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HRA 07/13/2000 - 00008297CITY OF FRIDLEY HOUSING & REDEVELOPMENT AUTHORITY MEETING J U LY 13, 2000 CALL TO ORDER: Vice-Chairperson Schnabel called the July 13, 2000, Housing and Redevelopment Authority meeting to order at 7:30 p.m. ROLL CALL: Members Present: Virginia Schnabel, John Meyer, Pat Gabel, Jim McFarland Members Absent: Larry Commers Others Present: Barbara Dacy, Community Development Director Grant Fernelius, Housing Coordinator Jim Casserly, Development Consultant Julie Vogel, HRA Accountant APPROVAL OF THE June 1, 2000, HOUSING AND REDEVELOPMENT AUTHORITY MEETING MINUTES: MOTION by Mr. Meyer, seconded by Ms. Gabel, to approve the June 1, 2000, Housing and Redevelopment Authority meeting minutes as written. UPON A VOICE VOTE, ALL VOTING AYE, VICE-CHAIRPERSON SCHNABEL DECLARED THE MOTION CARRIED UNANIMOUSLY. CONSENT AGENDA: 1. CONSIDER CHANGE TO INTEREST RATE FOR REVOLVING LOAN FUND: 2. APPROVE DEMOLITION CONTRACT FOR GATEWAY EAST PROPERTIES: 3. CLAIMS AND EXPENSES: MOTION by Mr. McFarland, seconded by Mr. Meyer, to approve the consent agenda with the additional expenses presented by Ms. Vogel. UPON A VOICE VOTE, ALL VOTING AYE, VICE-CHAIRPERSON SCHNABEL DECLARED THE MOTION CARRIED UNANIMOUSLY. ACTION ITEMS: 4. APPROVE CONTRACT FOR EXCLUSIVE NEGOTIATIONS WITH REAL ESTATE RECYCLING. INC.: HOUSING & REDEVELOPMENT AUTHORITY MEETING, JULY 13, 2000 PAGE 2 Ms. Dacy stated that the HRA's action tonight would be to approve a resolution authorizing execution of the contract for exclusive negotiations with Real Estate Recycling, Inc. The redevelopment project that the HRA and the City is evaluating is to redevelop certain properties in the northeast part of the City on the north and south sides of 73rd Avenue. The comprehensive plan discussion suggested elimination of underutilized types of properties and a combination of those with similar properties, specifically outdoor intensive uses such as salvage yards or other outdoor types of uses. The goal is to look at seeing if a redevelopment project could be undertaken such that a series of new industrial buildings could be constructed. They are hoping for as much as 245,000 square feet. Ms. Dacy stated that Paul Hyde is at the meeting to speak and answer questions. Real Estate Recycling Inc., does specialize in contaminated properties. There is reason to believe that some of the salvage yards may have some type of contamination. This developer has a significant track record with State and Federal agencies for funding and clean-up funding. Mr. Hyde participated in the Murphy Warehouse project south of the Onan campus. Mr. Hyde would be managing all aspects of the project with the HRA and City staff. The real estate market is very good and the economy is good. There is a lot of good industry in Fridley that needs move-up space. There are grant funds available right now from State and regional sources. There is a favorable environment in terms of regulation when it comes to cleaning properties. The end result is to create new jobs and tax base for the community. Ms. Dacy stated they are still exploring the financial feasibility of this project. The HRA granted staff the ability to hire an appraiser who would work with staff and the developer to approach the property owners in this particular area. They intend to use as much DTED and Metropolitan Council funding as possible. They may have to create a new TIF district and negotiate the land payments from the developer to the HRA. Based on current information, they think it is a feasible project but cannot be sure until they start talking to the owners and doing the environmental testing. Ms. Dacy stated that Real Estate Recycling Inc., would be responsible for negotiating acquisition and relocation and conducting the environmental assessments and the geo- technical analysis. They would prepare the grant applications and prepare a preliminary site plan. The HRA's responsibilities under the contract would be to work with this particular developer for one year or until June of 2001. They would cooperate with grant applications and site plan reviews and would work together on approaching the property owners. There is a statement in the contract that the HRA and the developer would negotiate in good faith for a redevelopment contract by the end of the exclusive negotiation terms. If it is determined that the project cannot proceed, they would come back to the HRA to review the situation. The agreement cannot be signed over to another developer. Staff is recommending that the HRA approve the resolution authorizing execution of the contract. Chairperson Commers has reviewed the changes in the contract and is in agreement. Mr. Hyde, Real Estate Recycling Inc., stated that he started his company six years ago with two partners. They are a developer of industrial projects and buildings focusing on sites with environmental issues. They are active in Minneapolis, St. Paul, Wisconsin, HOUSING & REDEVELOPMENT AUTHORITY MEETING, JULY 13, 2000 PAGE 3 and Illinois. Their expertise is that they are used in complex environmental situations. They are used to negotiating with agencies, the U.S. Environmental Protection Agency, or the Minnesota Pollution Control Agency. They are also experienced with obtaining funding for costs. Many of these sites involve unusual geo-technical issues and environmental clean-up costs that require funding outside of typical real-estate transactions. They are experienced in writing those grant applications and obtaining those funds, including the Murphy Warehouse project with over $1,000,000 in grant funds. That helps offset the tax increment. They are experienced in real estate development and the goal is to get the real estate developed and used. The environmental issues are ongoing with the ground water contamination being remediated, the tree systems, and so forth. They are good at making lenders comfortable with the clean-up issues and the liability protection. Mr. Hyde stated they have developed over 1,000,000 square feet of industrial buildings to date. They have sold the project to a nationally known real estate investment trust. This detailed the highest level of scrutiny of the environmental wrap-up. All of the financing is with a conventional bank and life insurance company that finances without premiums for environmental issues. Two of the sites developed were listed with the superfund sites including the Onan site here in Fridley. They never pull out of the deal and understand dealing with all the complex environmental issues. Mr. Hyde stated they have created a sum of over $36,000,000 in tax base and over 650 new jobs. The City has identified the scrap yards a site for potential redevelopment and that is their expertise in developing contaminated sites. They manage the liability protections, get the funding for the clean-up issues associated with these kinds of properties, and execute the actual development. They are interested and excited to work in this City and see if this project is feasible. At this point, it makes sense but they have to spend the money to complete some assessments for the properties. These grant funds are unique to Minnesota. They are a powerful tool for communities to redevelop these sites. It means that you do not have to use as much tax increment. It is now funded for another biennium and there is demand for sites for rehab. Developers can now purchase properties innocent of the clean-up liability in exchange for the promise of the execution of a clean-up on that site. Ms. Gabel asked that if everybody has liability protection, who is left with the liability? Mr. Hyde stated that whoever put it there always has the liability. They always look to the person responsible for the contamination for the clean-up. Ms. Schnabel stated that Chairperson Commers looked at this and has approved it in essence. The site is included in the schedule even though there is not a direct reference to the site listed in the contract. Schedule A includes both the north and south sides of 73rd Avenue. MOTION by Ms. Gabel, seconded by Mr. Meyer, to approve Resolution No. HRA 7- 2000, A Resolution Authorizing Execution and Delivery of a Contract for Exclusive Negotiations by and between the Housing and Redevelopment Authority in and for the City of Fridley, Minnesota, and Real Estate Recycling, LLC. HOUSING & REDEVELOPMENT AUTHORITY MEETING, JULY 13, 2000 PAGE 4 UPON A VOICE VOTE, ALL VOTING AYE, VICE-CHAIRPERSON SCHNABEL DECLARED THE MOTION CARRIED UNANIMOUSLY. 5. APPROVE CONTRACT WITH DEMOGRAPHIC TECHNOLOGIES, INC.: Ms. Dacy stated that this is regarding the Joint Task Force between the Cities of Fridley and Columbia Heights. The HRA's representative is Mr. Meyer. Columbia Heights and Fridley decided to initiate the task force in the latter part of February this year. The mission is to develop a plan of action to help both communities respond to the opportunities presented by Medtronic world headquarters. The task force is comprised of eleven people, four from each community and one from each of the three school districts. It is an advisory commission to both Fridley and Columbia Heights City Councils. There is a Council member, Planning Commission member, HRA member, and a business representative from each community. The task force is scheduled to meet the second Thursday of the month. The next meeting is August 10. June 22 was the first meeting. Ms. Dacy stated the task force will prepare a report and the Councils are to evaluate the ideas. They are looking at a defined study area that reaches from 45t" Avenue in Columbia Heights that reaches from the Mississippi River on the west extending to the city limits on the east. It goes as far north as Mississippi Street to 73rd Avenue in Fridley between Highway 65 and the City limits. Ms. Dacy stated that the task force will identify the variety of opportunities that could result from world headquarters. They will be looking at the strengths and weaknesses of both cities and identifying the limitations and the communities' goals. Are there image enhancements that should be pursued jointly and are there infrastructure improvements between the two cities? Should they be working together more on the commuter rail project? The staff from both cities is suggesting some consultant help. They are looking at the two step process for consultant help. They are requesting that the HRA fund some of the consultant costs. Ms. Dacy stated the GIS (Geographic Information Systems) draft contract in the packet is with Demographic Technologies, Inc. They specialize in the socio-economic or the social data as it applies to every household. GIS is a parcel-based system. Demographic Technologies Inc., takes that same computer system and gets a data base from the assessor's office, school districts, state licensing bureau, and takes by address and codes the information and assigns it to a particular household and group of households called insight blocks. Then they can describe the population characteristics such as age, number of people, type of house, etc. This would be more current than the census because it is based on the database coming from the city, school, or state records. The census data for the year 2000 will not be prepared for public information probably until the year 2002. Ms. Dacy stated that it would describe the demographics in Columbia Heights and Fridley. They City can use those demographics as the fuel to forecast what the future could hold for certain types of markets and land uses. This will provide an HOUSING & REDEVELOPMENT AUTHORITY MEETING, JULY 13, 2000 PAGE 5 understanding and a way to play with that information and it will give an understanding of the impacts. They feel that this is a very important aspect of this analysis. They have to preserve all the data privacy issues associated with that. The purpose of the land use and market consultant is to assist the task force and take them through the process. They will relate the information to the goals and opportunities. Ms. Dacy stated Demographic Technologies Inc., is the same consultant that the seven- community task force, including New Brighton, is using this for their 35W task force. They have been up and running for the last two to three years and are beginning to use the results in each community. The contract tonight is directly with the HRA. The contract amount includes the cost applicable to Columbia Heights. Columbia Heights would send us a check for its share of the cost. The cost is $2.00 per household and a $.30 per household cost to update the data. The contract is saying that Demographic Technologies, Inc., will input all the data and assign it to the parcels in Fridley and Columbia Heights. They will do an update in a year or two and also do some forecasting depending on what the task force comes up with. Ms. Dacy stated the total contract amount is approximately $43,900. In August or September, staff will come back with the land use and market contract. RFPs are now out for that part of the work. They are estimating $45,000. They are also asking other jurisdictions to particpate. In addition to the GIS funds, staff will be asking the HRA for an additional $16,300 to contribute toward the remaining amount of the contract costs. Staff recommends that the HRA authorize up to $44,500 for the task force consultants, subject to receipt of the other commitments for payment from the other jurisdictions. They did something similar to this with the regional remodeling handbook. Ms. Dacy stated that Columbia Heights will decide on its portion of the GIS contract on July 5. The GIS part of it could be initiated by the end of next week. Ms. Schnabel asked Ms. Dacy if the land use portion is the portion that Anoka County or the school districts might want to participate in. Ms. Dacy stated that is correct. An approach has been made to the County Commissioners, and all the school districts are aware of it. Ms. Schnabel asked if the GIS will include every household in Fridley and also every household in Columbia Heights. Ms. Dacy stated that is correct. Ms. Gabel asked what they would do if they did not get this other funding. Would the HRA be asked to pay? Ms. Dacy stated that staff would come back and suggest that. Mr. Meyer stated this survey is good for the City and is a necessary basic step. Councilmember Barnette was elected Chairperson of the task force so there is a strong Fridley presence. HOUSING & REDEVELOPMENT AUTHORITY MEETING, JULY 13, 2000 PAGE 6 Ms. Schnabel asked if any statistics from New Brighton will be used in any way. Ms. Dacy stated that New Brighton could be viewed as a competition, or the information that the consultant is producing could be used to assist us because the task force is saying that the market goes way beyond the borders of Columbia Heights and Fridley. They could look at that information and see how it compares to Fridley's. Chairperson Commers is concerned about the land use and the marketing issues. Because they do not have a good update on who is contributing, maybe the motion should be limited to the Demographic Technologies, Inc., contract. Staff could come back in August with a further update. MOTION by Mr. Meyer, seconded by Ms. Gabel, to approve the contract with Demographic Technologies, Inc. UPON A VOICE VOTE, ALL VOTING AYE, VICE-CHAIRPERSON SCHNABEL DECLARED THE MOTION CARRIED UNANIMOUSLY. INFORMATION ITEM: 6. UPDATE ON REQUEST FOR PROPOSALS FOR GATEWAY EAST : Mr. Fernelius stated that in May, the City sent an RFP to over 20 developers for the Gateway East project at the corner of 57t" Avenue and University Avenue. The deadline for those proposals was June 16t". They received two proposals, one from Real Estate Equities based out of St. Paul and one from Hokanson Development out of Blaine. At this time, they are not prepared to get into a discussion about the content of those proposals as they are still in the process of evaluating the submissions. They have interviews scheduled to ask detailed questions about the financing structure, experience level, and the actual product to be constructed. Then they will come back with an update in August and a recommendation for selecting a developer. They would then start the process of negotiating a redevelopment contract. Mr. Fernelius stated that the other item he wanted to update the HRA on was the TIF schedule. A proposed chronology was included in the packet, which starts the process of developing a tax increment district on August 22. There are several steps to go through to be completed in October with the City Council approving TIF District #17. This hinges on whether or not they decide to go with a developer. If they decide not to pursue a proposal, they would probably hold off on establishing a TIF district. Once they do that, the clock starts ticking and they would be compelled to move on some sort of project. Mr. Meyer asked if there was some way to change things and readvertise to encourage more replies. Mr. Fernelius stated they talked about that during an in-house staff committee meeting. They decided that the response level is due to the size of the project. It is small and will not attract big-scale developers like Rottlund. The quality of the two proposals is HOUSING & REDEVELOPMENT AUTHORITY MEETING, JULY 13, 2000 PAGE 7 acceptable. They are pleased with the design of one of the proposals. They do have concerns with the financial issues and will have to explore those. Ms. Schnabel stated that the proposal from Hokanson shows that its previous projects in 1993 have not yet sold. One of those two has been cited as an example of what they have done. Her suggestion would be to ask about that specific issue. The other developer did not list its sales figures on its projects. It would be interesting to do a comparison of the two companies. Mr. Fernelius stated staff would follow up on that. ADJOURNMENT MOTION by Ms. Gabel, seconded by Mr. Meyer, to adjourn the meeting. UPON A VOICE VOTE, ALL VOTING AYE, VICE-CHAIRPERSON SCHNABEL DECLARED THE MOTION CARRIED AND THE JULY 13, 2000, MEETING OF THE HOUSING AND REDEVELOPMENT AUTHORITY ADJOURNED AT 8:25 P.M. Respectfully submitted, Signe L. Johnson Recording Secretary