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HRA 08/04/2005 - 29594'� CITY OF FRIDLEY HOUSING AND REDEVELOPMENT AUTHORITY AUGUST 4, 2005 _ CALL TO ORDER: Chairperson Commers called the Housing and Redevelopment Authority meeting to order at 7:30 p.m. ROLL CALL: Members Pesent: Larry Commers John Meyer Pat Gabel William Holm Virginia Schnabel Others Present: Paul Bolin, Assistant HRA Director Paul Eisenmenger, Accountant Gay Cerney, HRA Counsel Mark McCary, Yale Place Associates �, APPROVAL OF MINUTES: July 7, 2005 MOTION by Commissioner Holm, seconded by Commissioner Gabel to approve the minutes as submitted. UPON A UNANIMOUS VOICE VOTE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED. CONSENT AGENDA: • Consider Claims & Expenses MOTION by Commissioner Meyer, seconded by Commissioner Schnabel, to approve the consent agenda. UPON A UNANIMOUS VOICE VOTE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED. ACTION: • Consider the Gateway West Requests for Proposals (RFP) n HOUSING AND REDEVELOPMENT AUTHORITY MEETING — AUGUST 4, 2005 Page 2 of 7 � Mr. Bolin reported the Gateway West RFP's were due on July 22, but only one proposal was received from Family Lifestyle Development Cocporation. Staff is recommending the HRA reject this proposal as it lacks variety in home designs, the proposed homes do not fit with the existing homes and the developer is not willing to pay anywhere near the $50,000 per lot minimum. Staff also recommends that the HRA give them the abi1ity seek out developers that can build exactly what the HRA would like to see in that area. Since the RFP deadline passed, two different builders contacted staff to express an interest in this project. MOTION by Commissioner Gabel, seconded by Commissioner Meyer, to reject the proposal from Lifestyle Development Corporation. Commissioner Meyer questioned if the HRA should consider reducing the $50,000 per lot figure or the square footage requirements. Mr. Bolin stated staff hoped that the $50,000 would be the minimum per lot to recover some of the costs of this project. Staff did not plat out the lots for this development, but left that for the developer's discretion. There is a 60 foot wide lot minimum in that area so the size of the home is limited by the setback requirements on that lot width. There are no maximum or minimum square footage requirements for the homes. Commissioner Schnabel questioned of zero lot lines is a possibility for this project. � Mr. Bolin explained that zero lot lines are typically used in a town home setting. He believed that a good sized home can be built on a 60 foot wide lot and still meet all the setback requirements. He added that the HRA's goal has been to have homes built that add value yet aren't so completely different from the existing housing in the neighborhood. Zero lot line homes would be a dramatic change. He further explained that he talked with the HRA counsel and was advised that the HRA is well within its rights to pursue other developers, now that the RFP deadline has passed. UPON A UNANIMOUS VOICE VOTE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED. • Approval to partner with Bancor Group Mr. Bolin stated the request for qualifications for the Islands of Peace Park brought responses from three good developers. At the HRA's joint meeting with the City Council on July 8, the three developers met with the HRA and Council. All three developers are capable of doing large developments. Staff has checked the references and viewed projects by each developer and recommends the Bancor Group. They offer the most flexibility in the type of housing products. All three developers have the financial ability, but Bancor Group has the patience to work on this type of project. Also the Bancor � Group received rave reviews in their ability to work with cities and make the City a part of the development team. Bancor will work with the City to determine if this is a project HOUSING AND REDEVELOPMENT AUTHORITY MEETING — AUGUST 4, 2005 Page 3 of 7 ^ the City even wanfs to pursue. Staff presented their recommendation to the Council at its July 25�' meeting and the� voted unanimously for the Bancor Group. Staff will be working with the H.RA caunsel to develop whatever agreements are necessary to form this partnership and take that next step in investigating the feasibility of doing this project. Commissioner Commers questioned what this agreement will cover. Mr. Bolin explained the content of the agreement will be determined over the next few weeks but the focus will be to have an exclusive agreement with the City / HRA to work with Bancor Group on investigating doing the Islands of Peace project. Ms. Cerney stated she and Jim Casserly, co-counsel, believe it would be a good idea for the HRA and Bancor to have an exclusive negotiations agreement. What that does is gets a developer on board to start assisting the HRA in assessing the market for different housing products, feasibility analysis and timing. What can be done in the agreement is include specific goals and progress that must be made by certain dates and if that's not happening, the parties can walk away. If progress is being made, then the HRA and Bancor can start working toward a redevelopment agreement including property acquisition. Commissioner Holm questioned if the HRA will be paying the Bancor Group for their �� initial efforts on the project. Mr. Bolin stated that with this initial agreement he would not anticipate the HRA would incur a cost. A benchmark can be established so that there are specific timeframes to decide whether or not to move forward with the project so the HRA has an "out". Commissioner Meyer questioned where the HRA would get the money to develop an area as large as the Islands of Peace. He believed that the HRA "has the cart before the horse" by pursuing a developer without the funds to proceed with such a project. Commissioner Commers commented it is his understanding that the purpose of the agreement with Bancor at this time is to determine the feasibility of this project and what kind of investment will be required. Commissioner Meyer asked what the approximate costs would be to purchase the buildings on the Islands of Peace site. Mr. Bolin responded there is a total of 13 properties the HRA would need to acquire at an estimated to be $11.5 million plus $1.4 million in relocation costs. Staff has had appraisals done of three different properties and have had lengthy discussions with the City's relocation expert and they believe their numbers are as accurate as they can be on the acquisition and relocation expenses. What is needed at this point is information n from a developer as to what they would build on this site and what the anticipated values will be in order to have a clear picture of the surplus or deficit. � HOUSING AND REDEVELOPMENT AtTTHORITY MEETING — AUGUST 4, 2005 Page 4 of 7 Commissioner Schnabel questioned what type of housing is being proposed for this site. Mr. Bolin responded that is not known at this point in time. In order to make the numbers close to breaking even, there will have to be some density on this site. If the City wants any assistance from the Metropolitan Council some units will have to be made more affordable than market rate and there may be a mix of some rental units as well. Bancor has done a number of such projects where high-end home ownership was mixed with rental components for a successful development. Commissioner Gabel commented that the HRA needs the assistance of Bancor to determine whether or not to move forward with this project and since there is no financial risk to the City she believed the HRA should accept staff's recommendation. Chairperson Commers stated there was a motion and a second to approve the stafPs recommendation to select Bancor Group and he called for a vote. UPON A FOUR TO ONE VOICE VOTE WITH COMMISSIONER MEYER VOTING NAY, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED. • Target Northern Operations Center � Mr. Bolin stated over the past few months there has been several discussions regarding Mark McCary's interest in the Target Operations Center. Mr. McCary believes this site is at least 100 parking stalls short of ineeting the needs of potential occupants for the vacant building. Mr. McCary was granted Council approval for smaller parking space widths and for the construction of a parking ramp. In 1984, Target and the City entered into development agreement. Target owns the land directly beneath the building but all the property around the building, including the parking lot, is known as Parcel B which is owned by the City. As a part of the development agreement, Target was required to make lease payments to the City for Parcel B in the amount of $15,000. The agreement also required Target to purchase the land in 2014 for $300,000. Rather than write a check to the HRA for $15,000 each year, Target purchased and had placed in the HRA's name a$135,000 Treasury Bond. which yields $15,000 per year. Initially Mr. McCary asked the HRA sell the parking lot to him now for $1.00 rather than 2014 for $300,000. Mr. McCary believed there was a need for such a discounted price, but over the past couple of weeks, staff and legal counsel has worked with Mr. McCary and all have agreed to the following: 1) Target will release any claims it has against the Treasury Bond, which Target has agreed to do. 2) That Target be released from the development agreement and Mr. McCary's group will then take over those obligations. ^ 3) The City & HRA will waive their right to construct a ramp on this site. HOUSING AND REDEVELOPMENT AUTHORITY MEETIl�TG — AUGUST 4, 2005 Page 5 of 7 4) The City & HRA wiil grant an access easement frorra 5�' Street. Currently there is a shared driveway for access to this site and the lower level municipal ramp. 5) Legal counsel recommended Mr. McCary purchase the property for the $300,000 figure as per the original agreement. (One change written into the agreement is giving the right to Mr. McCary to purchase the property prior to 2014 if he desires to do so.) Mr. Bolin stated legal counsel and staff have thoroughly reviewed the development agreement changes and the access agreement and recommend the HRA approve the resolutiorr that makes the changes in the second supplement to contract per private development and lease purchase agreement. Part of the second supplement includes the access easement agreement and the Council will take action on this as well. Chairperson Commers questioned if Mr. McCary wants to build the parking ramp prior to actually purchasing the property and what the tax consequences would be. Ms. Cerney responded that new buildings and improvements on the property would be similar to a fifteen year ground lease. Mr. McCary would own the improvements and the HRA would continue to own the land until such time as he purchases the property. The tax consequences would be that even though the property is owned by the HRA once it comes to private use the HRA would be required to make a payment in lieu of taxes and �'�'� it would go on the tax role as taxable property. If there is a concern, this can be negotiated, but in the current agreement as Target would have had the ability to construct the ramp. Mr. McCary commented that the agreement with Target identified a Parcel B3 which is the area deemed to be the location for the construction of an unlimited amount of structured parking to be constructed by either Target or the City or a combination of both. Chairperson Commers was concerned about the tax exposure for the City if the ramp is constructed but the property is not sold until 2014. Mr. McCary pointed out that condition exists now under the agreement with Target. Commissioner Schnabel pointed out that Section 4, Page 5, of the current agreement includes a statement regarding the ramp construction and that Target will assume full responsibility for the tax obligation. Mr. McCary stated he was not aware of that portion of the agreement. Chairperson Commers thought the HRA should approve the agreement presented by staff subject to getting some resolution to this issue. /"� HOUSING AND REDEVELOPMENT AUTHORITY MEETING — AUGUST 4, 2005 Page 6 of 7 !'� Ms. �erney agreed that there should be a determination as to the developer's time table for building the ramp, what the anticipated value of the ramp is and what the tax consequences would be. Mr. McCary stated he wauld be happy to work with the City to address this issue. Ms. Cerney stated for purposes of facilitating Mr. McCary's transaction it is important to know that the framework we have is acceptable-and the remaining piece can be ironed out. If a motion is made to approve and an agreement regarding the tax issue cannot be reached, this will have to be brought back to the HRA. MO_ TION by Commissioner Schnabel, seconded by Commissioner Gabel, to approve the second supplemented contract for Target Development and lease purchase. UPON A UNANIMOUS VOICE VOTE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED. • Resolution to adopt and approve modifications to redevelopment plan and existing TIF plans, creating TIF District #18. Mr. Bolin this resolution will allow staff to move forward with demolition of the properties and has become critical because of vandalism of the buildings. The Council set the �"`� public hearing on this item for their August 8 meeting with the second reading scheduled for August 22. State statute requires that the HRA adopt a resolution prior to City Council taking action. Chairperson Commers suggested staff prepare an analysis comparing project budgets and actual expenses. MOTION by Commissioner Gabel, seconded by Commissioner Holm, to approve the resolution modifying redevelopment plan for Redevelopment District No. 1 and adopting TIF plans for TIF District #18. UPON A UNANIMOUS VOICE VOTE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED. INFORMATION ITEMS: • Monthly Housing Report Mr. Bolin stated July was very good month for the housing program with 6 applications sent out and closings on five new loans. There are a total of 14 loans so far this year compared to 16 loans for the entire year of 2004. Currently there are three delinquent � loans in the amount of $2,700 for loans totaling just under $16,000 which is less than 2% of the total loans. The Remodeling Advisor completed finro appointments in July. HOUSING AND REDEVELOPMENT AUTHORITY MEETING — AUGUST 4, 2005 Page 7 of 7 � Mr. Bolin reported that the HRA had asked him to determine the value of the portion of the Columbia Park Clinic parking area that is owned by the City. The land is valued at $119,000 and with the improvements the value is $137,000. ADJOURNMENT: MOTION by Commissioner Holm, seconded by Commissioner Meyer, to adjourn. UPON A UNANIMOUS VOICE VOTE, CHAIRPERSON KUECHLE DECLARED THE MEETING ADJOURNED AT RespectFully submitted by, R.�-�� ���d���' Rebecca Brazys Recording Secretary n �� s o � CITY OF FRIDLEY SIGN-IN SHEET HOUSING & REDEVELOPMENT AUTHORITY MEETING �� ------------------------------ ------------------------------ Name and Address �� � ------------------------------------- ------------------------------------- Agenda Item of Interest