HRA 11/02/2000 - 6327s
. PUBLIC COPY
CITY OF FRIDLEY
HOUSING & REDEVELOPMENT AUTHORITY MEETING
NOVEMBER 2, 2000, MEETING, 7:30 P.M.
AGENDA
LOCATION: City Council Chambers
CALL TO ORDER:
ROLL CALL:
APPROVAL OF MINUTES:
October 5, 2000
CONSENT AGENDA:
Claimsand Expenses ........................................................ ............................... 1
Approve 2001 Meeting Dates .............................................. ............................... 2
ACTION ITEMS:
Consider Resolution Authorizing Contract for Private Redevelopment with Gateway
Redevelopment LLC (Real Estate Equities) for Gateway East Project ............... 3
Consider Resolution Approving Establishment of TIF District No. 17 and
Adoption of TIF Plan Modifications to Redevelopment Plan ............................ 4
OTHER BUSINESS
ADJOURNMENT
CITY OF FRIDLEY
HOUSING & REDEVELOPMENT AUTHORITY MEETING
OCTOBER 5, 2000
CALL TO ORDER:
Chairperson Commers called the October 5, 2000, Housing and Redevelopment Authority
meeting to order at 7:30 p.m.
ROLL CALL:
Members Present: Larry Commers, John Meyer, Jim McFarland, Pat Gabel
Members Absent: Virginia Schnabel
Others Present: Barbara Dacy, Community Development Director
Grant Fernelius, Housing Coordinator
William Burns, Director of HRA
Rick Pribyl, Finance Director
Jim Cassedy, Development Consultant
APPROVAL OF THE SEPTEMBER 7.2000, HOUSING AND REDEVELOPMENT
AUTHORITY MEETING MINUTES:
MOTION by Ms. Gabel, seconded by Mr. McFarland, to approve the September 7, 2000,
Housing and Redevelopment Authority meeting minutes.
UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED
THE MOTION CARRIED UNANIMOUSLY.
CONSENT AGENDA:
1. MEMORANDUM OF UNDERSTANDING WITH CITY OF COLUMBIA HEIGHTS
REGARDING JOINT TASK FORCE EXPENSES:
2. RESOLUTION NO. HRA 10 -2000, AUTHORIZING APPLICATION TO THE
MINNESOTA DEPARTMENT OF TRADE & ECONOMIC DEVELOPMENT FOR
THE REDEVELOPMENT GRANT PROGRAM (GATEWAY EAST):
3. CLAIMS AND EXPENSES:
Mr. Pribyl stated that five additional claims were added for approval.
MOTION by Mr. Meyer, seconded by Ms. Gabel, to approve the consent agenda with the
additional claims.
HOUSING & REDEVELOPMENT AUTHORITY MEETING, OCTOBER 5, 2000 PAGE 2
UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED
THE MOTION CARRIED UNANIMOUSLY.
PUBLIC HEARING:
4. CONDUCT PUBLIC HEARING REGARDING SALE OF 530 HUGO STREET AND
CONSIDER DEVELOPMENT CONTRACT WITH SCOTT OLMSTEAD BUILDERS
FOR 530 HUGO STREET:
MOTION by Ms. Gabel, seconded by Mr. McFarland, 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 7:36 P.M.
Mr. Femelius stated that the HRA is required to conduct a public hearing before it sells any
real property. The purpose of the public hearing is to review the project and provide an
opportunity for the public to ask questions. Staff would then ask the HRA to consider
approval of the plans as well as authorization of entering into a redevelopment contract
with the builder. The lot in question, located in the Riverview Heights neighborhood, was
acquired by the HRA in 1995. A house and garage on the site were tom down and the
property has been on the market since that time. Two offers on the property were
withdrawn. One offer was withdrawn due to the high water table limiting the type of home
that could be built on this site. A full basement is not feasible. A walkout design or half
basement would be appropriate for this site.
Mr. Fernelius stated that rSCoft Olmstead, the builder, is proposing to construct a split entry
design with an attached two -car garage. The home would have 1,141 square feet of
finished floor area on the main level. The lower level would be unfinished but could be
finished at a later point by the homeowner. The home would have three bedrooms with 1
1/2 baths on the main level. The sales price would be $152,475.
Mr. Fernelius stated the plan submitted by the builder initially was with a three car attached
garage. The buyer and the builder agreed to some changes similar to the designs in the
pattern book used by the City, but stated that this would be at additional cost and the lot
price needed to be adjusted. The changes include additional brick along the front fagade,
additional windows, relocation of the stairs inside the garage, a sidelight front window, the
garage being pushed back, and additional square footage to the house. Those costs
approached $6300. The lot is priced at $31,200. The adjustment price would be $24,900.
The practice of reducing a lot price to accommodate certain aesthetic improvements to a
house has been done in the past.
Mr. Femelius stated that the builder would enter into a redevelopment contract with the
HRA; the HRA would then close on the sale of the property within 45 days of execution of
the agreement. The HRA would then be paid for the land, and the builder would start
construction after the building permit is obtained. The builder would close with the
homebuyer upon completion of the property scheduled sometime in the first quarter of
2001. Upon conclusion of the public hearing, the HRA's action would be to approve the
plans and execution of the development contract.
HOUSING & REDEVELOPMENT AUTHORITY MEETING, OCTOBER 5, 2000 PAGE 3
Mr. Femelius stated that the builder accomodated the covered entry. The realtor, Janet
Sandretski, who is working on the project is here to answer any questions.
Ms. Gabel asked how much the HRA paid for the lot originally.
Mr. Fernelius stated that they paid $60,000 for the lot and the house.
Mr. Burns asked if the brick was veneer or solitary.
Mr. Fernelius stated that he believes it is a solitary.
Ms. Sandretski stated she has been working with both the buyer and the builder on this
property. She does have a signed purchase agreement copy in her file.
Mr. Meyer asked if the fagade of the garage was moved back so it would not be as
prominent. Where was the garage before?
Mr. Fernelius stated that the house plan had a three -car attached garage and was out
farther than it is right now.
Ms. Sandretski stated that the garage was closer to the front door where the two windows
were added. It also came out farther in front.
Mr. Meyer asked how far in front of the house the garage is now.
Ms. Sandretski stated it is not more than a few feet.
Mr. Meyer stated there is a lack of windows on the side elevation.
Ms. Sandretski stated that they have tried doing a window in the dining room area tG go
along the side wall, but then people do not have places for their china hutch and things like
that.
Mr. Burns asked if the property has concrete or asphalt driveway.
Ms. Sandretski stated it has an asphalt driveway.
Mr. Commers asked about the additional footage inside the garage with the stairs going
down into the lower level.
Ms. Sandretski stated they needed to add more footage to accommodate the stoop going
into the house.
Mr. Fernelius stated that since the garage was moved back, it has to be deeper to
accommodate the location.
Mr. Meyer stated that to enter the garage, you have to enter it from the lowest level only.
HOUSING & REDEVELOPMENT AUTHORITY MEETING, OCTOBER 5, 2000 PAGE 4
Ms. Sandretski stated that in order to comply with putting the garage back, the buyers are
willing to go in from the garage so they do not have to go outside to get into their home.
Mr. Meyer asked about the carbon monoxide factor. The lower level lower than the garage
floor is questionable because of the carbon monoxide danger.
Ms. Sandretski stated that it is only the stairs going into the lower level. It is the same type
of door there that would go into a regular entry.
Mr. Meyer stated that he is not sure what the code states about that.
Mr. Pribyl stated that a concrete lip is at the slab level, and the carbon monoxide will
actually hover across the concrete floor creating a ledge where it cannot move over the top
of that.
Mr. Meyer stated that is a terrible tripper and it is a good idea to pursue that.
Ms. Sandretski stated that she could check with the building official.
Mr. Meyer stated that if the lip does do the job, the buyer should be consulted as to the toe
tripper coming down the stairs into the house.
Mr. Meyer asked what specifications Ms. Sandretski had for the qualifications of the
construction.
Ms. Sandretski stated that they are prepared. The homeowner has not seen them. She
stated she has worked with Scott Olmstead for 4 1/2 years. He is reputable builder who
has been in the business for 22 years. He builds between 75 - 100 homes per year.
Mr. Meyer stated that it is a matter of good business that the quality should be known
thoroughly.
MOTION by Mr. Meyer, 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 CLOSED AT 7:55 P.M.
MOTION by Ms. Gabel, seconded by Mr. McFarland, to approve the sale of 530 Hugo
Street with the adjustment of the lot price from $31,000 to $24,900 and to approve
Resolution No. HRA 11 -2000, Authorizing Execution and Delivery of a Contract for Private
Redevelopment by and between the Housing & Redevelopment Authority in and for the
City of Fridley, Minnesota, and Scott Olmstead Builders, Inc.
Mr. Meyer asked where the adjustment in lot price was outlined in the memorandum
Mr. Commers stated that change will be made in the actual contract itself.
HOUSING & REDEVELOPMENT AUTHORITY MEETING, OCTOBER 5, 2000 PAGE 5
Mr. Casserly stated they should just note that they should make a change in the contract
and the resolution would reflect that price.
Mr. Commers stated that on page 3 under Terms of Agreement, the number should be
changed to $24,900 for the property price at closing.
UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED
THE MOTION CARRIED UNANIMOUSLY.
ACTION ITEMS:
5. MASTER PLAN AMENDMENT AND PROJECT PLAN APPROVAL, MEDTRONIC.
INC.:
Ms. Dacy stated that this request is for a free - standing daycare center for Medtronic
employees to be located at the northwest comer of the world headquarters campus site.
This use was programmed to be inside one of the buildings; but because of a variety of
issues, Medtronic has proposed a separate free - standing site. The property is zoned S -2,
redevelopment district. Medtronic stated that there were a number of issues of placing the
daycare within one of the proposed Stage 1 buildings. Daycare facilities are classified as
an E occupancy in the building, and they have stringent requirements in terms of exiting
and the separation from other types of uses and occupancies in a building. Medtronic
determined it would be safer for a free - standing building because there can be an exit
achieved for each part of the building. A facility is proposed to hold up to 120 children from
ages infant to pre - school age.
Ms. Dacy stated that the daycare center is set back 35 feet from the property lines, and
each part of the daycare has an exit to the outdoors. The play areas outside are enclosed
by fencing. It is for Medtronic employees only. The parking has ten drop -off spaces plus a
34 -space surface parking lot for the staff. That surface parking lot will become part of the
Phase 3 ramp. The driveways are about 180 feet from the intersection to 7t' Street. The
cost for the daycare facility is $1,800,000 or $156 per square foot. The Planning
Commission discussed this on September 20 and recommended approval. The S -2
zoning district requires that the HRA also make a recommendation on this project plan in
the S -2 district. This is a change in Medtronic's master plan, and staff recommends that
the HRA concur with the change.
Ms. Dacy stated that Phase I is the five buildings on the east side of the site. The daycare
facility is located in the extreme northwest part of the site.
Mr. Commers asked if the daycare was going to be fenced off from the street or the
parking ramp.
Ms. Dacy stated that the preschool, transitional, and infant/toddler areas will all have
separate fenced play areas adjacent to their rooms. A covered walkway will be
constructed from the drop -off area to the front entrance to the building. The staff will park
in the 34 -space lot next to the building.
HOUSING & REDEVELOPMENT AUTHORITY MEETING, OCTOBER 5, 2000 PAGE 6
Mr. Commers asked how far apart the ramp is to the building.
Ms. Dacy stated that there is at least 80 feet between them.
Mr. Commers asked how much space would be devoted to the daycare center including
the parking.
Ms. Dacy stated that it is approximately one -half acre. The storm pond has been moved to
the south.
Mr. Meyer asked if the storm pond is fenced.
Ms. Dacy stated that the storm pond is not fenced. Six -foot fencing will be constructed
around the daycare facility. Council will consider this on October 9.
Mr. Commers stated that, theoretically, they will have additional square footage on the tax
rolls as a result of this.
Mr. Casserly stated that is correct.
Mr. Meyer asked if this is a revenue raiser for Medtronic.
Ms. Dacy stated that she did not know.
Ms. Gabel stated that most places with daycares on the site.do charge, but the intent is to
provide an employee benefit, not make a profit.
MOTION by Mr. McFarland, seconded by Ms. Gabel, to approve the Project Plan and
Master Plan Amendment by Medtronic, Inc., for the daycare center.
UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED
THE MOTION CARRIED UNANIMOUSLY.
INFORMATION:
6. GATEWAY EAST REDEVELOPMENT PROJECT UPDATE:
Mr. Fernelius stated that they are still in discussions with the developer of Real Estate
Equities. They are still in the process of pulling together plans and cost estimates. The
revenue sharing concept was unacceptable to them and they have countered with a
proposal to split profit after project expenses 50/50. Staff is currently evaluating that
concept. Staff is also trying to refine the eligible improvements for the project that the HRA
will pay for. That assistance would not exceed $545,000. Staff has prepared an
application to the Department of Trade and Economic Development for the
Redevelopment Grant Program. The request was for $187,000 to help pay for public
improvements for the project. The program is very competitive, and the DTED staff liked
the project. The more significant issue is the creation of the tax increment district. The
City Council has a public hearing scheduled for October 23 for the creation of the TIF
HOUSING & REDEVELOPMENT AUTHORITY MEETING, OCTOBER 5, 2000 PAGE 7
district and then the HRA would consider a resolution to create the district at the November
6 meeting.
7. PROPOSAL BY CEE TO ADMINISTER PREVAILING WAGE ORDINANCE
REQUIREMENTS:
Ms. Dacy stated that Mr. Fernelius and she have worked together on this part of the
Gateway East Project. At the Joint Council and HRA workshop last spring, there was a
unanimous direction to ensure that the Gateway East Redevelopment Project's contractor
is required to meet the City's Prevailing Wage Ordinance requirements. Staff met with
State employees from the Department of Labor and Industry and talked to prevailing wage
officials at the County. Staff has talked to the City of Minneapolis about how to
appropriately enforce these types of requirements. Fridley is unique for a suburban
community having a prevailing wage requirement for redevelopment projects. The City of
Minneapolis has a whole department assigned to enforce those types of requirements.
The City of St. Paul has a similar approach as well.
Ms. Dacy stated that the City's approach has been to require in the development
agreement that the developer and the contractor are responsible for meeting the prevailing
wage requirements. Staff is suggesting that the City contract with CEE personnel with
extensive experience with these types of requirements. They can assist in the appropriate
procedures and documentation that the City could maintain to properly track what is going
on. The key is to establish the wage rate prior to the initiation of the project. They must
establish the types of employees and classifications in concert with the contractor and the
developer. They must establish appropriate payroll sheets and forms referring to Federal
requirements. Some routine site inspections to ensure the wage requirements are being
paid are necessary also.
Ms. Dacy stated that if the contract with Real Estate Equities proceeds, they have
extensive experience with prevailing wage rates and will cooperate fully. The other
proposer did not have experience. Staff is suggesting that it is a contract not to exceed a
certain amount approach. They could be incurring less cost. The maximum estimate was
about $15,000. It is a working contract and staff would have to submit a monthly invoice.
Prior to the November meeting, they have to incur a minor amount of expense with the
CEE staff to make sure that the development contract is referring to the right sets of rules.
The City and the HRA have not embarked on such a project before. They have learned a
lot about the prevailing wage with the Banfil Crossing project and this is a good approach
for the City. This would maintain documentation that is readily available to the City.
Ms. Gabel stated that she had no idea it would cost this much. What are the interviews?
Ms. Dacy stated that the intent is to interview the employees on the job site. It would be a
random set of interviews to make sure that the people that are working on the job are
being paid appropriately. They would then compare the on -site information with the
documentation on the payroll.
Mr. Commers stated that his concern is that they want to encourage and support the City's
prevailing wage law, but the issue is that this is the City's statute that bears enforcement,.
HOUSING & REDEVELOPMENT AUTHORITY MEETING, OCTOBER 5, 2000 PAGE 8
and is up to the City to enforce it the way the Council deems most appropriate for
themselves. He is not sure if it is appropriate for the HRA to get into the funding of this
kind of enforcement of a City statute. An intermediate suggestion is that the language be
put into the development contract requiring the developer to certify that he is meeting the
prevailing wage rates. If this is misrepresented, the City can determine what they want to
do.
Mr. Meyer asked if the $15,000 in this case is a pass through incidence to be passed
through the contractor?
Mr. Casseriy stated that it could be passed through if the HRA could get the contractor to
accept it as a negotiating issue. In this particular transaction, there is a substantial
shortfall. The developer has indicated that they know how to deal with the forms and from
their perspective they do not see themselves as incurring any great costs. If we told them
they would incur these additional costs, he is sure they would have a lot of additional
discussion.
Mr. Commers stated that the City Council feels that it is appropriate to monitor the
administrative costs. If they decide it needs monitoring, they certainly should act on their
concerns.
Mr. Meyer asked if it was necessary to go through this elaborate checking. Can they go
completely the other way and put it in their contract that they shall abide by this or be guilty
of fraud?
Ms. Dacy stated that it is perfectly defensible and that is what they have been doing so far.
The developer and the contractor hold all of the information, and staff feels that it should
be more involved and it puts the City in a better information position. The developer and
the contractor must swear to affidavits that they must meet those requirements. The City
is still open to a challenge from an aggrieved employee, and the developer will need proof
that they are not in violation. This will put the City in a good position to respond to
complaints promptly and would not require the City to expend the legal time and expense
to go after the contractor. This is a temporary enforcement provision and helps establish
the documentation, and they will advise us as to how to take steps is a complaint occurs.
Mr. Bums stated this is coming from staff, not City Council, stemming from the Banfil
Crossing incident.
Mr. Commers stated that the merits are well taken, and it would be nice to have that
information. The question is who is the appropriate body for this.
Mr. Meyer asked for clarification of the Banfil Crossing problem.
Ms. Dacy stated it was the senior housing project up on University Avenue and 83rd
Avenue There was an allegation that the subcontractors were not paying the prevailing
wage rates. Each of the subcontractors submitted an affidavit that stated that they were
paying the prevailing wages. The general contractor appeared before the Council and
testified to the fact that he believed that he was in compliance with the State requirements.
HOUSING & REDEVELOPMENT AUTHORITY MEETING, OCTOBER 5, 2000 PAGE 9
Mr. Meyer asked if the complainant just went away after the complaint.
Ms. Dacy stated that the complainant needed a sworn testimony to challenge it. They did
not come back with that.
Mr. Meyer asked if the City feels that these people had agreements and were "cowed" into
not pursuing it.
Ms. Dacy stated that the City direction was to properly enforce the requirements. Her
department is charged to make sure that these things are complied with. She is being
responsible to the City by researching all of the potential options and the wish to enforce it.
She feels this is a good option.
Ms. Gabel asked if this is similar to an insurance policy effect of having prevailing wages.
Ms. Dacy stated that is correct.
Mr. Burns stated that some people who had these complaints were going to the City
Council who were in turn coming back to City staff asking how prevailing wage was being
enforced. Staff was able to use the technique Ms. Dacy described, but it was not
comfortable because they were not really doing any enforcement other than requiring the
contractor to provide the affidavit.
Mr. Meyer stated that the procedure following Banfil was not giving the true results.
Ms. Dacy stated that was entirely legal but from a practical, administrative standpoint, it is
like having a setback requirement and you ask the builder to comply but then you do not
have a survey and then you take the builder's word for it.
Mr. Meyer stated that and other things are evenly proven.
Ms. Dacy stated that the ability to prove may be an issue the City should take over.
Mr. Meyer stated that after the fact, proof is just as good as during the fact proof.
Mr. Burns stated that is exactly what they have here. A practical approach versus a
retroactive approach.
Mr. Meyer stated that the staff is dissatisfied with the results of the Banfil Crossing
incident.
Ms. Dacy stated that she is not dissatisfied with it. The results were legal.
Mr. Meyer stated this is a bureaucratic situation imposing on the HRA and the contractor.
All of this is fine if there is a demonstrated hazard or requirement. He is puzzled as to why
they are creating this bureaucracy of $15,000 and maybe another $15,000 on the part of
the contractor.
HOUSING & REDEVELOPMENT AUTHORITY MEETING, OCTOBER 5, 2000 PAGE 10
Mr. Commers stated they had difficulty after the fact getting evidence together. They had
the sworn affidavits; and if they are lying on those, there may be revenues enforced
against them. To take an aggressive posture and monitor all of these projects, you are
undertaking a significant task. If staff feels it is necessary, he respects that and they
should go ahead and do that. His only question is if it is an HRA function. They should not
use the public money and the HRA to pay for that type of expense. The City Council
should be doing it to enforce it. They should table this and see what the City Council's
response is.
Mr. Casserly stated that the HRA did adopt a resolution on this topic. There is a four page
resolution defining what all this is about. Staff is saying that they have no verification that
the provisions the HRA has adopted are being adhered to. They are looking at some
ability to meet the provisions. They are concerned about being placed in an untenable
position.
Mr. Commers stated there is an answer without having to do the monitoring. It is
satisfactory and that is the way the Banfil Crossing problem was handled. It was proper
and legal. The conclusion was there was no violation in the prevailing wage, and
everybody accepts that.
Mr. Casserly stated that he has no information other than what has been presented.
MOTION by Mr. McFarland, seconded by Mr. Meyer, to table this item.
Mr. Burns stated that the HRA has adopted prevailing wage. This feels like the prevailing
wage is the Council's responsibility, not the HRA's so they should go back to Council and
make them pay for it. He thinks that the better route to go is to say that the HRA does not
want to go through the approach and accept the reactive approach rather than send this
back to Council. That is what he would prefer, but the HRA can pursue the course they
want to.
Mr. Commers stated that they may well want to do the monitoring.
Mr. Bums stated that it would be an unbudgeted expense for a redevelopment project,
which is typically an HRA project. It would be an emergency fund balance.
Mr. Commers stated that if they go back to accepting the method done by the City with
Banfill, he assumes there is no cost.
Ms. Dacy stated that there was no cost; but if a claim would be made, costs could match
any amount below or above $15,000 to defend the City. If the City or the HRA wanted to
go after the developer for the damages, they would expend costs trying to compel the
evidence and look at it after the fact.
Mr. Commers stated that if this is staff generated, it should be taken to the Council first to
see where they stand.
Mr. Bums stated they could do that. What are the limitations of a prevailing wage?
HOUSING & REDEVELOPMENT AUTHORITY MEETING, OCTOBER 5, 2000 PAGE 11
Ms. Dacy stated that the single family housing replacement program is exempt. Owner -
occupied redevelopment townhomes are exempt under the ordinance, but the prevailing
wage requirements need to be enforced under this type of project.
Mr. Meyer stated the wage lists are posted in a public place where the workers
congregate. He has never heard of an action needed against a contractor under those
circumstances. Why do they create this bureaucracy?
Mr. Burns stated that this is not an action, and it may not even need a tabling motion.
Mr. Commers stated that what they are saying is to talk to the City Council first and go
ahead and draft what you want; but whether or not it is for HRA approval is being reserved.
He asked that staff provide copies of the City Council minutes when this is discussed.
Ms. Dacy stated that the procedures and forms are needed if there is a problem. It is
standard operating procedure. It is a very controversial topic as well and they need to
provide the documentation.
Ms. Gabel asked if the documentation needs to be this extensive. If this is the HRA's
project, the HRA cannot divorce itself from this process. She is wondering about the forms
though, and they seem quite extensive.
Ms. Dacy stated that this particular developer is used to this and is very cooperative. An
experienced contractor will make sure that the subcontactors comply with that. Things will
go smoother, faster, and maybe cheaper.
Mr. Commers asked if the Rottlund project was exempt.
Ms. Dacy stated that was correct.
Mr. Commers stated that at the joint meeting, they voted to put this into the prevailing
wage, even though it does not fall under that statute.
MOTION by Mr. McFarland, seconded by Mr. Meyer, to withdraw the motion to table this
item.
UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED
THE MOTION CARRIED UNANIMOUSLY.
8. POTENTIAL REDEVELOPMENT PROJECT: FORMER LYNDALE GARDEN
CENTER:
Ms. Dacy stated that Bob's Produce has purchased the Lyndale Garden Center. They are
hoping to redevelop that site and are looking at additional retail and warehouse space for
Bob's Produce. They may be planning for a restaurant use as well. They are hoping to
finalize plans this winter and wanted to give the HRA an early heads -up that they may
come in for a specific request for tax increment assistance. If that is agreed to, then a new
tax increment district would have to be created for that particular parcel. In the meantime,
HOUSING & REDEVELOPMENT AUTHORITY MEETING, OCTOBER 5, 2000 PAGE 12
they will proceed on their own with the University Station site in demolishing that building
and constructing a new building with two tenant spaces, with one having a drive - through
window.
Mr. Meyer stated that he thought this was a very exciting development.
OTHER BUSINESS
Mr. Commers asked about an update on the negotiations on the salvage yards, but it is a
little premature. The HRA will get a report when there are more details.
Mr. Bums stated that he had a meeting with a company called Quick File in the Northco
Business Park. They make high density filing cabinets for mail rooms and are seeking
DTED funding. They will bring in 25 new jobs and be eligible for $75,000 in DTED funding
that would be passed through the City. The City's role would be to fill out the application
and file quarterly reports.
ADJOURNMENT
MOTION by Mr. McFarland, seconded by Ms. Gabel, to adjourn the meeting. Seconded
by Ms. Gabel.
UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED
THE MOTION CARRIED AND THE OCTOBER 5, 2000, MEETING OF THE HOUSING
AND REDEVELOPMENT AUTHORITY WAS ADJOURNED AT 8:57 P.M.
Respectfully submitted,
J� �- Sig a L. Joh son aed
Recording Secretary
r HOUSING AND REDEVELOPMENT
AUTHORITY
Memorandum
DATE: October 27, 2000
TO: William W. Burns, Executive Director of HRA
FROM: Barbara Dacy, Community Development Director _
Grant Fernelius, Housing Coordinator
SUBJECT: Consider Tax Increment Financing Plan and Resolution Establishing TIF
District No 17 for the Gateway East Project.
Introduction
At the HRA meeting next Thursday evening, staff will recommend that the HRA
establish the tax increment financing district for the Gateway East project.
Obviously, the HRA's decision on the development contract with Real Estate
Equities will have an impact on whether or not we should proceed and create the
district. Assuming the HRA approves the contract, we are suggesting that the
Authority also take action to create the TIF district the same evening.
One area of concern is the proposed Charter Amendment on the November
7t' ballot regarding a cap on revenue increases for City programs and services.
Although, it is unclear what impact, if any, this issue might have from a legal
perspective on the HRA, from a practical standpoint it seems to be prudent to
finalize as many of the project issues as possible before the Charter Amendment
is considered. The City Council would consider final approval of the Gateway
East TIF district on November 6, 2000.
TIF Plan Overview
The attached TIF Plan is required by state law and spells out the details of the
TIF district. The TIF Plan includes the traditional "but for" test, plus an
estimated budget, a cash flow analysis with tax increment projections, and an
estimate of the impacts on the other taxing jurisdictions.
The plan anticipates that the new development will have an estimated market value
of $4,480,000 and generate $70,820 in new taxes. After deducting the original
tax capacity ($4,816) the project will produce about $65,144 in tax increment
3
Gateway East TIF Memo
October 27, 2000
Page 2
per year. Over the life of the district (25 years) the cumulative tax increment is
estimated to be $2,113,124, less $211,312 for administrative charges which
results in $1,901,812 of net available tax increment. Using a 7.5% present value
factor, the tax increment revenue stream has a present value of $646,162.
There are a number of assumptions in the financial analysis that should be
noted. First, the cash flow projection assumes a 2% annual rate of inflation,
beginning in 2005/2006. Second, the average sales price is estimated to be
$160,000. In our previous analysis we have used an average sales price
of $135,000. However, for purposes of the TIF Plan, it is important to error oin-
the liberal side and over - estimate revenue since a conservative projection could
mean a loss of tax increment to the Authority (any increment over the
projected level would have to be returned). From a practical standpoint, the
Gateway East project already has a significant shortfall and whatever tax
increment is generated will simply "soften" the net cost to the Authority.
Intended Use of TIF
Legally, all of the tax increment that is generated must be used to pay for eligible
expenses incurred after the date the district is certified. In other words, the TIF
revenue cannot be used to reimburse the Authority for any expenses incurred to date.
However, the funds can be used for the site improvements that have been identified.
For example, the roads, utilities, storm ponding, fencing and lighting are all eligible
expenses. We have received preliminary estimates that these costs could exceed
$600,000 or more. The TIF plan contemplates that 100% of the tax increment will be
used to pay for eligible expenses.
Need for TIF
Creating the tax increment district is needed in order to facilitate redevelopment of this
important corner. The traditional "but for" test is met due to the fact that the Gateway
East area would not be redeveloped without public involvement. The tax increment will
help reduce the net cost to the Authority, which will have invested over $1,200,000 in
the project for such things as acquisition, relocation, demolition and site improvements.
Without the HRA's assistance, a redevelopment project would not take place. It would
be too costly for a private developer to try and acquire the sites and create a cohesive
development site. In all likelihood, the project area would continue to decline in
condition and become a further blighting influence on the surrounding neighborhood.
Gateway East TIF Memo
October 27, 2000
Page 3
Other Issues
The Gateway East TIF district would be the seventeenth TIF district created by the
Authority; however, the number of active TIF districts is far less. For example, Districts
No. 4, 5, 8 and 10 have all expired, and Districts No. 2 and 3 are restricted. In the case
of the last two districts, no additional expenditures can be made except inside those
districts. Using TIF for the Gateway East project is consistent with state statutes and
clearly meets the legislative intent of a redevelopment district. _
Next Steps
r..
The City Council conducted a public hearing on October 23, 2000, to review the
proposed TIF district and plan. There were no major issues raised during the hearing,
although Council member Billings inquired about the potential impact of the Governor's
tax plan on projects like Gateway East. Jim Casserly, who was in attendance, felt that
any impact would be minimal because the State would have a difficult time adopting
legislation that would put a city or HRA in an adverse financial position without some
sort of corresponding revenue off -set.
In terms of the next steps, once the HRA has approved the TIF plan and established
the district, the City Council must take action to approve the TIF district. The City
Council will consider formal approval of the district on November 6, 2000. The plan has
already been submitted to Anoka County and the Fridley School District; to date we
haven't received any comments.
Recommendation
Staff recommends that the Authority approve the attached resolution which establishes
Tax Increment Financing District No. 17, adopts the Tax Increment Financing Plan and
TIF Plan Modifications to the Redevelopment Plan and related TIF Plans.
M -00 -185
RESOLUTION NO.
A RESOLUTION MODIFYING THE REDEVELOPMENT
PLAN FOR REDEVELOPMENT PROJECT NO.1 AND THE
TAX INCREMENT FINANCING PLANS FOR TAX
INCREMENT FINANCING DISTRICTS NOS. 1, 2, 3, 6, 7, 9,
10, 11, 12, 13, 14, 15 AND 16 TO REFLECT INCREASED
PROJECT COSTS WITHIN REDEVELOPMENT PROJECT
NO. 1, AND CREATING TAX INCREMENT FINANCING
DISTRICT NO. 17 AND ADOPTING A TAX INCREMENT
FINANCING PLAN RELATING THERETO
BE IT RESOLVED by the Board of Commissioners (the "Commissioners") of the Housing
and Redevelopment Authority in and for the City of Fridley, Minnesota (the "Authority "), as
follows:
Section 1. Recitals.
1.01. It has been proposed that the Authority modify, approve and adopt a Modified
Redevelopment Plan relating to Redevelopment Project No. 1 to reflect increased project
costs, pursuant to and in accordance with Minnesota Statutes, Sections 469.001 to
469.047, inclusive, as amended and supplemented from time to time.
1.02. It has been further proposed that the Authority modify, approve and adopt Modified
Tax Increment Financing Plans for Tax Increment Financing Districts Nos. 1, 2, 3, 6, 7, 9,
10, 11, 12, 13, 14, 15 and 16 (the "Existing TIF Districts ") to reflect increased project
costs within Redevelopment Project No. 1, pursuant to Minnesota Statutes, Section
469.174 through 469.1791, inclusive, as amended and supplemented from time to time.
1.03. It has been. further proposed that the Authority approve the creation of proposed
Tax Increment Financing District No. 17 (the "Proposed TIF District") and adopt a
proposed Tax Increment Financing Plan relating thereto, pursuant to and in accordance
with Minnesota Statutes. Section 469.174 to 469.1791, inclusive, as amended and
supplemented from time to time.
1.04. The Authority has investigated the facts and has caused to be prepared with
respect thereto, a Modified Redevelopment Plan for Redevelopment Project No. 1 and
Modified Tax Increment Financing Plans for the Existing TIF Districts to reflect increased
project costs within Redevelopment Project No. 1 and a proposed Tax Increment
Financing Plan for the Proposed TIF District, defining more precisely the property to be
included the public costs to be incurred, and other matters relating thereto.
coo HOHN0& SSVHX 6962 SOO 9i8 %V3 ZZ 1;T..I2I3 oo /LZ /oT
Page 2 - Resolution No.
1.05. The Authority has performed all actions required by law to be performed prior to the
modification, approval and adoption of the Modified Redevelopment Plan, the Modified
Tax Increment Financing Plans and the proposed Tax Increment Financing Plan.
1.06. The Authority hereby determines that it is necessary and in the best interests of the
City and the Authority at this time to modify, approve and adopt the Modified
Redevelopment Plan and the Modified Tax Increment Financing Plans to reflect
increased project costs within Redevelopment Project No. 1 and to create the Proposed
TIF District and to approve and adopt the proposed Tax Increment Financing Plan
relating thereto.
Section 2. Findings.
2.01. The Authority hereby finds that the assistance to be provided through the adoption
and implementation of the Modified Redevelopment Plan, Modified Tax Increment
Financing Plans and proposed Tax Increment Financing Plan are necessary to assure
the development and redevelopment of Redevelopment Project No. 1.
2.02. The Authority hereby finds that the Modified Redevelopment Plan, Modified Tax
Increment Financing Plans and proposed Tax Increment Financing Plan conform to the
general plan for the development and redevelopment of the City as a whole in that they
are consistent with'the City's comprehensive plan.
2.03. The Authority finds that the Modified Redevelopment Plan, Modified Tax Increment
Financing Plans, and proposed Tax Increment Financing Plan afford maximum
opportunity consistent with the sound needs of the City as a whole for the development
and redevelopment of Redevelopment Project No. 1 by private enterprise and it is
contemplated that the development and redevelopment thereof will be carried out
pursuant to redevelopment contracts with private developers.
Section 3. Modification Approval and Adoption of Modified Redevelopment Plan.
3.01. The modification to the Modified Redevelopment Plan for Redevelopment Project
No. 1 reflecting increased project costs is hereby approved and adopted by the
Commissioners of the Authority and is forwarded to the Fridley City Council for public
hearing, review and approval.
Section 4. Modification Approval and Adoption of Modred Tax Increment Financing
Plans.
4.01. The modifications to the Modified Tax Increment Financing Plans for the Existing
TIF Districts reflecting increased project costs within Redevelopment Project No.1 are
cooim HOMON SSVU egos see ZT9 M 93:6T Ii9 00 /LZ /OT
Page 3 - Resolution No.
hereby approved and adopted by the Commissioners of the Authority and are forwarded
to the Fridley City Council for public hearing, review and approval.
Section 5. Creation of Tax Increment Financing District and Adoption of Tax Increment
Financing Plan.
5.01. The establishment of the Proposed TIF District within Redevelopment Project No. 1
and the adoption of the proposed Tax Increment Financing Plan relating thereto are
hereby approved and adopted by the Commissioners of the Authority and are forwarded
to the Fridley City Council for public hearing, review and approval.
Section 6. Filing of Plans.
6.01. Upon approval and adoption of the Modified Redevelopment Plan, the' Modified
Tax Increment Financing Plans and the proposed Tax Increment Financing Plan
(collectively the "Plans"), the Authority shall cause said Plans to be filed with the
Commissioner of Revenue.
PASSED AND ADOPTED BY THE FRIDLEY HOUSING AND REDEVELOPMENT
AUTHORITY OF THE CITY OF FRIDLEY THIS 2ND DAY OF NOVEMBER, 2000.
LAWRENCE R. COMMERS - CHAIRPERSON
ATTEST:
WILLIAM W. BURNS - EXECUTIVE DIRECTOR
t+00@ 3OHNON SWUM 0962 298 NO ZVd ZZM fii 00 /19/04
CERTIFICATION
I, William W. Bums, Executive Director of the Housing and Redevelopment Authority in
and for the City of Fridley, County of Anoka, Minnesota, hereby certify that the foregoing
is a true and correct copy of Resolution No. adopted by the Authority on
the 2nd day of November, 2000.
WILLIAM W. BURNS - EXECUTIVE DIRECTOR
m. \WMTA \P \mLnLZY \30 \TIF \=A T =Y M -DOC
200[m 30HNOW SSYU 6902 299 8T9 M CUtt f-t! 00IL9107
SECTION XVIII
TAX INCREMENT FINANCING PLAN FOR
TAX INCREMENT FINANCING DISTRICT NO. 17
(GATEWAY EAST PROJECT)
Subsection 18.1. Statement of Obiectives. See Section I, Subsection 1.5,
Statement of Objectives.
Subsection 18.2. Modified Redevelopment Plan. See Section I, Subsections 1.2
through 1.15.
Subsection *18.3. Parcels to be Included. The boundaries of Tax Increment
Financing District No. 17 are described on the attached Exhibit XVIII-A and'Olustrated
on- Exhibit XVIII -B. ,
Subsection 18.4. Parcels in Acquisition. The Authority may publicly acquire and
reconvey any or all of the parcels in Tax Increment Financing District No. 17 identified
on the attached Exhibit XVIII-A.
The following are conditions under which properties not designated to be
acquired may be acquired at a future date:
(1) The Authority may acquire property by gift, dedication, condemnation or
direct purchase from willing sellers in order to achieve the objectives of the Tax
Increment Financing Plan; and
(2) Such acquisition will be undertaken only when there is assurance of funding
to finance the acquisition and related costs.
Subsection 18.5. Development Activi for high Contracts have been Signed.
As of the date of adoption of the Tax Increment Financing Plan, the Authority intends to
enter into a Redevelopment Agreement with respect to the activities discussed below.
Subsection 18.6. Si3ecific Development Expected to Occur. At this time it is
anticipated that an approximately 28 unit owner - occupied, residential housing
townhouse development with an estimated market value of $4,480,000, will be
constructed beginning in 2001 and will be completed in 2002.
Subsection 18.7. Prior Planned Improvements. The Authority shall, after due
and diligent search, accompany its request for certification to the County Auditor or its
notice of district enlargement with a listing of all properties within Tax Increment
Financing District No. 17 for which building permits have been issued during the
eighteen (18) months immediately preceding approval of the Tax Increment Financing
Plan by the Authority. The county Auditor shall increase the original tax capacity of Tax
18 -1
900 in HOHNOW SSVHX 6069 999 ITO %V3 M4T Il ' 00 /1.9/0T
Increment Financing District No. 17 by the tax capacity of each improvement for which
the building permit was issued. If said listing does not accompany the aforementioned
request or notice, the absence of such listing shall indicate to the County Auditor that
no building permits were issued in the eighteen (18) months prior to the Authority's
approval of the Tax Increment Financing Plan.
Subsection 18-.8. Fiscal Disparities. The Council hereby elects the method of
tax increment computation set forth in Minnesota Statutes, Section 469.177,
Subdivision 3, clause (a) if and when commercial/industrial development occurs with
Tax Increment Financing District No. 17.
Subsection 18.9. Estimated Public Improvement Costs. The estimated costs
associated with Redevelopment Project No. 1 are listed in Section I, Subsections 1.9
and 1.10.
Subsection 18.10. Estimated Amount of Bonded Indebtedness.
It is anticipated that $1,599,861 of bonded indebtedness could be incurred witli, respect
to this portion of Redevelopment Project No. 1. Pursuant to Minnesota Statutes,
Section 469.178, Subdivision 1, General Obligation Tax Increment Bonds may be used
as required to amortize the costs identified in Section I, Subsections 1.9 and 1.10. The
Authority reserves the right to pay for all or part of the activities listed in. Section I,
Subsections 1.9 and 1.10 relating to Redevelopment Project No. 1 as tax increments
are generated and become available.
Subsection 18.11. Sources of Revenue. The costs outlined in Section I,
Subsection 1.9 will be financed through the annual collection of tax increments as well
as grants received from the State of Minnesota and the Metropolitan Council.
Subsection 18.12. Estimated mated Original and Cap_ tured Tax Capacities. The tax
capacity of all taxable property in Tax Increment Financing District No. 17, as most
recently certified -by the Commissioner of Revenue of the State of Minnesota on
January 2, 2000, is estimated to be $5,016.
The estimated captured tax capacity of Tax Increment Financing District No. 17
upon completion of the proposed improvements on January 2, 2002 Is estimated to be
$55,072. All the captured net tax capacity is necessary to finance the improvements to
be undertaken within Tax Increment Financing District No 17, therefore the Authority
chooses to retain all the captured net tax capacity for purposes of tax Increment
financing.
Subsection 18.13. Tax Increment. Tax increment has been calculated at
approximately $64,908 upon completion of the improvements assuming a static tax
capacity rate and a valuation increase of two percent (2 %) compounded annually.
Subsection 18.14. Tax Ca acit Rate. The estimated 1999 /2000 total tax
capacity rate is estimated at 117.859 %.
18 -2
L00 @ SONNOW SSVU 6962 2.88 ZT9 %V3 £Z :6T -1it3 00 /LZ/OT
Subsection 18.15. Type of Tax Increment Financing District. Tax Increment
Financing District No. 17 is, pursuant to Minnesota Statutes, Section 469.174,
Subdivision 10, a Redevelopment District.
Subsection 18.16. Duration of Tax Increment Financing District. The duration of
Tax Increment Financing District No. 17 is expected to be twenty five (25) years from
receipt of the first tax increment. The date of receipt of the first tax increment is
estimated to be July, 2003. Thus, it is estimated that Tax Increment Financing District
No. 17, including any modifications for subsequent phases or other changes, would
terminate in the year 2028.
Subsection 18.17. Estimated Im a on Other Taxing Jurisdictions. The
estimated impact on other taxing jurisdictions assumes construction would have
occurred without the creation of Tax Increment Financing District No. 17!' If the
construction is a result of tax increment financing, the impact is $0 to other entities.
Notwithstanding the fact that the fiscal impact on the other taxing jurisdictions is $0 due
to the fact that the financing would not have occurred without the assistance of the City,
the attached Exhibit XVIII -E reflects the estimated impact of Tax Increment Financing
District No. 17 if the "but'for° test was not met.
Subsection 18.18. Election of City Contribution. The Council hereby elects a
qualifying local contribution equal to five percent (5.00 %) of the tax increment
generated from Tax Increment Financing District No. 17, as set forth in Minnesota
Siltutes 273.1399.
Subsection 18.19. Modification of Tax Increment Financing Distri and /or Tax
Increment Financing Plan. On November 13, 2000, no modifications to Tax Increment
Financing District No. 17 or the Tax Increment Financing Plan therefore has been
made, said date being the date of initial approval and adoption thereof by the City
Council.
G:% WPDATA %FWRIDLEY%30%TIFITIFPLAN.DOC
18 -3
600 0 a0vRow SSVHX 6969 999 ZT9 %V3 EZ :vT I13 00 /bZ /OT
EXHIBIT XVIII — A
PARCELS TO BE INCLUDED IN
TAX INCREMENT FINANCING DISTRICT NO. 17
AS ORIGINALLY ADOPTED NOVEMBER 13, 2000
PIN 23- 30 -24 -24 -0014
PIN 23- 30 -24 -24 -0072
PIN 23- 30 -24 -24 -0073
PIN 23- 30 -24 -24 -0074
PIN 23- 30 -24 -24 -0075
PIN 23- 30 -24 -24 -0076
PIN 23- 30 -24 -24 -0101
PIN 23 -30 -24-24 -0102
PIN 23- 30 -24 -24 -0103
Including all adjacent rights -of -way.
XVIII —A -1
6002 HOHNOW ssvn 0902 299 9T9 %Vd t9 :trT I?I3 00 /19 /OT
EXHIBIT XVIII - B
BOUNDARY MAP OF
TAX INCREMENT FINANCING DISTRICT NO. 17
AS ORIGINALLY ADOPTED NOVEMBER 13, 2000
XVIII -B -1
OTOIB MHON SSVu 0069 299 9TO %V3 t9:3T* Ii ' 00 /LZ /OT
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City of Fridley
Redevelopment Project Areas and
Tax Increment Financing Districts
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Existing T1F District
r--1 6tisbng Redevelopment Project Area
[-1 Railroad Corridor
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wi=. - I :50.000
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EXHIBIT XVIII - C
CASH FLOW ANALYSIS FOR
TAX INCREMENT FINANCING DISTRICT NO. 17
AS ORIGINALLY ADOPTED NOVEMBER 13, 2000
r-,'
XVIII -C -1
ZTOlm soumox ssvn 6969 999 9T9 IVA tl : PT IM 001WOT
CITY OF FRIDLEY
GATEWAY EAST - TOWNHOMES
Real Estate Equities Proposal
ASSUMPTIONS
Original Market Value
land Area
Laced
Aulwiag
TOIAi-
PID # 23- 30.24 -24 -0014
25,974
58,500
115,901
174,401
23- 30- 24- 24.0072
11,240
33,720
24,900
58,620
23.30 -24 -24 -0073
5.620
16,860
16,860
23 -30 -24.24 -0074
11,240
30,000
30,000
23- 30 -24 -24 -0075
5,620
27,000
27,000
23- 30 -24 -24 -0076
11.240
30,000
85,897
115,897
23- 30 -24 -24 -0101
16,800
58,800
58,800
23- 30- 24- 24.0102
5,600
(right of way)
10,000
10,000
23- 30 -24 -24 -0103
5,600
(right of way)
10,000
10,000
98,934 sq.
ft. 274,880
226,698
501,578
Original Tax Capacity
- 5,016
1.00% <=
76,000
1.65% >
76,000
_
# of townhouse owners 28
'
PHASE
Estimated Market Value 14
units @
160,000 /unit
=
2,240,000
Estimated Tax Capacity 14
units
30,044
1.00% <=
76.000
1.65% >
76,000
Estimated Taxes 14
units @
2,529 /unit
=
35,410
Estimated Tax Increment
29,498
Construction
2001
50%
Valuation
2002
Taxes Payable
2003
PHASE 11- cumulative
Estimated Market Value 28
units @
160,000 /unit
=
_
4,480,000
Estimated Tax Capacity 28
units
60,088
1.00% <=
76,000
1.65% >
76,000
Estimated Taxes 28
units @
2,529 /unit
=
70,820
64,908
Estimated Tax Increment
Construction
2002
100%
Valuation
2003
Taxes Payable
2004
10.00 °Jo
Admin /Program Fees
1.17860
Pay 2000 Tax Rate
2.00%
Inflation
2005 /
2006
7.50%
P. V. Rate
12/01/00
Gateway East TIF.xIs
Prepared by Krass Monreo, PA.
p
10127/2000
£TOC�
302iNON SSYNX
8982
888
9T9 BV3
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CITY OF FRIDLEY
GATEWAY EAST - TOWNHOl1AiiES
Real Estate Equities Proposal
CASH FLOW AND PRESENT VALUE ANALYSIS
- ANNUAL
>
<
----- ---- --
-- SEMI - ANNUAL ---
0
0
(a) (e) (c)
(d)
(e)
(f)
(9)
(h)
0)
U)
Original Estimated
Captured
Estimated
Less:
Available
Cumulative
4-- Present Value -->
Tax Tax
Tax
Tax
Admin
Tax
Avail. Tax
Semi Annual
Cumulative
Date Capacity Capacity
Capacity
Increment
Fees
Increment
Increment
Balance
Balance
(sae assumptions.)
(c) - (b)
(d) x
(e) x
(e) - (t)
Total of (g)
P.V. of (g)
Total q1(1)
2.0% Inflation
(prev. year)
1.1786
10.00%
12/01/02
5,016
7.50%
12/01/00
06/01/00
5.016
5,016
0
0
0
0
0
0
12/01/00
6,016
5,016
0
0
0
0
0
0
08/01/01
5,015
5,016
0
0
0
0
0
0
12/01/01
5,016
5,016
0
0
0
0
0
0
06101/02
51015
30,044
0
0
0
0
0
0
0
12/01/02
5,016
30,044
0
0
0
0
0
0
0
06101/03
5,010
60,088
26,028
14,749
1,475
13,274
13,274
11.043
11.043
12/01103
5,016
00,088
25.028
14,749
1,475
13,274
26.548
10,643
21,686
08101104
5,016
60,088
66,072
32,454
3,245
29,209
55,767
22,673
44,259
12/01/04
5,016
60.088
55.072
32,454
3,246
29,209
64,966
21,757
66,017
06101/05
5,016
61,290
66,072
32,454
3,245
29,209
114,174
20,271
86,988
12/01/05
5.016
61,290
55,072
32.454
3,245
29,209
143.383
20,213
107,201
06/01106
5,016
62,516
66,274
33,102
3,316
29,846
173,229
19,908•
127,108
12/01/06
5,016
62,616
56,274
33,162
3,316
29,846
203.075
19,10
146,296
06/01/07
5,016
63,766
57,500
33,886
3,388
30,496
233,671
18897
165,193
12/01107
5,015
63,766
57,800
33.885
3,388
30,496
264,087
18,214
183,408
06/01/08
5,016
66,041
58,750
34,621
3,462
31.159
295,227
17,938
201,345
12101/06
5.016
66.041
58,750
34,621
.3,462
31,159
326.386
17,289
218,635
06101/09
5,016
65,342
60.025
35,373
3,537
31,836
358,222
17,026
235,661
12/01/09
5,010
66,342
50,025
35,373
3,537
31,836
390,057
16.411
252071
06/01/10
5,016
67,669
61.326
36,140
3,614
32.526
422,583
16,160
268,232
12/01/10
5,016
67,669
61,326
36,140
3.614
32,526
455,109
15,576
283,808
06101/11
5,016
69,022
62,653
36,921
3,692
33,229
488,338
15.338
299,146
12101/11
5,016
69.022
82.653
36,921
3,692
33.229
621,567
14,784
313.930
06/01/12
5.016
70,403
64.006
37.719
3,772
33,947
555,514
14,557
328,487
12101/12
61016
70,403
64.006
37,719
3,772
33.947
589,461
14,031
343,518
05/01/13
5.015
71.811
05,387
38,532
3,853
34,679
624,141
13,816
356,334
12101113
5,016
71,811
65,387
38,532
3,863
34,679
658,820
133,316
369,650
06/01114
51016
73,247
66,795
39,362
3.936
35.426
694,246
13,111
382,761
12/01/14
5,016
73,247
65,795
39,362
3,936
35,426
729,672
12,637
395,398
06101/15
5.015
74,712
68,231
40,209
4,021
36,188
765,860
12,442
407,841
12101/15
5,016
74.712
68.231
40,209
4,021
36,180
802,047
11.993
419,833
06101 /16
5.016
76,206
69,696
41,072
4,107
36,965
839,012
11,807
431,641
12/01/16
5,016
76.206
69,696
41,072
4,107
35,965
875,977
11,381
443,022
06/01/17
5,016
77,730
71,190
41,952
4,195
37,757
913,734
11,205
454,226
12101/17
51016
77,730
71,190
41,962
4,195
37,757
951,491
10,800
465,026
06/01/18
5,016
79,285
72,714
4201
4.285
38.566
990,057
10,632 -
475,658
12/01/18
131016
79,285
72,714
42,851
4,285
38,566
1,028,622
10,248
485,905
06/01/19
5.015
80.871
74,269
43,767
4,377
39.390
1.068,012
10.089
495,994
12/01/19
5,016
80,871
74,289
43.767
4,377
39,390
1,107,403
9,724
505,718
06101/20
5,016
82.488
75,855
44,701
4,470
40.231
1,147.534
9,573
515,290
12/0120
5,016
82,488
75,856
44,701
4,470
40,231
1,187,865
9,227
524,517
0610121
5,016
84.138
77,472
46,654
4,565
41,089
1,228,954
9,083
533,699
12/01/21
5,016
84,138
77,472
45,654
4.565
41.089
1,270.043
8,754
542.354
06101/22
5,010
85.820
79,122
46,627
4,663
41,964
1.312,006
8,618
550,971
12/0122
5,016
85,820
79,122
46.627
4,663
41,964
1,353,970
8.306
559,278
06/01/23
5.016
87.537
80.805
47,618
4,762
42,856
1,396,827
8,176
567,454
12/01/23
5,016
87,537
80,808
47,618
4,762
42,855
1,439,683
7,881
575,334
06/01124
5.016
89,288
82.521
48,630
4,863
43,767
1,483,450
7,757
583,092
12/01/24
5.016
89,288
82,521
48,630
4,863
43,767
1,527.217
7,477
590,588
06101/25
5,016
91,073
84,272
49,661
4,966
44,695
1,571,912
7,359
597,928
12/01/25
5,015
91,073
84.272
49,661
4,966
44,695
1,616,607
7,093
605,021
06/01/26
5,016
92,895
86,068
50,714
5,071
45,642
1.662.249
6,9112
612,003
12101/26
5,016
92.898
86,058
50,714
5.071
45,642
1,707,892
6.730
618,733
06/01/27
5.016
94,753
87,679
51,787
6,179
46,608
1,754,600
6,624
625,356
1210127
5,016
94,763
87,879
51,787
5,179
46,608
1,1301.109
6,384
631,740
06/01/28
5,016
94,753
89,737
52,882
5,288
47,594
1.848,702
6,284
538,024
12/01128
5,016
94,753
89,737
52,882
5.288
47,594
1,896,296
6,056
644,080
Gateway East TIRxis Prepared by Krass Monroe, PA. 101272000
f+TO Qj HOHNOW MEN 6969 999 ZT9 M 99 : t+T IRd 00 /LZ/OT
EXHIBIT XVIII — D
"BUT FOR" ANALYSIS
TAX INCREMENT FINANCING DISTRICT NO. 17
The proposed redevelopment district consists of nine parcels, three of which contained
structures. The City Council and the Authority adopted resolutions determining that
those three parcels were occupied by structurally substandard buildings and such
parcels were to be included within a tax increment financing district. The substandard
structures were demolished in 2000.
The street pattern in this area is also inefficient. Four of the nine parcels are "double
frontage" lots.
The structurally substandard buildings consisted of J.R. Automotive, Cash 'n Pawn (a
former service station) and a duplex. The property proposed to be included "within the
district is also blighted due to incompatible land uses and contamination..
It is proposed that 28, owner - occupied, townhouse units be constructed within the
district and will be sold at prices starting at $126,000. it is expected the City's tax base
will increase by approximately $4,000,000.
The proposed tax increment district contains parcels that have land uses that are
incompatible with each other and with adjacent parcels, have required - remediation and
require major infrastructure -improvements. The new construction will improve the
currently underutilized property that is located in a highly visible area of the City along
University Avenue and will provide a buffer between existing commercial and single -
family, residential areas within the neighborhood. The existing University Avenue
frontage road will be reconstructed in a more conducive alignment for efficient
development and double frontage lots will be eliminated. Because of the substantial
costs of acquisition, relocation, demolition, remediation, and utility and street relocation,
all of which substantially exceed the market value of the land, this redevelopment
project could not proceed without the financial assistance of the Authority.
0. \WMATA \S \MMLE7 \30 \Tip \TZBPLM -D=
XVIII —D -1
STO (M 308NOW SSV0 6962 299 ZT9 M SZ : YT Ill 00 /LZ/OT
EXHIBIT XVIII - E
ESTIMATED IMPACT OF TAX INCREMENT FINANCING DISTRICT NO. 17
IMPACT ON TAX BASE
IMPACT ON TAX RATE
ORIGINAL
ESTIMATED '
CAPTURED
DISTRICT
TAX
ENTITY
TAX
TAX
TAX
AS %
BASE
CAPACITY
CAPACITY
CAPACITY
OF TQTAL
City of Fridley 25,967,424
5,016
60,088
55,072
0.212%
County of Anoka 200,812,271
5,016
60,088
_
55,072
0.027%
ISD #14 11,740,431
5,016
60,088
55,072
0.469%
IMPACT ON TAX RATE
' Assumes construction would have occurred without the creation of a Tax Increment Financing
District. If construction is a result of Tax Increment Financing, the impact is $0.
XVIIi -E -1
9T01M ROHNOW SSVVx 6902 299 ZT9 %Y3 99:tT Il'Ia 0011910T
TAX
% OF
TAX
TAX RATE
ENTITY
RATE
MEAL
INCREMENT
INCREASE
City of Fridley
0.17070
14.48%
9,401
0.036%
County of Anoka
0.30861
26.18%
16,996
0.008%
ISD #14
0.61655
52.31%
33,955
0.291%
Other
0.08273
7.02%
4,556
1.17859
100.00%
64,907
' Assumes construction would have occurred without the creation of a Tax Increment Financing
District. If construction is a result of Tax Increment Financing, the impact is $0.
XVIIi -E -1
9T01M ROHNOW SSVVx 6902 299 ZT9 %Y3 99:tT Il'Ia 0011910T
1- - HOUSING AND REDEVELOPMENT
AUTHORITY
Memorandum
DATE: October 27, 2000
TO: William W. Burns, Executive Director of HRA
FROM: Barbara Dacy, Community Development Director
Grant Femelius, Housing Coordinator -
SUBJECT: Consider Contract for Private Redevelopment with Gateway East
Redevelopment LLC (Real Estate Equities) for the Gateway East
Project
Staff is continuing to work on the details of the development contract for the Gateway East
Project. Our legal counsel is still working with Real Estate Equities on a number of issues that
need to be addressed. An initial draft of the agreement was prepared by Krass Monroe and
distributed to the developer and staff on October 19t. Over the course of the last week the
developer's legal counsel has had an opportunity to review the agreement and provide
feedback.
At this point they have identified three areas of concern. First, is a concern about the potential
tax implications of the $546,000 in HRA assistance for the project. As you know, the HRH's
funds will be used to pay for the site improvements which are estimated at over $600,000.
Under the current draft the assistance could be interpreted as a grant or income and therefore
subject to income taxation. The developer wants the agreement to clearly state that the funds
are being used to improve the site before title transfers. One option we are exploring is to
execute a separate construction contract with developer for the site improvements. We hope to
have this issue resolved by the meeting.
Second, the developer has also expressed concerns about the limitation of the HRA's funds for
site improvements only. From their perspective, the site work is just one component of the
project. Although, they have good estimates on the cost to construct the units, they are
concerned that a potential over -run (for lumber or other materials) could create problems and
would like the HRA funds to help off -set those issues as well. Staff has indicated that the HRA's
funds are limited to TIF- eligible expenditures and not for general construction.
The third and more significant issue relates to environmental clean -up. The current draft
indicates that the HRA is selling the site "as is" and assumes no liability for any environmental
clean -up. The developer contends that they do not have the resources to take on a clean -up
effort in the event that contaminated soils are found. As you recall, when the HRA acquired the
Cash 'n' Pawn property from the Holiday Companies, we discovered a small pocket of
contaminated soil in an area below the former fuel tanks. Our environmental
0
Gateway East Contract Memo
October 27, 2000
Page 2
consultant felt that the area of contaminated soil was so small and far enough below the
surface that we could proceed with the development and leave the soil in place. MPCA allowed
us to proceed in this manner, but required that we file a Remedial Action Plan which would
indicate how the contamination, if impacted, would be dealt with. A site closure letter and no
association letter was issued by the MPCA to the Authority.
The developer feels that there is a good possibility they may come in contact with the soil
during excavation for utilities and are uncomfortable without assurances that the HRA will help
with any remediation effort. Obviously, our legal counsel is concerned about the implications of
doing so and we are currently evaluating what options exist. A related issue to this matter is
what happens to the development schedule and the performance dates contained in,the
agreement.
Again, we are continuing to examine these issues and hope to have an update for the Authority
on Thursday night. To follow is a summary of the contract terms that both parties have agreed
to at this point.
Overview
Deve %per
The contract will be executed with Gateway East Redevelopment, LLC, a limited liability
company, jointly formed by Real Estate Equities Development Company and Bisanz Brothers
Development Company. Previously, Real Estate Equities was the developer named in the
agreement.
Minimum Improvements
The developer shall construct twenty -eight (28) town homes on the project site. Attached is
the latest version of exterior elevations and floor plans for the project. The developer was able
to incorporate a front porch, additional landscaping and brick banding into the design, as
requested by staff. The units will be a split -entry design and have a two car tuck under garage
at grade; a kitchen, great room, dining room and bathroom on the main level; and two
bedrooms, a bathroom and laundry on the upper level. Each unit will have an entry porch and
a private deck. The units will be priced in the $126,000 to $142,000 range. We should also
point out that the site plan has been slightly modified to shift some of the units on the south
side away from the Valvoline site. This change does not affect the density of site nor create
any adverse impacts on functionality of the site plan.
retina
The construction of the town homes would take place on or about May 1, 2001 and be
completed by December 31, 2002. The term sheet identified an April 1, 2001 start date,
however the developer feels that May 1st is more acceptable.
Gateway East Contract Memo
October 27, 2000
Page 3
Purchase Price and Ciosin
As discussed previously, the Authority will sell the land for $1.00. The land price reflects the
extraordinary costs associated with developing on the Gateway East site (e.g. prevailing wage
requirement, site location, and surrounding neighborhood). The closing would take place on or
before May 1, 2000. The closing date will allow the developer to go through the land use
approval process before taking title. Staff has no objections to this approach since the land use
approvals will be required in order to undertake the project. It may be necessary for the
developer to start work (e.g. site improvements) before the closing date.
Pub lic Improvements and Site Improvements
The developer will coordinate and construct all of the site improvements. Eligible improvements
include such things as site grading, roads, utilities, sidewalks, landscaping, lighting and
decorative fencing. The HRA has agreed to contribute $545,000 toward these costs and the
funds will be placed into an escrow account and drawn down by the developer as the work is
completed. Any remaining funds would be returned to the Authority. The developer would be
responsible for any costs above the escrow amount.
Revenue Participation
As a means of re- couping some of the Authority's investment in the project, the developer has
agreed to share in any profits or "net revenues" after the project is completed. The
development agreement stipulates that both parties shall receive an equal split of the net
revenues. For purposes of the agreement, net revenue is calculated as the total revenue for
the project, plus the Authority's contribution, less the developer's expenses. Exhibit F to the
agreement describes the expenses that are eligible for deduction.
Otherlssues
The developer has identified several smaller, less substantive issues in the agreement which our
legal counsel is evaluating. From staffs perspective we are still trying to incorporate
appropriate language regarding the payment of prevailing wages. Although, the developer is
willing to pay them as part of the project, we may need to add detailed language to the
agreement because referencing the ordinance and resolution may not provide proper legal
protection.
Recommendation
Staff will have an update on the status of our negotiations and a recom - mendation on Thursday
night. If we cannot resolve the issues by then, we may need to table action until the December
meeting.
M -00 -186
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