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HRA 02/02/2012 -C Cgj February 2, 2012 HRA Meeting Regular Meeting Agenda 7:00 p.m. City Hall, Council Chambers Call to order Roll call Special Report: Real Estate Year End Review Eric J. Myers Government Affairs Director Saint Paul Area Association of REALTORS® • Brief Presentation on Trends in the Real Estate Market in 2011 and Expectations for 2012 Action Items 1. Approval of expenditures 2. Approval of January 5, 2012 Meeting Minutes 3. Public Hearing and Consideration of Resolution Authorizing Sale of 4757 2nd Street NE Informational Items 1. Update on Potential Redevelopment of 4800 East River Road 2. Housing Loan Program Update Adjournment K:\COMMISSION AGENDAS\2012 HRA Commission Agendas\12 02 02.docxK:\COMMISSION AGENDAS\2012 HRA Commission Agendas\12 02 02.docx January J Fridley HR,,Checking ACCOUN i b"PAYABLE Acct#0000117036 REGISTER Date Check# Vendor Invoice# Description Code Amount 12/30/2011 29337 Castle Visions 123011-1 2012 North Metro H&G Show 265-0000-430-4330 676.35 676.35 12/30/2011 29338 Center for Energy&Environment 10768 Loan Origination Fees-Ratliff 265-0000-430-4340 550.00 Installation Verification-McKee 265-0000-430-4340 140.00 Remodeling Advisor Visit-Fair 265-0000-430-4340 130.00 820.00 1/6/2012 29341 Fridley HRA Home Loan Program 157 Revolving Loan-Ratliff-386 Longfellow St 265-0000-127-0000 8,264.00 8,264.00 12/31/2011 29343 Liesch Associates,Inc 06801309.00-5 Abatement oversite prior to Demolition 501-0000-430-4340 481.50 481.50 1/6/2012 29344 MnGFOA 2012 Dues-Becky 100-0000-430-4331 60.00 60.00 1/11/2012 29340 Den-Mark Plumbing Home Demostration Finals 265-0000-430-4340 1,432.12 29345 Northwest Heating&Cooling Inc 265-0000-430-4340 1,704.91 29336 Arch Electric 265-0000-430-4340 1,909.50 j 29342 Jerrys Countertops LLC 265-0000-430-4340 477.38 29339 Cornerstone Custom Construction 265-0000-430-4340 1,295.73 6,819.64 1/9/2012 Xcel Energy Electricity-4727 2nd Street NE 265-0000-430-4338 37.28 37.28 1/13/2012 Wilson Development Svc,LLC Relocation Analysis-BAE/RER 100-0000-430-4330,4606 632.06 (RER to fully reimburse) 632.06 10/27/4889 CenterPoint Energy Gas-4757 2nd St NE 265-0000-430-4338 75.68 75.68 1/18/2012 Advantage Signs&Graphics Banner for H&G Show 265-0000-430-4335 143.75 143.75 1/17/2012 American Planning Association APA Membership 100-0000-430-4331 440.00 440.00 January L.) Fridley HR,-,)ecking ACCOUN i blAYABLE Acct#0000117036 REGISTER Date Check# Vendor Invoice# Description Code Amount 1/20/2012 Springsted Inc TIF Seminar-Becky -May 15th 100-0000-430-4337 35.00 35.00 1/20/2012 CenterPoint Energy Gas-551 Hugo Street-Final 501-0000-430-4338 29.42 29.42 1/31/2012 Passau,Inc Snow Plowing-4757 2nd St 265-0000-430-4340 130.00 130.00 1/31/2012 City of Fridley Wellness Testing 100-0000-430-4130 65.00 Communication 100-0000-430-4332 29.97 Printing&Binding 100-0000-430-4335 83.51 Insurance Non-Personnel 100-0000-430-4336 1,881.58 Services Contracted-Non Prof. 100-0000-430-4340 317.97 Miscellaneous 100-0000-430-4346 856.92 Health Insurance 100-0000-219-1001 1,564.62 Dental Insurance 100-0000-219-1100 179.03 Life Insurance 100-0000-219-1200 1,139.73 ICMA Retirement 100-0000-219-1700 1,808.45 LT Disability Insurance 100-0000-219-2300 272.02 Workers Compensation 100-0000-219-2400 903.02 Health Care Spending 100-0000-219-2500 92.32 Professional Services 265-0000-430-4340 249.23 9,443.37 1/31/2012 Castle Visions 2012 North Metro H&G 265-0000-430-4330 1,830.36 1,830.36 1/30/2012 Monroe Moxness Berg Administration Fees 100-0000-430-4330 14,243.32 14,243.32 January Invoices $ 37,342.09 ti. n CITY OF FRIDLEY HOUSING AND REDEVELOPMENT AUTHORITY COMMISSION January 5, 2012 CALL TO ORDER: Chairperson Commers called the HRA Meeting to order at 7:05 p.m. ROLL CALL: MEMBERS PRESENT: Larry Commers, Chair William Holm Stephen Eggert Pat Gabel John Meyer NONMEMBERS PRESENT: Paul Bolin, HRA Assistant Executive Director Scott Hickok, Community Development Director Becky Kiernan, Accountant William Burns, City Manager Greg Johnson, CPA Paul Hyde,Real Estate Recycling n ACTION ITEMS: 1. Approval of Expenditures MOTION by Commissioner Holm to approve the expenditures as presented. Seconded by Commissioner Eggert. UPON VOICE VOTE,ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY 2. Approval of December 3, 2011 Meeting Minutes MOTION by Commissioner Holm to approve the minutes as submitted. Seconded by Commissioner Eggert. UPON VOICE VOTE,ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY 3. Approval of Resolution Designating Official Depositories Becky Kiernan, Accountant, said that Wells Fargo has been the official bank for the both the City and HRA for a number of years. They are very responsive, easy to work with and flexible ■'■ Housing Redevelopment Authority Meeting of January 5,2012 2 with investment management. Staff recommends approval of the resolution designating Wells Fargo as the official depository for the Authority. MOTION by Commissioner Holm to approve the Resolution Designating Official Depositories to Wells Fargo. Seconded by Commissioner Gabel. UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY 4. Approval of the 2012 Mowing Contract Paul Bolin, HRA Assistant Executive Director, said that last year staff ran a formal process, in conjunction with CD code enforcement. Seven proposals were received and the Authority awarded the contract to Passau Inc. to mow Authority properties in 2011. City and Authority Staff were pleased with the work done by Passau. Passau is willing to extend the current contract for one year at last summer's rate. Staff recommends approval of the extension of the mowing contract with Passau Inc. Chairperson Commers asked if Passau was required to hold a certain amount of liability insurance. Mr. Bolin answered yes. Commissioner Gabel asked who was responsible for mowing the sidewalk area at the rail station. Mr. Bolin answered Metro Transit. Commissioner Gabel said they are not mowing the south end of the sidewalk area. MOTION by Commissioner Gabel to approve the 2012 Mowing Contract with Passau Inc. Seconded by Commissioner Meyer. UPON VOICE VOTE,ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY INFORMATIONAL ITEMS: 1. Update on Potential Redevelopment of 4800 East River Road/Preliminary Review of Tax Increment Analysis Paul Bolin, HRA Assistant Executive Director, said that in November, HRA signed an Interim Agreement with Real Estate Recycling(RER). In late November,RER signed a purchase agreement and they have 120 days for"due diligence". In December, the blight analysis was initiated and preliminary review indicates that the buildings meet the statutory requirements for Housing Redevelopment Authority Meeting of January 5,2012 3 "substandard". In late December/January, RER is scheduled to meet with the tenants and then the TI Analysis will be updated. Greg Johnson, CPA, reviewed the five page analysis that showed what kind of TI could be generated from this site and how much it would cost. Page one—Assumptions There is 250,000 square feet of development projected to occur each year for seven years. Using the pay 2012 Truth-in-Taxation rates, annual taxes upon completion would be $3.2M. Annual tax increment would be about half this amount at $1.6M. A Hazardous Substance Subdistrict would add an additional $338,000 of tax increment each year to help pay for clean-up costs. Page two—Cash Flow and Present Value Analysis Column e shows the semi-annual tax increment generated by this development. Over a 26 year period$37M of tax increment is generated. Assuming 10% admin fees (column f), $33.3M is available for project expenses (column g). the present value of this amount at a 6%present value rate is $13.4M(column i). no inflation has been assumed. Page three—Hazardous Substance Subdistrict (HSS) Because of the substantial remediation costs involved with this Site, RER is requesting that the Authority and the City establish a HSS. The tax increment results from reducing the base of the HSS to zero and then using its current market value for calculating the tax increment. The revenues generated by an HSS are not tax increment in the traditional sense because the Authority is capturing the existing tax capacity of the Site. An HSS is the only example in general law in which tax increment actually reduces tax capacity available to other taxing jurisdictions. Because the revenues from an HSS may only be spend on remediation and the district can last only as long as is necessary to pay for the remediation, the legislature has continuously supported the use of HSS revenues to assist in the redevelopment of polluted properties. As the Cash Flow demonstrates the potential amount of tax increment that may be collected over the life of the HSS should be approximately$8.8M. This amount is circled on the bottom of the column(e). After the HRA's administrative fees are deducted the total of the available tax increment, as shown in column(g), is $7.9M which has a present value of $3.5M as shown in column(i). Page four—Sources and Uses There is $54.2M in redevelopment costs identified by the developer. These include relocation of existing tenants, demolition of existing structure, environmental remediation of the site, and public infrastructure costs. Under the sources, we have calculated that $16.9M would be available from all tax increment, including HSS. The developer is projecting the $33.1M could be obtained as grants from various government agencies, including DEED, Met Council and Anoka County. A developer match of$2.5M is also assumed, which is a requirement of the grant funding. A deficit of$1.6M is currently shown, which is less than 3% of estimated costs. Housing Redevelopment Authority Meeting of January 5,2012 4 Page five—Pie Chart—Distribution of Taxes Upon Completion Available tax increment generated from this development for project expenses represents 46% of each tax dollar paid by this development for project expenses ° . . : .. , •e ••_ ._ - . I - . The HSS contributes another 9%. The HRA is estimated to retain about 6% or$197,000 annually. The State represents a significant portion of each tax dollar. The State's annual share is $910,000, or 28% of the total taxes. The school district, in the form of Market Value Referendums, will receive $154,000 annually. Commissioner Meyer asked what would happen if the first development took place and then it was another 10 years before the next development started. Unfortunately, there is a development history in Fridley for taking 10 years between phases. He asked what would happen if that type of situation transpired with this development. Mr. Johnson said there would not be enough funds to clean up everything and we would have to encapsulate it; nothing would happen on that site. In a TIF district you can delay receipt of the first increment and we can elect this to not come in for four years. This would help stretch out the funds. Commissioner Meyer asked if there were any risks; like were we obligated to clean up the area if he ran into problems. Mr. Johnson said that the developer has taken the responsibility to clean up this area with his funds. Chairperson Commers asked what happens if we don't keep up with the schedule and the phases are not completed. He asked if the area would be cleaned up as they go. Mr. Johnson answered yes; they will clean up as they go. Chairperson Commers asked how the discount rate was built in. Mr. Johnson said they used 6%. Developers are looking for a number higher than that but with the city involved a lower percentage was used. Right now he is not sure how this will be financed. This is a preliminary estimate and is not set at 6%. Chairperson Commers said that this is a different type of tax financing. He asked how much money the city/schools would be losing for full tax capacity. Mr. Johnson answered about $340,000 per year. He did not have the percentage breakdown. William Burns, City Manager, said that city is around 20-25%. Mr. Johnson thought the city was 40%, county 40%, and the school 20%. Dr. Burns said that the school has the largest percent, then the county, and then the city. ••• Housing Redevelopment Authority Meeting of January 5,2012 5 Mr. Johnson said that the school district, in regards to the tax capacity, is smaller plus the school gets the tax referendum. Chairperson Commers said then the $300,000 tax capacity loss is 40/40/20. Mr. Johnson answered yes, with the school receiving the smallest portion. Commissioner Holm asked if it were truly a loss as the gain wasn't that much. Chairperson Commers answered no;we are going back to zero. Mr. Johnson said that there are restrictions as to what that money can be used for. Once financing is established the hope is that you can decertify this hazardous district. Chairperson Commers noted that on page two, the regular tax increment, HRA doesn't take any capacity off that in column b correct? Also on page three there is no floor on the capacity, we start at zero. Paul Hyde,Real Estate Recycling, said that the idea at this point is that there will be some extraordinary costs to be encountered up front and other costs as we roll out a building. The environmental costs start immediately. We have had several conversations with staff and there will be upfront money there to start the project. As areas are built we may find different hot spots or even buried drums. That is how we will go through large costs with each phase of the development. If it takes us longer because the market is not there,the costs will not incur until the building is built. Grants and increment funds will be there when we are ready to start the building. Although we will need to work on some areas right away, the entire site doesn't have to reach the environmental condition on day one. That is the reason for the multiple phases as it could be tough financially. Chairperson Commers said that there will be funds available in 2015, $169,000 for the hazardous district and $74,000 in the TIF district. Mr. Johnson answered yes; semi annually. Mr. Hyde said that the next step will be to figure out the timing as to what needs to be done up front and what needs to be done over time. The site survey is complete and now an architect will lay out a site plan followed by developing the phases. Once this is done we will have a better sense of the cash flow that Mr. Johnson was talking about. We have to plan accordingly and be flexible in terms of the cash flow for the project. Next week we plan to start the site planning process and will get a better sense of how much we can build. We have to factor in storm water ponds and roads which will change the site coverage. Mr. Hyde said that two weeks ago he met with the US Navy who is in charge of the majority of the clean up and BAE systems. He is also in a cooperative partnership with the seller and they are aware it is difficult to clean up this site. Lastly we have had good early progress with talking Housing Redevelopment Authority Meeting of January 5, 2012 6 i to the tenants about the plans for the project. We plan to further our conversations with the tenants, develop the site plan, meet with the environmental person on board and then work with the cash flow. Mr. Hyde said that regarding the capital structure, you basically need two buckets; one is buying the site which includes 50% land loan from a bank with a 4/5 year term paid down and our own capital for other 50%which pays for the dirt. Then there is the construction loan for each building; which includes borrowing 75% and 25% from land equity. Each bank loan will finance each building. Lastly there is the permanent mortgage which will have a nonrecourse debt for stabilized buildings. Banks are coming back to us and we have found there is a lender appetite for this project. Lenders are very eager and they have seen the benefits of a new development and how it has weathered in this economy. Commissioner Eggert asked how many lenders talking to RER. Mr. Hyde answered up to 10 including US Bank and Wells Fargo. Commissioner Eggert asked from past experience, how much leverage is put in. Mr. Hyde said that on the land loan you typically borrow 50% of the land value. This site will have tenants on site for four years with leases so that will create cash flow. Stabilized buildings with cash flow will allow us to pay the loan off and when we have the new loan for the buildings we can borrow 75%with the other 25% land value. Commissioner Meyer said that we have had experience in the past with large acreages like where Medtronic is now and there were pre-designated types of buildings constructed to the amount of$5.0M. None of that was utilized and the $5.0M was wasted. With this large site, we talk about clean up or site improvement; what are going to do to prevent putting heavy amounts of money in parcels and not have that money wasted? What is the process to curtail activity until we have clients to avoid unfortunate expenditure? Mr. Hyde said that the plan is to not spend time trying to figure out each lot site and roads based on a speculation of what may end up there. We need to be careful and break down construction into phases so that the phase one building will be on the south side. There will be a thoughtful thinking process moving forward and we will build one building at a time. Commissioner Meyer asked what architect firm they were working with. Mr. Hyde said they are working with architects from OPUS. They have a skill set in knowing how to minimize upfront costs and are good at working with environmental engineers at marrying building and clean up environmental issues. Commissioner Gabel asked what percentage of the cleanup is the user's responsibility. Mr. Hyde said that RER will clean up the north part of site and the southern end of the site will be the responsibility of the Navy. The second clean up on the southern part of the lot will be Housing Redevelopment Authority Meeting of January 5,2012 7 paid by BAE. The stuff under the building will be a conversation with the Navy. The Navy is spending $350-400,000 on underground water systems. This project will lower ongoing future costs to the Navy and RER will work with the Navy to handle some of those expenses. The Navy sees value if the building is torn down. Commissioner Gabel asked what potential grants were in line for this project. Mr. Hyde said that there are currently two programs in line with a potential for a third. The first grant would be from DEED for the contamination cleanup program in the amount of$350 - $400,000 every six months. Met Council also has a grant for"green building" or reuse of existing infrastructure but there is less funding available there; $1-2.0M every six months. Some of this funding has been allocated to projects that are not got off the ground yet. Both programs have had success in Fridley. These are competitive grants and we need to do a good job at drafting up the application. The third grant Anoka County modeled after Hennepin and Ramsey County; making the project greener. We will go back to the legislature and get Hennepin County renewed and ask for a new grant for Anoka County. We will see what happens this year; if it doesn't happen this year maybe it will happen in the next year or two. Commissioner Holm asked if these grants are needed for the start up of the development. Mr. Hyde answered yes; they need to figure out how much is needed upfront through grants and TIF and then roll out the funds throughout the project. If we divide the project into smaller pieces we will be successful. This will be an enormous return on public investment. Commissioner Holm asked if they were committed to the four month window for due diligence. Mr. Hyde said that there is no opportunity like it to even improve water quality. He spoke to the seller today and if we need more time they will work with us. They know we have spent a lot of money already. Chairperson Commers said we are not bound because this is not government casing. Mr. Bolin said that this is a concern as we moved along on this. Last week we met with Dan Wilson who has worked on our behalf in the past. He is going though all of the existing leases and when Mr. Casserly is back, the two of them will figure out if we do have any exposure there. Chairperson Commers asked if we needed a legal opinion on that. Dr. Burns said that BAE is moving from production so the heavy equipment is no longer in use; they are moving back to research and development on that site. Chairperson Commers agreed that would be good but we don't know if that excludes the equipment that is on site. Commissioner Meyer asked what control HRA had regarding the type of building, size, and usage that is built. Housing Redevelopment Authority Meeting of January 5,2012 8 Mr. Hyde said that they have been working with staff and once the site plan is developed they will let them know what percentage is office/retail etc. The zoning and planning staff will guide us for planning use and types of construction. Whatever is built will be better than what is there now. There will be a mix of buildings and the game plan is to save the space upfront for something good like a Target. 2. Housing Replacement Program Update Paul Bolin, HRA Assistant Executive Director, reviewed the following: HRA Loans Total Loans (CEE) 2006 8 22 2007 8 17 2008 15 18 2009 16 18 2010 14 21 2011 9 13 #of Remodel Visits 2006 33 2007 26 2008 16 2009 18 2010 17 2011 12 Mr. Bolin said that there is a home remodeling fair the end of February which may inspire people to reinvest in their homes. Chairperson Commers asked how the foreclosure numbers were comparing 2011 to 2010. William Burns, City Manager, said he did not have those numbers but would email the Authority when they are available. Chairperson Commers asked how many vacant residential properties were in inventory. Mr. Bolin answered 32; he will email the list to the Authority. Dr. Burns said that foreclosures had dramatic reduction over 2010. There has been a federal freeze on foreclosures that is due to end very shortly so within the next few weeks or months we will see an increase as people go into the foreclosure process. Commissioner Gabel had questions on the minutes from the December 3, 2011 meeting that needed further clarification. Page 3 the PERA contribution went from $6,300 to $12,000. Becky Housing Redevelopment Authority Meeting of January 5,2012 9 said the correct amount should be $6,500. On page 4 the total expenses for Mr. Casserly; Becky sent an email to Chairperson Commers changing the total amount. ADJOURNMENT: MOTION by Commissioner Eggert to adjourn. Seconded by Commissioner Gabel. UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED AND THE MEETING ADJOURNED AT 8:10 P.M. Respectfully Submitted, 76,:a:tc.) 674is Krista Monsrud, Recording Secretary ACTION ITEM HRA MEETING OF FEBRUARY 2, 2012 CITY OF FRIDLEY Date: January 25, 2012 a To: William Burns, City Manager r N From: Paul Bolin, Asst. Executive HRA Director ► Subject: Home Improvement Demonstration Project Home Sale The Authority purchased the home at 4757 2nd Street in November of 2010 for$80,000 and spent $60,000 to renovate the home. At the time we started the project we expected to list the home, last April, in the $140,000 to $145,000 range . After a number of delays - some weather related and some contractor related, the home was not able to go on the market until October. The home was listed for $139,900. In the months that the Authority has owned the property, median sales prices have decreased by 12.1%, from $136,545 to $120,000 (North Star MLS - Tim Van Auken- Counselor Realty). Over the course of the past year, the percent of original asking price received has averaged 85.8% and homes were on the market for an average of 151 days before receiving an offer. Despite the barrage of dismal statistics, I am happy to report that our home at 4757 2nd Street has outperformed all of the statistics and a purchase offer has been made on the property. It took 119 days to get an offer worth 94%of the original asking price. The terms of the sale are as follows: Home sales price: $137,000 Seller concessions: $ 5,891 Final Price $131,109 Recommendation: Staff recommends adoption of the resolution authorizing the sale of the home located at 4757 2nd Street for the terms described above. n HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF FRIDLEY COUNTY OF ANOKA STATE OF MINNESOTA HRA RESOLUTION NO. 2012-O' A RESOLUTION AUTHORIZING THE SALE OF RESIDENTIAL PROPERTY BY THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF FRIDLEY, MINNESOTA BE IT RESOLVED by the Board of Commissioners(the"Commissioners")of the Housing and Redevelopment Authority in and for the City of Fridley,Minnesota(the "Authority") as follows: Section 1. Recitals. 1.01. It has been proposed that the Authority sell certain residential property (the "Property") described below: Parcel I.D. No. Street Address 26-30-24-32-0091 4757 2nd St. NE Section 2. Findings. 2.01. The Authority hereby finds that it has approved and adopted a development program known as the Modified Redevelopment Plan for its Redevelopment Project No. 1 (the "Redevelopment Program") pursuant to Minnesota Statutes, Section 469.001 et seq. 2.02. The Authority hereby finds that it has approved and adopted a Housing Replacement District Plan(the "Plan") and created Housing Replacement District No. 1,pursuant to and in accordance with Laws of Minnesota 1995,Chapter 264,Article 5, Sections 44 through 47;Laws of Minnesota 1996,chapter 471, article 7, section 22; Laws of Minnesota 1997, chapter 231, article 10, section 13; Laws of Minnesota 2002, chapter 377, article 7, section 6;Laws of Minnesota 2008,chapter 154, article 9, section 19, and Laws of Minnesota 2010, Chapter 216, Section 42 (collectively"The Act"). 2.03. The Authority hereby finds that it has performed all actions required by Minnesota Statutes for the sale of the Property. 2.04. The Authority hereby finds that the sale of the Property promotes the objectives as outlined in its Redevelopment Program and the Plan. Section 3. Approval of the Sale. 3.01 The sale of the Property is hereby approved. HRA Resolution 2012-_ Page 2 Section 4. Authorization for Execution and Delivery. 4.01. The Chairman and the Executive Director are hereby authorized to execute and deliver any documents necessary to effect the sale of the Property. PASSED AND ADOPTED BY THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF FRIDLEY, MINNESOTA, THIS 2ND DAY OF FEBRUARY, 2012. LAWRENCE R. COMMERS - CHAIRMAN ATTEST: WILLIAM W. BURNS - EXECUTIVE DIRECTOR ■ COUNTEROFFER ADDENDUM This farm approved by the Minnesota Association of REALTORS"', counse or which disclaims any liability arising out of use or misuse of Ills form, ©20o7 Minnesota Association of REALTORS°,Edina MN realty 1. Date January 18,2012 2. Page 3. Addendum to Purchase Agreement, Counteroffer Number °Ile 4. by L.IBuyer Setter to the Purchase Agreement, dated JarluarY 17 ,20 , ------- (Chock oila,3- 5. and signed by Buyer, Adam E.Brown 6, pertaining to the purchase and sale of the property located at 4757 2nd St NE Fridley 55421 [CAUTION: This Counteroffer Addendum does not include the terms or conditions in any otner 9. counteroffer] 10, The Purchase Agreement is rejected and the following Counteroffer is hereby made.AU terms and conditions remain 1. the same, as stated in the Purchase Agreement, except the following: 12, (Select appropriate changes from original offer) 1:3, if Sale,pite shall be $ 137,000-00 4 1 Earnest money shall be a total of$ 5. 11 C• ash of at least percent(%) of the sale price, which includes the earnest money;PLUS; 16. El Financing, the total amount secured against the property to fund the purchase, not to exceed 7, percent (%) of the sale price. 18. El C• losing date shall be On or Before 02-28 , 20 12 9. fl Seller agrees to complete all FHA/Lender required repairs, not to exceed$ 20. 11-1 S• eller shall pay Buyer's closing costs, prepaids, insurance and 21. not to exceed$ 22. 11,1 P• ossession shall be on , 20_ 23, I:1 Other: 24, Seller acceptance is subject to final Fridley BRA Board approval during the public bearing held 02/02/2012. 25, If the HRA Board votes to accept the offer,during the board hearing,then and only then will the Purchase 26. .Agreement be signed,executed and delivered. 27. ..tipon performance by Buyer, Seller shall deliver a Limited Warranty Deed, _ 28. - 8ignalkiie} (Data) (Beyer's Signature) pots) 30, This Counteroffer Addendum is P REJECTED 1-1 COUNTERED (Check one)- — (Initial) (initial) 31. ATTACH ONLY THE FINAL COUNTEROFFER ADDENDUM TO THE PURCHASE AGREEMENT. 32. 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INFORMATIONAL ITEM HRA MEETING OF FEBRUARY 2, 2012 CITY OF FRIDLEY Date: January 25, 2012 To: William Burns, Executive Director From: Paul Bolin, Asst. Executive HRA Director Subject: 4800 East River Road / RER Project Update A number of tasks have been ongoing as Real Estate Recycling moves forward in it's due diligence for the purchase of the former BAE Site. RER has been focused on refining their estimates for redevelopment costs and identifying different grant programs to assist in the cost of the project. The engineering firm of LHB, is putting the finishing touches on the blight report for the entire parcel and expects to have the final report to the Authority in time for next week's meeting. The purpose of the blight analysis is to determine if the property meets the �,,,1 statutory definition of "substandard". A substandard determination makes the property eligible for inclusion in a TIF District. LHB has confirmed that the property meets the statutory definition of"substandard". Staff, legal counsel, Dan Wilson, and Real Estate Recycling have had ongoing discussions on the issue of relocation. An update will be provided by Attorney Casserly at next week's meeting. The City Council will be asked at their February 13th meeting to set the public hearing for the potential creation of a TIF District to assist this redevelopment. The public hearing before the City Council would take place on Monday April 9th, following the Authority taking action on Thursday April 5th. A chronology for the proposed creation of the TIF District is attached. 1 CITY OF FRIDLEY PROPOSED CHRONOLOGY CREATION OF TAX INCREMENT FINANCING DISTRICT NO. 21 CREATION OF HAZARDOUS SUBSTANCE SUBDISTRICT NO. 21A (RER PROJECT) THURSDAY, JANUARY 5, 2012 HRA MEETING (review of project) THURSDAY, FEBRUARY 2, 2012 HRA MEETING (review of project) MONDAY, FEBRUARY 13, 2012 COUNCIL MEETING (1) call for public hearing THURSDAY, FEBRUARY 16, 2012 NOTICE PROVIDED TO COUNTY COMMISSIONER (minimum 30 days prior to publication) NOTICE PROVIDED TO COUNTY RE: ROAD COSTS (minimum 45 days prior to public hearing) MONDAY, MARCH 5, 2012 TIF PLAN AND HSS PLAN PROVIDED TO ANOKA COUNTY (minimum 30 days prior to public hearing) TIF PLAN AND HSS PLAN PROVIDED TO SCHOOL DISTRICT (#13) (minimum 30 days prior to public hearing) THURSDAY, MARCH 15, 2012 NOTICE OF PUBLIC HEARING PROVIDED TO NEWSPAPER THURSDAY, MARCH 22, 2012 PUBLICATION OF PUBLIC HEARING NOTICE (10 - 30 days prior to public hearing) THURSDAY, APRIL 5, 2012 HRA MEETING (1) modify Redevelopment Plan (2) modify existing TIF Plans (3) create TIF District No. 21 (4) adopt TIF Plan (5) create Hazardous Substance Subdistrict No. 21A (6) adopt Hazardous Substance Subdistrict Plan (7) approve Term Sheet MONDAY, APRIL 9, 2012 CITY COUNCIL MEETING - PUBLIC HEARING (1) modify Redevelopment Plan (2) modify existing TIF Plans �--� (3) create TIF District No. 21 (4) adopt TIF Plan (5) create Hazardous Substance Subdistrict No. 21A (6) adopt Hazardous Substance Subdistrict Plan MMB:4817-8747-4190,V. 1 /-\ /""N BAE SYSTEMS TIF DISTRICT CODE/CONDITION DEFICIENCY REPORT January 31,2012 Property Address: 4850 East River Road,Fridley,MN PIN: 27-30-24-13-0002&27-30-24-42-0002 Inspection Date(s) &Time(s): December 2,2011 -8:00 a.m. Inspection Type: Interior&Exterior Summary of Deficiencies: It is our professional opinion that this building is Substandard because: - Building Code deficiencies total more than 15%of replacement cost. - Substantial renovation is required to correct Conditions found. Estimated Replacement Cost: $ 179,468,500 Estimated Cost to Correct Building Code Deficiencies: $ 40,475,000 Percentage of Replacement Cost: 23% Description of Condition Deficiencies Minnesota Statutes, Section 469.174, Subdivision 10, states that a building is Structurally Substandard if it contains"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." •'• A.Defects in Structural Elements 1. Roof structure inadequate to support reroofing with correct amount of slope and insulation. 2. Roof structure under-sized to support snow drift loads. 3. Columns and roof structure are not fire-rated. B.Combination of Deficiencies 1. Essential Utilities and Facilities a. The HVAC system is piece-meal and of different ages,some elements dating from the 40s. Many of the older units appear to be aged and in need of replacement or repair. 2. Light and Ventilation a. Many light fixtures use T12 lamps,scheduled to be phased out by DOE mandate. 3. Fire Protection/Adequate Egress a. Two stairs are too steep and have inadequate handrails. b. Three stairs have inadequate handrails. c. Unlawful mechanical/electrical penetration at one stair enclosure. d. At least three stair enclosures exit into the factory space,instead of into an acceptable exit passage. e. Mechanical rooms appear to be inadequately separated from rest of construction. 4. Layout and Condition of Interior Partitions/Materials a. Interior finishes have been damaged by water leaking from roof in some locations. b. Office building wing badly damaged from mold infestation. c. Office wing finishes completely gutted, lighting removed and HVAC distribution system partially removed. 5. Exterior Construction a. Roofing appears cracked and worn. b. Roof slope inadequate,resulting in ponding and leaking. c. Office building wing badly damaged from mold infestation. Description of Code Deficiencies 1. Steel structure is exposed and unprotected. In order to meet allowable area requirements in the code, exposed steel columns and roof structure must be have at least 1-hour fire resistance. 2. Approximately 40%of the building is without required sprinkler system. 3. Stair guardrails at five locations do not meet code. Guardrail picket spacing is greater than 4". 4. Stair handrails are too low in five locations and lack extensions. 5. Stair risers in two locations exceed the maximum allowable 7" and treads are less than the minimum allowable 11" 6. There are unprotected penetrations in required fire-rated walls and ceilings (stair enclosure and mechanical room). 7. Roof slopes do not meet code for adequate drainage. 8. According to a roof survey conducted in the mid-80s, most of the roof is overstressed, meaning it would be unable to support the tapered insulation necessary to correct roof slopes. Although changes in the code have lessened roof design loads since the survey was conducted,a requirement to accommodate snow drift loads has been added. The result, in a building such as this with many clerestory areas that would cause drifting on lower roofs, is a greater design load in affected areas. It is estimated that 75% of the roof is structurally inadequate due to snow drift loading. 9. One of the elevators is without accessible controls. 10. Travel distance from building interior to public way exceeds allowable maximum. Energy Code In addition to the building code deficiencies listed above,the existing building does not comply with the current energy code. These deficiencies are not included in the estimated costs to correct code deficiencies and are not considered in determining whether or not the building is substandard: - Building's wall insulation does not meet current code requirements. - Building's heating and cooling is not as efficient as current energy code would require. - Building's lighting in majority of office areas not energy efficient. M:\11Proj\110621\400 Design\406 Reports\TIF\Substandard Building Report BAE 111228.docx ) ) ) BAE Systems Redevelopment TIF District 1/31/12 SUMMARY SPREADSHEET Coverage Area of Coverage Building 15%of No.of Buildings No.of TIF Improved or Survey Method Site Area Coverage Percent No.of Building Code buildings PID# Owner/Business/Use Property Address Improvements Quantity Replacement Replacement Exceeding 15% Map No. Vacant Used (S.F.) (S F) of Improvements (S.F.) Buildings Cost Cost Criteria Criteria determined substandard 1 27-30-24-13-0002 BAE Systems 4850 East River Road Improved Interior/Exterior 3,502,330 2,731,817 78.0% 3,502,330 1 $179,468,500 $26,920,275 $40,475,000 1 1 2 27-30-24-42-0002 BAE Systems 4850 East River Road Improved interior/Exterior 1,816,229 1,271,360 70.0% 1,816,229 Note 1 3 27-30-24-43-0002 gAE Systems 4850 East River Road Vacant Exterior 597,396 65,713 11.0% 0 0 TOTALS 5,915,955 5,318,559 1 1 1 — Total Coverage Percent: 89.9% Notes: 1.The building spans two parcels,but is only counted on TIF map no.1 Percent of buildings exceeding 15 percent code deficiency threshold: 100.0% Percent of buildings determined substandard: 100.0% M:\1 1 Proj\110621\400 Design\406 Reports\TIF\(BAE Spreadsheet.xls]Jan 30 Fridley HRA Housing Program Summary Cover Page February 2, 2012 HRA Meeting Report Description Loan Application Summary Loan application activity (e.g. mailed out, in process, closed loans)for past month and year-to-date. Loan Origination Report Loan originations for past month 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\2012\January 5,2012\Housing Program CoverPage.docx Fridley HRA January 15, 2011 Application Summary January Year-To-Date New Applications Total Applications Recd/ Loans Applications Applications* Loans Program Sent Out*** in Process Closed Mailed Processed Closed HRA Revolving Loan Fund 2 2 2 23 22 7 HRA- Fridley Last 1 0 0 3 4 4 MHFA Deferred Loan 0 0 0 3 3 0 MHFA Fix-Up Fund 0 0 0 4 3 1 MHFA Community Fix-Up Fund 0 0 0 0 1 0 MHFA Community Fix-Up w/Discount 0 0 0 1 1 0 CEE Home Energy Loan 4 1 1 23 9 4 Private Bank Loan (through CEE) 0 0 0 0 0 0 MHFA Rental Rehab Loan Fund 0 0 0 0 0 0 DOC Rental Energy Fund 0 0 0 0 0 0 Totals: 7 3 3 57 43 16 *** Number of applications sent out does not take into account property owners downloading their application from the CEE website *11 apps rejected in 2011 so far / ` ) .. Fridley HRA Remodeling Advisor Service - 2011 January 15, 2011 Remodeling Advisor Appointments Appointments Month Scheduled Completed Jan-11 1 1 Feb-11 0 0 Mar-11 0 0 Apr-11 2 2 May-11 1 1 Jun-11 2 2 Jul-11 1 1 Aug-11 0 0 Sep-11 2 2 Oct-11 1 1 Nov-11 2 2 Dec-11 2 2 Total 14 14 *Remodeling Advisor monthly amounts may change as paperwork from a visit may not come in until the next month for the previous month. !d (-0, � t Local Market Update December 2011 V �A RESEARCH TOOL PROVIDED BY THE SAINT PAUL AREA ASSOCIATION OF REALTORS® N I� nt 7�a l , �\ �� \�`� �:�5]UCIATIU\()F REALTORS' V 7(\l�J 0 0 ID - 15.4 /0 + 80.0 % - 28.1 /o Change in Change in Change in Fri d I ey New Listings Closed Sales Median Sales Price - December Year to Date l 2010 2011 +/— 2010 2011 +1— New Listings 26 22 -15.4% 493 429 -13.0% Closed Sales 10 18 +80.0% 205 267 +30.2% Median Sales Price* $138,000 $99,200 -28.1% $136,545 $120,000 -12.1% Average Sales Price* $133,560 $119,251 -10.7% $139,633 $119,829 -14.2% Price Per Square Foot* $87 $65 -25.7% $88 $71 -18.8% Percent of Original List Price Received* i 87.6% 89.9% +2.6% 91.0% 89.6% -1.6% Days on Market Until Sale 88 113 +28.5% 122 151 +23.0% Inventory of Homes for Sale E 139 94 32.4% Months Supply of Inventory 8.3 4.0 51.5% -- - Does not account for seller concessions. 1 Activity for one month can sometimes look extreme due to small sample size. December .2010 ■2011 Year to Date iii 2010 •2011 n 26 493 22 429 1 18 267 10 205 -15.4% +80.0% -13.0% +30.2% New Listings Closed Sales New Listings Closed Sales Change in Median Sales Price from Prior Year (6-Month Average)** Twin Cities Region Fridley +5% d . 0% / Ilk_ . ' -10% j -20% - /".\ -25% - - - - -' 1-2008 7-2008 1-2009 7-2009 1-2010 7-2010 1-2011 7-2011 "Each dot represents the change in median sales price from the prior year using a 6-month weighted average.This means that each of the 6 months used in a dot are proportioned according to their share of sales during that period. I All data cornes from the Regional Multiple Listing Service.Inc. 1 Powered by 10K Research and Marketing. Local Market Update - December 2011 A RESEARCH TOOL PROVIDED BY THE SAINT PAUL AREA ASSOCIATION OF REALTORS® 541-7:t..-7:,'4,--- ASSOCIATION Or REALTORS. �� - 26.2% + 16.3% - 7.6% Change in Change in Change in AnokaCounty New Listings Closed Sales Median Sales Price December Year to Date J_ 2010 2011 +1 2010 2011 +1- New Listings 473 349 -26.2% 8,101 6,841 -15.6% Closed Sales 312 363 +16.3% 3,853 4,350 +12.9% Median Sales Price* . $145,100 $134,000 -7.6% $155,000 $137,000 -11.6% Average Sales Price* $168,021 $156,429 -6.9% ` $174,547 $153,832 -11.9% Price Per Square Foot* $83 $78 -6.0% $91 $79 -13.3% Percent of Original List Price Received* i 89.1% 90.4% +1.5% 92.5% 90.7% -1.9% Days on Market Until Sale 137 148 +8.0% 129 143 +10.8% Inventory of Homes for Sale 2,250 1,519 -32.5% i -- -- -- Months Supply of Inventory i 7.0 4.1 -41.8% 'Does not account for seller concessions. I Activity for one month can sometimes look extreme due to small sample size. December .2010 .2011 Year to Date .2010 .2011 473 8,101 349 363 6,841 312 3,853 4,350 -26.2% +16.3% -15.6% +12.9% New Listings Closed Sales New Listings Closed Sales Change in Median Sales Price from Prior Year (6-Month Average)** Twin Cities Region . Anoka County +10% +5% o% - Plitli -5% -25% -- 1-2008 7-2008 1-2009 7-2009 1-2010 7-2010 1-2011 7-2011 "'Each dot represents the change in median sales price from the prior year using a 6-month weighted average.This means that each of the 6 months used in a dot are proportioned according to their share of sales during that period. I All data comes from the Regional Multiple Listing Service.Inc. I, Powered by 10K Research and Marketing.