HRA 11/04/1999 - 00002759CITY OF FRIDLEY
HOUSING & REDEVELOPMENT AUTHORITY MEETING
NOVEMBER 4, 1999
CALL TO ORDER:
Chairperson Commers called the November 4, 1999, Housing and Redevelopment
Authority meeting to order at 7:32 p.m.
ROLL CALL:
Members Present: Larry Commers, John Meyer, Virginia Schnabel, Jim McFarland,
Pat Gabel
Members Absent: None
Others Present: Barbara Dacy, Community Development Director
Grant Fernelius, Housing Coordinator
Jim Casserly, Development Consultant
Julie Vogel, Accountant
Dennis P. Micke, 621 Lafayette Street
Janice Bressler, 621 Lafayette Street
APPROVAL OF THE OCTOBER 14, 1999, HOUSING AND REDEVELOPMENT
AUTHORITY MEETING MINUTES:
MOTION by Ms. Gabel, seconded by Mr. McFarland, to approve the October 14, 1999,
Housing and Redevelopment Authority meeting minutes as presented.
UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED
THE MOTION CARRIED UNANIMOUSLY.
CONSENT AGENDA:
1. CONSIDER PARTICIPATION IN MINNESOTA SOLUTIONS FOR 2000.
2. CONSIDER ACQUISTION OF 6175 EAST RIVER ROAD.
3. AMENDMENT TO DEVELOPMENT CONTRACT WITH CEE.
4. COLA INCREASE FOR HRA EMPLOYEES.
5. CLAIMS AND EXPENSES.
MOTION by Mr. Meyer, seconded by Mr. McFarland, to approve the Consent Agenda
with the Consideration of the Acquisition of 6175 East River Road taken from the
Agenda, and with the addition of the additional expenses provided by Julie Vogel.
UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED
THE MOTION CARRIED UNANIMOUSLY.
PUBLIC HEARINGS:
HOUSING & REDEVELOPMENT AUTHORITY MEETING. NOVEMBER 4. 1999 PAGE 2
2. PUBLIC HEARING ON SALE OF 611 LAFAYETTE STREET:
MOTION by Ms. Schnabel, seconded by Ms. Gabel, to open the public hearing.
UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED
THE MOTION CARRIED AND THE PUBLIC HEARING WAS OPENED AT 7:40 P.M.
Mr. Fernelius stated that the property at 611 Lafayette Street is located in the Riverview
Heights area of Fridley. The property, acquired by the HRA 1996, was purchased from
a family that experienced a fire and the property was damaged beyond 50% of the value
of the structure and they were not able to rebuild. The HRA made an offer at that time
to purchase the property for $5,500. The lot is 55 feet wide and 110 feet deep and is
considered a non-buildable lot. The City has been unable to include it in the Scattered
Site Program as a site for a new home. Since that time they have been maintaining it
but have not done anything with it.
Mr. Fernelius stated that the property owner to the west, Dennis Micke at 621 Lafayette
Street, contacted him last summer. Mr. Micke had expressed interest in buying the
property and combining it with his parcel to expand the size of his yard and provide
opportunities to enlarge his home and other improvements. Mr. Fernelius proposed a
sale price of $5,500 to Mr. Micke. Mr. Micke expressed concerns about being able to
finance it on his own. A deal was negotiated in which the HRA would essentially
provide him with a deferred mortgage on the property. He would not have to pay that
off until he sells the entire site at some time in the future. This approach has been used
before on other HRA properties. Staff recommends authorization to award the property
to Mr. Micke.
Mr. Micke, 651 Lafayette Street, stated that he understood the process of the sale of the
lot. His plan for the lot was to combine it with his present lot. He has a small house and
would like to eventually turn it into a small garage and build a larger house on part of the
new lot.
Mr. Commers asked what lot Mr. Micke currently lives on.
Mr. Micke stated he lives on Lots 24 and 25. The lots are only 25 feet wide for a
combined total of 50 feet wide. This lot would add another 50 feet.
Ms. Schnabel asked if the 1% interest rate was standard.
Mr. Fernelius stated they have used this same interest rate on a recent lot that was sold
in Hyde Park to a property owner who had a similar situation.
Ms. Schnabel asked if the lots have to be recorded with the County in any special way.
Mr. Fernelius stated that nothing would be done from a planning perspective. The lot
would be combined into one parcel for tax purposes.
Ms. Gabel stated that with the sale, a conforming lot size is achieved.
HOUSING & REDEVELOPMENT AUTHORITY MEETING. NOVEMBER 4. 1999 PAGE 3
Mr. Micke asked if it would be an annual interest.
Mr. Fernelius stated that it would be simple interest.
Mr. Micke stated that he thought it was a very good deal and thanked the HRA
members.
Mr. Commers stated that the HRA was trying to help people and make things available
at a very reasonable price so they can improve their property.
MOTION by Ms. Schnabel, seconded by Mr. McFarland, to close the public hearing.
UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED
THE MOTION CARRIED AND THE PUBLIC HEARING WAS CLOSED AT 7:46 P.M.
MOTION by Mr. Meyer, seconded by Ms. Gabel, to approve the sale of 611 Lafayette
Street to Dennis Micke.
UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED
THE MOTION CARRIED UNANIMOUSLY.
ACTION ITEMS:
7. RESOLUTION AUTHORIZING COMDEMNATION OF GATEWAY EAST
REDEVELOPMENT PARCELS:
Mr. Fernelius stated that the HRA is attempting to acquire three remaining parcels in the
Gateway East Project area--the property owned by Valvoline at the corner of 57t" and
University Avenue, a duplex property at 353 57t" Place, and a vacant lot immediately
north of that site. They have attempted to negotiate with all three property owners, and
the owners of two of the sites are far apart on price with the City. They have not been
able to contact the tax forfeit lot owner due to the owner being out of state.
Mr. Fernelius stated that they would like to receive authorization to proceed with the
condemnation of all three sites. That does not preclude them from trying to negotiate
with the owners; but due to the timing and necessity that they get the transactions
closed by the end of the year, they feel it is important to take that action this evening.
This will have to happen fairly quickly, but they are not actually buying the properties at
this point.
Mr. Commers asked what Lots 4, 5, and 6 are.
Mr. Fernelius stated that Lots 4, 5, and 6, Block 3, City View Addition, is the tax-forfeit
lot owned by Richard Miller between the duplex and JR's Automotive. The second site,
Lots 5, 6, and 7, Block 6, City View Addition, is the Valvoline site directly east of Instant
Oil Change. The third site, Lots 7 and 8, Block 3, City View Addition, is the duplex
owned by William Fogarty.
HOUSING & REDEVELOPMENT AUTHORITY MEETING. NOVEMBER 4. 1999 PAGE 4
Mr. Fernelius stated staff would give the HRA an update on the process at the
December meeting. They can get into more discussions about evaluations and prices.
Mr. Commers stated the only issue is what is the HRA's obligation if they have to
condemn the property. How does that affect the consent decree?
Ms. Dacy stated that the City Attorney did evaluate that issue. He felt that the
acquisition and the condemnation are appropriate and that it would not adversely affect
the consent decree. She could provide a copy of his opinions.
Mr. Commers asked for clarification regarding the redevelopment and the resolution.
Mr. Casserly stated that legal documentation contained a number of references to the
redevelopment program that provides the HRA to enter into acquisitions. It really
specifies the factual justification.
Mr. Commers stated that if the resolution is sufficient, that is fine, in case somebody
wanted to object to the acquisition process.
Mr. Casserly stated that it was the redevelopment plan that states the public policy and
bindings that they use.
Ms. Schnabel asked if these are the only properties they need to proceed with.
Mr. Fernelius stated that is correct.
Mr. Commers stated that this was an outgrowth of the funds that are tied up in the other
districts.
Mr. Casserly stated that this was also necessitated by the fact that they have the funds
available. This district could never support itself, being that it would be residential.
They do need to use some of the other resources they have available now to do this
acquisition.
Mr. Commers stated that this was discussed at the joint City Council and HRA meeting,
and the majority felt this was what should be done.
MOTION by Mr. Meyer, seconded by Ms. Schnabel, to approve HRA Resolution No.
14-1999, Resolution Determining the Necessity for and Authorizing the Acquisition of
Certain Property by Proceedings in Eminent Domain.
UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED
THE MOTION CARRIED.
8. RESOLUTION AUTHORIZING AMENDMENT TO DEVELOPMENT
CONTRACT, MEDTRONIC, INC.
HOUSING & REDEVELOPMENT AUTHORITY MEETING. NOVEMBER 4. 1999 PAGE 5
Ms. Dacy stated that Medtronic is agreeable to the terms in general, but they wanted to
check with their legal counsel regarding the issue of the business subsidy law. Staff is
suggesting postponing this item until the December agenda.
Mr. Commers asked Mr. Casserly to give a summary of the changes made to the
resolution.
Mr. Casserly stated that from the time they originally entered into the contract for
negotiations with Medtronic, they had intended that there would be an actual sale of the
property. In order to try to get the project going, everybody agreed to go ahead and
proceed with the closing and execute the documents; then sort the issues out later.
Mr. Casserly stated Medtronic is signing a note to the City for $5,000,000 to cover the
cost of the site and the City's cost for public improvements, and there are still some
things that have not been done that will incur more expenses. It is also to cover their
option rights. They have the right to take down additional portions of the property. They
will provide the City with that note and pay the City over a period of time.
Mr. Casserly stated a copy of the revenue note shows the amount that is being paid
back to the City. The City has received three pages regarding cash flows. The pages
are titled Original, Restated, and Note. The cash flow that has the handwritten original
in the right hand corner reflects the cash flow they have been working on for many
months. The assumptions that go into this are just assumptions. There is a large
amount of increment projected which assumes that they will have very high market
valuation.
Mr. Casserly stated the buildings will be valued at $100 per square foot. It also
assumes the inflation rate of 2% per year and a buildup of six or seven years. It
assumes the legislature does not reduce the class rates anymore and a tax rate that is
fairly high also. All of these assumptions provide the revenue stream. The revenue
stream has then been allocated between the HRA and Medtronic. The original concept
shows how they have tried to piece this together through last winter and spring. The
amount in column C is the amount that is available from the HRA, and the amount in
Column F is the amount available from Medtronic. They needed to increase the
budgets for Tax Increment District 6 where Medtronic is located. That has all been
done and the public hearing was held by the City Council. That has been continued
until the second meeting in November or probably first meeting in December.
Mr. Casserly stated they reworked the arrangement with Medtronic, and the restated
cash flow is how the current arrangement would look if the HRA approved the changes.
In column E, the Medtronic loan payments are the result of the $5,000,000 loan
payments they need to execute. That note payment with interest would generate the
revenues that are shown in column E.
Mr. Casserly stated Column H is the restated cash flow which shows the flow of
payments to the HRA. If the HRA was to look back at the original cash flow and the
amount available to the City, column C is going to look very much like column H, the
restated cash flow. Medtronic will be paying the HRA by installment sales. These
figures are all just based on reasonable assumptions, but they cannot say for certainty
HOUSING & REDEVELOPMENT AUTHORITY MEETING. NOVEMBER 4. 1999 PAGE 6
that in ten years from now there will be a note payment of $250,000 every six months.
This should work favorably for the HRA, and Medtronic's corporate counsel indicated
that they are comfortable with the concept and want to try to make sure the formulas are
working. Medtronic has raised the issue of a subsidies act that went into effect August
1 St this year.
Mr. Commers stated that the HRA needed a little time to look over this change in
concept and thanked Mr. Casserly for giving a little more background.
Mr. Meyer stated that both sides are where they were before.
Mr. Commers stated that they are in terms of the numbers, but the HRA is in different
shape in the way that they are getting the money and how the money can be eligible.
Mr. Casserly stated that there is an opportunity that is important. If this site was really
built out more than the square feet projected, and if it was built sooner than the six year
period, it is possible for them to pay off this note. They could be getting more than
anybody anticipated. This project is complicated because the space is very difficult to
use other than what they need it for.
Mr. Casserly asked Ms. Dacy if they were doing some assembly.
Ms. Dacy stated that they would have an auditorium.
Mr. Commers asked if there was a way to expand the project area in this district.
Mr. Casserly stated that they would not be able to expand the district.
Mr. Commers asked if the funds generated on the tax increment side of this project will
have to be spent within the district.
Mr. Casserly stated that they will have to be spent within the district, or spent on the
special legislation authorizing very specific kinds of things. In addition, administrative
expenses are pooled, so for those amounts that can be allocated in the program, this
district could be a source for the administrative expenses.
Mr. Commers asked what fund the administrative receipts go into.
Ms. Dacy stated that the administrative fees go into the tax increment district where they
have created a fund. They will have to make some fund transfers and keep track of the
source. The land sale payments would be reflected in the revenue of that particular
fund for District 6.
Mr. Casserly suggested that those can be spent outside the district so they would
probably need to establish some kind of internal tracking mechanism.
Mr. Commers stated his concern is how they reflect the moneys that they are getting for
administrative expenses. He understands that they can be used any place they want.
What fund are they putting them into and how are they reflected in the budget?
HOUSING & REDEVELOPMENT AUTHORITY MEETING. NOVEMBER 4. 1999 PAGE 7
Ms. Dacy stated that the term "administrative expenses" has a broad definition in terms
of the TIF Statute. They do not have a revenue line item that specifies administrative
expenses, because administrative expenses can be all kinds of across line items in the
specific budget sheet.
Mr. Commers stated they have been getting administrative expenses for some time.
How much has been collected and has it just gone into the general account?
Ms. Dacy stated that up until this year they have not had to track by district. They had
one operating fund for all of the districts. This year they had to establish a tracking
system. They can probably go back and identify that number and answer that question,
but it may take some time.
Mr. Casserly stated that the HRA's annual administrative expenses have exceeded the
percentage that was authorized. They have been taking the portion that they can take
out the tax increment, and that portion that they cannot take has been coming from the
General Fund. You can only take up to 10% administrative expenses or 10% of the
increment generated.
Mr. Commers stated that he wants to find out where that money is going, because they
pay the general administrative expenses monthly to the City out of the General Fund.
How do these administrative moneys get into that General Fund to reimburse the HRA
for those expenses?
Mr. Casserly stated that they would have been pooled and integrated. They were
essentially operating with a unified fund. The City is now tracking them all individually
by district.
Mr. Commers asked Ms. Vogel where the money goes.
Ms. Vogel stated that with Ellers and Associates, they have gone back through the last
20 years and looked at the TIF District and looked at the charges. They have taken all
of the non-TIF revenues out of the TIF fund and put the non-TIF money into the General
Fund. That is why they have a good fund balance in the General Fund to be able to use
for administrative expenses. They are going to be incorporating a program that will be
charged to the specific TIF District based on where they spend their time. They can
spend up to 5% of the total TIF expenditures and a 10% for all of the other districts.
She has looked at the larger TIF districts. Districts 2 and 3 are well under the 5%
limitation of what they have in those districts. Those will expire in a couple of years.
They will hopefully try to charge for administrative expenses to those districts.
Mr. Commers asked why that was necessary if, overall, they are spending more than
they are reflecting and why do they have to track it to a district.
Ms. Vogel stated they do not charge as much for administrative expenses as 10%
allows for TIF districts.
Mr. Commers stated he thought they were charging the maximum.
HOUSING & REDEVELOPMENT AUTHORITY MEETING. NOVEMBER 4. 1999 PAGE 8
Ms. Vogel stated that she did not think it was being charged out that way, because the
districts have not been segregated out each year the way they are now.
Ms. Gabel asked if there was so much more available.
Mr. Casserly stated that they had to look at cash flows. They need to look at potential
revenue through the years. They have been reluctant to show some of that because
they have not been sure this project would proceed until last June.
Mr. Commers stated that he thought they also accumulated administrative expenses
overall of the other projects, and he thought they were taking the maximum every time.
Ms. Vogel stated that you cannot just take the 10% of increment received. You have to
show actual expenditures for that.
Mr. Commers stated that if you can pool it and use it anywhere and, over all their
expenses exceed that 10%, then why worry about tracking in one district. If one district
is 5%; but they make it up in some other district and use the funds in another district, he
does not see why it makes any difference.
Mr. Casserly stated that this is simply a State Auditor presentation of how they have to
proceed. He interprets that Program expenses have to be charged into the specific
district. In the aggregate they are not going to be able to exceed 10%. In previous
years they pooled all of their resources and did not have to do this. He does not think
they will be short any funds and it is just a matter of tracking.
Mr. Commers stated they have $519,000 worth of administrative fees for the year 2000.
They must be able to make a specific calculation for the 10% tax increment that they will
be bringing in this year to offset that.
Mr. Casserly stated that they are really dealing with the limitation of 10% of the available
increment that can be used for administrative expenses. If the administrative expenses
are greater than that, it has to be paid out of whatever resources they have available.
He believes that the administrative fees have exceeded the limitation the past number
of years. It has never been a major concern because of the unencumbered funds
available.
Mr. Commers stated that 10% of the total tax increment district would be $300,000, and
asked if that would be shown in the budget.
Ms. Dacy stated that it is not. The total revenues and types of resources and
expenditures by category is shown. They have created an operating budget so they
can make sense out of it. The Auditor's office is requiring a different set of accounting.
The City is doing a budget for the City and also must tell the Auditors office what they
spend.
Ms. Vogel stated that it is a confusing thing, especially with the language from the State
Auditors office.
HOUSING & REDEVELOPMENT AUTHORITY MEETING. NOVEMBER 4. 1999 PAGE 9
MOTION by Ms. Schnabel, seconded by Ms. Gabel, to table the Resolution Authorizing
Amendment to Development Contract, Medtronic, Inc., until the December meeting.
UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED
THE MOTION CARRIED UNANIMOUSLY.
9. YEAR 2000 BUDGET:
Ms. Dacy stated that the HRA approved the 1999 budget at the October meeting. There
are a number of summary sheets in the packets for the HRA, and funds have been
created for each of the Tax Increment Districts and the Housing activities. A General
Fund was created for the HRA for non-tax increment types of revenue. Next year, they
are projecting that they will receive about $4,000,000 in revenues. They are projecting
about $1,600,000 in expenditures. In addition, there will be slightly less than
$1,000,000 in debt service. They are projecting a year end fund balance of
$11, 300, 000.
Ms. Dacy stated the General Fund will provide the sources of funds for the Housing
Programs or other types of expenditures now or in the future. Charges will be charged
to each individual tax increment district fund. There are 17 tax increment districts with
four being inactive. Thirteen range from 2-4 acres in size. The Housing Replacement
District is authorized by state taxes. They want to continue the Revolving Loan
Program, the Hyde Park Rehabilitation Programs, the Remodeling Fair, contract with
CEE, and continue the Scattered Site Acquisition Program. Some minor expenditures
include a potential idea of a`Welcome to Fridley' sign at Christenson Crossing. The
acquisition expenditure for the Gateway East project will be wrapped up in 1999. They
anticipate expenditures next year with the relocation costs, demolition costs and
potentially they may even finish the demolition earlier.
Ms. Dacy stated staff recommends approval of the 2000 budget. Additional significant
expenditures other than the routine administrative activities will be brought for approval.
Next year, the City will have completed its Comprehensive Plan. Drafts will be in the
packets for the next month. There are also minor corrections to the Housing Fund.
Mr. Commers stated that after all of the operating expenses and debt service, they have
$1,500,000 to spend on various programs in the year 2000.
Ms. Dacy stated that was the annual calculation; but in addition to that, they have the
fund balance.
Mr. Commers stated that in other words, if they just break even next year of what they
are bringing in versus what they are spending, they have $1,500,00 to spend on the
programs if they do not go into their reserve.
Ms. Vogel stated that is correct.
Mr. Commers asked how much the budget proposes that they spend on programs.
HOUSING & REDEVELOPMENT AUTHORITY MEETING. NOVEMBER 4. 1999 PAGE 10
Ms. Dacy stated that from the $1,600,000 total from the total expenditures, $300,000 of
that $1,600,000 is for the Scattered Site Program. The Housing Rehab Programs are
also in addition to that. The Capital Outlay section of that $1,600,000 pertains to the
Gateway East expenditures and pay-as-you-go payments.
Mr. Commers asked for clarification.
Ms. Dacy stated that the $1,600,000 is including those programs. The CEE contract is
included in that as well.
Mr. Commers asked where that was reflected in the budget on page 1.
Ms. Dacy stated that should be part of Capital Outlay and Total Tax Increments
Districts.
Mr. Fernelius stated that would be under Capital Outlay 4510 Land. $459,000 with
$300,000 of that would be coming from the Housing Replacement Program.
Ms. Dacy stated that page 9 describes expenditures and revenues for each of the tax
increment districts.
Mr. Commers stated that the programs that are included in the budget are the Housing
Operation, the other housing programs, the Revolving Loan Fund, and the Housing
Replacement Program.
Mr. Commers asked where the Gateway Program is.
Ms. Dacy stated that is on page 26 and programmed to be a tax increment district.
MOTION by Mr. Meyer, seconded by Ms. Gabel, to approve the Year 2000 Budget.
UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED
THE MOTION CARRIED UNANIMOUSLY.
Mr. Commers thanked Staff for the information.
10. CONSIDER ACQUISTION OF 6175 EAST RIVER ROAD:
Ms. Dacy stated that this item was removed from the Consent Agenda and placed on
the Action Items.
Mr. Fernelius stated this property is located on East River Road at the corner of 61St
Way. The property is very small, a one-story house built in 1948. It has two bedrooms,
one bath, and a single car garage. The total square footage is 616 square feet. The lot
is 60 feet by 126 feet. It was platted before 1950 and is considered a conforming lot.
They could sell it as a buildable lot. The property was inspected by the appraiser, Paul
Schwartz, as well as the City's Chief Building Official. They noticed substandard
conditions. One of the critical things for a property to qualify for this program is that all
of the defects in the property have a cost of repair that exceeds over 15% of the value
HOUSING & REDEVELOPMENT AUTHORITY MEETING. NOVEMBER 4. 1999 PAGE 11
of the structure. Based on the analysis of the appraiser, the cost to improve this
property would be well over $20,000. This clearly meets the criteria of the Scattered
Site Program. It is extremely visible in the area and acquiring this property meets a
number of objectives. This would improve the streetscape along East River Road. The
appraisal amount came in at $74,000. That amount was offered to the owner. They
hired Wilson Development Services to help them in negotiating a number of
acquisitions. They met with the property owner and presented the appraisal as the
offered amount being $74,000. Staff recommends approval of the acquisition.
Ms. Gabel stated that she did not expect something of that size with that many
problems to be appraised at $74,000.
Mr. Fernelius stated that when the appraiser looks at these properties, they are always
using comparables. They look at three other properties that have sold within the recent
time period and make adjustments based on the condition of the property and reconcile
all of those figures to come up with what they believe is the final market value. The
market is strong with a high demand for properties. People are paying premiums for
properties that are substandard.
Mr. Commers asked if the $74,000 is after $20,000 of improvements have been made
to the property.
Mr. Fernelius stated that the $74,000 appraised price is before improvements have
been made.
Mr. McFarland asked if it would be worth $94,000 after improvements have been made.
Mr. Fernelius stated the analysis that is done for the Scattered Site Program is different
in terms of how they look at it for appraisal purposes. In theory, no two properties are
exactly identical. They make adjustments based on the condition of the property. The
analysis for purposes of the program is done in terms of what they believe it would cost
to upgrade this structure.
Ms. Schnabel stated that looking at the appraised value and then the square footage, it
calculates to $120 per square foot and she feels that is not worth that kind of money in
that condition.
Ms. Schnabel asked if they have only had one appraisal done and have they used the
same appraiser in the past.
Mr. Fernelius stated that they have had only appraisal This is an appraiser they have
used in at least a dozen times on other properties, and he feels they are competent
appraisers.
Ms. Gabel stated that unfortunately she feels the appraisal may be accurate. She has a
friend who is a realtor, and she tells her that these smaller types of homes have people
outbidding each other. Some are getting more than the original asking prices and that
is probably what is driving this.
HOUSING & REDEVELOPMENT AUTHORITY MEETING. NOVEMBER 4. 1999 PAGE 12
Mr. Meyer stated that it seems to him if the market is so over-inflated, they should hold
tight and let the folks stay with the house and wait until the market cools down for a year
or two or three. They will have to put in about $80,000 cash with demolition costs to a
residence that needs another $20,000 to come up to code.
Mr. Commers asked why they selected this house.
Mr. Fernelius stated that this property was identified by a number of ineans. City staff
and the appraiser in doing recent windshield surveys identified this. There was some
analysis done at one point of the East River Road Corridor, and this property came up.
They have been aware of it for awhile and given their recent interest in trying to utilize
as much of those funds as possible, this site became one of the properties they took a
hard look at. This is not the only site being considered.
Mr. Commers asked if this was involved in the tax increment transfer money.
Ms. Dacy stated that some of the Scattered Site Acquisition Programs are funded by
that source of funds.
Ms. Schnabel stated that Mr. Fernelius will be bringing other sites to the December
meeting for consideration.
Ms. Dacy stated that the Scattered Site Acquisitions brought to the HRA would be
funded by that source of funds. Next year's and this year's budget does have $300,000
to allocate each year, but that would then come out of the General fund.
Mr. Commers asked Ms. Dacy how much they have left out of the special arrangement.
Ms. Dacy stated they had budgeted approximately $400,000 for Scattered Site
Acquisitions. It does not look like they may be acquiring the Nelson property prior to the
end of the year. They are evaluating other options for the use of those funds as well.
Ms. Gabel asked if they should discuss this at the next meeting.
Mr. Fernelius stated that they could table this until the next meeting so they can also
evaluate whatever acquisitions they bring back all at once and prioritize them.
Mr. McFarland stated that they may have the same problems on all of the other sites.
Mr. Fernelius stated that potentially they would be faced with the same question on
each one of them.
Ms. Dacy stressed that the funds are an issue, but it is a secondary issue to the goal of
the program. The goal was to identify the houses that did have substandard conditions,
and they are trying to achieve that program. The value is higher than what they have
paid in the past, but they really are at a crossroads. The economy has a double-edged
sword. They are trying to remove substandard housing and replace it with new housing
and jump-start the neighborhoods.
HOUSING & REDEVELOPMENT AUTHORITY MEETING. NOVEMBER 4. 1999 PAGE 13
Mr. McFarland asked if the house was uninhabitable.
Mr. Fernelius stated that he would not categorize it as uninhabitable.
MOTION by Ms. Schnabel to table the acquisition of 6175 East River Road until the
December meeting. Seconded by Ms. Gabel.
UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED
THE MOTION CARRIED UNANIMOUSLY.
Ms. Schnabel stated that they will talk about this again in the December meeting when
they have the opportunity to review other options.
INFORMATION ITEMS:
11. ACQUISTION UPDATE:
Ms. Dacy stated that they did find some "detect" in the test pits at the Nielsen site.
There is contamination by diesel drainage products and also some volatile organic
compounds. It is an official leak site now that a consultant has reported to the MPCA
and they have advised the property owner. The good news is that it seems to be
contained into one part of the property. Additional tests have to be undertaken. The
City is evaluating different courses of action with the advice of the City Attorney and Mr.
Casserly in terms of acquisition of the property. More environmental analysis has to be
done first, however. They are not suggesting that the HRA acquire this by the end of
this year. It may come back at the December meeting with another proposal. A long-
term option agreement may be the best way to proceed.
Mr. Commers asked why they did not add this to the Condemnation Authority.
Ms. Dacy stated that they were originally evaluating this acquisition to be accomplished
by the end of this year. Staff is not suggesting that they go to condemnation.
Mr. Commers stated that they will have to wait for additional information to make an
informed decision.
Ms. Dacy stated that was correct.
Mr. Commers asked if they had any idea where the contamination came from.
Ms. Dacy stated that it is very close to the railroad, which has a lot of activity and a very
long history. In the old assessing records one of the owners was the former Northern
Pump Company. Her comment means no aspersion or allegation to anyone. It has
been vacant for a number of years and there has been no development on it. There is
construction fill underneath the surface and the majority is not hazardous and can easily
be corrected.
OTHER BUSINESS:
HOUSING & REDEVELOPMENT AUTHORITY MEETING. NOVEMBER 4. 1999 PAGE 14
Ms. Gabel pointed out that Ms. Dacy and the City of Fridley were recognized for
Community Building and won an NLC Award for submitting "A Planbook for Post World
War II Houses" which was recorded in the Nation's Cities Weekly.
Ms. Dacy thanked the HRA and stated that she had a lot of help.
Mr. Commers stated that she has developed a lot of expertise over the years, all to their
benefit, and thanked her.
ADJOURNMENT:
MOTION by Mr. McFarland, seconded by Mr. Meyer, to adjourn the meeting.
UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON SCHNABEL DECLARED
THE MOTION CARRIED AND MEETING OF THE HOUSING AND
REDEVELOPMENT AUTHORITY WAS ADJOURNED AT 9:12 P.M.
Respectfully submitted,
Signe L. Johnson
Recording Secretary