, seconded Mr. Prairie, to approve Resolution
No. HRA 6 -1998 as amended.
Mr. Meyers asked if there was adequate language in the contract to require the same
quality items that have been required_in the past contract with MEPC.
Mr. Casserly stated he believes this is all in order, nothing has changed in the contract.
The City has a permitting process which assures that the conditions are met.
Additionally, all the conditions are detailed on one of the schedules which are attached
to the contract. '
Ms. Dacy explained that during the permit process, if any deficiencies are seen, it is
immediately brought to their attention.
VOTE ON AMENDED RESOLUTION NO. 6 -1998
UPON A VOICE VOTE, ALL MEMBERS VOTING AYE, CHAIRPERSON COMMERS
DECLARED THE MOTION CARRIED UNANIMOUSLY.
INFORMATION ITEMS:
4. _COUNCILMEMBER BILLING'S LETTER TO NEIGHBORHOOD•
Mr. Commers stated that a copy of Councilmember Billings' letter to the residents in
the neighborhood around the Shorty's Towing /JR Auto Repair redevelopment site was
included in the Agenda packet for informational purposes.
5. STATUS OF DEALERS MANUFACTURING:
Mr. Commers explained that the HRA entered into a pass- through agreement with the
Metropolitan Council and the State Department of Trade and Economic Development
for cleanup at Dealer's Manufacturing located at 5130 Main Street. The HRA will be
receiving the money for this clean up and in turn will be issuing a check to Dealers
Manufacturing to reimburse them for the costs.
Ms. Dacy noted that Dealers Manufacturing has substantially completed the clean up
activities. Over the next four years, testing and sampling of the underground water will
be completed.
Mr. Commers noted the chart on Page 6A of the Agenda packet which provided
information in regard to loan activity and housing stock in the Hyde Park neighborhood.
Ms. Dacy explained that 21 loans have been granted since 1995 in the Hyde Park
neighborhood, with a total of 46 units receiving improvements. Ten loans have been
used to improve single family properties and eleven loans have gone to improve rental
property. To date,"a total of 182 loans have been disbursed city-wide; 158 installment
loans and 24 deferred loans.
Mr. Commers stated there is some confusion in the Council's suggestion to the HRA in
regard to the Hyde Park neighborhood.
Ms. Dacy stated the Council wants to be extremely careful about what is proposed in
Hyde Park and that they would like to focus on Gateway East first and the 57th Avenue
Reconstruction Program. This would set an example for what could happen on the
west side. She noted that the first meeting on the Frank's Used Car site was
controversial and the Council wants to be careful about what is proposed there. They
want the HRA to continue with the Housing programs in the Hyde Park neighborhood
and to get their reactions to the redevelopment proposed for the Gateway East area,
following close behind with the redevelopment of the Frank's site. If both sites are
redeveloped a tremendous changeover will occur and greatly impact the corridor.
Mr. Commers stated if the Council decides to proceed with the development of the
Gateway East project first, it could conceivably be two to three years before the
redevelopment of the Frank's Used Car site.
Ms. Dacy stated it is the Council's desire to move ahead aggressively. It is not
inconceivable that the City could get through the planning process this fall for the
Gateway East site and see development start in April of 1999. The City could then start
on the Hyde Park area by Fall of 1999.
Mr. Prairie noted that the Shorty's property has been talked about in the past for
redevelopment and nothing has occurred on the property.
Ms. Dacy noted that it is not the intent of the HRA to hold on to the property and that
plans are to move ahead aggressively on this project.
Mr. Commers stated he does not see any benefit in putting aside discussions on the
redevelopment of the west side. The City could come up with as good of a plan now
for the area as they will in two or three years.
Mr. Meyers stated the concerns he voiced at the last HRA meeting have not been
addressed. It was his feeling that perhaps changes would need to be made to the
loan /grant programs to make the programs more affordable to the low- income residents
in the area where the housing stock is poor.
Ms. Dacy stated that staff is prepared to research changes to the programs. However,
if the HRA wants to make changes, they will also need to consider the cash flow impact
that those changes will create. Additionally, she noted that there may very well be
other factors that influence a homeowners choice not to participate.
Mr. Meyers stated he would like the staff to determine the effects on the cash flow that
would be influenced by program changes. Program changes, such as 100% grants
rather than a 50/50 split could be made available city -wide, but with stricter income
guidelines. The City must keep in mind the goal of the program which is to improve the
housing stock. Many homeowners are using the funds for items which have nothing to
do with improving housing stock.
Ms. Dacy stated she would come back to the HRA Board at the July or August meeting
with some alternatives /ideas.
Mr. Commers stated he would also like further clarification from the Council on what
they are thinking of in terms of caution on the Franks Used Car site.
OTHER BUSINESS:
Ms. Dacy explained that at the end of April 1998, the HRA had closed on ten loans.
The City publication just went out and staff is anticipating increased activity during the
upcoming months. Additionally, the HRA currently has five lots for sale and has
received offers on all of them. Public hearings will be conducted at the next HRA
meeting in July.
Ms. Dacy noted that Grant Femelius and Jim Cassedy have been working on putting
together a policy addressing loan delinquencies. This will tentatively be presented to
the Board at the July meeting for review.
Mr. McFarland asked if the homeowners with delinquent loan payments are aware that
they are losing equity in their homes. Ms. Dacy stated she did not have that
information, but would ask if homeowners are notified of this.
Mr. Casserly stated the loan servicer has guidelines that they follow in regard to past
due loan payments. However, after they have pursued the matter, and the loan is
considered delinquent, the course of action is determined by the City.
NIONEW615 a : 1:9 ► 1M - •--•A
Ms. Dacy explained that the Center for Urban and Regional Affairs at the University has
a graduate internship program available and is requesting proposals form communities
to place these students. If Fridley is selected based on the City's needs, a student
would begin working for the HRA in September of 1998 and continue through until June
1999. The intern could assist staff with the Remodeling Fair as well as many other
duties. No action was requested of the HRA at this time.
• RZ11UM9,1111 �
Chairperson Commers declared the June 4, 1998, Housing & Redevelopment Authority
meeting adjourned at 8:50 p.m.
Respectfully submitted,
Tamara D. Saefke
Recording Secretary
DATE: June 25, 1998
MEMORANDUM
HOUSING
l
REDEVELOPMENT
AUTHORITY
TO: William Bums, Executive Director of HRA 44P
FROM: Barbara Dacy, Community Development Director
SUBJECT: Appointment of Chairperson and Vice - Chairperson
The HRA By -Laws require an annual meeting to be held in June for the purpose of
electing officers for the HRA. Staff neglected to, schedule this item for the June agenda;
therefore, a chairperson and vice - chairperson need to be selected at the July meeting.
Proposed is the appointment of Lary Commers as Chairperson and Virginia Schnabel
as Vice - Chairperson. If the HRA disagrees with these nominees, the item should be
removed from the "Consent Agenda ".
Staff recommends the HRA establish Larry Commers as Chairperson and Virginia
Schnabel as Vice - Chairperson for the 1998 -1999 term.
BD:Is
M -98 -143
1
e
TO: FRIDLEY H.R.A
FROM: CITY OF FRIDLEY
RE: BILLING FOR ADMINISTRATIVE AND OPERATING EXPENSES
JUNE 1998
Account Vs for
HRA's Use
ADMINISTRATIVE BILLING:
ADMINISTRATIVE PERSONAL SERVICES 21,006.58
ADMINISTRATIVE OVERHEAD 292.58
COMPUTER OVERHEAD 212.42
(For Micro & MW computers)
TOTAL ADMINISTRATIVE BILLING: 460- 0000 - 430 -4107 21.511.58
OPERATING EXPENSES:
CITY of FRIDLEY- PETTY CASH 460 -0000- 430 -4221 13.98
SNYDER DRUG-FILM DEVELOPING 262 - 0000 -430 -4221 19.29
US WEST - TELEPHONE 460-0000-430 -4332 23.18
TOTAL OPERATING EXPENSES: AIM
BENEFITS EXPENSES:
CITY OF FRIDLEY - HEALTH INS 262 - 0000 - 219 -1001 185.59
CITY OF FRIDLEY - DENTAL INS 262 -0000- 219 - 1100 22.53
CITY OF FRIDLEY - LIFE INS 262- 0000 - 219 -1200 3.50
TOTAL BENEFITS EXPENSES: 211.62
TOTAL EXPENDITURES -
Re: \EXDATA\HRA\TIF\98B[LL.)ds Details
JUNE 1998
Account Vs for CR
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236-0000- 336 -3000 HA
236-0000- 336 -3000 HA
236 - 0000 - 336 -3000 HA
236-0000- 219 -1001
236-0000 -219 -1100
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P.C!
DATE: June 29, 1998
MEMORANDUM
DOUSING
REDEVELOPMENT
AUTHORITY
TO: William Bums, Executive Director of HRA A
4
FROM: Barbara Dacy, Community Development Director
Grant Femelius, Housing Coordinator
SUBJECT: Public Hearing Regarding Sale of HRA Lots
This is the first step in the process of selling the HRA's vacant residential lots.
State law requires that the HRA conduct a public hearing before it sells any real
property. The purpose of the public hearing is to identify the sites that will be
sold and the price for each lot.
Once the hearing is completed, the next step in the process is to consider the
development contracts and house plans for each site. This will be the next item
on the HRA agenda.
The hearing should follow this format:
1. Motion to open public hearing.
2. Public hearing opened.
3. Staff presentation on the sites to be sold, the lot price and whether any offers
have been received.
4. Public comments and questions._ _
5. Motion to close public hearing.
6. Public hearing closed.
The following sites are to be sold:
Final
Address Listed Lot Price Lot Dimensions
5857 Main St. NE
$22,000
$20,000
80'x 129'
5925 Main St. NE
$21,000
$18,670
80'x 129'
1545 75t' Ave. NE .
$31,000
$29,000
75'x 140'
550 Hugo St. NE
$25,000
$25,000
100' x 110'
�s
3n
}
Public Hearing to Sell Lots
June 29, 1998
Page 2
The difference between the listed lot price and the final lot price reflects trade-
offs that were requested by staff to improve the design and value of the home.
On some of the house designs, staff suggested adding windows or brick to
improve the front facade. Because the margins are so small on homes in this
price range, these additional costs could only be accommodated by reducing the
lot price. The builders were required to document the costs of the additional
work.
Staff recommends that the HRA conduct the public hearing and approve the
attached resolution authorizing the sale of the lots listed above.
C -98 -147
3A
HRA RESOLUTION NO.
A RESOLUTION AUTHORIZING THE SALE OF RESIDENTIAL
BUILDING LOTS BY THE HOUSING AND REDEVELOPMENT
AUTHORITY IN AND FOR THE CITY OF FRIDLEY,
MINNESOTA.
BE IT RESOLVED by the Board of Commissioners (the "Commissioners ") of the Housing and
Redevelopment Authority in and for the City of Fridley, Minnesota (the "Authority ") as follows:
Section 1. Recitals.
1.01. It has been proposed that the Authority sell certain residential building lots (the "Lots ") described
below:
Parcel I.D. No.
23 -30- 24-23 -0102
23- 30 -24 -22 -0080
12- 30 -24 -11 -0071
03- 30 -24 -23 -0083 and 03- 30 -24 -23 -0084
03- 30 -24 -23 -0085
Section 2. Findings.
Street Address
5857 Main Street Northeast
5925 Main Street Northeast
1545 75h Avenue Northeast
550 Hugo Street Northeast
530 Hugo Street Northeast
2.01. The Authority hereby finds that it has approved and adopted a development program known as
the Modified Redevelopment Plan for its Redevelopment Project No. 1 (the "Redevelopment
Program ") pursuant to Minnesota Statutes, Section 469.001 et seq.
2.02. The Authority hereby finds that it has approved and adopted a Housing Replacement District
Plan (the "Plan") and created Housing Replacement District No. 1, pursuant to and in accordance
with Laws of Minnesota 1995, Chapter 264, Article 5, Sections 44 through 47, inclusive, as
amended and supplemented from time to time.
2.03. The Authority hereby finds that it has performed all actions required by Minnesota Statutes for
the sale of the Lots.
2.04. The Authority hereby finds that the sale of the Lots promotes the objectives as outlined in its
Redevelopment Program and the Plan.
Section 3. Approval of the Sale.
3.01. The sale of the Lots are hereby approved.
Section 4. Authorization for Execution and Delivery.
4.01. The Chairman and the Executive Director of the Authority are hereby authorized to
execute and deliver any documents necessary to effect the sale of the lots.
PASSED AND ADOPTED BY THE HOUSING AND REDEVELOPMENT AUTHORITY IN FOR
THE CITY OF FRIDLEY, MINNESOTA, THIS DAY OF '199
ATTEST:
WILLIAM W. BURNS - EXECUTIVE DIRECTOR
G:\ WPDATA \FFRmLEY\25\DOCIRESOLU7ION 2.DOC
3C
DATE: June 29, 1998
MEMORANDUM
HOUSING
AND
REDEVELOPMENT.
AUTHORITY
TO: William Bums, Executive Director of HRAdk
FROM: Barbara Dacy, Community Development Director
Grant Femelius, Housing Coordinator
SUBJECT: Consider House Plans and Development Contracts for HRA Lots
This is the second step in the process of selling the HRA's vacant residential
lots. Offers have been received on all five sites, however only four projects are
actually ready to begin construction.
In terms of approving each deal, staff is suggesting that the HRA review the
terms and conditions of each project along with the house plans. After reviewing
each package, the HRA would then authorize each project by separate
resolution. A sample redevelopment contract and resolution are attached.
The process of building a new home under the Housing Replacement Program is
fairly straightforward. The builder pays a $500.00 fee and signs a Participation
Agreement. This agreement gives the builder 60 days to execute a redevelop-
ment contract with the Authority for the site. If the builder fails to sign the
agreement, the deal would become null and void and the HRA would resume
marketing the site.
Before entering into the agreement, the builder must provide the following:
1. Evidence of a home buyer (if they don't have one already).
2. House plans and specifications.
3. Proof of construction financing.
The redevelopment contract spells out the details of the transaction such as the
purchase price of the lot, date of closing, date construction will start and be
House Plan Memo
June 29, 1998
Page 2
completed, etc. Once the agreement is signed each builder has until September
1, 1998 to close on the property. Construction would need to start within 45
days of closing. The builder would pay cash for the site at closing. Attached are
summaries of each project.
Recommendation
Staff recommends that the HRA approve the attached resolutions authorizing the
individual development agreements for 530 Hugo St., 5857 Main St., 5925 Main
St., and 1545 -751 Ave.
C -98 -148
Project Summary
Project #1
Address: 530 Hugo St.
Builder. Mike and Jackie- Egan
Buyer. Same as above.
Lot Price: $25,000
Minimum Home Value: $110,000 (land and structure)
Date of Construction: July 1998
Date of Completion: November 1998
House Plan: Builder is proposing to construct a split -entry design with
2 bedrooms, 1 -3/4 bath, and a 3 car attached garage. 1,182
s.f. on main level, unfinished lower level with space for 2
additional bedrooms and a family room. Exterior to be
finished in aluminum siding with partial brick facing on
garage facade.
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Project Summary
Prgiect
Address: 5857 Main St.
Builder. Jim Glidden d /b /a Homes "R" Us
Buyer: Unknown
Lot Price: $20,000
Minimum Home Value: $95,000 (land and structure)
Date of Construction: Not later than October 15, 1998
Date of Completion: Not later than February 15, 1998 for structure; May
15, 1999 for grading and landscaping.
Project Summary: Builder is proposing to construct a split -entry design with 2
bedrooms, 1 -3/4 bath, and a 2 car attached garage. 1,092
s.f. on main level, unfinished lower level with space for at
least 1 additional_ bedroom and a family room. Exterior to
be finished in vinyl .lap siding with partial brick facing on
front facade.
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Project Summary
Project
Address: 1545 - 75"' Ave. NE
Builder: Sussel Corp.
Buyer: Bill and J
Lot Price: $29,000
Minimum Home Value:
Date of Construction:
Date of Completion:
pan Clark
$130,000 (land and structure)
Not later than October 15, 1998
Not later than, February 15, 1998 for structure; May
15, 1999 for grading and landscaping.
Project Summary: Builder is proposing to construct a 1 story rambler design
with 2 bedrooms, den, 2 bathrooms, and a 2 car attached
garage. Exterior to be finished in vinyl lap siding.
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Project Summary
Project
Address: 5925 Main St.
Builder. Alliance Home Values, Inc.
Buyer: Unknown
Lot Price: $18,670
Minimum Home Value:
Date of Construction:
$95,000 (land and structure)
Not later than October 15, 1998
Date of Completion: Not later than February 15, 1998 for structure; May
15, 1999 for grading and landscaping.
Project Summary: Builder is proposing to construct a two story design with
three bedrooms, 2 bathrooms, and a 2 car attached garage.
1,624 s.f. on V and 2nd level, unfinished basement. Exterior
to be finished in vinyl lap siding.
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-KRASS MONROE, P.A.
ATTORNEYS AT LAW
■ James R Casserly
Emai[jamesc@krassmonroe.com
Direct Dial (612) 885 -1296
MEMORANDUM
To: City of Fridley
Attn: Grant Fernelius, Housing Coordinator
Barbara Dacy, Community Development Director
From: James R. Casserly
Date: June 25, 1998
Re: Model Contract for Private Redevelopment for Housing Replacement Program
Our File No. 9571 -25
Enclosed please find the following:
A model Contract for Private Redevelopment. This Contract acts as a purchase agreement
and helps ensure that the Authority will get the completed project, that is, the new home, for
which it has bargained.
Among the principal terms of the Contract are the following:
1. The purchase price is specified which the Redeveloper is to pay at the time of
closing.
2. Date of closing is established. However, prior to the Date of Closing, both the
Authority and the City must approve construction plans and the Redeveloper
must have an executed. purchase agreement with a home buyer in an amount
that is not less than the sales price. (this is an amount that is negotiated in an
arms length transaction with the Redeveloper and the home buyer and is the
amount that will be shown on the Certificate of Real Estate Value when the
project is completed.). In addition, the Redeveloper must demonstrate that it
has the financial capability of constructing the Minimum Improvements. This
requirement can be satisfied by the Redeveloper having a mortgage
commitment.
3. On the Closing Date the Redeveloper must pay the purchase price.
SUITE 1100 SOUTHPOINT OFFICE CENTER • 1650 WEST 82ND STREET • BLOOMINGTON, MINNESOTA 55431 -1447 ��
TELEPHONE 61ZU5 -5999 • FACSIMILE 612!885 -5969
4. The Contract provides for a date in which the construction of the Minimum
Improvements must be started and the date on which they must be completed.
5. The Authority will retain a right of reverter which allows the Authority to
recover the property if there is an event of default. The deed whereby the
property is conveyed from the Authority to the Redeveloper contains this right
of reverter. .
This document contemplates that the Authority's participation would be as follows:
1. The Authority would approve that various lots be sold for approximate
amounts under the Housing Replacement Program.
2. The Authority would approve each Redevelopment Contract. At the time it
approves the Contract, it would also hold a public hearing on the sale of the
building lot.
3. The Authority would approve the construction plans. Once the construction
plans are approved, then the closing may occur and the construction can
commence.
Please note that we have left blanks for the various dates. There needs to be some latitude on
the commencement and completion of construction which would depend on the time of year,
the closing of construction financing and the timing of the approval by the Authority.
The Contract assumes that the Authority will receive its full purchase price at the time of its
closing with the Redeveloper, and not at the time of the closing between the Redeveloper and
Home Owner. The transaction contemplated in this document is relatively straight forward.
The Authority will be offering its lots for a set price, the Redeveloper attempts to market a
given lot and secure a Home Buyer, the Redeveloper closes with the Authority, pays the
purchase price, constructs the residence and closes with the Home Buyer. Not all of our
transactions will fit within this model but we can revise it as necessary.
JRC/lrb
Enclosures
G.%WMATA+VRIDLFP251C0RfEMr:UUS DACY.1=
0 Page 2 4Y
DATE: June 29, 1998
MEMORANDUM
HOUSING
REDEVELOPMENT
AUTHORITY
TO: William Bums, Executive Director of HRA
FROM: Barbara Dacy, Community Development Director
Grant Femelius, Housing Coordinator
SUBJECT: Consider Acquisition of 5859 - 31 St. NE
This property is located in the Hyde Park neighborhood at the comer of 5e Ave.
and 3rd St. The home has had a rather lengthy history and has been the subject
of numerous neighborhood complaints.
..
In November of 1995 the house was purchased by a private party and moved to
its current location in.Hyde Park. The home was moved from Richfield where it
had been acquired by the Metropolitan Airports Commission as part of the airport
expansion project.
At the time, the owner's plans were to fix -up the house and occupy it as her .
principal residence. She submitted plans to construct a new foundation which
included space for an attached garage and small patio area. The mechanical,
electrical and plumbing systems would have to replaced . In addition, the interior
space would have to be finished. The building permit indicated a construction
value of $19,218 (exclusive of the house cost, moving cost and lot price).
Unfortunately, over the last 2 -1/2 years very little work has been done to the
home. Apparently, the owner ran into financial problems and eventually walked
away from the project. Mid - America Bank of St. Paul initiated foreclosure
proceedings this spring and will have clear title to the property by July 2"d.
a• . • •
The house has essentially been vacant since 1995. The garage was never built
and during a recent inspection it was discovered that most of the interior work _
5859 3rd St. Memo
June 29, 1998
Page 2
was never done either. To make matters worse over this past winter the water
meter burst and several hundred thousand gallons of water leaked into the
basement. The water caused significant mold and mildew problems and the
inspector believes that all of the interior trim, windows, cabinets and flooring will
be have to be replaced. Some of the sheet rock on the ceiling and walls will also
have to be replaced.
The house is a multi -level design with two bedrooms and a bath on the upper
level, a kitchen and living room on the main floor, and an unfinished basement.
The house has 1,104 square feet of living space. The lot measures 102.31' x
128.66' or 13,159 square feet. The Chief Building Official estimates that $45,000
is required to complete the project and bring the house into a habitable condition.
The property has been appraised at $46,000, but the bank is willing to sell for
$43,000. There are $7,000 in delinquent water bills which were certified to the
taxes. The bank has agreed to pay these expenses. For tax purposes, the
property is valued at $60,700 ($27,600 land, $33,100 building).
Pumose of Acauisitio
Staff believes that this is a critical acquisition in the Hyde Park neighborhood.
Over the last 2 -1/2 years, we have received numerous complaints about this site.
The City has tried to work with the previous owner to complete the project,
however all of those efforts were unsuccessful. The previous owner refused to
sell the property and never responded to offers to help with rehabilitation
financing.
After inspecting the property in May, staff believes that rehabilitating the property
will be expensive and possibly cost- prohibitive. The bank has received a couple
of inquires from contractors who would like to fix -up the property. Staff is
concerned that a contractor would probably invest the minimum necessary to
make the property salable.
In terms of re -use, the site is not large to split into two lots. One potential option
would be to look at the Werner's Furniture shop to the north. Staff has not had
any recent discussions with the owners of the Wemer's property about acq-
uisition. Under this scenario, the Werner's site, the 60' right -of -way for 59"' Ave.
and the 5859 - 3'd St. site could be combined to create four buildable lots.
5A
5859 3'd St. Memo
June 29, 1998
Page 3
Recommendation
Staff recommends that the HRA authorize the purchase of 5859 - 3'd St. NE for
$43,000 from Mid- America Bank and further to authorize the Executive Director
to sign the necessary documents to complete the acquisition.
Building Sketch
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MEMORANDUM
HOUSING
REDEVELOPMENT
AUTHORITY.
DATE: June 29, 1998
TO: William Bums Executive Director of HRA �r
FROM: Barbara Dacy, Community Development Director
Grant Femelius, Housing Coordinator
SUBJECT: Consider Acquisition of 621 Lafayette St.
This property is located in the Riverview Heights neighborhood. It is next door to
the house at 611 Lafayette St. that was acquired by the HRA in April from the
Saxe family.
The subject property is a one story rambler with one bedroom and a total of 400
square feet of living space. The property does not have a basement, but does
have a 1 car detached garage. The home is approximately 50 years old.
The home is in fairly good condition, but is considered substandard due to its
small size, lack of bedrooms, and non - conforming lot. If acquired, this site would
be combined with 611 Lafayette St. to create a buildable lot.
The property has been appraised for $57,000 ($22,000 land) and the owner has
agreed to sell for $55,000.
Staff recommends that the HRA authorize the purchase of 621 Lafayette St. NE
for $55,000 from Ramona Nickell and further to authorize the Executive Director
to sign the necessary documents to complete the acquisition.
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MEMORANDUM
HOUSING
REDEVELOPMENT
AUTHORITY
DATE: June 29, 1998
TO: William Bums, Executive Director of HRA
FROM: Barbara Dacy, Community Development Director
Grant Femelius, Housing Coordinator
SUBJECT: Consider Acquisition of 5845 2 -1/2 St. NE
This property is located in the Hyde Park neighborhood in Block 22. Previously,
the HRA has acquired two other homes in this block. The subject property is a
one story rambler with three bedrooms and a total of 816 square feet of living
space. The property does have a basement and a 1-1/2 car detached garage.
The home is approximately 45 years old.
The property has suffered from deferred maintenance and has a number of
deficiencies, including:
1. Severely deteriorated roofing and siding. The windows and doors also show
signs of deterioration.
2. A significant amount of mold and mildew which has accumulated throughout the house.
3. Deteriorated walls and ceilings.
4. Evidence of water problems in the basement which are deteriorating the
block foundation.
The lot is 50' x 110' and is considered substandard for new construction. The
site would have to be combined with an adjoining property to become buildable.
The property has been appraised at $54,000 ($20;000 for land). It is assessed
for tax purposes at $57,448 ($21,416 for land).
Staff did inquire with our appraiser about the valuation on this site. According to
the appraiser, there is a lot of demand for housing in the under $60,000 market,
_ - EJ
5945 2-1/2 St. Memo
June 29, 1998
Page 2
regardless of condition.
The owner has agreed to sell for $48,600 which is well below the appraised
value of the site.
Recommendation
Staff recommends that the HRA authorize the purchase of 5845 - 2 -1/2 St. NE
for $48,600 from Jean Gabrelcik and further to authorize the Executive Director
to sign the necessary documents to complete the acquisition.
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\TE: June 29, 1998
MEMORANDUM
HOUSING
REDEVELOPMENT
AUTHORITY
): William Bums, Executive Director HRA
:OM: Barbara Dacy, Community Development Director
IBJECT: Ratification of Miscellaneous Items pertaining to Emergency Meeting on
June 26, 1998
i Casserly has advised me the Authority will be required to pass additional action
ms regarding the Emergency Meeting on June 26, 1998. Because of the timing of
agenda, these materials cannot be distributed on Monday, June 29, 1998, but
her will be presented to the Authority on Thursday evening.
)\Jf
98 -146
L
DATE: June 25, 1998
MEMORANDUM
HOUSING
REDEVELOPMENT
AUTHORITY
TO: William Bums, Executive Director of HRA Ali
FROM: Barbara Dacy, Community Development Director
SUBJECT: Tax Increment Financing Request for Penk/Peterson Property
Background
Bill Penk and Dick Peterson own a 5 -acre site on the west side of Main Street just north
of 81 sl Avenue. The property is located across from the rear of Sam's Club and the
recently constructed Bachmans. The HRA may remember briefly discussing a tax
increment financing request for this property for Lindstrom Metric The property contains
several deep pockets of poor soils. Lindstrom Metric ultimately decided not to pursue
development of the property.
Since that time, the property owners have been trying to market the site and have
encountered difficulty in doing so because of the status of the soil correction. The
attached letter from Dick Peterson, one of the property owners, dated June 18, 1998,
outlines the process they have initiated to improve the salability of the lot. The owner
has hired a contractor to mine the peat from the area. The contractor is under
agreement to replace at least one -half the amount taken with good fill materials. There
is a total quantity of removal which totals about 50,000 cubic yards. In the meantime,
the site is now being considered for purchase by a uniform closing company. While this
company has yet to make a final decision on this parcel, its estimated project cost is
anywhere between $2 -2 %z million.
Assistance Philosooy
Given the level of soil correction needed and given the fact that the property owners,
because of the soil conditions, have redeemed the property twice from tax forfeiture,
this site seems appropriate for the HRA's tax increment financing assistance. The City
now has less than 80 acres of developable land, some of which is tied up by Everest
Properties. Much of the 80 acres is also in very small parcels, 2 -3 acres. This 5 -acre
site would allow a fairly substantial building of 60,000 square feet.
Typically, the HRA has executed development agreements with potential users of the
property in return for construction of the building and the generation of the tax
increment. In this case, staff is suggesting that the HRA consider executing the
development agreement with the property owner in order to provide the assistance to
correct the property and to offer a site that is comparable to other developable sites in
the north metro area.
A limited revenue note or pay- as- you-go approach is suggested. In other words, the
HRA would rely on the tax increment generated from the project to pay the owner the
amount contained in the revenue note. The potential amount of assistance using our
guidelines would be about $200,000 (a specific request has not been made). The
property owner is estimating that the -soil correction may entail anywhere between
$300,000 - 400,000.
At the writing of this memo, Jim Casserly was analyzing the tax increment implications
from this property. Jim will be prepared to address this issue at Thursday's meeting.
The tax increment district for this area expires in the year 2007.
The purpose of the HRA's discussion on this issue is to authorize staff to continue
negotiating with the property owners. A pay- as- you-go approach is recommended.
From the City's economic development standpoint, correction of the site would place
this parcel into a very attractive position. The industrial market is very active at this
point in time. Staff is aware of several Fridley companies that are seeking expansion
sites. Staff recommends that the HRA authorize staff to continue negotiations with the
owners of the property.
BD:Is
M -98 -144
9A-
MEMORANDUM
To: City of Fridley Housing and Redevelopment Authority
From: Bill Penk and Dick Peterson (Doherty, Rumble & Butler)
Re: Lot 2, Block 1, Mar -Len Addition in Fridley
Date: June 18, 1998
In exchange for unpaid architectural and legal fees, Bill Penk, architect, ended up owning Lot 2,
Block 1, Mar -Len Addition in Fridley, subject to alien in favor of Doherty, Rumble & Butler. This
is the property north of the ANR Truck Terminal property on Main Street.
We have held this property since 1989. We have twice redeemed the property from three years of
unpaid taxes at the rate of over $12,000 per year. That decision will come up again soon for the
taxes payable in 1996, 1997 and 1998. Taxes for future years have been substantially reduced
because of the adverse soil conditions, but it is not possible to 'get any relief for taxes payable in 1998
and prior years. .
While we were always aware of the fact that some soil correction was necessary, it was not until we
had our first serious inquiry from Lindstrom Metrics that a comprehensive soil test was done. Prior
to that time, we had relied on the representations of our prior client and the results of one boring test
done in 1987 as part of the development to the West. The test performed for Lindstrom Metrics in
1997 clearly indicated a more significant problem which resulted in a contractors estimate of up to
$600,000 to correct the soils or provide pilings to support the building. The Lindstrom Metrics
project was deemed to be not feasible and the sale was lost.
Faced with the new information in June of 1997, we contracted with Economy Dirt, a landscape
contractor from nearby to begin mining the peat. That agreement allows Economy to take peat from
the property at no cost so long as they replace at least one half of the amount taken with appropriate
fill materials. Unfortunately, this is a very slow process and less than 10,000 cubic yards of peat has
been removed out of a total quantity of 40,000 to 50,000 cubic yards. Less than 2,000 yards of fill
have been imported to the site at this time.
There are now some opportunities to sell this property or to develop it for users that would be
attractive economic additions to Fridley. In order to compete with other sites in other cities we need
to be able to assure the potential users that the soil correction will be completed correctly at no
additional cost to the user. We cannot sell or develop these lots without being able to make that
assurance and we cannot make that assurance without financial assistance to cover all or part of the
cost of correction. We believe that Tax Increment Financing is a useful tool to accomplish this.
We believe that there remains 30,000 to 40,000 cubic yards of peat to be removed and replaced to
correct the soil on this property. The amount of correction ultimately necessary will depend on the
building and parking configuration required by the user. Rough cost estimates to remove the peat
and import clean compatible fill range from $7 to $13 per cubic yard. Thus, the potential cost ranges
from $210,000 to $420,000. We believe that the value of the corrected land in that location is
approximately $1.50 per square foot, or approximately $400,000.
We will work closely with the City Attorney and the City Community Development Department to
be sure that all legal requirements are complied with and that the ultimate user benefits the City
economically. We would like some acknowledgment on your part that TIF will be available to us to
accomplish the needed rehabilitation of the land. We, as the landowners, are willing to stay in the
middle of the project financially to allow the best results for the City and the ultimate user.
The property is in a TIF district which expires in 2007. We, as the Landowners, are willing to take
the entire amount of the TIF proceeds in the form of a Revenue Note over the remaining life of the
TIF District (i.e. until 2007). This means that there would be no cash outlay by the City for any part
of the TIF proceeds because, in effect, the Landowner will finance the entire TIF amount. That also
means that the ultimate user will have no initial out of pocket costs for the soil correction. We are
also willing to be flexible on the interest rate if that is necessary to increase the TIF proceeds to allow
the soil correction to be made.
If a building having a value of $2,000,000 exclusive of land is constructed on the property, it is
anticipated there will be a tax capacity of approximately $70,000 per year which would be sufficient
to support tax increment proceeds to be used for soil correction of between $350,000 and $400,000.
At those amounts, the TIF proceeds available to the project would be 14% to 16% of the anticipated
completed value of the project. OF COURSE, in no event will TIF proceeds exceed the actual
verifiable cost of correcting the soils.
PeWR 556301.1 2
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