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HRA 12/09/1999 - 00002773CITY OF FRIDLEY HOUSING & REDEVELOPMENT AUTHORITY MEETING DECEMBER 9, 1999 CALL TO ORDER: Chairperson Commers called the December 9, 1999, Housing and Redevelopment Authority meeting to order at 7:38 p.m. ROLL CALL: Members Present: Larry Commers, Virginia Schnabel, Pat Gabel Members Absent: John Meyer, Jim McFarland Others Present: Barbara Dacy, Community Development Director Grant Fernelius, Housing Coordinator Jim Casserly, Development Consultant Julie Vogel, HRA Accountant APPROVAL OF THE NOVEMBER 4, 1999, HOUSING AND REDEVELOPMENT AUTHORITY MEETING MINUTES: MOTION by Ms. Schnabel, seconded by Ms. Gabel, to approve the November 4, 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. COLA INCREASE FOR HRA EMPLOYEES (AMENDED RESOLUTION). 2. APPROVE APPRAISALS FOR GATEWAY EAST PROPERTIES. 3. CLAIMS AND EXPENSES. Ms. Schnabel asked Ms. Vogel a question regarding the same check number that was included twice on the first page for Ehlers and Associates. The check number is 27170. Ms. Vogel stated that the expenditure was recorded twice with the same amount code. She will research that problem on the system the next day. Mr. Commers asked if this was going to be the last payment on the school refunds. Ms. Vogel stated that it was not. They have one payment to make for 1999, and then a full year of payments for 2000. HOUSING & REDEVELOPMENT AUTHORITY MEETING, DECEMBER 9, 1999 PAGE 2 MOTION by Ms. Schnabel, seconded by Ms. Gabel, to approve the Consent Agenda as presented. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. ACTION ITEMS: 4. APPROVE RESOLUTION AUTHORIZING EXECUTION OF RESTATED DEVELOPMENT CONTRACT, MEDTRONIC, INC. Ms. Dacy stated that the purpose of the amendment to the Medtronic development agreement is to provide for the sale of property to Medtronic Inc. The HRA intended to do this originally; but because of Medtronic's phase of construction plan and timing issues, they were not able to conclude it until this month. The amendment states that Medtronic will issue to the HRA a note of approximately $5,000,000 at 8.25% interest for acquisition of the property. Since the last meeting in November, Medtronic has issued a letter to the HRA requesting conveyance of the remaining 14 acres of the site, because they have finalized their plan to construct more than 500,000 square feet for Phase 1 development. Mr. Commers asked Ms. Dacy when Medtronic is asking the conveyance to occur. Ms. Dacy stated that Medtronic is suggesting that the conveyance occur before the end of this year. The property will then become fully taxable before the year 2000. Mr. Commers asked if that affects the development agreement. Mr. Casserly stated that this request is very timely, because it fits in perfectly with the amendment agreement. Ms. Dacy stated that the amended contract provides a copy of the most recent draft in the weekend packet. Medtronic would receive up to 90% of the tax increment through the life of the district to the year 2025, the HRA would retain ten percent, but the land sale payments would equal another 10% of the increment until the year 2010. In the year 2011, the HRA would obtain enough increment to achieve the present value of $1,085,000; and for the remainder of the district through the year 2025, Medtronic payments would equal 20% of the increment they received. The first phase plans are at 514,000 square feet. They made a lot of progress on the foundations and they are anticipating the filing of the permits for the remaining of the buildings tomorrow and for sure by the end of this year. In total, there will be $29,000,000 over the life of the district that would be paid to the HRA representing a present value of $10,000,000. $83,000,000 would go to Medtronic having a present value of $32,000,000. HOUSING & REDEVELOPMENT AUTHORITY MEETING, DECEMBER 9, 1999 PAGE 3 Ms. Dacy stated these amounts are the same as discussed in May. Staff's recommendation to the HRA is two-fold. The first resolution authorizes execution of the development agreement of the amended contract. The second resolution makes it clear that the HRA is agreeing to extend the term of the district to the year 2025 and modifies the tax increment financing plan for that district. Ultimately, the City Council has to approve the resolution to effectuate that extension. People from Medtronic are in agreement with these changes and resolutions. Mr. Casserly stated that is correct. The only changes being suggested are a couple of very technical changes regarding how the note would be administered. They want the HRA to provide them with a notice. They are going to making direct payments to the HRA in accordance with the terms in the note. It gives them an opportunity to review the amounts and gave them notice of the amount that is going on the bill, essentially invoice them for that and then they will pay us. If they do not pay us, it is a default on the agreement and they can discontinue making any payments in the future. That is really the only change. Both of these resolutions are contingent upon the City Council performing certain actions. The City Council has not approved the special legislation nor have they approved the extension of the district. Ms. Dacy stated that they have been awaiting completion of the development contract. They wanted to be assured that all issues surrounding the amended development contract were resolved. Mr. Commers asked when this would be on the Council agenda. Ms. Dacy stated that it would be on the December 13 agenda. Mr. Commers asked if they have been advised to the modification they are making on the note. Ms. Dacy stated that the City Council receives a copy of the HRA agenda. Mr. Casserly stated that they are also hopeful that they can close prior to Christmas. They would also receive a small land-holding payment. They have provided them notice that they intend to acquire the balance and theoretically they are to close December 8 or 9 but there are still some things occurring with the title and closing within the next 10 or 12 days. Mr. Commers asked about the revised contract. Based on what they know in terms of the reimbursable items, what are the approximate amount of payments they will be getting on each August and February? Mr. Casserly stated that the payments are going to be approximately starting out at about $100,000 every six months in approximately the year 2002. It would then reach approximately $250,000 by 2008 or 2009. In the year 2012 and thereafter, it should range from $450,000 up to over $600,000 every six months. HOUSING & REDEVELOPMENT AUTHORITY MEETING, DECEMBER 9, 1999 PAGE 4 Mr. Commers stated he is concerned about it from a budget and a planning point of view as to what the cash flow may be in terms of future projects. The first couple of years the payments are not significant. Mr. Casserly stated that it is not significant at first. There will be $200,000 per year that will be paid on the note and $200,000 per year that the HRA will receive for all of the other administrative activities. These numbers are just for the note amounts, and there will also be an addition to that the HRA will be receiving for its program operations. Ms. Gabel asked what the installment agreements are. Mr. Casserly stated that is the note and the note represents the installment agreements. MOTION by Ms. Gabel, seconded by Ms. Schnabel, to adopt the Resolution HRA 15- 1999, Authorizing Execution and Delivery of an Amended and Restated Contract for Private Redevelopment by and between the Housing and Redevelopment Authority in and for the City of Fridley, Minnesota and Medtronic, Inc. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. MOTION by Ms. Gabel, seconded by Ms. Schnabel, to adopt the Resolution HRA 16- 1999, Authorizing the Extension of the Duration of Tax Increment Financing District No. 6 and Approving the Modified Tax Increment Financing Plan Relating Thereto. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. 5. APPROVE PROPOSED ACQUISITIONS: a. Duplex at 340-353 57t" Place Mr. Fernelius stated that this is the acquisition of the duplex in the Gateway East project area. This is a two-unit rental property owned by William Fogarty. He owns a company by the name of Century Real Estate. It is currently occupied by two tenants who both have leases. The building was constructed in 1960, and each unit has two bedrooms. The rents range from $650 -$675 per month. After a month and a half of negotiations, they have reached an agreement with Mr. Fogarty. The sale price is $142,500. This is higher than the appraised value at $135,000. They are going to execute an escrow agreement with the seller, basically, placing all the sales proceeds in an escrow account with the title company by the end of this year. They will also issue a 90 day notice to the tenants. This will give them until the end of March to vacate the premises. The City's relocation consultant will be working with the tenants to find replacement housing. Once completed, they are anticipating closing on April 1 and then transferring the title and the building would be empty at that point. The property would be torn down and made available for the project. Staff is recommending approval of the purchase. Dan HOUSING & REDEVELOPMENT AUTHORITY MEETING, DECEMBER 9, 1999 PAGE 5 Wilson is here to answer any questions about the relocation issues and Julie Schwartz is available for any questions on the appraisal of the property. Mr. Commers asked Mr. Wilson when the obligations to the tenants would become effective. Mr. Wilson stated that the tenants become eligible for relocation assistance with the initiation of negotiations, probably at the time of the purchase agreement. Mr. Commers asked if the lease has anything to do with the initiation of negotiations. Mr. Wilson stated that the length of the lease has nothing to do with the relocation assistance. At the initiation of negotiations, one must simply be a lawful occupant. Ms. Gabel asked for more information about relocation. Mr. Wilson stated that the relocation for tenants is in two parts. One part is that they have a household full of furniture which needs to be picked up and moved. The tenant has the right to choose to have professional movers or receive cash to move themselves based on the number of occupied rooms. The other responsibility is rental assistance. The concept is that they are displacing someone by public action. Before they give the 90 day notice, they must find them one comparable replacement that is available to them. The money comes in the event that the replacement housing that is available comes at a higher price. Ms. Schnabel asked if the comparable property has to be in the same locality. Mr. Wilson stated that the regulations talk about it being in the neighborhood or the internal area. That is different for different people. Some people need to stay in the same school district. They start looking literally next door and then keep going out until they find something. Ms. Schnabel stated that they keep looking locally, even though the tenants may want to move to another city. Mr. Wilson stated that it is their responsibility to keep them here. There is some flexibility, but they try to respond to the tenants needs. Ms. Schnabel asked if there is no vacancy in a comparable unit that is found, what bearing does that have? Mr. Wilson stated that there has to be a vacant unit. The rental markets that they have had in the past few years only have apartments available for 2- 3 days. They tell the tenant that they need to respond very quickly. If they do not respond, they still use that as an option that the tenant could have had. HOUSING & REDEVELOPMENT AUTHORITY MEETING, DECEMBER 9, 1999 PAGE 6 Mr. Commers asked if the residents have an option to take a lump sum in lieu of the other payments. Mr. Wilson stated that is an option. The HRA has the option of how to make the payments to the tenant. Ms. Gabel asked the appraiser, Ms. Schwartz, to address the market situation and the increasing cost of land. Ms. Schwartz stated that in Fridley they are seeing higher rates for properties as well as the whole metro area. Fridley is seeing more than the metro wide because Fridley is more desirable than other areas. There has been an excessive amount of appreciation throughout the summer and springs months. There has been dual offer situations where more than one person will bid on a property and as a result they will sometimes pay more than the list price. That is a combination of low interest rates and general health of the economy. MOTION by Ms. Gabel, seconded by Ms. Schnabel, to approve the purchase and escrow between the HRA and Mr. Fogarty for the purchase of 349-353 57t" Place. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. Ms. Gabel asked if the fees paid for relocation come out of TIF District 2 or 3. Mr. Fernelius stated that the money will come out of the General Fund. Mr. Casserly stated that it may be difficult to escrow those dollars. Mr. Commers stated that he did not see this listed as TIF District 2 or 3 payments. Ms. Dacy stated that vacant land expenses are using the acquisition price. The Werner's Furniture did include $20,000 of relocation. It is a matter of timing. Whatever they can get done by the end of this year, they will utilize those funds. Mr. Commers stated that if they could utilize some of them, then they could make a lesser payment on the note. Ms. Dacy stated that is correct. 5b. Werner's Furniture: Mr. Commers stated that this is the Werner's Furniture acquisition on 3rd Street and 59tn Mr. Fernelius stated this is in the Hyde Park Neighborhood. It is one of two commercial buildings in the neighborhood. The other is the US West building. It has been used as HOUSING & REDEVELOPMENT AUTHORITY MEETING, DECEMBER 9, 1999 PAGE 7 a furniture refinishing and repair business for a number of years since the mid-1980s. The structure was built in the 1950s probably as a used car showroom. The building is approximately 2100 square feet in size. The parcel of land it sits on is a little over 15,000 square feet. The purpose of this acquisition is to move a non-compatible land use in a primarily residential area and offer that site for redevelopment. They would like to take the structure down and sell it in two lots for construction of single family homes. Mr. Fernelius stated the owner has agreed to a voluntary sale for $140,000. As an incentive, they have offered to provide relocation benefits since this is a business and more expenses involved. The total package then would be $160,000. Most of the transactions will involve escrow agreements, and that is what they are going to do in this case. They will escrow the money and in the meantime conduct some environmental tests to make sure there are no problems out there. They would close on the property on February 15. If there are any problems, they have the option of terminating the agreement and deciding what they want to do at that point. Assuming they do close on February 15, the tenant would be allowed to remain in the property for a period of six months to allow enough time to start construction on a new building in the City of Andover. They would assist him in whatever way with his relocation assistance. He would not be paying rent, but would be responsible for paying taxes, utilities and making sure the property is insured and the HRA would be protected against any liability. Staff's recommendation is to approve the purchase. Mr. Commers stated that the bottom line is that the property is $140,000, and he is collecting in a lump sum for the relocation. They will owe no other relocation expenses for him. Mr. Fernelius stated that is correct. There was a change in the transaction from what they presented in the memo. They are talking about placing all of the money in escrow. They will not close on it until after the testing is done. When they close, the owner will get all of the money. He needs those funds to construct the new facility. Mr. Commers asked if they would be doing soil borings. Mr. Fernelius stated that is correct. Ms. Gabel asked if he would be paying the taxes. Mr. Fernelius stated that is correct. Ms. Schnabel asked if he was only paying the first half of the year's taxes. Mr. Fernelius stated it would be pro-rated through the date of closing. Mr. Commers stated that they have to notify the County about their acquisitions and handle the tax appropriately. HOUSING & REDEVELOPMENT AUTHORITY MEETING, DECEMBER 9, 1999 PAGE 8 MOTION by Ms. Schnabel, seconded by Ms. Gabel, to approve the purchase and escrow agreements between Michael and Barbara Larson and the HRA for 5901 3rd St. N.E. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. 5c. Scattered Site Residential Ms. Dacy stated that the HRA needs to respond to some concerns that were raised at the November meeting. After the November discussion, Staff inet internally and talked to the appraiser and City assessors. They heard three issues in the November meeting. There were many questions about the strong market. There was also some discussion about the houses being acquired and eliminating an opportunity for housing and are they truly substandard. She would conclude with the recommendation from staff about the efficacy of the Scattered Site Program and look at why this was initiated in the first place. Ms. Dacy stated that the market is very strong due to a very good economy. There are very high sales that have driven the comparables. Valuations in the City are increasing and they have been able to keep the tax rates fairly low so they have not had a lot of opposition to taxes in Fridley. The City has one of the lowest in the area. The appraiser and assessors see the future as potentially stabilizing. There may be a leveling off in values. This situation may be around for some time. The HRA has to decide to carry out some of these acquisitions versus what risk it poses to the neighborhoods in which they are located. Ms. Dacy stated the Authority also had the question if they were truly dilapidated or if they are truly meeting the intent of the program. In 1995, the legislature passed a law for Fridley, Crystal and some of the central Cities that provided the Housing Replacement program and statutorily to find what was eligible to acquire. The cost of rehab was a tool defined in the statutes to assist them to determine if it met that test. The appraiser and the inspector went through these sites to determine that. They do feel that they are eligible for the Scattered Site program. They do understand they are attractive because they are in the lower value ranges that are in high demand. People are willing to overlook some of the rehab issues to be in the school district or neighborhood they want to be in. Ms. Dacy stated that when they find these houses in neighborhoods, it raises the question if this housing is the best way to provide lower value housing. Should they be looking at redevelopment projects and create some newer housing for people? The HRA has acquired 28 properties. As a result, 14 homes have been built in Fridley. Twenty-three of the 28 sites have been in those two areas with 12 new homes. This is a very good program in turning around some difficult areas in the Riverview Heights and Hyde Park neighborhoods. Citizen survey results stated that 42 of the respondents stated that this program is rated one of the top concerns to them. This is a fairly strong HOUSING & REDEVELOPMENT AUTHORITY MEETING, DECEMBER 9, 1999 PAGE 9 endorsement of the program. The Council survey results also stated that the majority suggested that they continue this program. Staff is recommending that they continue this program. Staff realizes that the valuations are higher than what was seen in the past, but the purpose of the program to help turn the neighborhoods around is well thought and should be continued. Ms. Schnabel stated that in making the appraisals, in just looking at the size and appraised value offered to the owner, the dollar amount per square foot is all over the place. There is not a standard dollar amount per square foot. What contributes to that fluctuation? It appears that the house in the worst shape is the one that has the higher amount. Ms. Schwartz stated that to look at housing on a per square foot basis is not accurate for indication of value. Typically when purchasers purchase they do not go out and look for a house based on per square foot. They look at the dollar amount they can afford. Ms. Schnabel stated that she understands that from a buyer's perspective; but in terms of an appraiser's professional opinion, is there not a consistent figure that would be used in appraising the value of a dwelling? Ms. Schwartz stated there was not in this price range. Part of the difference for the per square foot variance is the value of the land. A house that has 600 square feet sitting on a piece of land that may be of similar value to a house that has 1,100 square feet. A portion of that purchase price is based on the land value, and to look at price per square foot on a house would not include the price of the land. Mr. Commers asked if they appraise the land and house separately. Ms. Schwartz stated that they only do that in one of the approaches. This approach is not really relied upon for used housing. This is called the cost approach. You are looking at the appraisal cost new, and adding value of the land and subtracting the physical appreciation. This approach has very little reliance in older houses. A purchase does not look at the replacement cost new, you would look at what similar properties sold for. Ms. Schnabel stated that one of the properties is in extremely poor condition. That has a high appraised square foot value on it. Is the majority of that money appraised on the land and not on the structure itself? Ms. Schwartz stated that more than likely, you are looking at a significant component of that overall value attributable to the land. An average lot in Fridley is $22,000 - $27,000. The value of the land represents a pretty significant percentage of that purchase price. Ms. Schnabel asked the size of an average lot in Fridley. HOUSING & REDEVELOPMENT AUTHORITY MEETING, DECEMBER 9, 1999 PAGE 10 Ms. Schwartz stated that it typically is in the 8,000 - 10,000 square foot range. Ms. Schnabel asked if any of the structures have been for sale on the open market. Ms. Schwartz stated that as part of the appraisal process, they look at the sales history. None of the properties have been listed with the exception of a few that have sold within a fairly recent time period. They looked at the amount paid for some those properties and then trended the value upward based on appreciation through statistical analysis that is published in the local listing service. If you were to take that purchase price paid and apply that percentage of increase for appreciation, it came very close to the end result of what was appraised recently. This is another cross check to the appraised value. Ms. Schnabel asked if it was fair to do if the structure itself is in a deteriorating condition. Ms. Schwartz stated that typically the appreciation will consider to a certain extent the amount of depreciation. Houses typically depreciate around two percent or so per year. Ms. Schnabel stated that she was under the impression that one of the houses on East River Road was non-livable. Ms. Schwartz stated that it is currently occupied, so if someone is living in it, the property will remain habitable until someone condemns it. This one is getting very close though. Ms. Schnabel stated that was why she was questioning taking the initial purchase price and appling it to the factors of increased property values. If the structure is deteriorating in the meantime, she would think that that would bring the price down and would not fall within the set guidelines or standards you would apply to that price. Ms. Schwartz stated that can be true, but if you look at what this was like when it was originally sold was probably not significantly different as far as deferred maintenance. This is just a cross check. The true test would be how much the comparisons were of properties that were used as comparables. That property sold for $57,009 in 1991, and it probably was in similar condition then. The lower value houses will go up more than the mid- or upper-bracket houses. Housing becomes more affordable as the interest rates come down as the economy is good and people are making more money. People that never thought they could own a home become homeowners. Fridley is blessed with having a very desirable location. The entry-level purchasers will pay a premium to live in Fridley as opposed to other areas that may be deemed as not being as superior. As a result the lower value housing will go up in greater pace than the upper bracket housing. Mr. Fernelius stated that he would like to take the acquisitions in a little bit different order than they are in the memo. The first property at 6175 East River Road was the HOUSING & REDEVELOPMENT AUTHORITY MEETING, DECEMBER 9, 1999 PAGE 11 property talked about at the November meeting. The issue is the value, but they do have a pending offer with the seller for $74,000 and they have accepted that. The property is 40 years old with two bedrooms and slab on grade construction with a one- car detached garage and it is 616 square feet in size. There were a number of substandard conditions that were noted including water damage around the foundations, rotting flooring, worn shingles, asbestos siding, and some other life safety items. The building official was along at all the inspections, and he was involved in the evaluation of each of these properties as the appraiser was. In terms of the rehab work, they are estimating the rehab at about $20,000 conservatively. This is almost a third of the cost of the new structure. This is considered a buildable lot by code. What they would do is place the funds in escrow and then allow the seller to remain in the property after the closing for a period of six months in order to help him find a new place to live. Mr. Fernelius stated that the next property is at 571 Lafayette Street in the Riverview Heights neighborhood. It is similar to the last property in terms of age. It is over fifty years old. It is a two-bedroom, slab on grade construction, 500 square feet of living space. A lot of the substandard conditions are related to deferred maintenance around the roof area with inadequate rood venting. There has been a lot of rotting and deterioration of the roofing materials. There is also some buckling of a wall due to improper drainage. There are ventilation issues, unsafe heating system, and improper bathroom venting which has produced a lot of damage to the roof. Repairs are roughly $15,400 or about thirty percent of the cost of the new structure. This property was appraised at $58,000 which was the amount the owner has accepted. This is not a buildable lot. It is a 50 foot lot so it cannot be sold as a buildable site. They would follow the same practice in terms of closing in escrow funds. Mr. Commers asked what they do if it is non-buildable. Mr. Fernelius stated that they could split the site in half and offer it for sale to either one of the adjoining owners or sell the site as is to an adjoining property owner. The other option is to landbank it. The property to the east is a similar property in terms of age but in much better condition. Some point in the future, they could evaluate some other acquisition to combine the two sites for a buildable property. The last acquisition at 630 Ely Street is in tough condition. They did look at this property in 1996 and negotiated with the owner at that time, but they could not reach an agreement on a price. It is virtually identical to the last property talked about in terms of size and construction with a litany of substandard conditions, due to deferred maintenance. It has fallen into significant disrepair. It is a HUD foreclosure. The City was notified of the opportunity to bid on it and made the decision to proceed with a bid on the property which HUD accepted. The property was appraised at $41,500 in 1998. HUD was asking $48,001 for the property. The City made a full price offer on the property and HUD accepted it. It is a non-buildable site but would be an important acquisition in that neighborhood and would have a very good impact on the surrounding properties that are in very nice condition. They would probably sell that site to an adjoining owner. HOUSING & REDEVELOPMENT AUTHORITY MEETING, DECEMBER 9, 1999 PAGE 12 MOTION by Ms. Gabel, seconded by Ms. Schnabel, to acquire the properties at 6175 East River Road, 571 Lafayette Street, and 6175 East River Road. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. Ms. Gabel stated that they are all having trouble adapting to the escalating market, but it is a reality and if they look in terms of the big picture it is accurate. Mr. Commers stated that the biggest problem he sees is that these are non-buildable lots, and they are really in a position of having to hold those without any real possibilities of doing anything with them. That is overcome sometimes by the fact that they are in such bad condition that there is no purpose in taking them as they are. 5d. Vacant Land Acquisitions: Mr. Fernelius stated that over the past several months, they have been evaluating a number of vacant sites in the City of Fridley. A lot was related to the work on the Comprehensive Plan in terms of future redevelopment sites. These lots were identified as prime candidates for redevelopment. The purpose of the acquisitions is to gain site control. They believe that there is strong redevelopment potential based on the location. The sites along Central Avenue because of the development of Medtronic are believed to be spin-off developments from that project between those two campuses. They do not have specific development plans prepared for those properties. They will be holding on to those for anywhere from five to ten years. They do think that they are good candidates for redevelopment and given their opportunities to access some resources by the end of the year they thought it would be an opportunity they could not pass up. They would like to run through each of the sites and answer any questions about the properties. Mr. Fernelius stated that the Erickson site on Central Avenue just north of the racquet club is a little over 66,000 square feet in size. The Ziebart building is at the corner of East Moore Lake Drive and Central Avenue. This site is to the north of it between the Advance companies. It is zoned CR-1, general business zoning classification. It was appraised for $166,000 or $2.50 per square foot. The owner has accepted that for the sales price. Mr. Fernelius stated that second site, owned by Douglas Petty, is 32,000 square feet. It is zoned M-1, light industrial. It was appraised at $90,800, which is $2.83 per square foot. Mr. Fernelius stated the third site is the Nedegaard property located south of I-694 along the north side. This is zoned C-2, which is a general commercial zoning classification. It is 15,600 square feet appraised for $31,200. The owner agreed to sell for $32,000. HOUSING & REDEVELOPMENT AUTHORITY MEETING, DECEMBER 9, 1999 PAGE 13 Mr. Fernelius stated the fourth site along Old Central is the Carlson property, at the corner of Mississippi Street and Central Avenue. This is also zoned C-1, and it was appraised at $104,000 at $2.50 per square foot. Mr. Fernelius stated they have not done any kind of environmental or geo-technical testing on the properties. They wanted to do that before they close. They structured the escrow and purchase agreements to allow them to conduct the testing in advance of closing and if they find something they have the option of canceling the agreement and back out or close on the property. They want to have some assurances they have a developable site. They will be able to do that in the first couple of months next year. Mr. Fernelius stated that it is staff's recommendation to approve escrow and sales agreements for each of the four sites. Ms. Dacy stated that the resolution Mr. Casserly referred to earlier authorizes the HRA to expedite the sale and purchase agreements and escrow agreements in Exhibit A except for 630 Ely Street. They would like a motion to approve the resolution and Exhibit A if that is what the HRA so desires. Ms. Schnabel asked why they would want to purchase a landlocked piece of land as in the Nedegaard property. Ms. Dacy stated that according to the old plat, there is a former piece of right-of-way right under it for I-694 and for 55t" Avenue. It is just a gravel driveway. They purposes for this site is to attach it to the adjacent apartments and the parking lots to the west and to the south, or potential for some type of future redevelopment with the billboard company's lot just to the east of it. It will be a hard site to develop. It is a way to provide flexibility to the HRA for potential multi-family development or embark on apartment rehab. The adjacent owners may have some interest in this. Ms. Schnabel asked how the non-conforming use billboard becomes conforming or how it gets removed. Ms. Dacy stated that it is non-conforming, because it is in a C-2 district and the sign code states that billboards have to be in C-3 or industrial districts. It can become conforming if they rezone that site to C-3 or only industrial and that is very unlikely. Prior to the recent session of the legislature would be for the City to adopt an amortization ordinance to advertise non-conforming billboards for some prescribed time to get the money out of it. Mr. Burns stated that the legislature revocated the cement plan in St. Louis Park that prompted the revocation of the amortization rights. St. Paul had the referendum for the billboards. Ms. Dacy stated that billboards along the freeway are very controversial. HOUSING & REDEVELOPMENT AUTHORITY MEETING, DECEMBER 9, 1999 PAGE 14 Ms. Schnabel stated that if it sits on a lot that has value, the issue should be addressed to try to get it removed. Ms. Dacy stated that the billboard owner a number of years ago suggested relocating the billboard to this site to do what the City needed to do to redevelop the site, but that would require a special use permit and a variance. This might be an option for the future if they were to require this piece. Ms. Schnabel stated that on the Central Avenue site, the Petty and the Erickson sites on the west side seem to require a lot of soil correction. Mr. Fernelius stated that they have received information that there are soil problems out there and that is what they want to explore. Mr. Commers stated that they had soil problems with the Leahy property when it was developed when they were doing the highway and he imagines this would be the same issue. He has some of the same concerns as Ms. Schnabel. The other parcels along Central Avenue will have some development spurned by Medtronic and will be well advised to acquire. He does have reservations about the Nedegaard property. He did not think of the acquisition or the removal of the sign which is extremely expensive and he does not see them in a position to pursue that. It is landlocked, and the alley being vacated which runs all the way down the block, and it seems unlikely that anyone would put a street right there. Mr. Burns asked Ms. Dacy if the assumption that the area north of Rice Creek Road could be move-up type housing? Is there any thought in the Comprehensive Plan to make it all residential up to Mississippi Street? Ms. Dacy stated that the residential uses may be appropriate on the east side of Central and on the west side there may be some type of office or smaller retail, but non- automotive types of uses. Ms. Schnabel stated that she has reservations about the Nedegaard property. She understands why they should think about a piece of property like that, but she feels it has too many things going against it at the moment. The other properties are more developable in the near future than the Nedegaard property. Her preference would be to drop the Nedegaard property at this point. Down on University Avenue, just south of I-694, the property between the Amoco Station has some activity. Ms. Dacy stated that Mr. Bona and his brother are going to build an automotive repair facility and they just received Council approval in October. Mr. Commers asked if the HRA owns the house at the end of Councilmember Billings block. Mr. Fernelius stated that they do own it now and the parcel will be taken down. HOUSING & REDEVELOPMENT AUTHORITY MEETING, DECEMBER 9, 1999 PAGE 15 Mr. Commers stated he agrees that they should approve the Nedegaard parcel. Ms. Gabel stated that except for the location, it could be a good price, but it is landlocked and how long would it take to use it. She feels they should use the other three for sure. Ms. Schnabel stated that the issue should be explored with the Nedegaard property, but you cannot do anything with it right now. Ms. Dacy stated that the first one on Exhibit A is Michael and Barbara Larson, the Werner's Furniture item. Douglas Petty is included, Sentry Real Estate is the duplex at 340 353 57t" Place, and the Nedegaard Construction would be deleted. Daniel Erickson property on Central would be included, Carlson property, Patricia Melich at 6175 River Road, and the Schunemans on 571 Lafayette. What is not in here is 630 Ely Street because they close before the end of the year, and the Nedegaard piece was not included. MOTION by Ms. Schnabel, seconded by Ms. Gabel, to approve acquisition of the Erickson property, Doug Petty property, and the Carlson property, and adopt Resolution HRA 17-1999, Determining the Necessity for the Acquisition of Certain Properties and Authorizing Execution and Delivery of Sale and Purchase Agreements and Escrow Agreements Relating Thereto with Exhibit A attached containing the legal descriptions of the properties. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. 6. RESOLUTION AUTHORIZING PREPAYMENT OF HOUSING LOAN TO THE CITY OF FRIDLEY. Mr. Commers stated that this item was pretty simple regarding any excess funds to be used to pay down any obligation of the note of the money that has been borrowed from the City to help with their housing programs. MOTION by Ms. Gabel, seconded by Ms. Schnabel, to adopt the Resolution HRA 18- 1999, Authorizing Prepayment of Housing Loan to the City of Fridley. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. 7. RESOLUTION AUTHORIZING EXECUTION AND DELIVERY OF AN ESCROW AGREEMENT BY AND AMONG THE HOUSING AND REDEVELOPMENT AUTHROITY INAND FOR THE CITY OF FRIDLEY, MINNESOTA, FRIDLEY MAIN L.L.C. AND AN ESCROW AGENT NAMED THERIN: HOUSING & REDEVELOPMENT AUTHORITY MEETING, DECEMBER 9, 1999 PAGE 16 Ms. Dacy stated that this is one more resolution that refers to the tax increment financing assistance that the HRA approved at the October meeting to provide soil correction assistance for the Peterson five acre site on the west side of Main Street for $250,000. They have formed a partnership called Fridley Main, L.L.C. They have not executed the development agreement as of yet, and they are trying to set a closing date prior to the end of this year. If this cannot be accomplished, they are suggesting that you approve this Resolution which permits the City to place $250,000 into an escrow agreement. Mr. Casserly stated that they clearly cannot perform the work required by the agreement. They are just trying to make sure that they allocate the money on a timely basis. They do not release the funds until they have performed as any developer would perform. MOTION by Ms. Schnabel, seconded by Ms. Gabel, to adopt Resolution No. 19-1999, Authorizing Execution and Delivery of an Escrow Agreement by and among the Housing and Redevelopment Authority in and for the City of Fridley, Minnesota, Fridley Main L.L.C., and an Escrow Agent named Therein. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. INFORMATION ITEMS: 8. "WELCOME TO FRIDLEY" SIGN AT NORTHWEST CORNER OF TH 65 AND MEDTRONIC PARKWAY: Mr. Commers stated that he thought they wanted to do something by Medtronic Drive, but Fridley really starts on the south side of I-694. Ms. Dacy stated that he is correct, but they were thinking that the amenity of Moore Lake in the background next to the corporate campus would be a nice setting. If there are concerns, let the City know. Medtronic may have an issue also. Ms. Schnabel stated that she always thought there was a nice triangle piece of land on 53rd and Central on the east side across the street from the Ground Round in front of Menards. There are several Oak trees and would make a nice setting. She would urge the City to consider this site. Mr. Commers asked if this was the design with the house on it. Ms. Dacy stated that was correct. It was the Banfill Locke house. Mr. Burns stated that it came out of the 50t" Anniversary Task Force. Mr. Commers asked why the year the City was established was not on there. HOUSING & REDEVELOPMENT AUTHORITY MEETING, DECEMBER 9, 1999 PAGE 17 Mr. Burns stated that they were established in 1949, and there was a lot of debate about a lot of things and that was not agreed upon. Ms. Schnabel stated that she felt the signs in other communities are very attractive. Mr. Commers stated that they would have to keep the grounds around the sign kept up and that is something that should be considered. Ms. Dacy stated that they would be happy to investigate the Central Avenue sign. Mr. Commers stated that the sign is a good idea. 9. COMPREHENSIVE PLAN UPDATE: Ms. Dacy stated that this was a first draft of the Land Use, Housing, and Community Vision chapters. This is the very beginning of the process. The Planning Commission will hold its first public hearing on December 15. A draft will be submitted to the Metropolitan Council by the end of this year. When they are done reviewing it there will be another public hearing in March or April in the Planning Commission. They intend to take a second round of changes and drafts back to all of the Commissions again. There are some issues to be evaluated before adoption in the summer of 2000. Mr. Commers asked where the settlement language of priority for affordable housing in Fridley was. Ms. Dacy stated that the Housing chapter addresses those issues and there are some policy statements that states that the City will strive to maintain affordable housing. They meet and exceed Metropolitan Council's criteria. The City Attorney, Mr. Knaak, reviewed the initial draft of the Housing chapter and he felt it was fine. Ms. Gabel stated that it was interesting to look at all this and have the data to relate to planning. She watched the presentation to the City Council that was made by Bill Morris from Decision Resources and that was real interesting with a lot of useful information for future planning. Mr. Commers stated that they will have more opportunity to talk about it as they go along. Staff should be complimented for all their hard work. Ms. Dacy thanked Mr. Commers. OTHER BUSINESS Mr. Burns stated that they are in the process of trying to put together another Council/ Commission survey. If the HRA has anything that they would like to test in the survey, he would be happy to incorporate it. HOUSING & REDEVELOPMENT AUTHORITY MEETING, DECEMBER 9, 1999 PAGE 18 Mr. Commers stated that maybe he could refresh his recollection of what was in the survey previously. Mr. Burns stated that special impact studies were included for the Medtronic project, apartment rehab was included also. There was a question about additional money for the single family rehab also. This is the first planning event that occurs in the new year. They are planning for the next year but it starts people thinking about the kinds of issues on the horizon. They get staff involved in trying to identify the issues they think are out there so they can begin talking to the Commission members about the ideas. This kind of grows out of the various surveys they are doing. Mr. Commers stated that he feels this should be put on the agenda for discussion if they have any ideas. Ms. Dacy stated they could do that. Ms. Gabel asked if the duplex could be moved. Mr. Fernelius stated that early on in the Gateway East project, that was a question they had. They did have Ernst Moving Company take a look at it and they said it could be moved. The larger issue is where they could move it. Ms. Gabel asked if they could sell it to somebody else who could move it. Mr. Fernelius stated that they could look at that as an option. ADJOURNMENT MOTION by Ms. Schnabel, seconded by Ms. Gabel, to adjourn the meeting. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED AND THE DECEMBER 9, 1999, MEETING OF THE HOUSING AND REDEVELOPMENT AUTHORITY ADJOURNED AT 9:35 P.M. Respectfully submitted, Signe L. Johnson Recording Secretary