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HRA 06/06/2002 - 00025079CITY OF FRIDLEY HOUSING & REDEVELOPMENT AUTHORITY MEETING J U N E 6, 2002 CALL TO ORDER: Chairperson Commers called the June 6, 2002, Housing and Redevelopment Authority meeting to order at 7:30 p.m. ROLL CALL: Members Present: Larry Commers, John Meyer, Virginia Schnabel, Pat Gabel. Jay Bajwa Members Absent: None Others Present: Grant Fernelius, Assistant HRA Director Paul Eisenmenger, HRA Accountant APPROVAL OF THE MAY 2, 2002, HOUSING AND REDEVELOPMENT AUTHORITY MEETING MINUTES: MOTION by Mr. Meyer, seconded by Ms. Schnabel, to approve the May 2, 2002, Housing and Redevelopment Authority meeting minutes. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. ACTION ITEMS: 1. ANNUAL ELECTION OF OFFICERS: MOTION by Mr. Meyer, seconded by Ms. Gabel, to elect Mr. Commers to the position of Chairperson of the Housing and Redevelopment Authority. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. MOTION by Mr. Meyer, seconded by Ms. Gabel, to elect Ms. Schnabel to the position of Vice-Chairperson of the Housing and Redevelopment Authority. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. HOUSING & REDEVELOPMENT AUTHORITY MEETING, JUNE 6, 2002 PAGE 2 2. DECERTIFICATION OF TIF DISTRICT NO. 15 (MINNESOTA COMMERCIAL RAILWAY): Mr. Fernelius stated that this district was established in 1995 for the purposes of assisting the Minnesota Commercial Railway project located on the corner of 71St and East University Avenue Service Drive. The assistance was provided to help with soil correction and eventually a 57,000 square foot warehouse distribution facility was built. Assistance was in the form of a$125,000 loan at 5% and a$125,000 grant. The loan was paid off in 1999 including accrued interest. The developer has fulfilled all of obligations for the project. What was created was an economic development district, which expires in 2007. Mr. Fernelius stated it is considered operating railroad property. The State, not the County, is really involved in assessing the property for tax purposes. There was a provision in the development contract that required the developer to make up the shortfall in taxes. The minimum taxes that had to be generated on the property were $92,000. The obligation ended when the loan was repaid. There are no further issues with the project or the developer. Because the property is generating little or no tax increment, Krass-Monroe is recommending that the Authority decertify the district. Although the Authority is not legally required to de-certify the district, from a practical standpoint, it makes sense because there are a number of administrative expenses that have to be incurred. Mr. Fernelius stated that approval of the resolution is recommended, and the City Council would consider de-certification on June 24. As a last step, the County needs to approve the de-certification request. Mr. Commers asked what happens if whoever received the grant agreed to a minimum assessment, and they could not reclassify or protest the tax assessment? Mr. Fernelius stated that the Authority typically does require a minimum assessment agreement, but it did not in this case. He would check into the rationale for this approach. Mr. Commers stated that makes sense, but he would like to know the answer next time. It looks like it was reclassified after the loan and grant were given. Mr. Fernelius stated that was done by the State, and they reclassified it as operating railroad property. Mr. Commers asked if the property owner applied for that. Mr. Fernelius stated that was probably correct. Ms. Schnabel asked if all property within this TIF District is railroad property. HOUSING & REDEVELOPMENT AUTHORITY MEETING. JUNE 6. 2002 PAGE 3 Mr. Fernelius stated that is correct, and it includes two parcels. MOTION by Mr. Bajwa, seconded by Ms. Schnabel, to approve Resolution No. HRA 2- 2002 Relating to the Decertification of a Tax Increment Financing District No. 15. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. 3. CLAIMS AND EXPENSES: Ms. Schnabel asked if the checks that were written before May 31 were received. Mr. Eisenmenger stated that they are checks issued up to the end of May for expenses. Ms. Schnabel asked if they were the total of May expenses. Mr. Eisenmenger stated that these were all the checks for May. Mr. Commers asked if administrative expenses for May were recorded. Mr. Eisenmenger stated that administrative expenses were also recorded. MOTION by Ms. Gabel, seconded by Mr. Meyer, to approve Claims and Expenses as presented. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. INFORMATION ITEMS: 4. GATEWAY EAST UPDATE (VERBAL UPDATE AT MEETING): Mr. Fernelius stated that things are moving along at the site quite well. The developer reported that they have completed four of the eight buildings. The remaining four buildings are in various stages of completion at around 50% to 90% and will be completed in July. The landscaping has started and the irrigation systems have been installed. The decorative fence along University Avenue Service road is starting to be installed. The old chain link fence was taken out. Some trees and planting materials have been installed. Most of the work should be done in July. The final lift of asphalt on the street will be installed in October. Mr. Fernelius stated that they have sold 18 of the 28 units with two sales pending. They are pleased with the sales and progress of the project. There are several site issues that have come up and most have been addressed. For the most part, staff is pleased with the project. HOUSING & REDEVELOPMENT AUTHORITY MEETING. JUNE 6. 2002 PAGE 4 Mr. Commers asked what they had to do to remove the chain link fence. Mr. Fernelius stated that the developer applied to MnDOT for the permit and they were responsible for taking it down. Mr. Commers stated that the fence has been controversial and he thought at one time, MnDOT turned down a request to remove it. Ms. Gabel stated that it was due to approval only because it is being replaced with a decorative fence. Mr. Fernelius stated that is correct. Mr. Commers asked if the fence was up. Mr. Fernelius stated that they are just starting with the concrete. Mr. Meyer asked what the units are selling for. Mr. Fernelius stated that the model units are selling for around $190,000, but some interior units are selling for around $170,000. The upgrades account for the differences. Mr. Commers stated that it would be interesting to have a survey of where the buyers were coming from or where they work. That will help if we do a similar project on the west side. Mr. Fernelius stated that would help. 5. MONTHLY HOUSING REPORT: Mr. Fernelius stated that two reports were handed out. The separate report was a loan servicing report and is a summary of loan repayments in May. This came from the Community Reinvestment Fund that is responsible for servicing the loans. The funds were broken up in terms of where the dollars were coming from and repayments. Principal and interest payments have a total of all programs at $50,537 and a summary shows the ending principal balance. The summary for all the loans is $1,684,000 and there are 167 loans in the portfolio. The loan delinquency report will be provided in the future. There were no extraordinary delinquencies. Mr. Commers asked if this was CEE. Mr. Fernelius stated that was correct. CEE originates the loans but the Community Reinvestment Fund services the loans. Mr. Commers asked if staff was happy with the way this was working. HOUSING & REDEVELOPMENT AUTHORITY MEETING. JUNE 6. 2002 PAGE 5 Mr. Fernelius stated they were. Ms. Gabel asked about the Metropolitan Council's involvement in this. Mr. Fernelius stated that the Loan Origination dollars of the Metropolitan Council were from the Discount Loan program with the matching funds. To date, ten units have been improved for a total of $126,000. The interesting thing is that they leveraged quite a bit of dollars. They have spent around $4,600 and leveraged the balance through other resources. Mr. Commers asked if the other resources they are leveraging are Minnesota Housing Finance Agency and Metropolitan Council and the block grants. Mr. Fernelius stated that is correct. The block grants and the HOME Program are two from the County and both are federal dollars. The bulk of funds have come from federal sources. The other two reports relate to the Operation Insulation program. The numbers have dropped since May, which is some what expected. That will probably pick up in the fall. The Remodeling Advisor visits were at five for May, with 20 year-to- date. Mr. Commers asked for an update on those projects. Mr. Fernelius stated that Operation Insulation and the Remodeling Advisor are administered by CEE, a non-profit agency in Minneapolis. Operation Insulation involves a technician evaluating the home for energy efficiency with insulation, weather-stripping, indoor air quality, fans, exhaust fans, and issues related to indoor air quality and energy efficiency. Mr. Commers asked if those tests are free. Mr. Fernelius stated that the service is charged, but the HRA pays for part of it. The homeowner's cost is $62.50. If the homeowner decides to go ahead with the work, they will be reimbursed for the cost by the HRA. The Remodeling Advisor provides free remodeling advice on-site to the homeowner regarding improvements and selecting contractors. This is free to homeowners. Mr. Commers asked if grants are provided to eligible recipients. Mr. Fernelius stated there are a variety of programs ranging from low interest loans to grants. They have depleted most grant dollars for this year and want to reapply next year. Mr. Commers stated that these programs are attractive to people, and they are lucky to have them. HOUSING & REDEVELOPMENT AUTHORITY MEETING. JUNE 6. 2002 PAGE 6 ADJOURNMENT MOTION by Mr. Meyer, seconded by Ms. Gabel, to adjourn the meeting. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED AND THE JUNE 6, 2002, MEETING OF THE HOUSING AND REDEVELOPMENT AUTHORITY WAS ADJOURNED AT 7:55 P.M. Respectfully submitted, Signe L. Johnson Recording Secretary