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HRA 10/07/2010 - 29813CITY OF FRIDLEY HOUSING AND REDEVELOPMENT AUTHORITY COMMISSION OCTOBER 7, 2010 CALL TO ORDER: Chairperson Commers called the HRA Meeting to order at 7:02 p.m. ROLL CALL: MEMBERS PRESENT: William Holm Pat Gabel Larry Commers Stephen Eggert John Meyer NONMEMBERS PRESENT: Paul Bolin, HRA Assistant Executive Director Greg Johnson, Development Consultant Becky Kiernan, Accountant ACTION ITEMS: 1. Approval of Expenditures MOTION by Commissioner Holm to approve the expenditures as presented. Seconded by Commissioner Gabel. Commissioner Holm asked if the cost associated with 5825 2'/z street and Fairmont was for the purchase of acquiring the property. Paul Bolin, HRA Assistant Executive Director, said that is correct, that was the purchase price. Commissioner Holm said that there will be additional costs for the demolition of the home. Mr. Bolin said that is correct. UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY 2. Approval of September 9, 2010 Meeting Minutes MOTION by Commissioner Holm to approve the minutes as presented. Seconded by Commissioner Eggert. Commissioner Gabel asked on the top of page three to identify the house as Mississippi Project or House on Mississippi Street. UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY AND THE MINUTES APPROVED AS AMENDED 3. Purchase Agreement for 6061 University Avenue Paul Bolin, HRA Assistant Executive Director, said that the HRA entered into property purchase negotiations with Mr. Kim, owner of the Tae Kwan Do gym in early 2007. Past negotiations failed to result in a binding agreement. Mr. Kim has now purchased another property in Blaine and also plans to lease additional space in Fridley. Mr. Kim has presented a signed purchase agreement to the HRA for the terms most recently discussed this past spring. Staff recommends the HRA approve the purchase agreement in the amount of $375,000. ($310K for building and land, $SOK for business reestablishment, and $15K in moving expenses.) Commissioner Gabel asked how the taxes would be paid on this property. Mr. Bolin said that the taxes would be prorated at the time of the sale. Once HRA owns the property, HRA would be responsible for taxes. Chairperson Commers asked if the purchase agreement would have a specific date beyond which he cannot remain on the property. Mr. Bolin said that in the lease agreement the date is listed as February 28, 2011. If Mr. Kim stays beyond that date he will be charged $179 per day until he is out of the building. Chairperson Commers asked if the building needed to be demolished. Mr. Bolin answered yes, the reason the city would like Mr. Kim to vacate the property is so the city can complete the hazardous materials assessment and demolish the building. It would be economical to demolish the Select Products and Sikh Society building at the same time. It would also be advantageous to have the buildings demolished before the road restrictions take place. Chairperson Commers asked staff to put together a time table so HRA can see the process, what will take place and when. Commissioner Gabel asked if the abatement is standard procedure. Mr. Bolin said this was done last year on another lease back property, this has been done before and is a standard procedure that is in place. Commissioner Eggert asked if there were any concerns about the hold over and if the $179 per day is a fixed charge. Mr. Bolin said that fee would be charged until Mr. Kim vacates the premises. Commissioner Eggert asked how long Mr. Kim could stay on the premises. Chairperson Commers suggested staff putting an out date on the agreement. Mr. Bolin said this information is spelled out on section 16. It states that the city can do whatever it takes by law to move Mr. Kim off the property; any time after February 28, 2011. MOTION by Commissioner Gabel to approve the Purchase Agreement for 6061 University Avenue. Seconded by Commissioner Eggert. UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY INFORMATIONAL ITEMS: L Housing Replacement program TIF district financial overview Paul Bolin, HRA Executive Assistant Director, said that the Statute requires a formal process for the reauthorized program. This was originally established in 1995; Phase II — 1997, Phase III — 2001, Phase IV — 2004 and Phase V— will allow the streamlined addition of up to 78 parcels. Mr. Bolin said that inclusion of detailed financial assumptions allow the Authority to add parcels meeting criteria at any time. HRA will hold a hearing on December 2"d, Council will hold a hearing and take action on December 13th. Greg Johnson will provide an overview of financial assumptions. Greg Johnson, Development Consultant, reviewed numbers in the packet that was distributed to the Authority. Section 1C Assumptions: The tax increment is for a1178 new parcels. The amounts are based on the value of the land which the assessed value average is about $50,000. These numbers are assuming the homes will be tear down houses with the land being sold to a developer. The value of the new home is assumed at $200,000. The average value of the city houses are $175,000 right now but these will be new houses. Those numbers are how the $3 .9M was reached and the new market value of $15.6M The estimated tax increment is $105,000 annually. Each parcel can be in a TIF district for 16 years. Chairperson Commers asked about the reduction in the city aid where the city loses some funds under this program. Mr. Johnson said that could come out of the city budget but that would be gone whether the project is in the TIF district or not. Chairperson Commers said he thought the city was reimbursing some of the cost of lost revenue to the city, he asked for staff to look into that and see what effect it would have on this program. Mr. Johnson said that the total budget for the HRA would be $10,085,881, including administrative fees. This program requires a local match that could come out of the revolving loan program. HRA will always be getting approval on purchases etc. and this budget reflects the worst case scenario. Mr. Bolin said that at some point there may be a swing in the market and these numbers are based on what the market is today. Commissioner Eggert asked about the assessed value of the land, if that is the number that is used and the structure is always valued at zero. Mr. Johnson answered yes, the law states the value is the assessed land value. Chairperson Commers asked if each phase would be approved separately. Mr. Johnson said that it would be easier to approve each purchase that is made. Mr. Bolin said that there will be a resolution for HRA to add additional parcels. Commissioner Meyer asked how the number of 78 parcels came about. Chairperson Commers said that the 78 parcels is remaining on the new legislation of 100 units. HRA has already done 22 over the years so there are now 78 left. Commissioner Meyer asked if these were just numbers or if actual parcels have been acquired. Chairperson Commers said that only two more were added, none of the properties are identified right now. Commissioner Holm noted that when you look at all the numbers and local contribution, potential transfers in etc., it implies HRA may spend $4.SM and are improving the housing stock, adding to tax value, the city and school districts. The money will be coming out of HRA and HRA will not recover all of the expenses. Mr. Johnson confirmed that is correct, HRA will not be recovering what they will be putting in. Commissioner Holm said that overtime the city will be collecting funds through property taxes so it will be putting an investment to good use for the city. Mr. Johnson agreed these are community investment dollars. 2. Home remodeling demonstration program Paul Bolin, HRA Executive Assistant Director, said that the demonstration home at 831 Mississippi Street had two showings in the past month. The lack of traffic seems to be on par with other for sale homes in the north metro. Staff have been looking at potential remodels and they have found a one level living home. If an offer is made and accepted, staff will share more at the ne�t meeting. The split level homes are more difficult to find. 3. Housing Loan Program Update Paul Bolin, HRA Assistant Executive Director, said that in September two RLF loans were closed and one Deferred loan was closed. Year to date there are a total of five RLF loans, two Deferred loans and six other loans for a total of 13 loans year to date. The remodel advisor had four visits in September and a total of 12 year to date NONAGENDA ITEMS: Northstar Staff has received some encouraging news from Metro Transit. They are looking to start a new bus route connecting Fridley employers with the train. Metro Transit is applying for a Federal Jobs Access Reverse Commute (JARC) grant. The proposed route would meet each weekday train and provide service to Medtronic, Cummins, Unity and other employers located along the proposed route. Commissioner Meyer asked if the proposed busses would be free that meet the trains. Mr. Bolin said he was not sure. Most people will have a transfer slip from the rail to the final destination so they would have already paid. Waters of Fridley Should break ground before the end of the year. Faulkner Development Footings were being poured this afternoon and we should see walls being erected within the ne�t two weeks. Mowing Contract Chairperson Commers commented that the city charges were pretty high. Mr. Bolin said that he thought the same and noted that the current contractor is still lower than the city estimate. Columbia Arena Staff inet with Mr. Fogerty this week and Mr. Fogerty is looking at reusing the Columbia Arena buildings and converting them into 83 units of senior living. The final application will be submitted to the city tomorrow. Commissioner Meyers said that may be quite a challenge. Commissioner Eggert said that this is the future and a very "green" approach by reconstructing existing buildings. Commissioner Holm said that the site has more potential than just the use of the existing building. ADJOURNMENT: MOTION by Commissioner Gabel to adjourn. Seconded by Commissioner Eggert. UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY AND THE MEETING ADJOURNED AT 8:30 P.M. Respectfully Submitted, Krista Monsrud, Recording Secretary