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HRA 11/07/2013 CITY OF FRIDLEY HOUSING AND REDEVELOPMENT AUTHORITY COMMISSION November 7, 2013 CALL TO ORDER: Chairperson Commers called the HRA Meeting to order at 7:00 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 Wally Wysopal, City Manager Jim Casserly, Development Consultant Darin Nelson, Finance Director/Treasurer ACTION ITEMS: 1.Approval of Expenditures MOTION by Commissioner Holm to approve the expenditures. Seconded by Commissioner Gabel. UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY 2.Approval of October 3, 2013 Meeting Minutes MOTION by Commissioner Eggert to approve the minutes as presented. Seconded by Commissioner Backlund. Commissioner Gabel asked for the following corrections to be made: Page 4, fourth paragraph, second sentence should read “only be issued when the project and phase is complete...” phase Page 4, eleventh paragraph, second sentence should read “project is completed.” Commissioner Backlund asked for the following correction to be made: fiscal Page 6, second to last paragraph, second sentence should read “physical disparities.” HRA Meeting of November 7, 2013 2 UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY AND THE MINUTES APPROVED AS AMENDED 3.Approval of Phase X Housing Replacement Program Paul Bolin , HRA Assistant Executive Director, stated that in late 2010, the Authority and Council approved an amended and restated plan for the HRP. The restated plan gave the Authority the ability to add Phases (parcels) to the program by resolution. Once a parcel is included in the district, the HRA collects tax increment for a period of 15 years. The increment is used to help cover some of the costs of the program. Mr. Bolin said that since the program originally began in 1995, the City has approved nine phases for a total of 35 properties. Under special legislation approved in April 2010, the City can designate up to 100 total parcels, inclusive of the 35 properties already in the program. Staff recommends that the Authority approve the attached resolution amending the Housing Replacement Program to include Phase X. MOTION by Commissioner Gabel to adopt a resolution to add this parcel into phase X of the HRP Program. Seconded by Commissioner Eggert. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY Commissioner Gabel asked how big the lot was. Mr. Bolin replied 50’ wide by 110’ deep; it is a buildable lot. 4.Approval of Lot Sale – 561 Lafayette Street NE MOTION by Commissioner Backlund to open the public hearing. Seconded by Commissioner Gabel. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY AND THE PUBLIC HEARING OPENED AT 7:09 P.M. Paul Bolin, HRA Assistant Executive Director, stated that Shermer Homes of Dayton is proposing to build a 1,232 square foot two bedroom, two bathroom rambler configured to fit on the site; provided the proposed home plans meet the HRP’s criteria. Staff recommends approval of the resolution, authorizing the sale of the lot to Shermer Homes for $27,000. This provides new investment in the neighborhood and is consistent with HRP guidelines. Commissioner Gabel asked what the price of the home would be. Mr. Bolin replied in the $190,000 range. HRA Meeting of November 7, 2013 3 Commissioner Holm asked if there was a buyer for this home yet. Mr. Bolin answered no, it is a spec home. Commissioner Holm asked if this was a walkout into the back yard. Mr. Bolin answered no; the drawing shows an egress window. MOTION by Commissioner Holm to close the public hearing. Seconded by Commissioner Gabel. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY AND THE PUBLIC HEARING CLOSED AT 7:15 P.M. MOTION by Commissioner Backlund to approve the sale of 561 Lafayette Street to Shermer Homes for $27,000. Seconded by Commissioner Gabel. UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY th 5.Approval of Lot Sale – 291 57 Place MOTION by Commissioner Eggert to open the public hearing. Seconded by Commissioner Holm. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY AND THE PUBLIC HEARING OPENED AT 7:16 P.M. Paul Bolin , HRA Assistant Executive Director, said that Regal Homes has submitted a lot th reservation agreement to build a new home on the lot located at 291 57 Place. The builder has designed the home to compliment the other new homes on the block. Regal Homes is proposing to build a three level home with approximately 1,750 finished square feet. The home will have four bedrooms and three bathrooms. The exterior of the home will utilize a blend of maintenance free materials and will incorporate shakes and stone on the front of the home. Mr. Bolin said that the design of the home will be a nice addition to those already found in the Gateway West neighborhood. Staff recommends approval of the resolution authorizing the sale of the lot to Regal Homes for $30,000. This is new investment in the neighborhood and the proposed home design is consistent with HRP guidelines. Commissioner Gabel asked what the price of the home would be. HRA Meeting of November 7, 2013 4 Mr. Bolin replied in the $240,000 range. Commissioner Gabel noted that there has been a problem with people putting garbage in dumpsters that doesn’t belong to the builder. She asked if there was a city code to enforce this problem. Scott Hickok , Community Development Director, answered that there is no enforceable code and that this is something that is an issue between the builder and the people dumping. People dump anything from mattresses to furniture and it’s not a good thing but there is no ordinance. There is an ordinance to keep the property clean and that is the builder’s responsibility. Commissioner Gabel asked if there was a buyer for this home. Mr. Bolin answered no, it is a spec home. MOTION by Commissioner Holm to close the public hearing. Seconded by Commissioner Gabel. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY AND THE PUBLIC HEARING CLOSED AT 7:23 P.M. th MOTION by Commissioner Gabel to approve the sale of 291 57 Place to Regal Homes for $30,000. Seconded by Commissioner Eggert. UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY 6.Review of Draft 2014 HRA Budget Darin Nelson , Finance Director, said that the preliminary budget for 2014 is broken into three areas; General Fund, HRP and TIF Districts. 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, etc.). The Capital Project Funds include all of the tax increment (TIF) districts. Mr. Nelson stated that the General Fund shows the city revenues from the tax levy and there was a change in legislation that allowed the tax levy to be calculated using the aftermarket value rather than taxable market value. This created an additional levy just over $31,000 for 2014. Market values are still declining a little and that is why the revenue is a little less than last year. Under the expenditures there is a decrease in insurance rates for next year by about $6,500 because the Minnesota League of Cities changed how insurance is calculated. Miscellaneous expenses includes $2,500 for fence repairs along University which in an increase because the repair costs are higher. HRA Meeting of November 7, 2013 5 Chairperson Commers asked where the Authority was at regarding the reimbursement of legal expenses when TIF is issued to developers; there are some legal expenses that should be captured. Mr. Bolin said that the developer pays a $7,500 nonrefundable fee at the start of the TIF that goes to the HRA. Chairperson Commers asked if that was reflected in the budget. Mr. Nelson said it would be up in the revenue section on the top but it is not included in here because we never know when there will be additional TIF applications coming in. Jim Casserly , Development Consultant, added that it is difficult to budget for that revenue since it is unknown who will apply for TIF. Commissioner Holm asked if the capital outlays would be going into one of these TIF districts and if it affected the cash balance in the General Fund. Mr. Nelson answered that will not affect anything within the General Fund and would be reflected in the HSS showing negative cash balance. This section is a fund balance, not a cash balance. Chairperson Commers noted that the HSS doesn’t show anything coming in or going out of it. Mr. Nelson said that will be listed later in the report. Mr. Nelson reported that the Housing and Loan portion is pretty much the same but the remodel demonstration program portion has been removed from the budget. The Lakepoint Medtronic TIF tax levy for 2014 is reduced about $15,000 and is in line with the market values. Commissioner Holm said that this TIF has another 12 years to run and it looks like it will be in a positive flow in a short period of time. Mr. Nelson said that is correct, it will be positive and the land payment increased to 22% in the last year so it will be received at a higher rate; before it was only 11%. There is not much change in the Onan District. Commissioner Gabel asked if some of those funds should be moved to pay off others. Mr. Nelson replied yes; staff plans to transfer funds in December, before year end. Mr. Nelson reviewed the following TIF districts:  University and Osborne – not much change HRA Meeting of November 7, 2013 6  In District 464, Satellite, the tax levy revenue was reduced to $40,000 to reflect the actual tax levy proceeds coming in th  57 Avenue and Gateway East – not much change  Gateway West district the tax levy proceeds stay pretty close to what they are now; the new homes being built will be paying taxes in 2015  Main Street has a pay as you go note, the TIF increment includes 10% in administrative fees, the budget tax levy was reduced to reflect actual market values  In Gateway Northeast there was a lot of activity and 2014 will reflect professional administrative fees, commission for the broker for the sale of the property, additional legal fees and other professional fees.  BAE site will have professional services in the HSS district, $700,000 is going out as capital outlay in lieu of the first payment to Mr. Hyde Chairperson Commers asked if it will reflect in a note going back to the Authority; if a note was coming back into the General Funds. Mr. Casserly replied that the note is a form of security until the project is started. The Authority will collect on the note if the project isn't commenced and then the Authority would get back the grant funds. Mr. Nelson said there will be increment coming in to offset the funds going out. He said the Northstar Station includes minor professional and administrative fees associated with that district and the HRP scattered site district shows an increase of miscellaneous property that affects the revenues. The capital outlay is reduced to reflect the purchase and demolition of homes on that site. Staff will present the final budget to the Authority in December. Chairperson Commers asked for an update on the cash flow analysis for October and the beginning of January. Mr. Nelson said he could do that but the Authority shouldn’t look for a lot of change on that analysis because that is what was used to create this budget. The City Council approved the levy at the end of August; that is the final levy for the HRA and no additional steps are required for the levy. Commissioner Backlund said there is no truth and taxation in December. Mr. Nelson replied not for the HRA. 7.Approval of Interfund Loan to TIF #20 HSS Paul Bolin ,HRA Assistant Executive Director, said that in October, the Authority approved the redevelopment agreement between the Authority and Hyde Development for the BAE site. The agreement spells out the obligations of both the Authority and the developer in redeveloping the site. HRA Meeting of November 7, 2013 7 Mr. Bolin stated that a key provision in the agreement calls for the Authority to advance funds for eligible cleanup costs identified in the MPCA approved Response Action Plan. Specifically, the Authority will provide up to $4.5M in “grants” to the project from its general fund. The general fund will then be repaid from the increment available in TIF District #20’s Hazardous Substance Subdistrict. Mr. Bolin said that the obligations and responsibilities of HRA and Hyde Development include HRA providing TIF Assistance and assist in obtaining grants; and Hyde Development to develop the site as proposed and clean up contamination in accordance with RAP. Staff recommends the Authority adopt this resolution, approving an interfund loan between the HRA General Fund and the Hazardous Substance Subsdistrict No. 20A. All requirements for HSS District Certification have been met, RAP was approved by MPCA and documents sent to OSA and Anoka County. Commissioner Gabel asked if the loan would be for the entire $4.5m or if the money would be loaned out as funds are needed. Jim Casserly , Development Consultant, explained that the grants to the developer are based on each phase and only certain amounts will be allocated by phase. Because there is a limited amount of funds in the General Fund and staff wanted to make sure the General Fund advances are kept within a reasonable limit. That is why this resolution indicates a maximum of $1.0m for phase one. To make the grant available, money has to be transferred from the General Fund to the HSS. The HSS will accrue tax increment to go back to the General Fund. The resolution authorizes transfers over a 10 year period. As phases and eligible expenses occur an application will be made for a grant. Commissioner Backlund asked if these numbers were consistent to the cash flow analysis that was presented. Mr. Casserly replied yes, it was drafted specifically to follow the analysis. Chairperson Commers noted that was previously approved with the development agreement. Commissioner Holm asked who needed to approve each of the grants that are issued; the HRA, Mr. Bolin or the City Manager? Mr. Casserly replied that staff would administer and report back to the Authority. For the first Authority grant there are 9 things to do. Commissioner Backlund asked if a completion of what has been done would be submitted with the request for funds so when updates are done there is a way to track what has been completed. Mr. Casserly answered that a typical construction statement will be generated when that occurs. HRA Meeting of November 7, 2013 8 Commissioner Backlund asked if any funds would be held back for final payment; like 95%. Mr. Casserly replied that this partnership may get more convoluted than that. The funds will not even pay for the final completion; this is just a portion of the funds that are needed for this project. The developer can’t start building until a sign off is made on the Response Action Plan. Hold backs may not work; there are three different sources of funding for this project. Chairperson Commers said that the construction statement should reflect how they are proceeding towards completion of what they are doing. Commissioner Holm asked if the payback TIF from the HSS would start in 2015. He did not see that in the language of the agreement. Mr. Casserly said that this is subject to what the County does and because of the complexity of the Response Action Plan and that the MPCA just approved this, some things are still not final. Things are getting processed as quickly as possible and it is unknown if the increment would happen in 2014 at this time. 2015 would be the earliest any increment would be received. Commissioner Holm said there is taxable increment value today. Mr. Casserly replied that is why the HSS is secure; taxes that are being paid today become tax increment to give back to the HRA. Commissioner Gabel asked if the $4.5M becomes a restricted fund for the HRA. Mr. Casserly explained that the money is coming from the General Fund which is unrestricted; like a loan. As increment is used to repay the loan it goes back to the General Fund. MOTION by Commissioner Holm to approve theInterfund Loan to TIF #20 - HSS. Seconded by Commissioner Gabel. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY INFORMATIONAL ITEMS: 1.Islands of Peace Park Plan Review Scott Hickok , Community Development Director, stated that in December of last year, the City of Fridley was awarded an LCDA TOD Pre-Development Grant from the Metropolitan Council. The purpose of the $100,000 grant is to support the development of a master plan HRA Meeting of November 7, 2013 9 for the portion of the Northstar Transit Oriented Development (TOD) Zoning District that is planned to be located in the North Transit TIF District. Mr. Hickok stated that the purpose of the master plan project is to guide future redevelopment in Fridley’s Transit TIF District and to give developers a vision of the amenities that will be in place when the area is fully developed. A completed master plan will serve as an incentive to private redevelopment since developers will be allowed to bypass the TOD master plan application process if they are redeveloping a site according to the pre-approved master plan, saving them time and money. It will also serve as a guide for how transit TIF dollars can be spent to support the transit infrastructure needs of the district. Mr. Hickok said that there has been a delay of several months getting this started because the grant agreement contains language that the funds cannot be used for regional park planning. With Islands of Peace Park being part of the Riverfront Regional Park and a key feature in the future master plan, staff had to overcome this restriction. This was accomplished by the City working cooperatively with County Parks to develop a concept plan for redevelopment of the park with City and County funds. Mr. Hickok stated that a consultant was hired to complete a simple plan based on Staff’s vision for the park and how it could be reconfigured and improved to make the riverside park an amenity that provides views and desirable access to trails along the river. The key function of the plan was to demonstrate to the Metropolitan Council staff that the City has no intentions of removing park land but rather to expand it and add amenities to it. Commissioner Backlund said that the school added six classrooms and one issue they had was with the storm water runoff which they added a pond for that and the other issue was access to the Islands of Peace Park. He asked if staff was working with the School District as it is unclear what’s underneath that ground until they start digging. Mr. Hickok replied that staff has attended meetings with the school. The plan is to tie the school campus to the natural environment around it. Staff will look at the park plan and consider taking access at points that are already available rather than building expensive stairways. This isn’t one agency, a lot of agencies are working closely together to manage this park and even Met Council is involved. It will be a good plan with everyone’s input. Chairperson Commers asked how this corresponds to the comprehensive plan Mr. Hickok replied that all this work fits with the concept of the comprehensive plan. Staff wants to do something to make the river more visible to everyone. 2.GWNE Update Paul Bolin, HRA Assistant Executive Director, said that there will be a building demolition tomorrow and work will be completed next week. Trident has been busy since signing the letter of understanding. Over the last two months Trident has completed their survey work for the site, met with title experts, and met with private and public utilities to assist in laying HRA Meeting of November 7, 2013 10 out the development on the site. Trident is preparing to submit a Master Plan of the proposed development to the City in mid-November. 3.Housing Loan Program Update Paul Bolin, HRA Assistant Executive Director, reported there were no loans closed in October and two remodel advisor visits making a total of 7 year to date. ADJOURNMENT: MOTION by Commissioner Backlund to Adjourn. Seconded by Commissioner Gabel. UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED AND THE MEETING ADJOURNED AT 8:27 P.M. Respectfully Submitted, Krista Peterson Recording Secretary