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HRA 07/28/1999 - 6313CITY OF FRIDLEY JOINT HOUSING & REDEVELOPMENT AUTHORITY CITY COUNCIL MEETING WEDNESDAY, JULY 28.1999,7.-30 P.M. AGENDA LOCATION: Meeting Room 2 (Lower Level) CALL TO ORDER ROLL CALL: DISCUSSION ITEM: Housing and Redevelopment Priorities OTHER BUSINESS ADJOURNMENT HOUSING & REDEVELOPMENT rm AUTHORITY Memorandum CffOF FR1DI" DATE: July 22, 1999 TO: William Bums, Executive Director of HRA FROM: Barbara Dacy, Community Development Director SUBJECT: Joint City Council /Housing & Redevelopment Authority Meeting, Wednesday, July 28, 1999 WHAT DO WE WANT TO ACCOMPLISH WEDNESDAY NIGHT? The following questions will serve as the guidelines for discussion for the joint meeting: 1. How aggressive should the City be in analyzing the impact from the Medtronic project? 2. What is the priority list for redevelopment projects and housing programs for the next year? To follow is a synopsis of the issue and the staff recommendation for each of these questions. Should the Council and HRA decide to complete some type of impact analysis on the Medtronic project, another priority review session should be conducted after the conclusion of the study to determine how the outcomes should or should not be incorporated in the City Council and HRA programs. 1. How aggressive should the City be in analyzing the impact from the Medtronic ro'ect? The 1999 Council /Commission survey provides a basis to initiate discussion on this issue. Attachment #1 summarizes the areas of disagreement and agreement on this topic. Four Council members responded to the survey and 24 advisory commission members responded to the survey. Of the 24 commission members, one of the members was from the HRA. When asked if it would be "useful to analyze the types of uses that are likely to be stimulated by the Medtronic development ", the Council was split 2 in favor and 2 against. A majority of the commission members (21 of the 24), however, supported such an analysis. The HRA member who responded concurred that it is worthwhile to do this study. There was even more disagreement between the Council and commission members regarding identifying sites for the new uses generated by Medtronic. All four Council members agreed that a study should not be conducted to identify potential sites for land ,k JOINT CITY COUNCIUHRA MEETING, WEDNESDAY, JANUARY 28, 1999 PAGE 2 uses generated by Medtronic. Twenty commission members felt that the City should be doing this study. The HRA member was one of the 20 who felt a special study should be conducted. Staff Recommendation: The outcomes of this study will: • Help the City direct the form of future change to the community • Help the City identify what it wants to see happen around the campus and potentially elsewhere in the City • Assist the City Council in making zoning. and land use decisions • Assist the HRA in establishing guidelines for tax increment financing assistance for redevelopment requests Staff recommends the Housing & Redevelopment Authority fund a redevelopment planning study as outlined as "Approach #2" in the June 29, 1999, memo from Mark Koegler (Attachment #2). The cost of the study would range between $40,000- 55,000. This approach is very proactive and would examine the impacts from the Medtronic development in terms of land use, market issues, housing impacts, transportation impacts, and public finance. Koegler was asked to complete this memo -since his firm was hired to complete the city's comprehensive plan update (a consultant RFP process could certainly be conducted for this consultant's project). The Council, at its goals and objectives discussion session in May 1999, did not want a specific study and would prefer a more general approach to identifying the impacts. The reasons were the threat of "condemnation blight" and to get a better feel for what the private market will produce in reaction to the Medtronic development. Koegler's Approach #1 is more consistent with the Council's direction from May 1999. Staff, however, maintains its original recommendation that a more definitive approach to the impact analysis will serve the City better in the long run. In order to address some of the Council's concerns regarding condemnation /blight issues, City staff has asked the City Attorney to review these two approaches in light of the condemnation/blight argument. A verbal update will be provided to the Council and HRA on Wednesday evening. 2. What is the priority list for redevelopment projects and housing programs for the next year? The following discussion is divided into two parts, housing programs and redevelopment projects: Housing Programs Attachment #3 summarizes the survey results regarding priorities surrounding the housing programs including the scattered site acquisition program. Three Council members indicated that the City should aggressively continue the scattered site/ housing replacement program. Seventeen of the responding commission members agreed with this approach. The HRA member also agreed o° JOINT CITY COUNCIUHRA MEETING, WEDNESDAY, JANUARY 28, 1999 PAGE 3 that the program should be continued. There appears to be a consensus on this issue between the two groups. Approximately $355,000 per year for the next six years will be needed for the HRA to complete the originally defined program of establishing 50 lots in the housing replacement program (this program was established by special legislation requested by the City in 1995). Another question asked about the housing rehab programs. In general, the -responding Council members felt that the single family revolving loan program is successful and should be continued. Two of the responding Council members suggested that the maximum loan value be increased to $35,000 (this has been accomplished by the HRA). Thirteen commission members agreed that the program should be kept as it is. The HRA member who responded also agreed with this approach. No Council or commission member selected the option which would suggest restructuring of the program to make it more attractive for the owners of lower valued homes, even if this meant giving the money away. In order to create a self - sustaining revolving loan program, approximately $1.4 million of the HRA's general fund budget must be reserved over the next several years. A portion of this amount will be drawn down over time to fund up to 52 loans per year, assuming an average loan of $13,000 with a 13 -year term. The survey also asked about the City's approach on apartment rehabilitation programs. The Council was split as to whether apartment rehab programs should be provided to private developers. Two Council members indicated that incentives were appropriate; one Council member recommended the assistance go to rental owners and another did not support any assistance at all. Eighteen commission members expressed positive choices toward assisting apartment rehab. The HRA member indicated that the City should provide financial assistance to encourage rental owners to improve their properties. There is no question that apartment rehabilitation will take a significant amount of money. To date, however, staff has been unable to adequately evaluate a range of alternatives and a policy recommendation for apartment rehab because of other work priorities. Completion of this analysis is currently included in the Community Development Department's 2000 Goals and Objectives. Staff Recommendation: The Finance Department is still working on a projection for the Authority's General Fund that fuels the housing programs (remember the recent TIF legislation now requires new accounting procedures by the City). This has been a very complicated project for the Finance Department staff, and it is hoped that a projection will be available for Wednesday's meeting. Based on existing information, there are adequate funds through 2000 to continue the scattered site program, the revolving loan program and the remaining rehab programs heretofore offered by the HRA. It is prudent however to make sure the projection analysis underway is accurate and can properly guide the Council and HRA. Depending on the outcome of the projection for the Authority's General Fund, the issue that may face the City is: "Should the HRA re- allocate the resources for JOINT CITY COUNCIUHRA MEETING, WEDNESDAY, JANUARY 28, 1999 PAGE 4 single family rehab and scattered site acquisition to apartment rehabilitation programs ?" Redevelopment Projects The HRA last conducted a redevelopment priority session meeting in November 1996. At that meeting, a list of specific priorities were ranked as follows: 1. Lake. Pointe 2. Hyde Park and Holiday Plus 3. East side of University Avenue between 1 -694 and 61 st Avenue 4. Junkyards 5. Northeast quadrant of Mississippi Street and University Avenue 6. Redevelopment of deteriorated apartments 7. Northeast quadrant of 1 -694 and TH 65 There were other priorities identified that received a lower amount of points including the trailer park issue, "any residential area that needs it ", "redevelopment of homes ", "scattered home acquisition ", and "possible future ideas ". Of the above list, items #1 and #5 have been completed, and there has been significant progress on item #2 in Hyde Park and Holiday Plus area. Staff has been working recently on the Gateway East project, and redevelopment of the salvage yards has been included in the Community Development Department's goals and objectives for since 1998. Given the recent initiation of the Onan /Murphy project, the Authority is well poised to begin work on redeveloping the salvage yards. Staff Recommendation: Given the information available to date, Attachment #4 represents the staff approach to the list of priorities for the next 18 months plus, assuming budget questions are resolved, the anticipated projects to 2004. To summarize, staff recommends the HRA and City Council direct staff as follows: • Initiate salvage yard redevelopment project immediately. The Onan project will create substantial amounts of revenue to recover expenses with this project in addition to the increment that will be created by the new development on the redeveloped sites. It should also be remembered that this district is also permitted to pool its increment and would create funds for eligible expenses, such as the housing programs. Like the issues the City faced in the Lake Pointe district, the sooner the HRA can initiate the redevelopment process, the better financial position the HRA is in to use the increment to reimburse its expenses as well as fueling other eligible programs. Redeveloping the salvage yards will be time consuming and there will be a number of issues to address. • Finish the Gateway East project. Although there is legitimate argument to hold back on this development as part of the Medtronic impact study, the JOINT CITY COUNCIVHRA MEETING, WEDNESDAY, JANUARY 28, 1999 PAGE 5 size of the Gateway East project is very small. Further, accomplishing a redevelopment project in this area would help spur redevelopment of the Frank's Used Car site across the street in the Hyde Park area. The City Attorney is also finishing an opinion on replacing the housing units that would be removed. His opinion will be available Wednesday evening. • Initiate the planning process in 2001 for the Frank's Used Car site in the Hyde Park neighborhood and initiate the project in 2002. ADDITIONAL AVAILABLE INCREMENT About $1.4 million in TIF No. 3 is available for use by the end of this year only (or if the City receives a noncompliance letter from the State Auditor regarding TIF No. 2 and TIF No. 3). In addition, there is approximately $600,000 available in TIF # 1 that must be spent by April 2000 (See Attachment #5, the AMM FAX regarding the recent TIF law changes). The salvage yard redevelopment was an early candidate for these funds; however, the timing for committing these funds is too soon for the complexity of the project. Legal staff is therefore researching such options as using these funds for housing programs, paying off revenue notes early, pre - paying the City's loan to the HRA, or other similar obligations. Mr. Cassedy will have an update on these ideas Wednesday evening. The Authority will have take action on one of these options in the very near future. Staff is aiming for a recommendation for the September regular meeting. SUMMARY The following information will be presented Wednesday evening: • General Fund Cash Flow Projection • Legal opinion regarding condemnation blight and housing replacement • TIF analysis regarding use of additional available increment in TIF #3 and #1 I look forward to the upcoming meeting. BD:Is M -99 -174 SUMMARY OF 1999 COUNCIL /COMMISSION SURVEY RESULTS REGARDING NIEDTRONIC IMPACTS FOR 2000 GOALS AND OBJECTIVES To follow is an excerpt of the responses to the recent Council/Commission survey regarding the issues pertaining to studying the impacts of the Medtronic project. For purposes of the joint meeting excerpts of the City Manager's summary of both the Council and -all of the Commissioners'. responses are provided first. There was one HRA Commissioner who responded and that response is typed in italics. Areas of Disagreement Item 933 - Part 1 - We asked you whether it would be useful to analyze the types of uses that are likely to be stimulated by the Medtronic development. Two of you said yes; two of you said no. Twenty -one of the twenty -four commission members said yes. The HRA member answered "yes ", it is worthwhile to do a study. Item #33 - Part 2 - All of you agreed that we should not do a study whereby we try to identify sites for new uses generated by Medtronic. Twenty of the commission members feel that we should be doing this. The HRA member answered "yes ", the City should initiate a special study to analyze areas around the Medtronic site. Item #33 - Part 3 - Two of you said we should initiate a planning process whereby we attempt to match uses and sites after Medtronic's Phase 1 is under construction. Two others said that the question didn't apply given their answer to the preceding question. Nine of the commission members felt that we should do this study as part of the current comp plan amendment process.. Six more said that we should initiate the uses and sites study immediately. The HRA member stated that the City should conduct this study as part of the current Comprehensive Plan process, knowing that the process would not conclude until late 1999 or beyond. ATTACHEMENT 1 Areas of Agreement Item #33 - Part 2 - While you were split evenly on- the wisdom of stud the potential land uses that might be stimulated by the Medtronicg development, all four of you indicated that we should not try to match land areas to uses. We should wait to see what private market interest there is in the areas likely to be impacted by the Medtronic development. The HRA member answered -yes-, the City should initiate a special stud to analyze areas around the Medtronic site. y Item #35- Three out of four of you said that the Gateway East project ought to be pushed as quickly as possible. One of you thought that we wait until after comprehensive plan it amendments should w are completed and until we have a chance to size up future redevelopment efforts we may want to make in response to the Medtronic project. Fourteen commission members agreed with a majority of Council members. The HRA member responded that the Gateway East project should wait until after the comprehensive plan amendment process and after we have an opportunity to size up any future redevelopment efforts that we may want to address. MEMORANDUM Hoisington Koegler Group Inc. ®® TO: Barbara Dacy DATE: June 29, 1999 SUBJECT: Medtronic /Comprehensive Plan FROM: Mark Koegler The purpose of this memorandum is to address the relationship between the Medtronic development and the comprehensive plan update that is currently underway. It is my understanding that you have scheduled an BRA/City Council meeting in late July to discuss the development ramifications of Medtronic. Presumably, discussion topics at the meeting will include the city's position on the upcoming development (proactive or wait and see) and how Medtronic fits into Fridley's community-wide comprehensive plan. Comprehensive Plan Update As you know, we are currently working on the updating the Fridley Comprehensive Plan. The plan should be completed and approved by the Metropolitan Council by February of -2000. This schedule assumes completion of the plan draft by October 31, 1999, a 60- day time period for review by adjacent communities and a 60- day time period for action by the Metropolitan Council. The Comprehensive Plan will generally address land uses in and around the Medtronic site. The level of detail in the plan, however, will not adequately address the development and redevelopment implications of Medtronic. Assuming that the City elects to take a more proactive stance on this issue, a couple of approaches come to mind. These approaches may be more incremental than they are separate from one another. Approach #1— City /Consultant Preliminary Land Use Study The first approach might be the initial step in a larger effort or depending on the wishes of the City Council, it may represent an adequate analysis of the situation. This approach combines . the resources of the city staff and HKGi. The product of Approach #1 would be a series of illustrated "what if' scenarios. The purpose of the effort would be to test a number of ideas concerning development and redevelopment in the area surrounding the Medtronic site. This approach could involve the following steps: Step 1— Define Project Area Boundaries and Study Objectives The first task is to define the boundaries of the study area. The boundaries should include commercial and residential properties that might be impacted by the influences of Medtronic. It is likely that the project area may extend beyond the municipal limits of the City of Fridley. In defining 123 North Third Street, Suite 100 Minneapolis, N (612) 338 -0800 Fax ( ATTACHMENT #2 Memorandum — Barbara Dacy June 29, 1999 Page 2 the impact area, City staff may want to meet with a number of development companies and real estate professionals to do a little "brainstorming" on the potential spin -off effects of Medtronic. We have found on previous projects that developers are eager to share their expertise and insights in this type of situation at no cost to the City. The other portion of this task would be to agree on a series of objectives for the study. Topics would likely include: What should the Medtronic area's role be in the City of Fridley? What businesses are needed to support Medtronic and the community at- large? What will the large influx of Medtronic jobs mean to Fridley and how will the community address the impacts and opportunities? Step 2 — Assemble Detailed Base Data This task would include the assembly of detailed base information by the City's GIS consultant within the defined project area. Information would include land uses, building coverage, assessed values, building condition, and similar information. Step 3 — Assemble Alternative Land Use Concepts HKGi would prepare three different land use concepts for the identified project area. The concepts would address differing amounts and arrangements of various land uses, all of which are designed to meet the identified study objectives. A process would need to be defined to review the concept alternatives and ultimately select the one that best represents the needs of the Fridley community and Medtronic. Presumably, the City would want to review and seek input on the concept alternatives prior to identifying one as an agreed upon concept plan. Once one development and redevelopment concept is identified, subsequent work can be done to illustrate what it might look like. Step 4 — Concept Illustration HKGi and or the City would identify design elements and principal features of the agreed upon concept plan and prepare sketches, perspectives and elevations to illustrate project details. Sketches would focus on building massing and styles, theme elements, streetscape elements, entry features /signage, parking lot treatments, public spaces, roadway enhancements and other amenity elements. The package of illustrations could be used to promote the plan and seek interest from the development community. The cost of Approach #1 would vary depending on the tasks assigned to city staff, Fridley's GIs consultant and Hoisington Koegler Group. For planning and discussion purposes, it is reasonable to anticipate a total project ranging from $10,000 to $30,000. Memorandum — Barbara Dacy June 29, 1999 Page 3 Approach #2 — Redevelopment Planning Study The second approach represents a much more detailed and definitive planning effort. This approach would certainly be tied to a very proactive effort on the part of the City. .It starts with the conclusion- that the Medtronic development is one of the most significant development projects that the Metropolitan Area has seen in the last 10 years. Accordingly,-the impacts of a new 1.6 million square foot campus development will be felt throughout the City of - Fridley and in fact, may have a great deal to do with how Fridley is perceived in the years ahead. Accordingly, this approach examines the development and its resulting impacts focusing on land use, market, housing, transportation and public finance. A preliminary work program for such an effort might involve the following: Step 1 — Define Project Area Boundaries and Study Objectives The first task is to define the boundaries of the study area. The boundaries should include commercial and residential properties that might be impacted by the influences of Medtronic. It is likely that the project area may extend beyond the municipal limits of the City of Fridley. In defining the impact area, City staff may want to establish a development panel to participate in "brainstorming" on the potential spin -off effects of Medtronic and to have a review role in the study. We have found on previous projects that developers are eager to share their expertise and insights in this type of situation at no cost to the City. The panel's experience in housing, retail commercial, office, and specialty commercial would help ensure that planning concepts have "real world" applications. The other portion of this task would be to agree on a series of objectives for the study. Topics would likely include: What should the Medtronic area's role be in the City of Fridley? What businesses are needed to support- Medtronic and the community at- large? What will the large influx. of Medtronic jobs mean to Fridley and how will the community address the impacts and opportunities? Step 2 — Site Inventory Conduct a site and area analysis to gain an understanding of the forces that are at work in the area and forces that are likely to occur as a result of the. Medtronic campus. Review background information to be provided by the City and identify existing problems and future needs associated with the study area. This will include an evaluation of land use, parking, infrastructure, traffic, zoning, economic information and property ownership. The City's GIS consultant along with HKGi would prepare mapping of background information. Step 3 — Conduct a Demographic and Market Analysis Conduct a demographic and market analysis including the following: Memorandum — Barbara Dacy June 29, 1999 Page 4 • Location Analysis — Complete an analysis of development constraints and opportunities in and near the Medtronic campus area. Focus on proximity and relationship to other types of developments, traffic patterns, access and visibility. • Demographic Analysis — Define market areas for specific types of real estate development, review anticipated employment growth trends, identify major impacts and develop a demographic profile of market area residents and employees. Retail and Office Market Assessment — Inventory existing retail and office uses and assess the markets that they currently serve and the markets that they are likely to serve in the next 10 to 20 years. From - information collected, develop conclusions and recommendations on the potential demand for retail and office space, types of space needed from both a neighborhood, community and regional basis, and recommend types of development that would be appropriate. This assessment will also include entertainment and hospitality uses. Housing Assessment — Identify the age, mix and value of housing in the area and compare the are to other locations in Fridley and surrounding communities. Develop conclusions and recommendations based on demographic characteristics, community housing goals, priority projects and project absorption. Conclusions and Recommendations — Summarize findings for each type of land use and recommend the appropriate mix of development types given different development scenarios. Work with City staff to determine qualifications for tax increment financing. Step 4 — Explore the Possibilities The objective of this step will be to evaluate a range of alternatives as a means to help select a land use concept and strategy for further development in subsequent tasks. Tasks would involve: • Develop several alternative concept plans ranging from limited development/redevelopment to more aggressive future growth scenarios. Plans would be diagrammatic in nature illustrating land use and circulation patterns. Preliminary infrastructure costs associated with each alternative would be identified. • Develop a range of alternative strategies to be used for plan implementation. The purpose would be to correlate concept plans with supportive strategies. • Meet with the development panel to review the alternative concept plans and strategies to seek their input. Meet with Medtronic personnel to review the alternatives. • Develop a preferred plan that reflects the needs of the community and Medtronic. The plan would be general in nature reflecting desired land use types, circulation, access, utilities and Memorandum — Barbara Dacy June 29, 1999 Page 5 public spaces as appropriate. ■ Meet with the developer panel to review the preferred alternative and to seek their input. Ste 5 — Demonstrate How the Area Should Look The objective of this step is to refine the preferred alternative, illustrate the concept and define costs associated with public improvements. Tasks would include: ■ Formulate architectural and design guidelines to ensure that development is responsive to and compatible with the status of the location of the study area as a gateway to the City of Fridley. Architectural guidelines will address appropriate fagade treatments and the relationship of the buildings to the street, parking areas, etc. Site design guidelines will address transit (bus and rail), public spaces, parking, setbacks, sidewalks and landscaping. ■ Develop graphic sketches illustrating the neighborhood/community/business relationships embodied in the preferred alternative and, if appropriate, mitigating measures that will be needed to improve land use relationships. ■ Ref ne costs associated with the public improvements for the preferred plan. Stey 6 — Develop a Strategy to Get it Done The objective of this step will be to develop the action steps required to implement the plan. Tasks would include: • Formulate a specific strategy with action steps. The strategy would address acquisition, land use controls, funding and potential guidelines for a Request for Proposals for developers. • Conduct City Council/HRA workshops to discuss the recommended strategy and associated action steps. _ Step 7 —Seek Agreement to Move Forward The objective of this task will be to document the results and move forward with the preferred plan. Tasks would include: ■ Documentation of the plan in draft form. • Public hearings on the plan. • Completion of the final plan report in written and graphic form with documentation in a format Memorandum — Barbara Dacy June 29, 1999 Page 6 suitable for use in subsequent requests for proposals. The plan would include the community analysis, the market analysis summary, objectives, architectural and design guidelines, plans, and implementation strategies with action steps. The cost of Approach #2 would vary depending on the final scope of the project. In order to address all of the elements embodied in this approach, the effort would involve City staff, Fridley's GIS consultant, Hoisington Koegler Group and consultants with expertise in engineering, traffic, market analysis, housing and public finance. Based on the outline of Approach #2, the cost of the study could range from $40,000 to $55,000. Summary The purpose of this memorandum has been to provide "food for thought' on a couple of separate but possibly related approaches to addressing the impacts of the new Medtronic campus. Since the nature of the effort is undefined at this time, the level of detail is preliminary. For example, either of the approaches will need to involve public input and will need to be directed by some public body, presumably either the Fridley HRA or perhaps the Planning Commission. If either of these approaches seems reasonable, we can further refine their content. After you have had a chance to reflect on this information, give me a call. The Medtronic development will change the nature and image of the City of Fridley. A key issue to be determined is whether the City simply reacts to the change or places itself in a position to direct the form of future change. For reference, I have enclosed a copy of a similar planning study that we recently completed for the City of Richfield. The accompanying piece is a promotional brochure on the project that was just completed to enhance marketing efforts. A first phase, mixed use development is now under construction. © Hoisington Koegler Group Inc, 1999 The information contained in this memorandum is the intellectual property of Hoisington Koegler Group Inc. It shall not be copied, reproduced, distributed or used in any way without permission from Hoisington Koegler Group Inc. SUMMARY OF 1999 COUNCIL /COMMISSION SURVEY RESPONSES REGARDING HOUSING PROGRAMS AND ISSUES To follow is an excerpt of the responses to the recent Council/Commission survey regarding the issues pertaining to studying the impacts of the Medtronic project. For purposes of the joint meeting excerpts of the City Manager's summary of both the Council and all of the Commissioners.' responses are provided first. There was one HRA Commissioner who responded and that response is typed in italics. Areas of Disagreement Item #34 - In question 34 we asked whether or not the City should be proactive by initiating affordable replacement housing for the housing that will be affected by the City's redevelopment projects. You were split two to two in your answers to this one. The commission members were split 13 to 9 on this one with 2 abstentions. The 13 want us to be proactive in creating affordable housing. The HRA member responded that the City should assume that future development that is stimulated by the Medtronic project will be private development and should not worry about replacement housing. Item 936 - This question asked about restructuring the City's housing rehabilitation program. Two of you feel that the program is successful as currently structured and would leave it alone. Two others would maintain the existing program but raise the maximum loan value from $25,000 to $35,000. Thirteen commission members would leave the program structured as is. Eight more would keep it as is but raise the loan value limits. Three would scale back the program. It's interesting that no council or commission member selected option C. Under that option we would restructure the. program to make it more attractive for the owners of lower valued homes, even if this meant giving the money away. The HRA member responded that the program appears to be successful as it is structured, and leave it the way it is. s '� Item #37 In question 37 we asked about apartment rehab. Two of you would like us to develop programs that provide incentives for private developers to acquire and rehab apartment buildings. One of you would provide the assistance to the rental owners. And another of you didn't seem to be supportive of any: assistance. Eighteen of the commission members expressed positive, choices toward assisting apartment rehab. Eight of these agreed with the strategy of providing the incentive to developers. Seven would provide financial assistance to the owners. Five commission members thought we should not assist in apartment rehab. The HRA member responded that the City should provide financial assistance or other incentives to encourage rental owners to improve their properties, and the assistance should be for any type of property improvements. Areas of Agreement Item #38 - In this one we asked you about continuation of the City's scattered site housing program. Three of you said that we should aggressively continue. One of you feels that we should discontinue this program and rely on code enforcement and condemnation to address blighted properties. Seventeen of the commission members agree with a majority of you. The HRA member agreed with the majority and answered that we should continue with the scattered site program. U) �L 0 �L I..L E Q 0 Na) 0. .cn I 0 2 C) CD N r C 7 LL 0) C O O) O N C C = O d) H j C U N y � C Yom' 0) O) l0 N 7 .0 V ,C 07 CL m SD O1 C rj 01 W v E qc ai U Q N N 4: Z W 5 w al z a CL o � porn--AMM To: Bill Bums Date: 5125!99 Time: 3:22:22 PM Page 2 of 3 AMM FAX NEWS May 24-28,1999 A': VOW Association of Metropolitan Municipalities Amendments to the TIF Act: Q & A T 'a following are some ques lions and answers regarding the amendments made to the TIF Act this session: Question #1 Housing districts can chose to make a local contribution equal to 10°% of the increment. Was the percentage rate changed? Was the definition of a housing district changed? Answer #1 The amendments to the TIF Act are found in Article X of HF 2420 (1999 Omnibus Tax Act). The local contribution rate for housing dis- tricts was reduced from 10 to 5 percent. The change is effective for districts or geographic additions to AMM Fax News is fazed periodically to all AMM city managers and administrators. The information is in- tended to be shared with mayors, councilmembers and staff in order to keep officials abreast of important metro city issues OCopyright 1999 AMM 145 University Avenue West St. Paul, MN S5103-2044 Phone: (6S1) 215 -4000 Fax (6S1) 281 -1299 E -mail: amm@omml4S.org districts for which the request for certification was made after June 30, 1999. Although the definition of a "qualified" housing district was proposed in the Senate Tax Bill, it was not included in the Omnibus Bill. The definition of a housing district was not changed. Question #2 The Office of State Auditor (OSA) has concluded that TIF districts for which the request for certification was requested be- tween Aug. 1, 1979 and June 30, 1982 are not permitted to expend or pool increments outside the district. The OSA has identified the presence of 73 such districts in approximately 50 cities. While it has not completed audits on all cities the OSA has issued non- compliance-letters to at least three cities and has referred the issue to the county attorney. During the 1999 Session there were special law proposals and general law amendments regarding the °1979 to 1982". What did the 1999 Legislature do related to this issue? Answer #2 The final Tax Bill rates all expenditures made outside the district but requires district decertifi- cation upon the payment of all outstanding bonds— and contracts for preexisting in- district obligations and Preexisting outside district obligg~ tions. Preexisting outside district obliga- tions means (1) booms that were issued and the pledge of TIF was made befofe the Parker of a final notice of non compliance from the OSA or ri ((2) bonds issued to refund bonds discussed ; under clause 1 prove ed the refund- ing bonds do not increase the amount of TIF needed to pay the refunded bonds, and (3) ,binding written agreements secure - d by CIF and entered into by May 1, 1999. In- district obligations have the same meaning as the outside district obligations except t e ast date for entering into a binding written agreement is June 30, 1999. After Dec. 31, 1999, the district Cf it pooled increments) must use increments to only pay preexisting in- district and preexisting outside district obligations and administra- tive expenses. Question #3 Are there any exemptions or special rules related to the 9979 to ATTACHIl E K li From -AMM Ta Bill Bums Date: SQ5199 Time: 3:22:22 PM page 3 of 3 May 24-28,1999 ♦ AINAM Fax News ♦ Page 2 of 2 TIF Amendments/ Pooling provisions are modified Continued from Page 1 1982 districts? Answer #3 Yes, there are some exemptions and permitted expenditures. The 1979 to 1982 legislation does not apply to districts that (1) were decertified before the enactment date of the Tax Bill and all incre- ments pooled for expenditures outside the district have been repaid and distributed as excess increments and (2) increments were pooled to pay only for debt service on revenue bonds under section 469.129, subdivision 2 and to refund the bonds issued. In addition to the preexisting outside district obligations, incre- ments can be spent for expendi- tures outside the district before the �,earlier of notification by the state auditor or Dec. 31, 1999. ues ion During the session there was proposed legislation to prohibit the use of increment for a commons area used as a public park or a facility used for social, recreational or conference center. Was the legislation enacted? Answer #4 Section 2 of Article X prohibits the use of increment for the identi- fied purposes for all districts present and new but it does not apply to (1) expenditures made before Jan. 1, 2000 (2) expendi- tures made under a binding agree- ment entered before Jan. 1, 2000 or (3) expenditures made under a binding contract entered pursuant to a letter of intent with a developer if the letter of intent was entered before Jan. 1, 2000. The amendment prohibits public and private facilities but it does permit increment to be used for a privately owned conference facility. The prohibition does not apply _to the Mills Ruin Park and Milwaukee Road districts, as well as a future district that includes the former Federal Reserve Bank Building. Question #5 Can increment be used outside a district for public improvements, equipment or other items? Answer #5 Increments cannot be used outside a district for such purposes if the improvements, equipment or other items will primarily serve (1) an aesthetic or decorative purpose or (2) a functional purpose but their cost is increased by 100 percent as a result of the selection of materi- als, design or type as compared to more commonly used materials and designs. The prohibition does not apply to the rehabilitation of historic struc- tures that are on the National Register of Historic Places or are a contributing element to historic district listed on the National Regis- ter of Historic Places. Question #6 Can a district including a 1979 to 1982 district pool increments to cover deficits in making debt ser- vice caused by changes in property tax class rates? Answer #6 Yes, the 1999 Tax Bill amended the current pooling provisions relating to deficits to include changes made by the 1998 and 1999 legislatures. The amendment also allows a city council to authorize a city development agency to transfer tax increments to assist another city development agency in covering deficits in debt service caused by the changes. In addition, the law permits a city located within more than one county to pool increments for this purpose regardless of its location within the city. Question #7 Has the grant program that provides state funding for TIF deficits been amended? Answer #7 Yes, the grant program has been amended to include tax rate com- pression changes in 1998 and 1999. Other amendments include changing the application deadline date to Aug. 1, increasing the amount of the program from $2.0 million to $6.0 million and extending the sunset date from Jan. 1, 2001 to 2002. Question #8 The House made changes to the enforcement provisions of the TIF Act to include the Department of Revenue. Were any changes made to this section of the act? Answer #8 Yes, the act was amended to provide that the attorney general will review the case if the county attorney does not act. If the attorney general finds that there is non- comoliance and it is substantial, he may attempt to resolve it through dispute resolution or take the case to tax court- If tax court finds that there is non- compliance and it is substantial, the court can suspend an authority's ability to do TIF for up to five years. 32• A!- -M es: Motorhomes were left out of the large mmercial vehicle ordiaanc discussions, der current languaoe e vehicles and there recurrent allowed in the drivor ay or front yard area ifl ark d motorized paved surface. Shou cve amend the inance to restrict where motorhomes may be parked? A. No, the or ' ance ' fine as is. B . we should amend the 'nance to require that motorhomes be parked in the side or rear yard and on a d paved surface. C. Yes, we should amend the ordinance by ohibitina being parked on residential P roP e m'• a motorhomes from 33• Redevelopment Priorities• \ The Nfedtronic Campus will dramatically improve the appearance and image of the City. It will also stimulate other development and redevelopment projects along I -694. The areas immediately to the west of 7" Street and south of 57' Avenue will more than likely be of interest not only to Medtronic but also to developers. Nfedtronic has indicated that they would like this area to contain commercial services including a hotel and restaurant. This area contains a significant amount of housing, both rental and Ow This Is it worthwhile for the City to examine the types of uses that will be stimulated by the Nfedtronic development? Is it worthwhile for the City to examine the area around the Nfedtronic site as potential sites for these uses? How fast should the City undertake redevelopment planning in this area? Please read the following statements and check the one that best represents your recommendation to plan for the impacts from the Medtronic site. Is it worthwhile to analyze the types of uses that will be stimulated by the INIedtronic development? A. No. These types of studies are useless. Wait until the private sector reacts first. B. Yes. It is worthwhile to do a study, but make sure it includes in fr appropriate ut ate representatives of the private sector. P om Is it worthwhile to analyze the areas around the Medtronic site as potential sites for the uses identified in a study? A. No. The City should not initiate an waiting to see what private market nt rest therde is in this l area first and react to that proposal. B. Yes. The City should initiate a special study to analyze areas around the Medtronic site. 16 ATTACHMENT #6 If you answered YES to the question above, how fast should the City conduct a planning process? A. The City should conduct this study as part of the current Comprehensive Plan process, knowing that the planning process will not conclude until August, 1.999, or beyond. B. The City should initiate a study after the first phase of construction has been initiated in May 1999. C. The City should initiate a study of potential uses and sites immediately. 34. Housing Replacement: As the City undertakes more redevelopment projects, it is more than likely that affordable housing units will be affected (both rental and owner- occupied). How aggressive should the City be in replacing lost affordable housing? Please mark the statement that best reflects your recommendation on replacing lost housing. A. The City should assume the future development that is stimulated by the Medtronic project will be private development and should not worry about replacement housing. B. The City should assume that the future development that is stimulated by the Medtronic project will have enough public involvement to warrant creation of replacement housing. As a result, it should sponsor construction of affordable, owner - occupied, and rental housing units. 35. Redevelopment Priorities: While there is a variety of redevelopment projects that have been discussed from time to time and, while the City will have a better sense of overall redevelopment priorities with the completion of the comprehensive plan amendments, in the short term, staff focus is directed toward the completion of the Gateway East Project. In essence, this means the redevelopment of the area that is bounded by University Avenue on the west, 57' Avenue on the south, 5'b Street on the east, and 61' Avenue on the north. The project entails acquisition of properties and construction of a 20 to 25 unit town home development. Are we on the right track? Yes. This is an important project that should go forward as quickly as possible and as our highest redevelopment priority. Yes. It should go forward as a high priority project; however, we should consider combining it with the redevelopment of property on the west side of University Avenue that lies between 57`' Avenue and 61' Avenue (the Frank's Used Car site, etc.) even if this means slowing the project down by a year or two. 17 e ^` r No. We should wait until the comprehensive plan amendments are completed and also until we have an opportunity to size up any future redevelopment efforts that we may want to address in conjunction with the Medtronic project. Comments: 36. Housing Rehabilitation: . From time to time, we have heard criticism of the HRH's housing rehabilitation program on the grounds that the eligibility requirements are too generous and that current program guidelines allow room additions and other amenities rather than restrict the recipient of a loan to basic code - related improvements. Currently, any family with a gross annual income under $58,650 can qualify for loans of up to $25,000 at a 5 percent.annual interest rate. While we do not allow the money to be used for decks and patios, we do allow it to be used for room additions and other items that add value to the home. Since the program's beginning in 1993, we have issued 349 loans that have a cumulative value of $3,951,000. As it is structured, Fridley's single family rehabilitation program is one of the most active in the metropolitan area. What do you think? Which of the following options best reflects your feelings about the future of Fridley's housing rehabilitation program? A. The program does seem overly generous to me. We should consider reducing the annual income ceiling and limit eligible improvements to those that correct basic building code deficiencies. B. The program appears to be successful as it is structured. I would leave it the way it is. C. Since many homeowners in neighborhoods having lower value homes have not taken advantage of the loan program, we should consider eliminating the program as it is now defined. In its place, we should offer a program that focuses on lower valued homes and distributes money on terms that are affordable to those owners, even if this means offering rehabilitation money as grants rather than loans. - D. We should maintain the existing program, but expand the maximum loan value from $25,000 to $35,000 as requested by the housing rehabilitation loan recipients who responded to our recent survey. Comments: e 18 37. Apartment Rehabilitation: The HRA has focused most of its resources on the rehabilitation of single family housing stock. Based on the age and condition of the City's housing stock, it seems clear that there will continue to be a need for these programs in the future. Looming in the background, however, is the need to address multiple family rehabilitation. Based on our experience with rental property owners, it has been very difficult to encourage them to improve their properties. Our existing program provides low interest loans to owners, as opposed to grants Should the City do more? Please check the option that most agrees with your point-of view. A. The City should provide financial assistance or other incentives to encourage rental owners to improve their properties. The assistance should be for any type of property improvement. B. The City should provide financial assistance or other incentives . to encourage rental owners to improve their properties, but the funds should be for specific improvements'(e.g. exterior, landscaping, garages, etc.) C. Rather than loan or give money to apartment owners in general, the City should provide incentives for private developers to acquire and rehabilitate those apartment buildings that appear to be in the worst condition. D. The City should acquire, rehab and manage apartment buildings through the use of public bond programs. E. Considering the huge cost of apartment rehabilitation, the City should not get into this area unless it can be funded with outside resources. r. The City should not provide any type of assistance for multiple family rehabilitation. Comments: 38. Scattered Site Program: The Fridley HRA initiated a scattered site acquisition program in 1994. Under this program, we have acquired 22 properties and built 15 new homes. There are those, however, who feel that this is the wrong approach to dealing with deteriorated housing. Those individuals have suggested that we rely more heavily on code enforcement and condemnation rather than negotiated housing acquisitions. Since we do not have a housing maintenance code for single family property, this would mean relying on enforcement of code violations that are visible from the curb. It would also mean the condemnation of property that can be justified under Minnesota law. What do 19 a A you think. Should the Fridley HRA discontinue its scattered site acquisition program and rely on code enforcement and condemnation to eliminate deteriorated properties? A. No. The HRA should aggressively continue its scattered site acquisition program. B. Yes. By continuing this. program, we are only rewarding those owners who have allowed their properties to fall into a state of disrepair. Comments: 39. R enue to Su ort Services: In re nt years, we have budgeted for people and prog s without raising property tax or creating other new revenue streams that would cover ese costs. The /and spe ion program is only partially covered by fees. The two ne police officere a hiring in 1999 are only partly covered by grant funding. oreover, thding for these officers will be stepped down over a three -year riod. Youch workers that were once grant funded are now locally funded. The ity's sha Fridley Community Center's operating costs has never been covered new rIn general, these and other costs are being covered by transfer of fund alance of these costs and the rising use of fund balance ($1.3 million is budgete in 1 ch of the following options is most attractive to you? A. Seek t cover these costs through a combination of utility franchise fees and Vicibesed liquor operations revenues. Note that the utility franchise fees ill cbqst the average utility user an estimated $36 per year. B. S (ek to cove these costs through increased liquor operations revenues, penditure red ctions and continued use of fund balance. C. Seek to cover th a costs through moderate property tax increases, expenditure reducti0 and use of fund balance. Cover these costs by usi will bring General Fund year period. E. Other (please specify): 20 fund balances. Begin making budget cuts that )enditures and revenues in balance over a five-