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HRA 01/07/1999 - 6305HOUSING & REDEVELOPMENT AUTHORITY MEETING THURSDAY, JANUARY 7, 1999 7:30 P.M. PUBLIC COPY (Please return to Community Development Department) it CITY OF FRIDLEY HOUSING & REDEVELOPMENT AUTHORITY MEETING THURSDAY, JANUARY 7,1999,7:30 P.M. AGENDA LOCATION: City Council Chambers CALL TO ORDER ROLL CALL APPROVAL OF MINUTES December 3, 1998 CONSENT AGENDA Consider Change to Loan Subordination Policy .......................... 1 Amend Professional Service Agreement for Regional Remodeling Handbook, Gerloff Residential Architects, Inc ................. 2 Claims and Expenses ............. ............................... 3 ACTION ITEMS: Consider TIF Assistance for Murphy Warehouse & Onan .................. 4 INFORMATION ITEMS: Update on Housing Program Evaluation Report ........................ 5 Medtronic Update ................. ............................... 6 Update on Design and Development Issues for Scattered Site Program .......... ............................... 7 OTHER BUSINESS ADJOURNMENT CITY OF FRIDLEY HOUSING & REDEVELOPMENT AUTHORITY MEETING DECEMBER 3,1998 Chairperson Commers called the December 3, 1998, Housing and Redevelopment Authority meeting to order at 7:30 p.m. ROLL CALL: Members Present: Larry Commers, Virginia Schnabel, John Meyer, Jim McFarland Members Absent: Pat Gabel Others Present: Barb Dacy, Community Development Director Grant Femelius, Housing Coordinator Bill Bums, City Manager Jim Casserly, Financial Consultant Rick Pribyl, Finance Director Craig Ellestad, Accountant Ben Martig, Housing /Special Projects Intern APPROVAL OF OCTOBER 1 1998 HOUSING AND REDEVELOPMENT AUTHORITY MEETING MINUTES: MOTION by Mr. Meyer, seconded by Mr. McFarland, to approve the October 1, 1998, Housing and Redevelopment Authority minutes as presented in writing. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. CONSENT AGENDA: • - IT 2. CONSIDER SERVICE AGREEMENTS WITH THE CENTER ENERGY & ENVIRONMENT (CEE) FOR THE ADMINISTRATION OF THE HOME REHABILITATION GRANT PROGRAM HOUSING & REDEVELOPMENT AUTHORITY, DECEMBER 3,1998 PAGE 2 4. AUTHORIZE PROPOSALS FOR PROFESSIONALSERVICES -TO ASSIST HRA WITH AUAR AND ISP APPLICATIONS FOR MEDTRONIC DEVELOPMENT. 5. APPROVE RESOLUTION AUTHORIZING PAY INCREASES FOR HRA EMPLOYEES. 6. APPROVE RESOLUTION AUTHORIZING EXTENSION OF DEVELOPMENT CONTRACT FOR NOAH'S ARK, 7. CLAIMS AND EXPENSES (October and November) Mr. Commers asked that Item 7 (Claims and Expenses) be removed from the Consent Agenda for further discussion. MOTION by Mr. Meyer, seconded by Ms. Schnabel, to approve the Consent Agenda, AS AMENDED (Item 7 removed). UPON A VOICE VOTE, ALL MEMBERS VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. Mr. Commers stated at the last HRA meeting he had asked for a breakdown of personnel expenses. He asked if staff had had the opportunity to do so. Mr. Ellestad provided information in regard to the Administrative Personal Services, noting that this amount is increased annually, based on the COLA that is awarded. The Administrative Overhead Expense is for office space allocation for HRA employees and the Computer Overhead is for HRA computer programs. Mr. Commers asked what the G.O. Temp II bonds were. Mr. Ellestad explained that G.O. refers to General Obligation, which must be issued by the City. The City pays the principle and interest expenses, and the HRA reimburses the City for those expenses. This will be the last payment on the bonds. The new bonds were issued as of November 1 or December 1. Mr. Commers noted that a list of five additional expenses requiring HRA approval was distributed. Ms. Schnabel, referring to the Administrative Personal Services, wondered if a new study should be conducted, considering that the study is five years old. Mr. Bums stated staff would be happy to do so. HOUSING & REDEVELOPMENT AUTHORITY, DECEMBER 3,1998 PAGE 3 MOTION by Ms. Schnabel, seconded by Mr. Meyer, to approve the Claims and Expenses for October and November 1998. UPON A VOICE VOTE, ALL MEMBERS VOTINGAYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. INFORMATIONAL ITEMS: 8. UPDATE ON HOUSING PROGRAM EAVLUATION INTERNSHIP PROJECT Mr. Femelius stated in September of 1998, the HRA hired Intern Ben Martig through - -the University of Minnesota. One of the duties that assigned to Mr. Martig is to complete an in -depth analysis of the HRNs rehab programs. In particular, staff would like to determine the effectiveness of those programs on improving the housing stock in Fridley. Additionally, he will try to determine who is using the rehab programs in terms of demographic profile — the incomes, household composition, length of residence, etc. This will give the HRA a picture of which the typical borrower is. Mr. Femelius stated Mr. Martig will also be looking at some of the eligibility requirements. Typically, the HRA programs have assisted borrowers who generally would be classified as "middle income borrowers ". Staff would like to see if any adjustments in income requirements need to be made. Mr. Femelius stated that, additionally, Mr. Martig will be looking at some of the broader implications of the programs in terms of how they are affecting the city overall — property values, appearance of neighborhoods, etc. Comparisons will be made to other first -ring suburbs to determine whether Fridley is providing assistance similar in nature to other cities, etc. Mr. Femelius reviewed some of the activities which Mr. Martig has accomplished to date. Future activities include surveying loan and grant recipients who have been assisted through the HRA programs. A more in -depth survey and evaluation will be completed of the Hyde Park neighborhood to see how the HRA can boost activity in that area. He stated staff hopes to be able to give the HRA a formal presentation of the findings at the HRA meeting in February. Mr. Meyer stated it appears to be a very comprehensive survey and that it will be interesting to review the results of the studies. Mr. Commers asked what the Old House Special Property Tax Deferment Program is. Mr. Femelius stated he believes this was a law created in 1995 by the legislature which allows property owners of homes over 35 years old to defer a portion of the increased value due to improvements made to the property. This encourages property owners to rehab their properties without resulting in an increase in taxes. The program has been HOUSING & REDEVELOPMENT AUTHORITY, DECEMBER 3, 1998 PAGE 4 in place for several years and the HRA would like to determine how many residents have taken advantage of the program. Additionally, they would like to see if there is a way of promoting the program better. Mr. Commers stated he wondered how many residents were aware of the program. He stated he had never heard of it. Ms. Schnabel asked how great a percentage of Fridley's housing stock would fall into the home age category required to be eligible for the program. Mr. Fernelius stated that a large percentage of homes would qualify. Many homes in Fridley were built prior to 1970. Mr. Commers asked staff to provide the Board members with additional information on this program with some examples of how it works. 9. MEDTRONIC UPDATE: Ms. Dacy stated that staff has heard from the legal counsel for Medtronic. They will be returning a "black line draft" to the HRA by the end of next week. Staff was unable to meet with Medtronic prior to the HRA meeting as originally hoped. She noted that she has been meeting with Metropolitan Council, the MPCA, and Medtronics' consultant in preparation of the environmental review documents which will need to be completed in order for the project to proceed. She expects to have a draft of the AUAR by December 8. In January, she expects that Medtronic will be preparing for the plat and the land use applications. Mr. Commers asked if the intersection has been completed. Ms. Dacy stated the road construction will stop soon due to weather limitations. It will start again in the spring, with an estimated completion date of July 1, 1999. She stated she believes additional work is needed on the east side of Central Avenue. Mr. Commers asked about landscaping around the intersection once it has been completed. Ms. Dacy stated the scope of the project includes some proposed landscaping on the East side, adjacent to some of the residential homes that were affected by the realignment of the Central Avenue connection. On the west side, however, she does not believe there was any proposed landscaping in the intersection area. Any disturbed areas will need to be graded and sodded as deemed appropriate. Mr. Commers asked if Ms. Dacy would check to see if any landscaping has been proposed on the south side of the freeway between the frontage road and Central Avenue in front of Menards. HOUSING & REDEVELOPMENT AUTHORITY, DECEMBER 3, 1998 PAGE 5 Mr. Commers asked if any timetable has been established to get the documents finalized for this project. Mr. Casserly stated that this has become a rather complicated document. Medtronic has informed staff that they will do their best to get it finalized as soon as possible. As soon as they get something back from Medtronic, they will respond. 10. REQUEST FOR TIE ASSISTANCE BY ONAN & MURPHY WAREHOUSE. Ms. Dacy stated no action is requested of the HRA on this issue at this time; however, she expects that staff will be coming back in January or February for some type- of action. She noted that Onan is considering selling 26 acres of its campus to Murphy Warehouse who will build a 400,000 square foot facility. Onan would then lease approximately 60% of the building for some of its suppliers, which presents an operational advantage to Onan. At the present time, Onan rents space from Murphy in their warehouses on Main Street. Having an on -site warehouse, therefore, would provide savings to Onan. As a result of the proposed project, they feel it will create approximately 100 jobs. Ms. Dacy provided a history of the site, noting that this is a very good example of what the Metropolitan Council has been attempting to do in returning brownfield land to the tax rolls and trying to make it a productive piece of property. Funds will be needed, however to clean-up the problem and address some of the public improvements, which will, need to be made. Onan has hired a consultant and they have made an application to the Metropolitan Council for funds to clean up some of the problems. Ms. Dacy noted that this project would be a tremendous advantage to the City. The value of the property would increase significantly and new jobs would be created within the City. Mr. Commers stated it would be helpful to know the overall tax benefits of this project to all of the available entities that would share in the taxes. Mr. Casserly noted page 10J of the Agenda, which provided a breakdown of the various costs relating specifically to the site as well as various sources of revenue. The HRA is not being asked to subsidize the actual cost of the property, but rather to help with the redevelopment and the pollution costs. The site is worth roughly $1.4 million. Mr. Commers stated this has been a problem property, which has been difficult to develop. Ms. Dacy stated she expects to discuss a number of issues with Onan at the meeting scheduled for Monday, December 8: She will report back. HOUSING & REDEVELOPMENT AUTHORITY, DECEMBER 3,1998 PAGE 6 . • ` • . r • i .. . Mr. Commers noted that a copy of the contract with Innovative Irrigation for Lake Pointe property for 1999 was provided to the HRA.. He noted that there would be deductions in price based upon a percentage of acreage; and if the City is successful and the Medtronic project proceeds next summer, there will be a reduction in costs. MOTION by Ms. Schnabel, seconded by Mr. Meyer, to approve the Maintenance Agreement for Innovative Irrigation of the Lake Pointe property as presented. UPON A VOICE VOTE, ALL MEMBERS VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. ADJOURNMENT: MOTION by Ms. Schnabel, seconded by Mr. Meyer, to adjourn the meeting. UPON A VOICE VOTE, ALL MEMBERS VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY AND THE MEETING WAS OFFICIALLY ADJOURNED AT 8:25 P.M. Respectfully submitted, Tamara D. Saefke Recording Secretary 10I MMIL � 01 03 HOUSING :►1 REDEVELOPMENT DATE: December 28, 1998 AUTHORITY TO: William W. Bums, Executive Director of HRA 4'I'II-4t, FROM: Barbara Dacy, Community Development Director Grant Femelius, Housing Coordinator SUBJECT: Consider Change to Loan Subordination Policy At the November 13, 1997 meeting, the HRA established a policy for subordinating its home improvements loans. These types of requests are typically made by lenders who are in the process of refinancing a mortgage and need to ensure that their loan is in first position. Since adopting the policy last year, a number of requests have been received. From an administrative standpoint there is a significant amount of time required to process an agreement, including reviewing the property appraisal, good faith estimate and title work. A determination must also be made that the borrower is current on their loan payments and that ultimately the HRA's lien is in no worse of a security position. CEE is responsible for processing these requests and sending the completed file to HRA staff for review. If acceptable, CEE then prepares the necessary agreement and forwards it to the HRA for signature. CEE is requesting a $75.00 fee from the borrower to process the subordination request. The fee would be used to cover CEE's time and would be non- refundable. This practice is consistent with what CEE charges the Minneapolis Community Development Agency and Department of Public Service on their loans. Recommendation Staff recommends that the Authority approve the attached resolution modifying the loan subordination policy to allow for a $75.00 processing fee on all subordination requests. M -98 -246 1 MEMORANDUM HOUSING REDEVELOPMENT AUTHORITY DATE: December 23, 1998 TO: William Bums, Executive Director of HRA OII FROM: Barbara Dacy, Community Development Director SUBJECT: Addendum to Professional Services Agreement for the Regional Remodeling Planbook, Robert Gerloff Residential Architects Background On February 5, 1998, the HRA approved the Professional Service Agreement with Robert Gedoff Residential Architects in order to produce a draft of a remodeling planbook entitled: Cage Cods and Ramblers: A Remodeling Planbook for Post -World War II Houses. The HRA entered into this agreement at the same time as entering into agreements with 14 other cities to cost share in the design and production of the Planbook. A draft of the Planbook will be available at Thursday's meeting. The Planbook will be published in mid - January 1999 and will be available for distribution at the Remodeling Fairs of the participating cities. A press release will be issued to the Star & Tribune and local newspapers, and a press conference will be conducted in early February. ••• -• `••- • 11 The attached addendum amends the Professional Service Agreement for the architect to prepare an additional set of plans, elevations, and other drawings to portray a second story on a detached rambler. The additional cost is $2,200. There is no cost to the Fridley HRA. Each of the 14 cities have contributed $5,000 toward the consultant contract for a total of $70,000. The original contract amount was $60,000. The additional cost, therefore, is covered by funds received from the other cities. In order to publish the planbook, the cities have raised funds from other organizations which would pay for this additional cost. Approximately $20,300 has been raised to 2 Addendum December 23, 1998 Page 2 date, and an additional $8,000- 10,000 may be received in the near future. Publishing costs will probably be about $25,000. Planbook Content The Planbook will be 11 x 17 inches in size with a spiral binding. The back cover will contain a pocket for each city to insert its specialized information about housing programs or about the city in general. The appearance, font, and graphics of the book will mimic the style of the 50s and 60s. A brief description of housing construction in this era will act as the introduction to the book. The Planbook then describes the three families who volunteered to be case studies. Each family's housing needs are discussed, and then plans are shown to accommodate those needs and expand each house. A cape cod house, a rambler with a detached garage, and a rambler with an attached garage are featured. Recommendation Staff recommends that the HRA authorize the Chairperson and Executive Director to execute Addendum #1 to the Professional Service Agreement as presented. BD:Is M -98 -245 z -A 1. 01014 now** */01# cb "aotsi aad Ebot� December 15 1998 Barbara Dacy Community Development Director 6431 University Avenue NE Fridley, Minnesota 55432 Dear Barbara Dacy: This is Addendum #1 to the Professional Service Agreement for the Regional Remodeling Planbook extending the original Scope of Services agreement to include the following: Adding an additional design to house type #2, including plans, elevations and other drawings to communicate the design intent as well as a watercolor. Fees for the additional service are to be $2,200. This additional amount is to be added to the invoice for the Benchmark #4 payment. Sincerely, 1 � . Robert Gerloff, AIA V2 - %5.1,--%b date: William W. Burns, Executive Director Fridley HRA date: Lawrence R. Commers, Chairperson Fridley HRA date: 4007 SNERMN AVENUE SOUTH MINNEAPOLIS, MINNESOTA 65410 VOICE: 612/927.5913 FAX: 612/927.7301 E- 1111.: CILL TO: FRIDLEY H.R.A FROM: CITY OF FRIDLEY RE: BILLING FOR ADMINISTRATIVE AND OPERATING EXPENSES DECEMBER 1998 (13th Month) BENEFITS EXPENSES: CITY OF FRIDLEY - HEALTH INS CITY OF FRIDLEY - DENTAL INS CITY OF FRIDLEY - LIFE INS 262- 0000 - 219 -1001 207.62 236 - 0000 - 219 -1001 11 262- 0000 - 219 -1100 22.53 236- 0000 - 219 -1100 12 262 - 0000 - 219 -1200 3.50 236- 0000 -219 -1200 13 TOTAL BENEFITS EXPENSES: TOTAL EXPENDITURES - DECEMBER 1998 File: \EXDATA\HRA \TIFl98BILL.xis Details 3 233.65 Account #'s for Account #'s for CR HRA's Use City's Use Code ADMINISTRATIVE BILLING: ADMINISTRATIVE PERSONAL SERVICES 21,006.58 101 - 0000 - 341 -1200 H1 ADMINISTRATIVE OVERHEAD 292.58 101 - 0000 - 336 -3000 HA COMPUTER OVERHEAD 212.42 101- 0000 - 336 -3000 HA (For Micro & Mini computers) TOTAL ADMINISTRATIVE BILLING: 100- 0000 - 430 -4107 21,511.58 OPERATING EXPENSES: US WEST - TELEPHONE 100 - 0000 - 430 -4332 26.09 236 - 0000 - 336 -3000 HA CITY - INS ALLOCATION 100 - 0000 - 430 -4336 991.00 236 - 0000 - 336 -3000 HA 236 - 0000 - 336 -3000 HA 236- 0000 - 336 -3000 HA 236- 0000 - 336 -3000 HA TOTAL OPERATING EXPENSES: 1,017.09 BENEFITS EXPENSES: CITY OF FRIDLEY - HEALTH INS CITY OF FRIDLEY - DENTAL INS CITY OF FRIDLEY - LIFE INS 262- 0000 - 219 -1001 207.62 236 - 0000 - 219 -1001 11 262- 0000 - 219 -1100 22.53 236- 0000 - 219 -1100 12 262 - 0000 - 219 -1200 3.50 236- 0000 -219 -1200 13 TOTAL BENEFITS EXPENSES: TOTAL EXPENDITURES - DECEMBER 1998 File: \EXDATA\HRA \TIFl98BILL.xis Details 3 233.65 a � N r W OC H Z 1- Z 9 �lJy N W J K LU OC R IZ.1 CL �lu xlu J O ii d °L a i 0 U O_ r W W W U ON J-JJ O W W W cc r � p r O LU d L7 >~ Y m N� m~O Vu- W X°�A< W �� <�V L of If ° soM 1 1 / 1 1 I / / 1 / 1 1 1 1 1 1 1 1 H 1 O O O O O Q O pQ In 01 � M I O O O O O m O O O O N O P O � N OD �O 1� � In O i O O P V1 O O .O O O In O M I� $ N� O' w &A 1 P q In N O O N O O Ifs m M r a 1<A " v m I C O O O N M N P I r M F- 1 IA .- N N in ti .O M d N N W 1 L1 1 W 1 1 1 1 • 1 1 H 1 (i I W 1 w 2 I I 1 N CL 1 i 1 �L OL O i Op r v v v 7 7 7 7 7 7 7 7 7 I P > C V V y y y G . 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IL 1 -1 -1 a .1 a .l .4 a .4 .+ .1 11 19 .+ 3 -C - - 5 DATE: 'December 23, 1998 HOUSING REDEVELOPMENT AUTHORITY TO: William Bums, Executive Director of HRA 41 �� 1 FROM: Barbara Dacy, Community Development Director SUBJECT: Request for Tax Increment Financing Assistance, Murphy Warehouse and Onan Corporation Background At the December 7, 1998, meeting, the HRA received preliminary information regarding a tax increment financing request from Murphy Warehouse and Onan to assist them with pollution clean -up and infrastructure costs at the Onan campus on Central Avenue. Since the December meeting, staff has met with the developer, and the developer has submitted the HRA's tax increment financing application and has made the required deposit. The requested amount of assistance equals $1,290,875 for infrastructure and site preparation expenses. -..l_ The developer reports that the grant applications scored well with DTED and Met Council; however, because state statutes require DTED to fund a certain amount of its allocation for out -state projects, the Onan application did not receive any funds from DTED. Met Council did agree to award the requested $154,658, but this amount is not enough to pay for the needed clean -up ($956,140). The good news is that Met Council and DTED staff strongly recommended that the City and developer reapply for the next funding cycle in May 1999. If the application is unsuccessful at that time, another cycle is available in November 1999 (Met Council and DTED staff advised that some cities do continue to reapply until the project is funded). r! Murphy Warehouse & Onan Corporation December 23, 1998 Page 2 Because Murphy Warehouse has timing constraints as a result of leases in existing facilities, it is not possible to postpone initiation of development until after the next funding cycle (see attached letter from Murphy Warehouse dated December 21, 1998). The concept now being discussed with the developer proposes that the HRA would provide approximately $871,673 to the developer in March 1999 so that the site work and "environmental clean -up could begin ($956,140 minus the local match to be paid by developer of $84,377 = $871,763). The City and developer would also make application once again to DTED and Met Council for the May 1999 cycle. When funded in June 1999, the HRA would retain the state and regional funds as its reimbursement. The tax increment financing assistance issue still remains. The developer advises that the pay -as- you -go approach (or revenue note) for 100% of the requested assistance would be problematic because of the long term of the note (approximately 17 years). Therefore, it is proposed that a grant of approximately $435,881 would be deducted from the $1,200,000 note, leaving a balance of approximately $764,119. The term of the note would then be reduced to approximately 9Y2 years. If state funding is not received, the HRA will need to decide if it wants to provide assistance of approximately $2 million. The total project cost is $13,586,015. The pollution clean -up costs and infrastructure costs represent $2 million of the total costs. A majority of these costs would not exist if the development were to occur on a typical vacant parcel. Taxes to Other Jurisdictions At the December meeting, the Chairperson inquired about what other jurisdictions would receive as a result of the construction of the project. Unlike other older districts, taxing jurisdictions would receive tax payments beginning in the year 2001. The school district would receive approximately $83,000 per year, the County would receive approximately $45,000 per year, and the City would receive approximately $25,000 per year. Currently, the parcel is not producing any tax increment. ._: • • �_1:��•Si1 An update about the developer's response to staff's proposal will be given at Thursday's meeting. There are significant benefits to assisting their project with or without state and regional assistance: 4 -A Murphy Warehouse, & Onan Corporation December 23, 1998 Page 3 • Returns an unusable parcel to the tax rolls contributing taxes to all jurisdictions. • Creates 100 new jobs. • Cleans polluted land. • Provides public infrastructure for`mord"development on the Onan campus and, therefore, more tax dollars. • Provides an operating advantage to an important existing business. • Provides additional warehouse space for existing Fridley businesses. • Increment is generated in the district to accomplish other redevelopment objectives. BD:Is M -98 -258 701 24th Avenue S.E. Minneapolis, Minnesota 55414 December 21, 1998 Ms. Barbara Dacy Community Development Director City of Fridley Municipal Center 6431 University Avenue NE Fridley, MN 55432 WAREHOUSE Phone: 612- 623 -1200 Fax: 612- 623 -9108 COMPANY Email: sales@murphywarehouse.com Website: www.murphywarehouse.com RE: TIF Application for Former Boise/Onan/Medtronic Site Dear Barb: We are excited to be submitting this application to the City of Fridley for clean-up funding. The redevelopment of the Boise /Onan/Medtronic property represents an exciting possibility that will benefit all the stakeholders involved. At this point, the only impediment to the project moving ahead is funding for the extraordinary environmental, geo- technical and infrastructure costs necessary to prepare the site for development. As we discussed in our meeting on December 7, 1998, we were unsuccessful in two applications for grant funds. The grant applications totaled $980,000 and the funds were to be used to address the environmental and geo - technical issues on the former Superfund site. The balance of the extraordinary costs totaled approximately $13MM and such costs were targeted for TIF funding. The good news is that our grant application scored well enough to receive grant funding; the bad news is that because of a concern for funding out -state projects, the grant agencies moved our funding to out -state projects. Both Met Council and DTED have encouraged the project to reapply in May 1999._ Unfortunately, Murphy Warehouse Company cannot afford to wait until the grants are awarded in July 1999 to decide if the project will move forward. There is a very unique set of circumstances that dictate that this project will only work if it is completed by November 1, 1999. First, Murphy Warehouse Company currently leases space in several different buildings, and these leases expire in late 1999 or early 2000. It is the opportunity to consolidate this existing leased space into a.building owned by the Murphy family and located on the Onan site that makes this project possible. The new building must be ready for occupancy on November 1, 1999 in order to accommodate the trans er o pro uc om existing leased space into —We ie new space. Secondly, Onan Corp. is interested in this project because of the efficiencies created by having an on- site warehouse. Murphy Warehouse Company is willing to operate the warehouse on behalf of Onan. Additionally, Murphy Warehouse Company is the only potential owner of the new building willing to lease 60% of the building to Onan and still allow Onan to "give back" space over the tern of the lease. Onan does not want to own the building and no other developer would be willing to lease space t Onan on the terms that provide Onan the flexibility it requires.°' 0 Ms. Barbara Dacy December 21, 1998 Page 2 Thirdly, in order to meet the November 1, 1999 occupancy date, construction needs to begin no later than June 1, 1999. As a result of long lead times for steel and pre -cast panels, orders for steel and panels need to be placed no later than March 1999. Accordingly, Murphy needs to know whether or not the extraordinary costs are going to be funded in March 1999 before it makes the decision and significant financial commitment to order building materials. Additionally, &majority of the environmental and geo- technical work needs to have been completed prior to June 1, 1999 so that the site is ready for construction. Therefore, these costs need to be funded and the work completed before the next round of grant funds are awarded. Lastly, we discussed whether or not the new building could be built on another part of the Onan property that may be less expensive to prepare for construction. The only way this proposed building makes sense for Onan is at its current proposed location which provides efficiencies in moving product back and forth from the plant to the warehouse. Any other location on the Onan property might as well be off -site. Further, the cost savings from building in another location are not significant, as the environmental and infrastructure costs are still present. When we left the December 7 meeting, it seemed that there was the basis for a creative solution that would allow this exciting project to move forward. A funding package that provided up -front funding for environmental and geo- technical costs along with a Tax Increment Note for the remaining infrastructure and geo- technical costs provides Murphy with the certainty that the funding is there for extraordinary costs allowing permanent financing to be completed. A grant application can still be made in May 1999. If the grant application is successful, those costs can be funded and some of the up -front dollars from the City can go to reduce the face value of the TIF Note. This structure would appear to present a solution that allows the project to continue to move forward. Funding for these extraordinary costs is critical for the project moving ahead. The rationale for funding the extraordinary environmental, geotechnical and infrastructure costs is to keep these brownfields projects on the same financial footing as those on greenfield sites. The attached project pro forma is based on market rate building costs that generate market rate rental rates. To the extent that the project also has to absorb extraordinary costs, the project cost and the rental rate move above market rate rents. In this scenario, the new building can not compete with buildings on greenfield sites, and Murphy and Onan are better off leasing space in other locations rather than building this new facility. What are the benefits for the City of Fridley? Currently, the majority of the over 100 acres of land that Onan owns is undeveloped and vacant due to perceived as well as practical issues associated with redeveloping a former Superfund site. The property represents a tremendous opportunity to increase the City's tax base and provide jobs for its residents. The proposed $11 million, 400,000 SF building is expected to bring 100 jobs to the site. There will be a dramatic increase of $400,000 in net tax capacity from the redevelopment of this vacant and contaminated property. Despite the use of tax increment generated to reimburse the City and Murphy for eligible costs, the City, County and State will still receive incremental tax revenue from this project because of state law covering this TIF District. 4 -D Ms. Barbara Dacy December 21, 1998 Page Three The City of Fridley's Comprehensive Plan has identified the redevelopment of the former Onan site as an industrial use. However, until Real Estate Recycling approached Onan about redeveloping the site, no one ever thought the property would be anything other than vacant, unused land. Now the only impediment to redevelopment is funding the extraordinary costs necessary to develop the site. We are pleased to have the opportunity to work with the City of Fridley, Onan and RER on this unique opportunity to add -jobs and increase the tax base in Fridley. We feel sure it will be a solid success, and we hope you will partner with us to make it happen. Sincerely, MU WAREHOUSE COMPANY Richard T. urp V. Sr. Chairman/CEO RTM/wp 4 -E JOB CREATION The following is a projection of jobs new to the site as a result of the proposed redevelopment. Onan Employees The following are new jobs to the redevelopment site. In addition to the jobs located in the new building, over 1,400 jobs are being retained in the State as the new facility enhances Onan's long term viability at this site. This is a critical factor that can not be taken lightly as Onan recently shut down a huge manufacturing facility in Alabama and moved this-pperation to its existing Fridley facility. With the addition of the new building, the Fridley facility's efficiency will be greatly improved, helping it maintain its world class competitiveness. Position Title Managers Total Number of Jobs/FTE 3 Customer Service Reps 5 Material Controllers 4 Logistics Operations Personnel 80 Murphy Employees Annual Salary Per Job $56,000 per yr. with benefits $21 per hour with benefits $56,000 per yr. with benefits Expected Hiring Date $17 - $20 per hr with benefits Management, Operations Personnel 4-8 $17 - $22 per hr with benefits Total Number of All Jobs Created 100 4 -F On Site Nov. 1, 1999 On Site Nov 1, 1999 Jan 2000 On Site Nov 1, 1999 On Site Nov 1, 1999 Project Budget for Onan / Murphy Distribution Center Fridley, MN I. Cleanup Budget A. Site Investigation & Remediation Development Pre - Construction Site Investigation $78,000 Groundwater Modeling $7,000 Work Plan $11,000 Remedial Action Plan $15,500 Total Site Invstgn, RAP Dvlpmnt $111,500 B. RAP Implementation: Cleanup Costs Soil Impacts $249,575 (Excavation, Stockpiling, Sampling, Treatment, Backfill, Compaction) Groundwater $177,375 ( Dewatering, Constructed Wetland, Well Abandonment) City Oversight $5,000 Documentation / Implementation Report $12,500 MPCA Oversight $30,000 Total Implementation: $474,450 Contingency: $117,190 Total TBRA and DTED Cleanup Budget $703,140 H. Development / Redevelopment Budget Soil Correction, Dewatering (DIED P Cost) Soil Correction (French Drain) (DIED P Cost) Infrastructure Roadways Contingency - Infrastructure 15% Construction 406,164 SF Building Total Development Budget DTED Eligible Project Costs TOTAL PROJECT BUDGET M. Proposed Cost Allocation from Public Sources DIED (75% P Costs) City Met Council Total Grant Funding: Tax Increment Financing: Private Investment: 4 -G $65,000 $155,000 $915,000 $207,500 TIF (See attached breakout) $168,375 $11,372,000 $12,882,875 $956,140 $13,586,015 $717,105 $84,377 $154,658 $9— 56 U $1,290,875 $11,456,377 % of Total Project Costs 5.3% 0.6% 1.1% 7.0% 9.5% 84.3% a� 3 U Q U a H O V a U w .� 19 •�" cc .� 4-4 bo b° a� 'ob •=� a' o � a�i � � ;w Z° aoi *OB m o a O 02 .-- W O •� o � b o � a°i � _, a w � v o a o y > °' pw PC 79 E+ o Lam" on G° Co 79 ba zO l z O � o H �- 0 o 0 0 W) v� .• a o o g o o°M o 0 C M t- �-4 N ON o v VI 64 N N fA 64 GOC FJ9 bR .-i b~R -9 lqt ou Ld 69 V o O 3 •o b w o W O 3 � � 02 bu a_N PROJECT SCHEDULE There are several time critical elements of this project. First, the ultimate owner of the new building, Murphy Warehouse Co., is losing over 150,000 square feet of space in late 1999 and early 2000 as a result of lease terminations. Murphy can either extend those leases for 3 to 5 years or move that business to this new facility. In order to meet the timelines imposed by these lease expirations, Murphy and Onan need to occupy the new building by November 1, 1999. Secondly, the November 1, 1999 occupancy deadline means that construction of the new facility must begin in June 1999. Accordingly, the cleanup work and geotechnical soil correction must be completed in April and May 1999 to be ready for footings and foundations to be built. Finally, the long lead times for steel and precast panels dictates that steel and precast wall panels for the building be ordered in March 1998 in order to meet the November 1, 1999 occupancy date. This means that Murphy will need to know whether or not the extraordinary environmental, geotechnical and infrastructure costs will be funded before Murphy makes the very significant financial commitment to order the steel and precast panels. An abbreviated schedule is as follows: Task City Approvals TIF Approval Order Steel, Precast Envt'l, Geotechnical Work Construction Begins Building Occupancy 44 Date Feb. 1999 Feb. 1999 Mar. 1999 Apr —May 1999 June 1999 Nov. 1, 1999 MURPHY WAREHOUSE COMPANY PROFORMA INCOME AND CASH FLOW OF ONAN/MURPHY PROJECT December 21, 1998 LAND COST @ $3.00 ($1.00 per sq. ft. - 26+ acres) $ 1,218,492 SOFT COSTS @ $2.00 812,328 BUILDING COST a@ $23.00 9,341,180 BUILDING PROJECT TOTAL COST $ 11,372,000 INCOME RENTAL INCOME - a@ $3.53 per sq. ft. on 406,164 ft CASH ON CASH INVESTMENT ANNUAL COST MORTGAGE DEBT SERVICE NET CASH FLOW 44 $ 1,433,759 12.61% $ 1,141,440 $ 292,319 12/18/98 FRI 12:41 FAX 612 885 5969 RR9SS MONROE KRASS MONROE, P.A. ATTORNEYS AT LAW ■ James R Cater EmaBjamese@Jaassmomoe.aom www.lvassmonmecom DftO Dial (812) 885-1246 MEMORANDUM To: City of Fridley Attn: Barbara Dacy, Community Development Director Real Estate Recycling Attn: Paul M. Hyde, Chief Executive Officer From: James R. Casserly, Esq. �' G Greg D. Johnson, CPA (7 Date: December 17, 1998 Re: Assistance on Onan Project Our File No. 9571 -10 At our meeting last week there was extensive discussion regarding assistance for the project if the DTED grant was not received by the City. Our office agreed to look at various options to allow the project to proceed. We explained that the ERA would want to recover its additional contribution if it provided the funds for the cleanup. The grant request did receive a high priority and could be funded in the 1999 spring cycle. However, since we are not assured of receiving the grant monies and if the HRA wishes to have the project proceed, then it is necessary for the HRA to advance the funds. Richard Murphy also asked at the meeting whether or not the Authority would use half of the grant monies that it might receive to help prepay the Revenue Note. Attached are cash flows that analyze two possibilities. The first option is labeled With Grant Money and is contained in pages numbered 1 through 5 (the handwritten numbers appear in the upper right hand comer). This analysis is similar to the earlier analyses and assumes the following: 1. The HRA would advance $871,763 for the cleanup and the Redeveloper would contribute $84, 377 for the cleanup. SUITE 1100 SOUTHPOINT OFFICE CENTER .1650 WEST 82ND STREET • BLOOMINGTON, MINNESOTA 55431.1447 TELEPHONE 61118855999 • FACSIMILE 6121885 -5969 4 -K 002 . 12/18/98 FRI 12:42 FAX 812 885 5989 BRASS MONROE 2. The Redeveloper would be reimbursed up to $1,200,000 for infrastructure improvements. 3. In the spring, or possibly the fall of the 1999 cycle, the City would receive the full amount of the cleanup grant amounting to $871,763. 4. Fifty percent (50%) or $435,881 would be deducted from the $1,200,000 Revenue Note leaving a balance of $764,119. The payments on the Revenue Note are shown on page 5. In brief; this option has the Authority advancing the funds needed for the cleanup and the Redeveloper advancing the funds needed for the infrastructure. If the Authority is reimbursed for any of the cleanup costs, it will use fifty percent of the reimbursement to prepay the Revenue Note. With a maximum reimbursement, the Revenue Note is reduced to $764,119 and should be paid in approximately 9 %: years. Option II is labeled No Grant Money and is contained in pages 6 through 10. This option assumes the following: The Authority will fluid $871,763 of the cleanup with the Redeveloper funding $84,377 of the cleanup. 2. The Authority will use tax increment to recover the funds it has expended. Column B on page 8 shows the available tax increment to pay the Revenue Note and reimburse the Authority. The total revenues available in Column B are estimated to be $4,214,795. 3. The Revenue Note to the Redeveloper for infiumicture will be $1,200,000. To pay the Revenue Note, the Authority will pledge, as is shown in Column C on page 8, 57.92 percent of the tax increment generated Column D on page 8 demonstrates that if that percentage is pledged through 2015, the Redeveloper can recover the principal of $1,200,000 with interest at 7.5 percent. The payments on the Revenue Note are shown on page 10. In short, Option H has the Authority advancing the cleanup fiords and the Redeveloper advancing the infrastructure funds. There are no grant proceeds so that the Redeveloper will be receiving its $1,200,000 over the life of the tax increment district which is 17 years. Both the Authority and the Redeveloper will have to determine if Option II is feasible. Clearly both parties have additional risk The Authority would provide substantial cash up front in either option but with Option II it would take the Authority 17 years to recover its contribution. Under Option Il it would also take the Redeveloper 17 years to recover its contribution. a Page 2 A-1 lJ 093 12/18/98 FRI 12:42 FAX 812 885 5989 BRASS MONROE 1�jOO4 Tliese two options should represent the best and worst case scenarios. Please note that the Authority has not reviewed these scenarios and these are for discussion purposes only. Please call with any questions or observations. JRCArb Enclosures G- W$MTAIRMDLM1000R{pACY HME 2000 0 Page 3 4 -M 12/18/98 FRI 12:42 FAX 812 885 5989 HRASS MONROE (it 005 6. • M CITY OF FRIDLEY -- r, 6.,j `; 6AACJT- fAaaE 7 T.I.D. #9.ONAN ASSUMPTIONS Original Market Value PIN# 12-41 -0002 1,132,560 sq. ft. @ 1.00 /sq. ft. = 1,132,560. Original Tax Capacity 3.50% 39,640 Estimated Market Value 10,677,414 Land 1.132,560 sq. ft. @ 1.00 /sq. ft. = 1,132,560 - Building 406,164 sq. ft. @ 23.50 /sq. ft. = 9,544.854 Estimated Tax Capacity 3.50% 373,709 Estimated Taxes 406,164 sq. ft, @ 1.21 /sq. ft = 491,973 Constniction 1999 Valuation 2000 Taxes Payable 2001 Admin/Program Fees 25.00% Revenue Note Proceeds to Developer 764,119 63.68% Proceeds to City (If city pays redevelopment costs equal to 50% of grant) 435,882 36.32% Pay 1989 Tax Rate certified tax rate ' 0.97756 ' Pay 1999 Tax Rate - estimate - 1.31646 Inflation 2002/2003 2.00% P. V. Rate 12/01/98 for City Obligations /Debt 7.50% P. V. Rate 12/01/98 for Revenue Note 7.50% r, Onan2.WK4 PREPARED BY KRASS MONROE, P.A. 12/17/98 d.N 12/18/98 FRI 12:42 FAX 612 885 5969 RRASS MONROE CITY OF FRIDLEY T.I.D. 09.ONAN CASH FLOW AND PRESENT VALUE ANALYSIS X1006 (a) (b) ANNUAL (c) > (d) -C (e) -- SEMI - ANNUAL ---- --- -- .- ---. -� ��.____> Original Estimated Captured Estimated (0 Less: (9) Available (h) Cumulative f) G) :--- Present Value ---- Date Tax Capacity Tax Capacity Tax Capacity Tax Increment Admin Fees Tax Increment Avail. Tax Increment Semi Annual Balance -> Cumulative Balance (see assumptions) (c) - (b) (d) x (e) x (e) - (f) Total of (g) P.V. of (g) Total of (i) (Prev. year) 0.97756 25.00% 7.50% 06101198 39,640 39,640 0 0 0 0 0 0 12/01/98 39,640 39,640- 0 0 0 0 0 0 06/01/99 39,640 39,640 0 0 0 0 0 0 12101/99 39,640 39,640 0 0 0 0 0 0 06 /01 /00 39,640 373,709 -- 0 0 0 0 0 0 0 12/01/00 39,640 373,709 0 0 0 0 0 0 0 06/01/01 12/01/01 39,640 39,640 373,709 373,709 334,070 334,070 163,287 40,822 122,465 122,465 101,876 101,876 06/01/02 39,640 381,184 334,070 163,287 163,287 40,822 40,822 122,465 122,465 244,930 367,395 98,194 94,644 200,070 294,714 12/01/02 06/01/03 39.640 39,640 381,184 388,807 334,070 341,544 163,287 166,940 40,822 41,735 122,465 489,860 91,224 385,938 12/01/03 39,640 388,807 341,544 166,940 41,735 125,205 125,205 615,065 740,270 89,894 86,644 475,831 562,476 06/01104 12101/04 39,640 39,640 396,584 396,564 349,168 349,168 170,666 170,666 42,667 42,667 128,000 868,270 85.377 647,852 06/01/05 39,640 404,515 .356,944 174,467 43,617 128,000 130,850 996,269 1,127,120 82,291 81,083 730,143 811,226 12/01105 06/01/06 39,640 39,640 404,515 412,605 356,944 364,876 174,467 178,344 43,617 44,586 130,850 133,758 1,257,970 78.152 889,378 12101/06 39,640 412,605 364,876 178,344 44,586 133,758 1,391,728 1.525,486 77,001 74.218 966,360 1,040,598 06/01/07 12/01/07 39,640 39,640 420,858 420,858 372,966 372,966 182,298 182,298 45,575 45.575 136,724 136,724 1,662,209 1,798,933 73.122 1,113,719 06/01/08 39,640 429,275 381,218 186,332 46,583 139,749 1,938,682 70,479 89,434 1,184,198 1,253,632 12/01/08 06/01/09 39,640 39,640 429,275 437,860 381,218 389,635 188,332 190,446 46,583 47,611 139,749 142,834 2,078,431 66,925 1,320,557 12/01/09 39,640 437,860 389,635 190,446 47,611 142,834 2,221,265 2,364,099 65,930 63,547 1,386,487 1,450,034 08/01/10 12101/10 39,640 39,640 446,617 446,617 398,221 398,221 194,642 194,642 48,661 48,661 145,982 145,982 2,510,081 62,600 1,512,633 06/01/11 39,640 455,550 406,978 198,923 49,731 149,192 2,656,063 2,805,255 60,337 59,435 1,572,970 1,632,406 12/01/11 06101/12 39,640 39,640 455,550 464,661 406,978 415,910 198,923 203,289 49,731 50,822 149,192 152,466 2,954,447 57,287 1,689,692 12/01/12 39,640 464,661 415,910 203,289 50,822 152,466 3,106,913 3,259,380 56,428 54,389 1,746,120 1,800,509 06/01/13 12/01113 39,640 39,640 473,954 473,954 425,021 425,021 207,742 207,742 51,935 51,935 155,806 155,806 3,415,186 53,571 1,854,080 06/01/14 39,640 483.433 434,314 212.284 53,071 159,213 3,570,992 3,730,206 51,635 50,857 1,905,715 1,956,571 12/01/14 06/01/15 39,640 39,640 483,433 493,102 434,314 443,793 212,284 216,917 53,071 54,229 159,213 3,889,419 49,018 2,005,590 12/01/15 39,640 493,102 443,793 216,917 54.229 162,688 162,688 4,052,107 4,214,795 48,278 46,533 2.053,868 2,100,401 5.619,726 1,404,932 4,214 795 4,214 795 2.100.401 2.100,401 Onan2.WK4 PREPARED BY KRASS M tOE. P.A. 12/17/98 12/18/98 FRI 12:43 FAX 612 885 5969 BRASS MONROE Q007 CITY OF FRIDLEY T.I.D. #9 - OMAN PRESENT VALUE ANALYSIS FOR CITY AND REVENUE NOTE Date Available Tax Increment (from Cash Flow Analysis) Available for Revenue Note (b) x 63.68% P. V. Rate Semiannual Cumulative Balance Balance P.V. of (c) Total of (d) 7.50° available for Authority (b) - (c) P. V. Rate Semiannual Cumulative Balance Balance P.V. of (f) Total of (g) 7.50% Total Total Semiannual Cumulative Balance Balance (d) + (9) (e) + (h) 06/01/98 0 0 0 0 0 0 0 0 0 12101/98 0 0 0 0 0 0 0 0 0 06/01/99 0 0 0 0 0 0 0 0 0 12101/99 0 0 0 0 0 0- 0 0 0 06/01/00 0 0 0 0 0 0 0 0 0 12/01/00 0' 0 0 0 0 0 0 0 0 06/01/01 122,465 77,981 64,871 64,871 44,484 37,005 37,005 101,876 101,876 12101101 122,465 77,981 62,526 127,397 44,484 35,667 72,672 98,194 200,070 06 101/02 122,465 77,981 60,266 187,664 44,484 34,378 107,050 94,644 294,714 12101/02 122,465 77,981 58,088 245,752 44,484 33,136 140,186 91,224 385,938 06/01103 125,205 79,726 57,241 302,993 45,479 32,652 172,838 89,894 475,831 12/01/03 125,205 79,726 55,172 358,165 45,479 31,472 204,311 86,644 562,476 06/01/04 128,000 81,506 54,365 412,530 46,494 31,012 235,322 85,377 647,852 12/01/04 126,000 81,506 52,400 464,930 46,494 29,891 265,213 82,291 730,143 06/01105 130,850 83,321 51,631 516,561 47,529 29,452 294,665 81,083 811,226 12/01/05 130,850 83,321 49,765 566,325 47,529 28,388 323,053 78,152 889,378 06101106 133,758 85,172 49,032 615,357 48,585 27,970 351,022 77,001 966,380 12101/06 133,758 85,172 47,260 662,617 48,585 26,959 377,981 74,218 1,040,598 06101/07 136,724 87,061 46,561 709,178 49,663 26,560 404,541 73,122 1,113,719 12/01107 136,724 87,061 44,878 754,056 49,663 25,600 430,142 70,479 1,184,198 06101/06 139,749 20,253 10,063 764,119 119,496 59,372 489,513 69,434 1,253,632 12/01/08 139,749 0 764,119 139,749 66,925 556,438 66,925 1,320,557 06/01/09 142,834 0 764,119 142,834 65,930 622,368 65,930 1,386,487 12/01/09 142,834 0 764,119 142,834 63,547 665,915 63,547 1,450,034 06/01/10 145,982 0 764,119 145,982 62,600 748,514 62,600 1,512,633 12101/10 145,982 0 764,119 145,982 60.337 808,851 60,337 1,572,970 06/01/11 149,192 0 764,119 149,192 59,435 868,287 59,435 1,632,406 12/01111 149,192 0 764,119 149,192 57,287 925,573 57,287 1,689,692 06/01/12 152,466 0 764,119 152,466 56,428 982,001 56,428 1,746,120 12/01/12 152,466 0 764,119 152,466 54,389 1,036,390 54,389 1,800,509 06/01/13 155,806 0 764,119 155,806 53,571 1,089,981 53,571 1,854,080 12101/13 155,805 0 784,119 155,806 51,635 1,141,596 51,635 1,905,715 06/01/14 159,213 0 764,119 159,213 50,857 1,192,452 50,857 1,956,571 12/01/14 159,213 0 764,119 159,213 49,018 1,241,471 49,018 2,005,590 06/01/15 162,688 0 764,119 162,688 48,278 1,289,749 48,278 2,053,868 12/01/15 162,688 0 764,119 162.688 46,533 1,336,282 46,533 2,100,401 4,214795 1,165,751 764,119 764,119 3.049.043 1,336,282 1,336,282 112,100,401 2,100,401 Onan2.WK4 PREPARED BY KRASS MONROE, P.A. 12/17/98 a_D 12/18/98 FRI 12:43 FAX 812 885 5989 BRASS MONROE J0oe • CITY OF FRIDLEY T.l -D, #9 - ONAN SOURCES AND USES SOURCES Tax Increment Present Value Used DTED (75 °!0 of Cleanup & Soil Correction Costs) $956,140 @ 75.00% _ City (Developer Obligation) (Share of Cleanup & Soil Correction Costs) Met Council (Share of Cleanup & Soil Correction Costs) Land Payment 1,132,560 sq. ft. @ 1.20 /sq. ft. _ TOTAL SOURCES USES Land Acquisition 1,132,560 sq. ft. @ 1.00 /sq. ft. Cleanup costs (DTED P Cost) Site Investigation & Remediation Development 111,500 RAP Implementation - Cleanup Costs 474,450 Contingency 20.00% 117,190 Soil Correction, Dewatering (DTED P Cost) Dewatering 65,000 French Drain 155,000 Contingency 15.00% 33,000 Infrastructure Roadway access 207,500 Grading 265,000 Stormwater Treatment / Constructed Wetland 475,000 Sanitary Sewer 30,000 Water Debris on Site 75,000 Propane Tank Explosion Berm 30,000 Contingency 15.00% 40,000 168,375 Professional Fees TOTAL USES SURPLUS / (DEFICIT) 1,200,000 717,105 0 154,658 1,359,072 3,430,835 1,132,560 703,140 253,000 1,290,875 25,000 3,404,575 26,260 Onan2.WK4 PREPARED BY KRASS MONROE, P.A. 12/17/98 4 -Q 12/18/98 FRI 12:43 FAX 812 885 5989 BRASS MONROE X1009 CITY OF FRIDLEY T.I.D. #9 - ONAN TAX INCREMENT REVENUE NOTE Principal Amount Interest Rate Number of Payments Payment Amount Interest Start Date Term of Note 764,119 7.50% 15 semi - annual payments Available Tax Increment 12/01/98 9.5 years Capitalised Date Interest Payment Interest Principal Balance 12/01198 764,119 06/01/99 28,654 0 0 792,773 12/01/99 29,729 0 0 822,502 06 /01 /00 30,844 0 0 853,346 12/01/00 32,000 0 0 885,346 06/01/01 0 77,981 33,200 44,781 840,565 12/01/01 0 77,981 31,521 46,460 794,105 06/01/02 0 77,981 29,779 48,203 745,902 12/01/02 0 77,981 27,971 50,010 695,892 06/01/03 0 79,726 26,096 53,630 642,262 12/01/03 0 79,726 24,085 55,641 586,621. 06/01/04 0 81,506 21,998 59,507 527,113 12101 /04 0 81,506 19,767 61,739 465,374 06/01/05 0 83,321 17,452 65,869 399,505 12/01/05 0 83,321 14,981 68,340 331,165 06/01/06 0 85,172 12,419 72,754 258,412 12/01/06 0 85,172 9,690 75,482 182,930 06/01/07 0 87,061 6,860 80,201 102,729 12/01/07 0 87,061 3,852 83,209 19,520 06/01/08 0 20,253 732 19,521 (1) 121,228 1,165,751 280,404 885,347 Onan2.WK4 PREPARED BY KRASS MONROE, P.A. 12117/98 4 -R 12/18/98 FRI 12:44 FAX 912 885 5989 BRASS MONROE IJO1D CITY OF FRIDLEY T.I.D. 09 - ONAN ASSUMPTIONS Original Market Value PIN# 12-41 -0002 1,132,560 sq. ft. @ 1.00 /sq. ft. = 1,132,560 Original Tax Capacity 3.50% 39,640 Estimated Market Value 10,677,414 Land 1,132,560 sq. ft. @ 1.00 /sq. ft. = 1,132,560 Building 406,164 sq. ft. @ 23.50 /sq. ft. = 9,544,854 Estimated Tax Capacity 3.50% 373,709 Estimated Taxes 406,164 sq. ft. @ 1.21 /sq. ft. = 491,973 Construction 1 999 Valuation 2000 Taxes Payable 2001 Admin/Program Fees Revenue Note Proceeds to Developer (If no grant money is received) Proceeds to City (If no grant money is received) Pay 1989 Tax Rate certified tax rate Pay 1999 Tax Rate - estimate Inflation P. V. Rate P. V. Rate 2002/2003 12/01/98 12/01/98 25.00% 1,200,000 57.92% 871,763 42.08% 0.97756 __ 1.31646 2.00% for City Obligations /Debt 7.50% for Revenue Note 7,50% Onan2w.WK4 PREPARED BY KRASS MONROE, P.A. 12/17198 4 -S 12/18/98 FRI 12:44 FAX 612 885 5969 BRASS MONROE foil CITY OF FRIDLEY T.I.D. 89 - ONAN CASH FLOW AND PRESENT VALUE ANALYSIS 06/01/98 ANNUAL 39,640 0 0 SEMI - ANNUAL ---- --..�. > 12101/98 39,640 (a) (b) (c) (d) (e) M (9) (h) 39,640 39,640 Original Estimated Captured Estimated Less: Available Cumulative .-- Present Value ----.> Tax Tax Tax Tax Admin Tax Avail. Tax Semi Annual Cumulative Date Capacity Capacity Capacity Increment Fees Increment Increment Balance Balance (see assumptions) (c) - (b) (d) x (e) x (e) - (f) Total of (g) P.V. of (g) Total of (1) 40,822 122,465 (prev, year) 0.97756 25.00% 373,709 334,070 750% 40,822 06/01/98 39,640 39,640 0 0 0 0 0 12101/98 39,640 39,640 0 0 0 0 0 06/01/99 39,640 39,640 385,938 0 0 0 0 12/01/99 39,640 39,640 730,143 0 0 0 0 06 /01 /00 39,640 373,709 0 0 0 0 0 12101/00 39,640 373,709 0 0 0 0 0 06101101 39,640 373,709 334,070 163,287 40,822 122,465 122,465 12/01/01 39,640 373,709 334,070 163,287 40,822 122,465 244,930 06/01/02 39,640 381,184 334,070 183,287 40,822 122,465 367,395 12/01/02 39,640 381,184 334,070 163,287 40,822 122,465 489,860 06/01/03 39,640 388,807 341,544 166,940 41,735 125,205 615,085 12/01/03 39,640 388,807 341,544 166,940 41,735 125,205 740,270 06/01/04 39,640 396,584 349,168 170,666 42,667 128,000 868,270 12101/04 39.640 396,584 349,168 170,666 42,867 128,000 996,269 06101105 39,640 404,515 358,944 174,467 43,617 130.850 1,127,120 12/01/05 39,640 404,515 356,944 174,467 43,517 130,850 1,257,970 06/01/06 39,640 412,805 364,876 178,344 44,586 133,758 1,391,728 12101/06 39,640 412,605 364,876 178,344 44,586 133,758 1,525,486 06/01/07 39,640 420,858 372,966 182,298 45,575 136,724 1,662,209 12101/07 39,640 420,858 372,966 182,298 45,575 136,724 1,798,933 06/01/08 39,640 429,275 381,218 186,332 46,583 139,749 1,938,682 12/01/08 39,640 429,275 381,218 188,332 46,583 139,749 2,078,431 06/01/09 39,640 437,860 389,635 1901446 47,611 142,834 2,221,265 12101/09 39,640 437,860 389,835 190,446 47,611 142,834 2,364,099 06101/10 39,640 446,617 398,221 194,642 48,661 145,982 2,510,081 12101110 39,640 446,617 398,221 194,642 48,661 145,982 2,656,063 06101/11 39,640 455,550 408,978 198,923 49,731 149,192 2,805,255 12/01/11 39,840 455,550 406,978 198,923 49,731 149,192 2,954,447 06101/12 39,640 464,661 415,910 203,289 50,822 152,466 3,106,913 12101/12 39,640 484,661 415,910 203,289 50,822 152,466 3,259,380 08/01/13 39,640 473,954 425,021 207,742 51,935 155,806 3,415,186 12/01113 39,640 473,954 425.021 207,742 51,935 155,806 3,570,992 06/01/14 39,640 483,433 434,314 212,284 53,071 159,213 3,730,206 12/01114 39,640 483,433 434,314 212,284 53,071 159,213 3,889,419 06/01115 39,640 493,102 443,793 216,917 54,229 162,688 4,052,107 12/01/15 39,640 493,102 443,793 216,917 54,229 162,888 4,214,795 5,619}726 1,404.932 4,214,795 4.214,795 0 0 0 0 0 0 0 0 0 0 0 0 101,876 101,876 98,194 200,070 94,644 294,714 91,224 385,938 89,894 475,831 86,644 562,476 85,377 647,852 82,291 730,143 81,083 811,226 78,152 889,378 77,001 966,380 74,218 1,040,598 73,122 1,113,719 70,479 1,184,198 69,434 1,253,632 66,925 1,320,557 65,930 1,386,487 63,547 1,450,034 62,600 1,512,633 60,337 1,572,970 59,435 1,632,406 57,287 1,689,692 56,428 1,746,120 54,389 1,800,509 53,571 1,854,080 51,635 1,905,715 50,857 1,956,571 49,018 2,005,590 48,278 2,053,868 46,533 2,100,401 _ 2,100,401 2,100,401 Onan2w.WK4 PREPARED BY KRASS MONROE, P.A. 12/17198 A -T 12/18/98 FRI 12:44 FAX 612 885 5969 RRASS MONROE Z012 CITY OF FRIDLEY T.LD. #9 - ONAN PRESENT VALUE ANALYSIS FOR CITY AND REVENUE NOTE Date Available Tax Increment (from Cash Flow Analysis) Available for Revenue Note (b) x 57.92% P. V. Rate Semiannual. Cumulative Balance Balance P.V. of (c) Total of (d) 7.50% Nvallable for Authority (b) - (c) P. V. Rate Semiannual Cumulative Balance Balance P.V. of (f) Total of (g) 7.50 %, Total Total Semiannual Cumulatvvf Balance Balance (d) + (g) (e) + (h) 06/01/96 0 0 0 0 0 0 0 0 0 12/01198 0 0 0 0 0 0 0 0 p 06/01/99 0 0 0 0 0 0 0 0 p 12101/99 0 0 0 0 0 0 0 p 0 06/01/00 0 0 0 0 0 0 0 0 p 12101/00 0 0 0 0 0 0 0 0 0 06/01/01 12101/01 122,465 122,465 70,934 70,934 59,008 56,875 59,008 115.884 51,531 42,866 42,868 101,876 101,876 06/01/02 122,465 70,934 54,820 170,703 51,531 51,531 41,318 39,825 84,186 124,011 98,194 94,644 200,070 294,714 12/01/02 06/01/03 122,465 125,205 70,934 72,521 52,838 52,068 223,542 275,609 51,531 52,684 38,385 162,396 91,224 385,938 12101/03 125,205 72,521 50,186 325,795 52,684 37,826 36,458 200,222 236,680 89,894 86,644 475,831 562,476 06/01/04 12/01104 128,000 128,000 74,140 74,140 49,452 47,664 375,247 422,911 53,860 53,860 35,925 272,605 85,377 647,852 06/01/05 12101/05 130,850 75,791 46,965 469,876 55,060 34,627 34,118 307,232 341,350 82,291 81,083 730,143 811,226 06/01/06 130,850 133,758 75,791 77,475 45,267 44,600 515,143 559,743 55,060 56,283 32,885 374,235 78,152 689,378 12/01/06 08/01/07 133,758 77,475 42,988 602,732 56,283 32,401 31,230 406,636 437,666 77,001 74,218 966,380 1,040,598 12/01/07 136,724 136,724 79,193 79,193 42,353 40,822 645,085 685,907 57,531 57,531 30,768 29,656 488,634 73,122 1,113,719 06/01/08 139,749 80,945 40,218 726,125 58,804 29,217 498,291 527,507 70,479 69,434 1,184,198 1,253,632 12/01/08 06/01/09 139,749 142,834 80,945 82,732 38,764 38,188 764,889 803,077 58,804 28,161 555,668 66,925 1,320,557 12/01/09 142,834 82,732 36,807 839,884 60,102 60,102 27,742 26,739 583,410 810,150 65,930 63,547 1,386,487 1,450,034 06101/10 12/01/10 145,982 145,982 84,555 84,555 36,259 34,948 876,143 911,091 61,427 26,341 .636,491 62,600 1,512,633 06/01/11 149,192 86,414 34,426 945,517 61,427 62,777 25,389 25,009 661,879 686,889 60,337 59,435 1,572,970 1,632,406 12101/11 08101/12 149,192 152,466 86,414 88,311 33,181 32,684 978,698 1,011,382 62,777 84,155 24,105 710,994. 57,287 1,689,692 12/01/12 06/01/13 152,466 88,311 31,503 1,042,885 64,155 23,744 22,886 734,738 757,624 56,428 54,389 1,746,120 1,800,509 12/01/13 155,806 155,806 90,246 90,246 31,029 29,908 1,073,914 1,103,822 65,561 22,542 780,166 53,571 1,854,080 06/01/14 159,213 92,219 29,457 1,133,279 65,561 66,994 21,727 21,400 801,893 823,292 51,635 50,857 1,905,715 1,956,571 12101/14 06/01/15 159,213 162.688 92,219 94,232 28,392 27,963 1,181,671 1,189,635 66,994 68,456 20,626 843,918 49,018 2,005,590 12/01/15 162,688 36,239 10,365 1,200,000 126,449 20,315 38,168 864,233 900,401 48,278 46,533 2,053,868 2,100,401 4.214,795 2,383,287 1,200,000 1.200,000 1,831.507 900.401 900.401 2,100,401 2 100 401 Onan2w.WK4 PREPARED BY KRgS pAQNROE, P.A. 12/17/98 12/18/98 FRI 12:45 FAX 612 885 5969 BRASS MONROE 901-3 CITY OF FRIDLEY T.I.D. #9 - ONAN SOURCES ANb USES SOURCES Tax Increment Present Value Used DTED (75% of Cleanup & Soil Correction Costs) $956,140 @ 75.00% _ City (Developer Obligation) (Share of Cleanup & Soil Correction Costs) Met Council (Share of Cleanup & Soil Correction Costs) Land Payment 1,132,560 sq. ft. @ 1.20 /sq. ft. _ TOTAL SOURCES USES Land Acquisition 1,132,560 sq. ft. @ 1.00 /sq. ft. Cleanup costs (DTED P Cost) Site Investigation & Remediation Development 111,500 RAP Implementation - Cleanup Costs 474,450 Contingency 20.00% 117,190 Soil Correction, Dewatering (DTED P Cost) 30,000 Dewatering 65,000 French Drain 155,000 Contingency 15.00% 33,000 Infrastructure Roadway access 207,500 Grading 265,000 Stormwater Treatment / Constructed Wetland 475,000 Sanitary Sewer 30,000 Water 75,000 Debris on Site 30,000 Propane Tank Explosion Berm 40,000 Contingency 15.00% 168,375 Professional Fees TOTAL USES SURPLUS / (DEFICIT) 1,200,000 717,105 0 154,658 1,359,072 3,430,835 1,132,560 703,140 253,000 1,290,875 25,000 3,404,575 26,260 Onan2w.WK4 PREPARED BY KRASS MONROE, P.A. 12/17/98 12/18/98 FRI 12:45 FAX 812 885 5989 BRASS MONROE 014 CITY OF FRIDLEY T.I.D. #9 - ONAN TAX INCREMENT REVENUE NOTE Principal Amount Interest Rate Number of Payments Payment Amount Interest Start Date Term of Note 1,200,000 7.50% 30 semi - annual payments Available Tax Increment 12101/98 17.0 years Capitalized - Date Interest Payment Interest Principal Balance 12/01 /98 1,200,000 06/01199 45,000 0 0 1,245,000 12/01 /99 46,688 0 0 1,291,688 06/01 /00 48,438 0 0 1,340,126 12/01/00 50,255 0 0 1,390,380 06/01 /01 0 70,934 52,139 18,795 1,371,586 12/01 /01 0 70,934 51,434 19,499 1,352,087 06/01/02 0 70,934 50,703 20,231 1,331,856 12/01/02 0 70,934 49,945 20,989 1,310,867 06/01/03 0 72,521 49,158 23,363 1,287,504 12/01/03 0 72,521 48,281 24,239 1,263,264 06/01/04 0 74,140 47,372 26,767 1,236,497 12101/04 0 74,140 46,369 27,771 1,208,726 06/01105 0 75,791 45,327 30,463 1,178,263 12/01/05 0 75,791 44,185 31,606 1,146,657 06/01/06 0 77,475 43,000 34,475 1,112,182 12/01/06 0 77,475 41,707 35,768 1,076,414 06/01/07 0 79,193 40,366 38,827 1,037,586 12/01/07 0 79,193 38,909 40,283 997,303 06/01 /08 0 80,945 37,399 43,546 953,757 12/01/08 0 80,945 35,766 45,179 908,578 06/01/09 0 82,732 34,072 48,660 859,918 12101/09 0 82,732 32,247 50,485 809,433 06101/10 0 84,555 30,354 54,201 755,231 12/01/10 0 84,555 28,321 56,234 698,998 06/01/11 0 86,414 26,212 60,202 638,795 12/01 /11 0 86,414 23,955 62,460 576,336 06/01/12 0 88,311 21,613 66,699 509,637 12/01/12 0 88,311 19,111 69,200 440,438 06/01/13 0 90,246 16,516 73,729 366,708 12/01/13 0 90,246 13,752 76,494 290,214 06/01/14 0 92,219 10,883 81,336 208,878 12101/14 0 92,219 7,833 84,386 124,492 06/01/15 0 94,232 4,668 89,563 34,929 12/01/15 0 36,239 1,310 34,929 (0) 190,380 2,383,287 992,907 1,3901380 Onan2w.WK4 PREPARED BYMMONROE, P.A. 12/17/98 12/23/98 WED 12:21 FAX 612 885 5969 BRASS MONROE CITY OF FRIDLEY /V,G T.I.D. #9 - ONAN ANNUAL DISTRIBUTION OF TAXES 12 002 c R 4 cv, ina N F- ,y (a) (b) (c) (d) (e) (0 (9) - _6T Total Original Base Taxes +Taxes Over Certified Rate Available for Available for Property School Other Taxing Authority Revenue Note Taxes Paid District County City Jurisdictions 1 st 25% of Prior Yr Tax Portion Portion Portion Portion Tax Increment Avail. Tax Date Capacity x Taxes Not Captured by TIF District x + remainder Increment x 1.316459 50.6% 26.7% 15.2% 7.5% after Rev Note 57.92% 06/01/98 12/01/98 06/01199 0 0 12/01 /99 0 0 06/01/00 0 0 12/01/00 0 0 06/01/01 245,987 41,844 22,087 12,562 6,207 92,353 70,934 12/01/01 245,987 41,844 22,087 12,562 6,207 92,353 70,934 06/01/02 245,987 41,844 22,087 12,562 6,207 92,353 70,934 12/01102 245,987 41,844 22,087 12,562 6,207 92,353 70,934 06/01/03 250,906 42,485 22,426 12,754 6,302 94,419 72,521 12/01/03 250,906 42,485 22,426 12,754 6,302 94,419 72,521 06/01/04 255,924 43,138 22,771 12,951 6,399 96,527 74,140 12/01/04 255,924 43,138 22,771 12,951 6,399 96,527 74,140 06/01/05 261,043 43,805 23,123 13,151 6,498 98,676 75,791 12/01 /05 261,043 43,805 23,123 13,151 6,498 98,676 75,791 06/01/06 266,264 44,485 23,482 13,355 6,598 100,869 77,475 12/01/06 266,264 44,485 23,482 13,355 6,598 100,869 77,475 06/01/07 271,589 45,179 23,848 13,563 6,701 103,106 79,193 12/01/07 271,589 45.179 23,848 13,563 5,701 103,106 79,193 06/01/08 277,021 45,886 24,221 13,776 6,806 105,387 80,945 12/01/08 277,021 45,886 24,221 13,776 6,806 105,387 80,945 06/01/09 282,561 46,608 24,602 13.992 6,913 107,714 82,732 12101/09 282,561 46,608 24,602 13,992 6,913 107,714 82,732 06/01/10 288,213 47,344 24,991 14,213 7,022 110,087 84,555 12/01/10 288,213 47,344 24,991 14,213 7,022 110,087 84,555 06/01/11 293,977 48,095 25,387 14,439 7,134 112,508 86,414 12/01/11 293,977 48,095 25,387 14,439 7,134 112,508 86,414 06/01/12 299,856 48,860 25,791 14,669 7,247 114,977 88,311 12/01/12 299,856 48,660 25,791 14,669 7,247 114,977 88,311 06/01/13 305,853 49,642 26,204 14,903 7,363 117,496 90,246 12/01/13 305,853 49,642 26,204 14,903 7,363 117,496 90,246 06/01/14 311,971 50,438 26,624 15,142 7,481 120,065 92,219 12101 /14 311,971 50,438 26,624 15,142 7,481 120,065 92,219 06/01/15 318,210 51,251 27,053 15,386 7,602 122,686 94,232 12/01/15 318,210 51,251 27,053 15,386 7,602 180,678 36,239 8.35023, 1,381,805 729,392 414 838 204.a§?L 3,236,439 2.383,287 As % of Total Prop. Taxes Paid 16.5% 8.7% 5.0% 2.5% 38.8% 28.5% As % of Total Tax Increment Generated: 57.6% 42.4% Onan2w.WK4 Prepared by Krass Monroe, P.A. 12/23/98 4 -X 12/23/98 WED 12:21 FAX 812 885 5989 BRASS MONROE X1003 CITY OF FRIDLEY G�AvjY maNTW T.I.D. #9 - ONAN ANNUAL DISTRIBUTION OF TAXES (a) (b) (c) (d) (e) M (9) (i) Total Original Base Taxes +Taxes Over Certified Rate Available for Available for Property School Other Taxing Authority Revenue Note Taxes Paid District County City Jurisdictions 1st 25% of Prior Yr Tax Portion Portion Portion Portion Tax Increment Avail. Tax Date Capacity x Taxes Not Captured by TIF District x + remainder Increment x 1.316459 50.5% 26,7% 15.2% 7.5% after Rev Note 63.68% 06/01/98 12/01/98 06/01199 0 0 12101/99 0 0 06/01100 0 0 12/01100 0 0 06/01/01 245,987 41,844 22,087 .12,562 6,207 85,305 77,981 12/01/01 245,987 41,844 22,087 12,562 6,207 85,305 77,981 06/01/02 245,987 41,844 22,087 12,562 6,207 85,305 77,981 12/01/02 245;987 41,844 22,087 12,562 6,207 85,305 77,981 06/01/03 250,906 42,485 22,426 12,754 6,302 87,214 79,726 12/01/03 250,906 42,485 22,426 12,754 6,302 87,214 79,726 06/01/04 255,924 43,138 22,771 12,951 6,399 89,160 81,506 12/01104 255,924 43,138 22,771 12,951 6,399 89,160 81,506 06/01/05 261,043 43,805 23,123 13,151 6,498 91,146 83,321 12/01/05 261,043 43,805 23,123 13,151 6,498 91,146 83,321 06/01/06 266,264 44,485 23,482 13,355 6,598 93,171 85,172 12/01/06 266,264 44,485 23,482 13,355 6,598 93,171 85,172 06/01107 271,589 45,179 23,848 13,563 6,701 95,237 87,061 12101/07 271,589 45,179 23,848 13,563 6,701 95,237 87,061 06/01/08 277,021 45,886 24,221 13,776 6,806 166,079 20,253 12/01/08 277,021 45,886 24,221 13,776 6,806 186,332 0 06/01/09 282,561 46,608 24,602 13,992 6,913 190,446 0 12/01/09 282,561 46,608 24,602 13,992 6,913 190,446 0 06/01/10 288,213 47,344 24,991 14,213 7,022 194,642 0 12/01/10 288,213 47.344 24,991 14,213 7,022 194,642 0 06/01/11 293,977 48,095 25,387 14,439 7,134 198,923 0 12/01111 293,977 48,095 25,387 14,439 7,134 198,923 0 06/01/12 299,856 48,860 25,791 14,669 7,247 203,289 0 12/01/12 299,856 48,860 25,791 14,669 7,247 203,289 0 06/01/13 305,853 49,642 26,204 14,903 7,363 207,742 0 12/01/13 305,853 49,642 26,204 14,903 7,363 207,742 0 06/01114 311,971 50,438 26,624 15,142 7,481 212,284 0 12/01/14 311,971 50,438 26,624 15,142 7,481 212,284 0 06/01/15 318,210 51;251 27,053 15,386 7,602 216,917 0 12/01/15 318,210 51,251 27,053 15,386 7,602 216,917 0 8,350,723 1,381,805 729,392 414,838 204,962 4,453.975 1,1651751 0 As % of Total Prop. Taxes Paid 16.5% 8.7% 5.0% 2.5 % 53.3% 14.0% As % of Total Tax Increment Generated: 79.3% 20.7% Onan2.WK4 Prepared by Krass Monroe, P.A. 12/23/98 4 -Y 01 Did o UT-01W�� HOUSING AND REDEVELOPMENT DATE: December 28, 1998 AUTHORITY TO: William W. Bums, Executive Director of HRA A4 FROM: Barbara Dacy, Community Development Director Grant Femelius, Housing Coordinator SUBJECT: Update on Housing Program Evaluation Report Surveys In late November a written survey was mailed to 285 families who have participated in the HRA's housing program. The survey included all participants dating back to 1993. As of last week, 119 (41 %) of the surveys were returned. In addition, a separate survey was mailed to residents in the Hyde Park neighborhood. So far, 31 of 139 surveys (22 %) have been returned. Ben Martig, Housing Intern, is in the process of tabulating the survey results. A full report of the findings will be ready for the February HRA meeting. Personal Interviews In addition, staff has scheduled a number of personal interviews with respon- dents. The purpose of the personal interview is to get individual perspectives on the program. Follow -up questions will be asked to help expand on the issues from the written survey. The interviews will be videotaped and presented at the February HRA meeting as well. ttuxerur*Tmaro =0H At the December 3, 1998 meeting, the HRA requested additional information on the This Old House property tax. program. Ben Martig met with the City Assessor's office and Anoka County officials to learn more about the program. A separate memorandum is attached with more information. M -98 -247 5 rt MEMORANDUM HOUSING-DIVISION- TO: Barbara Dacy, Community Deveiopment Director Grant Femelius, Housing Coordinator FROM: Ben Martig, Housing and Special Projects Intern DATE: 12/22/98 RE: "This Old House" Program Background At the December 3'd HRA meeting, staff presented an update regarding the progress of the City home rehabilitation loan and grant program evaluation. One of the items discussed was the "This Old House" program. The HRA requested information on the program including examples of how the program works, eligible properties in the City, and the number of households that have participated. The following memo provides a description of the program, a case example of the tax benefits to a homeowner, the City's current marketing of the program, and the number of eligible properties and participants. Program Summary The This Old House program was established by the Minnesota Legislature in 1993. The program provides a property tax break on the increased market value of home improvements made to homes at least 35 years of age. The City's housing stock includes 4,495 eligible homes in the 35 -70 year category and 26 homes eligible in the over 70 year category. One hundred and thirty -three (133) residents have taken advantage of the program since it was established in 1993. The following is a list of eligibility guidelines and benefits of the This Old House program: • The property must be owner - occupied. • A minimum of $1,000 worth of improvements must be made to the home or garage. Landscaping, swimming pools, or normal upkeep such as roofing and painting are not eligible. y 5 -A • Up to three improvement projects can be included over a ten year period. • ' If the home is more than 70 years old, the owner qualifies for a property tax exclusion equal to the entire amount of the increase in the home's value, up to $50,000. • If the home is 35 to 70 years old, the owner qualifies for an exclusion equal to half of the increase in value, up to $25,000. • If the home is sold within the 15 -year grace period, the real estate agent is responsible for informing the new homeowner of the increased property tax (the deferred tax break is not transferable to a new owner). Current Program Marketing In general, residents are informed of the program after they receive a building permit. The building inspector will inform the resident that they may be eligible for a tax break. A pamphlet is distributed that contains an overview of the eligibility guidelines and benefits. The remodeling advisor also promotes the program during his appointments. The City's assessor reviews the building permits and visits the home to determine if the market value has changed due to the improvements. If the value has changed, the assessor will let the resident know about the This Old House program and provides them with an application. The assessor mails the completed application to the County for approval. Once the County reviews and verifies the application, a copy is sent back to the City for their records. From the assessors experience, most of the people who did qualify for the tax break were not aware of this added benefit. Case Example The subject property, located at 1630 66th Ave. NE, was improved this year and determined to be eligible for the program. The house was built in 1953, meaning it falls into the 35 to 70 year old category. The benefits include an exclusion of property taxes for ten years due to half of the value of the home improvement. After the ten years, 20% of the deferred value will be added to the home each year. By the fifteenth year, the entire value of the improvement will have been added to the home. The estimated total cost of the project was $25,000. The home improvements specified on the building permit include a three - season porch addition to the back of the house, new roof shingles, and minor roof repair above the dining room. The assessor determined that the three - season porch addition will add $6,134 of value to the home. The new shingles and roof repair are considered normal upkeep items which will not add value to the home and therefore are not eligible. Using the tax capacity rates for 1998, staff was able to forecast the amount of tax money saved by participating in the program. These numbers will vary depending 5 -B changes, such as increases in the percent taxable on the market value of the home, the local tax rate, and /or school district referendum levy's. Over a 15 -year period, the estimated total taxes paid with the tax deferment would be $23,657.64. Without the deferment, the estimated taxes would be $24,460.80. The total savings in taxes through the This Old House program equals $803.16 less in taxes or $63.93 less for the first ten years, $53.54 less the eleventh year, $40.17 less the twelfth year, $26.77 less the thirteenth year, and $13.38 less the fourteenth year. Although the tax deferment under the This Old House does lower tax costs, it is still can be very expensive for home owners to make a large home improvement investment in their home. Those projects which receive the most benefit through the This Old House program are major projects including remodeling, building additions, and adding a new garage. The decision to make the improvement is not likely to be heavily influenced by tax savings due to the high costs of these projects. A combination of City loans and the This Old House tax deferment can provide significant savings for larger projects. However, only 17 residents have taken part in both the This Old House program and a City loan or grant. Please inform staff if you desire any additional information. 5 -C DATE: December 23, 1998 I �� �� L 1 HOUSING Ae 1 REDEVELOPMENT AUTHORITY TO:. William Bums, Executive Director of HRA ,f 4V FROM: Barbara Dacy, Community Development Director SUBJECT: Medtronic Update Development Contract A black lined draft of the development contract was returned to staff from Medtronic on December 21, 1998. Jim Casserly and I are now in the process of reviewing the proposed changes to the contract. After our review, we will schedule a meeting with Medtronic the second week of January. An update will be provided to the HRA at Thursday's meeting regarding the proposed changes that were suggested by Medtronic. AUAR (Alternative Urban Area Wide Review) Process In the meantime, staff has been working diligently with Medtronic's consultant to prepare a draft of the AUAR for the Lake Pointe Corporate Center. The AUAR will be sent to the reviewing agencies the week of January 4, 1999. A 30 day comment period would then ensue expiring on February 10, 1999. The major findings of the AUAR are as follows: • The AUAR proposes the most intensive development as follows: 1,450,000 square feet of office /research & development, 100,000 square feet of light industrial, 10,000 square feet of restaurant, 40,000 square feet of motel • The phasing of the site development is assumed at a worst case scenario of full build -out by 2009 with the phasing of the development in four increments of 400,000 square feet each. Phase One would be completed by the year 2001, Phase Two L� Medtronic Update December 23, 1998 Page 2 would be completed in 2004, Phase Three would be completed in 2007, and Phase Four would be completed by 2009. • The existing Lake Pointe Drive is proposed to be removed so that the site can be fully utilized for the development. Bridgewater Drive is proposed to be reconstructed along the north side of the property and would intersect 7t' Street at the northwest -comer of the site as opposed to the existing intersection location at the southwest comer of the site. Although the location for the Phase One development has not been identified, the AUAR indicates that the connection to r Street from Bridgewater Drive will be made prior to Phase Two construction. There are no significant air quality impacts which require mitigation. There are two intersections which will operate at a level of Service E or F in the year 2010: => TH 65 /1-ake Pointe Drive /Central Avenue =:> TH 47 and 1 -694 South ramps The construction of an additional northbound and southbound lane on Highway 65 from 1 -694 to approximately the 63 d Avenue intersection may be considered as a possible mitigation alternative to address the level of service problem at that intersection. The lane addition could be accomplished without the need to fill Moore Lake by constructing sheet pile retaining walls on either side of the roadway. A cost estimate is currently being prepared by Medtronic's consultant. • A sewer line in 57' Avenue to the west of the site must either be removed and replaced with a larger sewer line or an additional sewer line must be installed prior to construction of Phase Two. The Indirect Source Permit application is also being prepared at this time and will be submitted to MPCA for its review. Approximately 6,200 parking spaces could ultimately be constructed on the campus, both in structured and surface parking. The air quality results show that state thresholds are not being exceeded. A copy of the draft concept plan contained in the AUAR is attached. No action is needed by the HRA at this time. BD:Is M -98 -259 6 -A I V D D r C F Q. o D S (D m N n N 3 0 m Q. T m 'O o; � O O D N O b O. D r d 7 Q _M W [t1 MEMORANDUM HOUSING REDEVELOPMENT ...- 11 DATE: December 28, 1998 AUTHORITY TO: William W. Bums, Executive Director of HRA 4N Y FROM: Barbara Dacy, Community Development Director Grant Femelius, Housing Coordinator SUBJECT: Update on Design and Development Issues for Scattered Site Program Design Issues The scattered site program has been very successful in replacing old deteriorated housing with new modem homes. Staff has worked with a number of scattered site builders on house design suggestions and modifications. In fact, staff recently rejected a proposed split level design on the Mississippi Street lot. One of the observations staff has made regarding the program is the fact that builders have been extremely cautious about innovations in the design of their scattered site homes. That is not to say that we are unhappy with, or not proud of, the homes that have been built. It has, however, caused staff to evaluate what can be done to encourage house designs which do not replicate the typical "suburban" tract houses from the outer ring cities. When asked to minimize the impact of garages or to avoid "cookie cutter" house designs, builders have responded with: • "We need to keep the price of the surrounding homes in perspective." • '"We know this floor plan sells." • "We have built many homes like this one." • 'We have built enough of these plans to know exactly what it costs to build it and what our margins are." Knowing what builders and developers are experiencing in the marketplace is important, but these comments and philosophies don't mean that we can't encourage innovative and attractive designs. Attached are several sample plans that typify the design issues staff would like to pursue. 7 Update on Design and Development Issues for Scattered Site Program December 28, 1998 Page 2 A Need for Move -Up Housing In addition to these design issues, there will be an increasing demand for "move -up" housing, given the onset of Medtronic development. Offering "move -up" housing accomplishes at least three objectives: r_ 1. Keeps residents from moving by- effering-another housing choice. 2. Gives up existing affordable houses to others. 3. Provides another housing choice for new households to move into Fridley. A prime opportunity to provide a move -up opportunity for housing is the scattered site lot at 1015 Mississippi Street. The site dimensions of 250 ft. x 107 ft. (26,750 sq. ft.), combined with mature trees and solid established homes in the area, make this a strong candidate for an innovative scattered site solution. A typical split entry $115,000- 125,000 home on this lot would be a lost opportunity to showcase what can be done when these lots become available. Suggested Approach We plan to meet with Robert Gerloff, the architect who is drafting the multi -city remodeling guide, on January 7, 1999, to discuss our design issues and, in particular, to address the design of a house on the Mississippi Street lot. From that meeting, we may ask the HRA to authorize staff to enter into an agreement with Gerloff to draft a set of house plans to take out to builders and realtors for feedback. At that point, we would with either solicit development proposals or possibly the HRA could act as its own developer. In the meantime, we plan to take the Mississippi St. lot off the market and keep this site in the inventory for a model project. Some of the design ideas could then be replicated at other future sites. We will update the HRA on Thursday with the results of our meeting with Gerloff. M -98 -248 7 -A i �*<iIIIE1111 111"', 147"7- -­7 11A AWN .......... Fl V F YA, Jam, 14P LI ME-- LI . FAIr P. "07 1 ' I I " � � �•- %i/ •gyp% i d '" �� I j,l dig) is I Design AA2661 First Floor: 1,020 square feet Second Floor: 777 square feet Total: 1,797 square feet Width 34' Depth 30' • Any other starter hcsu >-c or r_cir�n er;: c:. •: , couldn't have more charm than this lc� com- I pact fame houses a very livable rlan. An outsanding feature of the first floor is the lar_e O-Untry kitchen. lt: fine attractions include a beamed .eilin . raised- hearth fireplace, built-in windon• seat anki : -..;ot -r :e.tn:it:1 to the outdoors. A li% inn room is in the grunt of the plan Iand has another fireplace which shartw the single I chimney. The rear dormered second floor houses the sleeping and bath facilities. For information on customizing this design, call 1 --400 -322 -6797, ext. 500. I; BATH ' O 84TH (1 38 7 -C MR , a h'tii R w� Design by Home Planners, Inc. s. Design AA3316 First Floor: 1 11 : Second 'Floor: S86 Total: 1.997 squa- Width 32• -8'* Oeptti 513* $us= Ow 43, exterior. This offers three and plenty of living space. plan Notice that the -pooch leads to a rear terrace access to the breakfast room.: living room/dining with adds spaciousness to the first floor. room combination FM: -16 x 10 LFPER B;EAOASI 4A am T. $us= Ow 43, •y Design AA9117 Square Footage: 1,035 Width 27' Depth 42' -4 r" • This quaint, cozy cottage serves a even make a great primary residence varietv of needs. It could be used as for a single person or a couple. It's a second home or leisure get - away; fine detailing and traditional fea- it could he the perfect guest hruSr " tures make it a favorite with mother -in -law cottage; or it may everyone. Bedroom 1 WIDTH 27' a• O o� Op� Opy �., �q'b��O Rl�,ilC+p.�0 G , 11' -4' x 13' 40" ���4� �0 $WSJ p� o?la9D�' V V i0 DEPTH 42' -4^ •o�e NO, �,4 I r •• oar 80� ''A French door 5' -4' x 13' r" • This quaint, cozy cottage serves a even make a great primary residence varietv of needs. It could be used as for a single person or a couple. It's a second home or leisure get - away; fine detailing and traditional fea- it could he the perfect guest hruSr " tures make it a favorite with mother -in -law cottage; or it may everyone. Bedroom 1 WIDTH 27' 11' -4' x 13' DEPTH 42' -4^ I Attic Storage French door 5' -4' x 13' • I O O 6' wall Bath 5 -4' wall Porch • � a 6' d 6' x 18' �' 0 O 00 i_ oo sloped clg. Bath Kitchen serving 1.1'- -4'. -. counter dn.. Loft M l • 9' -4' x 13' athedral cig. • Living Dining 12' x 13' 9' x 11' French door - Design Bedroom 2' a' wan 1bAy/ Larry 12' a_ x,�10 ,�:•;h.�� Garnett & I • I-, - sloped cl p g' Associates, Inc. 7 -E I/ A /1TO. C'7 Srle3 �," :'.:: % /, %1��i,�;:i%snst�:.' � ' - • -.fir :r,►�?„ �u>arb,�r�� Design AA8953 Square Footage: 1,530 Width 30' -6" Depth 82' • Bricks and shingles lend a winsome air to this two-bedroom design. A gated porch brings visitors to the foyer; a large living room opens from here. A study backs up the living room with three skylights and built -in bookshelves. A French door leads from the dining room to a terrace outside. The kitchen, with its wet bar to the study, has direct access to the dining room. With two bedrooms, nothing is spared. The master suite, with its front- facing window, has a cathedral ceiling, a walk -in closet and a bath with a double -bowl vanity. Bedroom 2 remains at the other end of the house and also features a cathedral ceiling. A full bath with glass block is located across the hall. Design by Larry W. Garnett & Associates, Inc. 74 z- Vz- rko O O Bedroom 2 Q Bath 14' -4' x 11' -8' Q 71 u�.n C Master Bedroom 15' -8' x 13' - 28' Bedroom 3 11' -4' x 10' French Door i OQ Dining Kitchen 12' x 11' L J Stor. cap tRil L Bath Design by Foyer Larry W. Garnett & Associates, Inc. r -; Garage Living Room 15' -8' x 20' i FUe*ce ing Are 7 -G ta Design AA8956 e. First Floor: 845 square feet Second door: 845 square Total: 1.690 square feet Width 23' Depth 42' -4- 0 An angled staircase lends diversity to this three- bedroom plan. The large living room, with a front - facing sitting area, affords amenities such as a fire- place and lots of wall space for vari- ous furniture arrangements. The roomy kitchen features a comer sink and bar that services the dining room. Here you'll find a French door open- ing to the rear yard. A storage closet accommodates odds and ends. With a powder room and a utility area accessing the garage, the first floor meets the family's needs well. The sec- ond floor offers two family bedrooms that share a full bath, and a master bedroom that boasts a fine angled bath. With a double -bowl vanity, com- partmented toilet and comer spa tub, this bath easily competes with today's finest. 7 e �t X ill Design AA9174 =ir;; door: 6.30 souare feet Second Floor. 780 souare feet Total: 1.120 square feel ,'l;dth 21' -6'* �?�th 51' lu,, a :nor. crek -,round the two-car .i rag e. the er.tr% to this fine family home introduces the living room with its comer fireplace. A dining room brings up the rear of the plan and gains outdoor access through a French door. The kitchen boasts a pantry and direct passage to the utility area. Upstairs, the best in sleeping arrangements is offered through three private bedrooms. Bedroom 3 includes a generous walk -in closet while sharing a full hall bath with Bedroom 2. The master bedroom has a ten -foot tray ceiling. Lending a sense of the dramatic, French doors open to a balcony overlook to the living room below. Two walk -in closets grace this room. Plant shelves through- out the house add a special touch. Bedroc Bedroom 3 x 10' a 7 -H N s se����� i i C Design by Larry W. Garnett & Associates. Inc. i Bath Dining Unan Q p 12' x 12' French Door Plant Shelf Master Bedroom Pan French Doors 112' X 16' Kitchen I _ Living Room 0' x 12' ❑ Cluing Room Below 13' X 16' ❑ r Plant Shelf km/ij � L• - �y r '' Bedroc Bedroom 3 x 10' a 7 -H N s se����� i i C Design by Larry W. Garnett & Associates. Inc. vp lip ?�l k- - 4.} y y 7C! FF i . ........ ................ 0��q I V m7� . Design AA3481A Square footage: 1,901 Width 42' Depth 63' -6" • In just under 2,000 square feet, this pleasing one -story home bears all the livability of hous- es twice its size. A combined living and dining room offers elegance for entertaining; % ith tivo elevations to choose from, the living nom can either support on octagonal bay or , out nook. The L- shaped kitchen tinLi, access to the breakfast nook and rear t: ail•. room; sliding glass doors lead front the r,:mC . room to a back stoop. The master bed o, :n hi, a quaint potshelf and a private bate tub, a double -bowl vanih•, a walk -v7i a compartmented toilet. With two aud�t:�.n. family bedrooms --one may serve as a der, if desired —and a hall bath with dual lor. aRYir�- this plan offers the best in accommooacii-n:.. Both elevations come with the blueprint pack- age. For information on customizing this design, call 1-800-3/22-6797, ext. Soo. gk�_ Design AA3481 B Square footage: 1.908 Width 42' -4" Depth 63' -10" 74 BEDRM aA 138 x lop Krr —�- _ DEN V -• � vutrn as 138 x 11` LIVING 1 RM 0L21L1 �i 148 x 27` _VMY � fr—.17, - GARAGE 2' x 21° .u. WIDTH 42' DEPTH 63' -10" Design by Home Planners, Inc. MASTER -0a1 BEDRM FAMAY RM 138x148. �d 13Z.Xle _ -_- BEDRM aA 138 x lop Krr —�- _ DEN V -• � vutrn as 138 x 11` LIVING 1 RM 0L21L1 �i 148 x 27` _VMY � fr—.17, - GARAGE 2' x 21° .u. WIDTH 42' DEPTH 63' -10" Design by Home Planners, Inc. _ "�; \��v \tea.. � � �rj� •'. I ; _ Design AA3484 First Floor: 1,139 square feet Second Floor. 948 square feet Total: 2,087 square feet Width 32' Depth 59'4" • An angled entry offers a new perspective on the formal areas of this house: living room on the left; dining room on the right. Both rooms exchange views through a columned hallway; a potshelf and a niche add custom touches to this already attention - getting arrangement. At the back of the first floor, a familv room with built -in bookshelves and an entertainment- center niche opens to the kitchen and nook where both cooking and dining become a delight. The sec- ond floor provides interest with its balcony open to the liv- ing and family rooms. Three bedrooms include a master suite with a sloped ceiling, separate closets and a private bath. The two -car garage has direct access to the house. For information on customizing this design, call 1 -8170- 322 -6707 ext. SM BEDRM 1fox 12P a m nm, wog soar T'�fennmmn . . d . BEDRM D � I r -aL Designr� Home Planners, �, arm 4z �z• -o..