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HRA 04/09/1992 - 29631� �"� �"`, CITY OF FRIDLBY JOINT CITY COIINCIL/80II8ING & REDEVELOPMENT AIITHORITY MEETING APRIL 9, 1992 �..,..,...�..r...,..,..r.r..�.�..r.r.,....,..,..,..,..r.►......�..r�.�.......�.�.�.�..r.r.r�.�..,..►�..,....�...�..r�,�..r�.�.�..r�.�.�..r.....r CALL TO ORDER• Chairperson Commers called the April 9, 1992, joint City Council/ Housing & Redevelopment Authority meeting to order at 7:39 p.m. ROLL CALL• Members Present: Members Absent: Virginia Schnabel, Duane Prairie, John Meyer, Jim McFarland Larry Commers Others Present: William Burns, Executive Director of HRA Barbara Dacy, Community Development Director Mayor Bill Nee Councilmember Dennis Schneider Councilmember Nancy J. Jorgenson Councilmember Steve Billings Rick Pribyl, Finance Director Paul Hansen, Accountant Jim Casserly, Consultant APPROVAL OF MARCH 12, 1992, HOUSING & REDEVELOPMENT AUTHORITY MINUTES• MOTION by Mr. Meyer, seconded by Mr. McFarland, to approve the March 12, 1992, Housing & Redevelopment Authority Commission minutes as written. IIPON A VOICE VOTE, ALL VOTING AYE, VICE-CHAIRPERSON SCHNABEL DECLARED THE MOTION CARRIED ONANIMOII3LY. 1. DISCUSS TIF POLICIES Mr. Burns stated the objective is to develop a set of guidelines that will guide staff and the HRA in their dealings with various economic prospects. Prior to preparing the guidelines, staff (Barbara Dacy, Jim Casserly, and he) prepared a set of definitions to help understand the guidelines. Mr. Burns reviewed the Definitions and General Guidelines. Mr. Burns stated staff has already deleted item B from the General Guidelines, because it is practically the same as item J. ,� n HOIISING & REDEVELOPMENT AIITHORITY MTG., APRIL 9, 1992 PAGE 2 Ms. Schnabel stated that Item D in the General Guidelines states: "�he City should not suffer as a result of HRA funding a project." She stated she is not comfortable with the word "suffer". Mr. Burns stated staff will come up with some new wording for that item. Councilmember Billings stated he would get a little concerned that 3-4 years from now, someone could look at item D and take it to mean that the City as a whole should not be negatively impacted. Councilmember Schneider stated he also wanted to comment on item D. If they find something that is a high priority goal, maybe they will decide it is worth it to accomplish that goal. Councilmember Billings stated item D is just too broad. Ms. Schnabel stated she felt that the tone of that statement infers that the HRA would have a real liability on a development that somebody potentially would see it as a negative to the City, and it made her uncomfortable. Mr. Casserly stated that what this is really all about is an economic loss to the City because of HRA activities. He believed what they are trying to say is that the City will not have a net economic loss as a result of the HRA funding a project. They are trying to avoid an HRA action that would cause the City to incur losses. Mr. Burns stated staff would be willing to delete item D. Ms. Schnabel stated it is her opinion that items E, I, and K could be grouped together because they deal with developers as opposed to other things that go more with the City. She also thought maybe items C and H should be combined. Mr. Burns agreed that it seemed reasonable to group items E, I, and K together. Councilmember Billings stated that in item D, aren't they really trying to say that wherever possible, the HRA should consider the impact of their projects on state revenues? Or should they address anything at all? Councilmember Schneider stated he is in favor of guidelines as a way to analyze things with some level of consistency, or to recognize that they are going to be inconsistent by choice. Up ^ until now, they have not had anything written down. He also gets :� HOIISING & RTsDEVELOPMENT AIITHORITY MTG., APRIL 9, 1992 PAGE 3 concerned when they get more tax increment financing districts (item G). It gives them a benchmark. Mr. Meyer agreed with Councilmember Schneider that they are looking at the guidelines specifically as a benchmark. Mayor Nee stated it seems easier to just delete item D, but it is good language. The HRA members agreed to add the following wording to item D: Wherever possible, the HRA will consider the economic impact of projects on the City's financial condition. Mr. Casserly stated that as the HRA struggles with its redevelopment activities, they may well exceed the 15% captured tax capacity (item G). The fact that they exceed 15% may be a sign that the HRA is successful, because it may mean that the HRA is being more active in taking on the tough redevelopment projects. The 15% is there as a"tickler", but they should eliminate any negative connotation. Mr. Casserly stated the amount of assistance suggested in these guidelines is verv conservative. It forces them to provide the reasons for why they want to exceed the 15%, and that is a good ^ exercise. Mr. Burns referred to the chart entitled "Maximum Amounts of Developer/User Subsidy. Staff is suggesting that this chart apply to subsidy. They are not setting any percentage guidelines. They are saying that once they have provided property at market rate, these guidelines apply to additional money the HRA gives the project. The projects have been divided into Economic Development projects and Redevelopment projects, with subcategories of Industrial, Commercial/Office, and Housing in each category. What is being suggested is in keeping with past tradition. Mayor Nee stated that what has bothered him for the last couple of years is on economic development. Does everyone who asks for assistance have a right to claim 5%, or is there some test? Mr. Burns stated one of the major criteria is the financial credibility of the company. They want to give the subsidy to a company that has a cash flow that is going to support the debt service for the project. Mayor Nee stated that if the company does not need the money, don't give it to them. Mr. Meyer stated these things don't come down to whether a � company needs the money. It is a matter of business as to which �"� HOIISING � REDEVBLOPMENT AIITHORITY MTG., APRIL 9, 1992 PAGE 4 community will give the company th� best deal. There is competition between communities. Mr. Prairie stated he believed that is one of the tests. Mr. McFarland stated it is probably driven more by what the City needs, rather than what the company needs. Mr. Burns stated he believed the main test is whether or not a project meets the City's goals, what value is it bringing to the community, and does the company have the experience and the financial wherewithal to do what it says it will do? Ms. Schnabel stated that for the last two years, she has been concerned about housing and that they are not putting money into housing. They have not been able to come up with the right project, but she would like to see the HRA find a way to get a program going. MOTION by Mr. Meyer, seconded by Mr. Prairie, to adopt the General Guidelines as amended: A. TIF policies are not law, but are guidelines only. They are subject to change based on annual review of ^ redevelopment priorities and projects. The guidelines may have to be exceeded based on the project's contribution toward community needs as determined by the HRA and the City Council. B. Every district should be self-supporting; however, in certain areas the HRA's redevelopment costs may greatly exceed the value of tax increment revenues generated in projects that fulfill redevelopment goals (i.e. housing rehabilitation projects or redevelopment from commercial to resideritial). Pooling of TIF revenues is desirable as a means of accomplishing difficult redevelopment goals (i.e., housing rehab). C. Wherever possible, the HRA will consider the economic impact of projects on the City's financial condition. D. Any developer/user must justify the requested assistance ("But-For Test"). Wherever possible, the amount of TIF assistance for a project should be limited through the use of alternative financial incentives e.g. SBA 504 financing, industrial revenue bonds, or economic recovery fund grants. Developers and users should demonstrate the financial feasibility of the project. ''`� E. Whenever possible, the HRA should recapture its subsidy from the project. /"'\ . HOIISING & REDEVELOPMENT AIITHORITY MTG., APRIL 9, 1992 PAGE 5 F. The captured tax capacity shall not exceed 15% of the total tax capacity. G. The amount of TIF given to any project must be related to the contribution of the project to the City's redevelopment goals including creation and retention of jobs, enhancing the tax base, preserving the decline of tax values, eliminating blight and deteriorated properties, or meeting affordable housing/other housing objectives. IIPON A VOICE VOTE� ALL VOTING AYE� VICE-CHAIRPERSON SCHNABEL DECLARED THE MOTION CARRIED IINANIMOIISLY. 2. DISCUSS HOUSING GOALS: Ms. Dacy stated that last year the HRA sponsored the Maxfield Housing Study. Over the last year, the City Council has made several comments about investigating other housing programs and what other communities are doing. Ms. Dacy stated the first goal for this meeting is for the HRA and the Council to provide staff with some general direction � regarding their feelings and values about housing in general. The second goal is for the HRA and City Council to give staff some direction on a planning process. � Ms. Dacy stated she has developed some group discussion exercises to help the HRA and Council accomplish goal #1, so her role is to give the HRA and Council information and to act as a facilitator. Ms. Dacy reviewed the current status of the housing market. Ms. Dacy stated that when they try to analyze an issue, it is always helpful to start with who is involved. As a brainstorming exercise, she asked the HRA and Council members to list who they think the stakeholders are in the housing issue. The members came up with the following list: seniors taxpayers businesses/employers school systems City - Fire Dept., Police Dept., Housing Insp., Code Enforcement property owners County social services multi-residential owners absentee landlords social service system churches HOIIBING & REDEVELOPMENT AIITHORITY MTG.. APRIL 9, 1992 PAGE 6 � financial community contractors . realtors demolition companies repair people renters residents medical community families - single, single parent families, one-person households emptynesters people moving up City Council HRA Ms. Dacy stated that because of the "housing" cycle, focusing on one particular stakeholder may affect other stakeholders. Ms. Dacy reviewed a chart entitled, "Relationship Between Stake- holders and Lifecycle Housing". Ms. Dacy stated that knowing what the current trends are, how do these things interrelate? If the City Council and the HRA choose to do nothing, what would the City of Fridley look like three ,-� years from now? The Councilmembers and HRA put together the following list: • less secure • rundown • downtown Minneapolis • selective pockets of deteriorated housing • not much change in 3 years - may not°be North Minneapolis yet • increase in absentee landlords • more fear of cultural diversity • more color • more people on assistance • more need for social services • decline in housing stock will result in lower prices for homes; lower income owners may not be able to keep up the appearance of the home, resulting in further decline in housing stock • may not be able to maintain housing stock • neighborhoods "on edge of trouble" • decline in tax base > education > service delivery • crime increase • need to do something now Mayor Nee stated he sees neighborhoods on the edge of trouble, �''1 but not yet in trouble. He can visualize the tax base declining which affects education and City and County services; and there '""� � �"1 HOIISING & REDEVELOPMENT AIITHORITY MTG., APRIL 9, 1992 PAGE 7 is the prospect of having more difficulty in delivering services that people need. He stated a kind of limited goal is to offset the decline in value of tax base by: • encouraging rehab • trust/community spirit • relying more on affirmative actions by HRA and City than on police power • helping people improve housing (multiples) • tapping existing pride Ms. Dacy stated that she has prepared an exercise to help the Council and HRA identify how well they agreed with the general recommendations of the Maxfield Housing Study. The Council and HRA completed this exercise. Ms. Dacy stated that staff has formed an interdepartmental team to make recommendations on initial programming and strategies to investigate for the long term. She stated she hoped that staff would have recommendations by July or August. The HRA members and City Council members concurred with this approach. 3. CLAIMS AND EXPENSES: MOTION by Mr. Prairie, seconded by Mr. Meyer, to approve the Expenditure Approval List dated April 3, 1992, check numbers 2208-2211. IIPON A YOICE VOTE, ALL VOTING AYE, VICE-CHAIRPER30N SCHNABEL DECLARED THE MOTION CARRIED UNANIMOIISLY. 4. CONSIDERATION OF FUTURE ADVERTISING EFFORTS: Ms. Dacy stated that in 1991, the HRA budgeted $11,000 for advertising, but decided not to pursue any advertising in 1991. In 1992, they have done three ads to date, two of which are in Corporate Report. The basic theme of the ad has been as a testimonial to some of the successful project that have already occurred in Fridley. After the first two ads, staff thought the HRA might want to take a different approach to try to focus on some positive aspects of Fridley, outside of the successful d�velopments. Staff has prepared a third ad which will focus on the transportation aspects of Fridley and will be much more focused. Instead of a full page approach, they have decided to go to a half-page approach. � Ms. Dacy stated that because of a half-page approach, if they wanted to feature a company like Medtronic or Onan, the ad could say "Home to...."; or another aspect of the half-page approach is HOQSING & REDEVELOPMENT AIITHORITY MTG., APRIL 9, 1992 PAGE 8 � they could mirror it in a postcard if they want to market a specific redevelopment site. The postcard could be mailed to a targeted audience. Ms. Dacy stated the action needed by the HRA is whether or not they want to pursue a fourth ad in 1992. If they do, they will be about $4,000 over budget. The fourth ad would be featured in the fall issue of Minnesota Ventures. Minnesota Ventures will be doing a special focus section on the north metro area. Mr. Meyer stated he believed it is important for the HRA to keep its presence known in the field. Councilmember Schneider asked if other cities' HRAs run ads. Ms. Dacy stated, yes, they do. A number of the other member� cities in the North Metro Mayors' Association ran ads in the same Corporate Report issue and do so on a regular basis. It is a very competitive market. Ms. Schnabel asked staff if they feel there is a real benefit from these ads and to continue advertising. Ms. Dacy stated that one advantage for the ads for the future is ,-� that it seems to be a good vehicle to focus on a site if the HRA wants to market a particular site. She believed the postcard approach is very good. When they focus their advertising efforts, their effectiveness is going to be a lot better. She also liked the "Home to...." feature. It is a good way to improve Fridley's reputation and image and create better feelings about Fridley. Mr. Burns stated the HRA did not advertise last year largely because they believed they were far from resolving the Lake Pointe problems and because the economy was rather bleak. The economy has not completely recovered, but there are some signs that recovery is on its way. Mr. Burns stated that even though they have not had any specific responses to these ads, he believes the ads keep Fridley's name and image in front of the people who are making development decisions. He believed the Minnesota Ventures magazine is geared toward the smaller corporation and contains a lot of "how to" articles. They have not advertised in that magazine before, and he believed it is appropriate to try that particular market. MOTION by Mr. Meyer, seconded by Mr. Prairie, to authorize staff to put a fourth ad in the Minnesota Ventures magazine in 1992. IIPON A VOICE VOTE, ALL VOTING AYE, VICE-CHAIRPER30N 3CHNABEL �� DECLARED T$E MOTION CARRIED ONANIMOIISLY. 80IISING & REDEVELOPMENT AIITHORITY MTG., APRIL 9, 1992 PAGE 9 �� � � 5. SAM'S CLUB EXPANSION: Ms. Dacy stated this is an information item updating the HRA on Wal-Mart's plan to add a 30,000 sq. ft. addition to Sam's Club. 6. REAPPOINTMENT OF JIM McFARLAND: � Ms. Dacy stated Jim McFarland has been reappointed to the HRA. His term of office will expire on June 9, 1997. 7. BOB'S PRODUCE UPDATE: Ms. Dacy stated Bob and Mike Schroer are proposing a revised plan for the redevelopment of their site. Instead of constructing a brand new produce building, they will maintain the existing building and add a 9,300 sq. ft. addition on to the rear for Lyndale Garden Center. The HRA may consider this project at the next meeting. 8. RICE PLAZA UPDATE: This was an informational item. ADJOURNMENT• MOTION by Mr. Meyer, seconded by Mr. Prairie, to adjourn the meeting. Upon a voice vote, all voting aye, Vice-Chairperson Schnabel declared the motion carried and the April 9, 1992, Housing & Redevelopment Authority meeting adjourned at 10:15 p.m. Res ectfully sub itted, G�^� Lyn Saba Recording Secretary