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HRAM 09/05/2019 CITY OF FRIDLEY HOUSING AND REDEVELOPMENT AUTHORITY COMMISSION September 5, 2019 Chairperson Holm called the Housing and Redevelopment Authority Meeting to order at 7:00 p.m. MEMBERS PRESENT: William Holm Elizabeth Showalter Dave Ostwald Gordon Backlund MEMBERS ABSENT: Kyle Mulrooney OTHERS PRESENT: Paul Bolin, HRA Assistant Executive Director Wally Wysopal, City Manager Jim Casserly, Development Consultant Action Items: 1. Approval of Expenditures Chari Holm asked what the payment for the Hyde Development was for. Paul Bolin, HRA Assistant Executive Director, replied that was the TIF payment. MOTION by Commissioner Backlund to approve the expenses as submitted. Seconded by Commissioner Showalter. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON HOLM DECLARED THE MOTION CARRIED UNANIMOUSLY. 2. Approval of August 1, 2019 Meeting Minutes MOTION by Commissioner Showalter to approve the minutes as submitted. Seconded by Commissioner Ostwald. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON HOLM DECLARED THE MOTION CARRIED UNANIMOUSLY. 3. Resolution for Approval of 2019 Tax Levy for Taxes Payable in 2020 Paul Bolin, HRA Assistant Executive Director, stated that since 1996, the HRA has utilized a tax levy to help support its housing rehabilitation program. The levy is equal to .0185% of the estimated market value of all real estate and personal property. The tax levy will allow the Housing and Redevelopment Authority Meeting of September 5, 2019 2 Authority to collect approximately $528,164 based on an estimated market value of $2,854,939,500. In terms of the impact on taxpayers, the levy would cost $27.75 per year for a home valued at $150,000 and $185.00 per year for a commercial property valued at $1,000,000. The revenues raised by the levy are directed towards ongoing and future redevelopment priorities. Mr. Bolin noted that State Statutes require the consent of the City Council, prior to the tax levy th becoming effective. The City Council will act on this item on September 9. The HRA tax levy will be certified to the County Auditor by September 13, 2019. Staff recommends that the Authority approve this resolution. Chair Holm – it is clear the hra has had a history of generating a payoff for that investment far and above what the tax levy is so I am in favor of this motion. MOTION by Commissioner Backlund to approve the resolution for the 2019 Tax Levy for Taxes Payable in 2020. Seconded by Commissioner Showalter. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON HOLM DECLARED THE MOTION CARRIED UNANIMOUSLY. 4. Resolution Ratifying Real Estate Closing – Sherman Associations – Station Village Paul Bolin, HRA Assistant Executive Director, stated that over the past few months the Sherman project closing date has changed at least four different ties. The delays have been a result of Sherman using IRS Code 1031 to finance this project through the sale of another property. The th sale of the other property did not take place until August 29. Due to the timing of the sale, the rd closing between the Authority and Sherman cannot happen until September 3. The development contract, most recently amended in July, between the Authority and Sherman had a closing date st of August 31. The Authority can ratify and approve the change to the closing date, by resolution, th on September 5. Mr. Bolin noted that there has been a change since the information was distributed to the Authority. Originally the Authority was supposed to close on this today but there are issues with sale of one of their properties in St. Paul so instead of ratifying this closing staff is seeking an extension. The resolution allow change to the development agreement and an amendment to the development agreement. Shane LaFave is here from Sherman Association and can talk about the changes to the closing date. Shane LaFave, Sherman Associates, said that the reason they are waiting for the sale to happen is because of the cash situation. There are two sizeable developments going on at the same time and they need the sale to happen to bring in the cash and close immediately after the sale. This sale was supposed to happen a while ago but was set back in July. The reason for the closing delay is now this property requires compliance records. Upon the sale the city goes back to make sure everything is in order and as they looked backed in the records, they do not have prior records of all certifications and compliance records. We do not have records that date back 16 years so now we are trying to get the city what they need to get the city to sign off on the sale. The compliance team was at the site today and was able to find some good information and submitted it later this Housing and Redevelopment Authority Meeting of September 5, 2019 3 afternoon so hopefully we can work with the city to close on the property next week. Once we close the next business day we can close on this property. We are committed to this project and enjoy working with staff in Fridley. Chairperson Holm asked if they were requesting to delay the closing until the end of September. Mr. LaFave replied that they hope to close next week but in case there are other issues this builds in a little cushion. Commissioner Ostwald asked if they anticipated any other wrenches in the loop to delay this further. Mr. LaFave replied hopefully not, there is nothing he is aware of that would delay this process further. Commissioner Backlund asked if the records were related to the property. Mr. LaFave replied the records were to do with income verification that records are required to be maintained for seven years, they are wanting to go back 16 years. MOTION by Commissioner Showalter to approve the Resolution Real Estate Closing, Sherman Associations, Station Village. Seconded by Commissioner Ostwald. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON HOLM DECLARED THE MOTION CARRIED UNANIMOUSLY. 5. Resolution Adjusting Sales Price for Real Estate Closing – Lennar – Locke Park Paul Bolin, HRA Assistant Executive Director, stated that last month staff presented to the Authority information about the recent issue with the delay on closing with the Lennar property just south of the pond. There were several different environmental testing done and most recently some testing was done for vapors in the soils. One sample came in slightly higher than the threshold for residential properties. The simplest way to remediate this problem is to take the passive radon system and turn it into an active radon system. Quotes were put together by Braun ranging between $600 and $1,000 per unit. Discussion with Lennar was to add $600 per unit and anything beyond that they would take on that expense themselves. After the unit is installed Braun will do three borings to ensure the radon is taken out. Staff recommends the Authority adopt the resolution. Commissioner Showalter asked if staff was confident this isn’t a problem in other areas. Mr. Bolin replied that the testing that was done on the northern site or phase two site and we don’t anticipate finding the same vapors there. Before we close on that site more testing will be done to make sure levels are at residential standards. Housing and Redevelopment Authority Meeting of September 5, 2019 4 Commissioner Ostwald asked if the homeowners needed to do any monitoring. Mr. Bolin replied that this will come with a 5-year warranty but after that it is up to the homeowner to maintain. MOTION by Commissioner Backlund to approve the Resolution Adjusting Sales Price for Real Estate Closing, Lennar, Locke Park. Seconded by Commissioner Showalter. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON HOLM DECLARED THE MOTION CARRIED UNANIMOUSLY. Informational Items: 1. Potential Bond Issue – Northern Stacks Paul Bolin, HRA Assistant Executive Director, stated that in July the Authority held a work session to discuss the potential of the Authority issuing TIF revenue bonds to take out the $15.8M TIF note issued for the Northern Stacks project. Additional research and meetings with City staff, bond counsel and the City’s financial advisor indicate that its more advantageous for the City to issue General Obligation Bonds. The Authority would pledge the TIF revenue, but the City would guarantee bond payments in the event there were a shortfall in TIF revenue. Because the project has caused property values to increase 10-fold from approximately $12M to $112M, we are confident the increment will not only cover the bond payments, but also may fund additional projects. City issued GO bonds provide investors with more security and comfort, thus leading to a lower interest rate. The existing TIF Note is currently paying 4.69% in interest. A GO bond will pay interest rate between 2 and 2.9%. Staff continues to work on this with consultants to come up with a bond issue that will work well for the Authority and the City. Chairperson Holm asked if this would impact the City’s credit rating. Dan Tietner, Finance Director, replied that is part of the due diligence credit test to review the City’s outstanding debt and add in the $15.7M. It will likely not be any downward pressure on the City’s credit rating. 2. Housing Loan Program Update Paul Bolin, HRA Assistant Executive Director, reported that in August we closed on 5 loans making total of 14 year to date. There was one Remodel Advisor Visit making 14 year to date and Home Energy Squad had seven visits for total of 29 year to date. Mr. Bolin said that the former City Hall demolition is starting and tomorrow they will be hauling th a lot of debris out of there. They will meet the October 4deadline to complete the demolition. Housing and Redevelopment Authority Meeting of September 5, 2019 5 Adjournment: MOTION by Commissioner Ostwald to adjourn. Seconded by Commissioner Backlund. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON HOLM DECLARED THE MOTION CARRIED UNANIMOUSLY AND THE MEETING ADJOURNED AT 7:34 PM. Respectfully submitted, Krista Peterson Recording Secretary