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HRA 03/04/1999 - 29553� CITY OF FRIDLEY HOUSING & REDEVELOPMENT AUTHORITY MEETING MARCH 4, 1999 CALL TO ORDER: Chairperson Commers called the March 4, 1999, Housing and Redevelopment Authority meeting to order at 7:30 p.m. ROLL CALL: Members Present: Larry Commers, Virginia Schnabel and John Meyer Members Absent: Pat Gabel, Jim McFarland Others Present: Grant Femelius, Housing Coordinator Bill Bums, City Manager Jim Casserly, Financial Consultant Rick Pribyl, Finance Director Julie Vogel, Accountant ^ APPROVAL OF THE FEBRUARY 4. 1999 HOUSING AND REDEVELOPMENT AUTHORITY MEETING MINUTES: MOTION by Ms. Schnabel, seconded by Mr. Meyer, to approve the February 4, 1999, Housing and Redevelopment Authority minutes as presented in writing. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. CONSENT AGENDA: 1. CONSIDER RESOLUTION APPROVING CHANGE TO REVOLVING LOAN PROGRAM: 2. CLAIMS AND EXPENSES. Ms. Vogel, Accountant, distributed a list of additional exp�nses for consideration. Mr. Meyer requested that Item #1 be removed from the Consent Agenda for discussion. MOTION by Ms. Schnabel, seconded by Mr. Meyer, to approve the Consent Agenda as amended. n � HOUSING & REDEVELOPMENT AUTHORITY MEETING, MARCH 4, 1999, PAGE 2 UPON A VOICE VOTE, ALL MEMBERS VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. Chairperson Commers stated that Item #1 would be discussed as the first item under Action Items. ACTION ITEMS: 1. CONSIDER RESOLUTION APPROVING CHANGE TO REVOLVING LOAN PROGRAM: Mr. Ferr�elius, Housing Coordinator, explained that at the February HRA meeting, staff had made a recommendation to increase the maximum loan amount for the HRA's revolving loan program from $25,000 to $35,000. This recommendation was based upon the findings of the housing study which was recently completed for past recipients of HRA loan funds. In the study, approximately one-third of the respondents indicated that they felt the maximum loan amount should be increased. Mr. Meyer stated he agrees that there are people who would like to see the loan limit increased, as the interest rates are very attractive. However, he feels that the HRA is drifting farther and farther away from the real purpose of the loan program that is to ^ improve the housing stock in Fridley. He feels $25,000 is a very liberal loan amount. These funds are public money that has been subsidized by the govemment. By increasing the loan limit, he feels the HRA is only increasing the people's appetites for building without actually improving the housing stock of the community. Therefore, he cannot support this resolution. Mr. Femelius stated the cost of rehab is expensive. Since he has been employed with the City, he has seen the cost of roof replacement increase three-fold, not to mention siding and other improvements. Just completing basic maintenance upgrades to a house can easily absorb the $25,000 loan limit. The HRA wants to give people, who have the ability to take on the additional debt, an opportunity to make improvements that do upgrade the housing stock of Fridley. Ms. Schnabel asked if any of the larger loans that have been made in the past are in default. Mr. Femelius stated he did not have that information available, but would be happy to analyze the data and report back as to what type of loans are typically delinquent. Ms. Schnabel asked if the value of the home to be improved is considered when approving a higher loan amount. n, HOUSING & REDEVELOPMENT AUTHORITY MEETING, MARCH 4, 1999, PAGE 3 r-� Mr. Femelius stated that the HRA would not issue a loan to an applicant if the combined debt on the property were more than 115% of the value of the property. This is to insure that there is adequate security in the event that there was a default. Ms. Schnabel asked if a contractor required completion of the improvements. Mr. Femelius stated that the HRA allows the work to be done by either the homeowner himself or by a contractor. However, when a homeowner chooses to do the improvements himself, the HRA does require a breakdown of material costs to show how the funds are being spent. 1n any case, however, necessary building permits are required and the work must meet code requirements. Ms. Schnabel asked if there have been applicants who were unable to complete the work scope due to the lack of sufficient loan funds. Mr. Femelius stated, yes. Mr. Meyer stated he would not object to the increase in the loan limit if the HRA could determine that the improvements would in fact improve the housing stock. He stated, however, that he feels that many of the allowable improvements have nothing to do with improving the housing stock. Additionally, he feels the income limits should be looked at again. ^ Mr. Femelius stated that the housing study revealed that most of the improvements addressed health, safety, or maintenance issues. Furthermore, not every applicant will desire or be eligible for a$35,000 loan. The increase will merely give the HRA the flexibility to meet the cost of more substantial rehab projects. Mr. Commers suggested that this item be tabled until the next HRA meeting to allow staff an opportunity to go back and review past loans to see what the larger loans actually financed. MOTION by Mr. Meyer, seconded by Ms. Schnabel, to table this item until the April HRA meeting to allow staff to obtain additional information. UPON A VOICE VOTE, ALL MEMBERS VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. 3. CONSIDER RESOLUTION AUTHORIZING EXECUTION OF REDEVELOPMENT CONTRACT. SHAMROCK INVESTMENTS III. LLC: Mr. Casserly, Financial Consultant, explained that this redevelopment contract is for a 400,000 square foot redevelopment of a portion of the Onan property. Great efforts have been made to try to define the pollution costs which need to be covered. He explained that the concept for this project is that the State and the Metropolitan Council would ��"'� provide various clean-up grants. However, due to the geographical distribution .HOUSING & REDEVELOPMENT AUTHORITY MEETING, MARCH 4, 1999, PAGE 4 � requirements of the grant funds, this project was not funded in the last grant cycle. An application will now be submitted for the spring grant cycle. In order to allow the project to proceed, the HRA discussed and agreed to be the grant provider as a last resort and that the HRA would continue to make the application to try to recover those funds. The redevelopment of this site includes lots of pollution abatement costs and infrastructure and basic site preparation costs. The contract, as designed, states that the HRA will provide the pollution abatement assistance with HRA funds in a maximum amount of $871,763. The redeveloper would provide $84,377 as a match. If the HRA were successful in obtaining the grants, the agreement is that one-half of the grant proceeds will go back to the HRA to prepay the revenue note. The other one-half will go back into the HRA funds. Mr. Casserly noted that the project generates a substantial amount of tax increment. The market value, upon completion, will be a minimum of $10.8 million. With the increment generated, there should be more than adequate resources to repay the grant amounts in the event that the full amount were not recovered from the state, enough to pay the revenue note, and enough still to help with redevelopment of the area. Mr. Casserly briefly discussed the redevelopment contract. Since the memo included in the agenda packet was prepared, some changes have been made to the contract. He noted that Item #1 has been eliminated from the contract. Additionally, Item #6, line 3, has been changed to read "...the interest rate will be the lesser of the actual interest rate � charged by the lender or 8% ..." Mr. Richard Murphy of Murphy Warehouse, Mr. Paul Hyde of Real Estate Recyclers, Inc., Woody Nelson of Onan Corporation, and Gary Drizman of Onan Corporation were present to answer any questions. Mr. Murphy expressed his appreciation of the City/HRA staff assistance. He noted that this project takes a piece of property, which is basically of no value and turr�s it into over $500,000 per year in revenue which will benefit many. If the HRA approves the contract, they intend to begin the project within the next three to four weeks with an anticipated certificate of occupancy issued around November 1, 1999. Mr. Hyde provided the HRA with a brief summary of the environmental situation of the site. Mr. Commers asked Mr. Nelson if he anticipated the creation of any new jobs with this development. Mr. Nelson stated there will be some additional jobs created, but that most of the positions at the new site will actually be a transfer from the Main Street site. MOTION by Ms. Schnabel, seconded by Mr. Meyer, to approve Resolution No. HRA 01- 1999, Authorizing the Execution and Delivery of a Contract for Private Redevelopment by and Befinreen the Housing and Redevelopment Authority in and for the City of Fridley, � Minnesota, and Shamrock Investments III, LLC. �"� .HOUSING & REDEVELOPMENT AUTHORITY MEETING, MARCH 4, 1999, PAGE 5 UPON A VOICE VOTE, TWO MEMBERS VOTING AYE, SCHNABEL AND MEYER VOTING AYE, COMMERS ABSTAINING, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED. 4. CONSIDER PROPOSALS FOR ROBERT GERLOFF RESIDENTIAL ARCHITECTS: Mr. Femelius explained that staff has had several meetings with Mr. Robert Gerloff in regard to the City's scattered site in-fill redevelopment program. In the course of these meetings, he was asked to submit two proposals. Mr. Femelius stated the first proposal was to create a pattem book of general home designs to be used for homes to be built on the scattered site lots. The book would point out various issues of concem such as orientation of the garage to the street, the front entrance features, and use of different exterior materials. Mr. Gerloff has submitted a proposal for creating this pattem book at a cost of $10,050, which would include his time as well as that of an assistant to prepare the necessary drawings. Mr. Femelius stated the second proposal was to develop concept plans for the HRA- owned lot at 1015 Mississippi Street. This particular site is rather large and would be an excellent site for a move-up style home. The HRA would like Mr. Gerloff to prepare three ,...� schematic designs (elevation drawings, site plans) and to meet with builders, realtors and neighbors to identify a desirable plan. After identifying a marketable plan, the HRA would attempt to solicit proposals from builders to construct the home. Mr. Gerloff has submitted a proposal for this work in the amount of $7,650. A second part of this proposal would be to actually develop the working drawings for the plan which woul�l be an additional $7,300 cost. Mr. Gerloff has indicated that it would be very advantageous to work on both of these projects at the same time as he could combine many of his trips to Fridley and therefore offer.savings to the HRA. He has indicated that he would be willing to reduce the overall cost of the projects by $5,000 if both projects were to proceed. Mr. Femelius stated staff recommends that the HRA move forward with both projects in an amount not to exceed $20,000. He stated that the HRA is not anticipating that Mr. Gerloff would actually prepare the working drawings, but staff would like to have the flexibility in the event that the full set of drawings was necessary. Mr. Commers stated his concern in spending the money to put the drawings together only to find few people willing to accept them "as is". He wonders if people will want to start making changes to them. Mr. Meyer noted that if the plans were well done, it would not be difficult to modify them to suit individual tastes. � 4� .HOUSING & REDEVELOPMENT AUTHORITY MEETING, MARCH 4, 1999, PAGE 6 ^, Ms. Schnabel asked if the contractor could pay the additional cost of the working drawings. Mr. Femelius stated that this is possible and would be a cost-effective option for the HRA. After a brief discussion, it was the general consensus of the HRA that staff should come back to seek HRA approval in the event that working drawings are necessary. MOTION by Ms. Schnabel, seconded by Mr. Meyer, to authorize staff to enter into a contract with Robert Gerloff to complete Proposals #1 and #2 to the extent of the schematic drawings for a total cost of $12,700. UPON A VOICE VOTE, ALL MEMBERS VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. 5. CONSIDER PROPOSAL FROM BENSHOOF AND ASSOCIATES FOR PREPARATION OF FEDERAL FUNDING APPLOICATION FOR TH 65: Mr. Bums, City Manager, explained that staff is requesting that the HRA be authorized to hire Benshoof and Associates to prepare a grant application for ISTEA funds for the Highway 65 improvements which will be necessary to accommodate the Medtronic project once they develop 800,000 square feet. The contract costs for completing this work will ^ not exceed $11,200. He noted that the City would also be seeking state funds for the local match on these costs. The highway improvements will need to be completed by the year 2004; therefore it is necessary to begin these improvements as soon as possible. MOTION BY Mr. Meyer, seconded by Ms. Schnabel, to authorize the Executive Director to execute the contract with Benshoof & Associates, Inc. for an amount not to exceed $11,200. UPON A VOICE VOTE, ALL MEMBERS VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. 5.A CONSIDERATION OF CONTRACT WITH MS. BONNIE BOLUCH TO ASSIST WITH LOBBYING WITH REGARDS TO THE MEDTRONIC PROJECT. Mr. Bums explained that Ms. Bonnie Baluch has considerable experience working on legislative issues and is very knowledgeable with regard to tax increment financing. She has worked with various entities. Ms. Baluch has already been involved in the process, with her work mainly related to securing funding for the local match for highway improvements. MOTION by Mr. Meyer, seconded by Ms. Schnabel, to approve a contract with Ms. Bonnie Baluch to assist the HRA with lobbying for the Medtronic project, as set forth in the agreement, dated March 3, 1999. n •- < , HOUSING 8� REDEVELOPMENT AUTHORITY MEETING, MARCH 4, 1999, PAGE 7 ,-� UPON A VOICE VOTE, ALL MEMBERS VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. INFORMATION ITEMS: 6. MEDTRONIC UPDATE: Mr. Bums provided the HRA with an update on the Medtronic project. He stated that the AUAR document would be presented to the City Council at the April 12, 1999, meeting for review and approval. The master plan will be reviewed by the HRA at the April 8, 1999, meeting; the Planning Commission will review the various applications at their April 7, 1999, meeting, and the City Council will review them on April 26, 1999. Mr. Bums noted that a neighborhood meeting was held on Wednesday, March 3, 1999, regarding the status of Quincy and Jackson Streets (whether these streets will become cul-de-sacs or connected). Mr. Bums noted that Medtronic currently has five voluntary purchase agreements for properties to be acquired as part of the project. One property remains under negotiation and one property has been written out of the planning process. Mr. Casserly provided a brief update in regard to the development agreement, explaining that the third draft of the agreement would be sent out within the next few days. This draft ^ will only address the issues that were outlined in the original letter of intent (without any extension of the tax increment district). The remaining issues will be dealt with separately. He stated that Medtronic and their lobbyist will handle issues relating to the extension of the tax increment district. As a companion effort, the City/HRA will be working to secure funding for the "local match" for the highway improvements. Mr. Bums stated that staff met with representatives from the Minnesota Department of Transportation, the Metropolitan Council, and the Department of Trade & Economic Development. Ms. Bonnie Boluch and Senator Novak organized the meeting, with the hopes of obtaining some type of commitment from the State for assistance in funding the improvements. These representatives indicated a strong commitment; however, the funding source has yet to be determined. 7. CONSIDER TRANSFER OF PROPERTY AT 8184 EAST RIVER ROAD FROM ANOKA COUNTY TO AL KELLNER: Mr. Femelius explained that Anoka County has requested the HRA to assist them in the transfer of excess right-of-way land to an adjoining property owner at 8184 East River Road. State law prohibits the County from directly selling excess right-of-way land to private parties. The HRA's role would be to pay $4,000 for the land and then sell it to Mr. Kellner for the same price, plus any closing and legal costs. He stated that a public hearing would be required prior to the sale of the properly. The funds would be collected from Mr. Kellner upfront before proceeding any further. He stated that this was being n brought forward as information and that no formal action was required by the HRA Board. -_ � HOUSING 8� REDEVELOPMENT AUTHORITY MEETING, MARCH 4, 1999, PAGE 8 n OTHER BUSINESS: Mr. Femelius provided the HRA with a summary of the HRA's Housing Programs as well as a Loan Service Report. He stated that three loans have been made in 1999 for a total dollar amount of $29,061.00, which is less than the loans made in years past. He noted however that the Home Show was held over the past weekend and that the programs are continuing to be promoted to Fridley residents. Mr. Commers extended a welcome to Ms. Julie Vogel, Accountant, who recently began employment with the City. ADJOURNMENT: MOTI�N by Ms. Schnabel, seconded by Mr. Meyer, to adjoum the meeting. UPON A VOICE VOTE, ALL MEMBERS VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MARCH 4, 1999, HOUSING AND REDEVELOPMENT AUTHORITY MEETING ADJOURNED AT 9:00 P.M. R spectfully submitted, �� L�. � '� amara D. Saeflce Recording Secretary °� n