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HRA 08/01/2017 August 3,2017 HRA Meeting Regular Meeting Agenda 7:00 p.m. Call to order Roll call. Action Items 1. Approval of Expenditures 2. Approval of June 1, 2017 Meeting Minutes Informational Items 1. City Comprehensive Plan Process Update 2. Housing Conditions Survey Results 3. Locke Pointe Update 4. Housing Program Update Adjournment Check Report , ins/ City of Fridley, MN By Check Number Date Range: 06/28/2017-07/14/2017 I�ridlky Vendor Number Vendor Name Payment Date Payment Type Discount Amount Payment Amount Number Bank Code:APBNK-HRA-APBNK-NRA hra-623 FRIDLEY,CITY OF 07/12/2017 Regular 0.00 64.33 30031 hra-1113 MONROE MOXNESS BERG PA 07/14/2017 Regular 0.00 8,600.55 30032 hra-1333 MEDTRONIC,INC. 07/14/2017 Regular 0.00 266,290.64 30033 hra-1403 NATIONAL SPORTS CENTER/SCHWAN'S 07/14/2017 Regular 0.00 3,000.00 30034 hra-1601 PASSAU LANDCARE INC. 07/14/2017 Regular 0.00 540.00 30035 hra-917 ALLEN,JOHN N. 07/14/2017 Regular 0.00 54,186.44 30036 hra-903 INTERNAL REVENUE SERVICE-PAYROLL TAXES 06/30/2017 Bank Draft 0.00 743.53 DFT0001484 hra-903 INTERNAL REVENUE SERVICE-PAYROLL TAXES 06/30/2017 Bank Draft 0.00 159.72 DFT0001485 hra-905 MINNESOTA DEPARTMENT OF REVENUE-PAYROI 06/30/2017 Bank Draft 0.00 298.61 DFT0001486 hra-903 INTERNAL REVENUE SERVICE-PAYROLL TAXES 06/30/2017 Bank Draft 0.00 682.94 DFT0001487 hra-903 INTERNAL REVENUE SERVICE-PAYROLL TAXES 07/14/2017 Bank Draft hra-903 INTERNAL REVENUE SERVICE-PAYROLL TAXES 07/14/2017 Bank Draft 0.00 698.72 DFT0001492 hra-905 MINNESOTA DEPARTMENT OF REVENUE-PAYROI 07/14/2017 Bank Draft 0.00 151.06 DFT0001493 0.00 645.88 DFT0001494 I hra-903 INTERNAL REVENUE SERVICE-PAYROLL TAXES 07/14/2017 Bank Draft 0.00 645.88 DFT0001495 HRA-2614 HYDE DEVELOPMENT,LLC 07/14/2017 Bank Draft 0.00 329,857.70 DFT0001508 Bank Code APBNK-HRA Summary Payable Payment Payment Type Count Count Discount Payment Regular Checks 8 6 0.00 332,681.96 Manual Checks 0 0 0.00 0.00 Voided Checks 0 0 0.00 0.00 Bank Drafts 9 9 0.00 333,517.91 EFT's 0 0 0.00 0.00 17 15 0.00 666,199.87 1 Fund Summary Fund Name Period Amount 099 Pooled Cash-HRA 6/2017 1,884.80 099 Pooled Cash-HRA 7/2017 664,315.07 666,199.87 7/14/2017 11x)8:13 AM Page 1 of 2 CITY OF FRIDLEY HOUSING AND REDEVELOPMENT AUTHORITY MEETING JUNE 1,2017 Chairperson Pro Tem Gabel called the Housing and Redevelopment Authority Meeting to order at 7:02 p.m. MEMBERS PRESENT: William Holm Pat Gabel Gordon Backlund Kyle Mulrooney MEMBER ABSENT: Stephen Eggert OTHERS PRESENT: Paul Bolin, HRA Assistant Executive Director Shelly Peterson, Finance Director/Treasurer Jim Casserly, Development Consultant Shane LaFave, Sherman Associates Paul Hyde, Hyde Development Action Items 1. Approval of Expenditures. MOTION by Commissioner Holm approving the expenditures. Seconded by Commissioner Mulrooney. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON PRO TEM GABEL DECLARED THE MOTION CARRIED UNANIMOUSLY. 2. Approval of the May 4,2017,Meeting Minutes. MOTION by Commission Holm approving the minutes. Seconded by Commissioner Backlund. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON PRO TEM GABEL DECLARED THE MOTION CARRIED UNANIMOUSLY. 3. Annual Election of Officers Commissioner Holm nominated Pat Gabel as Chairperson. Commissioner Backlund nominated Stephen Eggert as Vice Chairperson. Housing and Redevelopment Authority Meeting of June 1, 2017 2 UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON PRO TEM GABEL DECLARED THE MOTION CARRIED UNANIMOUSLY. 4. Approval of Development Agreement for NS Rail Housing Development. Paul Bolin, HRA Assistant Executive Director, stated Sherman Associates is proposing to construct a 71-unit mixed income building. The building will be a mix of 1, 2, and 3-bedroom • units; 56 of the units will be rent restricted; and 15 of the units will be market rate. Sherman Associates is looking to obtain 9 percent housing tax credits in order to assist the project. In order to obtain those tax credits, the State Housing Finance Agency requires developers to have more than just a letter of support. They require at minimum a development agreement that shows that if the credits are granted, the development group will be able to take possession of the property. That is why the Commission has a fairly lengthy Development Agreement in their packet. Mr. Bolin stated that, in a nutshell what the Agreement says and does is that if Sherman is able to obtain the tax credit, then the Authority is willing to sell the needed land to Sherman for $400,000. If there are no credits, if they fail in their attempt to get those credits, then the Agreement is null and void. If credits are provided and the project moves forward, the Authority will also assist by providing a pay-as-you-go TIF note for $626,000 to help assist with the project. Mr. Bolin stated the Development Agreement also anticipates potential for two future buildings on this site. Those future buildings would include a market rate senior building that would be located closer to the railroad tracks, as well as a market rate non-age restricted rental that would sit at the intersection of Main Street and 61St Mr. Bolin stated as part of this they have had some discussions with Met Council about reducing the required number of parking stalls down on the site, and they seem to be making progress on getting those numbers reduced. The illustration before them shows the architecture and types of materials used on the buildings. Mr. Bolin stated adoption of the Development Agreement really does tie in nicely with the purpose of the Authority, really with their mission that is spelled out in Minn. Stat. Ch. 469 which states, among other things, it is the purpose of the Authority to remedy the shortage of housing for low and moderate income residents as well as providing housing opportunities for persons of all income. Mr. Bolin stated staff recommends adopting the Resolution approving the Development Agreement. Further, they would recommend adopting the Resolution supporting the application that they would like to make to the Met. Council for the Livable Communities Demonstration Account TOD grant funding. Sherman Associates are applying for $500,000 from that program as well to help offset some of the costs with this redevelopment project. Chairperson Pro Tem Gabel asked how the $400,000 price was established. Housing and Redevelopment Authority Meeting of June 1, 2017 3 Mr. Bolin replied that works out to be about $5,600 per unit for the land compared to the number of units. That is right within the ballpark with what multi-family properties are trading for. There is quite a range from just under $5,000 to about $12,000 depending on where you are located. Commissioner Holm asked as to the location of Phase I, is at the south end along Main Street? Mr. Bolin replied, yes, it is along Main Street and extending towards the railroad tracks. Commissioner Holm asked whether it is the"L" shaped building on the south end? Mr. Bolin replied it is. Chairperson Pro Tem Gabel asked who knows what the area median income is. •Shane LaFave, Sherman Associates, replied area median he believed is about$45,000. Chairperson Pro Tem Gabel asked for the purpose of this, what is considered low income and what is considered high income? She is sure it depends on number of people in a family. Mr. LaFave replied, as to the 15 market rate units you do not have any income restrictions. The low-income units are restricted to the 50 percent level or less. For a single person that would be about $22,500 per year or less. If you add people to the family it goes up incrementally from there. The 56 units are at the 50 percent level of affordability. There is a rent restriction that comes along with that income restriction, so they have to meet both requirements for any potential renters. They have to income qualify to even be a potential applicant, and once they are in, their rent is held at a certain level. Chairperson Pro Tem Gabel asked in the first building then, there are not any seniors? She found later on an indicator of seniors, but nothing in the first building. Mr. LaFave replied, the first building would be open to any age. One of the next phased buildings is strictly for 55 plus. The other two buildings are open to any age group. They are assumingbased the bedroom mix, l s 2 s and 3 s in the low income mix, you often get more families in those types of projects. However, it certainly is not restricting. Chairperson Pro Tem Gabel stated she asked whether they have valuation protection in there so they do not get into a thing such as Medtronic. She referred to Schedule G and Item K. That is their protection? Jim Casserly, Development Consultant, replied they do not have any protection as to a fixed market valuation; but the amount they are reimbursing the developer will be a result of the tax increments generated by their project. If the project is valued less, it would suggest their rents are less, and the tax increment may be less. They only get a percentage of the increment that comes off of their project not to exceed a present value of$626,000. Housing and Redevelopment Authority Meeting of June 1, 2017 4 Chairperson Pro Tem Gabel stated she really cannot see any reason why it would be to the developer's advantage to come back at the Commission about the valuation. It does not really make any sense. Sometimes they put these things in the contracts to make sure they will not be coming back at the Commission for that. Attorney Casserly replied, in a housing arrangement like this, the Commission would not have that kind of requirement. Mr. LaFave asked Chairperson Pro Tern Gabel whether she was talking about a minimum assessment agreement. Chairperson Pro Tem Gabel replied, yes. Mr. LaFave replied, he believes the way they structured this is that the TIF is set at$626,000. If their valuation ended up being higher, they would get more increment per year but they will never get more than $626,000. That would just get paid off faster, and the City would be collecting 100 percent of the tax revenues sooner. Chairperson Pro Tem Gabel asked whether this is contingent upon receiving the thing from MHFA. They are applying with this thing, but the developer will not hear about that until November. Mr. LaFave replied, yes--October. Chairperson Pro Tem Gabel asked what would they be doing in the meantime, if anything. Mr. LaFave replied, not a whole lot unfortunately. As soon as they get the thumbs up, then they immediately engage their architects to go full speed ahead. They cannot really do a whole lot. That is such a large part of the financing of the project. They cannot really go anywhere until they know that is lined up. It is a good sign if MHFA is asking you questions in that period of time. Chairperson Pro Tem Gabel asked whether they worry about some of the things going on in Washington right now where that could impact their ability to get some of these funds, or would these funds be safe for the moment. Mr. LaFave replied these funds are safe for the moment. These are tax credits that have already been allocated to the State of Minnesota which knows the amount they can allocate. It just needs to go through a competitive scoring process to determine who allocates them. The developer takes these tax credits that are awarded and sells them to an investor or their syndicator. Mr. LaFave stated they have seen pricing come down a little bit because the corporate tax rate has not officially come down yet but potentially is going to. That leads to less tax liability for corporations so there is a little bit less demand for these credits. However, they have factored that into their models. They were at about $.97 or $.96 per credit per dollar of credit, now they are down to about $.90 or $.91. They factored that into their underwriting. That is part of the Housing and Redevelopment Authority Meeting of June 1, 2017 5 reason they are asking for the Met Council TOD funds because of that gap that was created with the drop in pricing. However, the credits themselves are not at risk. Minnesota Housing has them, they are ready to be allocated, they just have to go through their formal application and competitive process to see who they are going to pick. Chairperson Pro Tem Gabel asked whether the note would run for the life of the increment. Attorney Casserly replied, it would run until the life of the district or until it was paid off. Chairperson Pro Tem Gabel asked whether there was anything in the Agreement regarding the �' g g last pages where they have given them the financial layout that the Commission should be looking at. Attorney Casserly replied this Agreement also has an option in it which is a little bit different. That is on page 27 of the Agreement, Section 8.4. The reason they had to do that is ideally they are going to have the total development over a period of years. This would be what they are looking at tonight is the first phase of that development. They have not worked out the terms, the timing, the provisions with these phases II and III. Attorney Casserly stated the other phases of the development require them reworking their arrangements with the Met Council because they have leased property to them, and that is where the other phases are going to be. They also have to work out where a storm water pond is going to end up, how it is going to flow and who is going to pay for it. Attorney Casserly stated they have a number of issues that need to be resolved, and they cannot resolve them today. If the MHFA does not provide the housing tax credits, then there is no reason to get in to worry about the balance of the development. That is why this option language is in there. Attorney Casserly stated there is just too much they do not know right now, but their goal is to develop the entire site. The area that they are building on is not subject to that lease of the Met Council. They own that land. They can work with their land and do what they are doing tonight. Clearly they want to see the entire site developed. Chairperson Pro Tem Gabel asked what would happen to Attorney Casserly's assumption if the first building is built, the market takes a nose drive, and they cannot proceed. Attorney Casserly replied the increment that is being generated is being based only on the building that is being constructed. Commissioner Holm stated he sees they have the Minnesota Housing Finance Agency issue which is the big one. He also sees there is a resolution before them concerning authorization for the funding from the Met Council's Livable Communities. Are these in conflict or in concert with each other or how does that work? Housing and Redevelopment Authority Meeting of June 1, 2017 6 Mr. LaFave replied, yes, they are in concert with each other. All the same promises and things that kind of score points that go over well with MHFA and also with the Met Council. The main thing with the Met Council is the location of the set, and being next to the commuter rail line station right there checks a huge box for them. Everything beyond that matters but, if they were three miles away from that station,this would be a different conversation; and there would not be an application to Met Council. That is the main thing. They are complementary of each other. The funding agencies do talk, but a lot of their goals and objectives are the same thing. Commissioner Holm asked so the Met Council will not approve this before the Minnesota Housing Finance Agency. Mr. LaFave replied they would, actually. He believes they announce in August whereas MHFA announces in October. The Met Council will tell them they have to start the development by "X" date, otherwise these funds come back to us. Commissioner Holm asked whether the restriction in the Agreement states if MHFA does not approve this funding, this project goes away. She asked if that was true for the grant from the Met Council. Mr. LaFave replied correct. The Met Council represents $500,000. The MHFA financing represents over $9 million. Hopefully they could find a way to make it work even without the Met Council dollars if they got the MHFA award. Commissioner Holm asked, as to the MHFA grants funds based on tax credits, that funding is so much per year for a period of years. Mr. LaFave replied, what happens is they allocate tax credits that are paid out over ten years. It is an annual credit that you get over ten years. They award the credits. They then take the credits, form a partnership, and bring in a limited partner investor. It is usually a larger bank like a U.S. Bank or RBC. In this case it would mostly likely be an RBC. Then RBC comes in and they are the 99.99 percent partner of the partnership, so they get those credits and in exchange they put money into the project. About 15 percent of that money comes in right when you close on the financing and the acquisition of the land, and then the bulk of that money comes in when you complete construction. They get an equal amount of credits every year for the next ten years. Commissioner Backlund asked so the contract is with the Met Council for the credits? Sherman Associates signed an agreement to receive these credits with somebody. Mr. LaFave replied, yes, they would sign an agreement with the Minnesota Housing NBA. Land use restrictions agreements require 30 years of affordability. Commissioner Backlund stated the agreement is then with Minnesota Housing, and they can vary their credits based on what they receive from the feds. Housing and Redevelopment Authority Meeting of June 1, 2017 7 Mr. LaFave replied, the award they would give is a set amount. They award you for ten years. The commitment is for ten years. Commissioner Backlund asked, and those can varyslightly? g Y• Mr. LaFave replied, the amount of the allocation to the State as a whole can vary from year to year; but the awards they give out every single year are for a ten-year commitment. Commissioner Backlund stated the big picture then can somewhat fluctuate but the little pictures, namely this, is fixed for ten years. Mr. LaFave replied, right. Once you get an award your credit amount is locked for ten years. That will not change. However, MHFA as a whole might get $10 million of credits allocated and then next year it might be $11 million or$9 million. Commissioner Backlund asked what part does the Met Council play in this process directly as far as money is concerned. Mr. LaFave replied, Met Council would be in their sources of funding stack. They have a conventional loan, they have the tax credit equity that is generated from the tax credits of MHFA, and then they have funds from Met Council. That would come in as a grant to the project. Separate from MHFA or other types of financing. It would come in as a grant directly from Met Council. Commissioner Backlund asked whether that was based on a single-year carryover or is it one time that is already allocated in the Met Council to their taxation. Mr. LaFave replied it is a grant so it is just one time. Commissioner Backlund stated Mr. LaFave said the $45,000 is the median income which would say that 50 percent is $22,500 approximately which is a person working full time at $11 an hour. That is the level of person who would qualify for this, he asked Mr. LaFave if that is what he understands? Mr. LaFave replied that is what he understands. Commissioner Backlund stated there is a high percentage of people in Fridley who are retired. Specifically around this area he asked Mr. LaFave if they looked at that statistic to see how it affects the $45,000 median income? Mr. LaFave replied he has not. Commissioner Backlund stated to Mr. LaFave he said there is a shortage of affordable housing. He asked if that shortage is in the Fridley area,the northern metro, or metro regional wide. Mr. LaFave replied,metro wide. Housing and Redevelopment Authority Meeting of June 1, 2017 8 Commissioner Backlund stated right now Fridley has 33 percent of low income housing based upon the Met Council's study of 6 or 7 years ago. Mr. LaFave asked,Fridley has 33 percent of the units are low income housing. Commissioner Backlund replied, in the bottom sector of the value of housing. Obviously they do not all qualify for some sort of subsidy or addressing that. There is a lot of affordable housing in the City of Fridley. Mr. LaFave replied from what they have seen, there is a lot of older affordable housing in the surrounding area. It does not seem there has been a lot of newer affordable housing that has been built in the area. The other thing is what they really like about the site and are really seeing around the metro area is this development building up around transit lines. You are seeing whether it be the North Star line or the southwest corridor they are talking about or any of these transit lines, you are really seeing a push for housing and a push for development around these transit stations as a way for people to potentially be without a car or potentially have a better means to get downtown for entertainment or jobs, etc. Mr. LaFave stated what they saw on this site is, here is some vacant land that is being used as parking but underutilized and really could be capitalized to fill a need and to kind of meet a lot of goals he believes the City and the State have. Also, they it is very attractive to potential renters out there these days who are looking to be closer to these amenities like transit or be within walking distance of parks or trails. This kind of checks all those boxes. Commissioner Backlund asked Mr. LaFave when they make a decision to go into an area, do they make them upon an assignment or risk or estimated risk of success. Mr. LaFave replied that is part of it. Commissioner Backlund asked how he would rate this from a risk standpoint. Mr. LaFave replied low. They see the low income housing is,generally pretty low risk. One of the things about it is there is always going to be a need for it. If the market goes through a downturn, you are still going to have people who need low income housing; whereas, the higher luxury stuff people might back off of that in a slower economy. Mr. LaFave stated they have been through 2007 and 2008, they have seen that, that is the real estate cycle, it is going to go up and down. Low income has proved over the past decades to be pretty constant. The occupancy rates stay high. The rent levels are not doing this because they are set at a set rate by the State. They view this that being next to transit is a huge plus in today's development world. They view this as lower risk. The biggest variable here is getting that award from MHFA tax credits. If they can obtain that, then this is a rock solid project. Commissioner Backlund stated it is obvious that the train is there, it makes one stop downtown Minneapolis and then the next stop is going the other way to Ramsey approximately. There are a couple of bus lines and the transit will reroute the buses so they will stop right next to the Housing and Redevelopment Authority Meeting of June 1, 2017 9 building. So you do have access to the bus lines, you just have to twist a few arms at the Met Council. Mr. LaFave replied,they will happily do that. Commissioner Mulrooney asked as to the cash flow assumptions, an analysis on the back of this model contemplates only completion of Phase I. Attorney Casserly replied correct. Commissioner Holm stated this Agreement calls for issue of a note for $626,000. He asked whether there are any other obligations that the City or HRA are responsible for beyond that dollar amount-site preparation, any utilities, etc. Attorney Casserly replied the only issue is going to be sorting out the storm pond. They have not resolved that issue because they are not sure of how all of this is going to develop yet. They will have that issue resolved when they know if they get the tax credits because that will really dictate how the site is going to develop. They have some issues they have to set up with the Met Council on that, too. Mr. Bolin may have more information on that. Mr. Bolin stated typically they are not before the Commission with a development agreement this early on a project. They really try to get by with just a letter to MHFA saying, hey, if you will give them these credits they will figure everything out and maybe make a land sale happen. They need to provide MHFA more than that. There is still a long ways to go even if and once the credits are issued. This will have to go through the City process for a plat. It will also need a rezoning and a master site plan approval for that. At that point, once the civil drawings start being put together, that is when they will address a lot of things such as the ponding location and how everything needs to drain out here. Commissioner Backlund asked whether there was an environmental impact statement developed when they leased the property to the Met Council for the transit. Attorney Casserly replied he did not know whether they had a threshold problem or issue or not. He asked Mr. Bolin whether he knew. Mr. Bolin replied as all of these stations were being developed there were a number of EIS's that were done, up and down the line, including the City's site as well. Commissioner Backlund asked would that qualify for satisfying the requirement for the ponding. Mr. Bolin replied there are no EIS's required for doing a pond for this site. It is simply a review by the City Engineering staff and the local watershed district. Commissioner Backlund asked if the City gets to control that with the watershed. Housing and Redevelopment Authority Meeting of June 1,2017 10 Mr. Bolin replied he believed it was in the Mississippi Watershed Management Organization which the City's engineers participate in. Commissioner Backlund stated so they do not get involved in the MPCA then. Mr. Bolin replied, the HRA does not get involved in the MPCA on storm ponds typically unless, as they are digging the pond out, they find contamination. Chairperson Pro Tem Gabel asked whether there is any reason they cannot use the existing pond. Mr. Bolin replied, when they would get to the second or third phase, they would need to get rid of the existing storm pond that sits on that north end. In order to get more parking in for Metro Transit, that drainage would need to change. This is one of those things where, as they look at this site even before they kind of had this layout that Metro Transit wanted, they had always talked about the best spot for the pond would be down in that southwest corner where it is kind of tucked away from everything and blocked by the electric company just to the east of that site as well. The grades out there are not so severe that it is not a huge engineering undertaking to redirect the water out on this site. Chairperson Pro Tem Gabel stated she always thought its current location is an attractive nuisance on that corner there where there are a lot of people with little kids walking around, etc. That makes sense to her. MOTION by Commissioner Holm approving the Development Agreement for NS Rail Housing Development. Seconded by Commissioner Mulrooney. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON PRO TEM GABEL DECLARED THE MOTION CARRIED UNANIMOUSLY. 5. Metropolitan Council LCDA Application Resolution of Support. MOTION by Commissioner Holm approving the Metropolitan Council LCDA Application Resolution of Support. Seconded by Commissioner Backlund. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON PRO TEM GABEL DECLARED THE MOTION CARRIED UNANIMOUSLY. 6. Approval of 4M Fund Membership. Shelly Peterson, Finance Director/Treasure, stated what the Commission has before them tonight is authorizing membership into the 4M Fund which is kind of a standard resolution they require the HRA completes and submit to them in order to gain membership. It is a free membership and is endorsed by the Minnesota League of Cities. Many cities and entities of cities participate in this program. The reason it is so appealing for the HRA right now is that they have so many exciting new projects coming, and the HRA has tax settlement money Housing and Redevelopment Authority Meeting of June 1, 2017 11 coming. Typically they invest HRA money for longer periods of time, but right now the HRA's cash flow is really unpredictable for some big projects that could be coming in the next couple of months. Also, they have Paul Hyde present talking about his project, and the agreement the HRA has with him is quite unique and makes it difficult for cash flow. Ms. Peterson stated with that the HRA has the opportunity to roll some its tax settlement money into a higher earning savings account just to keep for a while until it figures out what the HRA can invest. Commissioner Holm stated given today's interest rates he suspects the margin of difference is not particularly significant but it could be over the longer term. Ms. Peterson replied correct. As an example, currently with the bank they do their checking with they have a savings account there for just readily accessible money; and she thinks it earns .14 percent or possibly .2. The savings account at 4M is close to .7. When you are putting millions in for a short period of time it is a nice place to sock it away. Commissioner Backlund asked whether they have to worry about arbitrage. Ms. Peterson replied, arbitrage would be with bond money; and the HRA does not have any debt. MOTION by Commissioner Holm approving the 4M Fund Membership. Seconded by Commissioner Backlund. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON PRO TEM GABEL DECLARED THE MOTION CARRIED UNANIMOUSLY. Informational items 1. Northern Stacks Update Paul Hyde, Hyde Development, stated it has almost four years now since they first had their term sheet approved. They have some exciting progress to update the HRA on. This is really meant as an update on the progress of the project. He will discuss updates as to the budget, buildings completed to date, as well as next step, and a final slide on the TIF refinancing. Mr. Hyde stated in 2015 they got the site delisted from the Superfund list (the site soils). The groundwater was kept listed as a way to keep hooks into the Navy to keep them running the groundwater system. This was a major milestone showing not only for their tenants but the bank and others that they were actually moving forward and cleaning up the site and it was done. Mr. Hyde stated at that time there were two remaining issues, the Navy's plating shop, BAE's paint shop, and one of the things he is most delighted by is they had both the Navy and BAE put their own capital into resolving those two issues. Once they had taken the floor off the site, they Housing and Redevelopment Authority Meeting of June 1,2017 12 had a chance to address them and clean them up using their own money in a cost-effective way that resolved the issue. Mr. Hyde stated they have been working with the existing groundwater extraction system which continues to operate on site. They work around that, they have moved some wells, they have rebuilt some infrastructure; but that has never stopped working. Mr. Hyde stated as to the public financing, they thought they had a good idea of what the clean- up costs were going to be but you actually do not know until you are in the ground doing your investigation and getting your clean-up plan approved. They could not apply for grant funds to clean up the site in one application. There simply was $12 million in need, and you usually get $1 to $2 million at the most in a grant cycle. Therefore,they carved the site up into four slices of pizza and applied in four different installments for that pollution clean-up funding for Met Council and DEED; and they were successful every single time they applied. They were awarded thankfully for every dollar they applied for. Mr. Hyde stated at the same time they had all this infrastructure cost on site. They had one building with one water line and one sanitary sewer, one driveway they had to turn into eight buildings with their own water and sewer lines, storm water ponding which had never taken place on the site; and they projected that cost to be just about $20 million. That is where the tax increment came in to fund that extraordinary infrastructure cost. Mr. Hyde stated finally, City staff and HRA very cleverly created sort of a start-up fund of HRA grants they received for every phase of the project. That allowed them to start the testing, to figure out what pollution was there, to apply for the grants. The reason they were awarded 100 percent of their applied amounts, of the four times they applied to DEED and Met Council, is the HRA had its own grant in there. DEED and Met Council would always say, well, what is the City doing? The City had already committed first through the HRA's hazardous substance subdistrict grants. So the grant funders said we know the City is in, they are going to give this everything we can. They were awarded more money than any other project on any of those cycles. Mr. Hyde stated they are not done with their budget. He gave a breakdown of the uses side: land, $14 million; buildings, around $97 million; CAP (the paved areas where they are covering the impacted soil that stays on site); infrastructure, came in at $16 million; developments costs (everything from tenant improvements to broker fees to soft costs — loan fees); and environmental at $14.7 million. They got a great deal on the demolition because they were able to get credit for the scrap steel and copper in that building to offset the cost. There are also some modest relocation costs. Mr. Hyde stated as to the sources of funds and grants, that is the Met Council and DEED, 5 percent of the costs. The HRA grants. He thinks they are at $3 million today. There is the TIF. They spent the money on the land and there are the construction loans they borrowed, and they put in another$2 million for miscellaneous expenses. Housing and Redevelopment Authority Meeting of June 1,2017 13 Mr. Hyde stated with BAE and the five buildings south of BAE, they are now 82 percent of the square footage either built or under construction. Northern Stacks I was a 213,000 square foot bulk warehouse. They completed that in the spring of 2015. Once this first building went up and they started the second building, they have not been able to keep up with the demand for the project. In this case, $60 million of private investment; infrastructure and clean-up, $6.8 million. Mr. Hyde stated as to the BAE, it is a 560,000 foot technology center and was an adaptive reuse to the existing building. They finished that in November 2015. It was a $26 million private investment and about $6 million in clean-up and infrastructure. As to Stacks II they started in the spring of 2016. That was a private investment in the amount of about $13 million and $3 million in infrastructure and cleanup. As to Stacks III they started that last October and completed in April 2017. That is 70 percent leased. Private investment there was about $13 million and cleanup and infrastructure was about $4.6 million. They started Northern Stacks IV which is scheduled for completion in October 2017. That is a 177,000 foot bulk warehouse. They are 82 percent leased already. When they are done, that will be about an $18.9 million private investment with $2.5 million in cleanup and infrastructure. Mr. Hyde stated they are getting all their tenants from the warehouse district in Minneapolis or the Midway who want new modern buildings. They are headed out west and they stop in Fridley. They say we want this kind of building. It is closer to downtown, itis is closer to our employees, all of them like the bus routes, and that new product closer in is something they did not see. Before they are landing in Rogers,they are landing in Fridley. Mr. Hyde stated they just closed yesterday for their construction loan for Stacks V. This is the building that will be right along East River Road. It is scheduled to be completed in December. They have probably 200 percent of the space interested by tenants. They have 118,000 feet and 250,000 feet of prospects looking at it. They are getting more of a higher office finish here than some of the other buildings. That will be a $13.9 million building and about $2.5 million in cleanup and infrastructure. Mr. Hyde stated with those projects that have gone through they are at 82 percent of the square footage developed or under construction. They projected this would be a ten-year project, and they closed in July 2013. They have been fully funded on their grant funds to clean up Phase IV, the northern 22 acres of the site. Each one of these cleanups has been a completely different cleanup. The first buildings were really a parking lot, there was Phase III (the plating shop and the paint shop), and BAE building was its own unique animal. Its outside storage yard had a bunch of crummy soil in it and buried metal debris. They have two buildings left and they project those will be done in 2018 and 2019. If it keeps going at this pace, they will be done sooner. The cleanup on the Stacks VI building will be done in August, and the cleanup on the last site will be done in November. Mr. Hyde stated to date they have 1,362,000 square feet of building either built or under construction. About 900 new jobs. When they started it was in the high 300's and over $65 million including the stuff they have done. They were fortunate to have the project featured on the cover of their trade magazine which is a national magazine produced by NAIOP which is their trade group. The article was entitled, "The Rise of the Urban Warehouse, E-Commerce," Housing and Redevelopment Authority Meeting of June 1, 2017 14 and what folks like Amazon and Staples are trying to do to get that last mile of delivery so you can get your Amazon order within 24 hours. Projects like their park are what is making that happen. That was the feature of the article. Great visibility. They have also been fortunate to win NAIOP awards, cleanup awards from the ReScape awards, Finance and Commerce, and then the Business Journal best in real estate. Mr. Hyde introduced the idea, under 3.7 of the Development Agreement, asking the Authority after the completion of these now three phases, up to the fourth phase, to issue bonds to replace those T.I.notes. They have been able to get bank loans to fund the tax increment PAYGO notes. They borrowed the money from the bank; used that money to pay for the infrastructure, cleanup, and demolition; and then they get issued a PAYGO note. What has happened is they have so much of the PAYGO notes out with the bank, the banks are saying we are done. They cannot get any more of these PAYGO notes approved. Mr. Hyde asked to start a conversation with the Authority about some sort of take-out to refinance those notes so they can get the last few done and complete the project. Attorney Casserly asked Mr. Hyde how much have they borrowed from the Bank of Nebraska for the tax increment note part of it? He knows they do separate notes with each phase, and then they pledge,they do a collateral assignment, and he thinks that is just what was signed here. Mr. Hyde replied, they were coming up to $17 or $18 million with the one they closed yesterday. The last two buildings will be about $3 million total. They will be right around the $20 million mark when they are done. They have not drawn all that yet because they have to do that work this summer, but that is what is committed by the bank. Frankly, they got them a lot farther than he thought. Attorney Casserly stated the project is generating tax increment. It is generating some hundreds of thousands a year right now of tax increment. Those notes that have been pledged to the bank, they allocate the increment to the various notes and then pay the bank. That is occurring right now and what Paul Hyde is asking is at some point he would like the Authority to consider issuing a bond to take out some of these notes that have already been issued. There are notes so in effect it would be paying off the Bank of Nebraska some amount of money. There is no way the HRA is going to take out all the notes. Also, at the end of the day they are not exactly sure how many notes are going to be issued. Attorney Casserly stated that is why there are a number of issues surrounding the issuance of any kind of bond. The passage of time is sorting out all of these issues. More valuation is coming on line. At some point they are going to be doing a reconciliation in which they determine the total amount of notes that will actually be issued in this project. The maximum they have committed to is $20 million, but the HRA gets to adjust the later notes by what they call a clawback arrangement, whereby if the developer exceeds certain percentages that they have built into the agreement,then they will reduce the note on a pro rata basis. Attorney Casserly stated this is all part of a rather complicated arrangement which they do not do on a lot of these, but because of the complexity and the size of this one and the fact that no one knew if this project would be successful, they built in some arrangements whereby they do Housing and Redevelopment Authority Meeting of June 1, 2017 15 review all the revenues and expenses for the project and they will make revenue notes adjustments accordingly. These are all things that will be coming back to the HRA over a period of time and they can talk further. Attorney Casserly stated there are a number of issues that go into dealing with issuing a bond. The theory would be this would be a tax exempt revenue bond supported only by the revenues of the project. Before they go any further on that they are going to be asking the City's finance director and financial consultant to be giving the Authority an overview on how this works. The agreement is very clear. This is absolutely discretionary with the Authority, and they would do it getting all the advice that they want. Attorney Casserly stated the City has a lot on its plate right now. To try and review all of this at this time is not particularly prudent. Plus there is an enormous amount of valuation that is going to be coming on line January 1 of next year. There are two or three buildings that will be showing up either fully taxed or substantially fully taxed. They will have a better understanding of that. Attorney Casserly stated right now there is something in excess of $50 million of market valuation and, when these buildings come on line, it is going to be clearly $60, $70, or $80 million. Because of the complexity of the project they had always known that it would be very difficult to be able to do all of the revenue notes without considering some other options. This may be one of the largest revenue note g projects in the State. Chairperson Pro Tem Gabel stated clearly they will have a million questions which cannot be answered at this point in time. However, she asked Mr. Hyde if he had a timeframe he was looking at. Mr. Hyde replied, his sense is, in talking with attorney Casserly and Mr. Bolin, is that the more that is certain the easier it is. Starting in January 2018 they are done with all but the last two buildings and, frankly, one of them might be under construction. That is a really good time to start thinking about it. Commissioner Backlund asked whether the Bank of Nebraska is stressed at all? Mr. Hyde replied, it is the largest privately held bank in the United States. Commissioner Backlund stated so $20 million is not a big factor with them. Mr. Hyde replied, no, but banks are subject to pressure from regulators. Regulators do not like long-term loans in a bank, and these TIF loans have to be longer term to match the term of the district to get repaid. That is what they do not like. When they see so many of them, they are saying what is the long-term plan. That is the stresser. Not the money. Clearly they are producing increment. It is just a question of how long is it going to be on the books. Housing and Redevelopment Authority Meeting of June 1, 2017 16 2. Housing Program Update Mr. Bolin stated in the month of May they issued 2 revolving loans, and then there was 1 other loan. Oftentimes a CE might use a small portion of the HRA's funds as a match for another loan program that it has. For the year to date,they have done 3 revolving loans and the 1 other which gives them 4. Also, for the past week and one-half or so there have been some postcards the CE has prepared to go out. They are doing all the single-family homes in Fridley, and they did a special mailing to the mobile home parks to help get the word out on that program as well. Mr. Bolin stated as to the Remodeling Advisor, they had the first 2 for the year in May. With the Home Energy Squad, as it gets into summer it is kind of their quiet time, but they still did 6 visits in May giving them 26 for the year to date. Commissioner Holm asked whether they will have a work session to discuss the bonds. Attorney Casserly replied, they will have a lot of discussion. The City will want to weigh in on this, too, because even though they are not pledging their credit to it, it is a big deal and a big issue. They are going to want to make certain it will not have a negative impact on their debt. They are two separate bodies and they can issue debt separately. This is not a general obligation backing. It is not even a general obligation of the Authority. It is a pure revenue bond of the Authority, so that gets you into all kinds of underwriting issues and requirements dealing with coverages and terms. ADJOURN: MOTION by Commissioner Holm to adjourn. Seconded by CommissionerBacklund. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON PRO TEM GABEL DECLARED THE MOTION CARRIED UNANIMOUSLY AND THE MEETING ADJOURNED AT 8:23 P.M. Respectfully submitted, Denise M. Johnson Recording Secretary i 11111.1 INFORMATIONAL ITEM iCity of Fridley HRA MEETING OF AUGUST 3, 2017 ley To: Wally Wysopal, Executive Director of HRA,db,/ From: Julie Jones, Planning Manager Date: July 27, 2017 Re: City Comprehensive Plan Update The City's 2040 Comprehensive Plan update is due to the Metropolitan Council at the end of next year, so staff has been working to gather data over the past several months to begin preparing the Plan. Development of the Plan depends on public input from citizens and our advisorycommissions and boards in the City. Over the past few weeks, we have been concentrating our efforts on gathering opinions on various issues from the public. Many of you likely attended our May 20 Town Hall meeting, where I asked attendees to provide feedback on three maps. I will review the results of that exercise at your August 3 meeting. I will also share the public input we have gained from our online survey so far, which is asking people questions about streets, parks, and access to services. I have attached some of the maps we have prepared thus far for the housing chapter. We have been distributing cards with personal requests to complete the online survey at various events, such as the Fridley parade, our recycling drop off, and Nite to Unite. It has been a struggle to get feedback from folks, but we are trying to find outlets that reach our growing minority population. The Metropolitan Council is emphasizing "equity" in preparation of the 2040 Plan, which is difficult to do when the makeup of our City staff, Council, and commissions does not represent the racial/economic makeup of the City. As we proceed with development of the plan, we will be seeking the HRA's feedback during the process. Our schedule plans for a public hearing before the Planning Commission on the draft Plan in November of this year. Therefore, I will likely be coming back to the HRA in October for your review of the Housing and Economic Development chapters of the Plan before the hearing at the Planning Commission. This will give me time to make any changes the HRA would like to incorporate into the draft plan before the public hearing. Ramsey Fridley Poverty Andover, and Job I Fridimrley Concentration //V - _ 1 1 I: Anoka 1 t *` a I r I Dayton , Ns 1 Coon Rapids Champlin I i Blaine Lino Lakes i I Circle Pines ,,,,,r- ������ Lexington i • Osseo Ta- Brooklyn Park -I _ Spring •s Lake Park Maple Grove t �� Mounds View '``"°"""'�""""'"""" 1 North Oaks Air, 1 Fridley R- 4pe, I 1 1 Shoreview Brooklyn / Arden Hills #1/- 1 New Brighton - d Center �� r. Crystal 1 ;:;a ...„ ,,dr, . E i A New Hope --- ' 1 ( Robbinsdale g St. Plymouth € K Anthony / ,�/, y I ,_G.0 G ill J i :Fridley Area with No Transit Service %% Job and Activity Centers Medicine Share of Population w/income Taken below 185% of Poverty / �c Minneapolis /Lf 0%-7.9% Golden Valley pp 8%-15.2% 15.3%-23.2% i 23.3%-32.2% / 32.3%-42.8% I 42.9%-54.9% Sobiltryetonka Fridley Community eveloprngetu stPark 55%-69.9% Metropolitan Counc A 70%-100% 2014 ACS 5_Year S mmary File 017002 `v— g Hopkins �I' 0 04 108 1 24. a2 4 Map Date: 4/11 2017 Miles '�:N d {5 e li \1. 4 _i'1_. ._ ' .. 4_id Age of �, _ 61Fridley Housing Stock u 9 I- Ila W ■//,1j e �7 J F, V I T 1Tu� \`\ LLI'Q 1 lr����l� _� Year Built \. OSBORNE-RD-NE 14 7 Ing Pre-1930 � < ,14 , , 1 ' �' I, ' \'� t 1� LL� ■r i 1930s ;j t _ � 1940s 1 '1 —Zu W�,i -1 1950s ; 4:,- II �� P �a t_ 1 fi, 1960s , .A- 1 i 1970s I ts'S. n z 1980sr■^ 1 1 1990s � ;7 --, _ ., 2000s ) \\t-j . I I`_ _ 11 I' `.. �. ? 2010s C.5;6, - --1, tiM15515 IPPI Sr NE"I -r , 1 ._ r r -1� 3.' I �I I 0� C 'I I I Y �RICE�CREEK RD NE 7i i I 'r=� - II;`l r,n 1 / 0 ,w `� 4V i =` � 1 ll�1(r IW II __ /� d 1_11i ' .itlr > ` 65 z n�JZ 1 I _ I Illi I ;. i �___�II fJdl g) _ _ _ ` \J �� 694`-.._.� o 'tial' , .�_.._.-./� tC ( ; ' � C �`� .1=i ft k d 1,1 q, r ^]u `l W ., 1 , __...� ,(hri- • _, I, _.,_ 1- N. m 2 � 1 2 ci.\:12„, 2 _, N PQM— T, 0) \\\ ,C i; eye' _.__� 0 0.1 02 0.4 06 0.8 1 TO MAB / _ SOUfCeS: lO ", % Fridley Community Development il ;-1 1 i Fridley Public Works Metropolitan Council II Map Date: 1/13/2017 iCity of Fr dley I 6431 University Ave NE j Fridley,Minnesota 5543204303 /r ' I � Phone:(763)572-3566 N. �tk �,. 4 '--)- Estimated Market � _�`. � F 7, : L Value of Owner- Fridley Occupied Housing '`° a 1.i.° li,- 0 ..,. ,i I .. IlZ N -11:3J � � +J 4 .• -- ��' 1 .F;. --,-- 1 OS, BORNEIR-RTD -NE \ -ki1 1_ _ LA[ . `e - _L , Estimated Market Value y r t+ `-��_' C, ® Ei: ?o (5,199) ,elef k i e`•-f°. _ _ g r, t =1- l r,• �.,_ `\t- -- •-' ssissiovt ST�NEi I. L.L :: -715 Dr. il , . i • �r ° ! � � --RCE CREEKr D NE A r`y = ti ' :,-C, r e. ..., .., ar.iLir-:-.a >. Ji7ft•; H LlI !•• n. - 4' s !� ' D • , 694 '-J 1�i% ° -- t� r j I l 7 i c \ • J�i C 1 � ' re. 4` Off-; AliL i i - '' • - ItOk i4, -_J I_� 1rimaIr' .. 1 1[_ leIN ,.- k J NEv a -2. f�ga7 � mid, N o= -r.i r;, _ 0 0.1 0.2 04 06 0.8 1 j Miles co Sources: `I `4,, I- - Fridley Community Development —1 Fridley Public Works /1 g Metropolitan Council Map Date: 1/17/2017 /FH City of Fridley 6431 University Ave NE j 1 Fridley,Minnesota 5543204303 Phone:(763)572-3566 INFORMATIONAL ITEM rdiey HRA MEETING OF AUGUST 3, 2017 To: Walter T. Wysopal, Executive Director of HR i From: Annie Leibel, HRA Intern Paul Bolin, Assistant Executive Director Date: July 26, 2017 Re: Housing Conditions Survey Update A Housing Conditions Survey was completed to assess several exterior factors of residential buildings throughout the City. This data was gathered via a windshield survey based on the condition of the roof, soffit and fascia, siding and paint, windows and doors, and foundation. This data is based purely on the condition of each variable. Based on the above rated factors, each house was given an average score. This data will be used in the Comprehensive Plan to evaluate the existing housing stock and can be used to prepare targeted efforts for future HRA loan opportunities. I will provide a summary of this data at the meeting. INFORMATIONAL ITEM CVofHOUSING & REDEVELOPMENT AUTHORITY Fridley AUGUST 3, 2017 TO: Wally Wysopal, Executive Director of HRAil FROM: Paul Bolin, Assistant HRA Director SUBJECT: Project Update - Locke Park Pointe As the new City Hall begins to take shape and the site is overrun by construction vehicles& equipment, staff have continued to work with Landform/Flaherty& Collins on the private development surrounding the site. Work has progressed on a development agreement, but we are likely a month or more away from having an agreement for Authority approval. There are a number of terms that we are still quite far apart from the developer. The developer is working to revise their early draft of plans and proforma for the project. Staff st has another work session with the developers on August 1 . A verbal update will be provided ded at 9 p p the August 3rd HRA Meeting. Fridley HRA Housing Program Summary Cover Page August 3, 2017 HRA Meeting Report Description Loan Summary Report Loan application activity(e.g. mailed out, in process, closed loans) for year- to-date. Also shows the number of field appointments scheduled and completed for the Remodeling Advisor Services administered by Center for Energy and Environment. Home Energy Squad E-mail detailing recent activity and year to date. K:\HRA\HRA Agenda Packets\2017 Agenda Packets\August 3,2017\Housing Program Cover August 3,2017.docx T i FRIDLEY Loan Summary Report Activity for Period 6/16/17 - 7/15/17 cee:' Center for Energy and Environment Application packets requested/mailed: This period: I 5 I Year-to-Date: I 12 Residential Advisor Visits: This period: 0 Year-to-Date: i 4 Loans currently in process for residents in your City/Neighborhood: I 13 I Closed Loans This period: Year-to-Date: Fridley Units Units 0 0 Closed End 95,940.00 5 140,682.99 8 Last Resort 0.00 0 0.00 0 Last Resort Emergency 0.00 0 0.00 0 Deferred Mobile Home Closed End 0 0 Total 95,940.00 5 140,682.99 8 Leveraged Funds This period: Units Year-to-Date: CEE 0.00 0 10,353.00 Units Total 0.00 0 10,353.00 1 i Types of Improvements Financed YTD #of Projects %of Total Types of Properties Financed YTD # %of Total Garage 1 Single Family Residence 9 100.00 9.09 Heating System 3 2727 Other Interior Improvements 1 9.09 Plumbing 1 9.09 Roof 1 9.09 Windows,Doors,Storm Windows,Storn 4 36.36 14 obv.e Lie r $ ,tot d v1 Hi Paul, I checked the numbers and I'm showing two in June and so far one in July, making it 29 for YTD as of now. I ordered some new door hangers that we're going to be using for manufactured home parks across the metro,so we'll be reaching out to those parks in Fridley again this summer. Later this week or early next week I'll also be sending out so new program details and photos that can be featured on the City or HRA website. Hope you're having a nice summer! Stacy li