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HRA 01/03/2013 CITY OF FRIDLEY HOUSING AND REDEVELOPMENT AUTHORITY COMMISSION January 3, 2013 CALL TO ORDER: Chairperson Commers called the HRA Meeting to order at 7:07 p.m. ROLL CALL: MEMBERS PRESENT: William Holm Pat Gabel Larry Commers Stephen Eggert Gordon Backlund OTHERS PRESENT: Paul Bolin, HRA Assistant Executive Director Scott Hickok, Community Development Director Jim Casserly, Development Consultant Darin Nelson, Finance Director/Treasurer Becky Kiernan, Accountant ACTION ITEMS: 1.Welcome New Commissioner Gordon Backlund Paul Bolin, HRA Assistant Executive Director, stated that Commissioner Backlund has been a member of the Fridley Charter Commission for 10 years, the Fridley School Board for 23 years, the MN House of Representatives for 2 years and a Fridley Resident for 35 years. He brings experience in electrical engineering and worked for the Met Council as a Contract Administrator. 2.Approval of Expenditures MOTION by Commissioner Holm to approve the expenditures as submitted. Seconded by Commissioner Gabel. UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY 3.Approval of December 6, 2012 Meeting Minutes MOTION by Commissioner Holm to approve the minutes as presented. Seconded by Commissioner Gabel. Commissioner Eggert asked for the following corrections to be made: HRA Meeting of January 3, 2013 2 Page two, second paragraph, fourth line should read “And The Capital Outlay Funds…” Page eight, Non-Agenda Items, second sentence should read “been professional in the way he handle handled things which…” UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY AND THE MINUTES APPROVED AS AMENDED 4.Approval of Resolution Designating Official Depositories Paul Bolin, , HRA Assistant Executive Directorsaid that this item comes before the Authority every year and this year there are no changes. Wells Fargo has been the official bank for both the City and HRA for a number of years; they are easy to work with and flexible with investment management. Staff recommends approval of the resolution designating Wells Fargo as the official depository for the Authority. Chairperson Commers noted that Darin Nelson and Shelly Peterson will be signing document requests with the bank. Mr. Bolin answered that is correct. Commissioner Gabel asked if the Authority would gain any interest on the bank account. Darin Nelson, Finance Director, replied that staff tries to keep a minimal amount of cash at Wells Fargo as there is no incentive to keep funds there, due to low interest rates on savings accounts. MOTION by Commissioner Holm to approve the Resolution Designating Official Depositories. Seconded by Commissioner Gabel. UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY 5.Approval of Resolution Designating Official Newspaper Paul Bolin, , HRA Assistant Executive Directorsaid that annually the City and HRA designate an official Newspaper. The Fridley Sun Focus News and the Minneapolis Star Tribune have been the official newspapers for the both the City and HRA for a number of years. Both are available locally and meet the requirements found in MN Statutes. Staff recommends approval of the resolution designating these official newspapers. Chairperson Commers asked if the official newspaper would be the Fridley Sun Focus and Star Tribune. HRA Meeting of January 3, 2013 3 Paul Bolin, HRA Assistant Executive Director, replied yes, both would be official newspapers due to the fact that the Focus is a weekly newspaper and meeting the deadlines is sometimes an issue. Sometimes it is simpler and quicker to use the Start Tribune. Commissioner Gabel said she has called the Focus to get the newspaper delivered to her home and she still does not receive it. She asked if staff had the ability to put notices on the website or if there was a statute saying they have to be put in the newspaper. Mr. Bolin replied that there is a statute that notices have to be posted in the local offical newspaper. MOTION by Commissioner Holm to approve the Resolution Designating Fridley Sun Focus and Start Tribune as the Official Newspaper. Seconded by Commissioner Eggert. UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY 6.Approval of Resolution Ratifying Transfer of Funds Paul Bolin, HRA Assistant Executive Director, stated that the Winfield TIF District #7 created in 1986. It was decertified on 12/31/12 with a balance of $262,910. The balance was transferred to Gateway West TIF #18, per Statute, to cover a portion of the shortfall in TIF #18. Staff recommends approval of resolution ratifying transfer of funds, for record keeping purposes, from District #7 to District #18. MOTION by Commissioner Gabel to approve the Resolution Ratifying Transfer of Funds. Seconded by Commissioner Eggert. UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY 7.Approval of 2013 Budget Chairperson Commers noted that there were a few corrections made to the previous preliminary budget. MOTION by Commissioner Gabel to Approve the 2013 Budget. Seconded by Commissioner Holm. UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY 8.Approval of Resolution Authorizing Negotiations for Sale of 6017 University Avenue N.E. HRA Meeting of January 3, 2013 4 Paul Bolin, HRA Assistant Executive Director, stated that the McNutt Companies have wanted to purchase site since July. The purchase has been delayed to explore a pedestrian overpass, on a portion of this site, but the grant to design the overpass has since been denied. Mr. McNutt would like to begin construction in the spring of 2013. Staff recommends approval of a resolution authorizing an exclusive negotiation period between McNutt Companies and Authority. This will provide time to develop plans, market the site, secure funding and PC/HRA/CC approvals. Chairperson Commers asked for an explanation of the tiered pricing found in the agreement. Mr. Bolin said that is an attempt to maximize the potential value of the site. It is designed to encourage Mr. McNutt to build closer to a 4,500 sq. ft. instead of 2,000 sq. ft.. Chairperson Commers asked if this was a different approach than what has been done in the past. Mr. Bolin replied that is correct, this is a different approach. Mr. McNutt was looking to build somewhere between 2,000 and 4,500 sq. ft. of retail. In order for the Authority to get their investment back on the property, the more the square footage of building, the higher the market value of the building, the higher the increment generated for the Authority. If Mr. McNutt wanted to build a smaller building on this site he would pay a more market rate price to purchase the property from the Authority. If he chooses to build 4,500 sq. ft. he would receive a discount on the land price. Chairperson Commers asked what this would do in terms of precedent for other developers that come in. Mr. Bolin asked if he was referring to the land price. Chairperson Commers replied yes. Mr. Bolin said that staff has discussed a range of pricing with people looking at other portions of the site, some asking to sell the site for a dollar, others willing to pay a market rate. The end use of the property is what dictates what the sales price needs to be for redevelopment to happen on any parcel. The HRA can’t put a set sq. ft. price on the entire lot, as the uses will be varied. Staff will approach each negotiation separately and differently based upon use. Commissioner Gabel was concerned about having different pricing structures and wasn’t sure how that would work. She thought it would be better to sell the land at more consistent prices. Jim Casserly , Development Consultant, said that in this instance the developer wanted some flexibility in what he brought to the site and wasn’t sure what could be developed on the site. This resolution allows a period of time for him to explore development opportunities. If he HRA Meeting of January 3, 2013 5 knew what would be developed the Authority could be more specific on price. A broker has been promoting the site for many months and this is one of the better opportunities that came forward. The use will dictate the price a developer will be willing to pay. Staff would like someone to come in and offer a price for the entire site but that isn’t going to happen. There will be different uses; at the northern end will be commercial and south will be residential, rental or owner occupied residential. We know we want the highest quality of product on site and there is an opportunity for commercial business to occur right at the corners. Every year the site is not developed increment is lost. Mr. Bolin replied dealing with a local developer who has done similar sites; Mr. McNutt knows what he can or can’t pay for this site. If we work with someone from out of state, or with a different use, there will be a different negotiation. Mr. Bolin understands the concern from the Authority about not having a continuous look and feel in the corridor. This project was undertaken to improve the image of the City and the HRA has the authority to approve or disapprove any development that comes forward. Everything that is built on this corridor has to be reviewed and approved by the Authority, Planning Commission and City Council. The Authority will have total control of the look and what happens down there. Commissioner Eggert said that it is best to maximize the use of the land and building a 4,500 sq. ft. structure there will be a terrific use on that corner. Commissioner Backlund asked about the gas station and if the environmental tests would hold the Authority harmless in what they find. He asked when the responsibility of the land would be transferred. Mr. Bolin replied that prior to the Authority purchasing the site an environmental study was done and the tanks were removed. A letter was received from the MPCA saying the land was clean and required no further action. He doubts additional studies will be done. Mr. Casserly added that the Authority tradition is to sell the land with full disclosure, providing all information on the sites; but do not guarantee purity. The Authority is not responsible and does not have an obligation to clean anything up. If contamination is found, the Authority is not the responsible party, it would be the prior owner’s responsibility. Commissioner Backlund asked for confirmation that the previous owner would maintain the responsibility for clean up. Mr. Casserly said it would depend on the response from the MPCA after clean up. Chairperson Commers recalled an issue with Gateway East where contamination was found and that became the Authority’s problem. Mr. Casserly said that HRA could let property sit indefinitely or find out if something could be done to remediate it to allow construction to occur. HRA Meeting of January 3, 2013 6 Chairperson Commers said that if the property is sold, the land would have to get cleaned up and if Citgo is not willing to do it, the Authority would have to. Mr. Casserly said that there are funds available for this kind of clean up. The Authority has been in pretty good shape with the contamination it has found over the years. Commissioner Eggert said that the Authority paid different prices for each piece of land. Chairperson Commers wondered if there was one developer, if the development would have a more uniform look. Mr. Bolin said that it may be beneficial if a single developer were willing to purchase this site and the land to the south. Staff has had discussions with a larger developer; but they are not able to develop the entire site as their specialty is retail. Mr. McNutt would like to build this spring and he needs plans drawn up and submitted. He is trying to meet a 1/15 deadline for land use applications. Since July he has been persistently asking to purchase this property. So far he was okay to wait to find out about the grant opportunity for an overpass. At some point, if we can’t give him some commitment, he will walk away. Scott Hickok , Community Development Director, said that even if this larger group from out of state bought all the land for commercial use, there would be cooperation between them and the residential folks. There could be a coordination and development that would complement each other. The HRA would like a “village concept” and we have few opportunities after this to make sure that happens. This will be an invitation to other well designed projects. Commissioner Holm said that a catalyst is needed for this project. Is there risk associated with approving this? Yes, but the risks are reasonable and this is a good step forward to get something started on this project. Commissioner Eggert added that this is just an offer, not a purchase. Chairperson Commers was not sure or clear on how far the HRA can go and if the HRA doesn’t want that design, the deal is off. The HRA has been sued over those kinds of issues in the past. The HRA has some control but a deal is a deal. He is also not sure about the pricing and why we would do that at this point. If Mr. McNutt comes back with 4,500 sq. ft. we could make a better deal. MOTION by Commissioner Holm to Approve the Resolution Authorizing Negotiations for Sale of 6017 University Avenue NW. Seconded by Commissioner Eggert. UPON VOICE VOTE, COMMISSIONER EGGERT, COMMISSIONER HOLM AND COMMISSIONER BACKLUND VOTING AYE, COMMISSIONER GABEL AND CHAIRPERSON COMMERS VOTING NAY, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED ON A 3/2 VOTE HRA Meeting of January 3, 2013 7 9.Approval of Addition to the Housing Replacement Program Paul Bolin, HRA Assistant Executive Director, stated that in November City Council approved lot split on 5800 block of 2 ½ Street. The purpose was to provide two buildable lots for HRP, from 3 underlying lots (Lots 22-24, HP Add.) For record keeping purposes, and to make determination of increment simpler, the County has requested that lot 24 be added to Phase V of the Housing Replacement Program. Staff recommends approval of the resolution amending Phase V of the HRP to include underlying lot #24. MOTION by Commissioner Gabel to approve the Addition to the Housing Replacement Program. Seconded by Commissioner Eggert. UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY INFORMATIONAL ITEMS: 1.Housing Replacement Program Update Paul Bolin, HRA Assistant Executive Director, stated that in 2012 there were 15 loans and 21 remodeling advisor visits. In 2011, there were a total of 10 loans and 10 remodeling advisor visits so this program has increased quite a bit since last year. NON-AGENDA ITEMS: Last month the HRA rejected bids for demolition of a few more Housing Replacement Program parcels. The bidding process was reopened and four companies responded getting the bid down to $34,000 with a group out of Stillwater that we have dealt with in the past. Rejecting the bids saved $25,000. 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 8:15 P.M. Respectfully submitted, Krista Peterson Recording Secretary