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HRA 07/28/1999 - 00002711CITY OF FRIDLEY JOINT HOUSING AND REDEVELOPMENT AUTHORITY/ CITY COUNCIL MEETING J U LY 28, 1999 The joint meeting of the Housing and Redevelopment Authority and City was called to order by Mayor Jorgenson at 7:09 p.m. ROLL CALL: CITY COUNCIL MEMBERS PRESENT CITY COUNCIL MEMBERS ABSENT HRA MEMBERS PRESENT: CITY OF FRIDLEY STAFFPRESENT: DISCUSSION ITEM: Mayor Jorgenson, Councilmember Barnette, Councilmember Billings, Councilmember Bolkcom Councilmember Wolfe Larry Commers, Virginia Schnabel, John Meyer, Jim McFarland, Pat Gabel Barbara Dacy, Fritz Knaak, Rick Pribyl, Scott Hickok, Missy Daniels, Grant Fernelius, Jim Casserly Ms. Dacy stated that three important topics of discussion for the evening include talking about philosophy for redevelopment priorities, numbers which will help decide these issues, and thirdly end the session with what the next steps are. At minimum, members should count on having another meeting one year from now. Staff is suggesting the City should do some studies in the next 6 to 8 months so members can come back and re-evaluate the outcomes of the studies and take another look at priorities. Ms. Dacy stated that the first topic they should talk about tonight was how aggressive should the City be planning for the Medtronic impact. The City Council and Commission completed a survey relating to the Medtronic issue. The decision points this evening are whether the City should do a study (if yes, how detailed should it be?) and what are the redevelopment priorities with two subtasks. The first subtask is the housing programs and the second task is the redevelopment projects specifically Gateway East and whether it should move forward now or wait until the Medtronic Study is analyzed. The salvage yards and Frank's Used Cars need to be discussed as well. Finally, Ms. Dacy wanted to discuss options for use of additional increment available in Tax Increment Districts No. 2 and No. 3. JOINT CITY COUNCIL/HOUSING & REDEVELOPMENT AUTHORITY MEETING, JULY 28, 1999 PAGE 2 Ms. Dacy stated that the first topic is how aggressive should the City of Fridley be in planning for the impact from Medtronic. Should the City do a study, and if so, how aggressive should it be? City of Fridley Staff suggests that a study be done. City of Fridley consultant, Mark Koegler provided two options with a general approach for the study and also a more detailed approach. City of Fridley Staff is suggesting a more detailed approach. Ms. Dacy stated that she fully realized that City Council preferred a more general approach towards the study. The Commission seemed to favor a study that would be more specific and would link the land uses to specific sites. Ms. Dacy addressed some of the risks if the study was not completed. She stated that the Wingate Hotel is a more business-oriented hotel, and she is not sure if it is in the same class that Medtronic feels it wants. The point of bringing it up is that it represents an interest from a private market. Mr. Hickok has been getting a lot of phone calls from the Kelly Inn regarding expansion. Ms. Gabel arrived at 7:20 p.m. Councilmember Bolkcom asked if there were any Wingate Hotel sites in the Twin Cities already. Ms. Dacy stated that there was one in Oakdale. Ms. Schnabel asked Ms. Dacy if she had a feel for the type of facility that Medtronic would prefer, and how long are the Medtronic clients going to stay for their training. Ms. Dacy explained that Mr. Donn Hagmann, Medtronic representative, was suggesting that Medtronic wanted a 3 star hotel and she wasn't sure about the length of time the clients would be staying for training. She felt that that very question should be part of the analysis. Mr. Burns, City Manager stated that he thought Medtronic told the City of Fridley that they needed 5,000 hotel rooms a year when they were lobbying. Ms. Dacy stated that the other issue she wanted to identify was what the City would risk if they do not complete the study. Does the City want to encourage the hotels and restaurants and other uses of land to end up in Fridley or elsewhere? She understood New Brighton was redeveloping the I-694 and 35W interchange, and they have a couple of redevelopment projects going on. She also stated that if a study is not completed there might be a hodgepodge of architecture. If there is not a set plan there may be a lack of sense of direction for the community. Private investment may occur that may or may not be consistent depending again on what the City of Fridley wants. Despite the approach, these are the types of issues the study would look at. There should be a strong link between what the City wants in terms of land uses and what types of housing impacts are going to be in connection to the commuter rail line on Main Street and 61St JOINT CITY COUNCIL/HOUSING & REDEVELOPMENT AUTHORITY MEETING, JULY 28, 1999 PAGE 3 industrial and bikeway connections. Those are the types of issues the study would look at. Ms. Dacy explained what the City would expect for outcomes of the study. The study would be a game plan, a tool for the Council to use in evaluating proposals or a tool for the HRA to establish redevelopment plans. There are legal implications of a general plan for the study versus the more specific study. She stated it was a planning tool versus force of law. The decision was really up to the City Council. If the City adopts the plan as part of the comprehensive plan then it will have to follow the course of law. If the City wants a planning study, the City would use it to help evaluate problems as they come up. Councilmember Bolkcom asked Ms. Dacy how much the study would cost. Ms. Dacy stated that the general study would be a shorter process, probably three to six months and has the lower cost around $30,000. A more detailed study would have a longer process anywhere from six to nine months. The more detailed study would be more thorough in terms of identifying cost and time frames. She went to Mark Koegler to provide these estimates and certainly in-house staff would love to do this type of work for the studies but unfortunately the City staff has to work on a number of other things. Councilmember Barnette stated that if say Hilton Hotel came to the City and said they wanted to develop just west of the development between 57t" Street and the freeway. What would the City do if Hilton came to the City and asked for assistance in buying the properties? Ms. Dacy stated that that was one of the issues the study would address. Should redevelopment proceed west, and if so, what are the consequences? Should the development proceed south across the street where it is zoned commercial and what are the consequences. Those questions are hard to answer right now without knowing a whole bunch of answers and she doesn't think tonight is the time frame to say whether development can move west. She believed they need the benefit of more analysis. Councilmember Bolkcom stated that the study wouldn't just focus on hotels. Some of the other issues the City has are whether or not they can support a higher executive type home and other housing issues. She would like the study to focus on the commercial and housing issues. Mayor Jorgenson stated she thought the City has to look at people who are coming to the City now and want to build and hope that they are going to shirttail off of Medtronic and pick up some of their clients. Does the City want a lower end motel that the people of Medtronic aren't going to use and then have it sit there? Medtronic is going to be looking for a first class hotel and restaurant. Shorewood is wonderful but they want a first class restaurant that is going to be available when they can get into it that is convenient for them. Mayor Jorgenson stated they have a lot to decide here but she JOINT CITY COUNCIL/HOUSING & REDEVELOPMENT AUTHORITY MEETING, JULY 28, 1999 PAGE 4 doesn't want to start lower quality development that Medtronic wouldn't be expecting and does the City want to encourage that. Mr. Meyer asked Ms. Dacy what the City could do to control the type of development. There are zoning laws and building laws but how much more can the City influence the type of use and quality of the use to say nothing of the appearance. He asked what the City's legal restrictions were. Councilmember Bolkcom asked that if the City had a master plan for the redevelopment area can the City have more control over it. Ms. Dacy stated that the S-2 redevelopment district in the zoning ordinance gives all of the control to the City Council and the HRA and the Planning Commission to review the plan. For example if they came in and wanted to move west that area is zoned R1 and R3. The developer would have to receive a rezoning to get that developed. A good example is where the United Store and Target is. That is a C-3 zone and a hotel is a permitted use. So what about the quality and architectural controls. The City would have to enact another overlay ordinance for architectural guidelines. If businesses come in and want tax increment financing assistance then the City holds the club with whether the City can give assistance until the City sees the designs they want. What may be the issue is that the City may not be able to hold off some development depending on where it is located. Mr. Meyer stated they should face the fact that the City's powers are quite limited. For example if Wingate Hotel comes in and the City really wants a Radisson but if the Wingate Hotel fulfills all the concurrences the City is going to have a Wingate Hotel. Councilmember Billings stated that if Wingate is the class of a Ramada and a little step up from a Super 8 they have to realize that they are not going to get a lot of business from Medtronic. Medtronic right now is taking 90% of their business at the Northland Inn and the Marquette and Radisson in Minneapolis. A 3'/ star hotel adjacent to Medtronic probably couldn't guarantee them 5,000 rooms a year. Many of the doctors they are bringing in want to be close to the social amenities such as Orchestra Hall and the Guthrie or whatever because they want to spend a little bit of time doing some other things. If they want to bring their families they want their family to be close to some things as well. Other than the zoning there is not a lot the City can do for restrictions if they are not seeking public assistance. If they are seeking public assistance the City takes care of that kind of stuff with the development agreements. Mr. Meyer stated he thinks the City should bear that in mind while the City goes through this even with the development district they have had several curtailing influences with things they don't have much power over. The Wingate Hotel may not come in because there isn't the clientele. Mr. Commers stated that he believes Medtronic has a confidential report on hotel billing. He believes the report tells them that it is very premature and they aren't going to get a JOINT CITY COUNCIL/HOUSING & REDEVELOPMENT AUTHORITY MEETING, JULY 28, 1999 PAGE 5 4 star hotel in here unless there are significant incentives. He thought the City should ask them about the report. Councilmember Bolkcom stated that her concern is that someone will come in and want the City to help them and they are not going to have money to do it. Should the focus be whether the City should have a 4 star hotel and a restaurant or try to do something with the housing and apartment issues they have. Mr. Commers stated that was what everybody has to decide upon. That is the issue. Mayor Jorgenson stated that it appears that the redevelopment project could expand westward. If the City develops a study and puts together a redevelopment district and there are houses in the district we just sealed their fate. Ms. Dacy stated that the purpose of the study is to outline the options and the consequences of each option. Part of the study would identify how many units for development are there, how many are rental, how many are affordable, how much land is needed for the support types of uses for Medtronic. In the next six months the City is putting together the overall language for the comprehensive plan. In the housing element they are going to have to put in some statements about how the City is trying to meet the affordable housing demand, and if they have a significant amount of units that are going to be demolished. Met Council is probably going to want to know how that stacks up against their benchmarks. Mayor Jorgenson stated that an interesting comment Ted Mondale gave her the day they broke ground at Medtronic was "Well now all you have to do is get Medtronic to build and fund an improved housing program." which would mean market rate housing, low income housing, and executive housing. She thought that was kind of a foretelling of what Met Council expects to come. Councilmember Billings stated that he doesn't have a problem in doing a study and taking a look at things but he is not sure that he wants something included in the comprehensive plan at this point. He would like to proceed with their process of doing the comprehensive plan and make that the focal point of getting the comprehensive plan completed. He feels he wouldn't even want to know the results of the study until after he has adopted the comprehensive plan because he doesn't want to be forced into adding it to the comprehensive plan. Councilmember Billings stated that Mr. Koegler's firm is up to their neck in comprehensive plans so it might be hard for him to get it done before the comprehensive plans are done anyway. Ms. Dacy stated that Mr. Koegler's partner Mike Schroeder has done a study for the City of Richfield. The City of Richfield is implementing findings of the impressive study right now. She stated that Mark Koegler would still prioritize the comprehensive plan and his partner would complete the Medtronic analysis. JOINT CITY COUNCIL/HOUSING & REDEVELOPMENT AUTHORITY MEETING, JULY 28, 1999 PAGE 6 Councilmember Bolkcom asked Councilmember Billings to explain why he didn't want the Medtronic study. Councilmember Billings stated the comprehensive plan, under current state statute, takes precedence over the current zoning they have on a piece of property. It is different if you have adopted it as part of the comprehensive plan or have it merely as a planning tool. Councilmember Billings stated his other question is how large of an area would they be looking at. Ms. Dacy stated they have thought about that and talked about that internally but do not have a recommendation for tonight. It literally could be the whole city because of the size of the project and, at minimum, it does have implications up and down 694. At minimum, there needs to be a band from the river and from Mississippi Street on the north and the City limits on the south and go east. Once they define the scope better, they may have to come back and outline the boundaries. Mayor Jorgenson asked what percentage of residential homes this would affect. Ms. Dacy stated it would possibly be a third of it. Mayor Jorgenson stated that most of it is low to moderate income. Ms. Dacy stated that was true. Mr. Meyer asked if it was realistic to even worry about doing something with executive housing. Ms. Dacy stated it was worthwhile to ask those questions. Mr. Burns, City Manager, stated the City should talk to Medtronic and try to get a real good feel for the secondary impacts of their project. They have an idea of what industries they want to be near them and what other uses of land they want near them. They told the City that they are going to generate two jobs for every one job they generate. Mr. Commers stated that he thinks they should talk to Medtronic more being that they might have some information they may not be sharing as to where it is going. He also agrees with Councilmember Billings that the comprehensive plan should be done first because it gives us better leverage in many respects. Mr. Commers stated he is not so sure the special study does any more than the comprehensive plan. He is not sure that they should be paying for that again to spend $40,000 or $50,000 for a study that is concurrent with the comprehensive plan. He asked what good what that study do if it doesn't turn out to be compatible with the comprehensive plan. It seems to him they need that in place for the various reasons Councilmember Billings cited and then you are in a position to start figuring out what you are going to be able to do where, when, JOINT CITY COUNCIL/HOUSING & REDEVELOPMENT AUTHORITY MEETING, JULY 28, 1999 PAGE 7 and how. The comprehensive plan is for the benefit of the community as a whole. We want to accommodate Medtronic but we don't want them lagging the deal. Do we want Medtronic to tell the City how to operate? Councilmember Billings stated that his vision of the plan is to find out what types of businesses we think are going to be attracted because Medtronic is here. He feels it isn't necessarily to accommodate them but maybe try to control or have input pertaining towards the growth that will come as a result of Medtronic. He stated they should take a look at some of the possibilities and see what kind of positive or negative impact and try to position themselves so the better of the good happens and the lesser of the bad happens. Mr. Commers asked Barb Dacy why they needed someone to go out and develop concept plans and start putting together infrastructure things, draft blueprints, etc. He stated it is so far out yet and he doesn't understand why all of that is needed. Ms. Dacy stated that the comprehensive plan will deal with the City as a whole and certainly there is going to be some amount of census tract analysis and so on. The direction of the comprehensive plan was to be more general and broadbrush. The more detailed study would be more specific and get into a little more detail. The research would be more intensive and detailed. A sewer line does need to be built prior to Phase Two. Mayor Jorgenson asked if they should wait to see if Medtronic will do Phase Two or Phase Three because there is some question as to whether that will come into place. Ms. Dacy stated that if it does happen, the City can be better prepared. Mr. Commers asked what the contractual commitment for developing to the west was. Ms. Dacy explained that there is not a contractual commitment. Mr. Commers asked if that came out of the final deal for the City. Ms. Dacy stated that was correct. In a number of ineetings Medtronic made it quite clear that they perceived the west area as an area for potential commercial support types of uses. Mr. Commers asked Mr. Casserly if Medtronic does take down the whole property, does the City have any obligation to help with expansion? Mr. Casserly stated that the City does not have any obligation. Mr. Commers asked if the upgrade for 57t" Place intersection was included based on available funds. JOINT CITY COUNCIL/HOUSING & REDEVELOPMENT AUTHORITY MEETING, JULY 28, 1999 PAGE 8 Ms. Dacy stated it was based upon the City re-looking at the traffic at year 2008 or 2009 but it had to be done by the year 2009. Councilmember Billings stated that rather than all of the detail Mr. Commers was talking about, he would like to see more of a phased kind of study. He would like some of the research for some of the latter elements to get done up front, but more of a stage type plan to get more of the broader viewpoints. If something happens in three years they kind of would know what direction to go but not necessarily have plans drawn. After taking a look at the big picture maybe they would want to isolate in on some closer things. In terms of the comprehensive plan he assumes they would be carrying out some of the basic philosophy that they have had in prior comprehensive plans in the sense that big is beautiful. Ms. Dacy stated that she said the direction was to be general and broadbrush. Mr. Commers stated that is the fine line. Being big and broad presents lawsuits every time you turn somebody down. You have to determine where you want to draw the line between it being broad and being specific but that is up to the City. Mr. Casserly stated that New Brighton is finishing up with their visioning process and doing the 35W corridor and they are now interviewing people that have been interviewed for the Medtronic site. There is a 90 acre site in the Northwest Quadrant of 35W and 694, and it is clear this development is going to occur in about 18 months. They will be selecting a master developer in the next 30 - 45 days. New Brighton is trying to start a visioning process that impacts the major corridors. The City is probably going to want to figure out some ways to interact or at least to try to do some cooperative things with folks immediately to the east and west because it is really going to impact what vision the City would have for this corridor. These are going to be occuring right now and is going to be a 10 year buildup and is an enormous redevelopment project. Ms. Dacy stated there is a corridor coalition on 35W that does include a number of cities such as Blaine, New Brighton, Arden Hills, and Roseville. The City may want to consider joining in on the coalition effort and that is a topic for another night. The group of communities are supposedly convincing Met Council to look at that area as a group of cities instead of doing comprehensive plan revisions with each one and look at market areas for all of them. Ms. Gabel stated that she feels first they have to determine what Medtronic's real needs are. Mr. Commers stated that Mr. Hagmann should come to one of their meetings. Ms. Dacy stated she is hearing a yes to the study with the qualification that the plan process comes after the completion of the comprehensive plan with a phased approach, that starts by looking at general issues and then gradually gets more specific and Medtronic's participation is a big component. JOINT CITY COUNCIL/HOUSING & REDEVELOPMENT AUTHORITY MEETING, JULY 28, 1999 PAGE 9 Mr. Burns, City Manager, stated that they needed to think about the likely uses that are generated from the Medtronic project and then identify the requirements for those uses and the ramifications. Ms. Dacy stated that item number two was redevelopment priorities. The first issue is with housing programs and the second issue is with redevelopment projects. With the new state law they have to tract expenditures and revenues by district and they have created new funds for the Housing Program and a General Fund. Between now and 2011 the balance in the General Fund for the Housing and Redevelopment Authority will fuel the Housing Rehabilitation Programs. After that point in time, the City will begin to see some of the impacts of Medtronic, and they are good financial impacts. Between now and the year 2011 Onan and Murphy will create $5 million dollars of increment with about one million reimbursing the HRA for it's assistance to Onan Murphy and will fuel redevelopment of the salvage yards. When the salvage yards are redeveloped into tax producing properties, they will create increment as well. Mr. Pribyl, Finance Director, explained that the financial records are the product of many, many hours of work over the last 6 months or so and they are not completed yet. The accomplishments thus far actually deal with loans back and forth between funds to accomplish providing the basis for complying with the State Statute prior to the change that allowed pooling on the districts established between 1981 and 1983. Mayor Jorgenson asked Mr. Pribyl if he was talking about the HRA financial reports rather than the City of Fridley. Mr. Pribly stated they were talking about the HRA financial reports independent of any of the City funds. The comprehensive annual financial report of the City of Fridley would be aggregated into the total but these are completely separate. They have tried to summarize the main fund types with the General Fund, Housing Funds, Debt Service and the TIF Funds. The accumulative balance is $9,577,509. Ms. Dacy wanted to make sure that she could show they had enough money to support the Housing Programs and Mr. Pribyl feels they can support the Housing Programs in the future. There is a negative cash balance of $1,000,000 on the Housing Funds but that is only because that is the way it wound up in the end of 1998 prior to them transferring money in to actually fund those programs and that goes away in 1999. The transfers were accomplished in 1999. Ms. Dacy stated that the cumulative balance of 1999 in the year 2000 for the General Fund numbers have already assumed all of the expenditures for the Housing Program including Scattered Site Acquisition, revolving loan program, and the Matching Deferred Loan Program. Mr. Commers asked why it was blank in the 1999 Housing Fund column. Mr. Pribyl explained that it was because the program was fully funded and that cash deficit is wiped out and all the cash needs to support their housing program is fully JOINT CITY COUNCIL/HOUSING & REDEVELOPMENT AUTHORITY MEETING, JULY 28, 1999 PAGE 10 funded so the impact on that year is zero. There are enough revenues from the General Fund and all the supporting revenues such as the mortgage revenues to support their program for that year. Ms. Dacy stated that in general there are about $1,300,000 of housing expenditures in 1999 and they are predicting about the same amount in 2000. What the City is suggesting is that they can continue as they have for the next 18 months. In the year 2007 the Revolving Loan Program becomes to be self-supporting and then you see those housing funds increase. The City is also suggesting that one of the Housing Coordinator functions in the next year is to come back with a recommendation and approach regarding the apartment rehabilitation that could be a very expensive price tag. One year from now HRA, City Staff and City Council should be having another priority setting session because we should take another look at the financial picture and how much money should be set aside and compare it to single family programs or maybe what happens out of the Medtronic site. Mr. Commers asked Mr. Pribyl if the City was going to take $1,300,000 out of the General Fund to pay for the Housing. Mr. Pribyl stated that was correct. Mr. Commers asked if in the year 2000 they would take $1,300,000 out of the General Fund and transfer that amount up to the year 2007. Mr. Pribyl stated that in the year 1999 there is a transfer of $1,089,000 and in the year 2000 there is a transfer of $743,000. It begins to drop down based on the revenues that are supporting the housing program increasing while the transfers are decreasing. Ms. Dacy stated that the City did program the expenditures for the first six years for the Scattered Site program to finish out the program they had already originally hoped to accomplish with the special legislation in 1995. The only number that is missing to a great degree is Apartment Rehabilitation and that could be much more than that. Mr. Pribyl stated that financially the City will be okay pertaining to satisfying program needs, statutory requirements, and housing requirements. Councilmember Billings had a question pertaining to the TIF funds. Mr. Pribyl stated that those are all of the tax increment districts themselves. Councilmember Billings asked how much of the TIF fund in 2020 is locked into a specific district and how much is free to use anywhere. Mr. Pribyl stated that all of the money would be used in a district by district basis. Councilmember Billings asked if in the year 2020, is there any money that can be used outside of the district that the money came from. JOINT CITY COUNCIL/HOUSING & REDEVELOPMENT AUTHORITY MEETING, JULY 28, 1999 PAGE 11 Mr. Casserly stated it would be the Onan - Murphy money which would be 4 million dollars. If we can conclude successfully the installment sale with Medtronic, those revenues that will amount to about 15 million dollars will also become available. Mayor Jorgenson asked if the revenues available in the year 2025 include all three phases of Medtronic. Mr. Casserly stated it was assuming all three phases were completed. If it was Phase 1 only, it would be about 7.4 million dollars by the year 2025. Mayor Jorgenson stated they don't have any guarantee on Phases 2 and 3 so she hates to make assumptions on what they are going to do. Ms. Dacy stated that is why they should come back and revisit this one year from now and they should probably only be doing projections from 3- 5 years. Ms. Dacy stated that for the next five years the City has the revenues they need due to Phase 1 of Medtronic and Onan - Murphy. Councilmember Billings stated that in the year 2005 there will be 3.8 million dollars in the General Fund and 13 million in the TIF funds. He asked if they were going to decide to do the Gateway Projects is there money to fund them between now and the year 2005. Ms. Dacy stated that there was money to fund them. Mr. Casserly stated that part of the available money was shown in the general fund. Councilmember Billings stated that he was hoping the numbers he would see tonight are the numbers that say this is how much money the HRA has available to things with if any. Mr. Commers stated they do have that but they don't know where or how to use it. Mr. Pribyl stated that the General Fund is absolutely available and the goal the City has is to move as much money into the General Fund as possible. Ms. Dacy stated that they will create a TIF district for Gateway East and up until that point in time TIF #3 or the General Fund will be the source of those funds. Eventually the increment from the District will help to recoup some of those expenses as well and then they intend to apply for the Livable Communities Act to fill the gap. The net is $400, 000 to $500, 000. Councilmember Billings stated that since there will be adequate revenues in the year 2012 and beyond would it be practical to issue some bonds right now and pay the bonds off in 2012 and beyond when the cash is there. JOINT CITY COUNCIL/HOUSING & REDEVELOPMENT AUTHORITY MEETING, JULY 28, 1999 PAGE 12 Mr. Casserly stated he would want to wait 3- 5 years to find out how things are progressing and make a decision at that time. The interest component is so high it doesn't work very well. Councilmember Billings stated that he thought he heard Ms. Dacy saying that the City should be doing Gateway East and they need to seriously take a look at doing salvage yards. He doesn't see 3 million dollars enough to satisfy those cash flow needs. Mr. Casserly stated that it may not even be meritorious to even think about it but they need to do a little due diligence to figure out where its at. Councilmember Billings asked how they get the salvage yards going and how to pay for them. Ms. Dacy stated they have a rough idea of the market values of the property values. Ms. Dacy feels they should do the diligence and get the appraisals done and come up with a project budget because that project will probably take two to four years. Councilmember Billings asked if there was money to pay for the project after the due diligence. Mr. Casserly stated that it was hard to give a straight answer. The salvage yards are in the Onan - Murphy district. That district will be generating very substantial amounts of revenue. That revenue can be spent inside the district or outside the district. The City can probably go ahead assuming the clean-up costs are not exaggerated and depending on what kind of grants they can get from the state because the state is becoming more and more proactive in the system. The issue is getting a handle on what kinds of costs that they need to deal with and secondly finding out if those precious increments that can be spent outside the district have competing uses. Mr. Pribyl stated that the numbers are based on cash flow from the Onan - Murphy district. There are 5.8 million dollars of TIF revenues from the Onan - Murphy district alone. Mr. Commers asked the City's lawyer's opinion about replacement of Housing Units is. Mr. Knaak stated that the settlement agreement and the Fair Housing Act would not require the replacement of the duplex by the City with affordable housing. The Act itself does not compel a city to engage in this kind of construction unless the city has a policy in practice. He stated that the City is not required to construct a duplex as affordable housing. That is not to say that somebody wont sue the City but it his assessment that the City is in a very comfortable position. Councilmember Barnette stated that he agrees with the location of Gateway East because doing something on that side of University Avenue will stimulate the neighbors on the other side to desire to have some improvements made also. JOINT CITY COUNCIL/HOUSING & REDEVELOPMENT AUTHORITY MEETING, JULY 28, 1999 PAGE 13 Mayor Jorgenson stated that she thought the old McDonalds property was also vacant now. Councilmember Barnette stated that about a month ago there were still cars there. Councilmember Billings stated that one of the people who live right behind it works at the school district and when he stopped in there about two weeks ago they indicated that the church had vacated it. He sent an e-mail to staff saying that it may be vacant and they should take a look at whether or not they think it would have any attractiveness to including it in the project or not. Ms. Dacy stated that it does provide additional land area and is a possibility. The City is pursuing contacting the appropriate people to ask if it is available and at what price. Mr. Commers stated that his reservation toward the Gateway East project is that they are going to spend a lot of money today and in five years they find out something else has to be done and they could look relatively foolish. He stated that maybe the property is best utilized for some of the backup businesses that are needed to service Medtronic. Councilmember Billings stated he would personally encourage the City to do the Gateway East project. He stated that the big thing that stopped the City from doing something near the Frank's Used Car site was the fact that there were a few vocal people in the neighborhood that suspected the City was trying to dupe them in some way shape or fashion. He stated that he when the neighbors see how nice it is across the street with the Gateway East project the City might find the neighbors willing to stand up to the neighbors opposing the expansion and say look what we are missing out on because of you. Councilmember Bolkcom stated that the City needed to do something on University Avenue to update the look. Councilmember Billings stated that they needed to start doing something because they need to tear down J.R.'s Auto and Frank's Used Cars. He feels the City should decide and take action. Councilmember Barnette asked Mayor Jorgenson what her feelings were regarding Gateway West and completing it as quickly as they can. Mayor Jorgenson stated that she liked the idea of doing Gateway West but she didn't know if there would be funds available. Councilmember Barnette asked if she was in favor of moving ahead with Gateway East. Mayor Jorgenson stated that she would like to head in that general direction but she thinks they are going to have other projects competing with that project. It would JOINT CITY COUNCIL/HOUSING & REDEVELOPMENT AUTHORITY MEETING, JULY 28, 1999 PAGE 14 happen eventually but she didn't want to lead people on and say this year were going to Gateway East and Gateway West would happen next year. Mr. Commers stated they might have the same problems doing Gateway West as the problems with Gateway East. Mayor Jorgenson stated she didn't think they would have the same problems. Councilmember Bolkcom stated that she thought it would be a different issue. Councilmember Billings asked Ms. Dacy if Gateway East would cost about 1 million dollars. Ms. Dacy responded that that was the total expense in terms of cash flow. Some of that has been charged against 2 and 3 already and we can do some more of that by the end of this year. Mayor Jorgenson asked if some of that money in 2 and 3 isn't used by the end of the year literally unavailable if not used. Ms. Dacy stated that the funds have to be committed. Ms. Dacy stated that staff is suggesting that they would like to use as much of the 1.4 million dollars as possible in the next 3- 6 months to finish up the acquisition and Gateway East. The second option is that they could use those funds to pay for the upgrade in the sewer line. The City would have to go through the bidding process and award the contract to the contractor and probably have to escrow those funds from the HRA to pay for that and the project could start as soon as next spring. Mr. Burns, City Manager stated that they could use money from the Lake Point District for that sewer line. Councilmember Bolkcom asked where the costs associated with each of these items were. Ms. Dacy stated that with Gateway East, it was probably $200,000 to $400,000. The sewer line has a rough estimate between $100,000 to $200,000. The Scattered Site Acquisition program could be accelerated at 10 - 15 lots and that is'/ million dollars right there. Executing purchase agreement with the salvage yards would be very aggressive and she is not as confident the City can do that in the next three to six months. Ms. Dacy stated that the other option here is that maybe we start charging 2 and 3 with the payments to pay the City Council back on the 1.5 million dollar loan. Mr. Casserly stated that there is a real advantage from a structural and financial perspective of doing ten to fifteen scattered site acquisitions because you can actually JOINT CITY COUNCIL/HOUSING & REDEVELOPMENT AUTHORITY MEETING, JULY 28, 1999 PAGE 15 create a scattered site redevelopment district which is nicer to work with. You can use the revenue from all of them to support the activity in all of them. Mr. Burns, City Manager asked Mr. Fernelius if he could negotiate acquisitions and get appraisals for 10 - 15 properties in four months. Mr. Fernelius stated he was unsure of that. Ms. Dacy stated he would need help. Mr. Casserly stated that they wouldn't have to close them. They just have to have a purchase agreement that is irrevocably committed with no contingencies. Councilmember Bolkcom stated she thought it was well worth the money to hire Mr. Fernelius help than to lose the money. Ms. Dacy stated she felt she was hearing concurrence on these ideas, assuming they could get Mr. Fernelius some help. ADJOURNMENT: MAYOR JORGENSON AND CHAIRPERSON COMMERS DECLARED THE JULY 28, 1999, CITY OF FRIDLEY JOINT HOUSING AND REDEVELOPMENT/CITY COUNCIL MEETING ADJOURNED AT 10:07 P.M. Respectfully Submitted, Signe L. Johnson Recording Secretary