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HRAM 11/02/2017 CITY OF FRIDLEY HOUSING AND REDEVELOPMENT AUTHORITY COMMISSION November 2, 2017 Chairperson Gabel called the Housing and Redevelopment Authority Meeting to order at 7:00 p.m. MEMBERS PRESENT: Pat Gabel William Holm Stephen Eggert Kyle Mulrooney Gordon Backlund OTHERS PRESENT: Paul Bolin, HRA Assistant Executive Director Wally Wysopal, City Manager Scott Hickok, Community Development Director Jim Casserly, Development Consultant Shelly Peterson, Finance Director Julie Jones, City Planner Action Items: 1.Approval of Expenditures MOTION by Commissioner Holm to approve the expenditures. Seconded by Commissioner Eggert. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON GABEL DECLARED THE MOTION CARRIED UNANIMOUSLY 2.Approval of October 5, 2017 Meeting Minutes MOTION by Commissioner Backlund to approve the minutes as presented. Seconded by Commissioner Holm. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON GABEL DECLARED THE MOTION CARRIED UNANIMOUSLY Approval of 2018 HRA Regular Meeting Dates 3. MOTION by Commissioner Eggert to approve the 2018 Regular Meeting Dates. Seconded by Commissioner Mulrooney. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON GABEL DECLARED THE MOTION CARRIED UNANIMOUSLY. Housing and Redevelopment Authority Meeting of November 2, 2017 2 4.Approval of Preliminary 2018 HRA Budget Shelly Peterson, stated that staff will take information from this meeting and use it to develop th the final version of the budget for consideration at the December 7 HRA meeting. The budget includes the General Fund and Housing Loan Program Fund. The General Fund covers the bulk of the administrative and overhead costs of the HRA. It’s also used to provide internal loans to tax increment development projects. The Housing Loan Program Fund covers the housing related programs and services (CEE programs, etc.). Ms. Peterson noted that, also included are the projected fund balances for the Tax Increment Financing Funds (TIF). These funds all had budgets established when the districts were created, we have included a summary to provide the commission with a better picture of what staff anticipates fund balances to be at the end of 2018. The revenue highlights a property tax levy increase of $68,661 and makes up half of the revenue used to support the HRA. Ms. Peterson said that the 2018 proposed budget also includes $100,000 in pass-through grants from DEED and Met Council related to the BAE project. Expenditures within the general fund include 2% cost of living adjustment for 2018 and a 16% increase in professional services primarily due to anticipated legal expenses. Highlights for the anticipated revenue for 2018 reflect flat mortgage interest revenue, expenditure budget includes additional expenses related to the home show. Ms. Peterson said that staff recommends approval of the preliminary budget. Commission comments and suggestions will be incorporated into a final budget which will be presented for th approval on December 7. Commissioner Eggert asked if the budget reflected enough funds for moving to the new facility. Ms. Peterson replied that she looked at the last five years and anticipates $345,000 or $20,000 more than 2017. Paul Bolin, HRA Assistant Executive Director, added that they have done some things in the past year to prepare to sell this building. Preliminary discussions have taken place with people who may be interested in the building, but they are not ready to look for a broker if we would need one. Staff doesn’t anticipate anything out of the ordinary with selling this building. Commissioner Eggert thought that a lot of clean up needed to be done just in documentations for the transaction. Jim Casserly , Development Consultant, replied that some of that has already been done. At this point we are waiting until we know when the site will be available. Preliminary work has been done already including the title work and survey. Housing and Redevelopment Authority Meeting of November 2, 2017 3 Commissioner Eggert asked if the $3.0M in the housing fund was for the loan programs that are offered. Mr. Bolin replied yes, that is what is available for the loan programs. Commissioner Holm didn’t see anything about Locke Park Pointe in terms of expenses. He asked if staff anticipated expenses with that development. Ms. Peterson replied that the TIF Districts are listed separately. If some roads are put in that area it would be paid for with the HRA General Fund. Chairperson Gabel thought that some expenses should be anticipated for that too. Ms. Peterson said that the TIF District has no money to budget. We only have what there is to work with in this budget. Chairperson Gabel noted that this is different than past years. She asked about the debt service; if it is real or not, and if HRA had interest in that or not. Ms. Peterson replied that according to the agreement it is an interest-bearing loan and the principal is not due. While the loan is in place, interest is due to the City. Interest has been paid over the past 3 years. Mr. Casserly added that the General Fund loan to the TIF District is accruing interest that can only be paid from tax increments that will be generated from future improvements. Commissioner Backlund asked who owned the pond. Mr. Casserly replied that the City is the pond owner. MOTION by Commissioner Holm to approve the 2018 HRA Preliminary Budget. Seconded by Commissioner Eggert. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON GABEL DECLARED THE MOTION CARRIED UNANIMOUSLY 5.Locke Park Pointe – Exclusive Negotiations Contract Expiration Paul Bolin, HRA Executive Assistant Director, said that last winter, through a formal Request for Qualifications, the Authority chose to work with Flaherty and Collins/Landform group in th developing housing around the City Hall campus. On May 4, a Contract for Exclusive Negotiations was approved by the Authority and subsequently executed by the Authority and Redeveloper. The Contract spelled out a number of tasks for the Redeveloper to complete, Housing and Redevelopment Authority Meeting of November 2, 2017 4 including market studies, site design work, financial analysis, and engineering. These tasks were meant to put the Redeveloper and Authority in a position to draft a redevelopment agreement for the entire site. Mr. Bolin stated that the contract was to remain in effect until a Contract for Private Redevelopment was developed or until November 2, 2017. We have not been able to reach a development deal with Flaherty and Collins/Landform for the entire site. Flaherty and Collins were seeking $8M+ in TIF for their Multi-family building. The project simply doesn’t generate enough increment to provide that level of assistance. Mr. Bolin said that over the past few weeks, the Flaherty and Collins group became much less engaged in putting a project together. Darren Lazan, from Landform, has worked hard to bring other ideas forward. However, we are nowhere near being able to move forward with a redevelopment contract for the overall site. Staff recommends the Authority approve a motion allowing the Contract for Exclusive negotiations to terminate in accordance with its Sections 5.1 and 5.2 Commissioner Holm asked if a termination agreement needed to be done or if it would self- cancel. Mr. Bolin replied that this will formalize the termination. Commissioner Backlund asked if there was any financial liability to the Authority when the documents were signed. Mr. Bolin replied no. Mr. Casserly added that the agreement was specifically designed with this date in mind because this is when the Authority meets. Staff has spent a lot of time and effort to try to make this work, but this is a difficult project. Darren Lazan appreciated the opportunity to work with staff and they have spent over 400 hours and $40,000 in staffing. In the end construction costs were just too high. They looked at the scope of the project and regrets there is no way to move forward. It is frustrating they couldn’t find a way to make this happen but maybe there will be another way to work together in the future. Commissioner Backlund asked if a debrief would take place so we can learn from this experience. Mr. Lazan would be happy to participate in a debrief, they learned a lot and he would be glad to share. Housing and Redevelopment Authority Meeting of November 2, 2017 5 MOTION by Commissioner Eggert to end the contract for Exclusive Negotiations for Locke Park Pointe. Seconded by commissioner Backlund. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON GABEL DECLARED THE MOTION CARRIED UNANIMOUSLY 6.Lock Park Pointe – Authorization to Issue Requests for Proposals Paul Bolin , HRA Assistant Executive Director, said that over the past year, the Authority has spent a great deal of time working to find and then put together a development agreement with a single, master developer. Despite a strong effort by all parties, we were not able to reach an overall redevelopment agreement. As we look into the future of the Locke Park Pointe site, both City and HRA staff feel that going out to builders with two separate Requests for Proposals (RFP), is the best way to move forward. One RFP will be for the patio-home site, south of the yet to be installed parkway. The second EFP will be for the multi-family/senior site, north of the parkway. Next year, after the existing Public Works building is demolished, a third FRP can be issued for that parcel. Mr. Bolin noted that the RFP’s will be sent out to housing builders, asking them to tell us what product and how many units they would build, when they would build, where they would build (site layout), what they would pay for the land and what if any assistance they would need/anticipate. The RFP’s will be tightly drafted and incorporate comments from the neighborhood meetings environmental reports, soils reports, site limitations and extent of land available for redevelopment. The HRA will have the right to reject any and all proposals. Mr. Bolin reviewed the potential timeline: Issue RFP - Mid-November RFP’s Due – Mid-December Staff review – Mid/Late December Recommendations to HRA – January 4 Develop contract / refine proposal – February Building plan development – February/March/April Potential Construction Start – June 2018 Staff recommends the Authority approve a motion authorizing staff to move forward with a Request for Proposals process to select builders to construct the private development at Locke Park Pointe. Commissioner Eggert asked if the site could handle phased construction. Mr. Bolin replied that it can’t all be built at the same time; a phased approach will work best for construction. Commissioner Holm asked if there would be a market study. Housing and Redevelopment Authority Meeting of November 2, 2017 6 Mr. Bolin replied yes. Commissioner Backlund asked if there was any assurance, that by doing a revision, we would get a project to move forward with this time. Mr. Bolin replied that it is always the goal with these projects and sometimes we just can’t make the finances work. MOTION by Commissioner Mulrooney to approve the authorization to issue Requests for Proposals. Seconded by Commissioner Holm. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON GABEL DECLARED THE MOTION CARRIED UNANIMOUSLY 7.Sherman Rail Station Housing – Redevelopment Contract Expiration Paul Bolin , HRA Executive Assistant Director, said that this past June, the Authority approved entering into a contract with Sherman Development, to construct a mixed income rental building at the Northstar Station site. The agreement was conditioned upon Sherman receiving tax credits from Minnesota Housing Finance Agency (MHFA). The MHFA announced the awards on th October 18 and Sherman was not selected. There were a total of 48 metro area projects, seeking close to $80M in assistance. MHFA awarded only five tax credit projects for a total of $4.8M. Sherman had been seeking $1M in tax credits. Mr. Bolin stated that the agreement that was signed in June is now terminated, per section 9.1, Sherman would like to continue to pursue a project on the Northstar Station site. When they have a proposal put together, we will present the idea to the Authority and a new agreement would be developed. Staff recommends the Authority to approve a motion terminating the Contract for Private Redevelopment in accordance with its Section 9.1. Commissioner Eggert asked if there would be a mix of housing in there. Mr. Bolin replied yes, we would like to see affordable housing with market rate housing. Commissioner Backlund asked if it would be possible to look at the entire picture using this development to bring additional people in to use the transit. Mr. Bolin replied that using these units alone, when the mixed income is added, would add 430 potential riders. MOTION by Commissioner Holm to approve the motion terminating the Contract for Private Development in accordance with its Section 9.1. Seconded by Commissioner Eggert. Housing and Redevelopment Authority Meeting of November 2, 2017 7 UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON GABEL DECLARED THE MOTION CARRIED UNANIMOUSLY Informational Items: 1.Comprehensive Plan Update Annie Leibel , HRA Intern, stated that the City of Fridley will focus on retaining advanced employment opportunities, continuing to build relationships with businesses, connecting educational institutions with business needs, revitalizing underused sites and building a sustainable environment. There are more jobs than people in the workforce (4,000) and 1,388 residents live and work in Fridley. 35% of the workforce working in Fridley work in Manufacturing. Throughout the State, manufacturing makes up 13% of the workforce. In the next 10 years, MN is expected to see a 6.3% growth in machinist positions. The major employers in Fridley are Medtronic, Cummins and Unity Medical Center. Ms. Leibel noted that Educational Services, Health Care and Social Assistance make up 14% of the Fridley Workforce Population. 69.2% of Fridley residents age 16 and over are in the workforce and the national average is 63.3%. 90% of residents over age 25 have a high school diploma or higher. 26.6% of residents over age 25 have a Bachelor’s Degree. Ms. Leibel stated that there are four school districts in Fridley. The Fridley School District offers open enrolment with an emphasis on college preparatory, enriched, IB Diploma Program, and Project Lead the Way courses. Private school opportunities including Al Amal School, Calvin Christian High School, Grace Lutheran School, and Totino-Grace High School. The Fridley Community Center has senior programming and Tiger Club Care for preschool aged children. There is also the Springbrook Nature Center, the Anoka County Fridley-Mississippi Library, Banfill-Locke Center for the Arts, 38 neighborhood parks, 5 county parks, and 8 public school facilities, trails including the Rice Creek Regional Bike Trail, and the Mississippi River Regional Trail. Ms. Leibel said that Fridley is a Greenstep City. The Minnesota Pollution Control Agency operates the Greenstep City Program, and awards ratings to Cities who fit the criteria. Fridley has been awarded step one of the five step program, and is working towards the second step. Fridley’s BR&E Program helps local businesses stay competitive by addressing some of their key needs and concerns. 200 business visits resulting in changes to City Code, better communication between businesses and City staff, and a stronger community connection. Also resulted in recognizing small businesses, independent retailers, and manufacturers. Ms. Libel stated that Fridley has a large commercial and industrial tax base which is a contributor to fiscal disparities. Building Permit Activity has been increasing since 2008 and there has been an influx of activity in 2015 due to roof repairs from storm damage. The policy section of the Comprehensive Plan outlines broad policy statements the City plans to focus on over the next 20 years. The Action Step section outlines more specific goal statements with Housing and Redevelopment Authority Meeting of November 2, 2017 8 implementation plans. In summary the City of Fridley offers a convenient business location for businesses and their workers and understanding the needs of Fridley businesses and workforce enables the City to consider ideas that maximize potential. Fridley will strive to maintain a coordinated relationship with our local residents and businesses and in doing so strengthens the community by assisting industries in finding workers that match their needs. Chairperson Gabel asked about the Greenstep portion of the plan. Julie Jones , City Planner, replied that the City is already doing a lot of those things. There are a variety of things the City can do and we are working on step 2/3. A lot of different aspects will be involved with this. Commissioner Eggert said that Fridley has a strong manufacturing base and most of the workers are going elsewhere to work. There is also a serious skills gap going on. Ms. Leibel replied that is not specific to Fridley and this is a trend across the State. Businesses are working to address this by working with schools and connecting with students early on. Wally Wysopal , City Manager, said that a concern of the City and the HRA is why do businesses stay here. Business retention visits have been important to find out why they stay and are located here. Julie Jones, City Planner, presented the draft housing plan review for the 2040 Comprehensive Plan. Existing housing there are 8,301 structures and 11,943 units. Occupancy currently has 11,903 units with 7,609 owned and 4,294 rentals. Ten years ago, nearly 13% of Fridley’s single- family homes were valued over $249,999. The 2016 assessing data shows Fridley not recovered from the recession completed because only 6% of single family homes are currently valued over $249,999. Rental rates range from $625 for a studio to $1,634 for a 4 bedroom. Rental rates have significantly increased over the last 10 years. Subsidized housing accounts for only 4% of Fridley’s housing units. Fridley’s 2021-2030 allocation of need for affordable housing is 268 units. Ms. Jones stated that in the summer of 2017, Fridley HRA financed a housing conditions survey where single family homes were ranked on a three-point scale on the condition of roof, soffit/fascia, siding/paint, windows/doors and foundation. The finding reported that 97% of Fridley homes being in good to excellent condition. City staff was inspecting rental property every four years but the city’s policy was changed to inspect rental properties once every three years. Ms. Jones said that existing housing assessment for Fridley shows that while 92% of Fridley’s housing meets affordability and 4% of housing units are subsidized units, 25% of households are considered cost-burdened households. Similar to the situation 10 years ago, Fridley still lacks a Housing and Redevelopment Authority Meeting of November 2, 2017 9 wide variety of housing and higher price points. There are still no options in the City for senior cooperative housing, high rise condominiums or large, high value, single family homes. Ms. Jones said that due to code changes and purposeful staff efforts to enforce zoning and rental licensing codes, the housing stock in the City ranks as well-maintained. However, due to the age of the City’s housing stock, the City needs to continue to concentrate a significant effort on proactive inspections to maintain housing condition standards. Data shows that almost all of the owner-occupied housing in Fridley is affordable which means the City lacks higher-valued, move-up housing. A location that the City could serve the need for this type of housing in the future is to guide the zoning of the Girl Scout Camp for single-family housing. Ms. Jones noted that survey data has shown a safety concern over management of rental housing. The Police Department and Community Development Department will continue to work together on a crime -free rental housing initiative. Fridley will work to expand the size of the existing City-sponsored community garden area and amend zoning code to allow community gardens as a principal use in all zoning districts with a special use permit so more fresh produce is available for citizens. The plaza of the new Civic Campus will also be offered for seasonal, weekly farmers market. Lastly, senior program will continue to partner with agencies to meet senior’s needs, so they can safely live independently in their homes. Commissioner Backlund said that Fridley is among the top in affordable housing compared to everyone else. He asked if adding new developments would change those statistics. Ms. Jones has not seen anything on that but currently Fridley housing is 92% affordable. Commissioner Backlund suggested paying attention to the regional and national trends and use innovative methods as best we can. Commissioner Eggert thought that the City needed nicer, affordable housing with more diversity in the housing mix. Scott Hickok , Community Development Director, replied that there is little opportunity to build new, but housing stock is good. Commissioner Eggert commented that the housing looks good and excellent from the curb, but viewers may disagree. The evaluation is not based on factual data inside the unit. Mr. Hickok replied that they do not evaluate single family homes from the inside. CommissionerBacklund recalled that the market rate for Fridley took a hit in 2008 and the market around Fridley has increased. Housing and Redevelopment Authority Meeting of November 2, 2017 10 Commissioner Eggert thought that the inspection side has come a long way in last 5 years. He asked what other communities did with licensed rental inspections; three years seemed like a long time. Ms. Jones replied that is pretty typical with other communities. Inspections used to be once every 4 years but because of the age of the rental stock, inspections changed to every 3 years. This was a recent change and things have improved since we started inspections every 3 years. Mr. Hickok noted that there are 1,600 units inspected annually and rarely does that result in no return visits. 1,600 units result in 4,800 inspections in a year with things that need to be corrected. Inspections are thorough, and we are seeing great results. Mr. Bolin stated that every 10 years the Comprehensive Plan creates a snapshot of the condition of single family homes in Fridley. Julie also, every year systematically looks at each house for code violations etc. and writes letters to get those things corrected. The rental inspection division is a separate entity looking only at rental properties. Commissioner Mulrooney thought Fridley is improving home values each year and is glad to see the City is economically competitive. There is a need for entertainment options in Fridley to creates a hub for younger generations. 2.CEE Housing Programs Update Paul Bolin , HRA Executive Assistant Director, reported that there were no loans making 14 year-to-date; there was one residential advisor visit for 5 year-to-date. Currently there are 12 loans in process for residents in our City. We didn’t have any home energy squad visits in October but there are 7 scheduled in the upcoming months. January 27 is the Home and Garden Show at the Blaine Sport Expo Center from 9-3. More details can be found on the website; www.northmetrohomeandgarden.com. Adjournment: MOTION by Commissioner Eggert to adjourn. Seconded by Commissioner Backlund. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON GABEL DECLARED THE MOTION CARRIED UNANIMOUSLY AND THE MEETING ADJOURNED AT 9:07 P.M. Respectfully submitted, Krista Peterson Recording Secretary