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HRA 04/28/1999 - 00002676CITY OF FRIDLEY HOUSING & REDEVELOPMENT AUTHORITY MEETING APRIL 28, 1999 CALL TO ORDER: Vice-Chairperson Schnabel called the April 28, 1999, Housing and Redevelopment Authority special meeting to order at 7:35 p.m. ROLL CALL: Members Present: Virginia Schnabel, Pat Gabel and John Meyer Members Absent: Larry Commers and Jim McFarland Others Present: Barb Dacy, Community Development Director Grant Fernelius, Housing Coordinator Jim Casserly, Financial Consultant Ms. Dacy stated that there is a pending bill at the legislature, which would affect two of the districts in the City's redevelopment program. The bill will also require decertification of the districts after this year unless the HRA has existing obligations that need to be paid both inside and outside the district. Lastly, the bill will define what a pre-existing obligation is. In essence, if a city has approved bonds or pledged increments by April 1, 1999, it is deemed acceptable; or if a binding agreement has been entered into by May 1, 1999, it would also be an acceptable expenditure. Ms. Dacy stated that the HRA could still use the increment from the two districts to pay the debt of the Lake Pointe Bond and some of the other bond issues, which have been approved in the past. After December 31, 1999, cities must abide by the current law. ACTION ITEMS: CONSIDERATION OF A RESOLUTION NO. HRA 3-1999, AUTHORIZING EXECUTION OF A PURCHASE AGREEMENT WITH HOLIDAY PROPERTIES: Mr. Fernelius stated that he had distributed a copy of this resolution, which would authorize the HRA to enter into a purchase agreement for the property at 5807 University Avenue. Holiday Companies owns this property. Mr. Fernelius stated that this property is one of five parcels which the HRA has been looking at and which comprised the Gateway East Redevelopment Project. This would be the second site that the HRA would be acquiring. Mr. Fernelius gave a brief history of the building/property. The property was built in the1960s. It is approximately 4,300 square feet on a 200-foot by 129-foot site. This HOUSING & REDEVELOPMENT AUTHORITY MEETING, APRIL 28, 1999 PAGE 2 property would be a key piece to the Gateway East project. Without it, the viability of the project would be greatly reduced. Mr. Fernelius discussed some of the issues that had been identified by staff. The lease for the current tenant will expire on May 31, 1999. Holiday Companies has assured the HRA that this tenant will be out of the building by that time. He stated there are also some environmental issues which staff became aware of during their negotiations with Holiday Companies. Some soil tests were completed in March 1998 at which time polluted soil was found in the area where the underground storage tanks once existed. He noted that the tanks were actually removed in 1987; however, some polluted soil exists in an area approximately 18 to 20 feet below grade. Mr. Fernelius stated that staff has been working closely with Holiday Companies, its environmental consultant, and a consultant retained by the HRA. At this time, the reports are being reviewed and further analyses made as to potential issues. Based upon what has been relayed to the HRA, it appears that Holiday Companies are responsible should any clean-up need to take place. Determination is currently being made as to whether or not the contaminated soil actually needs to be removed. Preliminary discussions with the MPCA indicate that there may not be a problem if the soil is left in place, as long as no contact is made during the redevelopment project. Staff will continue to evaluate this situation and make sure that if corrective action is necessary, Holiday Companies will be responsible for the costs. Mr. Fernelius stated the property will be sold in an "as is" condition. Staff has not had an opportunity to go in and test for asbestos, etc. This cost has typically been absorbed in the past as part of other redevelopment properties, and it is a cost that the HRA would be responsible for in this case as well. The price of the property is $225,000. Closing on the property would take place after the tenant has moved out. If the HRA were agreeable to this purchase, proceeds would be placed in an escrow account and held with a third party until the closing is conducted. Mr. Fernelius stated that the HRA did have the property appraised and it was determined that the value was between $215,000 and $225,000. Ms. Schnabel asked what type of development is proposed for the site. Mr. Fernelius stated a townhome development is proposed. Ms. Schnabel asked if the homes would have basements. Mr. Fernelius stated this has not been determined yet. At this point, staff only has a footprint plan showing how many units could be placed on the site. Mr. Casserly stated he believes the HRA should be able to develop the site as desired. Ms. Schnabel asked what the costs would be for demolition of the building. HOUSING & REDEVELOPMENT AUTHORITY MEETING, APRIL 28, 1999 PAGE 3 Mr. Fernelius stated that these costs have not been obtained; however, typically the cost is $3.00 to $4.00 per square foot. Any asbestos removal, etc., would be additional. Ms. Schnabel stated that the assessed value of the property is approximately $60,000 less than the proposed purchase price. Mr. Fernelius stated there always seems to be a discrepancy between the assessor's value and the market value of properties. Ms. Dacy stated that the site, though located on a service road, has a lot of visibility. Mr. Meyer stated he is not surprised by the difference in the assessed value and the market value. Furthermore, in calculating the price per square foot, he feels the purchase price is fair. MOTION by Ms. Gabel, seconded by Mr. Meyer, to approve Resolution No. HRA 3- 1999, Authorizing the Execution and Delivery of a Purchase Agreement By and Between the Housing and Redevelopment Authority in and for the City of Fridley and Holiday Stationstores, Inc. UPON A VOICE VOTE, ALL MEMBERS VOTING AYE, VICE-CHAIRPERSON SCHNABEL DECLARED THE MOTION CARRIED UNANIMOUSLY. 2. CONSIDERATION OF RESOLUTION NO. HRA 4-1999, DETERMINING THAT CERTAIN PARCELS ARE OCCUPIED BY STRUCTURALLY SUBSTANDARD BUILDINGS AND ARE TO BE INCLUDED IN THE TAX INCREMENT DISTRICT: Ms. Dacy stated that this resolution is the same resolution that was used for the structure on the north side of 57th Avenue. This resolution would essentially declare the Holiday Stationstore property and the J R Automotive property as substandard. It would give the HRA the flexibility to demolish the buildings if the HRA should so choose and then would give a period of three years to include the properties in the TIF district. MOTION by Mr. Meyer, seconded by Ms. Gabel, to approve Resolution No. HRA 4- 1999, A Resolution Determining that Certain Parcels are Occupied by Structurally Substandard Buildings and are to be Included in a Tax Increment Financing District. UPON A VOICE VOTE, ALL MEMBERS VOTING AYE, VICE-CHAIRPERSON SCHNABEL DECLARED THE MOTION CARRIED UNANIMOUSLY. 3. CONSIDERATION OF RESOLUTION NO. HRA 5-1999 AUTHORIZING EXECUTION OF A DEVELOPMENT CONTRACT WITH SENIOR HOUSING CONSTRUCTION, INC. Ms. Dacy distributed copies of Resolution No. 5-1999. In essence, Senior Housing Construction, Inc. has purchased the property and the plans and is completing the construction of 108 senior housing rental units. The City Council did approve the revenue bond issuance to provide project financing. The tax increment financing HOUSING & REDEVELOPMENT AUTHORITY MEETING, APRIL 28, 1999 PAGE 4 assistance would be provided on a"pay as you go" note. The value of the note is approximately $683,000. This resolution would authorize the Chairperson and the Executive Director to execute the agreement, which is now in the name of Senior Housing Construction, Inc. MOTION by Ms. Gabel. Seconded by Mr. Meyer, to Approve the Adoption of Resolution No. HRA 5-1999, A Resolution Authorizing Execution and Delivery of a Contract for Private Redevelopment by and between the Housing and Redevelopment Authority in and for the City of Fridley and Senior Housing Construction, Inc. UPON A VOICE VOTE, ALL MEMBERS VOTING AYE, VICE-CHAIRPERSON SCHNABEL DECLARED THE MOTION CARRIED UNANIMOUSLY. 4. CONSIDERATION OF RESOLUTION NO. HRA 6-1999, A RESOLUTION AUTHORIZING EXECUTION OF A DEVELOPMENT CONTRACT WITH WAYMORE TRANSPORTATION: Ms. Dacy explained that this item was discussed at the last HRA meeting in April. At that time, there was a question as to the amount of assistance that was being requested for the Cintas Uniform Company project. At that time, this information was not readily available. Since that time, information has been obtained and the amount of assistance is 5% of the total project cost of nearly $5 million. Ms. Dacy stated that this contract would provide a grant at the certificate of completion in the amount of $112,000. The company is set to proceed and would be adding a 13,000 square foot refrigerated warehouse. They have agreed to the job goals that are required by state law. Ms. Dacy stated that in her telephone conversation with Mr. Commers, he noted a concern about the amount of the assistance and the fact that it is over the HRA's guidelines. Ms. Schnabel asked if anyone has reviewed the contract Waymore Trucking has with Cub Foods. She wondered how a cancellation of a contract such as Cub Foods would affect the company's ability to carry out the job goals that have been established. Furthermore, she was concerned that there was less demand for refrigerated warehouse space than for other warehouse space. Ms. Dacy stated she believes the contract is in place but has not reviewed it. However, the consequences for not meeting the state job goals would require them to repay the assistance. Mr. Casserly stated that Waymore Trucking would be required to sign an assessment agreement in which the valuation of the property will not be less than $42.50 per square foot for the next ten years. HOUSING & REDEVELOPMENT AUTHORITY MEETING, APRIL 28, 1999 PAGE 5 Mr. Meyer stated he does not see a problem with exceeding the current assistance guidelines. Some land will require more assistance than others will. If the assistance is not obtained, the property will likely remain dormant for many more years. Ms. Gabel stated this property has been a problem for a long time. Soil correction costs will only continue to increase and she feels the assistance is necessary. MOTION by Mr. Meyer, seconded by Ms. Gabel, to approve the Adoption of Resolution No. HRA 6-1999, A Resolution Authorizing Execution and Delivery of a Contract for Private Redevelopment by and between the Housing and Redevelopment Authority in and for the City of Fridley, Minnesota and Waymore Transportation, Inc. UPON A VOICE VOTE, ALL MEMBERS VOTING AYE, VICE-CHAIRPERSON SCHNABEL DECLARED THE MOTION CARRIED UNANIMOUSLY. OTHER BUSINESS: Ms. Dacy stated that Bill Burns, HRA Executive Director, will be out of town and some of the Contracts will need to be executed prior to Saturday, May 1, 1999. She would like the HRA to make a motion that would empower her to sign the contracts/agreements on behalf of the Executive Director in his absence. MOTION by Ms. Gabel, seconded by Mr. Meyer, to appoint Barbara Dacy as Assistant Executive Director and to authorize her to act on behalf of the Executive Director in his absence. UPON A VOICE VOTE, ALL MEMBERS VOTING AYE, VICE-CHAIRPERSON SCHNABEL DECLARED THE MOTION CARRIED UNANIMOUSLY. Ms. Dacy stated that staff is still awaiting comments from Medtronic in regard to the redevelopment agreement. They are hopeful that the last version of the agreement will be delivered on Thursday, April 29. It is unlikely that staff will be able to review the document, meet with Medtronic, and resolve any issues prior to the regularly scheduled HRA meeting on May 6, 1999. Therefore, she would like to postpone the regular HRA meeting until May 13, 1999 or May 20, 1999. This was agreeable to the HRA members, and they concurred that the meeting be postponed to either May 13 or May 20, 1999. ADJOURNMENT: MOTION by Mr. Meyer, seconded by Ms. Gabel, to adjourn the meeting. UPON A VOICE VOTE, ALL MEMBERS VOTING AYE, VICE-CHAIRPERSON SCHNABEL DECLARED THE MOTION CARRIED UNANIMOUSLY AND THE SPECIAL HRA MEETING OF APRIL 28, 1999 WAS ADJOURNED AT 8:35 P.M. HOUSING & REDEVELOPMENT AUTHORITY MEETING, APRIL 28, 1999 PAGE 6 Respectfully submitted, Tamara D. Saefke Recording Secretary