Loading...
HRA 12/01/2011 - 30039CITY OF FRIDLEY HOUSING AND REDEVELOPMENT AUTHORITY COMMISSION December 1, 2011 CALL TO ORDER: Chairperson Commers called the HRA Meeting to order at 7:00 p.m. ROLL CALL: MEMBERS PRESENT: NONMEMBERS PRESENT: ACTION ITEMS 1. Approval of Expenditures Larry Commers William Holm Stephen Eggert Pat Gabel John Meyer Paul Bolin, HRA Assistant Executive Director Darin Nelson, Finance Director/Treasurer Becky Kiernan, Accountant William Burns, City Manager Chairperson Commers asked if the item labeled as BAE was part of the reimbursed expenses. Paul Bolin, HRA Assistant Executive Director Paul, answered yes. Commissioner Holm asked what period of time the administrative operating expenses were for. Becky Kiernan, Accountant, answered six months. MOTION by Commissioner Eggert 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 November 3, 2011 Meeting Minutes MOTION by Commissioner Holm to approve the November 3, 2011 Meeting Minutes. Seconded by Commissioner Gabel. Commissioner Gabel asked on the bottom of page three for volleyball cou�ts to be changed to Spike�s. She was also confused about the retainer information on page five. Paul Bolin, HRA Assistant Executive Director, said that the initial $7,500 retainer was paid which is our standard practice. In this case, in the interim agreement, once we go through the Housing and Redevelopment Authority Commission Meeting of December 1, 2011 2 $7,500 initial retainer any additional costs will be reimbursed at 50% of our legal counsel's time. All of the studies that happen for this property are fully paid for by the developer. Commissioner Gabel asked what the $10,000 amount was for on page seven. Mr. Bolin answered that an additional $10,000 deposit will be made before we proceed with authorizing the blight analysis. When this fund gets down to $1,000 the developer will replenish with more funds. Commissioner Gabel noted on page seven, paragraph five, last sentence should read the reports go back to the city. And on page eight, first paragraph, to change rese�ve to preserve. Chairperson Commers said that on the bottom of page seven he had said he would like to see a 135 acre development like Medtronic on the BAE site. UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY AND THE MINTUES APPROVED AS AMENDED 3. Approve 2012 Budget Becky Kiernan, Accountant, said that the purpose of tonight's presentation is to provide highlights of the 2011 financial activity and an overview of the proposed 2012 budget. The packet that was distributed includes the Cash Balances as of 09/30/2011 for the General Fund, Housing Fund and TIF District Summary as well as the Fina12011 Budget and Proposed 2012 Budget. Ms. Kiernan said that the HRA Budget is divided into three categories; a General Fund that includes administrative and operating expenses, a Special Revenue Fund for the Housing Loan Program and Capital Outlay Funds which includes Tax increment districts, redevelopment projects and housing replacement program. Ms. Kiernan reviewed the 2011 Activity Highlights and Recap that included Property Acquisitions in the Scattered Home Site for property located at 551 Hugo Street, 381 Ironton St NE, 465 Mississippi Street NE, and 561 Ironton Street NE. It also includes the Home Demonstration Sites for property located at 831 Mississippi Street NE that sold in June and 4757 2"a Street NE which is currently for sale. Ms. Kiernan said that the total projected revenues for 2012 are $2.1 million, which is a $306,000 decrease from 2011. The reduction in levy amounts includes property values that showed a decline of approximately $36,000 in tax levy revenue and also a reduction in interest income, and rental income. Ms. Kiernan said that the projected expenses for 2012 are $2.3M which is a$111,000 increase from 2011. The increase is due to the Benefit Costs, purchases in the Housing Replacement Program and the cost of vacant lot maintenance. Housing and Redevelopment Authority Commission Meeting of December 1, 2011 3 Ms. Kiernan reviewed the following Total Projected Capital Outlay Expenditures for 2012: Funds: Housing Loan Programs $ 100,000 Lake Pointe (TIF #6) 709,330 57�' Street (TIF #16) — Paid off in 2011 0 Main Street (TIF # 19) 119,600 Scattered Site 500,000 Commissioner Gabel asked for confirmation regarding the administrative charges on page four that the full time employee salary is Paul, and then the charges for other employees include Dr. Burns, Scott Hickok or Becky. Ms. Kiernan replied that is correct. Commissioner Gabel asked why the PERA contribution is so much more; for 2011 it was $6,300 but for 2012 it is listed as $12,000. The percent should be 7.25% of salary but she didn't think it should be double. Ms. Kiernan said she would double check the number. William Burns, City Manager, knew there was an increase but not that much. Commissioner Gabel noted that the TIF Districts and Professional Services exceed the budget for this year. She asked what was included in the professional services and if the budget should be increased for 2012. Ms. Kiernan answered that in 2011 Ehlers and Associates had to do some extra work on the annual TIF reporting and had extenuating circumstances from the state which ended up spending extra time on those areas. Darin Nelson, Finance Director, added that the state auditor's office required this and staff does not see it happening again next year. Commissioner Gabel asked if it was a onetime charge. Mr. Nelson answered yes; a lot of extra time was spent on this audit. Ms. Kiernan noted that it was an additional expense staff wasn't expecting. Chairperson Commers questioned on page eight under professional services the actual expenditures were $7,400 this year but budget was only $1,200. He asked if next year's budget should be $7,500. Ms. Kiernan said those fees include a lot of expense for addressing the changes in the Medtronic TIF agreement. Chairperson Commers asked why the $7,500 isn't put back in the budget and if it should reflect back as if it was a onetime deal. Housing arid Redevelopment Authority Commission Meeting of December 1, 2011 4 Paul Bolin, HRA Assistant Executive Director, said that there was a question between the dates as to when that expense came on. There was one date in our agreement, the county had a date and legislation had another date. Expenses will likely be there next year as not everything has been resolved with that yet; the Medtronic / Lake Pointe TIF district involves quite a bit more work than the others. Chairperson Commers asked what the difference was between the legal expenses out of the general fund and professional services of $60,000. He asked if there were additional expenses in each tax district. Ms. Kiernan answered yes; Mr. Casserly bills each district sepaxately. Chairperson Commers asked what Mr. Casserly's total expenses were. Ms. Kiernan did not have that information but would get the total amount of Mr. Casserly's time back to the Authority. Chairperson Commers asked on page two what funds were dedicated and what funds could be put together for general use. Ms. Kiernan said that the only ones that are not dedicated are Winfield and Onan. Chairperson Commers said that as far as general funds, if the HRA wanted to do something on University they would be able to access Funds 100, 265, 456 and 458. Ms. Kiernan answered yes. Commissioner Holm noted that District Fund 456 goes away in 2012 and District 458 in 2015. Chairperson Commers asked if in order to get the benefit on District Fund 456 if the funds had to be expended before the end of 2012. Ms. Kiernan answered yes; funds would need to be transfened out to a project within that time frame. Commissioner Eggert asked about Castle Vision and the Home and Garden Show on page six and why it was over budget this year. Ms. Kiernan said that some of the items were coded into the wrong program but the actual numbers are around $13,000. Chairperson Commers asked where the income was reflected that was going back into the fund for the Home and Garden Show. Ms. Kiernan said that it is listed under other miscellaneous revenue as Home and Garden Show. There is a revenue of $22,870 for this year and next year is estimated at $23,000 which reflects profit of about $5,000. Housing and Redevelopment Authority Commission Meeting of December l, 2011 5 Commissioner Holm asked how much of the cash balance was for unrestricted use and what the balance of District 468, Gateway East, was. Ms. Kiernan replied that it is still in the red. Commissioner Holm agreed but wondered if the revenue coming back was going into unrestricted funds. Ms. Kiernan was not sure and she would have to check with Jim Casserly or Greg Johnson. Commissioner Holm said that in the budget it looks like a profitable TIF District and we have invested more than what we are getting back. He was confused and asked Becky to could check with Jim or Greg on that item. Dr. Burns said that there is a difference between revenue and cash balance. This district shouldn't be a cash balance. Commissioner Holm said that if revenue is coming in, it should go back to the general fund with unrestricted use. We are getting paid back less than what we invested, but any funds received should go back to unrestricted use. Dr. Burns said that the funds may be showing as not transferrable. Commissioner Holm said that he understood the funds were not to be used as unrestricted. Chairperson Commers agreed that when you look at the funds on page 11 showing the tax levy and interest on investment earnings as revenues with the expenses being of professional services, it does raise an issue as to where the $29,000 goes. Staff will research and get back to the Authority. It is probably a simple answer. MOTION by Commissioner Gabel to approve the 2012 Budget. Seconded by Commissioner Holm. UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY 4. Approve Fund Balance Policy Darin Nelson, Finance Director/Treasurer, said that there will be new components of the fund balance and no longer will there just be Reserved, Designated, and Undesignated. These changes are to governmental fund type definitions, specifically Special Revenue Funds, that will be effective for the 2011 calendar year. Mr. Nelson reviewed the following Fund Balance Definitions: — Nonspendable - Items not expected to be converted to cash (i.e. inventory, prepaid items, land held for resale) — Restricted - Externally imposed constraint (i.e. external parties such as creditor, grantor, government, etc.) Housing and Redevelopment Authority Commission Meeting of December 1, 2011 6 — Committed - Requires Board action (i.e. Mortgage interest earning revenues committed for on-going home improvement loans) — Assigned - Board authorizes the Executive Director, Asst. Executive Director and/or Finance Director to assign fund balance (i.e. interest earnings within a Special Revenue or Capital Projects Fund) — Unassigned - Available for any purpose, reported only in General Fund. Mr. Nelson said that Special Revenue Funds Statement 54 Definition are special revenue funds used to account for and report the proceeds of specific revenue sources that are restricted or committed to expenditures for specific purposes other than debt service and capital projects. In essence, one or more restricted or committed revenues should be the foundation for a special revenue fund and comprise a substantial portion of the fund's revenues. The Housing Loan Fund is the only fund that fits this definition. Mr. Nelson said that in addition to changing Fund Balance definitions and tightening Special Revenue Fund uses, GASB 54 also requires a fund balance policy to be implemented for the General and Special Revenue funds. Even though the Board and staff are routinely monitoring cash and fund balances, the HRA has not had a formal fund balance policy in place. Not having a fund balance policy in the past is not detrimenta.l. In fact, traditional fund balance policies do not necessarily apply to the HRA due to the uniqueness of our operations. Mr. Nelson said that determining an appropriate fund balance level for each of these funds is very arbitrary. The General Fund needs to have sufficient funds to cover general operating expenditures, at least 50% of the subsequent year's operating budget. It also needs to have necessary working capital to subsidize the beginning stages of potential redevelopment projects. The Housing Loan Special Revenue Fund balance level needs to be sufficient to support the revolving home loan program. Mr. Nelson said that establishing specific fund balance amounts or percentages for both of these funds is not nearly as important as continuing to monitor current and future cash flow trends to ensure sufficient reserve levels are available to meet demands, which both the Authority and staff are currently doing. Mr. Nelson said that the new fund balance policy also needs to authorize Executive Director, Asst. 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 only to assign resources from a presentation standpoint only. Mr. Nelson said that the policy also needs to include how the HRA intends to use its resources when multiple categories of fund balance are available. When both Restricted and Unrestricted resources are available, it will be the HRA's policy to first use restricted resources. When unrestricted resources are available, it will be the HRA's policy to use resources in the following manner. 1. Committed 2. Assigned 3. Unassigned Mr. Nelson said that these changes will not affect how the HRA conducts business. All of these changes will be from a presentation standpoint within the City's Comprehensive Annual Housing and Redevelopment Authority Commission Meeting of December l, 2011 7 Financial Report (CAFR) only. Staff recommends the Authority pass a motion approving the Fridley HRA Fund Balance Policy (Action Item #4). Staff also recommends the Authority pass Resolution 2011-12 committing specific revenue sources in the Housing Loan Special Revenue Fund (Action Item #5). Commissioner Holm said that there are now five accounts; nonspendable, restricted, committed, assigned and unassigned; basically subaccounts of unrestricted fund balances so we still have three categories. Mr. Nelson answered yes; but nothing will be classified as unrestricted. Commissioner Holm suggested in the second paragraph under General Fund to add the word meet so it reads: In addition to this minimum amount needed to meet cash flow general operations... And to eliminate the sentence that reads: Therefore, determining what an approp�iate fund balance is becomes a�bitrary. Chairperson Commers said that the HRA may have more than what is needed to meet the 50% requirement. Mr. Nelson said that maybe correct but 50% is in there plus whatever direction the Authority wants to go. He did not want to constraint the budget. Commissioner Holm suggested that under definitions for non spendable fund balance to place a comma after intact and semicolon after for example so it reads: Amounts that are not in a spendable form or are required to be maintained intact, for example; inventory, long term receivables and prepaids. Chairperson Commers said that as he understands the resolution, at any time the HRA can bring forth a motion to change where the funds go in the housing fund. The interest is dedicated but we can make changes by a motion. Mr. Nelson answered that changes would have to be done by a resolution. We have the option of assigning interest earned; mortgage interest from the loans. Those funds aze committed and we can roll that into future housing loans. Chairperson Commers asked if funds can be assigned to a different project if the resolution is passed. Mr. Nelson answered yes. Chairperson Commers asked what this really accomplishes. Mr. Nelson said that the GASB 54 would tighten up special revenue definitions. This does not allow the Authority to have undesignated funds. This will make things more comparable from city to city. MOTION by Commissioner Holm to approve the GASB 54 Fund Balance Policy with the revised comments as discussed. Seconded by Commissioner Gabel. Housing and Redevelopment Authority Commission Meeting of December 1, 2011 8 UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY 5. Approval of Resolution Committing Specific Revenue Sources in the Housing Loan Special Revenue Fund MOTION by Commissioner Holm to approve the Resolution Committing Specific Revenue Sources in the Housing Loan Special Revenue Fund. Seconded by Commissioner Gabel. UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY 6. Approve Contract for Blight Analysis Paul Bolin, HRA Assistant Executive Director, said that last month the HRA signed an Interim Agreement, with Real Estate Recycling (RER). RER signed a purchase agreement this week. RER has 120 days for "due diligence" and the Interim Agreement calls for a blight analysis. RER must meet the statutory requirement for substandard buildings for HRA to provide assistance. RER is required to pay for all studies and the engineering firm of LHB, will conduct the analysis. Staff recommends approval of contract with LHB. Mr. Bolin said that Chairperson Commers recommended replacing the owner with Fridley Housing and Redevelopment Authority and on the signature page change owner and have Chairtnan Commers sign it. Chairperson Commers thought that it was a pretty standard agreement. Commissioner Gabel questioned the cost and fee structure and asked what would constitute reimbursable expenses. Commissioner Meyer answered that would include things like travel, long distance phone calls or special rental of equipment. Chairperson Commers asked about Article 9 and if there would be any problem with these people getting full access to property to do the testing. Mr. Bolin said that the purchase agreement addresses access to the building for this analysis. There are a number of different things allowed in the purchase agreement. This looks at the structure and infrastructure, visible things that would cause the building to be substandard. Commissioner Holm assumed that Real Estate Recycling is in agreement. Mr. Bolin answered yes; they have been involved in the process of working with LHB on other projects as well. MOTION by Commissioner Eggert to approve the contract for blight analysis. Seconded by Commissioner Gabel. Housing and Redevelopment Authority Commission Meeting of December 1, 2011 9 UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY Respectfully Submitted, Krista Monsrud, Recording Secretary Housing and Redevelopment Authority Commission Meeting of December 1, 2011 10 INFORMATIONAL ITEMS 1. Housing Replacement Program Update Paul Bolin, HRA Assistant Executive Director, said that Veit completed the demolition work on November 18. Tomorrow morning we will close on 561 Ironton Street. This home was purchased for $47,000 and the home does have quite a bit of mold on the inside. The home will be a candidate for tear down late winter or early spring. Staff hopes to find a few more homes for demolition at the same time. Staff will continue to look for different properties. There has been a slow down on homes available for sale and banks are not letting large numbers of homes out of foreclosure. Currently there are not a lot of homes available below $100,000. Chairperson Commers asked if a price has been established for the vacant land. Mr. Bolin answered no; there is not a firm price. Commissioner Gabel was impressed how the homes were torn down so efficiently; everything was confined and well managed. 2. Housing Loan Program Update Paul Bolin, HRA Assistant Executive Director, said that in November one RLF loan was closed making a total of l O loans closed year to date. There was one remodel visit making a total of 10 year to date. Mr. Bolin said that the home on 2"d Street had three showings so traffic is picking up. Comments on the home have been very positive and no one has said the home is overpriced at $139,900. We will continue to market the home at this price and if the traffic goes down maybe then it's time to reduce the price. Sta.ff is optimistic it will sell before the end of the yeax; it is a unique home and nothing like this is on the market. Commissioner Meyer asked if there was any penalty if the house does not sell before the end of the year. Mr. Bolin answered no but the city will have to keep the driveway plowed, sidewalk clear and pay the heat bill. This will not affect the increment that is collected as no funds will be collected until the home is sold. Commissioner Meyer thought it may be best to hold off on any price changes until spring when the housing market usually picks up. Mr. Bolin said that if the trend continues where the values keep dropping, we may have to do something. Staff will keep a close watch. Mr. Bolin said that the listing agreements were signed for the properties on University Avenue. Premier spent time with staff trying to figure out from a zoning perspective what kind of users could use this space. They will be targeting certain types of groups. Mr. Bolin said that the other property on University Avenue at 5725 Third Street may be listed on MLS by the end of this week. They have a concept plan to use when marketing this property. Housing and Redevelopment Authority Commission Meeting of December 1, 2011 11 A two bedroom, one bath with an unfinished basement where there will be room for a third bedroom and family room. As they find a buyer the plan could change. Any home design needs to be approved by the Authority before moving forward. Mr. Bolin said that a map of the shuttle route for metro transit will run as a demo program trial. A 30' bus will meet every train and shuttle people to Unity Hospital, Holly Center, Cummins, Onan, and Medtronic Rice Creek Campus. Details are still being worked out on the exact schedule and route. Any comments can be sent to Bill or Paul. Commissioner Gabel asked if this shuttle will be advertised so people are aware this is going on. Mr. Bolin said he was not sure what marketing efforts would be done. William Burns, City Manager, said it will be mentioned in the news letter and in a video that was done featuring Dr. Burns. Mr. Bolin reminded the Authority of the North Metro Home and Garden Show on Saturday, February 25, 2012 at the Schwans Center in Blaine from 9:00 a.m. — 2:00 p.m. ADJOURNMENT MOTION by Commissioner Gabel to adjourn. Seconded by Commissioner Meyer. UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY AND THE MEETING ADJOURNED AT 8:30 P.M. Respectfully Submitted, �Ci� �no�� � Krista Monsrud, Recording Secretary