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HRA 04/02/1998 - 29824n CITY OF FRIDLEY HOUSING � REDEVELOPMENT AUTHORITY MEETING APRIL 2,1998 CALL TO ORDER: Chairperson Commers called the April 2, 1998, Housing and Redevelopment Authority meeting to order at 7:30 p.m. ROLL CALL: Members Present: Larry Commers, Virginia Schnabel, John Meyer Members Absent: Jim McFarland, Duane Prairie Others Present: William Bums, Executive Director Barbara Dacy, Community Development Director Grant Ferr�elius, Housing Coordinator Jim Casserly, Financial Consultant Craig Ellestad, Accountant � Carol and George Hatcher, 1015 Mississippi Street .---� . � .- ••: • � � � •- � •� MOTION: by Ms. Schnabel, seconded by Mr. Meyer to approve the March 5, 1998, Housing and Redevelopment Authority minutes as presented. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. CONSENT AGENDA: 1. CLAIMS AND EXPENSES: Mr. Ellestad distributed copies of his memo dated April 2� 1998� listing additional expenses for approval. Ms. Schnabel inquired as to Check #26626 identified as the acquisition of 611 Lafayette Street on the Billing for Administrative and Operating Expenses for March 1998. Ms. Dacy noted that this was coded incorrectly and is for the � acquisition of 611 Buffalo Street. HOUSING & REDEVELOPMENT AUTHORITY MTG., APRII, 2, 1998 - PAGE 2 r-� Mr. Commers asked what the City's commitment is on the Remodeling Handbook and what has been spent to date. Mr. Ellestad explained that the City has received reimbursement from all participating cities and this payment represents the City's first payment in the amount of $10,000. Mr. Meyer noted that the list of additional expenses requiring approval from Mr. Ellestad includes a payment to Holstad & Larson, PLC for the acquisition of 5297 Lincoln Street in the amount of $37,500. He felt this should be removed until the HRA has taken formal action on the request for acquisition. In addition, the amount is listed at $37,500, when the actual purchase price is $35.000. Mr. Ellestad explained that the checks listed on the memo of additional expenses are not processed until the day following the HRA meeting. This item was included in the list only to allow for the closing prior to the next scheduled HRA meeting, based on HRA approval. The $37,500 will also cover additional expenses (taxes, etc.) for which the HRA is responsible. Typically, the HRA does receive some refund at the closing. Mr. Meyer stated he did not believe the HRA should be paying real estate taxes on properties they purchase and asked that this matter be investigated. Ms. �� Dacy noted that this would be taken care of prior to the next HRA meeting. Ms. Schnabel noted that the check for the acquisition of 5297 Lincoln Street could be removed at this time and approved if necessary after the HRA has formally approved the purchase of the property. MOTION by Mr. Meyer, seconded by Ms. Schnabel to approve the Billings for Administrative and Operating Expenses, together with the additional expenses, as outlined in Mr. Ellestad's memo dated April 2, 1998 with the AMENDMENT that the acquisition of 5297 Lincoln Street in the amount of $37,500 be stricken. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. ACTION ITEMS: 2. CONSIDER ACQUISITION OF 611 LAFAYETTE STREET• Ms. Dacy stated she had spoken with the owner's attomey and has negotiated an agreement to recommend to the HRA. The property was originally identified n on the City's Scattered Site Acquisition list last year and is an eligible site for the Housing Replacement Program. At that time, the owner did not want to initiate HOUSING & REDEVELOPMENT AUTHORITY MTG., APRIL 2, 1998 - PAGE 3 � negotiations for the sale of his property; however, since that time the property has sustained considerable fire damage. The lot is 5,500 square feet and considered buildable according to the City's ordinance. Negotiations have continued since the last HRA meeting and they have reached an agreeable purchase price of $5,500, with the HRA assuming the demolition costs to remove the existing building. The owner has agreed to satisfy the first mortgage which exists against the property and the MHFA lien in second position. The owner's attomey has verbally confirmed the agreement and a letter has been sent documenting this. It is, therefore, stafPs recommendation that the HRA approve the purchase of the property in the amount of $5,500 and authorize staff to prepare and execute the necessary documents. Mr. Commers stated it is his understanding that there is an available lot with which this property can be combined. Ms. Dacy explained that the lot is not available at this time; however, she has been in contact with the owner of the property immediately to the west of this site which is unbuildable because of the lot area. The owner is investigating two options; either selling the lot at this time or possibly doing a minor amount of remodeling. She also may be interested in acquiring the HRA site to tie into her existing site; however, she has indicated that she is not prepared to make a decision at this time. The HRA site along with the site to the west could be !� combined and tumed into a buildable lot. Mr. Commers asked what would happen if she is not interested in combining the lots. Ms. Dacy noted that she did ask the property owner if she would be interested in selling her property to the HRA in the future and she responded affirmatively. There are no guarantees however. Mr. Commers stated that the owners of the property at 611 Lafayette are not happy with the City's position and asked Ms. Dacy for a brief summary of the situation. Ms. Dacy noted that the fire which occurred in December destroyed, according to the City's determination, more than 50% of the structure's value. The owner did not agree with the City and indicated that it was their desire to stay in the home and rehab it to its original condition. However, the City Code is specific and states that if more than 50% of the value is damaged, the non-conformity must revert to a conforming use. MOTION by Ms. Schnabel, seconded by Mr. Meyer, to approve the acquisition of the property at 611 Lafayette Street in the amount of $5,500. ,�, UPON A VOICE VOTE, ALL MEMBERS VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. HOUSING & REDEVELOPMENT AUTHORITY MTG., APRII, 2, 1998 - PAGE 4 � 3. �ONSIDER ACQUISITION OF 5297 LINCOLN STREET AND 1015 MISSISSIPPI STREET. 5297 Lincoln Street: Mr. Femelius explained that this property is a single family home built in 1950. The interior of the house has been completely gutted and it is in a severely dilapidated condition (uninhabitable). The deficiencies include: no utility services - plumbing, heating and electrical, the roof and stucco are deteriorating and there is poor drainage around the foundation. The owner purchased the property in 1996 for $30,000 with intent to occupy the property as his permanent residence. However, the cost involved in rehabbing the property was cost prohibitive so he contacted the HRA. The condition of the house meets the requirements of the Housing Replacement Program. The property value for taxes payable in 1998 is $45,107, much of which is land value. The fee appraiser appraised the property at $31,100, and the City negotiated a purchase price of $35,00, contingent upon the owner signing a relocation waiver and removing all of the personal property on the site. The staff recommends approving the purchase in the amount of $35,000. Ms. Schnabel noted that the property which the HRA approved for purchase prior to this was valued at a far less amount than this particular property and she wondered what substantiated the difference. Mr. Femelius explained that this is a buildable lot. The property at 611 Lafayette is not a buildable lot and therefore has less value. Mr. Commers noted that the location is also a key factor - the property is likely worth more. Ms. Schnabel asked about the real estate tax issue for this property. Mr. Femelius again stated that staff will be exploring the tax issue and that the HRA will not pay if they are not responsible. He again noted that the difference between the approved expense and the acquisition price is for the additional expenses which may be the HRA's responsibility at the time of closing. Any excess will be refunded to the HRA at that time. Mr. Commers stated there is a difference between delinquent taxes and taxes that are levied. It would be his understanding that any delinquent taxes are the responsibility of the owner and that the HRA's liability would only be for taxes from the time that they purchase the property. MOTION by Ms. Schnabel, seconded by Mr. Meyer to approve the acquisition of the property at 5297 Lincoln Street N.E. � HOUSING & REDEVELOPMENT AUTHORITY MTG., APRII, 2, 1998 - PAGE 5 � MOTION by Ms. Schnabel, seconded by Mr. Meyer TO AMEND the previous motion to include approval of the additional expense for acquisition of this property, as outlined in the April 2, 1998 memo from Craig Ellestad. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY AS AMENDED. 1015 Mississi�pi Street N E• Mr. Fernelius explained that this house was built in 1949, is a one story home with a crawl space. The home has finro bedrooms, one bathroom, a kitchen/dining room area and living room with a total living area of 906 square feet. The house was built without proper footings and over time, the house has shown some signs of settlement (garage floor is breaking up significantly). The owners had planned to remodel the home and construct a new foundation, including an expansion, however it ended up to be a very cost- prohibitive project. The owners applied for a loan with the HRA, but it was determined that the scope of the work did not meet the perimeters of the program. The owners, George and Carol Hatcher, purchased the property in 1993 for $57,000. They currently have a first mortgage against the properly for $72,000. This properly does meet the criteria for the Housing Replacement Program. The assessed value is $70,365. It was appraised for $64,000 and the HRA � negotiated a sale price of $68,000. The stafPs recommendation is to approve the purchase of the property in the amount of $68,000. Mr. Commers asked how this property meets the criteria of the Housing Replacement Program. Mr. Femelius explained that it is based on the square footage, the dilapidated state and the lack of proper footings. The lot is 107' X 250' and would be suitable for a new home. Mr. Meyer asked about the lack of footings. Mr. Femelius explained that when the house was constructed there were no concrete footings put in place. The block foundation is essentially resting on bare ground and in some areas is starting to settle. The kitchen floor is sloping from settlement and the garage floor is also breaking up. Mr. Commers asked what would happen if the HRA does not purchase the property. Mr. Femelius stated the owner would probably try to sell the property themselves. /'� HOUSING & REDEVELOPMENT AUTHORITY MTG., APRIL 2, 1998 - PAGE 6 ^ Mr. Meyer stated there are foundation problems in many homes that can be corrected. The HRA does not know the cost involved in putting in proper footings or if some rehab could be done to restore the property. He agreed that it does appear to be some deficiencies; however, the purpose of the Housing Replacement Program is not to take on someone else's deficiencies. The house is nicely maintained and it is not any apparent detriment to the neighborhood. Ms. Dacy stated she had reviewed the case with Mr. Femelius; and based upon the fact that the owners did attempt to rehabilitate it and analyzed providing a full foundation, staff feels it does meet the criteria for the program. Mr. and Mrs. Hatcher were present to discuss the situation with the HRA. Mrs. Hatcher explained that they have had a couple of contractors out to look at the properly. It has been determined that no footings exist . The settlement that has occurred is approximately 3-1/2 to 4 inches. The only thing that is keeping it from further settling is that there is timber sitting on cinder block holding up the house. Mr. Hatcher explained that they have tried for the past three Summers to do some remodeling to the house. He dug a hole and found the bottom of his foundation approximately 12-18 inches down. When he went into the crawl n space he found 2 X 4's nailed end to end to rough-cut beams which are resting on cinder blocks. A hydraulic floor jack holds the bathtub up. Two house movers came out and would agree to lift up the house� but would require them to sign a waiver stating the contractor would not be responsible if the house fell in on itself. The cost just to pick up the house and set it back down was $5.000. That did not include any excavation work undemeath the house. Mr. Commers asked if the installation of footings and a foundation was an eligible improvement under the loan program. Mr. Femelius noted that the scope of the project that the owners were discussing was essentially building a new home which was not eligible. That is why they were denied financing. Mr. Meyer stated if the house were lifted up to allow for new footings and replacement of floor joists, etc., the cost would be far less than the owner's original scope of work which included a new basement. He felt the owners should perhaps explore other alterriatives which would provide proper support for the building. Mr. Hatcher noted that the cost could reach $20,000 to $25,000 for a 900 square n foot home which may or may not be possible because of the way the house is constructed. He noted that the last contractor who came out indicated that it HOUSING & REDEVELOPMENT AUTHORITY MTG., APRIL 2, 1998 - PAGE 7 �—,, would be difficult to lift the house to allow for the installation of a new support system. Mr. Meyer stated he feels there are other practical ways to get around the difficulties, and he feels a new foundation and floor system would be advantageous to all. Ms. Schnabel asked if a building Inspector has been out to evaluate the properly. Mr. Femelius stated that he was the only one from staff who had been out to the property. Ms. Dacy noted that staff would be happy to table this item to allow time for a building Inspector to go out and inspect the property. A report could be prepared for the HRA's review at the next meeting. Mr. Commers stated he understands the difficulty of the situation; however, he does not feel that should be the criteria for acquiring the property. Mr. Femelius noted that the HRA is not asking to purchase the property to bail the owners out of a hardship. The issue is the condition of the property. ��, However, if the HRA would so desire, a more detailed report of the condition of the property could be obtained. Ms. Dacy explained that the requirements in the State Law are based on condition and structural issues. This property is probably one of the older homes in the community. The value of the property is probably higher due to the lot size and location. Mr. Bums stated staff has resisted the hardship of the case. This is a very buildable lot with a house that has a terminal condition. Ms. Schnabel stated she would like to obtain a report from the building inspector as well as obtain additional information frora� the owners (information from appraisers/consultants in regard to the condition). She has some concem that there may be other properties in the community that meet the criteria for the Housing Replacement Program better than this. Mr. Meyer stated he is not convinced that all other options have been exercised that would have a lower cost to the property owner. O I by Ms. Schnabel, seconded by Mr. Meyer to table this request until � such time as they can get additional information from staff and the property owner. __._.__._�_� HOUSING & REDEVELOPMENT AUTHORITY MTG., APRIL 2, 1998 - PAGE 8 � UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. INFORMATION ITEMS• 4. UPDATE ON LAKE POINTE TECHNOLOGY CENTER• Ms. Dacy explained that the three issues identified in her memo of March 27th have been resolved: 1. MEPC has agreed to pay for 1/2 of the lighting for the streets affecting its 10 acre site up to a maximum of $25,000 which will be assessed over a 10 year time frame. 2 A July 15, 1998 deadline has been established for them to obtain approval from their Board of Directors regarding the initiation of the project. 3. The agreement will terminate if the interse�tion improvements are not initiated by November 1, 1998. MEPC will retain the option to close on the property prior to November 1. �` Mr. Commers asked if there was any issue over what would constitute intersection improvements. � Mr. Casserly stated this would include anything that would be done under the terms of the contract. Mr. Commers asked if there is any information as to where the State is at this point. Ms. Dacy explained that one office of MNDOT has completed their plan review. The signatures on the title pages are being obtained and they are now preparing the special provisions language that goes into the Cooperafive Agreement. Mr. Commers asked about the eight acres of tum back that is not part of the site. Ms. Dacy stated the tumback is actually about 1/2 acre in size--befinreen the 8 acres and Highway 65. Mr. Casserly stated they are still working out some minor issues and will prepare an executed copy of the agreement and have it circulated. HOUSING & REDEVELOPMENT AUTHORITY MTG., APRIL 2, 1998 - PAGE 9 � 5. COMMISSION AND COUNCIL SURVEY RESULTS: Ms. Dacy noted that a copy of the sunrey was included in the Agenda so that all Advisory Commissions that participated in the survey saw the results. This is a planning tool and will be used to identify the goals and objectives and gives them a list of things to accomplish. Mr. Bums noted that staff sent out 47 surveys to commission members and 26 or 27 were completed and retumed. One thing that pertained to the HRA was on the citizen survey where citizens indicated that more emphasis needed to be placed on community development commercial/industrial property. Mr. Commers stated there are some �identifiable issues related to the HRA that should be discussed at the next meeting and determine if a response is in order. Ms. Dacy stated the two areas she noted were the image enhancements and the balance of commercial and industrial redevelopment versus the amount of housing redevelopment activities. Mr. Bums indicated that they recently received the Business Surveys which pretty much parallels the Citizen Survey in regard to the redevelopment issue, with an indication that more emphasis should be spent on commercial and �"� industrial development. Mr. Commers stated the HRA needs to identify why the emphasis has been shifted to residential redevelopment. He noted that the State Representative also has a survey out regarding University Avenue and whether or not money should be appropriated for cleaning up the medians, etc. The Cifiy may wish to request a copy of the results of that survey. 6. 1999 COMMUNITY DEV�LOPMENT DEPARTMENT GOALS AND OBJECTIVES• Mr. Commers asked Ms. Dacy to explain the term "Absorbed" on Page 6E, Objective 3a. Ms. Dacy explained that this term is used if the activity does not require an extra expenditure of City funds. One idea listed under the Planning Objectives (pg. 6G, Objective #5), would be to share an intem between the Housing division and the Planning division which would be a part-time position of 20 hours per week for the first three months of 1999. The next 18 months are expected to be very busy for the City including preparation of the Comprehensive Plan, evaluating redevelopment of salvage yards/Frank's Used Cars. Additionally, the Apartment �--. Rehab issue will need to be looked at along with Housing Rehab. A discussion followed in regard to various options and resources for Intem positions. HOUSING & REDEVELOPMENT AUTHORITY MTG., APRIL 2, 1998 - PAGE 10 � 7. HOME REMODELING FAIR UPDATE• Mr. Femelius reminded the HRA that the Remodeling Fair will be held on Saturday, April 18, at the Fridley High School from 10:00 a.m. to 3:00 p.m. Approximately 70 vendors have signed up and various workshops will be held to provide information to homeowners. Mr. Commers noted the Loan Delinquency Policy and Procedures had been included in the agenda packet as per request by the HRA. Mr. Fernelius provided a brief summary of the Policy when someone becomes delinquent on their payment. He noted that this matter was talked about at the staff level last Fall and it was suggested that some type of policy be adopted for the HRA in the event of default. This has been discussed with Commissioner McFarland and some research has been done. This information will be provided at one of the next HRA meetings with some type of policy for consideration. 8. REQUEST FOR T I F ASSISTANCE FOR METAL TEK: Mr. Commers noted the memo from Ms. Dacy of March 31, 1998 in regard to this issue. Ms. Dacy stated she believes this proposal as outlined is worthwhile. The site has very poor soil conditions and the estimated amount of soil correction !"'` assistance is approximately $80,000 to $100,000. It appears that the guidelines for assistance can be met. Staff would like to continue negotiating with the contractor and prepare a development contract for review at the HRA's May meeting. Mr. Commers stated that in terms of residents wishing to see some industrial/commercial development, and it was the Commissioner's consensus that staff should continue the negotiation process. 9. OTHER BUSIIVESS: Mr. Commers noted that staff had provided them with a copy of the Fridley Rambler Edition of the Remodeling Handbook. Mr. Femelius noted that this handbook is in the process of being printed and will be unveiled at the remodeling fair. It is a free guide for Fridley residents and provides homeowners with very helpful information on remodeling a rambler. The Commissioners congratulated Mr. Femelius on his fine work on this handbook. ADJOURNMENT: � MOTION by Ms. Schnabel, seconded by Mr. Meyer to adjoum the meeting. HOUSING & REDEVELOPMENT AUTHORITY MTG., APRIL 2, 1998 - PAGE 11 � UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED AND THE APRIL 2,1998, MEETING OF THE HOUSING AND REDEVELOPMENT AUTHORITY ADJOURNED AT 9:05 P.M. Respectfully subm' ed, ��i1/1'Y10►-� Tamara D. Saeflce � Recording Secretary � �