HRA 12/01/2011 - 6553December 1, 2011
HRA Meeting
Regular Meeting Agenda
7.00 p.m.
Call to order
Roll call.
Action Items
1. Approval of expenditures
2. Approval of November 3, 2011 Meeting Minutes
3. Approval of 2012 Budget
4. Approve Fund Balance Policy
5. Approval of Resolution Committing Specific Revenue Sources in the Housing
Loan Special Revenue Fund
6. Approve Contract for Blight Analysis
Informational Items
1. Housing Replacement Program Update
2. Housing Loan Program Update
Adjournment
H:\— Paul's Documents\HRA\HRA Agenda Items\201 I \December 1, 2011\December -2011 Agenda Outline.docxW -- Paul's
Documents\HRA\HRA Agenda Items\2011\December 1, 2011\December -2011 Agenda Outline.docx
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CITY OF FRIDLEY
HOUSING AND REDEVELOPMENT AUTHORITY COMMISSION
November 3, 2011
CALL TO ORDER:
Chairperson Commers called the HRA Meeting to order at 7:05 p.m.
ROLL CALL:
MEMBERS PRESENT: Larry Commers
William Holm
Stephen Eggert
Pat Gabel
John Meyer
NONMEMBERS PRESENT: Paul Bolin, HRA Assistant Executive Director
Scott Hickok, Community Development Director
Becky Kiernan, Accountant
Jim Casserly, Development Consultant
William Burns, City Manager
ACTION ITEMS:
1. Approval of Expenditures
MOTION by Commissioner Holm to approve the expenditures as presented. Seconded by
Commissioner Gabel.
UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED
THE MOTION CARRIED UNANIMOUSLY
2. Approval of October 6, 2011 Meeting Minutes
Commissioner Gabel noted a correction for the last page: change Sandy Site to Sandy's
Restaurant.
MOTION by Commissioner Holm to approve the minutes as amended. Seconded by
Commissioner Eggert.
UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED
THE MOTION CARRIED UNANIMOUSLY
3. Award GWNE Broker Contract
Housing Redevelopment Authority Meeting of November 3, 2011 2
Paul Bolin, HRA Assistant Executive Director, said that for a number of months staff and the
Authority have discussed hiring a broker to help market the five acres of vacant land along
University Avenue in what we have been calling the Gateway Northeast area.
Mr. Bolin said that in September the Authority authorized staff to move forward with issuing a
request for qualifications to select a broker for these properties. Brokers were evaluated based
on their commercial experience in the area, their marketing methods, and their ability to work
with and attract different market segments to the Fridley area.
Mr. Bolin said that two very professional brokerage groups were interviewed and after doing
some follow up staff unanimously selected Premier Commercial Properties. Premier has
expertise in the local market, key contacts in various market segments; including medical offices
and senior housing. Premier also has a proven record as both a broker and as a development
partner; one of their more visible projects is the Fridley Medical Center on Osborne Road.
Mr. Bolin said that staff believes that Premier has the right combination of ability, experience
and contacts to bring a project to the Gateway Northeast Area and is recommending that the
Authority approve a motion awarding Premier a one year contract to broker the properties.
Mr. Bolin said that rather than a straight 6% commission on any land sold, the Authority will
pay fifty cents per square foot for any land transferred during the listing period. This would
allow the Authority more options in disposing of the property for example if the project of a
lifetime is proposed for the site, and the Authority must give the land to the developer for the
project to happen, the broker would be reimbursed for their time and efforts.
Mr. Bolin said that in order to address any potential conflicts with the fact that Premier is both a
Property Broker and at times a Developer, language has been added to the Dual Agency
Disclosure portion of the agreement. Specifically, no commission will be paid to Premier if they
have any ownership share in any development group that purchases land.
Mr. Bolin said that while this is a fairly short notice, we have discussed the listing of this
property for some time and the Authority formally authorized the Request For Qualification
process to select a broker back in September. If the Authority has major concerns that can't be
addressed tonight, we can always wait until December for approval. However, this document is
simply the mechanism needed to engage the broker selected from the thoroughly conducted
Request for Qualification selection process. Staff believes that Premier has the ability,
experience, and contacts to bring a project to GWNE.
Chairperson Commers noted that the developer has worked on several developments in
Fridley.
Housing Redevelopment Authority Meeting of November 3, 2011 3
Rodney Lee, Premier Commercial Properties, answered yes; the Fridley Medical Center is just
one of the property's they worked on, all other properties are featured in the brochure.
Chairperson Commers asked if Mr. Lee had any preliminary thoughts about developing this
parcel of land.
Mr. Lee said this site is difficult because the lots are so narrow which isn't ideal for retail
development, but there are different options to consider. He doesn't personally deal with
development in senior housing but does work with developers that do. Maybe a medical condo
would work with the light rail being so close; he has several ideas in mind. More people were
looking for space than what was available when they were building the Fridley Medical Center
so he may go back to those people to see if they are interested in space in this area.
Chairperson Commers asked if Jim Casserly looked at the listing agreement.
Jim Casserly, Development Consultant, answered yes; this agreement requires a good working
relationship because we don't have a set price. We need flexibility because we are not sure what
will go on that site. The broker has to assume that we will respond positively to good projects.
That is why the arrangement written this way. We think that paying a brokerage fee based on 50
cents per square foot on any property that is closed is a reasonable arrangement.
Commissioner Meyer asked if medical facilities were tax exempt.
Mr. Lee replied that medical facilities pay full real estate taxes. Fridley Medical Center pays
full taxes; almost $500,000 per year.
Commissioner Eggert asked for Mr. Lee to define what role he played in the developments;
broker or developer.
Mr. Lee replied that he was the broker of the volleyball courts and on other projects he played
both broker and developer or co- developer. He doesn't see himself as the developer on this site
unless a situation would arise. They have relationships with other developers who would have
interest in working in this area and it may be split between two or even three developers. The
site is long and narrow with areas that are not continuous.
Commissioner Eggert asked if a client wanted to do something without development ability if
Mr. Lee would develop for them.
Mr. Lee answered yes. When they look at a project like this, they have ideas; staff has ideas and
quite often they will get a call from someone they didn't think of that will offer a nice fit. You
don't know until you go out there to market the property who will come forward. They have
very strong marketing experience.
Commissioner Holm asked what happens if a plan is presented that the Authority doesn't like.
Mr. Lee said they don't pay.
Housing Redevelopment Authority Meeting of November 3, 2011 4
Mr. Casserly said that is why we have to consent to whatever the sale is and there needs to be a
good working relationship.
Mr. Lee said that as brokers, if someone has a concept they have to bring it to the Authority for
approval.
Commissioner Gabel asked for confirmation that they don't expect to find one developer to
develop the entire site. She was concerned about continuity and the flow of the buildings if there
was more than one developer.
Mr. Lee did not know. Because of the layout of this area with streets breaking up the area, it
will be hard to lay out a single development. If the area were five acres in one chunk, one piece
of property that would be much easier. This is 135 feet wide and very long; it will be hard to
have one developer figure out what to do with the space. If we go with a medical condo and all
of a sudden we have a developer who would do it all; that would be wonderful. But you may
have senior housing, medical condos and one other user, we just don't know.
Commissioner Gabel wants to make sure there is continuity if there is more than one developer.
MOTION by Commissioner Gabel to Award the GWNE Broker Contract. Seconded by
Commissioner Holm.
Commissioner Holm asked for confirmation that this is a one year agreement.
Chairperson Commers replied yes.
UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED
THE MOTION CARRIED UNANIMOUSLY
4. Approve Exclusive Development Agreement with Real Estate Recycling
Paul Bolin, HRA Assistant Executive Director, said that Real Estate Recycling is a
redevelopment group led by Paul Hyde and specializing in heavily polluted sites is currently
working to secure ownership of the 135 acres located at 4800 East River Road, currently the
home of BAE, Industries.
Mr. Bolin said that Mr. Hyde has approached the Authority to discuss the potential for
assistance with the clean up and future redevelopment of the BAE site. Tonight, Mr. Hyde is
simply seeking an interim agreement to discuss redevelopment of the site with the Authority.
Mr. Bolin said that the purpose of the Interim agreement is quite simple. The agreement states
that as Mr. Hyde works to secure the property, develop concept plans, and complete his due
diligence; the Authority will not allow other developers to take Mr. Hyde's work and ask us for
Housing Redevelopment Authority Meeting of November 3, 2011 5
assistance on the same site. The agreement also says the HRA will consider providing some
assistance if the project turns out to be feasible.
Mr. Bolin said the Interim agreement is just that, temporary and preliminary and does not
obligate the Authority to provide any assistance to a future redevelopment project. The Interim
agreement allows Mr. Hyde and the Authority to explore all of the potential costs and benefits to
doing a redevelopment project on this site.
Mr. Bolin said that there are a number of key steps that need to happen in a very short timeframe
to keep the Interim agreement in place. Deadlines are spelled out for completing a blight
analysis, a concept plan for design and phasing of the redevelopment and financial feasibility
analysis.
Mr. Bolin said that based-on the schedule, the Authority will really know sometime between
February and April if it is worthwhile to pursue a project with Mr. Hyde on this site. It will not
be until all of this analysis is complete that the Authority will need to make a decision on
whether or not to actually provide any assistance to Mr. Hyde. In the Interim, the agreement
requires Real Estate Recycling to pay for all studies and 50% of our development counsels time,
if and when the $7,500 retainer we have already received is exhausted.
Mr. Bolin said that the Authority has very little financial exposure entering into an Interim
agreement with Real Estate Recycling. T he Authority will know within a matter of three to five
months if it is feasible to pursue a long term redevelopment agreement with Real Estate
Recycling. For these reasons, Staff recommends the Authority adopt the resolution that approves
the Interim agreement. The agreement will provide Real Estate Recycling the confidence they
need to move forward in their purchase negotiations.
Paul Hyde, Real Estate Recycling, said he is excited to work on this significant important
project in Fridley. Great progress has been made so far and they are ready to sign the purchase
agreement for this site.
Chairperson Commers said that this is a new agreement that was received tonight as some
changes were made on page one in response to some concerns that were raised.
Jim Casserly, Development Consultant, said that we wanted to make sure there was no
opportunity for the Authority to be responsible for any relocation expenses; that is the principal
reason for that change. On page three there are some language changes. We don't know if there
will be other costs associated with the project or requirements for studies of any kind. We don't
want to have that exposure if the project doesn't proceed. We are trying to make language read
if studies are needed Real Estate Recycling would be responsible for those charges. The blight
analysis should not exceed the amount that is in the contract. This is a complicated project; a lot
of things need to be done. We need to figure out if the parcel will qualify for a development in a
tax inclement district; we need to refine the analysis. Real Estate Recycling needs to figure out
Housing Redevelopment Authority Meeting of November 3, 2011 6
how to phase this project; this is a long term multi -year phased in project. This agreement
focuses us on what needs to be started in order to go forward with other decisions. It will take a
few months to sort all the issues out and we have provided the framework to do that.
Commissioner Holm said that he read the agreement and thought it does a good job at
protecting both parties. A lot of work needs to be done to see if this project is feasible. This is a
one year agreement with 4 -5 deadlines before spring. These deadlines may or may not be
achieved. He asked what happens if the deadlines are not met.
Mr. Casserly answered that if there were reasons the deadlines cannot be achieved Real Estate
Recycling would be before the Authority letting them know why they can't be achieved. We
have to have the basic deal put together before we can establish a tax increment district. I'm
assuming they have put enough time in the purchase agreement so we will respond positively
within that time frame. All these things have to mesh together. It is an aggressive time table that
will be starting in the next few weeks.
Chairperson Commers said that an agreement has never been done quite like this before. The
Authority has always controlled the property beforehand so this is a little different. The
assumptions and budgets were just received today so he hasn't had a good chance to study the
numbers. He wasn't sure what all the numbers meant or if they had real meaning.
Mr. Casserly said that the numbers were very preliminary. They were done to find out if there
was any way this could be feasible. We are not sure what the cost will be. The revenue side is a
function of what they think can be built on the site and the timing that goes into it.
Chairperson Commers said he would not spend a lot of time looking at numbers if they were
very preliminary.
Mr. Casserly said that the goal is to come back to the Authority in a few months with a better
analysis.
Chairperson Commers asked how the tax increment would come into play when the project is
done in phases.
Mr. Casserly replied that tax increment would come in as new values come into the project.
Each time there is an addition or increase in value then the increment comes in 18 -24 months
after that. The first phase may not create any increment; that is why we have to understand
better how some of this will come together. The increment will increase over a period of years.
Chairperson Commers asked what the relationship was with BAE and their lease and if anyone
knew how many employees they have working there.
Mr. Hyde said that they have five years left on that lease. Half is on the market for sublease and
a number people have been moved out of the building. Part of our goal is to learn more about
their thoughts on the future once the lease is up. We would like to consolidate them to one area
and are talking about building a new building. I don't know the exact number of jobs on the site.
Housing Redevelopment Authority Meeting of November 3, 2011 7
Mr. Bolin said that currently 675 staff work there.
William Burns, City Manager, added that more staff would be moved out of that location; the
alternative location in Louisville.
Mr. Hyde said that the site could have 3,000 -4,000 jobs once a project is fully developed.
Commissioner Meyer asked what would happen, for example, if Real Estate Recycling
deposited $10,000 to the city to pay for soil information and surveys that are necessary. Then
the project doesn't go through and Real Estate Recycling is out the $10,000 or additional money
is needed because of the soil, who pays for that.
Mr. Casserly said that the way we tried to design the agreement is the studies that are required
as result of reusing the site are their expense. What we need to sort out is how to pay for
restructure, utilities etc. The cost of the testing is the responsibility of the developer. We do not
have control of the site and can share any information we have. If everything falls through and
money is spent for exploratory reasons, such as soil reports etc., the reports to back to the city for
other people to use.
Mr. Hyde said that Real Estate Recycling will be spending a lot more than $10,000. We will
take some risk on that and that is why we want an interim agreement; then we will try to get
reimbursed through grant funds. Money will also be spent on site surveys and infrastructure.
Once we have figured it out and closed on the site, then it's just executing. This could be a 7 -10
year program. Real Estate Recycling is happy to share whatever information they have with the
HRA; they will be public documents.
Commissioner Meyer asked if there was anything in the agreement that precludes the city from
using that information.
Chairperson Commers said no, that information is covered in paragraph six.
Commissioner Eggert said that it was mentioned that they were close to putting together a
contract; what is close?
Mr. Hyde said that they are exchanging drafts and should have it signed in a week.
Commissioner Eggert is excited about the project. A project like this takes a lot of time and a
solid partnership. He takes comfort in working with this organization going forward. They have
worked in our community and they have handled more complex projects than this.
Chairperson Commers said he was glad to see this property in redevelopment. We are all glad
to be able to work in this partnership with Real Estate Recycling. He does have concerns about
what will be developed on this property; he did not want a total warehouse going in there.
Fridley was fortunate to get Medtronic to develop a 135 acre campus. He hopes it will be a
development that makes the Authority proud and satisfy the financial tax requirements. He does
Housing Redevelopment Authority Meeting of November 3, 2011 8
not see any reason not to go forward. He asked if anything can be done with the BAE property
on the south end.
Mr. Hyde said that most of the south side of the property has been vacated. That is part of what
we need to figure out. We are not dead set anything for development. This isn't going to be a
low budgeted project; we plan to preserve the front part of the site for something special. We
don't know what the numbers will be but we will figure out that in the next six to nine months.
Commissioner Gabel said that it would be nice to have something nice out front to anchor the
area.
MOTION by Commissioner Eggert to approve the Exclusive Development Agreement with
Real Estate Recycling. Seconded by Commissioner Meyer.
UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED
THE MOTION CARRIED UNANIMOUSLY
5. Intrafund Loan — HRP
Becky Kiernan, Accountant, said that seven homes were acquired and demolished in 2010 and
2011. The HRP fund currently has a negative balance. Loaning $600,000 from the interfund
will eliminate the negative balance and provide funds for additional purchases. Staff
recommends approval of the resolution approving the Interfund Loan.
Commissioner Holm was wondering why we call this a loan as we understand this will involve
more expenditures than what we will receive. He thought it should be a transfer rather than a
loan.
Jim Casserly, Development Consultant, said that because the HRP creates some revenue this is
the way we need to proceed. If we don't create this type of document we have no way to repay
those expenses. We need to document that we are paying and have authorized a number of
parcels to be included.
Commissioner Gabel wondered when we say we can't pay this back.
Mr. Casserly said that the Authority would need to acknowledge that they can't repay and then
the general fund can't receive that amount; we leave that part to the accounting experts. Whether
they write it off or schedule a repayment it is up to them. Without documenting this we have no
ability to revoke the funds we have invested.
MOTION by Commissioner Holm to approve the Intrafund Loan. Seconded by Commissioner
Gabel.
UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED
THE MOTION CARRIED UNANIMOUSLY
Housing Redevelopment Authority Meeting of November 3, 2011 9
6. Approve Administration Contract for 2012 Home and Garden Show
Paul Bolin, HRA Assistant Executive Director, said that Fridley has been the fiscal agent for the
Home and Garden Show for 14 years. (Blaine & Mounds View) Revenues from booth rental
cover the expenses for the show. Since 2005, the Home and Garden Show has contracted with
Marsha Wagner of Castle Visions to perform all administrative tasks for show. Her work has
been excellent and much appreciated by all. Staff recommends approval of the contract
authorizing Castle Visions to perform admin work for 2012 Home and Garden Show.
Commissioner Gabel asked what the date was for the event.
Mr. Bolin answered it is the last Saturday in February.
Commissioner Holm asked for the date to be corrected where Marsha Wagner's signature is
listed.
MOTION by Commissioner Holm to approve the Administration Contract for 2012 Home and
Garden Show. Seconded by Commissioner Gabel.
UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED
THE MOTION CARRIED UNANIMOUSLY
7. Approve Workers Compensation Insurance for Commissioners
Paul Bolin, HRA Assistant Executive Director, said that State Statute allows the HRA
Commissioners to be covered by Workers Compensation insurance. Commissioners often attend
off -site locations at HRP sites, RD Homes, etc. City Council added workers compensation three
years ago. The total cost is less than $100 /year. Staff recommends adopting the resolution
enabling Commissioners to be covered by workers compensation in their duties as HRA
Commissioners.
Commissioner Holm did not think this is necessary and he was not in favor of it.
MOTION by Commissioner Meyer to approve the workers compensation insurance for
Commissioners. Seconded by Commissioner Eggert.
UPON VOICE VOTE, COMMISSIONER GABEL, COMMISSIONER EGGERT,
COMMISSIONER MEYER AND CHAIRPERSON COMMERS VOTING AYE,
COMMISISONER HOLM VOTING NAY, CHAIRPERSON COMMERS DECLARED
THE MOTION CARRIED ON A 4 -1 VOTE
INFORMATIONAL ITEMS:
1. Home Improvement Demonstration Project Update
Housing Redevelopment Authority Meeting of November 3, 2011 10
Paul Bolin, HRA Assistant Executive Director, said that the home on 4757 Second Street had
six showings since the October meeting and over 300 viewings on line. At the open house on
October 19 almost two dozen people went through the home. All comments about the home are
positive and no comments have been received that the price is too high. It is not the price but
may be that the location is not desirable to the buyer. Staff will continue to market this home.
William Burns, City Manager, said that he has asked Brian Strand to promote the home on the
city's cable channel.
Chairperson Commers commented that the home looks nice and thought it would be a good
idea to market the home on cable. He thought that is something that should be done on all the
remodeled properties HRA completes.
2. Housing Replacement Program Update
Paul Bolin, HRA Assistant Executive Director, said that the homes on Mississippi, Hugo and
Ironton Street will start demolition next week. Those lots will be graded and seeded by
November 18. All asbestos has been abated from the properties. The recycling and salvage is
complete and the bulk of the hazardous materials has been removed. Public Works staff hand
delivered a schedule to neighbors so they know what is happening. Just yesterday staff sent off
earnest money and the purchase application for the home at 561 Ironton Street. This is a 74 x
110 lot. Staff will keep looking and try to buy a few more properties over the winter and
schedule another demolition for late spring.
Chairperson Commers asked if residents were giving any feedback on the homes the Authority
is buying, demolishing and rebuilding.
Mr. Bolin said that staff do get some comments, but not too many. Most comments are very
positive. We are buying the worst of the worst, the ones that should be demolished.
3. Housing Loan Program Update
Paul Bolin, HRA Assistant Executive Director, said that for the month of October there were no
loans closed and a total of nine loans have been closed year to date. There were two remodeling
advisor visits making a total of nine year to date.
William Burns, City Manager, reported good news; the Metro Transit did a survey of local
employers a few years ago and the survey came back that people want a shuttle service and one
will start up in March. The shuttle will run in the morning and evening for local employers. A
preliminary map was passed around for Commissioners to review.
Dr. Burns is also in the process of looking at the preliminary budget for Fridley and
employment has improved. Unemployment is 6.6% for Fridley and 6.3% for Anoka County.
Retail has went down and we continue to lose retail jobs. Housing is better than what it was; we
are seeing more sales and a decline in the housing inventory. Property values still continue to be
Housing Redevelopment Authority Meeting of November 3, 2011 I 1
down but the number of foreclosures in 2011 has dropped dramatically in Fridley. Public
assistance still high but not as high as it was in the past; it is up only 9% rather than 16 %.
ADJOURNMENT:
MOTION by Commissioner Gabel to adjourn. Seconded by Commissioner Eggert.
UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED
THE MOTION CARRIED AND THE MEETING ADJOURNED AT 8:20 P.M.
Respectfully Submitted,
F.-Mu.
Krista Monsrud, Recording Secretary
COMMUNITY DEVELOPMENT
DEPARTMENT
HOUSING AND REDEVELOPMENT AUTHORITY
Memorandum
DATE: November 21, 2011
TO: William W. Bums, Executive Director of HRA
FROM: Darin R. Nelson, Finance Director /
Paul Bolin, Assistant Director of H
Rebecca Kiernan, HRA Accountant
SUBJECT: Review of Final 2012 Budget
Attached you will find the final 2012 budget document and the cash balances as of September
30, 2011.
The budget is divided into three separate categories. The General Fund covers the bulk of the
administrative and overhead costs of the HRA. The Housing Loan Program Fund covers the
housing related programs and services (CEE programs). The Capital Outlay Funds include all of
the tax increment (TIF) districts. We will be available to answer any questions that you may have.
Staff revised the layout of the document and removed any decertified TIF districts from the
income and expense report section. The only change from the draft budget was the reduction of
Administrative fees due to the City. `
Staff recommends that the HRA approve the budget at the December 1st, 2011 meeting.
City of Fridley HRA
2012 Final Budget
Packet
2011 Cash Balances ................Page (1 -2)
2012 Budget
General Fund ...............Page (3 -4)
Housing Program ......... Page (5 -6)
Tax Increment Districts..Page (7 -15)
City of Fridley HRA
2011 Cash Balances
As of 9130111
Page 1
Page 2
City of Fridley HRA
'
Cash Balances
as of 09130/2011
Cash Balances as of September 30, 2011
Fund
Description
Balance
100
General Fund
2,625,961
-
265
Housing Loan Program
2,790,830
All Districts are
now decertiified j
450
Center City - Dist 1
14,490
e R
451
Moore Lake - Dist 2
-
Holding until Tax
452
North Area - Dist 3
33,710
Petitions resolved
455
Lake Pointe - Dist 6
131,299
456
Winfield - Dist 7
292,528
458
Onan - Dist 9
1,302,897
Poolable
462
University - Dist 11
57,922
463
McGlynn - Dist 12
23,336
464
Satellite - Dist 13
32,507
Special Legislation
467
57th Ave - Dist 16
36,185
468
Gateway East - Dist 17
29,559
470
Gateway West Dist 18
652
472
Main Street - Dist 19
6,271
474
Gateway NorthEast
328,987
501
Housing Replacement
83,501
Total
7,790,634
Page 2
City of Fridley HRA
2012 Budget
General Fund
Page 3
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City of Fridley HRA
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Housing Loan Program
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Account Description
General Fund
Revenues
City Revenues
Tax Levy
Tex Levy - Delinquent Yews
Reshlual MV Homestead Credit
Other Miseollenous Revenue
Interest on Investment Earnings
Interest on Mortgages
Rent and Royalties
Sale of Miscellaneous Property
City of Fridley HRA
Budget
Fiscal Year 2012
2011 Activity YTD as a %of
through 9130111 FY 2011 Budget Budget FY 2012 Budget
232,701.42
472,507.00
49%
472,507.00
4,828.90
-
WA
-
Expenses
WA
237 330.32
472,507.00
50%
472,507.00
-
23,5W.00
0%
23,500.00
22,182.05
-
WA
37,019.00
7,200.00
9,800.00
75%
9,800.00
2,500.00
Purchased Services
WA
76,730.W
7200DD
3310D.W
22%
33.100.00
jfotalRavenusl�`Fund
.244:SS0:3d�
z "'�8079D F 18% =:`t
F'�.807.00`.
Expenses
Salaries and Wages
189,432.30
292,194.18
58%
289,584.00
Benefits
22,182.05
28,366.00
78%
37,019.00
Supplies and Materials
909.74
2,5W.00
38%
2,500.00
Purchased Services
42,36825
76,730.W
55%
88,730.0
Other Fhum Uses
3,060.87
2 000.00
153%
3.500.00
237.9W.21
401 790.18
59%
419,313.00
Tow (�ratFUtW 23731 401780 A6 589L s_,:z- 14492739Da
Rlttirrcomec'Geaeral�nnd "
8980.11' -
.103.8169? "_ --
8828k00'
Housing Program
Revenues
Other Mlseellenous Revenue
-
22,5W.00
0%
22,500.00
Interest on Investment Earnings
Interest on Mortgages (Pod 0, 1, 2)
34,624.59
47,000.00
74%
47,000.00
Interest on Mortgages (Poo/3)
1200.79
18D.00
667%
1,300.00
Miscellaneous Revenue (H 8 G Slow 8 deffmmirathn homes) 22,870.00
335 000.00
7%
23.000.00
68 69536
404 880.00
15%
93.8W.00
YO> 811tailll /llss'HWisllihphOpraal898
iO6gB0W
J59s, i ag3$DOWi
Expenses
Purchased Services
122,959.96
161800.00
76% _
265.800.00
122 95995
181600.00
76%
285.800.00
,Td b7Exaen aes -Sou inn'ProAram c
-322:889:00- : — 161900.00
i�thramas+i iwPloAlam
7$K 6981-
- 7149080
TIF Districts
Revenues
City Revenues
Tax Increment
874,925.02
1,539,154.W
57%
1,538,297.00
Tau Increment- Delinquent Years
3,055.67
WA
-
Residual MV Homestead Credit
-
WA
-
87798DED
1539154.00
57%
1.538297.00
Other Mlacellenous Revenue
-
22,038.00
0%
17,438.00
Interest on Inveafinerd Earnings
Transfers and Other MtseeBenous Receipts
WA
22.038.W
0%
17.438.00
71Dtal tZevsililes 4aFDistrfats
89
1981192' = =' -'. 88% ' _
3918 �:i
Expenses
Purchased Services
150,072.63
333200.00
45%
338,100.00
Cap{ Outlay
854,658.10
1,351,930.W
48%
1,328,930.00
Other Finance Uses
32 68923
18,300.00
179%
26.000.00
837,429.9B
1 703 430.00
49%
1.893.038.00
MAW TlFwftbft�
RatLlcorl'la ';TIFDist�tr' ;
"
� "
'
_. - < -: .• * r ' -_ -;: g 7 - :. 888,82 ".' ,,� 'a _ � �:.a`,
Revs
2011
2,471,479.00
2012
2,155,142.00
318,337.00
Expenses
2011
2266,820.18
2012
2,377,943.00
(111,122.82)
U—.%.d thft -Fs Nreoad .d PurP —�d1r
Page 15
AGENDA ITEM
HRA MEETING OF DECEMBER 1, 2011
O]TY OF
FRIDLEY
To: William W. Bums, City Manager
Paul Bolin, Asst. Executive Director
From: Darin R. Nelson, Finance Director
Date: November 21, 2011
Re: GASB Statement No. 54 Fund Balance Policy and Resolution Committing Specific
Revenue Sources in the HRA's Housing Loan Special Revenue Fund
BackgEound
The Governmental Accounting Standards Board (GASB) issued Statement No. 54 Fund Balance
Reporting and Governmental Fund Type Definitions, which is effective for calendar years ending
December 31, 2011.
GASB 54 separates fund balance into five new categories: Nonspendable, Restricted,
Committed, Assigned, and Unassigned. Under the old standards there were three categories:
Reserved, Designated, and Undesignated. The new categories are more descriptive, and focus on
how the HRA plans to use its resources.
In addition to revising fund balance definitions, GASB also revised, or reality, tightened the
definition for special revenue funds. Under GASB Statement No. 54, a special revenue fund
now must have one or more specified restricted or committed revenues as a foundation for the
fund and comprise a substantial portion of the fund's inflows. This standard requires Board
action to commit specific revenues sources for specified purposes other than debt services or
capital projects.
For the HRA's Housing Loan Special Revenue Fund, mortgage interest earnings are the
specified committed source for the intended purpose of funding home improvement loans and
programs. The fund does have other revenue sources, such as general interest earnings and
various other minor miscellaneous revenues, but mortgage interest earnings are truly the
intended revenue source for the fund. Even though interest earnings and miscellaneous other
revenues do not meet the definition of a specified revenue source, these revenues will also be
classified as committed fund balance.
The requirements to commit fund balance include:
• Self - imposed constraint (no external party constraints),
• Constraint is for a specific purpose,
• Constraint made by the highest level of decision making authority (HRA Board),
• Constraint can be removed or changed only by a taking same action, and
• Action to constrain resources for a specific purpose must occur prior to end of fiscal year,
though the exact amount may be determined subsequently (No need to specify exact
dollar amount).
A final change of note is related to the HRH's fund balance policy. Prior to now, the HRA has
not had a fund balance policy in place. However, with the implementation of GASB Statement
No. 54, a fund balance policy is now strongly recommended for both the General Fund and the
Housing Loan Special Revenue Fund.
Determining an appropriate fund balance level for each of these funds is very arbitrary. The
General Fund needs to have sufficient funds available to cover general operating expenditures as
well as necessary working capital to subsidize potential redevelopment projects. The HRA
General Fund receives tax proceeds twice a year, at a minimum the General Fund needs to
maintain an unassigned fund balance of at least 50% of the subsequent year's budgeted
expenditures in order to maintain a positive cash balance. More importantly and more
realistically, the General Fund needs to have a fund balance substantially higher to support the
beginning stages of potential redevelopment projects. In regards to the Housing Loan Special
Revenue Fund, the fund balance level needs to be sufficient in order to support the revolving
home loan program.
Establishing specific fund balance amounts or percentages for both of these funds are not nearly
as important as continuing to monitor current and future cash flow trends to ensure the General
Fund and the Housing Loan Special Revenue Fund has sufficient reserves available to meet
current and future demands.
The fund balance policy also needs to authorize the Executive Director, Assistant Executive
Director, and/or Finance Director to assign fund balance to reflect the HRA's intended use of
funds. This does not change the authority to actually spend resources, but to assign resources for
a presentation standpoint only. The fund balance policy also needs to include how the HRA
intends to use its resources when multiple categories of fund balance are available.
These changes do not affect how the HRA conducts business. All of the changes will be from a
presentation standpoint in the City's Comprehensive Annual Financial Report (CAFR) only.
Staff Recommendation
Staff recommends a motion adopting Resolution 2011 -12 enabling the Fridley HRA Board of
Commissioners to commit specific revenue sources in the HRA's Housing Loan Special
Revenue Fund. Staff also recommends the Fridley HRA Board of Commissioners pass a motion
approving the attached fund balance policy for the HRH's General Fund and Housing Loan
Special Revenue Fund.
Attachments:
Fridley HRA Policy
Resolution Committing Specific Revenue Sources in Special Revenue Funds
III. Definitions
Fund balance — the difference between assets and liabilities reported in a governmental
fund.
Nonspendable fund balance — amounts that are not in a spendable form or are required
to be maintained intact for example inventory, long term receivables & prepaids.
Restricted fund balance — amounts subject to externally enforceable legal restrictions.
Unrestricted fund balance — the total of committed fund balance, assigned fund balance,
and unassigned fund balance.
Committed fund balance — amounts that can be used only for the specific
purposes determined by a formal action of the government's highest level of
decision - making authority. Commitments may be changed or lifted only by the
government taking the same formal action that imposed the constraint originally.
Assigned fund balance — amounts a government intends to use for a specific
purpose; intent can be expressed by the government body or by an official or body
to which the governing body delegates the authority.
Unassigned fund balance — amounts that are available for any purpose in the
general fund.
Approved December 1, 2011
RESOLUTION NO. 2011-12
RESOLUTION COMMITTING SPECIFIC REVENUE SOURCES
IN THE HOUSING LOAN SPECIAL REVENUE FUND
WHEREAS, the Governmental Accounting Standards Board's Statement #54 definition of
special revenue funds states that special revenue funds are used to account for and report the
proceeds of specific revenue sources that are restricted or committed to expenditures for specified
purposes other than debt service or capital projects; and,
WHEREAS, the term "proceeds of specific revenue sources" establishes that one or more specific
restricted or committed revenues should be the foundation for a special revenue fund and
comprise a substantial portion of the fund's revenues; and,
WHEREAS, investment earnings and transfers from other funds do not meet the definition of a
specific revenue source; and,
WHEREAS, board action is required to formalize the commitment of the specific revenue sources
to specified purposes.
NOW, THEREFORE BE IT RESOLVED by the Commissioners of the Fridley Housing and
Redevelopment Authority, in and for the City of Fridley, that effective December 31, 2011, the
specific revenue source of each special revenue fund and the specific purposes for which they are
committed are as follows:
Fund .
Specific Revenue Sources
Committed For
Housing Loan
Mortgage Interest Earnings
Revolving Home Loan Programs
PASSED AND ADOPTED BY THE FRIDLEY HOUSING AND REDEVELOPMENT
AUTHORITY, IN AND FOR THE CITY OF FRIDLEY THIS I sT DAY OF DECEMBER, 2011.
Lawrence R. Commers, Chairperson
ATTEST:
William W. Burns, Executive Director
ACTION ITEM
ri HRA MEETING OF DECEMBER 11 2011
CRY Of
FR @LEY
Date: November 23, 2011
To: William Bums, Executive Director
From: Paul Bolin, Asst. Executive HRA Director
Subject: Resolution Declarinq Structure Bliahted
In November, Real Estate approached the Authority to discuss the potential for
assistance with the clean up and future redevelopment of the property located at 4800
East River Road. Real Estate Recycling is very close to securing ownership of the 135
acres located at 4800 East River Road.
At last month's meeting, the Authority approved an interim agreement with RER to allow
for the exploration of the feasibility of redeveloping the site. The Interim Agreement
requires Real Estate Recycling to pay for all studies and 50% of the Authorities
Development Counsel's time. The agreement calls out a series of action steps that
must be met to explore the potential of assistance from the Authority. One of the first
steps is to conduct a blight analysis and determine if the property meets statutory
requirements for "substandard" properties.
The engineering firm of LHB, with a long history of conducting blight reports for the
Authority, has presented the attached proposal for a blight analysis of 4800 East River
Road. The purpose of the blight analysis is to determine if the property meets the
statutory definition of "substandard ": A substandard determination would make the
property eligible for inclusion in a TIF District.
Staff recommends approval of the attached proposal from LHB. Costs associated with
the blight analysis will be reimbursed by Real Estate Recycling, LLC.
#AIA Document B727TM - 8?
Standard Form of Agreement Between Owner and Architect for special Services
AGREEMENT made as of the 21st day ofNovember in the year 2011.
BETWEEN the Owner:
(train. legal status and address)
City of Fridley
cio Scott Hickok
Director of Community Development
6431 University Avenue Northeast
Fridley, MN 55432
and the Architect:
[Name. legal .status and atddrevs)
LHB. Inc.
.250 Third Avenue North. Suite 450
Minneapolis, MN 55401
for the following Project:
(Inelude detailed description n1'Prgiec1, location, address and scope.)
LHB Project No. J] 0621
Fridley BAE TIF Analysis
Fridley, MN
The Owner and the Architect agree as set forth below.
METHODOLOGY
A. Survey the proposed TIF District to determine if it meets the "Coverage
Test ":
1. To meet the coverage test; parcels consisting of 70 percent of the area of
the district must be "occupied" by buildings, streets, utilities, or paved or
gravel parking lots.
�. A parcel is not considered "occupied" unless at least 15% of its total area
contains improvements.
B. inspect the interior and exterior of the buildings:
1. Obtain property owner's consent for inspection.
2. Document all property conditions relative to Minnesota Statutes Section
469.174 Subdivision 10.
C. Determine replacement cost for the buildings:
1. Replacement. cost is the cost of Constructing a new structure of the same
square footage and type on the site.
ADDITIONS AND DELETIONS:
The author of this document has
added information needed for its
completion. The author may also
have revised the text of the original
AIA standard form. An Addr7ions and
Deletions Report that notes added
information as well as revisions to the
standard form text is available from
the author and should be reviewed. A
vertical One inlhe left margin of this
document indicates where the author
has added necessary information
and where the author has added to or
deleted from the original AIA text.
This document has important legal
consequences. Consultation with an
attorney is. encouraged with respect
to its completion or modification.
Init. AIA Document S727TH^ —1988. Copyright 0 1972, 1979 and 1988 by The American Institute of Architects. All rights reserved. WARKINC: This AfA" Document
is protected by US. Copyright Law and International Treaties. Unouthorized reproduction or distribution of this AIA Document or any portion of it
may result in severe civil and criminal penalties, and will be prosecuted to the maximum extent possible under the law. This. document was produced by
t AIA soflware at 09:51:46 on 11222011 under Order No.44851534.06__1 which expires on 01126!2012, and is not for resale.
User Notes: (545436242)
2. A base cost will be calculated by establishing the building class, type and construction
quality.
3. Identify amenities, which increase the value of the building over the standard construction
quality level.
4. Review building permits for each parcel..
5. The. base cost and cost of amenities will be totaled to determine the replacement cost for the
property.
D. Determine the existing condition of the buildings:
1. 'Structurally substandard shall mean containing defects in structural elements or a
combination of deficiencies in essential utilities and facilities, light and ventilation, fire
protection including: adequate egress, layout and condition of interior partitions, or similar
factors, which defects or deficiencies are of sufficient total significance to justify substantial
renovation or clearance."
E.. Determine Code Deficiencies for the buildings:
I. Determine technical conditions; which are not in compliance with current building code
applicable to new buildings.
2. Determine costs to correct identified deficiencies.
3. Compare cost of deficiency corrections to replacement value of building.
4.. A building is not structurally substandard if it is in compliance Aith building code applicable
to new buildings or could be modified to satisfy the building code at a cost of less than 15
percent of replacement cost.
F. Prepare a final report outlining findings:
1. Prepare a written narrative analysis of the redevelopment district describing why the property
within the district does or does not meet the criteria as "structurally substandard" as
established in Minnesota Statutes Section 469.174, subdivision 10.
2. Deliver final reports to City staff,
ASSUMPTIONS
Preliminary boundaries of the prospective district include two parcels with approximately 2 million
square feet of building(s) that will require interior inspections.
The City of Fridley will provide the following:
• A scalable parcel map and/or aerial photo of the area to be inspected, including GIS information
with specific parcel data
• A list of all parcels. including owner, current known business or resident name and address.
unit AIA Document B727- -1988. Copyright 91972, 1979 and M8 by The American MSlitule of Architects. An rights reserved. WARNING This AIR° Document
is protected by U.S. Copyright Law and International Treaties. Unauthorized reproduction or diaribution of this AIA' Document, or any portion of it
-
may result in severe civil and eriminel psnetties, and will bd proseputed to the rrmazinmurn extent possible under the laud, This document was produced by
ALA software at 09:51;46 en 1 1 12 2120 1 1 under Order No.4 4 8 61 53 406.1 which expires on 0112612G12, end is not for resale.
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ARTICLE 1 ARCHITECT'S SERVICES
(Here list those services to he provided by the Architeci under the Terins and Conditions :of this Agreement. Note
Yonder each service vice listed the method and means of compensation to he.usecf if applicable, as provided in Article 8.)
Service to be provided Method and means of compensation
TTF Analysis as described in the attached proposal letter Hourly + Reimbursables
dated November 21, 2011,
ARTICLE 2 OWNER'S RESPONSIBILITIES
§ 2.1 The Owner shall provide full information regarding requirements for the Project. The Owner shall furnish
required information as expeditiously as necessary for the orderly progress of the Work, anti the Architect shall be
entitled to rely on the accuracy and completeness thereof.
§ 2.2 The Owner shall designate a representative authorized to act on the Owner's behalf with Tespect to the Project.
The Owner or such authorized representative shall render decisions in a timely manner pertaining to documents
submitted by the Architect in order to avoid unreasonable delay in the orderly and sequential progress of the
Architect's services..
ARTICLE 3 USE OF ARCHITECT'S DOCUMENTS
§ 3.1 The documents prepared by the Architect for this Project are instruments of the Architect's scrvice_for use solely
with respect to this Project 2nd, unless otherwise provided, the Architect shall be deemed the author of these
documents and shall retain all common law. statutory and other reserved rights: including the copyright. The Owner
shall be permitted to retain copies, including reproducible copies, of the Arehitect's documents for the Owner's
information, reference and use in connection with the Proicct. The Architect's documents shall not be used by the
Owner or others on other projects. for additions to: this Project or for completion of this Project by others, unless the
Architect is adjudged to be in default under this Agreement, except by agreement in writing and with appropriate
compensation to the Architect.
(Paragraphs deleted)
§ 3.2 To the extent the Instruments of the Architect's Service are modified. supplemented.or otherwise altered by the
Owner, subsequent Designs Professionul, or any other -party, the Owner agrees to indemnify, defend and hold the
Architect harmless for any claims, demands, damages or causes of action arising out of such modification,
supplementation or alteration.
§ 3.3 If it is subsequently determined that a required iteru has been omitted from the Architect's original Instruments
of Service, the Owner shall be responsible for the associated cost. The Architect is not responsible for any cost
incurred by the Owner that provides an upgrade to, or enbances the value of the project.
ARTICLE 4 MEDIATION.
§ 4.5 Unless the parties mutually agree otherw=ise, the parties shall endeavor to settle disputes by mediation in
accordance with the Construction Industry Mediation Rules of the American Arbitration Association currently in
effect at the time of the dispute. A demand for mediation shall be filed, in writing, within a reasonable period of time
after a claim, dispute or other matter in question has arisen. In no event shall demand for mediation be made after the
date when the institution of legal or equitable proceedings, based upon such a claim, di."ite or other matter in
question, would have been barred by an applicable statute of limitation.
ARTICLE 5 TERMINATION OR SUSPENSION
§ 5.1 This Agreement may be terminated by either party upon not less.than seven days'written notice should the other
party fail substantially to perform in accordance with the terms of this Agreement through no fault of the party
initiating the termination.
§ 5.21f the Owner fails to make payment when due the Architect for services and expenses, the Architect may, upon
seven days' written notice to die Owner, suspend performance of services under this Agreement. Unless payment in
full is received by the Architect within seven days of the date of the notice, the suspension shall take effect without
Init. AIA Document 872711 -1988. DopyrightQ1972,1979 and 1988 by The American lnslitule of Architects. All rights reserved. WARNING- This AIAz Document
is protected by U.S. Copyright Law and International Treaties. Unauthorized reproduction or distribution of this Alk Document, orany portion cif it, 3
may result in severer civil and edinirial penalties, and will be prosecuted to the maximum extent possible under the law. This document was produced by
AIA software at 09:51:46 on 11/2212011 under Order Np,4485163406_1 which expires on 012612012, and is not for resale.
User Notes: (845436242)
further notice. In the event of a suspension of services. the Architect shall have no liability to the Owner for delay or
damage caused the Owner because of such suspension of services.
§ 5.3 In the event of termination not the fault of the Architect, the Architect shall be compensated for services
performed prior to termination. together with Reimbursable Expenses then due.
(Parag7'aphs deleted)
ARTICLE 6 MISCELLANEOUS PROVISIONS
§ 6.1 Unless otherwise provided. this Agreement shall be governed by the law of the principal place of business of the
Architect.
§ 6.2 Causes of action between the parties to this Agreement pertaining to acts or failures to act shall be deemed to
have accrued and the applicable statute of limitations shall commence to run not later than the date payment is due the
Architect pursuant to Section 8.4.
§ 6.3 The Owner and Architect, respectively, bind themselves, their partners, successors, assigns and legal
representatives to the other party to this Agreement and to the partners, successors, assigns and legal representatives of
such other party with respect to all covenants of this Agreement. Neither Owner nor Architect shall assign this
Agreement without the written consent of the other.
§ 6.4 This Agreement represents the entire and integrated agreement between theClwner and Architect. ind supersedes
all prior negotiations ,.representations or agreements, either written or oral. This Agreement maybe amended only by
written instrument signed by both 0%mcr and Architect.
§ 6.5 Nothing contained in this Agreement shall create a contractual relationship with or a cause of action in favor of a
third party against either the Owner or Architect.
§ 6.6 Unless otherwise provided in this Agreement, the Architect and Architect's consultants shall have no.
responsibility for the discovery, presence, handling, removal or disposal of or exposure of persons to hazardous
materials in any form at the Project site, including but not limited to asbestos, asbestos-products, polychlorinated
biphenyl (PCB) or other toxic substances.
6.7 The Architect and the Owner waive consequential damages for claims; disputes or other matters in question
arising out of or relating to this Agreement. This mutual waiver is applicable, without limitation, to all consequential
damages• due to either party's termination in accordance with Article 5.
6,8 To the maximum extent permitted by law,. the Owner agrees to limit. the Architect's liability for the ()w'ner's
damages to the sum of Teti Thousand Dollars ($10,000) or the amotutt of the Compensation for Architect's Services
wh.ichevcr amount is greater. This limitation shall apply regardless of the cause of action or legal theory pled or
asserted.
ARTICLE 7 PAYMENTS TO THE ARCHITECT
§ 7.1 DIRECT PERSONNEL EXPENSE
§ 7.1.1 Direct Personnel Expense is defined as the direct salaries of the Architect's personnel engaged on the Project
and the portion of the cost of their mandatory and customary contributions and benefits related thereto, such as
employment taxes and other statutory employee benefits; insurance; sick leave, holidays, vacations. pensions, and
similar contributions and benefits.
§ 7.2 REIMBURSABLE EXPENSES
§ 7.2.1 Reimbursable Expenses are in addition to the Architect's compensation and include expenses incurred by the
Architect and Architect's employees and consultants in the interest of the Project for:
.1 expense of transportation and living expenses in connection with out -of -town travel authorized by the
Owner.
.2 long - distance communications,
3 tees paid for securing approval of authorities having jurisdiction over the Project.
.4 reproductions;
Init. AIA Document 8727- —198& Copyright @ 1972,1979 and 1998 by7he American Institute of Architects. All rights reserved. WARNING: This AIA'' Document
is protected: by U,S. Ossnyfght Law and international Treaties. Unauthorized reproduction or distribution of this AW Document, or any portion of it,
may result in severe .civil and criminal penalties, and will be prosecuted to the maximum extent possible under the law. This document was produced tV
/ AiA software at 09:51 :46 on 11/2272011 under Order No.44'85153406_1 which e*.pires on 0112612012. and is not for resale.
User Notes: (945496242)
.5 postage and handling of documents;
.6 expense of overtime work requiring higher than regular rates, if authorized by the Owner,
.7 renderings and models requested by the Owner:
.8 expense of additional coverage or limits, including. professional liability insurance, requested by the
Owner in excess of that normally carried by the Architect and the Architect's consultants.
§ 7.3 PAYMENTS ON ACCOUNT OF THE ARCHITECTS SERVICES
§ 7.3.1 Payments on account-of the Architect's services and for Reimbursable Expenses shall be made monthly upon
presentation of the Architect's. statement of services rendered or as otherwise provided in this Agreement.
§ 7.3.2 An initial payment as forth in Section 8.1 is the minimum payment under this Agreement.
§ 7.4 ARCHITECT'S ACCOUNTING RECORDS
§ 7.4.1 Records of Reimbursable E•xpenses.and expenses pertaining to services performed on the basis of a multiple of
Direct Personnel Expense shall be available to the Owner or the Owner's authorized representative at mutually
convenient tunes.
ARTICLE 8 BASIS OF COMPENSATION
The Owner shall compensate the Architect as follows:
§ 8.1 AN INITIAL PAYMENT OF Zero Dollars and Zero Cents f$ 0.00 ) shall be. made upon execution of this
Agreement and credited to the Owner';: account at final payment.
§ 8.2 COMPENSATION FOR THE ARCHITECT'S SERVICES. as described in Article 1, Architect's Services, shall
be computed as follows:
(Paragraph deleted)
We will work on an hourly basis with a maximum fee budget of $10.000 plus reimbursable expenses for the inspection
of tlic buildings and a full report outlining die findings for` the T1F District.
§ 8.3 FOR REIMBURSABLE EXPENSES, as described in Article 7, and any other items included in Article 4 as
Reimbursable Expenses, a multiple of One ( 1.00 ) times the expenses incurred by the Architect, the Architect's
employees and consultants in the interest of the Project.
§ 8.4 Payments are due and payable Thirty (30) days from the date of the Architect's invoice. Amounts unpaid Sixty
( 60 ) days after the invoice date shall bear interest at the rate entered below, or in the absence thereof. at the legal rate
prevailing. from time to time at the principal place of business of the Architect.
(Insert rate gfinterest tigreed upon.)
;tera per annum; .67% monthly on unpaid balances
(U.stity lawns and requirements under the Federal 7'r iah in Lending; Act, similar state and local consumer credit lasts
and other regulations at the OLtvrer's and Architect 's principal places of business. the loexioit 0j'the Project and
else+ +Mere men• afec9 the 1. aliditr of this provision. Specific legal advice should he obtained u-ith respect to deletioay.
or modifications, and also regardlrtg other requirements such as N.7•11ten disclosures or ii Hirers:)
§ 8.5 iF THE SCOPE ofthe Project or of the Architect's services is changed materially, the amounts of compensation
shall be equitably adjusted.
ARTICLE 9 OTHER CONDITIONS
LHB and the City, acting through the City's legal representative, will. to the fullest reasonable extent, cooperate and
coordinate efforts in preparing necessary responses to any third party challenges to the inspections. The City agrees to
pay LHB its regular hourly rates for time spent as a result of a third party legal challenge.
Init. AIA Document B727 T. -1988. Copyright 43 1972, 1979 and 1988 byThe American Institute of Architects. All rights resarved. WARNIM, This AIA:' Document
Is protected by US Copyright Law and International Treaties. Unauthorized reproduction or distribution of this Ale Document, or any portion of it. 5
may result In severe civil and criminal penalties, and will be prosecuted to the maximum extent possible under the law. This document was produced by
t AIA software at 09:51:46 on 11122/2011 under Order No.4485153406 1 which expires on 0112 812 0 1 2, and is not for resale.
User Notes; (9454366242)
This Agreement entered into as of the day and year first wTitten above.
OWNER
("Signature)
(Printed name and title)
Date:
ARCHITECT
(Signature)
MICHAEL A. FISCHER, AIA, LEED BD+C
SENIOR VICE PRESIDENT
LHB, INC.
(Printed name and title:)
11.21.11
Date:
In it. AIA Docurnant B727'"" —1968. Copyright 61972, 1979 and 1986 by The American institute of Architects. Alt rights reserved, WARNING: This AEA "' Document
is protected by U,S, Copyright Law and international Treaties. Unauthorized reproduction or distribution of this AIA" Document, or any portion of it,
may result in severe civil and criminal penalties, and will be pr"acuted to the. maximum *xxent possible under the law. This dacumenl was produced by
ALA software at 09:51:46 on 1122/201.1 under Order No.448515a4.o6_1 which expirss on 01126=12. and Is not.fbr regale.
User Notes: (945436242)
250 Third Avenue North, Suite 450
Minneapolis, Minnesota 55401
612.338.2029
Fax 612.338.2088
www.LHBcorp.com
November 21, 2011
Scott Hickok
Director of Community Development
City of Fridley
6431 University Avenue Northeast
Fridley, MN 55432
PROPOSAL FOR BAE TIF DISTRICT ANALYSIS
Thank you for the opportunity to submit a proposal for the TIF analysis at the BAE site in
Fridley, Minnesota. LHB is a full- service architecture, planning and engineering firm with
165 employees in our Minneapolis and Duluth offices.
Our Government studio has extensive experience working with local governments on their
planning, design, architectural and engineering needs. Having been personally involved as a
City Council President, I understand how cities function and the importance of maintaining
the support of the city council and community throughout the process.
PREVIOUS EXPERIENCE
LHB has significant experience with a variety of inspection and facility assessment projects,
including the analysis of over 100 TIF Districts in the past seven years. Examples include:
• City of Columbia Heights TIF inspection services
• City of St. Paul TIF inspection services
• City of St. Anthony Village, NW Quadrant TIF inspection services
• City of St. Louis Park TIF District inspection services
• City of Mound TIF District "1 -2" inspection services
• City of Osseo TIF inspection services
• City of New Richmond, WI TIF inspection services
• Minnesota State Colleges and Universities system facility assessments
• State of Minnesota Facility Assessments
• Property Condition Assessments for the St. Paul Department of Planning and Economic
Development (Franklin/Emerald Neighborhood)
• Condition survey of every property along the I -394 corridor for the Minnesota
Department of Transportation, prior to and during the construction of I -394
• ADA Compliance Assessments for the State of Minnesota (82 buildings in 1992)
Duluth, MN Minneapolis, MN
Fridley BAE Redevelopment TIF Proposal
Page 2 of 5
November 21, 2011
METHODOLOGY
A. Survey the proposed TIF District to determine if it meets the "Coverage Test ":
1. To meet the coverage test, parcels consisting of 70 percent of the area of the district
must be "occupied" by buildings, streets, utilities, or paved or gravel parking lots.
2. A parcel is not considered "occupied" unless at least 15% of its total area contains
improvements.
B. Inspect the interior and exterior of the buildings:
1. Obtain property owner's consent for inspection.
2. Document all property conditions relative to Minnesota Statutes Section 469.174
Subdivision 10.
C. Determine replacement cost for the buildings:
1. Replacement cost is the cost of constructing a new structure of the same square
footage and type on the site.
2. A base cost will be calculated by establishing the building class, type and
construction quality.
3. Identify amenities, which increase the value of the building over the standard
construction quality level.
4. Review building permits for each parcel.
5. The base cost and cost of amenities will be totaled to determine the replacement cost
for the property.
D. Determine the existing condition of the buildings:
1. "Structurally substandard shall mean containing defects in structural elements or a
combination of deficiencies in essential utilities and facilities, light and ventilation,
fire protection including adequate egress, layout and condition of interior partitions,
or similar factors, which defects or deficiencies are of sufficient total significance to
justify substantial renovation or clearance."
E. Determine Code Deficiencies for the buildings:
1. Determine technical conditions, which are not in compliance with current building
code applicable to new buildings.
2. Determine costs to correct identified deficiencies.
3. Compare cost of deficiency corrections to replacement value of building.
4. A building is not structurally substandard if it is in compliance with building code
applicable to new buildings or could be modified to satisfy the building code at a
cost of less than 15 percent of replacement cost.
F. Prepare a final report outlining findings:
1. Prepare a written narrative analysis of the redevelopment district describing why the
property within the district does or does not meet the criteria as "structurally
substandard" as established in Minnesota Statutes Section 469.174, subdivision 10.
2. Deliver final reports to City staff.
Fridley BAE Redevelopment TIF Proposal
Page 3 of 5
November 21, 2011
ASSUMPTIONS
Preliminary boundaries of the prospective district include two parcels with approximately 2
million square feet of building(s) that will require interior inspections. It is assumed that
LHB's work will be focused on finding large -scale deficiencies and not itemizing thousands
of small items.
The City of Fridley will provide the following:
• A scalable parcel map and/or aerial photo of the area
information with specific parcel data
• A list of all parcels including owner, current known
address.
COST AND FEE STRUCTURE
to be inspected, including GIS
business or resident name and
We propose to work on an hourly basis with the following key staff:
Project Principal, Michael Fischer (TIF analysis)
Project Manager /Architect/Inspector, Ben Trousdale
Project Administrator (Property owner contacts, documentation)
We will work on an hourly basis with a maximum fee of $1(
expenses for a full report outlining the findings for the TIF District.
SCHEDULE
$231/hour
$107/hour
$77/hour
),000 plus reimbursable
LHB will be able to deliver a verbal affirmation of the results of our analysis within four
weeks of authorization of this proposal. We will complete the final report on or before
February 2, 2012.
TERMS
We propose using an AIA Document B727 (Standard Form of Agreement between Owner
and Architect for Special Services). The contract will include "limit of liability" language
(equal to our fee or $10,000 maximum, whichever is greater). In addition, the contract will
contain language negotiated with the City indicating that LHB and the City, acting through
the City's legal representative, will, to the fullest reasonable extent, cooperate and coordinate
efforts in preparing responses to any third party challenges to the inspections.
Fridley BAE Redevelopment TIF Proposal
Page 4 of 5
November 21, 2011
�rMEllK
Michael A. Fischer, ALA LEED AP - Project Principal/TIFAnalyst
Michael has twenty-four years of architectural experience as project principal, project
manager, project designer and project architect on municipal planning, educational,
commercial and governmental projects. He is an expert in Tax Increment Finance,
having analyzed more than 100 TIF Districts in the past seven years. Michael is a Senior
Vice President at LHB and currently leads the Minneapolis office. He completed a two -
year Bush Fellowship at the Massachusetts Institute of Technology in 1999, earning
Masters Degrees in City Planning and Real Estate Development. Michael has served on
over 35 committees, boards and community task forces, including a term as City Council
President and Chair of the Duluth/Superior Metropolitan Planning organization. He is
currently a member of the Edina Planning Commission. He was one of four architects in
the country to receive the National "Young Architects Citation" from the American
Institute of Architects in 1997.
Ben Trousdale, AIA - Project Manager/Inspector
Ben is a project architect in LHB's Minneapolis office with 20 years of experience
working on a variety of multi - family housing and commercial projects. He has extensive
skills in creating quality construction documents that convey a building's fundamentals
and unique design details. His responsibilities include project management, code analysis,
and overseeing document production. Ben is a licensed architect in Minnesota and is
involved with AIA activities including Search for Shelter charrettes.
Lydia Major, MLA, ASLA — GISIMapping
Lydia recently joined LHB's Urban Design and Planning group, bringing with her a
passion for design that benefits the client, the community, and the environment. Her
experience includes designing and drafting commercial and residential properties at a
variety of scales. Lydia integrates her skills with AutoCAD, ArcGIS, and the Adobe
Creative Suite to produce plans, color renderings, booklets, and other presentation
materials. Communication is a critical component in all projects, and Lydia's uses her
education as a writer to create compelling project documents, including proposals,
requests for variance, and other public - relations materials.
Fridley BAE Redevelopment TIF Proposal
Page 5 of 5
November 21, 2011
REFERENCES
Stephen J. Bubul
Kennedy & Graven
612/337 -9300
Mary L. Ippel
Briggs and Morgan
651/223 -6620
NEXT STEP
Upon acceptance of this proposal, we will draft an AIA Owner /Architect agreement for your
review.
Thank you for the opportunity to submit a proposal for your project. Please contact me at
(612) 752 -6920 if you have any questions.
LHB INC.
w-w•
MICHAEL A. FISCHER, AIA
SENIOR VICE PRESIDENT
L WARKETINGTroposal Letters\201 RTIF ProposalsTridley BAE TIF Analysis 11 -21 -1 Ldoc
INFORMATIONAL ITEM
ri HRA MEETING OF DECEMBER 1, 2011
QTY OF
FRIDLEY
Date: November 23, 2011
To: William Bums, Executive Director
From: Paul Bolin, Asst. Executive HRA Director
Subject: Housing Replacement Program — Update
Veit Companies has completed demolition of the following properties:
465 Mississippi Street
551 Hugo Street
381 Ironton Street
Kurth Surveying was not able to complete the surveying of the Hugo Street lots, until all
of the demolition and re- grading of the property was completed. The lot split will go to
the Planning Commission in January.
Staff continues to look for additional properties and is set to close on the property
located at 561 Ironton Street on December 2nd. This property was purchased for
$46,810 and has extensive mold damage.
Fridley HRA
Housing Program Summary
Cover Page
December 1, 2011 HRA Meeting
Report Description
Loan Application Summary Loan application activity (e.g. mailed
out, in process, closed loans) for Oct. to
November 15th and year -to -date.
Loan Origination Report Monthly loan originations and year -to-
date.
Remodeling Advisor Shows the number of field appointments
scheduled and completed for the
Remodeling Advisor Services
administered by Center for Energy and
Environment.
H: \— Paul's Documents\HRA\HRA Agenda Items\2011\November 3, 2011\Housing Program CoverOctohendocx
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