HRA 01/09/1992 - 29628�"`,
CITY OF FRIDLEY
HOIIBING & REDEVELOPMENT AIITHORITY MEETING, JANUARY 9� 1992
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CALL TO ORDER•
Chairperson Commers called the January 9, 1992, Housing &
Redevelopment Authority minutes to order at 7:45 p.m.
ROLL CALL•
Members Present: Larry Commers, Virginia Schnabel, John Meyer,
Jim McFarland
Members Absent: Duane Prairie
Others Present: William Burns, Executive Director of HRA
Barbara Dacy, Community Development Director
Paul Hansen, Accountant
Jim Casserly, Consultant
Jim Hoeft, HRA Attorney
Steve Billings, Councilmember
Nancy J. Jorgenson, Councilmember
Mark Rasmusson, McGlynn Bakeries, Inc.
Mike McGlynn, McGlynn Bakeries, Inc.
� Lee Maxfield, Maxfield Research Group
Mary Bujold, Maxfield Research Group
Dale Beckman, BRW, Inc. (Wal-Mart)
Doug Erickson, Fridley Focus
APPROVAL OF DECEMBER 12, 1991, HOUSING & REDEVELOPMENT AUTHORITY
MINUTES•
MOTION by Mr. Meyer, seconded by Mr. McFarland, to approve the
December 12, 1991, Housing & Redevelopment Authority minutes as
written.
IIPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED
THE MOTION CARRIED IINANIMOIISLY.
1. CONSIDER APPROVAL OF DEVELOPMENT AGREEMENT WITH MCGLYNN
BAKERIES•
Mr. Burns stated this item has been reviewed at a number of levels,
including the Planning Commission review for conformance with the
Comprehensive Plan. The HRA has looked at the modified
development plan and the creation of a TIF district. The City
Council held a public hearing on December 9, 1991, on the
modification of the development plan and the creation of TIF
District No. 12 with McGlynn Bakeries. On January 6, 1992, the
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HOUSI�NG & REDEVELOPMENT AIITHORITY MTG.. JANUARY 9, 1992 - PAGE 2
City Council approved the modified development plan and creation
of TIF District No. 12.
Mr. Burns stated that in addition to all these reviews, the Anoka
County Board of Commissioners has reviewed and approved the TIF
district and the school districts have been notified and given an
opportunity to review.•
Mr. Burns stated he has asked Mr. Casserly to prepar� an executive
summary to the Development Agreement. His summarized comments are
from this executive summary.
Mr. Burns stated that, in theory, the redeveloper, McGlynn
Bakeries, is providing funds to the HRA for qualified improvements;
in this case, a land writedown. The HRA is actually borrowing
money from McGlynn to be repaid through available tax increment.
The redeveloper does not receive his agreed-upon TIF payments
unless he employs an average of 200 full time employees or full
time equivalents during the preceding calendar year. Theoreti-
cally, the HRA acquires the property from McGlynn Bakeries for the
amount of the note, $701,172, and conveys it back to McGlynn for
$1. The note is not executed until the HRA has certification that
all the improvements have been completed. Al1 minimum improvements
are to be completed by June 30, 1993.
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� Mr. Burns stated McGlynn is also required to maintain adequate
insurance to cover the value of the property. McGlynn Bakeries
also agrees that a minimum market value of the property shall not
be less than $3,800,000. It is currently being valued at
$2,100,000. McGlynn will receive 95% of the value of that
increment, and the HRA will receive 5% of the available tax
increment for coverage of its administrative costs over a period
of approximately 14 years.
Mr. Burns stated McGlynn also agrees to pay prevailing wages as
defined in M.S., Section 177.42, and City Resolution No. 25-90,
for all work connected with the project.
Mr. Burns stated TIF is pledged on a"pay-as-you-go" basis over 14
years. The present value of the amount projected is $649,542.
The City has also succeeded to get, with great help from
Representative Wayne Simoneau and the State Department of Trade
and Economic Development, an Economic Recovery Loan in the amount
of $250,000 to assist McGlynn with the purchase of machinery and
equipment. In addition, the HRA will spend approximately $10,000
for the correction of the drainage problems in the rear parking
lot. So, the total package is $649,542 plus $250,000 plus $10,000.
Mr. Burns stated staff believes that the project more than
adequately complies with the state law which requires a"But-For"
�'1 Test. They do not believe redevelopment would occur here in
Fridley without the HRA's investment. There is an old building on
HOUBING & REDEVELOPMENT AIITHORITY MTG.� JANIIARY 9, 1992 - PAGE 3
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the site that was constructed piecemeal for the processing of
pizzas. There is a lot of expenses associated with repairing the
building and reconfiguring it for making bakery projects rather
than pizzas. In many respects, it might be cheaper for McGlynn to
go somewhere else and build a new building than to rehabilitate
this building. So, staff believes the HRA's money is necessary to
attract the project. Staff also believes that by doing this
project, they are eliminating a blighting influence on the City of
Fridley. .
Mr. Burns stated other advantages to the project are as follows:
1. McGlynn has pledged to bring a minimum of 250 full time
jobs to Fridley by the end of 1995. With recent
developments, staff believes that job creation could be
substantially greater than that officially pledged.
2. McGlynn enjoys a reputation as a fast growing,
financially sound company. The City will benefit by
having a company of this quality in Fridley.
3. McGlynn will be bringing a$7,000,000 annual payroll that
will no doubt generate additional jobs in Fridley and
that some of those dollars will be spent in Fridley.
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4. McGlynn fills a void that might otherwise be difficult
to fill.
Mr. Burns stated staff recommends the approval of the Development
Agreement between HRA and McGlynn Bakeries.
Mr. Commers asked Mr. Casserly to review paragraph 3, page 37, to
see if, in fact, the word "and" should be changed to "or": "The
Authority shall pay on each Scheduled Payment Date to the
Registered Owner the lesser of the Available Tax Increment � or
the Scheduled Payment due hereon on that date."
Mr. Casserly stated that is probably correct.
Mr. Casserly handed out materials that should be included with the
Development Agreement. The first hand-out is a schedule of what
is included in the minimum improvements. The other thing that
needs to be corrected is conformance to a couple of definitions.
The definition of "Redeveloper" is the definition that is contained
in the Development Agreement between the City and McGlynn. That
Development Agreement is a result of the State providing a$250,000
grant to the City and not to the HRA. So, the City enters into an
agreement with McGlynn; and, in several instances, he has tried to
conform that the Agreement was really negotiated between McGlynn
and the State, and the City is really acting as a conduit for that
^ agreement. One of the definitions that should be consistent is the
definition of Redeveloper. The Redeveloper has asked that this
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HOIIBING & REDEVELOPMENT AIITHORITY MTG., JANUARY 9, 1992 - PAGE 4
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redevelopment contract conform to the Development Agreement. He
recommends that the HRA include that as part of the Development
Agreement.
Mr. Casserly stated another change is as a result of a discussion
with City Council, and that is a new representation that the City
is asking McGlynn to make which would go on page 8 of the
Development Agreement. This is the representation that the company
will, in fact, pay wages according to the Prevailing Wage Rate.
The City Public Works Department will be responsible for monitoring
compliance. He has also made reference to the City's resolution
which adopted the Prevailing Wage Provision. A copy of that
resolution is attached, and he recommends that it be incorporated
into the Agreement. McGlynn concurs with this.
Mr. Mark Rasmusson stated McGlynn Bakeries is very excited about
coming to Fridley. Everything that has been planned to come to
Fridley will still come to Fridley, plus a little more. He stated
Mike McGlynn, President of McGlynn Bakeries, is also at the meeting
to address any concerns or questions the HRA might have because of
the publicity in the paper about their recent sale of the frozen
products division to Grand Met/Pillsbury.
Mr. Mike McGlynn stated that on behalf of the shareholders of the
� McGlynn family and all the McGlynn employees that will be moving
to Fridley, he wanted to e�tpress their excitement about moving into
a new facility and being part of the City of Fridley. He also
wanted to thank the HRA and staff for all their work on this
project, and McGlynn looks forward to working with them in the
future.
Mr. Commers stated that with regard to the purchase of McGlynn's
frozen products division by Grand Met/Pillsbury, will that purchase
affect the entity of McGlynn Bakeries, Inc.?
Mr. McGlynn stated it will not. They will still be McGlynn
Bakeries, Inc. The present shareholders of McGlynn Bakeries will
continue in their present form minus the frozen products division.
Mr. Commers stated that part of the intention of entering into this
redevelopment agreement was based on McGlynn Bakeries, Inc.'s,
financial ability to fulfill their side of the bargain in terms of
development of the project, being able to pay the real estate
taxes, etc. With the sale of the frozen products division which
will be a significant portion of McGlynn's assets, is there any
problem in McGlynn Bakeries, Inc., providing City staff with some
kind of information regarding the remaining McGlynn Bakeries'
ability to continue to meet their financial obligations?
Mr. McGlynn stated there is some confidentiality with Grand Met so
�''`�� there are some things they cannot disclose without Grand Met's
permission. Many questioris being asked by people are whether there
80IISINa & REDEVELOPMENT AIITSORITY MTG., JANIIARY 9, 1992 - PAGE 5
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is any connectio
Grand Met and the
Met. He state
coincidence. He
Totino plant long
purchasing their
n between the purchase of the Totino plant from
sale of McGlynn's frozen foods division to Grand
d that there is no connection; it was pure
stated they were looking at the purchase of the
before Grand Met ever approached McGlynn about
frozen products division.
Mr. McGlynn stated that regarding Mr. Commers' question about
McGlynn's present financial condition. If anything, McGlynn now
has a higher level of strength and stability. After this trans-
action with Grand Met is completed, the availability of bank loans
and the net equity, etc., of the company will be strengthened
through the strength of the shareholders. The transaction is not
a cash transaction, but a stock-for-stock transaction. The
structure of McGlynn Bakeries, Inc., is such that the voting
control of the vast majority is held by his father, so his
financial condition on paper greatly improves.
Mr. Commers asked if the HRA has any personal guarantee on this
transaction.
Mr. Casserly stated that because they are not issuing any debt,
they have not asked for any personal guarantee.
,,.�, Mr. Rasmusson stated that before the meeting, they provided Mr.
Casserly with some numbers and briefly reviewed those numbers with
him of what the remaining company's projected 5-year cash flow and
earnings and other financial data will look like for the next five
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years. As they can see, McGlynn Bakeries, Inc., is a very
financially strong company by itself. The frozen products division
was a net cash user, because it was growing so rapidly. The retail
division grows fast but not as fast as the frozen products
division. For the last 5-10 years, the retail division has been
supplying excess cash within the company to the frozen products
division; and now it will no longer have to do that. It can
maintain its cash flow for its own purposes.
Steve Billings, City Councilmember, stated that on Monday, January
6, 1992, the City Council voted on a 4-1 vote to approve the tax
increment district. Lately, it has been the Council's position
to not create any new districts unless they are fairly confident
the HRA has a development agreement ready to go. He stated he is
at the meeting to do two things: (1) to explain his "no" vote at
the Council; and (2) to e�ress his feelings of betrayal.
Councilmember Billings stated that for the last three months the
City has been hearing how great McGlynn Bakeries, Inc., and what
a terrific neighbor they are going to make, and all the jobs that
will be created in Fridley; and by moving to Fridley, they will
free up space in Eden Prairie to create new jobs in Eden Prairie.
Before he knew they were going to be creating new jobs in Eden
Prairie, he thought if they are just moving jobs from one side of
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HOIISING & REDEVELOPMENT AUTHORITY MTG.. JANUARY 9. 1992 - PAGE 6
the seven-county metropolitan area to another and creating an
additional .67 jobs for each production job in Fridley, that means
they are losing .67 jobs plus the production jobs in Eden Prairie.
When he heard they were creating new j obs in Eden Prairie, that
made his feel a little more comfortable.
Councilmember Billings stated that throughout this whole process,
they have been aware that it will be 18 years before School
Districts 14 and 16 and Anoka County start to receive any money
from the real property taxes that are going to be generated off
this project. They have been hearing talk about the $7 million
payroll and the jobs, but he had a lot of questions, and he still
cannot put his finger on why things are just not ringing perfectly
true to him.
Councilmember Billings stated that now McGlynn is selling off a
portion of its business which employs 900 people in Eden Prairie
and Chanhassen to a company which previously bought property and
business located in the City of Fridley and chose to move those
jobs from the Totino plant to Indianapolis for greater national
distribution. There is no guarantee to the City of Fridley that
Grand Met is not going to do the same thing with the Eden Prairie
and Chanhassen facilities. So, McGlynn Bakeries, Inc., has just
completed a multi-million dollar deal to sell off a portion of
�., their business, they needed the retail operation to move to, they
came to the City of Fridley and are receiving from Fridley and the
State of Minnesota close to $1 million additionally to help them
put together that multi-million dollar windfall they are getting;
and, in the process, have been less than honest with the City of
Fridley and the HRA.
Councilmember Billings stated he cannot believe this package was
put together between Monday night, January 6, and Wednesday
morning, January 8. Someone in the McGlynn organization knew they
were working on this deal with Grand Met and were not forthright
in letting the City of Fridley know that there was the possibility
that jobs are going to be leaving Eden Prairie. At the Council
meeting on Monday night, January 6, 1992, the Fridley City Manager
indicated in his presentation to the Council that 44 new j obs would
be created in Fridley, 200+ jobs would move from Eden Prairie to
Fridley, and that would allow space in Eden Prairie for expansion
of the frozen foods operation creating another 70 jobs.
Councilmember Billings stated he just wanted to express his
feelings to the HRA and have the HRA analyze those feelings before
making any decision. He believed McGlynn has been less than
honest, and it truly troubled him.
Councilmember Billings stated that in the newspaper in a discussion
on whether or not Grand Met will move jobs, a spokesperson for
�`�, Grant Met indicated that they would not be contemplating that on
day 1 for sure. In talking about the current McGlynn employees,
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HOIIBINa & REDBVELOPMENT AIITHORITY MTG., JANUARY 9, 1992 - PAGE 7
Mr. McGlynn was alleged to have said that job security is the
product of hard work. Councilmember Billings stated it is his
opinion that economic assistance from the City of Fridley is a
product of honesty. He thanked the FiRA for their time.
Ms. Schnabel stated that if the HRA approves the development
agreement with McGlynn and McGlynn does develop the property in
Fridley, did Mr. Billings believe there will a problem with the
employment figures that have been presented by Mr. Burns? Or, does
he think McGlynn will fulfill the things they have talked about as
far as the payroll and numbers.
Councilmember Billings stated based on the less than honest
presentation of their situation, at this point in time, he did not
know what to believe. Although Mr. McGly.nn has indicated at this
meeting that the acquisition of the building was separate from the
sale of their frozen products division to Grand Met, he did not
know if he believed that either. He believed this is something
that has been going on all the time, and McGlynn was looking for
somewhere to move their retail division so they could sell off
their frozen products division.
Councilmember Billings stated that part of the argument for what
the City is doing and part of the argument for the "But-For" Test
,—, was that if the City didn't help McGlynn with this project, they
would be going to North Carolina. Somewhere along the line when
they decided to go to Grand Met, they knew they were not going to
North Carolina. If they were going to move a portion of the
business to North Carolina, it would have been the frozen products
division. More importantly, it is his view that all this was a way
to glean an extra $1 million and make this a multi-million dollar
plus $910,000 deal.
Mr. McGlynn stated the purchase of the building from Grand Met and
the transaction of the frozen products division are totally
unrelated. He did not know why Grand Met approached them about
purchasing their frozen products division. He stated he feels bad
that people think they were deceived along the way. Up until 5:45
p.m. Tuesday night when the agreement was signed with Grant
Met/Pillsbury, they could not say for sure whether or not the
frozen products division was going to be sold. It has been worked
on for months and months, and they were under confidential
disclosure agreements which McGlynn signed not to disclose that
they were talking or meeting with Grand Met about any part of the
McGlynn business. One of the hardest things with these kinds of
transactions is not being able to inform the public, employees,
customers, suppliers, etc., but the reasons for not disclosing it
are good and valid, and if nothing had come of the negotiations,
it would have saved a lot of people the trauma of worrying about
it.
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HOIIBING � REDEVELOPMENT AIITHORITY MTG., JANUARY 9, 1992 - PAGE S
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Mr. McGlynn stated that relative to the fact about building another
plant in another state, they certainly had thought about it, looked
at some development, and talked to other people in the industry who
had developed plants in other states, specifically in North
Carolina. There were many things that had to considered if they
did not sell the frozen products division.
Mr. McGlynn stated that several years ago when they were looking
at expanding in Chanhassen, many of their employees were nervous
and a lot of rumors were flying. He met with virtually every
employee and assured each one that no jobs would be lost, and no
jobs were lost because of that expansion.
Mr. Commers asked what would happen if, after a year or two,
McGlynn decides to sell the McGlynn retail facility and the Totino
plant. What happens to the development agreement?
Mr. Casserly stated McGlynn can (1) agree to terminate the
development agreement so it would no longer be effective and
proceed which would eliminate any requirement for the HRA to pay
the note; or (2) transfer the development agreement and "any
proposed transferee shall have the qualifications and financial
responsibility, in the reasonable judgment of the Authority,
necessary and adequate to fulfill the obligations undertaken in
� this Agreement by the Redeveloper" (page 20, ii, of the Development
' Agreement).
Mr. Commers asked if, in the judgment of the HRA, the transferee
did not have those qualifications, did the HRA have the option to
terminate the Development Agreement?
Mr. Casserly stated that is an option available to the HRA.
MOTION by Ms. Schnabel, seconded by Mr. McFarland, to approve the
Development Agreement and Resolution No. HRA 1-1992, "A Resolution
Authorizing Execution and Delivery of a Contract for Private
Redevelopment by and between the Housing and Redevelopment
Authority in and for the City of Fridley and McGlynn Bakeries,
Inc."
IIPON A VOICE VOTE, COMMERB, SCHNABEL, AND MeFARLAND VOTING AYE,
MEYER ABSTAINING� CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED
BY A VOTE OF 3-1.
MOTION TO AMEND by Ms. Schnabel, seconded by Mr. McFarland, to
approve the Development Agreement and Resolution No. HRA 1-1992,
"A Resolution Authorizing Execution and Delivery of a Contract for
Private Redevelopment by and between the Housing and Redevelopment
Authority in and for the City of Fridley and McGlynn Bakeries,
Inc.", and that staff be assured that the surviving entity, McGlynn
'� Bakeries, Inc., has the financial capability of carrying out the
Development Agreement.
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80IISING & REDEVELOPMENT AIITHORITY MTG.. JANUARY 9, 1992 - PAGE 9
IIPON A VOICE VOTE, COMMERH, SCHNABEL, AND McFARLAND VOTING AYE,
MEYER ABBTAINING, CHAIRPERSON COMMERS DECLARED THE MOTION A8
AMENDED CARRIED BY A VOTE OF 3-1.
Mr. Commers thanked Councilmember Billings for his comments and
concerns.
2. PRESENTATION OF MAXFIELD RESEARCH GROUP - CITY OF FRIDLEY
HOUSING STUDY•
Ms. Dacy stated that in August 1990, staff recommended that the
HRA conduct a housing study and identified six reasons to hire
Maxfield Research Group. Mr. Lee Maxfield and his assistant, Ms.
Mary Bujold, are at the meeting to present the major findings of
the report. �
Ms. Mary Bu�old thanked the HRA for allowing Maxfield Research
Group, Inc., to conduct the housing study. She stated her
presentation would be conducted in three parts: (i) the
methodology of how they conducted the study; (2) general research
findings; (3) brief overall of recommendations.
Ms. Bujold stated that when they started the study, they met with
,-. Mr. Burns and Ms. Dacy to define the work program. They identified
areas and divided Fridley into seven neighborhoods. They reviewed
overall demographic trends nationally and locally and then narrowed
down to look at Fridley within that larger scope. They tried to
analyze some of the strong market influences that are occurring
within Fridley and how that has progressed, specifically through
the 1980's. They interviewed a large number of people who had a
stake in Fridley and housing issues in the City of Fridley: school
administrators, real estate agents, people in churches in each of
the neighborhoods, rental building owners and managers, and many
of the City officials (Parks & Recreation, City Assessor, Fire
Marshall with regard to inspections of rental housing property,
Planning Department, Housing Specialist, and others). They also
spoke with major employers in the City.
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Ms. Bujold stated they conducted an extensive visual survey of each
neighborhood to assess each neighborhood's strengths and
weaknesses, potential areas for redevelopment, advantages, and
appropriate land uses.
Ms. Bujold stated that from their research, she believed they got
a very good sense of what and who the City of Fridley is . They
found that Fridley is a fully developed suburb. There is very
little vacant land available for new development and that most of
the existing development that will take place will be redevelopment
of areas that are now occupied and some infill development on a
small number of vacant lots.
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HOIISINa & REDEVELOPMENT AIITHORITY MTG., JANUARY 9, 1992 - PAGE 10
Ms. Bujold stated the housing stock is primarily older, the
majority of which was built in the 1950's and 1960's; however, the
majority of the housing stock is also very well maintained. They
identified some areas where the housing stock may be deteriorating
somewhat, but they did not find any areas in Fridley where they
felt the housing stock was of a blighted nature and that these are
areas that, through monitoring and programs, could certainly be
maintained and upgraded.
Ms. Bujold stated Fridley has a very strong employment base. Many
people live in Fridley because they want to be near their place of
employment and do work in Fridley or nearby. People believe that
Fridley has very strong school systems. Realtors said that is one
of the many reasons why people want to move to Fridley.
Ms. Bujold stated there is a very strong Neighborhood Crime Watch
Program, and they found it is second only to the City of
Minneapolis as far as the number of neighborhoods and people
participating. They felt this was a very strong indication that
the residents of Fridley are very concerned about their safety, and
neighborhood issues and that they are concerned about maintaining
the livability of their neighborhoods.
Ms. Bujold stated their conversations also indicated that Fridley
,.� has a very strong community loyalty. In other studies they have
conducted, this has not come out as a strong perception. People
want to stay here. Several said they are second and even third
generations in the community, which is highly unusual in this day
and age.
Ms. Bujold stated there are no very large concentrations of rental
housing in the City, which is an advantage to Fridley in that the
rental housing tends to be spread out more. Fridley has a very
good access to freeways and metro highways. This is a distinct
advantage to why people want to move to Fridley.
Ms. Bujold stated Fridley will have to be concerned in the future
about what will be happening with other surrounding communities.
Housing will continue to be a very competitive market, and Fridley
will have to continue to compete for its share of homeowners and
tenants.
Ms. Bujold stated she would like to outline some recommendations
in general:
1. The need to promote Fridley as a desirable residential
community.
2. The need to emphasize the advantages of being in the
Fridley school system, the affordability of housing, and
�`� realize that Fridley must compete with surrounding
suburbs.
HOIISING & REDEVELOPMENT AIIT80RITY MTG.•, JANQARY 9, 1992 - PAGE il
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3. The need to maintain and upgrade existing housing base
and to assist owners, both single family owners and small
landlords, with maintaining properties, either through
education and/or financial assistance.
4. The need to encourage buyers to purchase in Fridley.
There are a lot of renters in Fridley who could also be
a strong market for potential homeowners.
5. The need to provide housing alternatives for empty
nesters and seniors to stay in the community. Through
that process, freeing up necessary housing for first time
homebuyers.
6. The need to provide housing for low to moderate income
renters. Because of some of the other issues such as
low rents in Fridley, some of the housing for low and
moderate income renters has been created through
preferred maintenance which is not a preferred
alternative for low and moderate income renters.
7. The need to encourage and educate small rental property
owners on how to better screen tenants and better manage
,—� renters.
8. The need to keep cooperation between all the City
services so they can all work together to create the
desirability of Fridley as a livable community.
Mr. Meyer stated Maxfield Research Group has prepared an excellent
report that he believed will be very useful to the City and the
HRA.
Ms. Bujold thanked Mr. Meyer. She stated she thoroughly enjoyed
working on the study. It was extremely interesting.
Mr. Commers asked Ms. Dacy how staff envisions the use of this
study.
Ms. Dacy stated that Mr. Maxfield and Ms. Bujold will also be
making a presentation to the Council at the January 13, 1992,
Council Conference meeting. • After that she and Mr. Burns will
outline a process that will be submitted to the IiRA and the Council
to evaluate the next step which is to identify priorities. In her
memo dated December 31, 1991, she alluded to some of the things she
feels will need to be addressed. One of the other benefits from
the study is that Maxfield Research Group put together an appendix
of other financial resources, state and federal, and staff is
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compiling information of housing programs in other communities.
HOIISING & REDEVELOPMENT AIITHORITY MTG., JANIIARY 9, 1992 - PAGE 12
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Mr. Burns stated the job ahead of them is to look at the problems
and recommendations the study has provided for each of the seven
geographic areas in Fridley and then try to match the
recommendations with their resources, internal and well as
external, once they have identified their resources. At the staff
level, they see housing as an increasingly important area of
emphasis for Fridley and the Fridley HRA.
Mr. Meyer stated the study gave him a basic overview of the
community that he did not fully have before. It will be a valuable
reference source.
Mr. Commers thanked Mr. Maxfield and Ms. Bujold for coming to the
meeting and for the fine job done on the study.
Ms. Bujold stated that if the HRA members have any more comments
or questions, they are to feel free to either contact her directly
or through Barbara Dacy.
3. REVIEW WAL-MART ARCHITECTURAL PLANS:
Ms. Dacy stated that in the mid-1980's, there were two development
agreements executed with Vantage Properties, Inc., on this site:
one between the HRA and Vantage and one between the City and
,-�\ Vantage. The HRA development agreement provided the mechanism for
the assistance for the soil correction. In 1987, the HRA assisted
the development of The Wholesale Club and the property with
$100,000. Wal-Mart is not requesting any assistance.
Ms. Dacy stated the City development agreement, which the HRA
development agreement also required compliance with, spent a lot
of time talking about quality and exterior building materials and
making sure that the two phases of the project were cohesive.
Since Wal-Mart is submitting applications to go through the various
planning approvals for the development, staff believed that it is
important that the HRA be briefed on the type of architectural
exteriors that are being proposed.
Ms. Dacy stated Wal-Mart's consulting firm is BRW, Inc., and Dale
Beckman, the project manager, is at the meeting to describe what
is being proposed.
Mr. Beckman stated Wal-Mart is excited to be in the City of
Fridley. They believe that Fridley offers a lot of opportunities
that provides that "hometown atmosphere". Wal-Mart started in
small middle Arkansas towns and has now spread throughout the
United States. There are about 1,700 Wa1-Mart stores,
approximately 25 in Minnesota. There are also approximately 275
Sam's Clubs nationwide. Wal-Mart is the prominent retail developer
in the United States at this time. Sales are estimated at
� approximately $40 billion.
HOUBING & REDEVELOPMLNT AIITHORITY MTG., JANUARY 9, 1992 - PAGE 13
�"` ---
Mr. Beclaaan stated the plan proposes a 116, 000 sq. ft. Wal-Mart
building which will be constructed directly adjacent to the north
face of Sam's Club, step back approximately 10 feet with a garden
center on the very north edge. Wal-Mart has under option two
additional acres of land (part of the Caba Addition), which was
not originally addressed in the Vantage development agreement, to
provide them with access to 83rd Avenue, as well as to provide an
area for e�oanded parking sometime in the future when Wal-Mart
plans to add on approximately 30,000 sq. ft. Wal-Mart is also
acquiring, under the original development agreement, two acres of
the Mar-Len Addition to relocate the detention basin. The 30,000
sq. ft. addition would come off the back side of the building and
would meet all the Zoning Code setback requirements.
Mr. Beckman stated the architectural compatibility for the site is
very important. When Vantage originally came before the HRA to
request assistance for soil correction, part of the agreement was
that Vantage would provide an architecturally-enhanced building on
this location. The development agreement also talked about having
some future valuation of the development in Phase II, about $3
million. With the 116,000 sq. ft. Wal-Mart development, the
valuation is in the neighborhood of $5-6 million, so they feel they
have met the intent of the original development agreement.
,-� Mr. Beckman stated Wal-Mart's next task was to try to enhance what
is there today with Sam's Club and combine it with the new building
to make the two buildings blend together. One of the major
features they wanted to incorporate into the Wal-Mart building was
the brick incorporated in the original Wholesale Club building (now
Sam's Club}, and they have done that. He reviewed the
architectural plans with the HRA.
Mr. Beckman stated one of the other features they have worked on
with staff is trying to come up with a way of treating the garden
center that is typical of all Wal-Mart buildings and how to
architecturally enhance the garden center. Wal-Mart usually uses
chain link fencing. Wal-Mart has proposed that in the area where
the garden center faces University Avenue and along a portion of
the garden center that faces 83rd Avenue, they will extend the rock
face block over the edge, create a pillar that runs the whole
height of the garden center, a 2-foot high knee wall along the
bottom edge, and then a wrought iron railing treatment along the
edge. They believe it will enhance the garden center area and
lends a sense of harmony of the garden center with the rest of the
building.
Mr. Beckman stated that he recently received information that Sam's
Club would like to do a 30,000 sq. ft. expansion on Sam's Club in
conjunction with the Wal-Mart construction. Because of this, they
will have to amend the site plan. They are considering putting the
r"� Wal-Mart building so that the vestibule will be on the north end
�,.
HOIIBING � REDEVELOPMENT AIIT80RITY MTG., JANUARY 9, 1992 - PAGE 14
to separate the two entrances to the buildings and move the garden
center closer to Sam's Club.
Mr. Dacy stated staff believes that the plans submitted by Wal-Mart
do fulfill the requirements of the original development agreements.
MOTION by Mr. Meyer, seconded by Ms. Schnabel, that the plans as
submitted by BRW, Inc., for the proposed Wal-Mart store do fulfill
the intentions of the original development agreements with Vantage
Properties, Inc., and are acceptable to the HRA.
IIPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERBON COMMERS DECLARED
THE MOTION CARRIED IINANIMOIISLY.
4. APPROVAL OF RESOLUTION DESIGNATING OFFICIAL DEPOSITORIES FOR
THE FRIDLEY HOUSING & REDEVELOPMENT AUTHORITY:
MOTION by Ms. Schnabel, seconded by Mr. Meyer, to approve
Resolution No. HRA 2-1992, "Resolution Designating Official
Depositories for the Fridley Housing and Redevelopment Authority".
IIPON A DOICE VOTE, ALL VOTING AYE, CHAIRPERBON COMMERS DECLARED
THE MOTION CARRIED ONANIMOIISLY.
,�.� 5. CLAIMS AND EXPENSES:
a. Check Register (2186-2189)
MOTION by Mr. McFarland, seconded by Ms. Schnabel, to approve
the check register dated January 3, 1992.
IIPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS
DECLARED T$E MOTION CARRIED IINANIMOIISLY.
6. RICE PLAZA UPDATE:
This is an update on Rice Plaza 1991 rent for informational
purposes only.
7. DI�CUSS TIF POLICIES:
Ms. Dacy stated the Council asked staff to prepare TIF policies
prior to proposing additional modifications to the redevelopment
plan and creation of tax increment districts. Her memo dated
December 6, 1991, identifies three major issues the City Council
asked staff to follow up on after the TIF policies were presented
to the Council on November 25, 1991. Staff will be presenting that
follow-up information to the Council on January 13, 1992.
Ms. Dacy stated the first part of the TIF policies is a list of
^ definitions. Two the key definitions are "Cost" versus "Subsidy".
There is a difference between redevelopment cost and subsidy or
HOIIBINa & REDEVELOPMENT AIITHORITY MTG.. JANIIARY 9, 1992 - PAGE 15
/"�
assistance they give to a project. They also talked about the
difference between a redevelopment project and an economic
development project.
Ms. Dacy stated the meat of the TIF policy issues is on agenda page
7-C beginning with the General Guidelines. She stated the TIF
policies put together are guidelines; they .are not identified
goals. It was an attempt to have both bodies operating off the
same list of policies.
Ms. Dacy stated one of the most important issues the Council asked
staff to evaluate pertains to the percent cap issue of the total
amount of tax capacity that is captured. Policy G under the
General Guidelines states: "The captured tax capacity shall not
exceed 15� of the total tax capacity." Comments from the Council
and the HRA Chairperson Commers were that they do not want to limit
the HRA's flexibility in completing projects such as Lake Pointe
or Southwest Quadrant. The Council asked staff to prepare some
additional information on what 15% really means: Currently, about
11� is now captured in tax capacity. More appropriately, the
policy statement should probably be amended to state that if the
tax capacity does approach 15%, both the HRA and City Council re-
evaluate where they stand in terms of priority projects.
,-�� Mr. Casserly stated no one knows if 15% is the right number. He
believed the idea is to have some mechanism whereby the HRA is
forced to review its projects.
Mr. Commers stated he had no objection to a review, but he still
questioned why there should be a specific number. For example, if
they are able to put together a development on the Lake Pointe
site, he could foresee where this criteria would possibly exceed
that 15� cap.
Mr. Casserly stated that is certainly true. The numbers are only
illustrative.
Ms. Dacy stated the Council is getting calls from constituents who
are concerned about the amount of tax capacity in the tax
increment. As stated by Mr. Casserly, this was proposed as an
initial guideline so the options are either to (1) rephrase the
policy statement to give the Council and HRA more flexibility to
evaluate it; or (2) not to state a number, but to say that on an
annual basis, the HRA and Council will take stock of how much of
the tax capacity is in the tax increment. Staff proposed the first
option as a way to get started. �
Mr. Casserly stated the more blighted a piece of property is and
the more successful they are in turning it around, the higher the
percentage is going to be. So, if the community has gotten very
�'`� stable in its property valuations and is really involved in very
active redevelopment, it may have a somewhat higher percentage.
80II8ING & REDEVSLOPMENT AIITHORITY MTG.. JANUARY 9, 1992 - PAGE 16
��
and may indicate success. The percentage itself is not necessarily
good or bad, but it simply provides some mechanism to review where
they are at.
Mr. Burns stated the danger is it becomes an absolute.
Mr. Commers asked if the concern is that there has been unworthy
projects that should not have been done?
Councilmeiaber Billings stated there are at least two councilmembers
who are very concerned with the percentage of land that is in TIF
districts. It is his personal position that they do not need to
have any type of cap on it because the City has a very well
qualified HRA and, in addition, they have the balance of having,
by statute, the Council approving the districts.
Councilmember Billings stated that in terms of the 15% figure, that
is a figure that came up at the Council discussion on November 28,
1991. It appeared to him that the rest of the Council was willing
to buy that 15% figure, but then he asked staff to go back and look
at the City's current wish list; namely, Lake Pointe, Southwest
Quadrant, and other projects, and see how they affect that 150.
Councilmember Billings stated that when setting the date for the
� November 28, 1991, Council meeting, he asked if the HRA was going
to be involved in that meeting. Two councilmembers did not feel
there was a need for the HRA to be involved in that meeting. He
personally thought it was a perfect time to get the HRA and Council
together to talk about this. This is not something that should be
communicated from the HRA through the staff to Council and back and
forth again. As the HRA might remember, he has been saying for the
last four years that there should be more meetings with the HRA and
Council together so they are not talking to each other through
staff.
Councilmember Jorgenson stated that she is the councilmember who
asked staff to look into a cap, not only for the citizens of
Fridley but also for Senator pon Frank and Representatives Wayne
Simoneau and Alice Johnson. There is some concern over tax
increment financing and how it is being utilized in the City of
Fridley. There is a misrepresentation out there that communities
have misused tax increment financing. No one is pointing a finger
at Fridley and saying Fridley has misused TIF, and she did not
believe they have. But, when there are three legislators telling
the public that communities are misusing this tool and the public
is calling the councilmembers asking why they keep having tax
increment districts, the school districts are having troubles
financially, and isn't the City putting more money aside through
the HRA that the City may need to use before these districts
expire, that is why she asked staff to put together some guidelines
��"1 using the realization that there are projects out there the City
wants to see done. She just wants the City and the HRA to be more
r'1
�—,,
HOOSING & REDEVELOPMENT AIITHORITY MTG., JANIIARY 9, 1992 - PAGE 17
careful so they can realize the dreams they �have for the City
without putting so much into other projects that they cannot
totally realize those dreams.
Mr. Commers stated it might be helpful to invite Senator pon Frank
to one of the HRA meetings to discuss this.
Mr. Commers stated that in the 1992 HRA budget, there is a refund
to the school districts of approximately $370,000, which he would
venture to guess is probably one of the highest in the State of
Minnesota.
Councilmember Jorgenson stated there is a lot of apathy out there
and just a general misconception of tax increment financing and
how it is being used.
Mr. Commers asked if it would be helpful for the HRA to try to
provide some kind of informational meetings or mailings to the
public to help clear up some if this misunderstandings.
Councilmember Jorgenson stated it might be worthwhile, but she did
not know how to correct the misconceptions out there. The three
legislators share these views and pass them on to their
constituents.
Ms. Schnabel agreed with Mr. Commers that it might behoove the City
and the HRA to meet with the legislators to try to find some common
ground of understanding.
Ms. Schnabel stated what makes her a little nervous about a 15%
cap is if they would suddenly get a windfall and be able to develop
some of these projects they want to get developed, then they are
reacting to something. Then they suddenly have to take a look at
this figure and maybe this figure will put some clamps on them that
is not in their best interest at the time. That is part of the
danger of setting these kinds of figures. She is not opposed to
the review part, but it makes her nervous to think that if they do
get the opportunity to be able to get a development going, they
have to scramble to get the number changed for that project. That
then does look manipulative.
Mr. Meyer stated he did not see them reacting to either the Council
or the legislators since the HRA's hands are clean. He did not see
any reason to go with a recommended cap or any cap, but the HRA
should explain its position and that the HRA•feels it is behaving
responsibly.
Mr. McFarland stated he is in favor of policies. It is important
to have a good understanding between the HRA and City Council.
The policies have to be realistic but shouldn't be unduly
'"� restrictive.
HOIISING & REDEVELOPMLNT AIITHORITY MTG., JANUARY 9, 1992 - PAGE 18
��
Ms. Schnabel stated she believed the HRA has been very conservative
in their decisions. She agreed with Mr. McFarland about policies
and that they are important, but the cap is what she is concerned
about.
Mr. Commers asked what precipitates Councilmember Jorgenson's
concerns about the caps on the redevelopment costs if the HRA was
to take some money from one district and use it in another
district. Did she really want to say that the HRA can only borrow
"x" amount of dollars from one district to use in another district?
Councilmember Jorgenson stated that was not her general intent.
Another argument heard from the Tax Committee is that they are
bleeding from one TIF district into another trying to make
projects work. She talked to Senator Frank about the possibility
of allowing the City greater variance in using monies from one
district to another for housing development and rehab, and he
seemed to be rather receptive to that idea. Then, he comes up with
the other comment that they should not take money from one district
to make another district go.
Mr. Commers stated he did not believe the HRA has any real
objections to the basic guidelines and criteria. Basically, they
have tried to get a consensus of the Council before they have done
,� any big projects.
Councilmember Billings suggested a compromise on the cap, to change
the language to read that the cap will be 15% for 1992 and this
number shall be reviewed annually by the HRA and Council.
Mr. Burns stated staff is also very concerned about the 1250
maximum cap for industrial and commercial/office redevelopment
projects and 150� for housing redevelopment projects.
Mr. Commers stated the matrix with the economic development caps
should be discussed also. He suggested that the HRA and Council
discuss this further at a joint session.
Mr. Burns stated staff will work on these guidelines and will try
to come back with something more acceptable to the HRA and Council.
8. HRA BUDGET•
Mr. Commers stated the 1992 HRA budget was discussed prior to this
reqular meeting and will be discussed again at the February 13,
1992, HRA meeting.
r"�
HOUBING & REDEVELOPMLNT AIITHORITY MTG., JANIIARY 9, 1992 - PAGE 19
�,.'"`�
ADJOURNMENT•
MOTION by Mr. McFarland, seconded by Mr. Meyer, to adjourn the
meeting. Upon a voice vote, all voting aye, Chairperson Commers
declared the January 9, 1992, Housing and Redevelopment Authority
meeting adjourned at 10:30 p.m.
Res ectfully s mitted,
Ly e Saba
Recording Secretary
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