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HRA 11/03/2005 - 29598� CITY OF FRIDLEY HOUSING AND REDEVELOPMENT AUTHORITY COMMISSION NOVEMBER 3RD, 2005 CALL TO ORDER Chairperson Schnabel called the Housing and Redevelopment Authority meeting to order at 7:30 p.m. ROLL CALL Members Present: John Meyer Pat Gabel Virginia Schnabel William Holm Others Present: Paul Bolin, Assistant HRA Director Richard Pribyl, Finance Director / Treasurer APPROVE HRA COMMISSION MEETING MINUTES — October 6, 2005 APPROVE SPECIAL MEETING MINUTES - October 18 2005 MOTION by Commissioner Holm, seconded by Commissioner Gable, to approve the minutes as presented. Chairperson Schnabel asked if anyone had any corrections on the minutes from the October 6, 2005 meeting or October 18, 2005 meeting. �'"1 Commissioner Holm noted that on page six, under Mr. Bolin's first paragraph, second bullet point, the time should be changed from 5:00 a.m. to 5:00 p.m., and throughout both minutes (October 6 and October 18) to change Commissioner Burns to Mr. Bums. Chairperson Schnabel asked that on page 7, Mr. Bolin's first comment should say "Mr. Bolin stated" rather than "Mr. Bolin inquired", and on page 8, Commissioner Schnabel's comment should read "Commissioner Schnabel questioned if a buffer will be built for the existing houses so they would not see the parking /ot area." Commissioner Holm asked that on page 5 of the October 18th minutes, for Ms. Ann to be changed to Councilmember Bolkcom. MOTION by Commissioner Holm, seconded by Commissioner Gabel, to approve the minutes with the above mentioned conections. UPON UNANIMOUS VOICE VOTE, CHAIRPERSON SCHNABEL DECLARED THE MOTION CARRIED. CONSENT AGENDA: Consider Claims and Expenses MOTION by Commissioner Holm, seconded by Commissioner Gabel to approve the Consent Agenda. UPON UNANIMOUS VOICE VOTE, CHAIRPERSON SCHNABEL DECLARED THE MOTION CARRIED. ��, November 3rd 2005 � ACTION: Review and Approval of Draft Budget for 2006 Page 2 of 9 Mr. Pribyl, Finance Director for the City of Fridley, presented the budget and has asked for additional time to complete the budget packet due to a recent staffing change. He will be working closely with Mr. Bolin to develop the 2006 Budget. The County information and abstract of values are estimates at this time as they do not have the exact amount regarding the tax increment. The 2006 Budget was presented with estimates of expenses and balances. The final 2006 Budget will be available at the December HRA Meeting. Mr. Pribyl stated that the budget is divided into three separate categories, like the 2005 Budget. The General Fund covers the bulk of the administrative and overhead costs of the HRA. The two Special Project Funds include the revolving loan fund and an additional fund for other housing refated programs and services (CEE Programs such as Operation Insulation). The Capital Outlay Funds include all of the tax increment (TIF) districts. Summaries for each group and aggregate report were submitted. Mr. Pribyl reported that the estimated revenues of $3.9M budget for 2006. This is a$2.2M decrease or 35.8% less than 2005. The 2005 budget includes a one time expense of $700,000 for the Gateway West Project and $300,000 for the Housing Replacement Program. These numbers represent some of the key differences when comparing the 2006 Budget to the 2005 Budget. The tax levy increment was $22,135 or 14%. The projected total expense is $3.7M for 2006 which is $1.4M less or 28% decrease from 2005. The revenue reductions and revenue notes are based on tax increments which are not verified to date. We should have updated information shortly. Mr. Pribyl said the 2006 budget consists of a capital outlay of $1,125,231 expenses, $1,857,429 transfer to the City for Debt Services, $261,471 for Personal Services, $226,688 in Other Services and Charges, �, $675 for Supplies totaling $3,798,923. The significant parts related to capital outlays include Medtronic $410,206, Gateway West $500,000, Shamrock $121,000 and Linn Development for $16,000. Mr. Pribyl reported that the 2006 Budget issues include the Medtronic project values from 2007 and beyond. Our cash position is looking good but we need to carefully look at future redevelopment projects. Future debt obligations need to be paid and if we have sufficient increments we will see if we need to reserve anything out of the General Fund. The TIF Districts 1-3 will expire during the time of 2007-2009. The debt service obligation will continue through 2012 and we have $3M reserved in the General Fund which should support our debt services. Mr. Pribyl concluded that looking ahead to 2006 and beyond, we need to monitor HRA resources, evaluate the future redevelopment opportunities and whenever possible try to leverage the local resources with outside funds. We will have an updated budget to present before the HRA at the December meeting for your review. Commissioner Holm questioned the Gateway West project and the $700,000 sale revenue listed in 2005. There is no dollar amount in 2006 and the lots will be sold on a periodic bases, i.e. 2 lots per quarter, so a portion of the sale should go into 2006 at different times depending on the time frame that the lots are sold. Mr. Pribyl stated that part of the income will be reflected in 2006 with the remainder in 2007. Mr. Bolin and Mr. Pribyl will work out the numbers before the final budget is presented. Commissioner Gabel questioned if under all the funds, $174,000 administrative expenses, include the City administrative expenses and prorate the share of heat, lights etc. � Mr. Pribyl confirmed that it does include support staff and utilities. Commissioner Gabel asked for clarification if we can transfer funds from one District to another. Mr. Pribyl stated that they use all three Districts (1,2 and 3) together. November 3rd 2005 Page 3 of 9 �.,\ Commissioner Gabel questioned on the last page, if we used $25,000 transfer out of the operating budget to pay for professional services. Mr. Pribyl stated that the transfer was for the Island of Peace project and should not be in the budget. The island of Peace project is now set up on its own budget to track expenses. We wili isolate those funds to capture them in the future when it becomes a tax increment district. In the beginning of the project, the costs are in the General Fund but once we incur some expenses, we create a new fund to track expenses. The funds were transferred from the General Fund into the Island of Peace as a temporary loan to pay for expenses. We may bring back a resolution with the "Intent to Reimburse" from future tax increment. Commissioner Meyer questioned if they foresaw any future problems, any short or long term issues that should be brought to our attention. Mr. Pribyl responded that we are beginning to look better than they had thought a few years ago. We have sufficient income to not use the General Funds at this time for debt. We just need to look at projects on the horizon and how we will finance those new projects. We have done a good job at protecting our current resources. Chairperson Schnabel questioned the services contracted that are non professional. These funds have fallen from 2004 to 2006. What did the services consist of and why did they drop so dramatically. Mr. Pribyl responded that most of those services were contracted for the Gateway West project and they do not foresee needing those funds for 2006. Mr. Bolin confirmed that the charges were for the Gateway West project and the charges were for mowing the area and boarding up the buildings on the property. They did not think these expenses will �'"'� apply to the 2006 budget. Chairperson Schnabel questioned the $500,000 deficit in the General Fund under other financial resources Inter Fund loan. Mr. Pribyl responded that this represents movement of cash to Gateway West. The Inter Fund loan from the General Fund to Gateway West is reimbursed once we start receiving funds. Chairperson Schnabel also commented how she likes the budget vs. actual in the new budget. Mr. Pribyl responded that this is the same format they use for the City Budget. Terms Agreement with Blue Print Homes Mr. Bolin stated that back in September HRA approved Blue Print Homes to be the developer of the Gateway West project. The Terms Agreement was discussed on October 6th and October 18th. Changes were made to the Terms Agreement and we have discussed ways to address the structure of the land payment and the developer purchasing the lots. The developer agreed to the Terms Agreement in a non binding agreement but this is the basis upon which the binding development agreement will be drafted. Blue Print Homes attorney has agreed with this new Terms Agreement. Staff recommends the motion to approve and sign the development Terms Agreement, barring any major unfavorable changes to the agreement. This agreement, once signed, will serve as the foundation for the development agreement to be brought forward at the HRA's December meeting. �� Commissioner Holm questioned the vacation of the public right-of-way. He was not aware of this vacation and wanted to be sure this was correct. Mr. Bolin responded that the vacation would be a 6' strip of property, currently the front yard of an November 3rd 2005 ,—� existing home. It does not impact the boulevard or street. Page 4 of 9 Commissioner Gabel commented that the special meeting with Blue Print Homes on October 18th was very helpful to communicate directly with the developers. Everyone felt more confident and now they are very excited to see the development. She questioned if the environmental mediation is standard procedure. Mr. Bolin stated that the liability language is standard language and they do not anticipate any problems on the site. They did find some minor solvents on the property, but this has been cleaned up and pollution control has inspected and approved the property. Commissioner Gabel asked if there were any pending assessments. Mr. Bolin replied that there are no assessments pending at this time. Commissioner Meyer questioned how many dwelling properties would be in this area. Commissioner Gabel clarified that it was stated in the agreement on page three, 16 properties. Chairperson Schnabel agreed with Commissioner Gabel that the October 18�' meeting was very informative and everyone left feeling comfortable with 16 homes on the property. Commissioner Gabel stated that she was opposed to building 16 homes on the property prior to the October 18th meeting, but now believes that Blue Print Homes will do a terrific job at putting 16 homes in the area and will be satisfied with the outcome. Chairperson Schnabel agreed with Commissioner Gabel stating that Blue Print Homes was able to �� demonstrate how the lots will fit within the neighborhood. She was also not in favor of the 16 lots but after seeing the plat drawing and the variety of homes they have to offer, she was comfortable with the layout of the 16 lots. Commissioner Meyer was pleased that it was discussed to everyone's satisfaction and regrets not being able to attend the meeting. He has observed the 14 vs. 16 homes in the area and considered the prices people will pay for these homes and personally thinks this will be very hard to market. The Terms Agreement is very vague, with no square footage requirements etc. Chairperson Schnabel replied that with the new set back requirements, as long as the homeowner maintains 15' between the homes, they can build the home to their desired specifications. That is the only limitation and buyers usually build to the maximum capacity of the lot. Commissioner Meyer questioned the average square footage of the homes and if there are any minimum requirements or specifications for construction. Chairperson Schnabel responded that it depends on the home owner. They can build a finro story home or a rambler and the size may depend on their family needs, funds available, size of the lot etc. Mr. Bolin stated that the City Code minimum could be 1100 square feet. It is possible someone would build a minimum square foot home. We need to remember that Blue Print Homes offers quality construction and craftsmanship. It is this quality that will attract buyers to this area. A home listed for $289,000 qualifies for a first home buyer and the developer has done their homework to know there is a special financing program available to these first time home buyers. The average home will sell between $250,000 and $400,000 depending on the floor plan design and upgrades the buyer chooses. The smallest home is around 1200 square feet and many of the designs are between 1400 and 2000 square � feet. The interior finishes are driven by the purchaser of the home. This development is not similar to the Gateway East project where we specified the finishes in each unit. We can get more specific with the construction requirements but each buyer will have that listed in their spec sheet. November 3rd 2005 Page 5 of 9 ,...� Commissioner Meyer wanted to make sure that if the buyer expects first rate construction, that is what they will receive. A lot of times if specifications are not in writing, i.e. the construction specifications, the buyer doesn't know what they are getting for their money. He feels the agreement is too general and needs to be more specific. Questions arose such as: are we requiring sod, irrigation system, pave driveway etc. How is the buyer going to know what we are expecting them to build on these lots? Mr. Bolin responded that these are all custom homes. The buyer will build 2-3 models featuring different items in each home. We cannot dictate what a buyer must have in a custom home, but we can assure them top quality construction. Commissioner Meyer replied that he has been in this business for years and the buyer's only resource is in writing and many times the builder does not come through with their promises. Chairperson Schnabel stated that this development is like the early days of Fridley. We bought the land, the developer will put up models and the buyers will chose their custom home. We have not had large enough areas of land to do this type of project with individual homes and this is a unique opportunity. All of us came to the meeting on October 18�' opposed to the density if this development but left confident that this will enhance the neighborhood. This is quality construction and all are in agreement that in the end we will have a great development. Commissioner Meyer agreed that this will be good business, but he wants more details in the Terms Agreement. This property is made possible by the City and we are responsible to ensure the verbal agreement is fulfilled. Commissioner Gabel questioned if there was a way to have the minimum standard listed in the Terms Agreement and the buyer could upgrade if they so desire. � Commissioner Meyer mentioned that certain things could be done to the Terms Agreement such as window requirements; minimum electrical amps etc. to give protect the buyer. Commissioner Gabel suggested that Commissioner Meyer see a copy of the spec sheet before the next meeting and in the meantime we should approve this Terms Agreement. Chairperson Schnabel asked if a spec sheet could be included with the Terms Agreement. Mr. Bolin stated that we need flexibility in the Terms Agreement for some items, but the house will be built to code. If we put minimum requirements in the contract, the builder builds to those requirements. We have stated in the Terms Agreement that the builder will build comparable or better homes than that of developments in Hugo, Oak Grove and Blaine. Blue Print Homes has constructed homes of top quality in all of those developments. We can provide Commissioner Meyer with a typical spec sheet. Commissioner Meyer replied that it would be helpful to see a spec sheet. MOTION by Commissioner Gabel, seconded by Commissioner Holm to approve the Terms Agreement with Blue Print Homes. UPON UNANIMOUS VOICE VOTE, CHAIRPERSON SCHNABEL DECLARED THE MOTION CARRIED. • Approval of Contract for Administrative Support for 2006 Home and Garden Show Mr. Bolin stated that HRA is partnering with Blaine, Mounds View and New Brighten for the 8�' year in supporting the Home and Garden Show. The show will be held at the Schwan's Center in Blaine on ,� February 25�' from 10 a.m. — 2:00 p.m. Mr. Bolin reported that last year approximately1300 people attended the Home and Garden show and there are a number of administrative tasks that were contracted out with Marsha Wagner of Castle Visions. Marsha worked on mailing lists, lined up vendors and set up sponsors. Through her hard work November 3rd 2005 Page 6 of 9 ,� the show was well attended and she was able to find sponsors plus increase the revenue from booth rentals. The Home and Garden show is free to the public and the revenues are generated from the booth rentals. Our revenues exceeded all costs in the past years. Mr. Bolin said the Home and Garden Show planning group would like to contract Marsha Wagner for the 2006 Home and Garden Show. Marsha's rates are very reasonable and the show generates adequate revenue to cover the cost of contracting with Marsha. Staff recommends approval of the contract between the HRA and Marsha Wagner/Castle Visions to provide assistance with the 2006 Home and Garden Show. MOTION by Commissioner Meyer, seconded by Commissioner Gabel to approve the contract between the HRA and Marsha Wagner/Castle Visions to provide assistance with the 2006 Home and Garden Show. UPON UNANIMOUS VOICE VOTE, CHAIRPERSON SCHNABEL DECLARED THE MOTION CARRIED. • Approval of 2006 HRA Commission Meeting Dates Mr. Bolin suggested scheduling a July meeting date and having the option of canceling the meeting if there are no issues. With the Gateway West project under construction at that time, it would be better to have a meeting scheduled for July in case any issues arise. MOTION by Commissioner Gabel, seconded by Commissioner Holm to approve the 2006 HRA Commission Meeting Dates including a July meeting date. �` UPON UNANIMOUS VOICE VOTE, CHAIRPERSON SCHNABEL DECLARED THE MOTION CARRIED. • Approve Purchase Agreement for Sale of Properly at 6000 East River Road Mr. Bolin stated that in June, the HRA made an offer to purchase the home at 6000 East River Road. In July the property was appraised at $235,000. In August we authorized staff to offer to purchase the home for $235,000 plus any relocation fees. They will close on the home on March 1, 2006. Staff recommends HRA to accept and authorize the Vice Chairperson and Executive Director to sign the purchase agreement for $235,000 plus $4,900 relocation expenses. MOTION by Commissioner Holm, seconded by Commissioner Gabel to accept and authorize the Vice Chairperson and Executive Director to sign the purchase agreement for $235,000 plus $4,900 relocation expenses. UPON UNANIMOUS VOICE VOTE, CHAIRPERSON SCHNABEL DECLARED THE MOTION CARRIED. fT�I3�7:li�/_r�[�7�t���i�F? • Islands of Peace Update Mr. Bolin stated that Bancor Group has begun to explore a number pf potential site designs and potential layouts. They continue to examine different street configurations, park improvements, and potential housing products to make the project feasible. � Mr. Bolin stated that Bancor has asked for a joint HRA-Council meeting to be held to discuss some of their early configurations. They want to incorporate as much of HRA's vision and desires into the project, as is practicable, before heading too far down the road of site design and building type. November 3rd 2005 Page 7 of 9 A joint meeting has been set for Monday, November 14�' at 6:00 p.m. The meeting will be held in the lower level meeting rooms in City Hall. A dinner will be served. Commissioner Meyer stated that we have discussed some options and questioned if there would be more rental or owner property. Mr. Bolin responded that currently there are a number of different ideas to be presented. Each person has their own ideas and they would like to hear HRA Councils feedback. Bancor wants to work together with the HRA and discuss what is feasible and what will sell. Commissioner Meyer questioned if we have given Bancor any direction. Mr. Bolin responded that staff has not given any direction. Currently there are 144 rental units in the area and funds may be available to offset costs to offer some affordable units. Currently there is no final plan in the works. Commissioner Meyer shared concerns that a developer could put on new siding, paint and walkway and claim that it is a new building. Is the redevelopment that simple of an idea? Mr. Bolin replied that they have not discussed this in detail as a group. The developer has tried to save an apartment building and build new units between the existing units. A similar situation occurred in St. Paul where they took existing apartment buildings; completely improved the building and they look like new condos. A person would have no idea what the building looked like prior to the reconstruction. All of these issues can be discussed at the joint meeting. • Monthly Housing Report Mr. Bolin reported that in October they were very busy with 38 new applications. Fridley revolving loan � applications are at 47 total for the year which includes other programs. Last year we had 16 loans all year and this year we have 19 year to date. Two years ago we only had four loans total so this program has really grown. When people get their gas bills this winter, we may see more loan applications. Currently there is no income limit to qualify for a loan and the interest rate is 5'/4% for all who qualify. The Fridley HRA Funding sources is $329,062, MHFA is $15,677 and CEE $174,187 for a total of $362,157 new investment in this past year. The loan summary report end principal balance is $969,681. There are 80 loans in the portfolio and a servicing fee of $509. We took in $13,000 in payments with finro delinquent loans totaling less than 1%. The Operation Insulation Program is not doing as well as we had anticipated. We had a goal of 50 appointments and to date we are at 14°/a of our goal or 7 appointments. High energy bills this winter may increase the numbers. On November 9�', the Center for Energy and Environment will put on a program at Coon Rapids City Hall from 5-8 p.m. We have been advertising this on local cable shows and all Fridley residents should have received an invitation. This may also alert residents of the various loan programs we have to offer. ADJOURNMENT: MOTION by Commissioner Gabel, seconded by Commissioner Holm to adjoum meeting. UPON A UNANIMOUS VOICE VOTE, CHAIRPERSON COMMERS DECLARED THE MEETING ADJOURNED AT 9:08 P.M. RespectFully Submitted by, ,� �G����,-� � _ Krista Monsrud Recording Secretary � b ,� CITY OF FRIDLEY SIGN-IN SHEET HOUSING & REDEVELOPMENT AUTHORITY MEETING —�����:� 1�e� ��� � �C�.S ------------------------------------------------------------- ------------------------------------------------------------- Name and Address �"\ '"� Agenda Item of Interest