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HRA 01/14/1982 City of Fridley AGENDA HOUSING AND REDEVELOPMENT AUTHORITY MEETING THURSDAY, JANUARY 14, 1982 7:30 P.M. Location: Community Room II (lower level ) PAGES CALL TO ORDER: ROLL CALL: APPROVE HOUSING & REDEVELOPMENT AUTHORITY MINUTES: DECEMBER 10, 1981 1 - 10 I. CENTER CITY PROJECT 11 - 14 A. Phase III - Shopping Center 1 . Receive MEMO NO. 82-01 , from Executive Director B. Phase II - Columbia Park Clinic 1 . Receive MEMO NO. 82-02, from Executive Director C. Cash Flow Analysis of Projects II. MOORE LAKE PROJECT 15 . A. Phase I - Office Building 1 . Cheryl Nybo - Report at Meeting III. FINANCE 16 IV. BY-LAWS APPROVAL 17 - 28 V. RECEIVE LETTER FROM STATE AUDITOR'S OFFICE 29 - 32 A. Designate Auditor for 1981 Audit VI. OTHER BUSINESS: ADJOURNMENT: CITY OF FRIDLEY HOUSING & REDEVELOPMENT AUTHORITY MEETING DECEMBER 10, 1981 CALL TO ORDER: Chairperson Commers called the December 10, 1981 , Housing & Redevelopment Authority meeting to order at 7:34 p.m. ROLL CALL. Members Present: Larry Commers, Russell Houck, Elmars Prieditis, Carolyn Svendsen (arr. 8:06) Members Absent: Duane Prairie Others Present: Jerrold Boardman, City Planner Sid Inman, Director of Central Services Dave Newman, City Attorney A. J. Remmen, Contract Development Corporation James Vassar, Chaska, Mn. John Utley, 470 Pillsbury Center, Mpls. 55402 Jimi Suh, 12 Island Rd. , St. Paul 55110 David Fuerstenberg, 1601 - 662 Ave. N.E. Tim Signorelli , Administrator of the Columbia Park Clinic APPROVAL OF NOVEMBER 12, 1981 , HOUSING & REDEVELOPMENT AUTHORITY MINUTES: MOTION BY MR. PRIEDITIS, SECONDED BY MR. HOUCK, TO APPROVE THE NOVEMBER 12, 1981, HOUSING & REDEVELOPMENT AUTHORITY MINUTES AS WRITTEN. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. APPROVAL OF NOVEMBER 19, 1981 , HOUSING & REDEVELOPMENT AUTHORITY PUBLIC HEARING MINUTES: MOTION BY MR. HOUCK, SECONDED BY MR. PRIEDITIS, TO APPROVE THE NOVEMBER 19, 1981, HOUSING & REDEVELOPMENT AUTHORITY PUBLIC HEARING MINUTES AS WRITTEN. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. HOUSING & REDEVELOPMENT AUTHORITY MEETING, DECEMBER 10, 1981 PAGE 2 I. CENTER CITY A. Phase III 1 . Final Contract Development - Center Plaza Development (Memo #81-88) Mr. Commers stated that Memo #81-88 related to Mr. Boardman's meeting with Mr. Remmen and Mr. Remmen's attorney, John Utley, on Nov. 25. He asked Mr. Boardman to give the present status of the contract for the development. Mr. Boardman stated they .have had several meetings this week with Mr. Remmen and Mr. Utley. The contract documents the HRA members have were developed by Mr. Utley. Mr. Boardman stated he and Mr. Herrick have looked at these contract documents and feel they are satisfactory and in the best interest of the HRA. He stated he would like to point out several important items, but these items will still have to be considered by the HRA when they review the contract documents. Mr. Boardman stated page 4 of the document talks about the purchase price which is $515,000. That value was determined based on the value of the hardware property, Rice Plaza at $2.70/sq. ft. , and the property adjacent to University at $3/sq. ft. Taking that into consideration,without the Burger King property, the value came out at $515,000. Mr. Boardman stated that on page 10, regarding the description of the "good faith deposit", the good faith deposit would be "at the execution of this agreement". That allows the developer 90 days to put the financing together. If he has not done so in 90 days and requests an extension, then it would be $10,000 for each exten- sion up to 90 additional days. If at any point in time, the developer pulls out of the project or cannot put the financing together, that is not a reimbursable good faith deposit. Mr. Boardman referred to page 11 , section b: "if the redeveloper has submitted to the agency evidence of commitment for financing sufficient for construction of the minimum improvements in accordance with those Sections 3.6 and 7.1 (which are the financing sections), and the payment and performance bonds have been delivered to the agency pursuant to the terms of Section 4.5 in the agreement, then the agency will refund the entire amount of good faith deposit with interest." Mr. Boardman stated the next section of importance to the HRA is Section 4.5 on page 14 where it talks about the payment and performance bonds: "The redeveloper shall furnish and cause to be furnished to the agency before the commencement of construction of the minimum improvement a payment bond and performance bond." HOUSING & REDEVELOPMENT AUTHORITY MEETING, DECEMBER 10, 1981 PAGE 3 Mr. Boardman stated the only other changes they had discussed was in the Lease Agreement which was an attached section at the end of all the articles. On page 8 of the Lease section, they are talking about during the first leasehold year, there would be no rental due. On the first day of the second leasehold, including the first day of the fifth leasehold, there will be a rental of $25,000 per year. On the first day of the sixth leasehold, due and including the first day of the tenth leasehold, rental would equal $40,000. Item "d" has been changed to read: "On the last day of the tenth leasehold year, the rental shall equal the unpaid purchase price and interest on the purchase price at a rate per annum payable on the bonds less all payments heretofore made pursuant to this Section 5.2." Mr. Boardman stated the only thing that has not been discussed with the HRA is the actual lease terms of $25,000, $40,000, and the balance. Staff's recommendation would be to accept this. Mr. Commers stated that at the last meeting, the HRA had discussed the fact that if the developer was going to have a presale, they are not going to prevent somebody from taking advantage of what, to some extent, they view as a very favorable lease arrangement, but if somebody else is going to come in and buy within 2-3-4 years, at that time, they might want to retain some kind of option to at least accelerate some of the payments or accelerate the amount of the land. Mr. Remmen stated the reason they did not proceed on that basis was because this thing actually would be a position of "break-even" based on the rents and would probably be in the position of "break- even" until the eleventh year. That is when they put the requirement in that the land be paid off the last day of the tenth year. Anyone buying it during the periods of years 1-10 would not be looking at any cash flow, but would be looking at probably either a cash loss or a break-even at best. Mr. Remmen stated there are some other things that need to be dis- cussed and addressed. He stated he was of the opinion that they would be getting the subordinated ground lease, and Mr. Herrick had objected to a subordinated ground lease in that it did not have the protection the City needed. He stated he could understand the City's position on that. Mr. Herrick has discussed this with Mr. Utley, and they came up with the lease that is part of the document now. Mr. Remmen stated the question he has now is whether this lease is bankable. He was involved in two centers--Valley North and Maplewood Plaza--where they had subordinated ground leases, and they were able to bank those and finance them. However, he stated that non-subordinated ground leases are somewhat of a new idea. HOUSING & REDEVELOPMENT AUTHORITY MEETING, DECEMBER 10, 1981 PAGE 4 Mr. Remmen stated they have progressed to a letter of intent from Super Valu. They have made all the changes agreed upon with Mr. Hauser in the lease. He stated he hoped to have the completed and finalized lease within 10 days. He stated they are moving ahead with finalizing the lease with Our Own Hardware and Snyder's, or an alternative drugstore. Mr. Remmen stated the other question that arises is their subsidiza- tion of the Super Valu lease. A food store was necessary in order to move ahead with the project. They were not able to finalize a very attractive lease with Super Valu. On that lease, they are looking at $280,000 in improvements over and above a base store, $33,000 to pick up the cost of the rents across on the store. They are looking at $1/sq. ft. and 10% CAP figure. That is a $250,000 loss of value on this center, so they are looking at subsidizing $571 ,000 on that lease. He stated that on a buy-out, he has had figures using a CAP figure anywhere from 10-12%. After his meeting with the City, he reran all the figures. At 12% based on this project and their projected costs which. he felt were relatively close to accurate, they would be doing the center on a break-even situation. At 10%, they would be coming very close to their original figures, and at 11%, they would be alright. The problem is they have no idea what is going to happen. It is in the hands of the lenders. He stated that at this point, he still thought they were looking at a sell-out, and on a sell-out, the lease would not be of any value to them. So, they are looking at whether they can afford to subsidize Super Valu at $571 ,000. Mr. Remmen stated they had discussed with City Staff their taking the lease to the mortgage broker, running it by them, and seeing if they would give any partnership credit. He thought that was one way of getting a valid opinion. Mr. Remmen stated he would like to have time to validate the lease and see if it has any value. At this time, he did not know the time frame. Mr. Boardman stated that if that direction is acceptable to the HRA, the HRA would have to authorize the signing of the contract as it is written with the lease agreement as it stands and with the payment of the $30,000 upon the signing of the lease contract. That way, if Mr. Remmen takes it to the financial advisor and gets an opinion that it is a workable thing, they would at that time sign the documents and have the contract documents in hand. If it is not workable, the HRA would have to look at the situation again to see if they want to continue with the development or give some further reduction. He stated he felt it would be in the HRA's best interest to authorize the signing of the contract document as is, allowing the City to sign the contract document if the lease arrangement is feasible. HOUSING & REDEVELOPMENT AUTHORITY MEETING, DECEMBER 10, 1981 PAGE 5 Mr. Commers stated they have a lot of concerned tenants in that area, and the sooner they finalize this, the better. Mr. Prieditis stated he would vote against a reduction in price, but the extension of time should be considered. (Ms. Svendsen arrived at 8:06 p.m.) Mr. Newman stated that if the HRA were to approve the documents and give authority to the Executive Director and the Chairperson to execute the documents and get it approved by the limited partnership, then it would be possible the documents could be executed within the next couple of weeks which might help with the time problem. MOTION BY MR. PRIEDITIS, SECONDED BY MR. HOUCK, TO APPROVE THE CONTRACT FOR PRIVATE REDEVELOPMENT BETWEEN THE HOUSING & REDEVELOP- MENT AUTHORITY, THE CITY OF FRIDLEY, AND THE CENTER PLAZA DEVELOP- MENT LIMITED PARTNERSHIP, AND THE LEASE AND COLLATERAL DOCUMENTS ATTACHED THERETO AS PRESENTED AT THE DEC. 10, 1981, HOUSING & REDEVELOPMENT AUTHORITY MEETING. UPON A VOICE VOTE, COMMERS, HOUCK, AND PRIEDITIS VOTING AYE, SVENDSEN ABSTAINING, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED. MOTION BY MR. HOUCK, SECONDED BY MR. PRIEDITIS, TO APPROVE AN EXTENSION OF TIME IN WHICH TO EXECUTE THE CONTRACT FOR DEVELOPMENT TO THE NEXT REGULAR HRA MEETING ON JANUARY 14, 1982. UPON A VOICE VOTE, COMMERS, PRIEDITIS, AND HOUCK VOTING AYE, SVENDSEN ABSTAINING, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED. B. Phase II 1 . Columbia Park Clinic Proposal (Memo #81-89) Mr. Boardman introduced Mr. Tim Signorelli , Administrator of the Columbia Park Clinic. Mr. Commers stated Memo #81-89 sets forth a brief summary of the discussions between the HRA Executive Director and the officials from Columbia Park Clinic. Mr. Boardman stated Columbia Park Clinic is looking at two sites-- the Unity Hospital site as well as the Center City site. They have been moving ahead relatively quickly, because they do want to start construction of a new clinic in the spring. He stated the City has had several sessions with the Columbia Park Clinic, and he would like to briefly summarize those negotiations. HOUSING & REDEVELOPMENT AUTHORITY MEETING, DECEMBER 10, 1981 PAGE 6 Mr. Boardman stated the first phase would be for approximately 28,400 sq. ft. of building, of which 14,000 sq. ft. would be the footprint. It would be a two-story building. They discussed the fact that the City would provide them the 28,400 sq. ft. , plus adequate parking (140 stalls) , and would provide for the first phase at a value of $1 for the property. One reason they considered the $1 for the property in the first phase is because they have to understand that the value on a clinic building, as compared to a regular office building, is generally higher and is therefore taxed at a higher rate. Mr. Boardman stated the Columbia Park Clinic is looking at an expan- sion of about 28,000 sq. ft. , up to a possible total of 56,000 sq.ft. of clinic space. They also wanted from the HRA an option on addi- tional property so they could foresee their expansion in the future. That option agreement is laid out at the back of the document he had given the HRA members. In looking at the option, the HRA would provide them with land equal to 12 times the building footprint and land for sale or lease equal to the sum indicated sufficient for necessary parking at a ratio of one parking stall for every 200 sq. ft. of building. Mr. Boardman stated another thing discussed was the base option price for the property. They have talked about--"Columbia Park Clinic properties on the option, if they exercise that option, shall pay 75% of that above option price plus the adjustment for inflation based on the consumer price index, not less than 8% or more than 12% per annum." Mr. Boardman stated they put a reduction value on the purchase price because the sooner they get the property occupied, the better off they are as far as bond sales and getting that money into the district. If the Columbia Park Clinic occupies a structure sooner than 1988, then the City would reduce it by 5% per year for each year they come in and occupy the building on January 1 . The reason they set January 1 is because that is when they determine the value on the structure. They also talked with Columbia Park Clinic that, upon exercising the agreement, $10,000 as a good faith deposit would be paid to the HRA. That would be held until construction was started and the option agreement was signed. At the time the option agree- ment is signed, the $10,000 would then become option money and on January 1 , 1986, when the option runs out or when they provide a letter saying they are going to exercise the option, they would deposit with the HRA another $15,000 as good faith deposit and that would be returned upon the beginning construction of their second phase. HOUSING & REDEVELOPMENT AUTHORITY MEETING, DECEMBER 10, 1981 PAGE 7 Mr. Signorelli stated they have a lot of patients who come from Fridley and north of Fridley, and they have been looking at expanding their amount of capacity to serve people in different areas. They felt Fridley was an excellent location, insofar as they hospitalize at Unity Hospital exclusively. They were originally looking at a site near the Unity Hospital Campus when Mr. Boardman contacted him and made him aware of the Center City project area. He stated they have been encouraged with the discussions with the City, and they think the total Center City redevelopment project has a lot going for it. There are also some 15,000 people living within walking distance from the site, many of whom are elderly. They feel it would be something both the City of Fridley and the Columbia Park Clinic could benefit from. Mr. Commers asked what kind of timeframe the Columbia Park Clinic was looking at for their project. Mr. Signorelli stated there were a variety of factors influencing the timing: (1) Their own personal timetable which is to start early spring construction. Their original timetable was to have the clinic open in Jan.-Feb. 1983, but since it is now a little larger building, it would probably open in April-May 1983; (2) Another factor is the financing. They are looking for industrial revenue bond financing, and they are trying to get that resolved before the first of the year, if possible; (3) Mr. Boardman and Mr. Qureshi have indicated their interest in having the project move forward as soon as possible. Mr. Signorelli stated he thought they would be prepared to come to a decision within the next couple of weeks, but he did not know the HRA's schedule. Mr. Boardman stated the HRA would probably be looking at some kind of commitment or contract documents at their January 14, 1982, meeting. Hopefully, at that time, they will have any of the problems worked out, and they would be in a position to sign a contract or make some deal at that time. He thought they were looking at 120- 150 days for acquisition. They would need 120 days before they could take title, even in a condemnation suit. Mr. Commers thanked Mr. Signorelli for coming to the meeting. Mr. Commers stated he thought they obviously had to do something for the clinic, but he was not sure how far they should go. He had difficulty with the City giving the land away on the second phase on that option. They have to draw the line on how much they are going to subsidize for the Columbia Park Clinic. He was not downgrading the clinic; he thought it was a terrific idea, because of the ideal location, and the City really needs it, but there are HOUSING & REDEVELOPMENT AUTHORITY MEETING, DECEMBER 10, 1981 PAGE 8 other considerations. What are the rest of the taxpayers going to say when the City gives the whole thing away? He thought it was a very delicate issue and they have to give some thought to it. He thought they should strive to maintain some type of fairness and uniformity among the different people. He stated he could see there were many arguments that make it favorable on the first phase that it is easy to justify it on the first phase, but he was not sure they should do it on the second phase. Mr. Prieditis stated he agreed with Mr. Commers. Mr. Commers stated maybe they should be concentrating on Mr. Remmen's project and giving him the break on the land. He felt they owed it to the tenants in the Center Plaza development area to devote all their efforts to get that project either on line or terminated. Mr. Boardman stated they have to look at the amount of taxes they are going to get out of the clinic facility as compared to Mr. Remmen's facility. Mr. Boardman stated this was to inform the HRA of the discussions with the Columbia Park Clinic and to get an indication from them of whether the discussions with the clinic have been acceptable. He realized it was hard for the HRA to make any decisions until they see the actual figures, and the actual figures will be available at the Jan. 14, 1982, HRA meeting. 2. Acquisition of Property at 378 - 64th Ave. N.E. (Memo #81-90) Mr. Boardman stated that at the last meeting, the HRA asked Staff to get an appraisal on the property because of Mr. Singer's request that the HRA purchase his property. He stated the appraisal came in at $58,900. In a discussion with Mr. Singer, Mr. Singer stated the value was approximately the value on the property when he pur- chased the property two years ago, and he would agree to $63,000 for the property. Mr. Commers stated one thing the HRA is going to need to know is what their position is going to be on acquisitions. If everyone is going to be coming in and wanting further land reductions, they are going to have to reanalyze the whole situation. Are they in a position to pick up these parcels, even though it may be very advantageous? He felt the HRA needed some kind of analysis from Staff as to where they are. He would recommend they continue dis- cussion on this acquisition until they have a report from Staff as to the acquisition monies and availability of funds. HOUSING & REDEVELOPMENT AUTHORITY MEETING, DECEMBER 10, 1981 PAGE 9 MOTION BY MR. HOUCK, SECONDED BY MR. PRIEDITIS, TO CONTINUE FURTHER DISCUSSION REGARDING THE PURCHASE OF PROPERTY AT 378 - 64th AVE. N.E. UNTIL THE JAN. 14, 1982, MEETING, AT WHICH TIME THE HRA WILL RECEIVE A REPORT FROM STAFF ON THE ACQUISITION FUNDS. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. B. Phase I 1 . Purchase of Christianson Building Mr. Boardman stated that at the last meeting, the HRA requested some information about the rents and utilities in the building. Mr. Inman stated he had a handwritten breakdown of the utility accounts for the last year. The varying degree from the information they got from Minnegasco seems to be based on occupancy, and there was a gas leak. Aside from that, the figures are true and accurate. He also had a breakdown on rents for 1980 and 1981 . He stated they will notice a $400 revenue from the City. The City was renting space from the Christianson building for police parking. With the City purchasing the building, there was no longer any need for the City to actually rent space. He did not know if the HRA wanted to do anything about having the City rent the parking space from the HRA. He thought they should probably discuss this with Mr. Qureshi because that is in limbo right now with the purchasing of the Christianson building by the HRA. Mr. Boardman stated the HRA needs to authorize the closing on the Christianson building. MOTION BY MR. HOUCK, SECONDED BY MR. PRIEDITIS, TO CLOSE THE TRANS- ACTION WITH THE CITY WITH REGARD TO THE CHRISTIANSON PROPERTY. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. 2. Demolition of Christianson Building (Memo #81-91 ) Mr. Commers asked if the Staff had any recommendations on whether they should leave the building on the site or have it demolished immediately. Mr. Boardman stated he would like to see the building demolished. He felt it was probably more detrimental to the development and to the area to leave it standing. They are also still paying insurance on the building. HOUSING & REDEVELOPMENT AUTHORITY MEETING, DECEMBER 10, 1981 PAGE 10 Mr. Inman stated that from both a staff and citizen standpoint, if the building is torn down, people will see that something is happening, and it will have a positive impact. The HRA members agreed that the building should be demolished and agreed that Mr. Boardman should go forward and get some formal demolition bids. Mr. Boardman stated he would start the process. 3. Northwestern Bell Telephone Building (Memo #81-92) Mr. Commers stated that Mark Haggerty has approached the City regarding the property which is presently up for a lease renewal . Mr. Commers stated the question is whether or not any negotiations should be entered into. Here again, it would seem since the lease is up for renewal , it would be the ideal time to acquire the property, but the question was whether or not they could afford to do that. Mr. Boardman stated maybe the HRA should authorize an appraisal on the property, and by the time the appraisal comes in, they should have an indication on where the HRA is financially. It was the concensus of the HRA that Mr. Boardman be authorized to go ahead with an appraisal on the Northwestern Bell Telephone building. II . HOUSING PLAN (Memo #81-93) MOTION BY MR. PRIEDITIS, SECONDED BY MS. SVENDSEN, TO RECEIVE THE HOUSING PLAN FOR THE CITY OF FRIDLEY. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. Mr. Boardman stated this is a city plan. It has no affect on the HRA at this point in time unless the City requests some assistance from the HRA. Based on state and federal law requirements, it would allow the City to sell housing mortgage bonds, similar to industrial revenue bonds , at lower interest rates. The only packages that are available are multiple housing packages. A condition of that package is that 20% of the units have to be occupied by low and moderate income persons. HOUSING & REDEVELOPMENT AUTHORITY MEETING, DECEMBER 10, 1981 PAGE 11 III. FINANCIAL REPORT: A. Monthly Report Mr. Inman stated he had written a memo outlining the basis of the financial report for this meeting. He stated he had included a copy of the chart of accounts for the HRA and correlated City accounts. One of the things he and Mr. Boardman have been trying to do is eliminate some of the confusion and give a better explanation of why they have this type of accounting system. Mr. Commers thanked Mr. Inman for coming and explaining the financial report. MOTION BY MR. HOUCK, SECONDED BY MR. PRIEDITIS, TO EXPRESS THE HRA'S APPRECIATION TO MR• INMAN FOR A JOB WELL DONE THIS PAST YEAR. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. B. Check Register MOTION BY MR. HOUCK, SECONDED BY MS. SVENDSEN, TO APPROVE THE CHECK REGISTER DATED DEC. 8, 1981, IN THE AMOUNT OF $294,382.05. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. IV. UPDATE ON NORTH AREA PROJECT (Memo #81-95) Mr. Commers stated the memo stated that the City Council approved the North Area Redevelopment Plan and the Tax Increment Plan at their Nov. 23 meeting. ADJOURNMENT: MOTION BY MS. SVENDSEN, SECONDED BY MR. HOUCK, TO ADJOURN THE MEETING. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE DECEMBER 10, 1981, HOUSING & REDEVELOPMENT AUTHORITY MEETING ADJOURNED AT 10:15 P.M. RESPECTFULLY SU MITTED, .1 LY SABA RECORDING SECRETARY 11 CENTER CITY PROJECT 12 THE CITY OF 77J,,,„1„ HOUSING �"taw .. and %. •: cc REDEVELOPMENT y MEMORANDUM .. AUTHORITY ::' L FRIDLEY ... FROM EXECUTIVE DIRECTOR MEMO NO.82_01 DATE January 8, 1982 TO ACTION INFO. SUBJECT Housing & Redevelopment Authority X Center Plaza Shopping Center - Phase III I've talked to Mr. Remmen about the Contract Documents and anticipate a request by him to reduce the value of the property at the January 14, 1982 meeting. He will be contacting me further on January 11, 1982 to inform me of the progess he is making with his financial people on the pre-sale of the project. The HRA will most likely have to analyze this proposal further so I showed all cash flow projects (Item I C of your agenda) with a reduced property sale value so that you will be able to make any necessary judgement about the project. JLB/de 13 THE CITY OF HOUSING -�- : 14 H.R.A. CASH FUN ANALYSIS AS OF1, 1982 Clinic Columbia and Clinic Park Shopping Center Clinic Center Office Jan 82 Beginning Balance January 1, 1982 1,967,895 1,967,895 1,967,895 Jan 82 Purchase Christenson Building -282,961 -282,961 -282,961 Jan 82 - Good Faith Deposit -0- 30,000 30,000 Jan 82 Acquire Singer Property -63,000 -63,000 -63,000 Feb 82 Bond Closing - Clinic 540,000 540,000 640,000 Mar 82 Closing on CPC Property -135,900 -135,900 -135,900 Mar 82 Relocation and Sale of 2 Properties 10,000 10,000 10,000 Mar 82 Interest* 45,000 47,000 50,000 Apr 82 Bond Closing - Office -0- -0- 460,000 May 82 Bond Closing - Shopping Center -0- 600,000 600,000 June 82 Sale of Office Property -0- 120,000 120,000 June 82 Interest* 45,000 70,000 78,000 July 82 Closing on Center Plaza Property -0- -1,900,000 -1,900,000 Aug 82 -0- -0- -0- Sept 82 Sale of Shopping Center Property -0- 280,000 280,000 Sept 82 Interest* 45,000 33,000 _ 41,000 Oct 82 -0- -0- -0- Nov 82 -0- -0- -0- Dec 82 Interest* 45,000 33,000 41,000 Jan 83 -0- -0- -0- Feb 83 -0- -0- -0- Mar 83 Purchase Rest of Office and Clinic Properties -670,000 -670,000 -670,000 TOTAL E-O-P 1,546,034 679,034 1,266,034 * Interest Income is Calculated From a Conservative Approach at 10% Interest. 15 MOORE LAKE PROJECT 16 FINANCIAL REPORT 17 BY-LAWS APPROVAL 18 MEMORANDUM TO: JERRY BOARDMAN, Executive Director, H.R.A. FROM: DAVID P. NEWMAN a „ RE: ALLOCATION OF FUNDS FOR COMPENSATION OF COMMISSIONERS DATE: AUGUST 18, 1981 M.S .A. Section 462 .441 authorizes the payment of compensation to H.R.A. commissioners. M.S.A. Section 462 .445 subd. 4 ( 16) permits the H.R.A. to make these payments from general funds . M.S.A. Section 273 .75 subd. 3 sets a limitation on the amount of tax increment revenues which may be used for administrative expenses. "Administrative Expenses" is defined by M.S.A. Section 273 .73 subd. 13 as expenditures "directly connected with the physical development of the real property in the district. " It is unclear, although it could be argued, whether compensation for commissioners constitutes an administrative expense. Even if it were held to be such an expense, the tax increment funds could only be used for compensation to the extent that the commissioners devote their time to tax increment projects. This type of allocation would, obviously, be very difficult to determine. It is my understanding that the H.R.A. has no general funds . Thus , it is impossible to compensate the commissioners for time spent on non-tax increment projects. Even if the allo- cation problems could be resolved, I would advise against compen- sating the commissioners only for tax increment work, since people providing those funds could argue that they are being discriminated against. 19 MEMORANDUM TO: JERROLD BOARDMAN FROM: DAVID P. NEWMAN`',,_ RE: REVISED BY-LAWS OF FRIDLEY H.R.A. DATE: JUNE 10, 1981 I have reviewed your proposed By-Laws for the Housing and Redevelop- ment Authority. I would suggest the following changes: Article I , Section 6 , second sentence, should read: "A certificate of appointment. . .be promptly filed with the City Clerk. . ." This article does not make any provision for compensation of members of the Authority. You will note that Minnesota Statutes 462 .441 all- ows members to be compensated at the rate of $25 .00 per meeting in an aggregate amount not to exceed $1500.00 per year. I would suggest that you add Section 7 and either simply state that commission mem- bers shall be remunerated for their services or set a specific amou- nt of compensation which does not exceed this statutory authoriza- ation. If you fail to make any provision, it could conceivably be argued that the members are to serve without any compensation at all. Article II. Minnesota Statutes require the appointment of a secretary. I see that your proposed By-Laws do not provide for such a position. It would be my suggestion that this position be added and if you so desire, you can include with it the duties of Vice Chairman. Article III, Section 1. I would suggest that you add a clause authorizing the Executive Director to accept the service of process upon the Fridley Housing and Redevelopment Authority. Article III, Section 2. I would revise the first sentence to read as follows : "The Authority may from time to time use such personnel and use the services of local public bodies as it deems necessary to exercise its powers, duties, and functions as prescribed by law." Article IV, Section 1. You will note that this section re- quires you to be authorized by the Housing and Redevelopment Author- ity before you execute any transactions relating to real property. Although I agree with this requirement, I think you should be aware of the fact that in some cases, a prospective buyer may rightfully insist upon a written resolution from the Housing and Redevelopment 20 Authority authorizing you to convey title in real property before agreeing to close. I would suggest that you add an article relating to powers and it should read as follows: "The Authority shall be a public body corporate and politic and shall have all the powers necessary or convenient to carry out the purposes of Minnesota Statutes 462.415 to 462 .711. " At present, your By-Laws do not provide the Housing and Redevelopment Authority with any specific authority. Consequently, I would propose that you include the above section. As you are probably aware, Minnesota Statutes Section 462 .431 pro- hibits certain persons from having an interest in an Authority pro- ject. Since the statute applies to the Fridley Housing and Redevelop- ment Authority, it is not necessary for it to be repeated in your By-Laws, particularly since the statute may be amended later and it would require you to revise your By-Laws. However, I want you to be aware of this statute; and if the Authority were to so desire, they could incorporate certain of its provisions in their By-Laws. BY-LAWS OF THE FRIDLEY HOUSING AND REDEVELOPMENT AUTHORITY 21 FRIDLEY, MINNESOTA ARTICLE I: THE AUTHORITY Section 1: Name of the Authority The name of the Authority shall be Fridley Housing and Redevelopment Authority, Fridley, Minnesota. Section 2: Powers The Authority shall be a public body corporate and politic and shall have all the powers necessary or convenient to carry out the purpose of Minnesota Statutes 462.415 to 462.711 . Section 3 : Membership The Authority shall consist of five commissioners, who shall be residents of the City of Fridley. Section 4 : Appointment, Approval The Commissioners of the Authority shall be appointed by the Mayor with approval by the City Council of Fridley, Minnesota. Section 5 : Term The Commissioners shall be initially appointed for terms of one, two, three, four and five years respectively. Thereafter all commissioners shall be appointed for five-year terms. Section 6 : Vacancy Each vacancy in an unexpired term shall be filled in the same manner in which the original appointment was made. Section 7 : Certificate of Appointment Commissioners shall hold office until their successors have been appointed and qualified. A certificate of appointment of each commissioner shall be filed with the City clerk and a certified copy thereof with the State housing commission. ARTICLE II: OFFICERS Section 1: Officers The officers of the Authority shall be a Chairman and a Vice Chairman. Section 2: Chairman The Chairman shall preside at all meetings of the Authority at which he is present. Section 3: Vice Chairman / Secretary The Vice Chairman shall perform the duties of the Chairman in his absence or incapacity, and/or because of resignation or death of the Chairman, until a new Chairman is elected. 22 Section 4: Terms of Officers All officers of the Authority shall be elected annually by the Authority and shall serve for the term of one year or until their successors are elected and qualified. Section 5: Vacancies Should an office become vacant, the Authority shall elect a successor from its membership at a regular meeting, and such election shall be for the unexpired term of said office. ARTICLE III: STAFF SERVICES Section 1: Executive Director An Executive Director shall be appointed by the Authority, at such compensation, for such term and with such duties as the Authority shall determine by resolution. The Executive Director shall perform, or have performed, such activities as the Authority shall from time to time, reasonably request, including the responsibility for the care and custody of all funds of the Authority and for the deposit thereof in the name of the Authority in such bank or banks as the Authority from time to time shall designate; for the keeping of regular books of accounts showing receipts and expenditures; for budget and budgeting activities, for keeping the records of the Authority/4Y4'the keep- ing of the seal of .the Authority and to accept the service of process upon the Authority. Section 2: Additional Personnel The Authority may from time to time use such personnel and use the services of local puplic bodies as it deems necessary to exercise its powers, duties and functions as prescribed by law. . ARTICLE IV: EXECUTION OF INSTRUMENTS Section 1: Execution of Investments All deeds, contracts, promissory notes, warrants and other instruments including checks issued by the Authority shall be executed by the Executive Director only after authorization of such transactions by the Authority by resolution or other approved action. ARTICLE V: MEETINGS Section 1: Regular Meetings Regular meetings of the Authority shall be set by the Authority annually and shall remain for that period of time unless changed by majority vote of the Authority at a regular scheduled meeting. -2- 23 Section 2: Special Meetings Special meetings of the Authority may be held at any time on at least a 24-hour written call of the Chair- man, or any two members of the Authority. Notice shall be in writing, and state the time, place, and purpose of the meeting. Upon unanimous consent of all members, any of the provisions of this section may be waived. Section 3: Annual Meeting An annual meeting will be held the second Thursday of June at 7:30 p.m. for the purpose of electing officers of the Authority. The date of the annual meeting may be postponed to a date on or before the second Thursday of July upon a majority vote of the Commissioners in office at any time take, at a regular meeting of the Authority. Section 4: Quorum The powers of the Authority shall be vested in the commissioners thereof in office at any one time; a majority of whom shall constitute a quorum for all purposes, but lessor number may adjourn a meeting from time to time until a quorum is obtained. Section 5: Manner of Voting The Chairman and all commissioners in attendance at every meeting of the Authority shall be entitled to vote. All motions and resolutions shall require an affirmative vote of a majority of the commissioners. A roll call on any question coming before the Authority must be taken upon the demand of any one or more of the commissioners. Section 6: Parliamentary Procedures Parliamentary Procedures at meetings of the Authority shall be governed by the last edition of Robert's Rules of Order. ARTICLE VI : FISCAL YEAR Section 1: Fiscal Year The fiscal year of the Authority shall be from January 1 to December 31 of each year. Section 2: Annual Report The Executive Director shall prepare an annual report to the Authority of Authority activities on or before the last day of February for the proceeding fiscal year. Section 3: Budget The Executive Director shall prepare an annual budget for Authority approval prior to December 31 for the next fiscal year. This budget shall layout anticipated revenue and expenditures of the Authority for the next fiscal year. -3- 7ti ARTICLE VII: AMENDMENTS Section 1: Amendments The By-Laws of the Authority shall be amended only with the approval of at least a majority of the com- missioners in office at that time. Chairman Vice Chairman `25 BY-LAWS OF THE FRIDLEY HOUSING AND REDEVELOPMENT AUTHORITY FPIDLES. MINNESOTA ARTICLEII T!E ent Section l` Name of Authority. The name of the Authority shall be Fridley Housing endRedev lopnent Authority, Fridley, Minnesota. Section 2, Membership. Commissioners shall be legally appoint- ed by the City Council of of-Vijay, Minnesota, Section 3. Ste. The Authority shall have an official seal having the name of the Authority in a circle. Section 4. Office. The principal office of the Authority shall be determined by the Authority, ARTICLE OFFICERS Section 1. Offic . The officers of the Authority shall be a Chairman, a Vice Chairman, a Treasurer, and a Secretary. A Commissioner shall not hold more than one of the above named offices at the same time, Section 2;, Chairman, The Chairman shall preside at all meet- ings of the Authority at which he is present. Section 3. Vico Chairelan, The Vice Chairmen shall perform the duties of the Chairman in his absence or incapacity, and/or because of resignation or death of the Chairman, until a new Chairman is elected. Section 40 Secretate, The Secretary shall keep minutes of all meetings and records of the Authority, The Secretary may delegate to the Executive Director such of his paver as he is not leEally required to execute personally, Section 5. Trieasuree, The Treasurer shall cause to be kept full and accurate records and accounts in barks belonging to the Authority of all monies and securities of the Authority. Funds of the Authority shall be deposited in banks approved by the Authority which comply with applicable State Law and which meet the standans specified by the Public Housing Ad- ministration and the Urban Renewal. Lardniatratioa for deposit of funds ad- vanced by them, Securities teloreeirg to the Authority shall be deposited for sate keeping with one or more of the Authoritycs banks of account, or the Federal Reserve Bank, unless by rest lution of the Authority it is determined to place them in a safe-deposit vault, The Treasurer shall annually make a full report of the financial condition of the Authority and make such other reports as may be required of him by the Authority. All Commissioners hav- ing authority to sign for the Authority in the control of funds or securi- ties shall be bonded in such sum as mey be required by the Authority by reso- lution, 26 Section 6. Execution of Instruments, All deeds, contracts, promissory notes, warrants and other instruments excepting checks issued by the Authority shall be signed by two delegated Commissioners. Checks shall be signed by the Executive Director and the Treasurer, or by either of these and one .Commissioner, or in the absence of both of these, by two Commissioners delegated by the Chairman, AEXEIWEILL TERKS OF OFFICERS All officers of the Authority shall be elected at each annual meeting of the Authority and shall serve for the term of one year or until the next annual meeting and until their successors are elected and quali- fied, 1RTICLE IV VACANCIES Should an office become vacant, the Authority shall elect a sue. censor from its membership at a regular meeting, and such election shall be for the unexpired term of said office, ARTICLEn D EXECUTIVE DIRECTOR An Executive Director shall be appointed by the Authority, at such compensation, for such term, and with such duties as the Authority shall determine by resolution. ARTICLE VI ADDITIONAL PERSJII The Authority way from time to tine employ such personnel as it deems necessary to exercise its powers, duties and functions as pre- scribed rred by lawn The compensation of suchpersonnel shall be determined by the Authority, upon rcco,' .endation of the Executive Director° MTICLE VI; ANNUAl, MEETINGS The Annual Meeting of the Authority sl.th.11 be held on the let Wedneed..y of June of each year at g:OO oeclock p.m.; however, the date of the annual meeting me- be po;tp`nod to a date on or before the last Wednesday of July upon the vote of a majority of Commissioners in office at any time taken, at any regular meeting of the Authority, 27 ARTICLE VIII REGULAR MEETINGS Regular Meetings of the Authority shall be, without notice, at 8:00 o'clock p.m., on Lednesday of each week, unless the same be a legal holiday. • ARTICLE IX SPECIAL MEETINGS Special Meetings of the Authority may be held at any time on at least 24 hour written call of the Chairman, or any two members of the Authority. Notice shall be in writing, and state the time, place, and purpose of the meeting and no business shell be considered than shall have been specified, in the notice. Upon unanimous consent of all members, any of the provisioiia of this article may be waived. ARTICLE X QUORUM The powers of the Authority shall be vested in the Commis— sioners thereof in office at any one time; a majority of mhos shall constitute a quorum for all purposes, but a lesesr number may adjourn a meeting from time to time until a quorum is obtained. ARTICLE XI ORDER OF BUSINESS At the regular meetings of the Authority, the following shall be the order of business; 1. Roll Call. 2. Reading and approval of minutes of previous meeting. 3. Bills and comaunications. 4. Report of the Executive Director. 5. Reports of Committees. 6. Unfinished business. 7. New Business 8. Adjournment. Upon direction of the Chairman, or the motion and second of two Commissioners of the Authority, all resolutions shall be in writing and shall be copied in a journal of the proceedings of the Authority. �3� 28 ARTICLE XII MANNER OF VOTING The Chairman and all members of the Authority at every meet. i.ng of said Authority shall be entitled to vote. A?1 motions and reso- lutions shall require an affirmative vote of a majority of the Members of the Authority. A roll call on any question coming before the Authority must be taken upon the demand of any ono or more Members of the Authority. ARTICLE XIII PARLIAIIEUTARY PROCEDURE Parliamentary Procedure at meetings of the Authority shall be governed by the last edition of Robertas Rules of Order. AITICLE XIV • FISCAL YEAR The fiscal year of the Authority shall be July let to June 30th. ARTICLE XV AMENDMENTS The By-Laws of the Authority shall be amended only with the approval of at least a majority of the Commissioners in office at any time. Chairman Vice Chairman Secretary 29 STATE AUDITOR'S OFFICE 30 ..t STATE OF MINNESOTA o m OFFICE OF THE STATE AUDITOR 4 SAINT PAUL 55103 yI� ARNE IL CA!a.eoN 296-2551 STATE AUDITOR December 31, 1981 Mr. Jerrold L. Boardman Executive Director Fridley Housing & Redevelopment Authority 6431 University Avenue Fridley, Minnesota 55432 Dear Mr. Boardman: In response to your telephone call of December 28, 1981 you requested permission to have the Fridley Housing & Redevelopment Authority audited by a certified public accountant for the year ended December 31, 1981. The State Auditor is required by statute to audit Housing & Redevelopment Authorities. Because you need an audit for the year ended December 31, 1981 and our staff is committed to other audits, we would not be able to complete your audit timely. We are of the opinion that our mandated responsibility can be met under conditions. These conditions are as follows and should be contained in the engagement letter with a certified public accountant: - That the audit be made using generally accepted audit standards. - That the financial statements be prepared using generally accepted accounting princinles as defined by the National Committee on Governmental Accounting in Statements 1 and 2. - That all financial activities be included in the financial statements. - That copies of the financial statements, compliance and management letters be forwarded to the Office of the State Auditor by the certified public accountant. - The financial statements, etc. , should be completed by June 30, 1982 and forwarded to the State Auditor' s office within 30 days. AN EQUAL OPPORTUNITY EMPLOYER 31 Mr. Jerrold L. Boardman December 31, 1981 Page Two - That the State Auditor have access to the workpapers, carryforward files, etc. - That we be advised timely of suspected or actual shortages, fraud or defalcations. - That the audit include tests for compliance with the various statutes, rules and regulations. Based on the above conditions, you may engage a firm of certified public accountants to audit the Fridley Housing & Redevelopment Authority for the period ended December 31, 1981. Please send us a copy of the engagement letter when it has been signed. Staff of this office may be assigned to monitor and review the audit of the HRA. In this event you will be billed for these services. We do not authorize you to engage the firm in subsequent years. This delegation will be considered annually based on availability of staff of the State Auditor. If you have any questions, contact this office. Sincerely, ARNE H. CARLSON State Auditor Henry L. Tembrock Director of State and Federal Programs HLT:pt cc: Elaine Hansen, Audit Manager Office of the State Auditor 32 GEORGE M. HANSEN COMPANY, P.A. A Professional Corporation of Certified Public Accountants 175 SOUTH PLAZA BUILDING WAYZATA BOULEVARD AT HIGHWAY 100 MINNEAPOLIS,MINNESOTA 55416 612/546-2566 November 16, 1981 Board of Directors Housing and Redevelopment Authority of Fridley 6431 University Avenue N.E. Fridley, Minnesota 55432 Dear Board Members: We are currently planning our fall and winter work program and would appreciate an indication that we may be invited to conduct the 1981 audit of the Authority as we have the past year. We would perform an audit of the balance sheets of the various funds of the Authority as of December 31, 1981 and the related financial statements for the year then ended. The audit would be performed in accordance with the procedures established by the American Institute of Certified Public Accountants. The audit which we will perform will be an examination which consists of a review of internal control, accounting procedures and the details of all records, including subsidiary records and supporting data as to mathematical accuracy, propriety and completeness of all transactions on a test basis. The test examination presumes that the items selected are representative of all the transactions. Although such an audit is the one most frequently used today, it will not necessarily discover fraud or defalcation. However, should fraud or defalcation exist, it may be uncovered as the result of one or more of the procedures applied on a test basis. We have enjoyed our relationship with the Authority during the past year and hope that we may be allowed to conduct the 1981 audit. Very truly yours, -.9/77 1711‘.-.4 `� JGM:ap J.l:- Gregory Mur Ph Y Accepted by the Housing and Redevelopment Authority of Fridley By Title Date