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HRA 02/05/2004 - 6231CITY OF FRIDLEY HOUSING & REDEVELOPMENT AUTHORITY MEETING Thursday, February 5, 2004, 7:30 P.M. AGENDA LOCATION: Council Chambers (upper level) CALL TO ORDER: ROLL CALL: APPROVAL OF MINUTES: December 4, 2003 CONSENT AGENDA: Consider 2% COLA for HRA Employees ................................ ............................... 1 Consider payment of expenses related to Fred Oreel Condemnation (Former Hardee's Site) .................................................. ............................... 2 ACTION ITEMS: Consider extension of contract with CEE for Administration- of Loan Programs ............. 3 Consider extension of contract with CEE for Operation Insulation Program .................. 4 Consider Blight Resolution. for Gateway West INFORMATION ITEMS: Update on University Avenue Service Road Improvements ....... ............................... 6 Update on sale of Tax Increment Refunding Bonds ................. ............................... 7 Update on 2004 CDBG Application ....................................... ............................... 8 Update on Anoka County Regional Rail Authority Legislation .... ............................... 9 Update on 2004 North Metro Home & Garden Fair .................... .............................10 MonthlyHousing Report ........................................................ .............................11 ADJOURNMENT: CITY OF FRIDLEY HOUSING AND REDEVELOPMENT AUTHORITY MEETING DECEMBER 4, 2003 CALL TO ORDER: Chairperson Commers called the December 4, 2003, Housing and Redevelopment Authority meeting to order at 7:30 p.m. ROLL CALL: Members Present: Larry Commers, Virginia Schnabel, Pat Gabel, Bill Holm Members Absent: John Meyer Others Present: Grant Ferneliius, Assistant HRA Director William Burns, Executive Director of HRA Paul Eisenmenger, HRA Accountant _APPROVAL THE NOVEMBER 6.2003, HOUSING AND REDEVELOPMENT AUTHORITY MEETING MINUTES: MOTION by Ms. Gabel, seconded by Ms. Schnabel, to approve the November 6, 2003, HRA minutes. Ms. Schnabel referred to page 8, paragraph 3: "Mr. Commers asked about the status of the loan balance to the City." She believed the correct word should be "from the City". It would be the same for paragraph 4. Mr. Meyer stated that in paragraph 5, the word "butt" should be "but it ". UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY AND THE MINUTES APPROVED AS AMENDED. CONSENT ITEMS: 1. CONSIDER RESOLUTION ADOPTING A FINAL HRA TAX LEVY FOR TAXES PAYABLE FOR 2004 (RESOLUTION HRA 6 -2003) 2. CONSIDER PROPOSAL BY SEH TO CONDUCT TIF BLIGHT ANALYSIS 3. CLAIMS AND EXPENSES Ms. Gabel requested that item #2 be removed from the Consent Agenda for further discussion. MOTION by Ms. Gabel, seconded by Mr. Holm, to approve Consent Agenda, items #1 and #3. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. ACTION ITEMS: 4. CONSIDER ADOPTION OF FINAL 2004 HRA BUDGET: HOUSING & REDEVELOPMENT AUTHORITY MEETING, DECEMBER 4, 2003 PAGE 2 Mr. Femelius stated he had a couple of items on the 2004 budget that he wanted to bring to the HRH's attention. The first one is the budget document itself. Staff included a new set of budget pages which replaced the previous version received at the November HRA meeting. In terms of the changes made in the previous budget document and this one, staff updated the estimates of tax increment revenue which went up slightly. On the expense side, they reduced the payment to Medtronic. Other than that, the items within the budget are the same as the previous budget document. Mr. Fernelius stated that he had included a letter in the agenda packet from the City Assessor, Mary Smith, on the "Status of the Medtronic's Tax Petition ". Ms. Smith presented a nice chronology of what has happened since August 2002. Today, he spoke with her about the current status. Medtronic has received the City's appraisal and reviewed that with the County Attorney's office. Medtronic will soon be discussing what the next steps might be. Medtronic has filed its petition with the tax courts, but he did not know if a trial date has yet been set. Mr. Commers stated that he had read in the agenda that the City has valued the building at $150 /square foot, and Medtronic is talking about $100 /square foot, so about one -third is at risk. Mr. Fernelius stated the second item concerned the HRA's real estate holdings. He did prepare a list of the 14 real estate holdings. All of these sites were acquired for redevelopment purposes, not for any speculative purposes. In fact, in addition to the five sites listed on the Gateway West project, five additional sites are scattered site properties the HRA has acquired. There are also two vacant sites along old Central acquired back in 1999. Those sites have some soil problems which are not currently developable. No activity is planned on those sites at this time. Of the last two sites, one is a vacant parcel leased to ACCAP that adjoins an apartment property owned by ACCAP in Hyde Park, and the other site is a transitional-housing facility the HRA owns and leases to ACCAP for a transitional housing service. Mr. Fernelius stated that he believed Mr. Commers had asked how those real estate holdings were reflected in the auditor's financial statement. The answer is that they are not reflected in that statement. They are treated as expenses, because the typical practice is to buy them, then turn around and reconvey or sell them to a developer. So, they are not held onto for any length of time and are classified as an asset. Ms. Schnabel asked about the sites leased to ACCAP. Does ACCAP pay any type of rental fee? Mr. Fernelius stated he would have to check on that, but he did not believe ACCAP pays a fee. The HRA acted as kind of a "pastor" for the transitional project. It was a requirement that a public entity actually own the land. The HRA has no active role in managing the project. He wasn't sure if a payment was made up front on the vacant parcel. Mr. Fernelius stated the last piece of information for this agenda item is a memo from Krass Monroe P.A., along with some spreadsheets. He summarized some of the issues that Krass Monroe had raised and reviewed the spreadsheets to give the HRA a sense of what some of the cash flow projections are going forward. Mr. Fernelius stated that in the memo, Krass Monroe stated that beginning in 2004, the HRA should receive approximately $210,000 of additional tax increment. That is a result of the adjustments that will be made to the original tax capacities in their pre -1988 districts. That legislation was passed last spring. That is good news. HOUSING & REDEVELOPMENT AUTHORITY MEETING, DECEMBER 4, 2003 PAGE 3 Mr. Fernelius stated that regarding Medtronic, Krass Monroe has projected the worst case scenario and a lower valuation throughout this cash flow analysis. So, the 30% that Mr. Commers mentioned earlier is already factored into these numbers. Mr. Fernelius stated that staff is recommending the HRA approve the 2004 budget. Ms. Schnabel stated that taking the worst case scenario that Krass Monroe determines the HRA cannot use this money in any other TIF district, what happens to that money? Mr. Fernelius stated it would go back to the taxing jurisdictions —the County, school district, and the City. The City would get approximately one -third of that amount. The first preference, obviously, would be to try to use those resources towards the HRA's debt service obligations. Mr. Commers stated that at the last meeting because of a large amount of money in their revolving loan fund, they had discussed the possibility of paying off the City loan in full. Mr. Fernelius stated that it is true that the HRA has a fairly substantial cash balance in the revolving loan fund, and the question is whether it is appropriate to pay off the loan? Staff needs to evaluate this and make a recommendation to the HRA. Mr. Commers stated he thought it was important enough for the staff to look into that and give the HRA a recommendation. It would save the HRA a considerable amount of interest. There was some discussion about the possibility of adding the CDBG monies to the budget. Staff indicated they would report back to the HRA when they know more. MOTION by Ms. Schnabel, seconded by Mr. Holm, to approve the final 2004 HRA budget. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. Mr. Commers stated he wanted to again thank staff for all its hard work and time in preparing this budget. 5. CONSIDER RESOLUTION MODIFYING REDEVELOPMENT PROJECT NO. 1 AND TAX INCREMENT FINANCING PLANS (RESOLUTION HRA 7 -2003) Mr. Fernelius stated staff is modifying the redevelopment plan and the underlying tax increment financing plans for each of the HRA's TIF districts. They are doing this in response to new mandates from the Office of the State Auditor (OSA) which has oversight for tax increment financing in the state. These amendments are in response to those new mandates and new requirements from the OSA. Mr. Fernelius stated the agenda packet included a lot of spreadsheet information. With this information, he hoped to give the HRA a sense of what is going on in each district. He also had prepared a separate spreadsheet he had handed out at the meeting which provides a kind of summary of the entire budget and how they look at these budgets. As opposed to a revenue and an expense, they look at them from a source and a use. And, they have to balance out. That is what this document does if this is approved by the HRA and City Council. The total sources will reconcile or balance the total uses. Mr. Fernelius stated he believed that has been a sticking point in the past. When these tax increment financing budgets are prepared, when they start a project, they are really trying to anticipate what projected expenses and revenues will be. As often is the case, they found out HOUSING & REDEVELOPMENT AUTHORITY MEETING, DECEMBER 4 2003 PAGE 4 over time that these projects generate more revenue, there are more expenses, and yet that is not reflected in the budget. The individual tax increment financing budgets don't have to be updated every year. So, when they send reports to the OSA office, they have to explain all these issues of why things don't match up. They are doing all the things they are supposed to do, but the action being proposed to the HRA will make it much clearer in terms of what their total projected resources will be and what they are anticipating to be their total expenses at the end of the tax increment financing program. He believed they are using the date of 2025. These are very large numbers, which are kind of surprising, but staff is trying to anticipate what the totals will be over the life of their redevelopment programs looking back from 1979 through the year 2025. Mr. Fernelius stated staff is recommending the HRA approve the amendments to these individual budgets. A resolution that has been prepared is the legislative action the HRA will approve. The next step is for the Council to conduct a public hearing on December 8, and they will also have to approve these modifications as well. As part of this process, they did notify all the affected taxing jurisdictions, school districts, and the County, but they have not received any comments back from those groups. Dr. Bums stated he had received a call from a person who read the legal notice on this and thought the City was setting up a new tax increment district. He wanted to make it real clear that they are not setting up a new district; this is simply an adjustment of finances on existing districts. Mr. Commers asked if there are any districts where they have exceeded the maximum amount of expense prior to this change in the law? Mr. Eisenmenger stated he could not answer that question at this time. He would have to go back to the prior years' TIF reports and look that up. Mr. Fernelius stated an issue they have had with the OSA is when they show districts that have deficits. So, part of what they want to do with this action is to account for some transfers that would be made to clear up those deficit issues. Mr. Commers asked how they would make up for any deficits? Mr. Fernelius stated that they would first need to figure out which districts have deficits right now. Part of what is going on is trying to anticipate what is going to happen in the future. So, they definitely need to be concerned about any existing deficits they may have in districts and have a strategy for addressing those. Going forward, they will have to address the deficits as they come along. MOTION by Mr. Holm, seconded by Ms. Gabel, to approve Resolution HRA 7 -2003, A Resolution Modifying the Redevelopment Plan for Redevelopment Project No. 1 and the Tax Increment Financing Plans for Tax Increment for Tax Increment Financing Districts Nos. 1, 2, 3, 6, 7, 9, 11, 12, 13, 14, 16, and 17 to Reflect Increased Project Costs and Increased Bonding Authority with Redevelopment Project No. 1, due to new mandates from the OSA. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. 5. MONTHLY HOUSING REPORT Mr. Fernelius stated these reports include the Loan Servicing report, Loan Originations, and Remodeling Advisor & Operation Insulation programs. HOUSING & REDEVELOPMENT AUTHORITY MEETING, DECEMBER 4, 2003 PAGE 5 6. CONSIDER PROPOSAL BY SEH TO CONDUCT TIF BLIGHT ANALYSIS (continued From the Consent Items) Mr. Fernelius stated this is a contract with SEH, an independent architectural, engineering, and land use planning consultant that has experience in the area of doing blight assessments which are both a legal requirement and a good idea when they create tax increment financing districts. SEH would go out and do a physical inspection of the property, take photographs, make an assessment of the condition, and prepare a report to the HRA documenting the conditions and verify that there is blight. The report would not become part of the findings, but would be part of the background information the HRA would have when they create the district. The cost of the estimate is estimated at $5,000. Ms. Gabel stated she believed this has to be done, but she thought the cost was high. Could staff give her a little information to make her more comfortable? Mr. Fernelius stated it involves a number of professional staff members (architectural engineering backgrounds) with credentials that qualify them to make these kinds of assessments. It is expensive to hire experts with these kinds of credentials. They will go out, do an assessment, and then prepare the report for the HRA. The letter agreement was not worded as he had instructed SEH. He wanted a "cost not to exceed $5,000" so that needs to be clarified. It could be less than that depending on the time that has to taken. The conversation he had with SEH was that it would be billed on a time and materials basis. Typically, these agreements are written this way so they don't have to come back for small amendments. Ms. Gabel stated she believed Mr. Femelius had clarified it well for her by explaining that these are professional staff people with high qualifying credentials. Mr. Holm stated he believed the letter agreement follows staffs instructions for a "cost not to exceed $5,000 ". He referred to paragraph 2 of the letter which stated: "The cost for conducting the assessments is estimated to be $5,000. Compensation shall be on an hourly basis to the established maximum fee...." Mr. Commers agreed. Dr. Burns stated maybe the minutes could reflect that it is the HRH's understanding that it is "up to the established maximum fee..." It is really a matter of interpretation. MOTION by Ms. Schnabel, seconded by Ms. Gabel, to approve the contract with SEH to conduct a TIF blight analysis at a cost of up to $5,000 and to authorize the Chairperson and Executive Director to execute the appropriate agreements. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. 7. OTHER BUSINESS Mr. Commers stated the HRA had received a breakdown from Mr. Eisenmenger of the various cash balances and operating expenses from 1999 -2003. That was in response to the HRA's question about its cash balances over the last five years, its operating expenses, etc. It is for the HRH's information only. HOUSING & REDEVELOPMENT AUTHORITY MEETING, DECEMBER 4, 2003 PAGE 6 Mr. Eisenmenger stated that what he was attempting to show was that the general fund is holding its own when it comes to operating expenses. Between interest revenue and the tax levy, the general fund is paying for its own operating expenses. ADJOURNMENT: MOTION made by Ms. Gabel, seconded by Ms. Schnabel, to adjourn the meeting. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED AND THE DECEMBER 4, 2003, HOUSING & REDEVELOPMENT AUTHORITY MEETING ADJOURNED AT 8:40 P.M. Respectfully submitted, Lynne Saba Recording Secretary CK CITY of FRIDLEY MEMORANDUM Deborah K: Dahl Director of Human Resources (763) 572 -3507 Memorandum to: Scott J. Hickok, Director of Community Development From: Deborah K. Dahl, Director of Human Resources -4p Subject: Resolution Authorizing Pay Increase for HRA Employees Date: January 28, 2004 Since the HRA is a distinct entity it will be necessary for its board to authorize salary increases for employees. I have adapted the resolution we use for the Fridley City Council to apply to the needs of the HRA. In order to provide a two percent (2 %) cost of living adjustment (C.O.L.A.) salary increase effective January 1, 2004, it will be necessary for the HRA to take action on this matter immediately. The two percent C.O.L.A. is consistent with the two percent approved by the City Council for all non -union City employees. I recommend that you present this matter for action at the next HRA meeting. If I can be of any further assistance please let me know. DKD /jn RESOLUTION NO. HRA ice` -2004 A RESOLUTION AUTHORIZING AN INCREASE IN COMPENSATION FOR FRIDLEY HOUSE AND REDEVELOPMENT AUTHORITY EMPLOYEES FOR THE 2004 CALENDAR YEAR WHEREAS, it is the intention of the Fridley Housing and Redevelopment Authority (HRA) to provide fair and equitable compensation to Employees within budgetary constraints; and WHEREAS, the Fridley HRA intends to comply with the Minnesota Local Government Pay Equity Act; and WHEREAS, Staff of the City of Fridley have reviewed the HRA's financial position as well as economic indicators and compensation adjustments by comparable employers; and WHEREAS, an adjustment of employee salaries and benefits is warranted; NOW, THEREFORE, BE IT RESOLVED by the Fridley Housing and Redevelopment Authority that the following adjustments be authorized for employees of the Fridley HRA, with the exception of employees who are members of a bargaining unit, effective January 1, 2004: 1. A general increase of 2.0 percent in employee salaries. 2. Mileage reimbursement at the rate of the Internal Revenue Service. 3. Other benefits as promulgated by the City Council for 2004. PASSED AND ADOPTED BY THE HOUSING AND REDEVELOPMENT AUTHORITY OF THE CITY OF FRIDLEY THIS DAY OF , 2004. LAWRENCE R. COMNIERS, CHAIRMAN WILLIAM W. BURNS, EXECUTIVE DIRECTOR Fridley Housing and Redevelopment gal Authority MEMORANDUM DATE: January 30, 2004 ,p� TO: William W. Burns, Executive Director of HRA�4 FROM: Scott J. Hickok, Community Development Director Grant Fernelius, Assistant HRA Director SUBJECT: Consideration of Financial Assistance With the Hardee's Condemnation Appraisal and Associated Court Costs Request The purpose of this memo is to request consideration of financial assistance with the Hardee's condemnation appraisal and associated court costs. These costs total $10,385.00. When split between the City and the HRA, the HRA's contribution would equal $5,192.50. History In December 2003, an Anoka County jury conferred upon the condemnation case of Fred Oreel vs. The City of Fridley. You may recall that Fred Oreel was once the owner of the site now owned by Burger King. Under Oreel's ownership, the site was a Hardee's franchise. In 1998, the City of Fridley with the financial help of the HRA, County, and adjacent property owners rebuilt the segment of 57th Avenue between University Avenue and Main Street. The improvement included new lighting, landscape, utilities, and most notable a new roadway with enhanced engineering design for safety and convenience. As part of the overall project, access into the Hardee's site from 57h Avenue terminated. Mr. Oreel chose not to discuss the matter at the time, but instead, apparently preferred to handle the matter through the condemnation process. In 2002, the Commissioners appointed to hear the condemnation matter surprised the City by not only awarding the $40,600.00 our appraiser (and their own appraiser) valued the temporary and permanent easements as is, but they added $32,100.00 for what we presumed to be their assessment of severance damages. We challenged the award. Meanwhile, the City and HRA split the required minimum payment of $52,000.00 to Mr. Oreel as the case awaited its jury review in Anoka County. 0 Hardee's Condemnation — Appraisal Costs January 30, 2004 Paae 2 The good news is that the Jury in Anoka County disagreed that there were any severance damages and only chose to award Fred Oreel the Appraiser's original value of $40,600.00. Now that the case has reached this point, Mr. Oreel's attorney has asked for interest on the $40,600.00 (which Oreel is legally entitled to - from back to the date of taking — approximately $7,000.00). Has also requested financial remuneration equal to the balance of the $52,000.00 previously shared by the City and HRA (remaining $4,400.00). The financial remuneration will likely to be paid since their entitlement to remuneration is a matter of debate, however, settlement at this point would be less costly than further appeals and legal fees. Appraisal To properly prepare for the jury trial a new appraisal of the taking was completed. The appraisal was completed by Julie Jeffrey Schwartz, Lake State Realty Services, Inc. Ms. Schwartz also served as the City's expert witness in the trial on this matter. Her costs totaled $10,385.00. Shared between the City and the HRA, the HRA's contribution would equal $5,192.50. Recommendation Staff recommends that the HRA consider this matter and if deemed appropriate, authorize contribution of the amount of $5,192.50 for half of the appraisal costs to resolve this matter. M -04 -13 A Lake State Realty Services, Inc. 2140 Otter Lake Drive White Bear Lake, MN 55110 651- 653 -0788 Fax 651- 653 -1381 E -Mai 1 lakestate@goldengate.net * * ** *INVOICE * * * ** INVOICE DATE: December 8, 2003 INVOICE NUMBER: 23231 VENDEE: Frederic W. ( "Fritz ") Knaak, Esq. 6431 University Ave. NE Fridley, MN 55432 Knaak & Kantrud, P.A. 3500 Willow Lake Road - Suite 800 Vadnais Heights, MN. 55110 PAS' �lf� — And — Accounts Payable Department The City of Fridley 6431 University' Ave. NE Fridley, MN 55432 PROPERTY DESCRIPTION: 289 57`x' Ave. NE, Fridley, MN 55432 DESCRIPTION OF SERVICE: Updated report; pre -trial preparation; rebuttal research; and expert witness testimony PROFESSIONAL FEE: Date Description of Services Time Amount 11/17/03 Complete updated report (new research); deliver 5 N/A $2,800.00 original copies 11/17/03 Rebuttal research; research 86 sales to determine 2.75 $508.75 land to building ratios, and site sizes; prepare @ Excel spreadsheets with applicable data $185/hr. 11/28/03 Meeting at Attorney Knaak's (includes travel) 2 $370.00 @ $185/hr. 12/1/03 Appear in Anoka County Court and travel; 9.25 $1,711.25 reviewed Taylor appraisal; provided list of @ questions to ask to Attorney Knaak; Call to Rick $185/hr. Bentz to get industry data; call to Attorney Knaak; entails to Knaak, Hickok; Houkus 12/2/03 Appear in Anoka County Court and travel 9 $1,665.00 @ $185/hr. 12/3/03 Appear in Anoka County Court and travel 9 $1,665.00 @ $185/hr. 12/4/03 Appear in Anoka County Court and travel; gave 9 $1,665.00 expert witness testimony @ $185/hr. 12/5/03 Appear in Anoka County Court and travel No $0.00 charge TOTAL: $10,385.00 TOTAL ......... $10,385.00 MAKE CHECK PAYABLE TO: LAKE STATE REALTY SERVICES, INC. 2140 Otter Lake Dr. White Bear Lake, MN 55110 Federal I.D. #: 41- 1799525 �(QD M TERMS: Net 30 days. Q� FD�PP 6431 UNIVERSITYAVE. N.E. • FRIDLEY, MN 55432 CrffOF (763) 571 -3450 FAX (763) 571 -1287 RwLff VENDOR: PURCHASE '1 03639 ORDER NO. SHIP TO: a�e 1�ca 1 Serve '(e � rn� • . �l o Doer La 9 c bri ve_ y�hife��r'�aK�e ��U 5511 D P.O. DATP CONTRACT NO. 112-. DEPARTMENT -Cco / c D 424v tnual p P DATE REOUIRED REMARKS ACCOUNT NO. JOB NO. DESCRIPTION QTY. UNIT PRICE AMOUNT y330 -P5C) _57ftiAve•� Ord e-05 ! is -03 I, Epll+- ireh,l�wi�h 013b5 I M P O RTA NT THE PURCHASE ORDER NUMBER MUST APPEAR ON INVOICES, PACKAGES, PLEASE NOTE PACKING SLIPS AND ALL CORRESPONDENCE. AMOUNT DUE AFFIRMATIVE ACTION / EQUAL OPPORTUNITY EMPLOYER APPROVED BY Fridley Housing and Redevelopment Authority MEMORANDUM DATE: January 30, 2004 TO: William W. Burns, Executive Director of HRA FROM: Scott J. Hickok, Community Development Director Grant Fernelius, Assistant HRA Director SUBJECT: Consider Contract with CEE for Administration of Loan Programs Introduction As you know, the Center for Energy and Environment (CEE) is a non -profit agency based in Minneapolis that is responsible for administering the Authority's housing rehabilitation programs. The Authority has contracted with CEE since 1996 to oversee the housing programs. By working with CEE, the Authority has been able to outsource most of the administrative functions, including program marketing, loan processing, underwriting, loan closing, and disbursements to the contractors. CEE also has a number of technical experts on staff that can assist homeowners on such topics as home remodeling, energy conservation, indoor air quality and related subjects. Lastly, the arrangement with CEE allows the Authority to leverage its resources with outside dollars (e.g. Minnesota Housing Finance Agency, Met Council, etc.) and tailor financial packages to meet individual homeowners' circumstances. The current agreement with CEE expired on December 31, 2003. Staff believes it is important to continue working with CEE and is recommending that the Authority renew its commitment for another 3 years. Although, CEE is not seeking any changes in the rate of compensation for their services, they have suggested some changes to the underlying programs. Overview of Agreement Attached is a copy of the proposed agreement that would run from January 1, 2004 through December 31, 2007. This agreement is essentially the same as the previous document, with a few revisions (mostly to include new programs or changes in program eligibility that are referenced in Schedule A). The following section summarizes the major contract components. 3 CEE Loan Agreement January 30, 2004 Page 2 Administrative Responsibilities CEE is responsible for administering a number of different loan programs on behalf of the Authority. Each of these programs is designed for a particular target market (e.g. very-low income, low income, or middle- income). When CEE receives an inquiry from an interested resident, several questions are asked in order to identify which program best meets their needs. At that point, CEE works with the resident to complete a loan application and collect the necessary information to evaluate their eligibility. Among the issues that will be examined are the borrower's income, credit history and related factors. CEE then outlines the financing options and helps the homeowner select the best terms and conditions. In some cases a loan might be funded by the Authority, while in other cases the loan might be funded by NIHFA. Once a loan is closed, the funds are held in escrow until the work is completed; once the job is finished CEE verifies that all permits have been obtained and that the work has been inspected. The exception is for loans financed through MBFA, which does not have an escrow procedure in place. Loan Fees CEE is paid based on each loan that is made, rather than a flat administrative charge. If loans are originated under an MBFA program, MBFA pays CEE an origination fee ($550.00 per loan). If loans are originated under one of the Authority's programs, the HRA pays CEE an origination fee ($550.00 per loan). This rate of compensation is the same as the last agreement. Comprehensive Building Analysis (Remodeling Advisor) CEE is paid a flat fee of $130.00 per visit by the remodeling advisor. Generally, these visits take 1.5 to 2.0 hours to complete and are done on site at the resident's home. This rate of compensation is the same as the last agreement. Installation Verification CEE is paid a flat fee of $70.00 per inspection. Generally, if a building permit is required (and the work will be inspected by the city), CEE does not charge a fee. In cases where the work does not require a permit (e.g. carpet, painting, landscaping, fencing, etc.), CEE staff will make an inspection to verify that the work has been completed. This rate of compensation is the same as the last agreement. Program Changes CEE is proposing to add two new programs to the agreement: 1) N1BFA Community Fix -Up Fund (CFUF), and 2) Fridley Discount Loan Program. The CFUF program is funded solely by CEE Loan Agreement January 30, 2004 Page 3 MHFA and is marketed to families earning up to 115% of median income ($87,000). This demographic group includes many two- income wage earners who might be attracted to a program with a low- interest rate. Frankly, the goal of this program is retain middle- income families in older suburban areas, rather than move to an outer -ring community. The Discount Loan Program has been offered in the past as part of a special pilot program between the Authority and MHFA. MHFA provides the loan capital, while the HRA helps write down the interest rate. Under this program, the Authority can leverage a relatively large amount of resources. For example, during the last phase of this program a total of 39 loans were made with a combined value of $537,900, of which the HRA provided $21,700 in funding for write- downs and administrative costs. Interest Rate Changes Beyond the new programs described above, CEE is also recommending a reduction in interest rates from the current 6% rate to a 4 %. This rate would apply on Authority funded loans, as well as on those loans made by MHFA. In the case of MHFA programs, the Authority would write down the interest from 5 -1/2% down to 4 %. The cities of Blaine, Columbia Heights, and Coon Rapids have also reduced the interest rate on their program loans to 4 %. Attached is a matrix that describes what some of the other communities are offering. The rationale behind the lower interest rate is that the program is no longer attractive because interests in the private market have fallen below 6 %. This explains much of the sharp drop off in HRA loan activity over the last couple of years. Income Limit Changes In addition to reducing the interest, we are recommending that the maximum household income be raised on Authority - funded programs. The current income limit is $63,000 and was tied to the MHFA ceiling established in 2000. Over the course of the last few years, MHFA has raised their income limits in conjunction with changes in household median income estimates for the metro area. For simplicity in marketing and ease of administration we are suggesting that the Authority's cap be established at 115% of median income. This figure would be consistent with the MHFA CFUF program. Checking Account Revisions Since the Authority began working with CEE in 1996, a joint checking account has been used to operate the program. The Authority was invoiced for each loan and then deposited sufficient funds into the account. CEE was then responsible for releasing the funds and paying the contractors as the work was completed. In recent years, due to the low loan volume, a minimum account balance was maintained. On occasion loans would be made that required quick turn around times, however the funds could not be released until the HRA deposited the necessary CEE Loan Agreement January 30, 2004 Paize 4 funds (which takes up to a week or more). The proposed change would require that the HRA 1) maintain a minimum balance in the account of $25,000, and 2) deposit loan proceeds within 7 days. The intent of this change is to make sure that prompt payment can be made to borrowers and their contractors. Conclusion Staff believes that the suggested changes are necessary to keep the housing programs viable in 2004 and beyond. Over the last couple of years a significant amount of refinancing activity has resulted in early loan payoffs, in fact the cash balance in the HRA's Revolving Loan Fund has increased to nearly $10M. Although some of these resources will be transferred back into the General Fund, a portion of the fund should remain available for continuing program operations. The recommendations described in this memo will hopefully produce some positive results. Recommendation Staff recommends that the Authority approve the Loan Origination Agreement with the Center for Energy and Environment for the term January 1, 2004 through December 31, 2007. M -04 -14 LOAN ORIGINATION AGREEMENT This LOAN ORIGINATION AGREEMENT ( "Agreement ") is made as of the day of February 2004, by and between the HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF FRIDLEY, MINNESOTA with offices at 6431 University Avenue Northeast, Fridley, Minnesota 55432 ( "Authority "), and CENTER FOR ENERGY AND ENVIRONMENT (a Minnesota nonprofit corporation), with offices at 211 First Street North, Suite 455, Minneapolis, Minnesota 55401 ( "CEE" ) RECITALS A. The Authority has a need for certain professional services and desires to retain CEE to provide said services, all subject to the terms and conditions contained in this Agreement. B. CEE is qualified to provide the desired professional services, all subject to the terms and conditions in this Agreement. NOW, THEREFORE, in consideration of the foregoing and the mutual promises contained in this Agreement, the parties agree as follows: 1. Services /Scope of Work 1.1. CEE shall in conjunction with the Authority develop and deliver a Comprehensive Housing Rehabilitation Program for the City of Fridley (hereinafter the "Program ") and more fully described on Schedule A attached hereto. All activities delivered under the Program shall be coordinated with the Authority's designated program manager. 1.2. CEE shall assist the Authority staff in marketing the Program on a time and materials basis. CEE shall insure that the Authority's sponsorship of the program is a prominent part of any marketing effort. 1.3. During the term of this Agreement, CEE shall complete Remodeling Advisor Visits as described below. The Remodeling Advisor Visit shall assist the property owner with identifying and prioritizing rehabilitation opportunities. 1.4. CEE shall originate and close all Program loans. Prior to origination of any loans by CEE pursuant to the program set forth in Section 1.5(g)and (h), CEE shall obtain prior written approval of the Authority. In addition, with respect to loans funded by the Authority pursuant to the programs set forth in Sections 1.5(e), (g), and (h) CEE shall follow the procedure described below: a. At the time of closing, CEE will require the borrower to execute an escrow agreement in the form attached hereto as Schedule B ( "Escrow Agreement ") b. Upon closing the loan, CEE will invoice the Authority for the principal amount of the loan originated. C. The Authority will remit the amount of the loan principal to CEE in the manner set forth in Section 2.2 hereof which shall then place said funds in escrow pursuant to the Escrow Agreement. The funds shall then be disbursed by CEE in accordance with the terms of the Escrow Agreement. 1.5. CEE shall develop a personalized financial package for each eligible borrower that coordinates financing from the various programs described in Schedule A which includes the following: a. CEE Rental Loan Fund b. MHFA Rental Rehabilitation Program C. MHFA Fix -up Fund Program d. MHFA Community Fix -up Fund Program e. Fridley Revolving Loan Program f. Fridley /MHFA Discount Loan Program g. Fridley Single Family Last Resort Deferred Loan Program h. Fridley Multiple Family Last Resort Deferred Loan Program The funding source in (e) , (g) and (h) above is exclusively from the Authority and these three programs will be referred to as the Authority Funded Program. The funding source for (f) above is co- funded by the Authority and the Minnesota Housing Finance Agency. 1.6. CEE shall complete an Installation Verification as described below to verify that all improvements are complete and were used for eligible purposes if financed by the Authority Funded Program described in Section 1.5(e) -(h). The Installation Verification will be performed by a CEE housing technician when a 2 1 -28 -2004 building permit is not required by City ordinance. The Installation Verification shall not substitute for any required code or permit inspection performed by the Authority. 2. Compensation 2.1. The Authority shall pay CEE for services provided under this agreement according to the following schedule: Remodeling Advisor Visit $130.00 The Authority shall pay CEE a fee for each Remodeling Advisor Visit completed. CEE shall provide a copy of the analysis report as documentation of completion. Installation Verification $70.00 The Authority shall pay CEE a fee for each Installation Verification completed. The Installation Verification shall be performed by a CEE housing technician as provided in 1.6 above. CEE shall provide a copy of the Installation Verification report as documentation of the inspection. Loan Origination $550.00 The Authority shall pay CEE an Origination Fee for each loan closed using the Authority Funded Program, except for the Fridley Discount Loan Program. The Origination Fee shall compensate CEE for assisting borrowers with loan applications, preparation of loan documents, loan closing and other direct costs of processing loans. Mortgage filing costs shall be paid by the borrower. CEE shall provide a copy of all closing documents including the loan note and mortgage as documentation of the loan closing. Discount Loan Administrative Fee $125.00 The Authority shall pay CEE an Administrative Fee of for each loan originated under the MHFA Discount Loan Program. The Administrative Fee shall compensate CEE for the administrative costs of processing the MHFA discount loan. CEE shall provide a copy of the origination certificate from MHFA indicating the total amount of the discount. Mortgage filing costs shall be paid by the borrower. The Authority shall compensate CEE only for services completed. 3 1 -28 -2004 At the Authority's direction, CEE will provide marketing services for the following fees: Marketing Coordinator $55.00 /hour Graphics /Clerical $45.00 /hour Hourly rates are inclusive of all overhead expenses and will be charged only for hours directly related to program marketing. CEE will be reimbursed by the Authority for any non - labor, out -of- pocket expenses, relating to these services on a dollar- for - dollar basis with no mark -up. 2.2. CEE shall invoice the Authority not more than two times each month for (i) the principal of loans in the Authority Funded Program, (ii) the Remodeling Advisor Visits, (iii) Loan Origination and Installation Verification Fees, (iv) Discount Loan Administrative Fees, and (v) Marketing and Program Development services. The Authority shall pay CEE within the following time frames: a. 7 days of receipt of the invoice for loans made under the Authority Funded Program. b. 30 days of receipt of the invoice for such costs such as Remodeling Advisor Visit, Loan Origination and Installation Verification Fees. 3. The Authority's Obligations 3.1. If requested by CEE, the Authority shall make reasonable efforts to obtain information and or permission for access from the Authority's clients which may be necessary for CEE to provide the services under this Agreement. 3.2. The Authority shall assist CEE in obtaining names, addresses, phone numbers and building characteristics of potential Authority Funded Program participants and eligible Authority Funded Program structures. 3.3. The Authority shall assist in marketing the Program by authorizing the use of City of Fridley or other city agency logos and letterheads to CEE for use on marketing literature. All Program marketing materials used by CEE to promote this Program shall be approved in advance by the Authority. 3.4. The Authority shall provide the Authority Funded Programs with sufficient capital to finance eligible 4 1 -28 -2004 loans. The Authority shall determine the amount of funds allocated to the Program. 3.5. The Authority shall establish eligibility for the Authority Funded Program and shall provide these criteria in writing to CEE prior to commencement of any marketing efforts. 3.6. The Authority shall make reasonable efforts to respond promptly to requests from CEE for information and approvals regarding the services to be provided under this Agreement. 3.7. The Authority shall maintain a checking account for purposes of depositing funds that are to be disbursed pursuant to the Escrow Agreement that is attached hereto as Schedule B and for the discount portion of the Authority's obligation under the MHFA Discount Loan Program. The Authority shall maintain a minimum balance in the account of $25,000. The account shall identify both the Authority and CEE as authorized signatories on the account, provided that both signatures will not be required to sign the checks. The account shall be interest bearing, with the Authority receiving all accrued interest. Except for interest payments to the Authority pursuant to this paragraph, all disbursements from the account shall be made in accordance with the terms of the Escrow Agreement and Discount Loan Program, and for no other purpose. 4. CEE's Obligations 4.1. CEE shall use its best efforts to provide services under this Agreement in a professional manner consistent with the care and skill used by reputable members of CEE's profession. 4.2. CEE, and all of its employees or agents shall comply with all statutes, ordinances, rules, regulations and other laws applicable laws applicable to the provision of services under this Agreement. 4.3. CEE shall secure all permits and licenses required for performance of the services under this Agreement. 4.4. CEE shall not engage in discriminatory employment practices against any employee or applicant for employment and shall in all respects comply with all federal, state and local laws, regulations and orders, including without limitation, Chapter 363 of the 5 1 -28 -2004 Minnesota Statutes, as amended from time to time. Failure to comply with the provisions hereof shall be deemed a material default under this Agreement. 5. Term and Termination 5.1. Unless earlier terminated as provided in the following paragraphs, this Agreement shall become effective on January 1, 2004, and continue through December 31, 2007. 5.2. This Agreement may be terminated by either party, for any reason or no reason, immediately upon written notice to the other party. In the event this Agreement is terminated by CEE prior to the expiration of the term set forth in paragraph 5.1, the Authority shall compensate CEE for all services delivered up to the date of termination and CEE shall provide the Authority with such information as the Authority may request regarding the status of the Authority Funded Program. 5.3. Any termination of this Agreement shall not release either party from their respective obligations under sections 7 and 8 of this Agreement. 6. Insurance 6.1. During the term of this Agreement, CEE shall obtain and maintain the following insurance coverage: a. Worker's Compensation Insurance at the statutory requirement for the State of Minnesota b. Commercial General Liability Insurance with a $1,000,000 limit each occurrence and a general aggregate limit of $2,000,000 C. Business Auto Insurance with a combined single limit of $1,000,000 each accident 6.2. During the term of this Agreement, CEE shall provide the Authority with a certificate or certificates of insurance relating to the insurance required pursuant to paragraph 6.1. 7. Liability and Indemnification 7.1. CEE represents that the services to be provided under this Agreement are reasonable in scope and that CEE has the experience and ability to provide the services. 7.2. CEE acknowledges that the Authority cannot control the conditions at any site where the services may be provided, and accordingly, the Authority is not liable 6 1 -28 -2004 for any claim, damage, loss, injury or expense of any type which CEE may suffer as a result of providing the services under this Agreement. 7.3. CEE warrants that any services provided hereunder shall be done in a professional and workmanlike manner. 7.4. CEE shall indemnify, defend and hold harmless the Authority and the City and their officers, directors, employees and agents from and against any and all claims, damages, losses, injuries and expenses (including attorney's fees and damages for death, personal injury and property damage) which the Authority or the City may incur as a result of any act or omission by CEE in providing services under this Agreement. 7.5. The Authority shall indemnify, defend and hold harmless CEE and its officers, directors, employees and agents from and against any and all claims, damages, losses, injuries and expenses (including attorney's fee and damages for death, personal injury and property damage) which CEE may incur as a result of any act or omission by the Authority in discharging its duties under this Agreement . 8. Confidentiality Unless otherwise agreed by the Authority in writing, CEE shall maintain in confidence and not disclose to any third party any information obtained regarding the Authority and /or any of the Authority's clients for which CEE is providing services; provided, however, that this obligation to maintain confidentiality shall not apply to: • Information in the public disclosure; • Information which becomes disclosure through no fau • Information which CEE can prior to the date of this 9. Relationship of Parties domain at the time of part of the public domain after Lt of CEE; or demonstrate was known by it Agreement. CEE will provide services as an independent contractor under this Agreement. Neither CEE, nor any of its employees or agents, shall be considered employees of the Authority for any purpose, and neither shall CEE be eligible for any compensation or benefits which the Authority may provide to its employees from time to time. CEE shall be solely responsible for employment and other taxes applicable to providing services hereunder, and the Authority will not withhold any taxes applicable to providing services 1 -28 -2004 hereunder, and the Authority will not withhold any taxes or contributions from the compensation payable to CEE under this Agreement. If any governmental authority (federal, state or other) claims that the Authority owes taxes or contributions which allegedly should have been withheld or made, then, to the extent permitted by law, CEE shall pay the Authority the amounts claimed to be due, plus reasonable attorney's fees and any other costs which the Authority may incur in defending such claim, whether or not a lawsuit is commenced. All notices, requests, demands and other communications required to be given in writing under this Agreement shall be given to the other party in person or by mail as provided in this section. If delivered personally, notice shall be deemed to have been duly given on the date of delivery. If delivered by mail, such notice shall be sent via first class U.S, mail, postage prepaid, to the address set forth at the beginning of this Agreement or such other address as a party may otherwise request written notice shall be deemed duly given three (3) business days after mailing. 10. Assignment This Agreement shall be binding upon and inure to the benefit of the parties and their respective heirs, successors and assigns; provided however, that neither party shall assign or transfer in any manner, this Agreement or any portion hereof without the prior written consent of the other party, and any attempt to assign or transfer without prior written consent shall be void and of no effect. 11. Governing Law This Agreement shall be governed by and construed in accordance with the laws of the State of Minnesota. 12. Miscellaneous 12.1. Headings and captions used in this Agreement are for convenience only and shall not affect the meaning of this Agreement. 12.2. This Agreement contains the entire agreement of the parties and supersedes all prior agreements, discussions and representations, written or oral, concerning the subject matter hereof. 12.3. No waiver by the Authority of any term or condition of this Agreement or any document referred to herein shall, whether by conduct or otherwise, be construed as a waiver or release of any other term or condition in this Agreement. 8 1 -28 -2004 12.4. This Agreement may only be amended in a written agreement signed by both parties. 12.5. Except as expressly set forth in Section 7, the rights and benefits under this Agreement shall inure solely to the benefit of the Authority and CEE, and this Agreement shall not be construed to give any rights, benefits or causes of action to any third party. 12.6. The invalidity or partial invalidity of any provision of this Agreement shall not invalidate the remaining provision, and the remainder shall be construed as of the invalidated portion shall have never been a part of this Agreement. 12.7. CEE shall comply with the provisions of Minnesota Statutes Chapter 13 (Government Data Practices) that are applicable to the Authority and shall not disseminate any information concerning loan requests or the borrowers without the prior written approval of the Authority . 12.8. This Agreement may be signed in any number of counterparts, each of which shall be deemed an original and one and the same instrument. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF FRIDLEY, MINNESOTA Date Date By: Lawrence R. Commers Its: Chair By: William W. Burns Its: Executive Director CENTER FOR ENERGY AND ENVIRONMENT By: Date Sheldon Strom Its: Executive Director Federal Tax Identification Number: 41- 1647799 9 1 -28 -2004 DRAFT: 1/29/2004 SCHEDULE A DESCRIPTION AND GUIDELINES COMPREHENSIVE HOUSING REHABILITATION PROGRAM FOR THE CITY OF FRIDLEY I. SINGLE FAMILY LOAN PROGRAMS A. REVOLVING LOAN PROGRAM 1. Loan Descri tp ion This program is intended to address the home improvement financing needs of eligible homeowners residing in the City of Fridley. 2. Funding Source The Revolving Loan Program will be funded solely by the Authority. 3. Program Administrator The Center for Energy and Environment will market, administer and close all loans under this program. 4. Qualifications Income Limits: $87,000. This means projected annual household income as defined by the MHFA Home Improvement Loan Program Procedural Guide. Underwriting: Borrowers shall meet the following underwriting: a. Debt -to- Income Ratios not to exceed 50 %. b. Loan-to -Value Ratios not to exceed 115 %. C. May have marginal credit, but have the ability to make a monthly payment. CEE shall notify the Authority of any applicants with credit blemishes in advance of closing a loan. Property Type: Owner- occupied, 1 to 4 unit residential properties located in Fridley. SCHEDULE A Page 2 5. Program Specifics The Revolving Loan will carry an annual interest rate of four (4) percent and must be repaid in monthly installments. The maximum Revolving Loan shall not exceed $35,000. The maximum term shall not exceed 20 years. All Revolving Loans will be secured with a separate mortgage. 6. General Requirements This program is available to any homeowner in the City of Fridley who meets the income, credit, and other program requirements in Section I (A)(1 -7) or as otherwise approved by the Authority. 7. Improvements Borrowers shall use fields under this program to make permanent repairs and improvements to their properties. Improvements shall be limited to those defined in the most current version of the MHFA Home Improvement Loan Program Procedural Guide. B. LAST RESORT LOAN PROGRAM 1. Loan Description This program is designed for those homeowners who cannot qualify for any other Authority loan or grant programs. Funding will be provided in the form of a deferred payment loan up to $10,000. The Last Resort Loan is due and payable when the home is sold or after twenty (20) years from the date of the loan note, whichever comes first. The Last Resort Loan may be prepaid at any time. The Authority, at its discretion, may extend the maturity date of a Last Resort Loan. 2. Funding � ource The Last Resort Loan Program will be funded solely by the Authority. 3. Program Administrator The Center for Energy and Environment will market, administer and close all loans under this program. SCHEDULE A Page 3 4. Qualifications Income Limits: $87,000 Underwriting: This is a last resort program and as such applicants shall be selected for this program only if they are unable to qualify for financing through other Authority programs. The Authority and the Program Administrator shall work in cooperation to identify all possible resources before an applicant can be considered for this program. Equity: The Last Resort Loan shall be secured with a separate mortgage. Property Type: Owner- occupied, 1 to 4 unit residential properties located in the City of Fridley. 5. Program Specifics The Last Resort Loan is designed specifically for homeowners in the City of Fridley who can't qualify for a loan or a grant. The interest rate for the Last Resort Loan will be two (2 %) percent. Acceptable criteria include, but are not limited to: a. Borrowers who have existing financial obligations and/or insufficient income to qualify for a loan. b. Debt -to- income ratios in excess of 50 %. Loan-to -value ratios in excess of 115 %, but not greater than 125 %. d. Borrowers who have had credit problems, such as slow payment. e. Borrowers who can't qualify for any CDBG or HOME program funding because their incomes exceed the program guidelines. This program is not available to borrowers with pending bankruptcies or foreclosures, unpaid judgments or liens, or non - payment of real estate taxes /assessments. SCHEDULE A Page 4 6. General Requirements This program is available to any homeowner in the City of Fridley with incomes up to $87,000 per year who meet the criteria in Section I (B)(1 -7). 7. Improvements Borrowers shall use funds under this program to make permanent repairs and improvements to their properties. Improvements shall be limited to those defined in the most current version of the MHFA Home Improvement Loan Program Procedural Guide. All properties shall be inspected prior to the approval of any financing. The Authority will only disburse funds to the contractor /s directly after an inspection has been conducted and the homeowner signs a completion certificate. C. DISCOUNT LOAN PROGRAM Loan Descri tp ion This program is intended to address the home improvement financing needs of eligible homeowners residing in the City of Fridley. 2. Funding Source The discount portion of the loan will be funded solely by the Authority. The principal portion of the loan will be funded by Minnesota Housing Finance Agency. 3. Program Administrator The Center for Energy and Environment will market, administer and close all loans under this program. 4. Qualifications Income Limits: The MHFA Community Fix -up Fund Program income limit is currently $87,000. This means projected annual household income as defined by the MEIFA Home Improvement Loan Program Procedural Guide. SCHEDULE A Page 5 Underwriting: Borrowers shall meet the following underwriting: a. Debt -to- Income Ratios not to exceed 48 %. b. Loan -to -Value Ratios not to exceed 110 %. Must demonstrate the ability to repay the loan. Must meet basic credit underwriting guidelines. Property Type: Owner- occupied, 1 to 4 unit residential properties located in Fridley. 5. Program Specifics The Discount Loan will carry an annual interest rate of four (4) percent and must be repaid in monthly installments. The maximum Discount Loan shall not exceed $35,000. The maximum term shall not exceed 15 years. All loans in excess of $5,000 will be secured with a separate mortgage. 6. General Requirements This program is available to any homeowner in the City of Fridley who meets the income, credit, and other program requirements in Section I (C)(1 -7). 7. Improvements Borrowers shall use funds under this program to make permanent repairs and improvements to their properties. Improvements shall be limited to those defined in the most current version of the MHFA Home Improvement Loan Program Procedural Guide. 1. Loan Descri to ion This program is intended to address the home improvement financing needs of eligible homeowners residing in the City of Fridley. 2. Funding Source ource The Fix -up Fund Loan Program will be funded solely by the Minnesota Housing Finance Agency. SCHEDULE A Page 6 3. Program Administrator The Center for Energy and Environment will market, administer and close all loans under this program. 4. Qualifications Income Limits: $75,000. This means projected annual household income as defined by the MHFA Home Improvement Loan Program Procedural Guide. Underwriting: Borrowers shall meet the following underwriting: a. Debt -to- Income Ratios not to exceed 48 %. b. Loan-to -Value Ratios not to exceed 100 %. C. Must demonstrate the ability to repay the loan. Must meet basic credit underwriting guidelines. Property Type: Owner- occupied, 1 to 4 unit residential properties located in Fridley. 5. Program Specifics The Fix -up Fund Loan currently offers an annual interest rate of 5.25% and must be repaid in monthly installments. The maximum Fix -up fund loan shall not exceed $25,000. The maximum term shall not exceed 20 years. All loans exceeding $5,000 will be secured with a separate mortgage. 6. General Requirements This program is available to any homeowner in the City of Fridley who meets the income, credit, and other program requirements in Section I (D)(1 -7) or as otherwise approved by the Authority. 7. Improvements Borrowers shall use funds under this program to make permanent repairs and improvements to their properties. Improvements shall be limited to those defined in the most current version of the MHFA Home Improvement Loan Program Procedural Guide. SCHEDULE A Page 7 E. MHFA CommuNny Fix -up FUND LOAN PROGRAM Loan Description This program is intended to address the home improvement financing needs of eligible homeowners residing in the City of Fridley. 2. Funding Source ource The Community Fix -up Fund Loan Program will be funded solely by the Minnesota Housing Finance Agency. 3. Program Administrator The Center for Energy and Environment will market, administer and close all loans under this program. 4. Qualifications Income Limits: $87,000. This means projected annual household income as defined by the MHFA Home Improvement Loan Program Procedural Guide. Underwriting: Borrowers shall meet the following underwriting: a. Debt -to- Income Ratios not to exceed 48 %. b. Loan-to -Value Ratios not to exceed 110 %. C. Must demonstrate the ability to repay the loan. Must meet basic credit underwriting guidelines. Property Type: Owner - occupied Rambler or Cape Cod style homes constructed prior to 1970 located in Fridley. 5. Program Specifics The Fix -up Fund Loan currently offers an annual interest rate of five (5) percent and must be repaid in monthly installments. The maximum Fix -up fund loan shall not exceed $35,000. The maximum term shall not exceed 20 years. All loans exceeding $5,000 will be secured with a separate mortgage. SCHEDULE A Page 8 6 7. General Requirements This program is available to any homeowner in the City of Fridley who meets the income, credit, and other program requirements in Section I (E)(1 -7). Improvements Borrowers shall use funds under this program to make permanent repairs and improvements to their properties. Improvements shall be limited to those defined in the most current version of the MHFA Home Improvement Loan Program Procedural Guide. II. MULTIPLE FAMILY LOAN PROGRAMS Loan Descri tp ion The Rental Rehabilitation Loan Program is funded by the Minnesota Housing Finance Agency and is intended to help rental property owners complete improvements which increase the livability and energy efficiency of their properties. The program provides loans at 6% simple interest with repayment terms up to 15 years. The maximum amount that can be borrowed is based on the number of units in the property. I and 2 Unit Buildings Minimum: $1,000 Maximum: $25,000 3 or More Units 2. Minimum: $1,000 Maximum: Lesser of $10,000 per unit, not to exceed $100,000 per structure. SCHEDULE A Page 9 All loans over $5,000 must be secured with a separate mortgage against the property to be improved. 3. Funding Source The Rental Rehabilitation Loan Program will be solely funded by the MHFA. CEE will originate and sell loans directly to MHFA. The Authority will not provide any funding under this program. 4. Program Administrator The Center for Energy and Environment will market, administer and close all loans under this program. 5. Qualifications Income Limits: None Underwriting: The property generally must show positive cash flow after the rehabilitation work is complete. For loans which are unsecured, the borrower must have the ability to repay the loan based on their own personal finances. For loans which are secured, the property must show positive cash -flow after the rehab is completed. Equity: The borrower must have sufficient equity in the property, if the loan exceeds $5,000. Property Type: Owner- occupied and absentee -owned residential rental properties located in the City of Fridley. 6. Program Specifics After the improvements are completed a certain portion of the units must be occupied by households with incomes less than 80% of the state median income. SCHEDULE A Page 10 7. General Requirements This program is available to any rental property owner in the City of Fridley who meets the guidelines of the programs as described in Section II (A)(1 -7). Improvements Borrowers shall use funds under this program to make permanent repairs and improvements to their properties. Improvements shall be limited to those defined in the most current version of the MHFA Rental Rehabilitation Loan Program Procedural Guide. B. RENTAL ENERGY LOAN PROGRAM 1. Loan Description The Rental Energy Loan Program is funded by the Minnesota Department of Commerce and uses Exxon Oil Overcharge funds. The program provides loans at 4% simple interest with repayment terms up to 5 years. The minimum and maximum loan amounts are as follows: Minimum: $500 Maximum: $10,000 All loans must be secured with a separate mortgage against the property to be improved. 2. Funding Source The Rental Energy Loan Program will be solely funded by the Minnesota Department of Commerce. CEE will originate and sell loans directly to MNDC. The Authority will not provide any funding under this program. SCHEDULE A Page 11 3. Program Administrator The Center for Energy and Environment will market, administer and close all loans under this program. 4. Qualifications Income Limits: None Underwriting: The property generally must show positive cash flow after the rehabilitation work is complete. The loan may also be based solely on the borrower's ability to repay the loan based on their own personal finances. Equity: The borrower must have sufficient equity in the property. Property Type: Owner- occupied and absentee -owned residential rental properties located in the City of Fridley. 5. Pro-gram Specifics None. 6. General Requirements This program is available to any rental property owner in the City of Fridley who meets the guidelines of the programs described in Section II (B)(I -7). 7. Improvements Borrowers shall use funds under this program to make permanent repairs and improvements to their properties. Improvements shall be limited to those defined in the most current version of the Minnesota Department of Commerce Rental Energy Loan Fund Procedural Guide. SCHEDULE A Page 12 C. LAST RESORT RENTAL LOAN PROGRAM 1. Loan Descri to ion This program is designed for those rental property owners who cannot qualify for any other Authority loan or grant programs. Funding will be provided in the form of a deferred payment loan up to $10,000 per unit, not to exceed $50,000 per structure. * For the first ten years, 2% (simple interest) charged on the principal balance. After ten years, no interest shall be charged. The Last Resort Loan is due and payable when the property is sold or transferred or after twenty (20) years from the date of the loan note, whichever comes first. The Last Resort Loan may be prepaid at any time. The Authority, may, at its discretion, extend the maturity date of a Last Resort Loan. 2. Funding Source The Last Resort Rental Loan Program will be funded solely by the Authority. 3. Program Administrator The Center for Energy and Environment will market, administer and close all Last Resort Rental Loan Program Loans. 4. Qualifications Income Limits: No income limit. Underwriting: This is a last resort program and as such applicants shall be selected for this program only if they are unable to qualify for financing through other Authority programs. The Authority and the Program Administrator shall work in cooperation to identify all possible resources before an applicant can be considered for this program. SCHEDULE A Page 13 Equity: The Last Resort Loan shall be secured with a separate mortgage. Property Type: Non - owner- occupied, residential rental properties located in the City of Fridley. 5. Program Specifics The Last Resort Rental Loan Program is designed specifically for rental property owners who can't qualify for a loan or a grant. Because there are numerous variables which are used when underwriting a multiple family rental loan, it is difficult to list all of the scenarios which would qualify an applicant for the Last Resort Rental Loan Program. In general, the following criteria will be used as primary factors: a. Borrowers who have a negative cashflow on their property. b. Borrowers Debt -to- Income ratio exceeds 50 %. Borrowers who have no equity in their property and the Loan-to- Value Ratio (with the new debt) which exceeds 100 %, but is not greater than 125 %. d. Borrowers who have had credit problems, such as slow payment. This program is not available to borrowers with pendin bankruptcies or foreclosures, unpaid judgements or liens, or non- payment of real estate taxes /assessments. 6. General Requirements This program is available to rental property owners on a case -by -case basis. The Authority Board of Commissioners shall specifically approve all Last Resort Rental Loans in excess of $10, 000. 7. Improvements Borrowers shall use funds under this program to make permanent repairs and improvements to their properties. Improvements shall be limited to those defined in the most current version of the NIHFA Rental Rehabilitation Loan Program Procedural Guide. 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Burns Executive Director of HRA it FROM: Scott J. Hickok, Community Development Director Grant Fernelius, Assistant HRA Director SUBJECT: Consider Extension of Contract with CEE for Administration of Operation Insulation Program In December of 2001, the Authority entered into an agreement with CEE for the Operation Insulation (OI) program. This special program offers an energy audit that includes an analysis of insulation condition and level, weather - stripping, air - leaks, carbon monoxide levels and other indoor air quality issues. Since the contract began, CEE has inspected a total of 97 homes. The total cost of the program to date has been $8,688, which covers 50% of the cost of each audit, plus additional funds in the event a homeowner proceeds with the improvements. In this case, the Authority pays an additional $62.50 to cover the full cost of the audit. The reaction to the program has been very good and staff believes it compliments the other housing programs that are offered. Staff is recommending that the Authority renew the agreement to run concurrently with the loan programs (through December 31, 2007 or until the HRA's $25,000 budget runs out). As you recall, the HRA originally committed $25,000 to this program, of which $8,688 has been spent. Staff is proposing to use the remaining funds and is not seeking additional funding at this time. Recommendation Staff recommends that the Authority approve the contract extension with CEE for the Operation Insulation program through December 31, 2007. M -04 -15 tl Amendment #1 To Consulting Agreement Between Housing and Redevelopment Authority in and for the City of Fridley And Center for Energy & Environment The Agreement for Consulting Services for Operation Insulation Services is hereby amended. Section 5 of the Agreement is amended to read as follows: 5. Term and Termination 5.1 Unless earlier terminated as provided in the following paragraphs, this Agreement shall become effective on December 12, 2001 and continue through December 31, 2007. All other sections of the contract shall remain as written in the original agreement. IN WITNESS WHEREOF, the parties here hereunder set their hands as of the date written below: HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF FRIDLEY By Lawrence R. Commers, Chair Date C William W. Burns, Executive Director Date CENTER FOR ENERGY AND ENVIRONMENT Date T:\Admin\CONMCr\ACTNEXCRR \Fridley OI Agreement Amend 1.doc January 7, 2003 Sheldon Strom, Executive Director UK Fridley Housing and Redevelopment Authority MEMORANDUM DATE: January 30, 2004 TO: William W. Burns, Executive Director of HRA 40 FROM: Scott J. Hickok, Community Development Director Grant E. Femelius, Assistant HRA Director SUBJECT: Consider Resolution Declaring Substandard Property Background As you recall, the Authority tabled this item at their October 2, 2003 meeting. At the time, several commissioners inquired about the level of background documentation used to make the "public findings" and declare the sites in the Gateway West project as substandard. To address these concerns, the Authority directed staff to gather additional information on the condition of the properties. At the December 4, 2003 meeting, the HRA authorized a contract with SEH, Inc. a firm with extensive experience in the areas of engineering, architecture, transportation, land planning, and redevelopment assessments. SEH staff visited the sites in mid- December and conducted a thorough inspection of each property. The study looked at four of the five sites under HRA control, including the former Frank's Used Car building and the homes at 5917, 5923 and 5925 3rd Street. The vacant lot (former Werner's Furniture site) was not included in the study. With the exception of one site, four of the properties (80 %) meet the blight definition established in state law. Since only 50% of the structures must meet the blight test, the Gateway West project would qualify for the new TIF district. Next Steps The attached resolution establishes the necessary findings in order to create the TIF district. By adopting the resolution now, the Authority has greater flexibility should it decide to take the buildings down (this spring), rather than wait until later. The Authority has three years from the date of adoption to request certification of the Gateway West TIF District. s Gateway West TIF Resolution January 30, 2004 Pate 2 Recommendation Staff recommends that the Authority approve the attached resolution Determining that Certain Parcels are Occupied by Structurally Substandard Buildings and are to be Included in a Tax Increment Financing District. M -04 -16 Page 1 - Resolution No. 2003 - 5 HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF FRIDLEY COUNTY OF ANOKA STATE OF MINNESOTA RESOLUTION 2003 - 5 A RESOLUTION DETERMINING THAT CERTAIN PARCELS ARE OCCUPIED BY STRUCTURALLY SUBSTANDARD BUILDINGS AND ARE TO BE INCLUDED IN A TAX INCREMENT FINANCING DISTRICT BE IT RESOLVED by the Board of Commissioners (the "Commissioners ") of the Housing and Redevelopment Authority in and for the City of Fridley (the "Authority") as follows: Section 1. Recitals. 1.01 The Authority has approved the acquisition and/or redevelopment of the following parcels (the "Parcels "): 1. 5917 3rd Street NE PIN 23- 30 -24 -22 -0150 2. 5923 3' Street NE PIN 23- 30 -24 -22 -0133 3. 5925 3' St. NE PIN: 23- 30 -24 -22 -0134 4. 5740 University Avenue NE PIN: 23- 30 -24 -23 -0015 23- 30 -24 -23 -0016 23- 30 -24 -23 -0038 23- 30 -24 -23 -0128 23- 30 -24 -23 -0129 23- 30 -24 -23 -0130 1.02 Minnesota Statutes, Section 469.174 et seq., as amended and supplemented from time to time (the "Tax Increment Act ") provide for the establishment of a tax increment financing district as a redevelopment district. The Tax Increment Act allows for the inclusion of parcels within a redevelopment district after substandard buildings have been removed by complying with Minnesota Statutes, Section 469.174, subd. 10, para. (d). Gateway West - Blighted Property (5917, 5923, 5925 and 5745 Univ.).doc Page 2 - Resolution No. 2003 - 5 Section 2. Findings. 2.01 The Authority hereby finds that the acquisition and/or redevelopment of the Parcels further the goals and objectives of the Redevelopment Plan. 2.02 The Authority hereby finds that the Parcels are occupied by structures that are structurally substandard as defined in the Tax Increment Act and that the structures must be demolished and removed from the Parcels. 2.03 The Authority intends to demolish or cause to be demolished the substandard buildings and to prepare the Parcels for redevelopment. Section 3. Declaration of Intent. 3.01 The Authority hereby declares its intent to demolish or cause to be demolished the substandard buildings and to include the Parcels within a type of tax increment financing district known as a redevelopment district. The Parcels shall have been occupied by substandard buildings within three years of the filing of the request for certification of the Parcels as part of a district with the Anoka County Auditor. 3.02 The Authority hereby declares its intent that the acquisition cost of the Parcels be eligible for tax increment financing and is to be repaid through collections of tax increment from the tax increment financing district to be created. Section 4. Notice to County Auditor. 4.01 When the Authority establishes a tax increment financing district and includes the Parcels, then upon filing the request for the certification of the tax capacity of the Parcels as part of such district, the Authority shall notify the Anoka County Auditor that the original tax capacity of the Parcels must be adjusted as provided in Minnesota Statutes, Section 469.177, subd. 1, para. (f). PASSED AND ADOPTED BY THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF FRIDLEY THIS DAY OF 12004. Lawrence R. Commers, Chairman ATTEST: William W. Burns, Executive Director Gateway West - Blighted Property (5917, 5923, 5925 and 5745 Univ.).doc City of Fridley TO: William W. Burns, Executive Director HRA PW04-012 Grant Femnelius, Assistant Director HRA FROM: Jon H. ti kaas, Public Works Director Layne Otteson, Asst Public Works Director DATE: January 30, 2004 SUBJECT: Update on Reconstruction of University Avenue East Service Drive The public hearing for the 2004 street improvement project was held January 26, 2004. The council and property owners appear favorable to the project as it continues to move forward. Staff will be recommending approval of final plans and going out for bids at the next council meeting. University Avenue East Service Drive will be reconstructed from 61' Avenue to Mississippi Street as part of the 2004 street improvement project The work will include complete replacement of the gravel base and bituminous pavement The existing concrete curbs will remain except for spot repairs of deteriorated concrete curbs. All work will take place between the existing curb Imes. Staff has identified some storm sewer upgrades that will be performed in conjunction with the street reconstruction. Also, the parking lot adjacent to the fire station will be reconstructed. A decorative fence with aluminum railing and pilasters is included in the design of the project This fence will replace the deteriorated fence along University Avenue East Service Drive, between 6r Avenue and Mississippi Street The fence will be very similar in appearance to the fence located at Christianson Crossing and at Gateway East The pilasters will be brick and have a height of 4 feet The fence will be black tube rail and have a height of 42 inches. The project cost to reconstruct University Avenue East Service Drive is estimated to be $325,000. The project is 100% amble and wHI split 50/50 to each srde. The estimated assessment per foot is $65.00. The fence work wifl also be assessed 50% per side to the property owners. We will add this item to the project as an alternative, which may be deleted should council elect to. LO /JHt1:cz FINANCE DEPARTMENT CITY OF FRIDLEY MEMORANDUM r,. '4 TO: HRA COMMISSION MEMBERS FROM: RICHARD D. PRIBYL, FINANCE DIRECTOR RICHARD D. PRIBYL FINANCE DIRECTOR SUBJECT: REFINANCING OF TAX INCREMENT BOND ISSUES DATE: January 29, 2004 The City of Fridley is in the process of issuing debt for some capital improvements necessary for the Water Utility. As part of our debt management program, we frequently review the existing debt issues to determine, based on the current interest rate environment, if it makes financial sense to refinance existing debt. As a benchmark, we have felt that if the net estimated savings exceeds 3 %, we should proceed with a refinancing. Ehlers and Associates reviewed all of the existing tax increment related debt and found that one of the issues could provide a savings through a re- issuance. The $4,185,000 Taxable General Obligation Tax Increment Bonds, Series 1998B was used to purchase the land on which the Medtronic project was built. At this time, we calculate that the net estimated savings by reissuing this debt would be approximately $176,393.03. The new issue to be sold to refinance the 1998B issue would be an "advance refunding ". Since the interest rates are at such a low point and the City is currently selling debt for its water system, Staff felt it was appropriate to proceed with this refinance activity. Last Monday evening the City Council passed a resolution approving Ehlers and Associates, Inc. to act as the Fiscal Agent for the City and to proceed with the actions necessary to competitively bid general obligation debt for the City. Also approved by Council was a resolution authorizing Ehlers to conduct the same process to refinance the Tax Increment Bonds, Series 1998B. :I' u- cc: Grant Fernelius, HRA Housing Coordinator r/ am Fridley Housing and Redevelopment vial Authority fizLi MEMORANDUM DATE: January 30, 2004 TO: William W. Burns, Executive Director of HRA FROM: Scott J. Hickok, Community Development Director Grant E. Fernelius, Assistant HRA Director SUBJECT: Concept for 2004 CDBG Funding Request Introduction The following memo is to update the Authority on a proposal to seek CDBG funds for a series of workshops on affordable and life -cycle housing. As you know, we received positive feedback from the City Council during an informal discussion on January 26th. The City Council will consider a resolution approving the proposal at their meeting on February 9, 2004. Background In December of last year, staff provided you with an email update on potential projects for funding through the 2004 CDBG program. At the time, we mentioned that five ideas were produced from the staff brainstorming sessions and that two of these projects seemed to have the most promise: (1) Long -range land use planning for the United Defense site; 2) streetscape improvements in and around the Charles Street apartment area. After further analysis, staff concluded that neither concept was developed to the point that an application could be adequately prepared. For example, after speaking with representatives from United Defense we learned that they intend to remain in Fridley rather than close down and consolidate their operations elsewhere. Planning for future re -use at this point in time seemed premature. With regard to the Charles Street improvement project, additional details are needed such as costs estimates and the level of owner participation (not to mention City Council discussion) before proceeding further. In addition, the City did receive $200,000 in CDBG funds in 2003 — a fact that made staff somewhat reluctant to present an application for projects that were in very preliminary phases of analysis. Nonetheless, staff was encouraged to prepare an application in time for the January 9, , 2004 deadline. In a subsequent email, staff outlined another funding possibility: using CDBG funds to help pay for a series of workshops in connection with potential revisions to the City's Housing Chapter in the Comprehensive Plan. While it is not our practice to submit applications • CDBG Memo January 30, 2004 Page 2 prior to Council discussion, in this case the short time window left us no other choice. Should the Council decide that they don't support this concept, the application can easily be withdrawn. Recent Discussions During recent land use discussions involving the Brandes Place and Town Center projects, a number of housing related questions have emerged: • Doesn't the city already have an abundance of apartments and rental property? Why do we need to build any more high- density housing, especially town homes and condominiums? • What are the housing goals in the current comprehensive land use plan? How were these goals developed? Are these goals consistent with current housing needs? • What role does the Met Council play in relationship to the City's housing goals and priorities? • How is affordable and life -cycle housing defined? Who is this housing intended to serve? In addition, staff heard concerns that the public wants to re- examine housing related issues and wants a voice in the process. Although, there is nothing that compels the City to re -open a discussion, it might be time to consider such an option, only because we are likely to experience more redevelopment pressures in the future. To respond to these calls for more public input, staff is proposing a series of educational workshops /public forums. Workshop Concept, The basic concept is to host a series of up to four workshops on the topic of housing, with a particular emphasis on affordable and life -cycle housing. Although, a work plan has not been devised at this point, the workshops could be structured as follows: Workshop #1 This workshop will provide an overview of the topics to be covered and general background on housing issues, including the definitions of life cycle and affordable housing. Other questions to be addressed: What is considered "affordable" housing and what standards are used? Who is in need of affordable housing? CDBG Memo January 30, 2004 Page 3 • What is "life- cycle" housing? • How much of Fridley's housing stock is affordable and how does the City compare to other communities? • What has happened in the Fridley housing market in the last few years, especially in terms average sales price and rental rates? • What are the socio - economic and/or demographics of people moving into Fridley? • What is happening to the City's existing population? Workshop #2 This workshop will focus on the legal issues affecting the City, such as its obligations under the Metropolitan Livable Communities Act; the federal Fair Housing Act, and other relevant laws and regulations. Other issues to be addressed: • How are these obligations related to other issues, such as transportation or redevelopment funding? • What other external constraints impact land use decisions at the local level? Workshop #3 This workshop will highlight the goals outlined in the housing chapter of the comprehensive plan. Are these goals consistent with current and future housing needs? What role should the general public play in assessing housing needs and formulating goals? This workshop will also provide an opportunity to public participation. The end product could possibly include a list of recommendations for Council consideration (e.g. potential amendments to the housing chapter). Workshop #4 This final workshop will include a discussion of the City's role in addressing affordable and life - cycle housing. Should the City take an active role or should it only react to proposals as they are made? How strong of a position should be taken in supporting these issues? Are there any action steps that could be taken by the City? Conclusion The workshop concept needs further refinement, but the primary goal is to initiate a two -way exchange or dialogue with interested residents. Equally as important it is an opportunity for the public to learn more about this topic, for city officials to hear the public's concerns, and ultimately for both sides to try and identify common ground. CDBG Memo January 30, 2004 Page 4 As part of the process, an outside facilitator would be brought into run the meetings and ensure some continuity from one session to the next. In addition, outside experts would be brought in to address such topics as affordable and life cycle housing. Staff prepared a request for $15,000 in CDBG funds or approximately %2 of the workshop costs. If Council supports this concept, we would refine the plan further over the course of the next few months, however the funds would not be available until after July 1, 2004. No action is needed by the Authority at this time. M -04 -17 Fridley Housing and Redevelopment Authority MEMORANDUM DATE: January 30, 2004 TO: William W. Burns, Executive Director of HRA 41-A) FROM: Scott J. Hickok, Community Development Director Grant E. Fernelius, Assistant HRA Director SUBJECT: Update on Anoka County Regional Rail Authority Introduction The following memo is to update the Authority on recent developments concerning Anoka County's plans to expand the powers of the Regional Rail Authority. A similar memo was distributed to the City Council on January 26th. Backgaround As you recall, during the 2003 legislative session Anoka County drafted legislation that would have converted its HRA into a Community Development Authority (CDA) — essentially a hybrid agency with both HRA and EDA powers. Fridley, along with several other communities (e.g. Anoka, Coon Rapids, Columbia Heights, etc.) fought the proposal primarily due to concerns that the CDA legislation included a separate tax levy. Eventually, the legislation was removed from the omnibus tax bill and the issue was dead for the 2003 session. Current Status Since last spring the county has been working on an alternative proposal that would expand the scope of the Anoka County Regional Rail Authority ( ACRRA) to include broader powers. A copy of the draft legislation is attached (this is the same legislation sent to Mayor Lund on January 9, 2004). Staff also spoke with Lona Schreiber from Anoka County last November for an update. At the time, we were told that the county was no longer interested in additional tax levy authority. Instead, the county would use the existing ACRRA levy to fund its economic and transit- related development activities. The catch, however, was that the rail authority was limited in the types of activities that it could undertake. As a result, special legislation is needed to modify the powers of the ACRRA. Anoka County Legislation Memo January 30, 2004 Page 2 Overview of Legislation As the cover letter indicates, the county wants to engage in economic and transit- oriented development, but does not intend to include an additional (tax) levy. A closer analysis of the bill reveals that the ACRRA would possess some (but not all) of the EDA and HRA powers granted under state law. EDA Powers Subdivision 1 (Lines 9 and 10) of the draft bill includes the EDA powers referenced in sections 469.090, 469.098, and 469.101 to 469.106. These sections refer to the general EDA powers such as the ability to acquire property, use eminent domain, enter into contracts, act as a limited partner, and make small business loans. The bill does not include a separate EDA tax (469.107). In addition, the ACRRA would also have the ability to issue general obligation and revenue bonds under the EDA statutes. This last point is mentioned only because if the ACRRA were to issue G.O. bonds, state law requires that a levy be imposed to help pay back the obligation. RRA Powers Subdivision 1 (Lines 11 and 12) state that the ACRRA may also exercise any of the HRA powers in sections 469.001 to 469.047 for transit- oriented development. Transit - oriented development is not defined in the bill. Inclusive in these statutes is 469.033, Subd. 6, which does allow a separate HRA tax levy. According to Bob Streetar, Community Development Director for Columbia Heights, this provision of the county's bill has since been deleted. If this were the case, then the County would not have separate levy authority beyond the existing rail levy. The county, however, has not provided our staff with a copy of the new language. Rail Authority Powers While not referenced in the draft bill, the ACRRA would continue to have all of the powers referenced in Minnesota Statutes 398A. Other Communities We have contacted the cities of Anoka, Coon Rapids and Columbia Heights to find out whether they have taken a position on the issue. To follow is a short summary of what we learned. Anoka County Legislation Memo January 30, 2004 Page 3 City of Anoka Tim Cruikshank, City Manager, said that the Anoka City Council would meet with representatives from Anoka County on Monday, January 26`x`. He mentioned that the Council has discussed this issue on 3 or 4 previous occasions. Last year they passed a resolution in opposition to the CDA legislation. Although it is dangerous to speculate, Cruikshank expects that the council's reaction could range from full support to indifference; he does not anticipate strong opposition like last year. Part of the change in attitude is that they do not perceive this as a new tax. The rail authority already levies a tax and the focus (from Anoka's perspective) should be on how the county will spend the funds. City of Coon Rapids According to Jerry Splinter, City Manager, the Coon Rapids City Council will consider this issue at their February P meeting. Last year they vigorously opposed the legislation on the grounds that it would be a new tax levy. They were also concerned about projects happening without the city's approval. Although they have not thoroughly analyzed the legislation, Splinter felt that it matches a promise made by the county last fall. He anticipates that the city council will support the new legislation. City of Columbia Heights Walt Fehst, City Manager, said that he has not formally discussed the latest proposal with the Columbia Heights City Council. One of their council members attended the county's meeting on December 30, 2003 and reported that most of the municipal officials in attendance supported the proposal. Fehst said that they still have some concerns that the money raised through the rail levy will be used outside of Columbia Heights. He suggested that that the county adopts a policy up front, including a set of criteria for how the funds might be used. This would provide some certainty that the City could access some of these resources for future redevelopment. In terms of formal action, he hasn't planned a formal discussion with their city council. Staff Analysis The proposed legislation appears to be straightforward and well reasoned. However, a few questions are still unanswered: 1. The current plan is to use the rail authority levy only. The 2003 levy raised about $2.8M. This amount is about 1/3 of the total levy that could be raised if the county were to impose the maximum levy rate. What guarantees can be provided that the levy would not raised in the future? Anoka County Legislation Memo January 30, 2004 Page 4 2. The relationship between the ACRRA and the Anoka County HRA has not been defined. Both agencies would possess HRA powers, albeit to varying degrees. It would be helpful to know the how the relationship between the two entities will work. 3. How will the money be spent? The County will have roughly $3.OM in resources toward redevelopment and transit- oriented development. Will the funds be available for open competition or earmarked for the county's own projects? Conclusion At this point in time, staff would like clarification from Anoka County on the questions described above. We would also like to gauge the county's willingness to share the resources with local units of government. Assuming these issues can be adequately addressed, we see no reason to oppose the county's legislation. Although no action is needed by the Authority, any comments or feedback are always welcome. I 1� ANOKA COUNTY COUNTY OF ANOKA OFFICE OF COUNTY BOARD OF COMMISSIONERS GOvERNNIENT CENTER 2100 3RD AvENUE • ANOKA, MINNESOTA 55303 -2265 (763) 323 -5700 January 9, 2004 The Honorable Scott Lund Mayor City of Fridley. 6431 University Avenue NE Fridley, MN 55432 RE: Anoka County Development Authority Dear Mayor Lund: The meeting on December 30, 2003, was held to discuss the Anoka County proposal for special legislation to enable the county to engage in economic development and transit oriented activities with representatives from numerous municipalities attending. Our thanks to those of you who participated and provided thoughtful suggestions and excellent inquiries about the county proposal. The consensus was that the county move forward with the drafting of the concept in legislative form That draft is now completed and enclosed with this letter for your information. A question raised at the meeting was what types of economic development activities could the county engage in if the proposal became law. The draft language provides that the county be authorized to engage in the same economic development activities cities and most counties currently are allowed. The statutes allowing for these activities are found in Minn. Stat_ §§ 469.090 through 469.1081. The county proposal would not allow an additional levy nor include the provisions for establishment of a separate commission, as Anoka County activities will function under the organizational umbrella of the county rail authority. A copy of Minn. Stat. § 469.090, which generally outlines allowable economic development activities is enclosed for your information. Another excellent suggestion made at the meeting was that if the legislation passes, a multi jurisdictional advisory group be organized to establish guidelines and criteria to review proposed economic development projects. There are a number of models we could modify to fit these needs. Again our thanks to all of you who have taken the time from your busy schedules to meet, discuss, and offer input on this important issue. Sincerely Commis:io ' Margaret Langfeld Intergovefnmental Committee Chair Enclosures cc: Dr. William Burns, City Manager Commissioner Jim Kordiak District #4 FAX: 763 - 323 -5682 Affirmative Action / Equal Opportunity Employer TDDITTY: 763 - 323 -5289 DRAFT OF JANUARY 8, 2004 FOR DISCUSSION PURPOSES ONLY 1 A bill for an act 2 relating to the Anoka county regional railroad authority; authorizing the Anoka 3 county regional railroad authority to exercise economic development authority 4 powers. 6 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 7 Section 1. [ANOKA COUNTY REGIONAL RAILROAD AUTHORITY POWERS.] Subdivision 1. [ECONOMIC DEVELOPMENT POWERS AND DUTIES.] The Anoka 9 countv regional railroad authority may exercise any of the powers and duties of an economic to development authority under sections 469.090 469.098, and 469.101 to 469.106. The Anoka 11 county_ regional railroad authority may exercise the powers under sections 469.001 to 469.047 12 for the Rurpose of transit oriented development In applying sections 469.001 to 469.047, 13 469.090, 469.098, and 469.101 to 469.106 to the Anoka county regional railroad authority, the 14 county is considered to be the city and the county board is considered to be the city council. 15 Subd. 2. [RELATION TO LOCAL AUTHORITIES.] Nothing in subdivision 1 shall 16 alter or impair the powers or duties of a city, a town a municipal housing and redevelopment 17 authority or a municipal economic development authority. 18 Subd. 3. [LOCAL APPROVAL.] If any economic development project is constructed in 19 the county pursuant to the authorization in this section, the project must be approved by the 20 governing body of each city or town within which the project will be constructed. 21 Sec. 2. [EFFECTIVE DATE.] Section 1 is effective the day after the governing body of 22 the Anoka county regional railroad authority and its chief clerical officer timely completes its 23 compliance with Minnesota Statutes, section 645.021, subdivisions 2 and 3. Nlirnesota Statutes 2003, 469.090 Or Minnesota Statutes 200 Table of Chapters Table of ccontents_fgr_Chs tp er469 469.090 Definitions. E%dee Ot ©4 aun.e,enT *son. s+o,4 v,+, :s 190a Cities. Subdivision 1. Generally. In sections 469.090 to 469.108, the terms defined in this section have the meanings given them herein, unless the context indicates a different meaning. Subd. 2. Authority. "Authority" means an economic development authority. Subd. 3. City. "City" means a home rule charter or statutory city. Subd. 4. Development. "Development" includes redevelopment, and "developing" includes redeveloping. Subd. 5. Cost of redevelopment. "Cost of redevelopment" means, with respect to an economic development district project, the cost of: (1) acquiring property, whether by purchase, lease, condemnation, or otherwise; (2) demolishing or removing structures or other improvements on acquired properties; (3) correcting soil deficiencies necessary to develop or use the property for an appropriate use as determined by the authority; (4) constructing or installing public improvements, including streets, roads, and utilities; (5) providing relocation benefits to the occupants of acquired properties; (6) planning, engineering, legal, and other services necessary to carry out the functions listed in clauses (1) to (5); and (7) the allocated administrative expenses of the authority for the project. HIST: 1987 c 291 s 91 Copyright 2003 by the Office of Revisor of Statutes, State of Minnesota. Page 1 of 1 http: / /www. revisor. leg.state.nm.us /stats /469/090.html 12/31/2003 Fridley Housing and Redevelopment Authority MEMORANDUM DATE: January 30, 2004 TO: William W. Burns, Executive Director of HRA sv FROM: Scott J. Hickok, Community Development Director Grant E. Fernelius, Assistant HRA Director SUBJECT: Update on 2004 North Metro Home and Garden Fair The 6t' annual North Metro Home and Garden Fair has been scheduled for Saturday, March 6, 2004 from 9:00 a.m. to 2:00 p.m. at the Mounds View Community Center (MVCC) located at 5394 Edgewood Drive. The best way to get there from Fridley is to take Highway 65 north to County Highway 10, then go east on CH 10 through Spring Lake Park about 1 -1/2 miles to Edgewood Drive, then turn left. So far we've reserved nearly 50 booths from a variety of vendors. We also plan to have workshops throughout the day and free door prize drawings. As a final note, Clear Channel Communications has agreed to advertise the event on several billboards in the area. In addition, an article will be published in the next issue of the City's newsletter and statement stuffers were sent out in the last two rounds of utility bills. We invite everyone to attend. M -04 -19 to Fridley HRA Housing Program Summary Cover Page February 5, 200 eeting Report Loan Origination Report Loan Servicing Report Remodeling Advisor & Operation Insulation Description Shows all loan and grant activity (e.g. closed files) for the year, through January 30, 2004. Note: the report now includes a summary of improvements. Shows all servicing activity for HRA- funded loans through December 31, 2003. Note: the loan servicing report for January 2004 is not yet available. Shows the number of field visits performed by the Remodeling Advisor Operation Insulation staff through January 30, 2004. Loan Origination Report January 2004 Loan / Grant Originations This Previous Month Months YTD Loans Issued 2 _ 2 Grants Issued Funding Sources Total 2 - 2 I This Previous E Month Months YTD Fridley HRA $ _ $ _ $ _ MHFA $ 30,655 $ - $ 30,655 Met Council $ _ $ _ $ _ CDBG /HOME $ _ $ _ $ _ CEE $ _ $ _ $ _ Other $ _ $ _ $ _ Types of Units Improved Total $ 30,655 $ - $ 30,655 This Previous Month Months YTD Single Family 2 2 Duplex - _ _ Tri-Plex - _ _ 4 to 9 Units - _ 10 to 20 Units - _ _ 20+ Units - _ _ Total 2 Types of Improvements Bathroom remodel Kitchen remodel General plumbing Heating system Electrical system Basement finish Insulation Misc. interior projects Exterior Siding /Fascia/Soffit - Roofing _ Windows /Doors 1 - 1 Garage - _ _ Driveway /sidewalk - _ _ Landscaping _ _ _ Misc. exterior projects - _ _ Monthly Housing Report (January 2004).xls Loan Origination 1/30/2004 Loan Servicing Report December 2003 Monthly Report Pool Pool Pool Pool Deferred Installment Installment Deferred Loans Loans Loans Loans Total Principal Paid - 2,133.28 4,342.68 - 6,475.96 Interest Paid - 1,014.84 2,141.82 - 3,156.66 Total Payments Rec'd - 3,148.12 6,484.50 - 9,632.62 Ending Principal Balance 31,500.66 180,058.53 484,902.01 13,355.92 709,817.12 Loans in Portfolio 7 18 51 3 79 Monthly Servicing Fees $ 424.00 NET FUNDS RECEIVED $ 9,208.62 Delinquency Report % Of Delinquent Delinquent Delinquent Delinquent Time Frame Loans Payments Principal Principal 1 to 30 days Late 7.00 $ 1,145.97 $ 89,913.00 12.60% 31 to 60 Days Late - $ - $ - 0.00% Over 60 Days Late 2.00 $ 4,280.00 $ 2,637.86 0.37% Monthly Housing Report (January 2004).xis Loan Servicing 1/30/2004 Remodeling Advisor and Operation Insulation January 2004 Remodeling Advisor Program Description A free service available to all Fridley homeowners. Program is administered by the Center for Energy and Environment (CEE) on behalf of the Fridley HRA. Services include a in -home consulation, free remodeling advice, referrals to financing programs and building code information. Remodeling advisor appointments can be made by calling 612 - 335 -5874. Appointments This Month Appointments Previous Months Appointments Y -T -D Operation insulation Program Description A fee - for - service program available to all Fridley homeowners. Program is administered by the Center for Energy and Environment (CEE) on behalf of the Fridley HRA. Service includes in -home energy audit, recommendations on ways to improve weather- stripping, insulation, ventilation and related indoor air quality. As an added incentive homeowners can receive the audit at not cost if they make the recommended improve- ments. Appointments can be made by calling 612- 335 -5877. New Appointments This Month Appointments Previous Months Appointments Y -T -D Energy Improvement Projects * Projects completed in connection with a previous energy audit. Monthly Housing Report (January 2004).xls R.A. - O.I. 1/30/2004 2 *