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HRA 08/11/1983 HOUSING & REDEVELOPMENT AUTHORITY MEETING THHIMAY, AUGUST 11 , 1983 7:30 P.M. City of Fridley AGENDA HOUSING & REDEVELOPMENT AUTHORITY MEETING THURSDAY, AUGUST 11 , 1983 7:30 P.M. Location: Council Cahmbers (uppere level ) CALL TO ORDER: ROLL CALL: APPROVAL OF MINUTES: Housing & Redevelopment Authority Minutes: July 14, 1983 Housing & Redevelopment Authority Minutes : July 21 , 1983 ADOPTION OF AGENDA: REQUEST BY VON KLUG & ASSOCIATES FOR MORE MONEY UNDER RELOCATION CONTRACT lA to 1M REDRAFT OF RIGHT OF DEVELOPMENT/ST. PHILLIPS HUMAN SERVICES, INC. 2-2B DISCUSSION OF HARDWARE BUILDING (CONTINUED ITEM) 3 CHECK REGISTER (at meeting) FINANCIAL REPORT ( at meeting) CITY OF FRIDLEY HOUSING & REDEVELOPMENT AUTHORITY MEETING JULY 14, 1983 CALL TO ORDER: Vice-Chairperson Prieditis called the July 14, 1983, Housing & Redevelopment Authority meeting to order at 7:40 p.m. ROLL CALL: Members Present: Elmars Prieditis, Carolyn Svendsen, Duane Prairie Members Absent: Larry Commers, Walter Rasmussen Others Present: Jerrold Boardman, City Planner Sid Inman, City Finance Director Mark Haggerty, 6441 University Ave. N.E. Arlin Waelti , O'Connor & Hannan Jim Casserly, O'Connor & Hannan Howard Helgen, St. Phillips Human Services, Inc. APPROVAL OF JUNE 9, 1983, HOUSING &REDEVELOPMENT AUTHORITY MINUTES: MOTION BY MR. PRAIRIE, SECONDED BY MS. SVENDSEN, TO APPROVE THE JUNE 9, 1983, HOUSING' & REDEVELOPMENT AUTHORITY MINUTES AS WRITTEN. UPON A VOICE VOTE, ALL VOTING AYE, VICE-CHAIRPERSON PRIEDITIS DECLARED THE MOTION CARRIED UNANIMOUSLY. ADOPTION OF AGENDA: Mr. Boardman stated the following item should be added as Item #2: "Moore Lake District Discussion on Option" Vice-Chairperson Prieditis declared the agenda adopted as amended. 1. CONSIDERATION OF LEASE AGREEMENTS FOR STANDARD STATION: Mr. Boardman stated the "Mutual Agreement" is a standard agreement form. As far as the "Agreement of Lease", the HRA had approved it at their last meeting; but at that time, the agreement was for zero dollars. After the actual lease documents had been sent to the HRA members and after review of those documents, there was some concern, and the HRA members did want the lease documents back on the agenda for discussion. He stated some modifications have been made to the documents based on the HRA members concerns and comments. After a discussion with each HRA member, a monthly installment payment of $270 has been put into the lease. That was a change from zero dollars in the original lease agreement. HOUSING & REDEVELOPMENT AUTHORITY MEETING, JULY 14, 1983 PAGE 2 Mr. Boardman stated that in Memo #83-53, he was recommending that the HRA approve the execution of the Mutual Agreement and Agreement of Lease as presented with the authorization that Staff work with Mr. Ryan per Staff's recommendations. Mr. Boardman stated the draft stated that the lesser may, upon request of the lessee, provide some assistance on the modifications. In discussions they said that any HRA expenditures would be strictly for material costs which would go into the building, and the HRA would pay the contractors directly for those material costs. The cost would not exceed $5,900.00. Ms. Svendsen had had a question about liens on the property. He stated he did discuss this with Mr. Haggerty, and they did put quite an extensive clause in the lease on liens. They are also pretty well protected because they are holding $10,000 in relocation costs, plus there will be an additional dollar amount that will probably come out of the condemnation. Ms. Svendsen stated she felt that any time they are dealing with this type of short term lease where the building most likely will be destroyed at some point in time, she would like to see some routine things that would protect them from any liens. Mr. Haggerty stated a letter of credit is not a workable solution. He stated that under state law, it takes 90 days to file a lien. He stated he would be willing to add a statement that the City will hold as additional security the relocation money for a period of 120 days after the last item of work has been completed. MOTION BY MS. SVENDSEN, SECONDED BY MR. PRAIRIE, TO APPROVE THE "AGREEMENT OF LEASE" AND "MUTUAL AGREEMENT" CONTINGENT UPON THE CITY HOLDING ALL OF MR. TOM RYAN'S RELOCATION MONIES FOR A PERIOD OF 120 DAYS AFTER THE LAST ITEM OF WORK HAS BEEN COMPLETED. UPON A VOICE VOTE, ALL VOTING AYE, VICE-CHAIRPERSON PRIEDITIS DECLARED THE MOTION CARRIED UNANIMOUSLY. 2. MOORE LAKE DISCUSSION ON OPTION: Mr. Boardman stated that Mr. Howard Helgen had contacted him on this item. Mr. Helgen has been negotiating with Mr. Max Saliterman to get a price on the property. Mr. Helgen and Mr. Saliterman have reached an agreement for pur- chasing the property for $300,000. This comes out to $2.36/sq. ft. Mr. Boardman stated it was his understanding from discussions with Mr. Commers and the other HRA members that they felt it would be important to have a quick appraisal done on the proeprty. He stated he has contacted Patchin Appraisals and they can do an appraisal next Wednesday with a report back on Friday. They are just trying to estimate what the actual market value is on that property. Mr. Boardman stated he did feel $2.36/sq. ft. was very realistic. HOUSING & REDEVELOPMENT AUTHORITY MEETING, JULY 14, 1983 PAGE 3 Mr. Boardman stated that if St. Phillips Human Services, Inc. , enters into an option agreement with Mr. Saliterman, the HRA would require St. Phillips to put up the option money which is $1,000. That essentially takes the HRA out of the acquisition of the property. He stated the HRA needs to rewrite the right of developrnt so it is tied to 202 funding and to the potion. It ties the money directly to St. Phillips Human Services, Inc. , so that St. Phillips can exercise the option with HRA assistance. Mr. Boardman stated he has talKed to Mr. Qureshi , City Manager, about this. As far as the CDBG funding, Mr. Qureshi seems to feel the City Council would be in favor of working with St. Phillips Human Service, Inc. , on an option agree- ment, rather than going into condemnation. Mr. Boardman stated he also checked with HUD on the use of CDBG funds. CDBG monies can be directed to non-profit or private organizations based on a purchase agreement, rather than on an appraisal. He stated if they can work out an option agreement with St. Phillips Human Services, Inc. , and Mr. Saliterman, it saves Staff a lot of paperwork and time. Mr. Helgen stated he thought $2.36/sq. ft. was a fair figure and he felt they should get the option contract in writing and get it to HUD so HUD knows that St. Phillips Human Services, Inc. , has some control of the site. One of the problems when putting in an application to HUD is that if they don't have control of the site, HUD is more reluctant to give funding because HUD does not know if they are actually going to get the property. There are too many uncertainties with condemnation. Mr. Helgen stated Mr. Boardman feels that St. Phillips Human Services, Inc. , should acquire the property. He stated he did not have any strong feelings on that, but he thought that the HRA bbught the properties in a lot of other projects. If the appraisal comes in at $300,000, he did not know how the HRA would feel about acquiring the property. The concern was that if the appraisal comes in at less, there may be some problems with having the HRA acquire the property. The concern he had was that if St. Phillips Human Services, Inc. , does the acquiring, St. Phillips Human Services, Inc. , needs to be assured that any expenses they incur,that would otherwise have been incurred by the HRA, will be covered by the HRA. He was a little reluctant to have their committees and non-profit organization acquire the property unless they are pretty sure on the documents ahead of time that all the costs are covered. Mr. Boardman stated the easiest thing to do with CDBG monies is land acqui- sition because there are no contractors with land acquisition. So they want to take the $80,000 or whatever is put in from CDBG monies for acquisition, take tax increment monies, and turn around and do the soil correction. It is cleaner in terms of the administration of the project. If the HRA acquires the property, then the acquiring agency becomes a public agency, and CDBG monies cannot be used unless there is an appraisal , and if the appraisal is lower than the $300,000, they cannot spend CDBG monies for a project over that appraised value. That is where they run into problems. How do they put CDBG monies into land acquisition if the appraisal is at $270,000? Once the HRA gets involved, they are required to have an appraisal . He felt it was better for St. Phillips Human Services, Inc., to enter into the option agree- ment, and the HRA would cover St. Phillips with a right of development. HOUSING & REDEVELOPMENT AUTHORITY MEETING, JULY 14, 1983 PAGE 4 Mr. Prieditis asked Mr. Helgen what action he was looking for from the HRA. Mr. Helgen stated he would like to be in the position to enter into an agree- ment with Mr. Saliterman within the next couple of weeks. At this point, although there has been an agreement, that agreement is not binding until it is put into writing. He would like a motion from the HRA that says the HRA, in principle, supports the acquisition based on entering into an option contract. The main thing is to get a guarantee from the HRA before they can apply for the funding. MOTION BY MR. PRAIRIE, SECONDED BY MR. PRIEDITIS, TO AUTHORIZE STAFF TO GO AHEAD WITH THE APPRAISAL ON THE MOORE LAKE PROPERTY. UPON A VOICE VOTE, PRIEDITIS AND PRAIRIE VOTING AYE, SVENDSEN ABSTAINING, VICE-CHAIRPERSON PRIEDITIS DECLARED THE MOTION CARRIED. MOTION BY MR. PRAIRIE, SECONDED BY MR. PRIEDITIS, TO APPROVE THE IDEA OF THE OPTION IN PRINCIPLE AND TO AUTHORIZE STAFF TO WORK WITH ST. PHILLIPS HUMAN SERVICES, INC., ON THE APPROPRIATE RIGHT-OF-DEVELOPMENT DOCUMENTS. UPON A VOICE VOTE, PRIEDITIS AND PRAIRIE VOTING AYE, SVENDSEN ABSTAINING, VICE-CHAIRPERSON PRIEDITIS DECLARED THE MOTION CARRIED. 3. CONSIDERATION OF GENERAL RESERVE SYSTEM DOCUMENTS: Mr. Boardman stated the HRA approved the resolution approving the General Reserve System and had authorized City, Staff to prepare the necessary documents to enact this System. The General Reserve System documents were given to the HRA for review, but discussion was not to be held until all the documentation was gotten together. The items mailed to the HRA recently were the actual amendments necessary to the redevelopment districts and tax increment districts to allow tax increment funds to be used in a General Reserve System. He stated there were two separate sets of documents:(1 )the documents establishing the General Reserve System; and (2) the documents needed to amend the existing - plans to allow the General Reserve System within the tax increment. Mr. Boardman stated Jim Casserly and Arlin Waelti from O'Connor & Hannan were at the meeting to answer questions. Mr. Casserly handed out a brochure on the "Common Bond Fund System" (shortened to "Bond Fund") , the system that Minneapolis has developed over the last 18 months. He stated this is the brochure the Minneapolis Community Development Agency is using and sending to prospective users of the System. It explains the System in a fairly reasonable way. What it explains to the potential user is why the Bond Fund in Minneapolis would be an attractive device, it explains what an industrial revenue bond is, why you can get long term fixed rate HOUSING & REDEVELOPMENT AUTHORITY MEETING, JULY 14, 1983 PAGE 5 financing, explains that a user could get up to 100% financing for rehab for a new facility, for an addition, for equipment and have a fixed rate, it explains that it is a rated bond and also explains how the reserves are pooled and that provides the additional security. Mr. Casserly stated that in the middle of the brochure, there is one distinc- tion between the system they are talking about in Fridley and the one Minneapolis now has in effect. "The Minneapolis Bond Fund was established with a $5 million letter of credit from Northwest Bank of Minneapolis. This letter of credit acts as a secondary reserve for repayment of bonds issued to the Fund and has helped the Fund's initial bond issue receive an invest- ment rate with Standard & Poor Corporation. The Fund is further enhanced by pooling the debt service and reserve accounts of each individual bond issued." Mr. Casserly stated that what Fridley is doing is basically providing initially a cash from their existing bond proceeds to fund the secondary reserve. In Minneapolis, they were able to convince Northwest Bank Systems to come up with a $5 million letter of credit. He stated cash is actually superior. Minneapolis is spending a lot of time trying to figure out how to put cash into their system. Once they achieve that and put the cash in and the secondary reserve is finally funded, they will then have an A-rated system. He stated it is going to take longer in Fridley to get a rating for their system, because they do not have as much area to work with. Minneapolis was able to do it immediately. It will probably take a couple of years in Fridley. Once the system is rated, the bonds are even more marketable. Mr. Casserly stated that is essentially what the system is all about--the System is to provide additional security for those people allowed to use it. Because Fridley has a System, they have a development tool , a way to attract businesses into the community, they have lower cost financing, financing that is more like the traditional home mortgage, fixed-rate, long-term financing. In order to make the System work, they have to have policy makers who understand what the System is about, they have to have a staff who feels comfortable with the System, they have to have underwriters to manage it-- underwriters willing to meet the potential users, explain the System, and work out small and medium-sized businesspeople's problems. If they have those things, they have a chance to develop a very attractive device. Mr. Boardman stated the HRA has been pretty well briefed on the actual work- ings of the System. The only thing they haven't covered in great length is the actual amendments to the documents. Mr. Casserly stated there are three resolutions that ultimately have to be adopted. He stated the second part of what they are preparing for the HRA is the "Modified Redevelopment Plan" prepared by Arlin Waelti. Mr. Casserly stated this plan has two real functions: (1) Combining all of the City's redevelopment projects into a single project area. This is what cities are now doing around the state. Since it does not force the City to HOUSING & REDEVELOPMENT AUTHORITY MEETING, JULY 14, 1983 PAGE 6 do anything or not do anything. It simply gives the City greater latitude in dealing with what they do have. It makes good sense to integrate the City's redevelopment areas; (2) it allows tax increment funds to be used to set up a reserve fund program. Mr. Boardman stated the City currently has three redevelopment plans. Within each redevelopment district, there are separate tax increment plans. What they are proposing is amending the Center City Redevelopment Plan to include the North Area and Moore Lake as part of the same redevelopment district. State law now allows them to have non-contiguous redevelopment districts. The proposed district would be called Redevelopment Project No. 1. The reason they are looking at amending it this way is because it is the only way to do a city-wide reserve system. Otherwise, if they wanted to use the reserve system in each redevelopment district, they would have to set up three separate reserves and it is not functional to do it that way. Instead of calling it Moore Lake Tax Increment, Center City Tax Increment,_ North Area Tax Increment, they will call it Tax Increment No. 1, Tax Increment No. 2, and Tax Increment No. 3, etc. Ms. Waelti stated that when they are defining the redevelopment project, that is the geographic area in which they can spend public monies. It has nothing to do with taking monies, so they are identifying a very large area that is non-contiguous where the HRA can decide where they wish public improvements to occur with funds available from any tax increment district within that project area. What this modification has done is it has taken all of the tax increment districts and put them within one project area so there is lots of flexibility. They can take excess tax increments that have not been pledged to the repayment of bonds (first priority) and can designate where they want public improvements to occur, and they can move those tax increments around. From that definition, the HRA can see how important it is that the underlying project area is one area. Ms. Waelti stated that is not true of what tax increments are all about. A tax increment is the increased value accruing to that property because of public improvements the HRA is making. That is money they are taking, and that increased value is tax money they are going to take for a period of time. They may initially spend that money to retire the principle and interest on the bonds they may have issued or it may be a property they are just capturing the tax increment on and they are going to use that toward their reserve. She stated there are a number of options. Ms. Waelti stated the important thing is they have to meet the commitments on the original pledge of .the tax increment bond. Any excess money is money to use for public purpose expenditures to either put into the reserve or use for a number of purposes listed in the plan. It is important to keep in mind the concept that the project area defines where they can spend public money and tax increment districts identify those areas where they can acquire money. For that reason, it is important to keep tax increment districts very small. HOUSING & REDEVELOPMENT AUTHORITY MEETING, JULY 14, 1983 PAGE 7 Ms. Waelti stated that from the public's perspective, what they want to do is make sure the HRA is taking only those parcels from which they are acquiring an increased tax base. They want to keep each tax increment district separate, because each tax increment district has a life of its own. Ms. Svendsen asked what other communities are seriously considering the General Reserve System. • Mr. Casserly stated that Minneapolis and St. Paul have adopted the General Reserve System. Marshall and Blaine have also adopted the System. Apple Valley is adopting the System that same evening. He stated Blaine adopted the System about 16 months ago. He stated the Iron Range Cities have special authorization to combine the whole Iron Range into a single reserve fund program and $5 million has been allocated to start initial funding of the System. Metropolitan Council is looking at it. He was aware of other under- writers who are trying to design systems that would be multi-city, multi- county. He felt this would be very difficult to do. If you have a well- designed, locally controlled, locally funded system, you have flexibility on your own that is extremely competitive. As you start expanding the number of units who participate in that system, you then have to become far more rigid in how you apply the system. Mr. Prieditis asked what costs were incurred in getting to the point where the System starts working. Ms. Waelti stated the System is built and the law that was passed kept in mind the fact that as development occurs, it almost requires additional staff. In the law there is an allowance for 10% of each tax increment project to be spent on administrative costs. Each city is going to vary on how much it feels is appropriate, but she thought it was advisable for cities to look at using a portion or all of it because this is a financial tool and it doesn't operate by itself. They need good competent staff to work with the System to make it do what the HRA wants it to do. Administrative staff would be like a city's economic development director. As cities are finding that the state is cutting off funding and federal funding is disappearing, the cities are looking to their own resources, and one of the best uses of city resources is to have economic development people or consultants so the city can attract the type of projects into the city that will use the Reserve System so it expands the city's local tax base. Mr. Casserly stated it is important to know that there is nothing in the resolutions that requires more staff time. There is a trustee the HRA will appoint who actually handles the funds after the bonds are sold and the underwriter is handling the sale of the bonds and the original negotiations. That is not what is causing additional staff; but if a city is successful and has people using the System, it is going to need some help with it. Ms. Svendsen asked if the City would be using existing staff or would they be hiring additional staff? HOUSING & REDEVELOPMENT AUTHORITY MEETING, JULY 14, 1983 PAGE 8 Mr. Inman stated the City will soon be hiring an economic development officer to replace Kent Hill. It is a city position. At the point where that person starts to work with Mr. Haggerty, development comes on line, reserve financing starts, and money begins to flow, obviously some of that person's salary will be picked up by the HRA. But, he was convinced they need someone to work with the System. Mr. Boardman stated that with the grand opening of the plaza and the new Community Park on Oct. 7-8, they will be putting together a brochure to be mailed out to developers in the area, they will be contacting all the real estate agencies in the area that deal with commercial/industrial real estate, and they will be putting an article in the National Association of Office Park Developers' newsletter. He stated they are going to get the word out in a promotional-type effort and they are looking at October as the big push effort. Mr. Boardman stated another thing they have to consider is that this is not necessarily a tool for someone coming into the tax increment district, but a tool to be used by anyone who wants to use industrial development bonds in the City of Fridley. Mr. Boardman stated this was being discussed at this meeting so the HRA would become more comfortable with the System. He would like to have a special meeting in a week or two for approval of the resolutions. He stated the City Council has been receiving the same documents as the HRA. The process is set up for a public hearing before the City Council for approval on Aug. 22. The HRA set a special meeting for Thursday, July 21 , at 5:00 p.m. 4. FINANCIAL REPORT: Mr. Inman stated the HRA members had received a copy of the annual financial report as audited. The HRA had also received the "HRA Rent Schedule" as of May 31 , 1983, and a "Fridley HRA Combined Statements of Revenues, Expenses, and Changes in Fund Balance" as of July 13, 1983. Chairperson Prieditis declared the HRA's annual financial report, the Rent Schedule, and the HRA Combined Statements received into the record. 5. CHECK REGISTER: MOTION BY MS. SVENDSEN, SECONDED BY MR. PRAIRIE, TO APPROVE THE CHECK REGISTER DATED JULY 13, 1983, IN THE AMOUNT OF $364,665,53. UPON A VOICE VOTE, ALL VOTING AYE, VICE-CHAIRPERSON PRIEDITIS DECLARED THE MOTION CARRIED UNANIMOUSLY. HOUSING & REDEVELOPMENT AUTHORITY MEETING, JULY 14, 1983 PAGE 9 Mr. Boardman stated healso needed approval on the progress payment for the demolition at 6379 University Ave. N.E. MOTION BY MR. PRAIRIE, SECONDED BY MS. SVENDSEN, TO APPROVE THE PROGRESS PAYMENT FOR THE DEMOLITION AT 6379 UNIVERSITY AVE. N.E. IN THE AMOUNT OF $8,611.75. UPON A VOICE VOTE, ALL VOTING AYE, VICE-CHAIRPERSON PRIEDITIS DECLARED THE MOTION CARRIED UNANIMOUSLY. 6. OTHER BUSINESS: Mr. Boardman stated he wanted to stress to the HRA that there needs to be some discussion on what direction they should go with the hardware building. The Lions Club is still waiting to hear from the HRA, and staff needs some direction from the HRA. Mr. Prieditis stated that this discussion should take place when there are at least four commissioners present at a meeting. ADJOURNMENT: MOTION BY MS. SVENDSEN, SECONDED BY MR. PRAIRIE, TO ADJOURN THE MEETING. UPON A VOICE VOTE, ALL VOTING AYE, VICE-CHAIRPERSON PRIEDITIS DECLARED THE JULY 14, 1983, HOUSING & REDEVELOPMENT AUTHORITY MEETING ADJOURNED AT 9:45 P.M. Respectfully su mitted, 54 Lyn Saba Recording Secretary CITY OF FRIDLEY HOUSING & REDEVELOPMENT AUTHORITY _ SPECIAL MEETING JULY 21, 1983 CALL TO ORDER: Chairperson Commers called the July 21 , 1983, special Housing & Redevelopment Authority meeting to order at 5:00 p.m. ROLL CALL: Members Present: Larry Commers, Elmars Prieditis, Carolyn Svendsen Members Absent: Duane Prairie, Walter Rasmussen Others Present: Jerrold Boardman, City Planner Sid Inman, City Finance Director Jim Casserly, O'Connor & Hannan - Mary Malzahn, O'Connor & Hannan CONSIDER FOR APPROVAL AND ADOPTION TWO RESOLUTIONS RELATING TO A MODIFICATION TO THE TAX INCREMENT FINANCING PLAN; REVIEW AND CONSIDER THE ADOPTION OF AN AMENDMENT TO THE REDEVELOPMENT PLAN OF FRIDLEY; AND CONSIDER FOR ADOPTION RESOLUTIONS RELATING TO THE ESTABLISHMENT OF THE GENERAL RESERVE SYSTEM IN FRIDLEY: Mr. Commers asked Mr. Casserly to review with the HRA the documents O'Connor & Hannan have prepared and are presenting to the HRA at this meeting. Mr. Casserly stated he had asked Arlin Waelti , their Bond Counsel who had actually drafted the modification of the plan, to prepare a cover letter summar- izing the modifications and the reason for them. Mr. Commers stated that, as he understood it, regarding the districts themselves, they are merely consolidating the districts into one project so as to give the HRA more flexibility. Even though the districts are not physically contiguous, they will have one redevelopment project within the City of Fridley which will be made up of the three previous individual projects. Mr. Commers stated that as Ms. Waelti pointed out on page 2 of the July 21 , 1983, cover letter, there are really no restrictions or limitations being put on those districts and they are, in fact, expanding their flexibility and authority with regard to the districts with these modifications. Mr. Casserly stated that was correct. Recent legislation has made it very clear that they can use non-contiguous project areas and have non-contiguous tax incre- ment districts. That simply means they can take whatever areas they wish to develop in the city and treat them as a single project. SPECIAL HOUSING & REDEVELOPMENT AUTHORITY MEETING, JULY 21 ,1983 PAGE 2 Mr. Casserly stated there are two resolutions they are requesting the HRA to adopt.The three-page resolution is Resolution HRA -10-83. That is the resolu- tion whereby they designate the Center City Redeveopment Area as a Redevelop- ment Project No. 1 and modify it by enlarging Redevelopment No. 1 and the Redevelopment Plan relating thereto pursuant to existing statutes. They designate. Center City Redevelopment Area as Tax Increment District 1 , Moore Lake Redevelop- ment Area as Tax Increment District No. 2, and the North Area Redevelopment Area as Tax Increment District No. 3, all not located within Redevelopment Project No. 1. Mr. Casserly stated Resolution HRA 11-83 is the resolution that would request the City Council to call a public hearing on redesignating these districts. There is a statutory requirement to do this. He stated O'Conner & Hannan has also prepared for Staff the notice of public hearing. He stated the public hearing at City Council will be on August 22. MOTION BY MR. PRIEDITIS, SECONDED BY MS. SVENDSEN, TO ADOPT RESOLUTION NO. HRA 104-83 AS PRESENTED. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. MOTION BY MR. PRIEDITIS, SECONDED BY MS. SVENDSEN, TO ADOPT RESOLUTION NO. HRA 11-83 AS PRESENTED. UPON'A VOICE VOTE ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. Mr. Commers stated he would call the HRA's attention to the General Reserve document discussed at length at the July 14, 1983, HRA meeting. He stated he was not present at that meeting because of business out of town, but he had the opportunity to go through the document and had the opportunity to talk with Sid Inman and Jim Casserly about some of the questions he had. He stated that, at this time, he was satisfied that all his questions were answered adequately. Mr. Prieditis stated he was also satisfied with the concepts in the document. Mr. Commers stated the HRA does retain control over the use of this vehicle on an individual project basis to determine whether it should be made available or not. There is also a great deal of flexibility within the terms of the document as to what the HRA might and might not do. Mr. Commers stated that if the HRA does have some excess tax increment monies, his concern has been what they are going to be able to continue to do with those funds or whether they are going to be obligated to make any commitment to the reserve fund with tax increment excesses. Was he correct in understanding that those excesses can be used by the HRA in any manner or mode they want, one of which could be contributions to the reserve fund, but they are not required to contribute to the reserve fund? SPECIAL HOUSING & REDEVELOPMENT AUTHORITY MEETING, JULY 21 , 1983 PAGE 3 Mr. Casserly stated that was correct. Actually, they are not excesses because they have been part of the HRA plan and all the HRA is really doing is amending their whole finance plan to allow the reserve system to be an opportunity. They really do have a plan for the use of those funds. The funds just happen to be available at this time because they have not been spent, but they are part of the overall plan. Mr. Casserly stated there are three resolutions which must be adopted to establish the basic structure of the Fridley financing system. These are (1) Resolution Establishing a General Reserve Fund; (2) Resolution Establishing the Industrial Development Bond Account in the General Reserve Fund; and (3) Basic Resolution and Indenture in setting up the rules and regulations. MOTION BY MS. SVENDSEN, SECONDED BY 112. PRIEDITIS, TO ADOPT RESOLUTION NO. HRA 12-83 THE RESOLUTION ESTABLISHING A GENERAL, RESERVE FUND. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. MOTION BY MS. SVENDSEN, SECONDED BY MR. PRIEDITIS, TO ADOPT RESOLUTION NO. HRA 13-83 THE RESOLUTION ESTABLISHING THE IDB ACCOUNT AS A SPECIAL ACCOUNT IN THE GENERAL RESERVE FUND. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. MOTION BY MR. PRIEDITIS, SECONDED BY MS. SVENDSEN, TO ADOPT RESOLUTION NO.HRA 14-83 THE BASIC RESOLUTION AND INDENTURE IN SETTING UP THE RULES AND REGULATIONS. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. Mr. Casserly stated there was one final short resolution which was an administra- tive one. The HRA will be seeing a number of these kinds of things that deal with the mechanics of the system. This resolution deals with authorizing the Executive Director to administratively call for the publication of a public hearing. The reason for this is because the HRA meets once a month and they have to meet to call for a public hearing, they could end up with very long time lines for the issuance of IDB`s. If the Executive Director is allowed to pub- lish the notice, it simply gets the issue moving. Mr. Commers stated that whenever someone comes in with a project, is the HRA automatically required to have a public hearing? Mr. Casserly stated they were not. SPECIAL HOUSING & REDEVELOPMENT AUTHORITY MEETING, JULY 21 , 1983 PAGE 4 Mr. Commers stated he had no objection to this resolution, but his question was who was going to determine whether or not there is going to be a public hearing. Would that be after the HRA has decided that a project is worthy of being considered for this kind of financing? Mr. Casserly said that what the HRA is going to have to ultimately do is develop some guidelines for those projects they think should be part of the system. This is something the HRA will evolve over a period of time. The HRA has mostly rules, not strict regulations. His impression from. working in other places is that Staff tends to be even more conservative in bringing things forward than the people who are the policy makers. Mr. Commers stated he would not like the Executive Director to call for a public hearing and go to the expense and trouble to have a public hearing if, for any reason, the HRA members would have any reservations about whether a project was worthy of this kind of financing. Mr. Boardman stated that in most cases, the HRA is going to be involved in a project long before they get into ID Bs. Mr. Commers stated maybe there should be some guidelines that have to be met before a public hearing is noticed. Mr. Boardman stated maybe some type of statement should be put into the resolu- tion stating that the Executive Director will notify the HRA of the intent to call for a public hearing. MOTION BY MR. PRIEDITIS, SECONDED BY MS. SVENDSEN, TO AMEND RESOLUTION NO. HRA-15-83 TO ADD A STATEMENT THAT THE EXECUTIVE DIRECTOR WILL CALL FOR A PUBLIC HEARING ONLY AFTER NOTIFICATION TO THE HRA, AND TO ADOPT THE RESOLUTION AS AMENDED. Mr. Commers asked Staff to amend the resolution. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION ' CARRIED UNANIMOUSLY. ADJOURNMENT: Chairperson Commers declared the July 21 , 1983, special Housing & Redevelopment Authority meeting adjourned at 5:30 p.m. Respectfullys mitted, y (Saba Recording Secretary 'ID: H JSIIG AM) REINIVELCFNERY AITMRUZY MON: JERRY ROAN, EICKUTIVE DIREMOR OF BRA morn mum PCR I/CREASE IN comma PAYNENIIS BY BILL VCP RUG PCR VC IR IC__ & ASSOCINBIS DATE: AUGUST 5, 1983 We have received a request for an increase to the relocation contract that we have with Von Klug & Associates. This request is based on present expenditures which he claims are over and above the contract cost. I have turned this matter over to legal counsel for review of existing contracts and respond. That report will be submitted to you prior to the meeting on August 11, 1983. I received this request in a letter dated July 27, 1983. At that time, I had requested a follow-up letter with a complete breakdown of what they felt were contract hours versus noncontract hours so that we would have the opportunity to analyze those tasks based on the contract. Instead of the follow-up that I requested, I received a letter of August 2, 1983. This letter raises some issues that I feel need direct response. First of all, there has never been any discussion or authorization from HRA or Staff for additional payments beyond the $9,000 provided in the contract. The work that was being done by Van Klug & Associates was, in my opinion, all part of their normal process for relocation. If it was any different than this, it was never brought up by Von Klug & Associates in our initial meetings or any of the meetings that they had with Staff or the HRA throughout the process. Mr. Van Klug stated that they recognized early on and assumed Staff knew that they were doing noncontractural work. Yet, there was no discussion from Von Klug & Associates that would lead us to believe there was anything that was not part of the contract. Mr. Von Klug did advise us that fixture appraisals were not done for the Fridley Center and that they were needed for the protection of the HRA. He also offered to contact the appraisers that he knew did fixture appraisals. These appraisers then contacted me and we selected, based on low quote, through our normal process. Mr. Von Klug stated that 2 separate events solidified their change in course. (More extensive site search and the fact that 2 businesses were put on hold.) There has never been an indication from Von Klug & Associates as to what is meant by more extensive sight search efforts or the number that constitutes this claim. We supplied Von Klug & Associates with a timetable for the relocation of businesses and at no point was any business put on hold because of CDBG Funding. In fact, it was not determined to use COBG until the end of January for the Dr. Ryan building. Mr. Van Aug indicated that they informed the HRA Staff in writing, in March, and received no response. Me notice to the HRA only consisted of a statement that they may be having problems. They stated that it was being reviewed and a contract adjustment may be requested. At that time, I did follow this up with a telephone call to Bill Von Aug who indicated that they would work it out and to disregard the correspondence. With that conversation, we did not follow-up with any further discussion on this matter which indicated to me that Mr. Von Aug had worked out any problems that he may have had with the contract. My primary concern with the contract was to ensure that the contract was being crone in a timely mariner, not to watch to see if Mr. Von Rlug's costs were exceeding the amount to be provided in the contract. I have no complaint with the job being done by Von Aug & Associates. I do, however, have a problem with making changes to the contract after expenditures are made for items that should have been brought specifically to our attention in writing prior to those expenditures. I would not recommend that the HRA increase the contract to $15,000. JB/bd 3/0/19/9 -1-B NOTE: I discussed this with legal counsel on August 5, 1983 and reviewed the written report. Dave has found no basis for this increase to the contract. The report will be ready to mail to the IRA on Monday. This will come in a separate mailing so you will have the information prior to the meeting. • 1C . 4723 EXCELSIOR BOULEVARD/SUITE 401 MINNEAPOLIS.MINNESOTA 55416 16121626-5597 DENVER AREA 13031 431-5123 August 2, 1983 Jerrold Boardman, Executive Director Housing and Redevelopment Authority of Fridley 6431 University Avenue NE Fridley, MN 55432 Dear Jerry: Per your request, the following is a more detailed report on our activities for the Center City Project. I would like to begin by reviewing the services the HRA hired us to deliver. We were to go into each building to be acquired, interview the tenants on site, estimate the relocation compensation each could receive, search for several replacement site referrals for each, and compile individual written reports forwarding the above. If anything, our current problem is the result of our putting our client's welfare (the HRA) ahead of our own. When we com- piled our proposal, we had ample reason to assume under both alternatives that the HRA was acquiring trade fixtures, particu- larly those owned by tenants with the express right of removal. Not only had staff attended conferences where the importance of this was discussed, but we had also met with same on this very topic, along with other acquisition procedures, which we did for no cost. Therefore, we could have, when we got on site and found that fixtures were not being acquired, simply have listed them in the personal property inventories, secured moving bids, turned in our reports, and collected our money. But we didn't. Instead, wesa1 led _the 1HRA_staff_ .rld_met sin this.lpatte _ We reviewed leases to determine the HRA' s exposure. We assisted with the _hiring of a fixture appraiser on short notice and facilitated his work whenever possible. We explained applicable requirements to the HRA staff and also met with the HRA on this matter. We helped negotiate fixture settl_ements with the tenants; and in one case we were even forced to draw the Bill of Sale to complete the trans- Von Klug € Associates, Inc. Specialists in Redevelopment Relocation Mr. Jerrold Boardman, Executive Director August 2, 1983 1D Page 2 action on schedule. We s'ecognized__at_ the_time_all _of_this_ was happening, particularly in relation to Lennie' s and Magic Swirl, that we were expending a significant number of hours on non-contractual work. However, the R_staff requested our continual involvement; we assume_ the staff also knew it was non-contractual; our priority was to complete the job stasifactorily; and given all of the above to this point plus the fact that our work saved the HRA far more than our services cost, we finally assumed it would not be difficult to receive payment for the extra services rendered. Perhaps at this point we still could have turned things around to our contractual services. However, the_ businesses were. calling us regularly about their relocations and had seen us in an ex- tensive role which would have been difficult to reverse. Remember, evaluations are less expensive because we go in and out fairly quickly rather than establishing an on-going relationship through to the actual move. Two separate events, though, solidified our change of course. First, more extensive site search efforts were_requested by the HRA staff for Dr. Ryan and Community Credit. Again, this was done to minimize the HRA' s total financial exposure by negating any future claims for "loss of going concern" by businesses claiming they had to terminate business for a lack of an adequate replace- ment site. As a result of our extra efforts not required under the Uniform Act, it is our opinion that the HRA can successfully defend itself against any such claims. Secondly, two businesses were put on hold, since their relocations were to be funded with CDBG_funds. The fast-track evaluation method cannot be used in that circumstance; hence our contractual reference to a tax increment project, wherein the evaluation method is allowed. The one thing that is stressed in the Uniform Act is uniform treatment of displacees within a project. It would obviously not be fair to afford complete service to two businesses and streamlined services to the rest, particularly when all are located in the same general area and being displaced for the same general project. Again, since HRA staff had attended conferences where this was stressed and we had._additionally_ talked to_ staff on an individual basis.and stressed this concept, we mistakenly assumed the_ staff knew theimplications__of the f1 ndinq_change. In retrospects perhaps we should have halted work to iron out _these differences. Instead we put the HRA' s objectives ahead of our company' s welfare, as we at this point are "out" about $5,000, and have been carrying $3,000 under our contract since February, when we exceeded $9,000 in actual hours expended. Von Klug 6 Associates, Inc. Specialists in Acquisition/Relocation lE Mr. Jerrold Boardman, Executive Director August 2, 1983 Page 3 In March, then, we informed the HRA of the contract discrepancy via our second invoice for payment. A__copv of this billing is 3nclp_sedl and we note that at n_ o time thereafter did staff contact us, or ex ress sur rise at our statement that non-contractual services were o rendered, or nte that there woulaThe_anyy _problem In adj Sting_our _contract_for_the work__act1.1a_1ly,_ requested by the HRA_ and_ subseguently completed for same. We sincerely wish the HRA would have responded to that billing if it disagreed _with_ it premise, rather than waiting until an additional $4 , 930 had been expended in hourly services and we submitted our reconciliation in July. Speaking frankly, the HRA requested additional services; we did not exceed. the_ contract without verbal instructions to_do_so from _staff. We informed the HRA of_ the situation_ in writing in i h7iii received .no response. It is therefore reasonable to expect payment. However, if additional justification is needed , it can certainly be found in the dollars our work ultimately saved the HRA. Each of these businesses had improved their leased sites with trade fixtures which they were entitled to remove when they vacated. The cost to move these fixtures could therefore have been correctly included in their relocation payments. However , we saw that the cost to move the items greatly exceeded their acquisition value and helped the HRA acquire them at a savings. Also given, then, for each business is the savings secured , i.e. our estimate of the cost to move the fixtures under relocation, minus the amount paid by the HRA to acquire the same fixtures. Lennie' s Laundromat $76, 000 Discount Battery 7 ,000 Dr. Ryan's 20,000 House of Dragon 6,000 Magic Swirl 10,000 As can be seen by the listing, our pointing out this situation and correcting it saved the HRA an estimated $119, 000. 00. This does not consider the potential costs of litigation over loss of going concern, regardless of whether any such actions were successful , which were negated by our extra site searching. Our first letter requested that our original proposal of $14 , 500. 00 for full relocation services be accepted and that an additional $1,500. 00 be alloted for acquisition services. This proposed add-on is less than the estimated 58 hours actually expended on acquisition-related services. However, we seldom hit our maximum not-to-exceed figures, as we build in the time necessary to work with people to satisfactorily resolve problems. Fridley would have been no exception, and the savings in relocation were first applied to acquisition services before determining the add-on amount. Von Klug 6 Associates, Inc. Specialists in Acquisition/Relocation • 1F Mr. Jerrold Boardman August 2, 1983 Page 4 Also in computing the amount of add-on, we assumed delivery of some additional site search hours for Dr. Ryan's and some additional acquisition hours to review the HRA's parcel files for documentation as required for CDBG-related projects and to write a report on same. This was in keeping with our philosophy of providing complete services to our clients. For example, in the latter case, technical errors in documenting files can result in problems with present and future HUD/State funding. However, given that the HRA is reticent to secure specialized services, we would propose that our original proposal of $14 ,500 for standard business relocation services be accepted with an add-on of $500, for a total of $15,000. We will complete the written relocation claim for the last one business, Dr. Ryan' s, but will not site search any more for Dr. Ryan's or review your acquisition files and provide a written report on same. If you want either of these two non-contractual services, we will need a letter of authorization for same. Given that we saved $119,000. 00, and provided complete and uniform services to all businesses, as specified in our proposal last fall for $14 ,500, a total contract addition of $6, 000 and a real overage of $500 is in our opinion not unreasonable. I will be glad to meet with the Housing and Redevelopment Authority to amicably resolve this matter. Sincerely, \ ,� ,, O^. Wi] liam Von Klu President sl Von Klug 6 Associates, Inc. Specialists in Acquisition/Relocation • 1G Von Mug g Associates, Inc. 4725 EXCELSIOR SLVOISIJITE 401 .1,7; MINNEAPOLIS. MN B$41• li 121 525.5557 DENVER AREA 13031•314123 March 23, 1963 INVOICE Mousing and Redevelopment Authority of Fridley Attention: Jerrold Boardman, Executive Director 6431 University Avenue N.E. Fridley, MN 55432 RELOCATION SERVICES FOR CENTER CITY PROJECT Payment is requested in the amount of $3,000. 00 for relocation services for the Center City Project. This repre- sents 67 percent of the total original contract amount, and the percentage of completed services exceeds 67 percent. It should be noted that the original agreement specified different services than those which have been and are going to be required. This situation is current- ly under review, and a contract adjustment may be requested. At this time, though, Von Klug & Associates is definitely due another payment for its services to date. TOTAL AMOUNT DUE $3,000. 00 Specialists In Redevelopment Relocation 4725 EXCELSIOR BOULEVARD/SUITE 401 • MINNEAPOLIS. MINNESOTA 55416 1H 16121 929-5597 DENVER AREA 13031 431-51 23 July 27 , 1983 Jerrold Boardman, Executive Director Housing and Redevelopment Authority of Fridley 5431 University Avenue NE Fridley, MN 55432 Subject: Agreement for Professional Services dated September 17 , 1982 Center City Project Dear Jerry: Back in August, 1982 , when our company discussed alternatives for our services for the above-referenced project, two proposals were given. One was for a fast-track approach, applicable when the work can be done before the businesses are ready to move and when no Federal (HUD) money is used to finance a por- tion of the project. The other was for standard relocation services. No acquisition services were included in either alternative . The prices quoted were $9 , 000 and $14 , 500 respect- ively; and a copy of our letter in this regard is enclosed for your easy reference. The HRA chose the streamline option; and the second enclosure is our contract for services. The third enclosure is our alternate contract for standard services. As you can see, our work has been the standard scope, not the streamlined method. This is our problem. To date, we have been paid the first two installments under our contract totalling $6, 000, leaving a balance owed of $3 , 000. However, as of May 30, we have expended 335: hours, which at $40.00 an hour equals $13 ,410. This is obviously more in line with the proposal for standard services as well, particularly considering that our work is almost done and that some acquisition services were also rendered. For example, we negotiated for the sale of fixtures to the agency, counseled on the cancellation of leases, prepared Notices of Displacement, and drew Bills of Sale. Von Klug g Associates, Inc. Specialists in Redevelopment Relocation Jerrold Boardman, Executive Director 1J July 27 , 1983 Page 2 You might remember back to the start of our work that it never was possible after our agreement to implement the streamlined method. First, some parcels were released to us for immediate work and the businesses were already planning their actual moves, which naturally increases the amount of assistance they ask from the agency or in this case, us. This is why the stream- lined method is only practical before the businesses are ready to move. Second, some were displaced with HUD money. The stream- line approach is not accepted by HUD and use of two different methods within the same project area results in non-uniform treat- ment among the affected businesses. Therefore, all were afforded the standard, full, on-going assistance program, not just those displaced by HUD monies. Finally, the streamlined procedure does not provide an extensive referral search for each individual business, as does the standard contract. The HRA asked us to continue to provide referrals for several of the concerns in the area to assist with their reestablishments. As noted in our letter of August 10, the major advantage to the standard method is "that the businesses affected would have available to them members of our staff to assist them, from the execution of the contract until displacement, to determine costs and alternatives to their special needs. The possibility of persons claiming inadequate assistance from the city in the relocation process is nil under this procedure. " Also as noted, the major disadvantage is the cost to the HRA. It is unfortunately not possible for us to provide standard services at the streamlined cost. We are therefore asking for an increase in our contract amount to $16, 000 , which is the sum quoted last fall for standard services and an allotment for the acquisition services provided and for one review of your acquisition files in the future for compliance with HUD regulations. If agreement can be reached on the above, the last detail is how to make payment for services from September through May for actual hours expended. Normally, we send a monthly invoice giving the dates services were rendered, a brief description by the day, and the number of hours (by quarter hours) expended each day detailed. However, in this case, with 335+ hours expended it would be a hardship for us to detail out all these hours. On the premise that you are generally familiar with the services we have rendered, we would propose to compile a monthly summary instead of a daily one which would highlight the major work activities and note the total hours expended for each monthly period. With so much money outstanding, I am sure you can understand that I am anxious to resolve this matter. I will be glad to meet with you and the HRA if you wish to answer any questions or clarify any Von Klug g Associates, Inc. Specialists in Acquisition/Relocation Mr. Jerrold Boardman, Executive Director 1K July 27 , 1983 Page 3 of the above if necessary. Thank you for your assistance and cooperation. Sincerely, JAJ21t2 n Klug President sl Enclosures Von Klug 6 Associates, Inc. Specialists in Acquisition/Relocation - Monthly Summary of Time 1L Fridley Center City Project Each month the following general services were delivered: 1. Telephone calls with businesses 2 . Telephone calls with HRA Executive Director 3 . Staff update/coordination discussions 4 . Filework 5. Weekly perusal of MLS commercial listings for site search The remainder of this Summary notes the areas in which services were concentrated each month and the total monthly charge for general and specific services. August, 1982 2 Hours Begin project set-up in office $ 80 . 00 September , 1982 22 .75 Hours Complete file set-up; meet with project appraisers; conduct initial meetings with Lennie' s, Fridley Auto, and Community Credit; site search for Lennie' s $ 910 . 00 October , 1982 62 . 25 Hours Meet with Magic Swirl, House of Dragon, Community Credit, and Lennie ' s; meet with appraisers, HRA Attorney, HRA Executive Director, movers, and Lennie' s on Lennie' s negotiations; work on written monetary claim for Fridley Auto; site search for Lennie' s, Magic Swirl , House of Dragon, and Community Credit; meet with movers on other businesses (besides Lennie ' s) $2 , 490. 00 November, 1982 80. 75 Hours Negotiate with Lennie' s, in- cluding meetings with all parties detailed above in October; present report to Fridley HRA; work on written monetary claim for Fridley Auto; concentrate on site search and claim work for Community Credit; remain in contact with all businesses and HRA; site search for most busi- nesses and meet with them on same $3 ,230. 00 Von Klug 6 Associates, Inc. Specialists in Acquisition/Relocation -2- December, 1982 11.50 Hours 1M Meet with Fridley Auto; write House of Dragon; site search $ 460. 00 January, 1983 14 .75 Hours Concentrate on Magic Swirl, in- cluding the sale of its fixtures to the HRA and the problems associated with this case; meet with the business at least twice on same; prepare Bill of Sale for its fixtures $ 590. 00 February, 1983 62.00 Hours Concentrate on Dr. Ryan' s, House of Dragon, and Discount Battery; complete and submit written monetary claims for Discount Battery and for House of Dragon; site search, par- ticularly for Dr. Ryan' s, House of Dragon, and Community Credit $2 , 480. 00 March, 1983 30. 25 Hours Work on direct moving costs for Magic Swirl , including bids by commercial movers; draft letters to Community Credit; meet with HRA Executive Director on leasehold improvements; site search for re- maining businesses $1 , 210. 00 April, 1983 38 . 50 Hours Concentrate on replacement sites for Dr. Ryan; meet with business on same three times; also site search for Community Credit during the month $1 , 540. 00 May, 1983 10.50 Hours Work on written monetary claim for Magic Swirl; update with re- maining businesses; work with Community Credit on its direct moving costs $ 420. 00 June, 1983 13 . 00 Hours Finish monetary claim for Magic Swirl; begin writing one for Community Credit; meet with both of these businesses; site search for Dr. Ryan' s and draft letter to same; evaluate contract status $ 520. 00 TOTAL EXPENDED TO DATE $13 ,930. 00 PAYMENTS TO DATE $ 6, 000. 00 BALANCE REQUESTED FOR PAYMENT $ 7 , 930. 00 Von Klug 6 Associates, Inc. Specialists in Acquisition/Relocation 2 August 11, 1983 Ms. Judy Lee St. Philip's Human Services, Inc. 6180 Highway 65 N.E. Fridley, MN 55432 Re: Redraft of the right to develop 202 Project in Phase III of the Fridley Moore Lake Redevelopment District Dear Ms. Lee: The Fridley Housing and Redevelopment Authority, at their August 11, 1983 meeting, approved the redraft of your request for right to develop a portion of Phase III of the Moore Lake Redevelopment District. This approval is based on your option on the property presented to the HRA on August 11, 1983 as well as your preliminary presentation to the Housing and Redevelopment Authority on May 12, 1983 for the minimum development of a 40 unit elderly/handicap housing project. This approval is also contingent upon the following factors and these contingencies shall only be removed by decision of the Fridley Housing and Redevelopment Authority. 1. That St. Philip's Human Services, Inc. proceed to work on the submission of a 202 Application to the Department of Housing and Urban Development. Approval of the site plan by the HRA will require St. Philip's Human Services, Inc. to proceed on a schedule of work leading to contract documents which shall be entered into no later than April 1, 1984, with financing coinmittment for construction to begin in October, 1984. This time period will be extended only by approval of the HRA. The schedule of work shall be jointly established by the HRA and St. Philip's Human Services, Inc. upon acceptance of this selection. Each party shall keep the other in_ formed of potential problems and delays. If, in the opinion of the HRA, St. Philip's Human Services, Inc. is not proceeding in a timely and positive fashion, if financing and scope of the project is substantially changed from the preliminary proposal, or if the application submitted to HUD for this project is denied, the HRA may withdraw this selection. 2. That the selection herein given allows St. Philip's Human Services, Inc. exclusive rights within the law to promote study and plan for the redevelopment of that portion of land area in Phase III, generally described as follows: 2A Page 2 St. Philip's Human Services, Inc. August 11, 1983 The Southwest corner of Central Avenue NE and Rice Creek Road NE also described as that part of Lot 17 , Auditor ' s Subdivision No. 88 being that part of the Southwest quarter of Section 13, 230, R24 Anoka County. (Approximately 2.92 acres) 3. That the HRA shall guarantee, in support of the option agreement that St. Philip's Human Services, Inc. has entered into for the purchase of the property, that they shall provide assistance for that acquisition in the amount of $2.20 per square foot. (Approximate value $279,829 for 2.92 acres) This does not, however, preclude St. Philip's Human Services, Inc. frau requesting additional assistance from the HRA for soil correction or other needed public improvements. Nor does it obligate the HRA to commit additional sums. The total HRA assistance, including future canmittments, shall not exceed $320,000 or that value of tax increments generated based on the development of 40 units with a building value of $1,360,000, paying an estimated $47,649 in taxes. In no way does this right of development obligate St. Philip's Human Services, Inc. to expend any funds for land acquisition. Other reasonable and legal alternatives for public assistance available to the developer shall be explored by the HRA. These funds may be available to write down additional costs on the project. These funds include, but are not limited to, COW funds, additional tax increment funds from the overall district, delayed assessments, donations, etc. 4. That St. Philip's Human Services, Inc. agrees to provide the HRA and its staff such plans and financial projections as necessary as determined by the BRA to allow for accurate land use analysis, site plan analysis, financial analysis and legal analysis. 5. It is understood and agreed by St. Philip's Human Services, Inc. that this selection may be terminated for cause or in accordance with the terms of this document by the HRA at any time prior to the execution of the contract documents and that St. Philip's Human Services, Inc. agrees to hold the HRA harmless for any damages or expenses incurred by St. Philip's Human Services, Inc. under this selection. Please sign a copy of the letter enclosed and return it to me so I know that you have received and understood the conditions laid out by the HRA and will proceed in a timely manner toward final action between yourself and the Fridley HRA. 2B Page 3 St. Philip's Human Services, Inc. August 11, 1983 If you have any questions or if I can be of any assistance to you, please feel free to call me at 571-3450. Sincerely, Jerrold L. Boardman St. Philip's Human Services, Inc. Executive Director Representative Fridley Housing and Redevelopment Authority By JB/dw 3 THE CITY OF 1 -7;1;2 � HOUSING ''.. and . :: REDEVELOPMENT • MEMORANDUM AUTHORITY =SOE FRIDLEY ��� .. FROM EXECUTIVE DIRECTOR MEMO NO. 83-56 DATE August 5, 1983 TO ACTION INFO. SUBJECT HARDWARE BUILDING Housing & Redevelopment Authority This item has been continued for a number of meetings since the request from the Lions Club for use of that building. I feel that it is essential to discuss the use of the building so that I can respond to the Lions on the direction of the HRA. As indicated to you at prior meetings, the leasing of the building for short term retail at $3 per sq. ft. will be very difficult. We have talked to Jim Benson of Benson & Malkerson who does commercial leasing in this area. He indicated that the market for that size of space is nearly non-existant. JLB/jh