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HRA 02/02/2006 - 29600� CITY OF FRIDLEY HOUSING AND REDEVELOPMENT AUTHORITY COMMISSION February 2, 2006 CALL TO ORDER Chairperson Commers called the Housing and Redevelopment Authority meeting to order at 7:30 p.m. ROLL CALL Members Present: Larry Commers Virginia Schnabel William Holm John Meyer Others Present: Paul Bolin, Assistant Executive HRA Director Richard Pribyl, Finance Director / Treasurer Gay Cerney, HRA Attorney Mike Jezorski, HRA Accountant Scott Hickok, Community Development Director Sam Newberg, Dahlgren, Shardlow & Uban APPROVE PLANNING COMMISSION MEETING MINUTES - December 1, 2005 MOTION by Commissioner Holm, seconded by Commissioner Schnabel, to approve the minutes � as presented. UPON A UNANIMOUS VOICE VOTE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED. CONSENT AGENDA: • Consider Claims and Expenses MOTION by Commissioner Meyer, seconded by Commissioner Holm, to approve the consent agenda. ' UPON UNANIMOUS VOICE VOTE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED. ACTION: • Review and Approval of Budget for 2006 Mr. Pribyl, Finance Director/Treasurer, presented the HRA budget for 2006. The budget was reviewed at the December meeting but the tax increment numbers were missing. The value information previously missing from the County is now incorporated into the 2006 budget for your review. The budget is broken up into three categories: General Fund, Housing Fund and Capital Fund. Mr. Pribyl reviewed the proposed budget consisting of estimated revenue of $4.5 million. This is a decrease from 2005 by $1.1 million (19%). The major changes from 2005 include a decrease � of $500,000 in both the sale of TIF funds and the tax increment revenue from Gateway West. The HRA tax levy is increased $22,135 (14%) from 2005. The total expenses for 2006 are $3.7 million which is a decrease of $1.0 million (21 %) from 2005. The decrease is related to limited HRA Commission Feb. 2, 2006 �,.� revenue notes for 2006. Mr. Pribyl summarized the budget as follows: Capital Outlay 1,235,305 Debt Services 1,905,394 Personal Services 261,471 Other Services 268,888 Supplies 675 Total 3,371,735 Capital Outlay Funds Medtronic 571,408 Gateway West 500,000 Island of Peace 235,000 Linn Development 16,000 Debt Services N. TIF #3 336,422 N. TIF #2 1,481,543 Page 2 of 7 Commissioner Commers questioned what will be purchased in 2006 for the Islands of Peace Project. Mr. Bolin replied that is the expense of the residential home that was purchased in 2005 and will not close until 2/15/2006. Mr. Pribyl stated that 99% of the budget plan is unchanged from prior documents so most of the r"'1 items have been discussed. Commissioner Holm asked for explanation of the parking facilities in the capital outlay in the amount of $410,000. Mr. Pribyl answered that those charges are related to Medtronic. Commissioner Commers commented that all funds look in very good shape. Mr. Pribyl stated that the initial thought was that HRA would need to take funds from the general fund to repay the bond issue but there are significant funds to make the payments. Commissioner Commers commented that the reserve funds may not be needed for 2006. Mr. Pribyl answered that is a possibility. Commissioner Schnabel questioned the capital funds and budget balance, and for an explanation of the difference from 2004 to 2006. Mr. Pribyl stated that he would need to go through each district to show the growth areas and increments that have evolved. He can do an analysis by district before the final report is delivered. MOTION by Commissioner Schnabel, seconded by Commissioner Holm, to approve the 2006 HRA Budget as submitted. �,..1 UPON UNANIMOUS VOICE VOTE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED. HRA Commission Feb. 2, 2006 �,..� • ADDITION - Resolution to Amend Tax Increment Pledge Agreement Page 3 of 7 Mr. Pribyl stated that staff is asking for a resolution to amend the pledge agreement regarding the 2005 B-Bonds. In review of the current agreement, tax increment #6 is included and should not have been included. This resolution will remove tax increment #6 from the current pledge agreement. This has been reviewed and the information is correct and it was an inadvertent inclusion that was discovered and asked to be removed. This item will be brought before the City Council on February 13, 2006. MOTION by Commissioner Schnabel, seconded by Commissioner Meyer to amend the tax increment pledge agreement and remove Dist. #6 (Lakepoint) from the pledge agreement. • Review & Approve Development Agreement with Blue Print Homes Mr. Bolin, Assistant Executive HRA Director, reviewed back in late November HRA legal counsel drafted up a development agreement with Blue Print Homes. Discussions with the attomey for Blue Print Homes, and a review of the prevailing wage ordinance, legal counsel has drafted a development agreement for review. Staff had a discussion with Blue Print Homes and they (Blue Print Homes) stated their only concem with the development agreement had been the prevailing wage requirements. Staff recommends that HRA review and approves the development agreement as presented. If any further objections arise, staff will bring the document back for amendment on March 2, 2006. Commissioner Commers questioned if the City Council was in agreement with the language in the development agreement and if the prevailing wage was included in the Gateway East Project. Commissioner Meyers thought that the prevailing wage should apply to the Gateway West ^ project. Mr. Bolin stated that there is a memo enclosed from the City Manager, William Burns, regarding the prevailing wage issue. Prior to the current ordinance adopted in 1995, the prevailing wage did not have the same wording regarding exemptions. The ordinance that was passed was more specific to the type of project such as Gateway West and the prevailing wage does not relate to owner occupied developments. Ms. Cerney, HRA Attorney, stated that the development agreement for Gateway West was created from a draft of the Gateway East project and that is how the prevailing wage clause was added to the development agreement. Commissioner Meyers stated that he is disappointed that the developer is going to build $300,000 homes and cannot afford to pay prevailing wages. He wanted to make sure Council does not want to take another action for Gateway West. Mr. Bolin stated that according to the memo, the Council does not expect to require prevailing wage be paid for this project. Commissioner Commers stated that the prevailing wages are exempt for small projects such as Gateway West so HRA could not require prevailing wages in this project. Commissioner Meyers questioned when HRA would see actual construction plans and specifications. Mr. Bolin stated that the plans will be reviewed on a house by house basis. These homes are ,�.� custom built homes and the specifications are up to each buyer. The homes will need to meet all city codes and be in character with the type of homes we are looking to see in this development. HRA Commission Feb. 2, 2006 Page 4 of 7 � Ms. Cerney stated that the homeowner will not be able to start construction until the plan is signed by HRA. Page 13 of the contract, section 4.3, paragraph A and B should answer any questions regarding preliminary and construction plans. MOTION by Commissioner Holm, seconded by Commissioner Schnabel to approve the Development Agreement with Blue Print Homes UPON UNANIMOUS VOICE VOTE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED. • Termination of McGlynn/Lofthouse Revenue Note Mr. Pribyl reviewed that on March 23, 2004; HRA consented to the assignment by McGlynn Bakeries, LLC of the Contract for Private Redevelopment with the HRA dated as of January 9, 1992 and the transfer of the Redevelopment Property to Sparky Acquisition Corporation. The assignee's name has since been changed to Lofthouse Bakery Products. The contract required McGlynn, and now Lofthouse as its assignee, to submit to the HRA on or before August 1, of each year, verification of employment of 200 full time employees at the Redevelopment Project. This verification was to be prepared by a certified public accountant. This requirement remains in effect until the earliest of February 1, 2009, full payment of the Note or termination of the Contract. Lofthouse failed to submit the required employment verification reports to the HRA which were due on August 1, 2004 and August 1, 2005. Failure to file the reports for two successive years entitles the HRA to terminate the Contract pursuant. Staff recommends HRA make a motion to terminate the contract with Lofthouse Bakery Products. Commissioner Commers questioned if this was a significant payment for the HRA. ^ Ms. Cerney stated that the note payment schedule is not available but was approximately $39,000 per year. Mr. Pribyl noted that not all of the payment was due to HRA and some expenses were for reimbursement for tax increment so HRA does not receive 100% of the payment. Commissioner Holm questioned if HRA would get less revenue because of no more tax increment from Lofthouse. Mr. Pribyl stated that the income would be less but there is no obligation and HRA would still get the tax increment. MOTION by Commissioner Holm, seconded by Commissioner Schnabel to terminate the contract with Lofthouse Bakery Products. UPON UNANIMOUS VOICE VOTE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED. INFORMATION ITEMS • Islands of Peace Update Mr. Newberg, of Dahlgren, Shardlow, 8� Uban, presented an independent analysis on the marketability of the Islands of Peace site for different rypes of housing. The research indicated that the Islands of Peace would not be a desirable location for construction of upper-end, multi- story condominiums. His research indicated that a mix of town homes and condominiums priced � beiween $175,000 and $250,000 would be the most marketable on the site. Mr. Newberg stated that the area around the site is close to 694, East River Road, Elementary HRA Commission Feb. 2, 2006 Page 5 of 7 i--1 School, Apartments etc. but the neighborhood is confined and disconnected from the city. The site is average compared to the competition. When looking at a possible site, the developer will rank the site on things beyond their control but also loot at the potential to improve the site. The commuter rail is an amenity and would elevate the rank of the site. The surrounding employment and shopping areas are not substantial items to make the site more valuable. This particular site is average but could be improved. Mr. Newberg reviewed the demographics and with the dramatic increases in the number of echo boomer and baby boomer households, both play a role in demand for condominium development. With regard to the subject site, both groups will likely be attracted to condos developed there, although the target market may tend slightly toward buyers over 45 years of age. A wide variety of household types, including empty nesters, professional singles and couples, divorcees, and longtime area residents could be attracted to the site. Mr. Newberg stated that currently there are a lot of town home and condominium projects in the area. Because of this, they do not recommend rushing units to the market. There is likely to be substantial competition for the next couple years so it may be wise to wait a year or two before finalizing a concept and phasing plan. Several charts of current and future construction were shared along with pre-sold and units for sale. Mr. Newberg concluded that this is an average site, there is significant competition, they do not recommend hi-rise condo's, keep the price below $250,000, upgrade the current park and create a site plan that will take advantage of the commuter rail and parks. Commissioner Holm questioned the success in hi-rise condominiums in NE Minneapolis. Mr. Newberg stated that Minneapolis is successful because there are 160,000 jobs available � downtown Minneapolis. The culture, theatre, museums, restaurants etc. make that area very attractive to buyers. Fridley has a history of long time home owners and is also a price sensitive area. Currently the competition is great and if there are not enough sales the project will get delayed. Commissioner Holm commented on the Parkview development in Columbia Heights and that it looks like a potential large development. Mr. Newberg stated that the Parkview development is for 250 units and a second phase of town home / condominium has not started yet. Commissioner Meyers stated that he thought Mr. Newberg provided an excellent analysis. HRA and others thought a hi-rise would be desirable on this site with the views of the river etc. The key will be to find out how to draw people to the area and what would the "wow" factor be for the area. With the trees along the river, you must construct a building 4 stories or higher to take advantage of the view of the river. If this site does not support tall condominiums, then what is the "wow" factor? Commissioner Schnabel concurred that the report was wonderful and comprehensive but also discouraging. The report is saying not to do anything with this development yet because of what is currently on the market. Hopefully with the desirability of the commuter rail it will provide housing for people who want to use those services. Mr. Newberg stated that maybe there is a way to link the commuter rail and the development together to create interest in the area. The key is to provide affordable housing. A possibly could be to remove some of the current buildings and create new housing or another possibility is to � renovate the current buildings. People are looking for affordable housing and that would also create a draw to the area. HRA Commission Feb. 2, 2006 Page 6 of 7 � Commissioner Schnabel questioned what kind of people are looking for affordable housing. Mr. Newberg stated that both young and old persons desire affordable housing. The current median household income in Anoka County is $77,000. 60% of the median is the affordability level which would be $46,000 household income. This income would support a wide range of persons young and old that would fall into the category of people looking for affordable housing. Commissioner Commers agreed that the report was very helpful. It seems the location is average or below but could be brought up by addressing certain areas. With the competition and current units on the market, he would concur with the report to wait for current units on the market to sell down prior to building on this site. The idea of building affordable housing under $200,000 may something to look at as a place to start. Commissioner Meyers commented that the railroad tracks are not the most desirable or successful development to build on but if we could build attractive homes at a desirable price point, people could leam to live with the railroad tracks. There are success stories of developments built by railroad tracks if a barrier was built befinreen the tracks and homes. A hi- rise may exploit the "wow" factor drawing persons to the area. We need to keep in mind the Medtronic expansion and future employees may be looking for something such as a hi-rise. This may be something to explore more fully and consider. Commissioner Commers questioned who controls the Island of Peace decisions regarding the park. Mr. Bolin stated that the City owns the park. He also mentioned that the City Manager and Council would like to meet as a group again prior to the March 2 HRA meeting. They would like to see this presentation and discuss the possibilities for the Island of Peace area. A meeting was ^ set for 7:00 p.m. on March 2"d and the HRA will meet at 8:30 p.m. Commissioner Meyers added that we should be prepared to speak of the cost of a hi-rise more than four stories tall and if we could find a developer to take the risk because we would want to build high enough to see the river view. People at this meeting are going to want to hear factual commentary and we should be prepared to discuss the cost of building a hi-rise. • Monthly Housing Report Mr. Bolin stated that because there was no January meeting, he would report the numbers for 2005 entire year. 40 loans were issued for 2005 compared to 16 loans in 2004. This is due to a change in the marketing efforts. CE increased their direct mailings, loans are promoted during televised meetings on the bottom of the screen and the City Manager has been promoting them in the city news letter. HRA loaned out $455,000 for the year which was all used for single family home improvements. Improvements ranged from heating systems, new windows, roof, sidewalks and kitchen remodels. The monthly service report shows net funds received of $13,800. Cur�ently we have only .03% in delinquent payments so persons are doing well at paying their loans. Operation Insulation and Remodel did not do very well. This program is both surprising and disappointing. This program did not generate many calls, probably due to the mild winter. CE is working on direct mailing to promote these services and this service is free to home owners. Operation Insulation had a goal of 50 appointments and only held 13, Remodeling Advisor had a goal of 25 and actually held 36. This is a nice service for Fridley residents and hopefully 2006 will be more successful. OTHER ITEMS: � 2006 Home and Garden Show Mr. Bolin mentioned that the 2006 Home and Garden show will be held on Saturday February HRA Commission Feb. 2, 2006 Page 7 of 7 /"\ 25, 2006 from 9:00 a.m. - 2:00 p.m. It is at the Schwan's Event Center in Blaine. There will be 85 vendors attending and the event is sold out. Three workshops are available on Gardening Perennials, Garage Safety and Organization and Simple Ways to Lower Energy Costs. The workshops will be held at 10:30 and 12:30. Gateway North - East Eminent Domain - Met Council Grant Funds ADJOURNMENT: MOTION by Commissioner Schnabel, seconded by Commissioner Meyers, to adjoum meeting. UPON A UNANIMOUS VOICE VOTE, CHAIRPERSON COMMERS DECLARED THE MEETING ADJOURNED AT 9:20 P.M. RespectFully Submitted by, ��/��C�-� � Krista Monsn.�d Recording Secretary � � � � CITY OF FRIDLEY SIGN-IN SHEET HOUSING & REDEVELOPMENT AUTHORITY MEETING I ��� �, a �c��o --------------------------------------------------------------------------- --------------------------------------------------------------------------- Name and Address Agenda Item of Interest