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HRA 09/10/1992 - 29634� � � CITY OF FRIDLEY HOIISING & REDEVELOPMLNT AIITHORITY MEETING, SEPTEMBER 10, 1992 �..�������������____��������.._�_..����..�_�_..____��__�..��_����..�����.... GALL TO ORDER• Vice-Chairperson Schnabel called the September 10, 1992, Housing & Redevelopment Authority meeting to order at 7:30 p.m. ROLL CALL: Members Present: Members Absent: Virginia Schnabel, Duane Prairie, John Meyer Larry Commers, Jim McFarland Others Present: William Burns, Executive Director of Barbara Dacy, Community Development Rick Pribyl, Finance Director Paul Hansen, Accountant Jim Casserly, Consultant Bob and Mike Schroer, Bob's Produce Dave Newman, Nedegaard Construction HRA Director Ranch APPROVAL OF JULY 9 1992 HOUSII�TG & REDEVELOPMENT AUTHORITY MINUTES• MOTION by Mr. Prairie, seconded by Mr. Meyer, to approve the July 9, 1992, Iiousing & Redevelopment Authority minutes as written. UPON A VOICE VOTE, ALL VOTING AYE, VICE-CHAIRPERSON BCHNABEL DECLARED T8E MOTION CARRIED ONANIMOIISLY. 1. CONSIDER APPROVAL OF RESOLUTIOI�T TO EXECUTE DEVELOPMENT AGREEMENT WITH SHEET METAL CONNECTORS: Ms. Dacy stated that at the July meeting, the HRA approved in concept a$200,000 loan for Sheet Metal Connectors to construct a 100,000 sq. ft. manufacturing building. The site is iocated on the west side of Main Street just north of I-694. Ms. Dacy stated the HRA has received a copy of the development agreement with Sheet Metal Connectors. The developer is required to construct a 100, 000 sq. ft. building, and a building permi't will be issued by the end of the week. After completion of the building and after the City issues a certificate of occupancy, the HRA will issue a check in the amount of $200,000. This action is consistent with the concept approval given by the HRA at the July meeting. �"� HOIIBING & REDEVELOPMENT AIITHORITY MTG., 3EPT. 10, 1992 PAGE 2 Ms. Dacy stated staff is recommending that the HRA approve the resolution authorizing the Executive Director and HRA Chairperson to execute the development agreement with Sheet Metal Connectors. MOTION by Mr. Meyer, seconded by Mr. Prairie, to approve Resolution No. HRA 4-1992, "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 MSCJ, Inc.". . IIPON A VOICE VOTE, ALL VOTING AYE, VICE-CHAIRPER80N 3CHNABEL DECLARED THE MOTION CARRIED IINANIMOII3LY. 2. CONSIDER APPROVAL OF RESOLUTION TO EXECUTE DEVELOPMENT AGREEMENT WITH BOB'S PRODUCE: Ms. Dacy stated Bob and Mike Schroer have proposed a redevelopment plan which would add 9,000 sq. ft. onto their existing building. The other part of the plan is to remove the former Malmborg part of the building, and Lyndale Garden Center will construct a 15,000 sq. ft. building. The Schroers and Lyndale Garden Center have been to Council a number of times and have received several land use permits. She stated Jim Casserly will review the development contract. • ^ Mr. Casserly stated the development contract is almost identical to the one for McGlynn Bakeries and Cub Foods. This particular contract is a pay-as-you-go type of program. The developer is not getting any money up front, but only gettinq.money over time. The developer has to do a number of. qualified improvements, and all these improvements relate only to soils and site preparation. There is no land writedown. The beginning balance of the revenue note is $156,618, and there is some interest that accrues. The HRA is agreeing to provide $156,618. Out of that $156,618, the HRA is actually paying about $261,000 because they are paying interest, too. • Mr. Dave Newman stated he has reviewed the development agreement with the Schroers and overall they are very comfortable with it. As they are all aware, they are in the process of conveying a portion of the site to Lyndale Garden Center. By every indication, Lyndale Garden Center will develop the site. However, if for any reason beyond anyone's control, Lyndale Garden Center does not develop the site, the Schroers, under this development agreement, would be in default and the City wouldn't have the $170,000 in improvements. He is suggesting that the development agreement be modified to provide a separate valuat�ion for the Schroer property and a separate valuation for Lyndale Garden Center. The other issue is that if the Lyndale Garden Center site isn't remodeled, there is not going to be any increment from that site. There would �'�, be less pay-as-you-go per year, and the Schroers would not get the �"� HOIISING & REDEVELOPMENT AUTHORITY MTG.� SEPT. 10, 1992 PAGE 3 full amount on .the note, because the assumption is that they wouldn't have the minimum improvements constructed. Ms. Schnabel asked if the amount of money agreed upon is predicated on the total development being done. Mr. Casserly stated that is correct. Mr. Newman stated the qualifying cost is the site work and the soil preparation, and the greater amount of that is allocated to the Schroer property. Mr. Casserly stated Mr. Newman has described the problem well, but it is even a little more onerous. The redeveloper payment that goes back to the City also assumes that the Lyndale Garden Center project is going forward. The way the agreement is set up, if Lyndale Garden Center doesn't go, not only would the Schroers not receive the amount, there wouldn't be the increment to pay them the note, and they have also committed to pay $2,000 per year which isn't the City's loss at all. Mr. Casserly stated the agreement as drafted gave everyone two years, August 1992 to August 1994, to complete the basic improveme.nts, and it was all based on the overall development ^ taking place. If the Lyndale Garden Center project doesn't go, the Schroers will be penalized several ways. Mr. Newman suggested that the development agreement be modified to provide some type of staging. In other words, if the Schroers complete "x" amount of improvements, they receive "x" amount of assistance. So,' an alternative since the HRA receives the increment generated from the project, they need to reduce the valuation for minimum improvements.. That way, if the Schroers just complete their building, they won't be in default because they have only completed the minimum improvements, but they won't receive the full amount of payment. Another problem is timing. The Schroers are ready to construct their building this fall, but Lyndale Garden Center's construction is probably a year away. Mr. Bob Schroer stated he is comfortable that Lyndale Garden Center will go ahead with their project, but it is too bad that they can't do the whole development together. Mr. Newman stated he would be comfortable working out this problem with staff with concept approval from the HRA. Mr. Casserly stated he believed it is really a policy question. The redevelopers would like to have a two-stage project. The way the development agreement is drafted now is that the Schroers will receive no assistance until both phases are completed. They are /'� saying that they can guarantee their own phase; but they cannot guarantee the second phase. If the HRA agrees to put this � � 8.O�18ING & REDEVELOPMENT AIITHORITY MTG., SEPT. 10, 1992 PAGE 4 agreement into two phases, then the Schroers can get the benefit for the first phase of the development; and if Lyndale Garden Center goes ahead, then the Schroers would get some additional benefit. Mr. Casserly stated the HRA has absolutely no risk in this project. The real issue for the HRA is whether or not it wants to provide assistance if it is not getting what it originally anticipated. Mr. Meyer stated that if Lyndale Garden Center decides not to proceed with the project and decides to sell the property in two years, what happens to the ag�eement and to the improvements? Mr. Casserly stated he can define the minimum improvements and a general approximate valuation. Mr. Casserly stated that, with HRA approval, he will work with staff and Mr. Newman to put together an agreement to reflect the two phase approach. Ms. Schnabel stated that she is willing Casserly negotiate a modification to the long as staff is involved. Mr. Burns stated staff will be involved. to let Mr. Newman and Mr. development agreement as Mr. Meyer stated he has no problem with the two phase approach. As long as the Schroers know what they are facing, then he is comfortable with Mr. Casserly, Mr. Newman, and staff working out the specifics. Mr. Prairie stated he is also willing to let Mr. Casserly, Mr. Newman, and staff work out an acceptable agreement. MOTION by Mr. Meyer, seconded by Mr. Prairie, to approve Resolution No. HRA 5-1992, "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 East Ranch Estates", and to direct staff to work with Mr. Casserly and Mr. Newman to make the appropriate modifications to the development agreement to reflect a two phase development. IIPON A VOICE VOTE, ALL VOTING AYE, VICE-CHAIRPERSON 3CHNABEL DECLARED THE MOTION CARRIED UNANIMOUSLY. 3. CONSIDER APPROVAL OF RECOMMENDED HOUSING PROGRAMS: This item was moved to the end o� tfie agenda. 4. CLAIMS AND EXPENSES: a. Check Re.gister (2234-2247) 80IISING & REDEVELOPMENT AUTHORITY MTG.. 3EPT. 10, 1992 PAGE 5 ^ -- MOTION by Mr. Prairie, seconded by Mr. Meyer, to approve check registers dated August 6 and September 10, 1992, as presented. IIPON A VOICE VOTE, ALL VOTING AYE, VICE-CHAIRPERSON SCHNABEL DECLARED THE MOTION CARRIED UNANIMOIISLY. 5. REVISED PARKING LEASE BETWEEN HRA AND COLUMBIA PARK PROPERTIES: Ms. Dacy stated that Jim Hoeft wanted the HRA to know that he and the attorney for Columbia Park Properties are still working on a revised parking lease. There have been a number of leases and documents pertaining to this property, so the intent is to combine everything into one document. When the document is completed, it will be signed by the Chairperson and Executive director. 6. RICE PLAZA UPDATE: Ms. Dacy stated that when staff and the HRA were reviewing the 1992 budget, they looked at Rice Plaza and the income versus the expenditures. At that time, there were only three vacant spaces out of eight rental spaces. At the end of 1991, balance of revenues minus expenditures equalled an excess of about $47,000. � Ms. Dac stated that last y year the HRA discussed three options: 1. Existing status, with tenant improvements (about $15,000) 2. Demolishing the building in March 1992 3. Gradual phase-out Ms. Dacy stated the option chosen at that time was option #3. About $2,500 was allocated in the budget for a trash enclosure and sign improvements. Ms. Dacy stated that a number of tenants have now left the building. The most recent tenant, Rapit Printing, will be vacating effective October 1, 1992, and will be moving to the old Zantigo building on University Avenue. Ms. Dacy stated that five out of eight rent�l spaces are now vacant. One of the remaining three tenants, Hong Kong Kitchen, is on a lease until October 1993. The other two tenants, Cinnamon Skin Tan and Bargains, Bargains are on a month-to-month basis. Ms. Dacy stated that as compared to the 1991 balance of revenues minus expenditures of $47,000, projecting the revenues out to the end of 1992 minus the expenditures, they will have a positive � balance of about $9,600. However, with only three spaces rented, �� HOIISING & REDEVELOPMENT AUTHORITY MTG., 3EPT. 10, 1992 PAGE 6 by the end of 1993, the revenues minus expenditures will be a negative $16,900. Ms. Dacy outlined the costs of comparing the three options (option #1 - Current tenants with improvement; option #2 - Demolish 1993; option #3 - Gradual phase-out. Based on Mr. Kordiak's opinion that he cannot re-lease any space without improving the appearance of the building and the HRA's discussion last year, option #1 really isn't an option. That leaves options #2 and #3. If the HRA decides to demolish the building, they would probably have to break Hong Kong Kitchen's lease and have to pay relocation expenses. Demolishing the building will cost about $25,000 plus the normal operating expenses.plus taxes, so it will cost about $100,000 to demolish the building. She stated that with gradual phase-out option, while they don't have the demolition expense, they begin to lose money because of lack of tenants. Ms. Dacy stated staff is recommending that the HRA not take any action on the building until the end of 1992 and see if any of the tenants can be relocated in the Fridley Town Square development. More information on that development should be forthcoming in the next one to two months. If the tenants do not relocate to Fridley Town Square, staff recommends the HRA strongly consider demolishing the building in 1993. A potential time would be to do it in con- ^ junction with the Mississippi Street improvement project by Anoka County next spring. Mr. Burns suggested the HRA wait to see what happens. If Hong Kong Kitchen does not break its lease, them maybe the HRA should wait to demolish the building until October 1993 when the Hong Kong Kitchen lease expires. That way the HRA would not have to pay relocation expenses. Ms. Schnabel stated staff's analysis appears to be very sound. She would agree with Mr. Burns, that the HRA wait on any decisions to see what happens.with the Fridley Town Square development and the current tenants. Mr. Meyer and Mr. Prairie agreed. 7. RE4UEST BY TIM WERNER REGARDING LAKE POINTE SITE: Ms. Dacy stated Mr. Werner is running against Alice Johnson for State Representative. Because Mr. Werner believes the metro area should better pursue bus service, he has inquired as to whether or not the HRA would be willing to establish a park-and-ride site at the immediate intersection of Highway 65 and West Moore Lake Drive (where the bank, hotel, and restaurant buildings are proposed in the original Lake Pointe plan). Nlr. Werner has been calling her weekly regarding this issue. She stated she has told Mr. Werner ,�, that the HRA is looking at a lot of options for the Lake Pointe site. � �� �"1 HOIISING & REDEVELOPMENT AUTHORITY MTG., SEPT. 10. 1992 PAGE 7 Ms. Dacy stated this is an in.formational item only. However, if the HRA members have any comments, she would be happy to convey those comments to Mr. Werner. Mr. Burns stated that it is hard to make a promise for a park-and- ride site for a site that the HRA does not currently control. Secondly, if they look at their future strategically, it seems like the best choice would be to develop some good quality office space located on the large portion of the site and recover some of the incentive they have used to qet the good quality office space by selling off the retail site (7.8 acres) where Mr. Werner has proposed the park-and-ride site. It becomes a policy issue. Which is more valuable: a potential park-and-ride site or potential revenue for that 7.8 acres? 8. COAiSIDER RE4UEST FOR TEMPORARY SIGNAGE FOR SOUTHWEST QUADRANT: Ms. Dacy stated that on August 31, 1992, the Council requested that the signage directing traffic to businesses in the southwest quadrant during the reconstruction of Mississippi Street be installed this fall and remain until the completion of the street reconstruction. The City, not the HRA, will be responsible for the installation and the cost of the signage. 9. FRIDLEY TOWN SOUARE UPDATE: � Ms. Dacy stated that she spoke to Lowell Wagner (in partnership with Don Fitch of the Dairy Queen), the other interested developer that morning. According to Mr. Wagner, the owner of the property, Theisen Partnership (or Norma 9wanson) essentially has two similar offers, one from Scott Ericson and one from Lowell Wagner. The offers say that either party will purchase the property within a certain period of time and construct the development approved by the Council in 1990. 10. LAKE POINTE NEGOTIATIONS: Mr. Burns stated that during July and August, substantial progress was made with Woodbridge Corporation toward the resolution of Lake Pointe related issues. He stated that, assuming the City is going to acquire the property, he would like to approach the County and request that the penalties and interest on the back taxes be waived. He would ask the HRA's concurrence to allow him to discuss this with the County Auditor and Jim Kordiak, County Commissioner, as this is fairly urgent. The amount of money at stake is approximatel� $150,000. � The HRA members concurred with this action. HOIISING 6 REDEVELOPMENT AUTHORITY MTG.. SEPT. 10, 1992 PAGE 8 � Mr. Casserly stated that regarding the negotiations, he hopes to have all the agreements that need to be signed for the HRA by the October meeting. 11. CONSIDER APPROVAL OF RECOMMENDED HOUSING PROGRAMS: Ms. Dacy stated she will divide her presentation into four areas: 1. Describe the issue. 2. Describe housing problems and identify them. 3. Go through recommendations identified in her September 3, 1992, memo. 4. Discuss future items and direction from the HRA. Ms. Dacy stated that in April, the HRA had a joint meeting with the Council, and they identified some of the values they h�d about single family housing and multiple family housing, and whether they should approach it on a community basis or a neighborhood basis. Staff used that guidance and the results from the Maxfield study and formed an 11 member interdepartmental staff team to develop recommendations for housing programs. !-� Ms. Dacy stated the following key areas became the basis for their proposed solutions: (1) structural condition of housing stock (2) new developments (3) cultural diversity (4) neighborhood vitality (5) ongoing maintenance Ms. Dacy stated that regarding ongoing maintenance, staff interviewed a number of other communities, and the first thing they recommended was an aggressive inspection program. Ms. Dacy stated staff did an extensive windshield survey, beyond the Maxfield survey, and took count of the amount of abandoned homes, homes that needed rehab, etc., and did that on a neighborhood-by-neighborhood basis. The conclusion was that there isn't any one neighborhood that is really bad, but there are pockets in certain neighborhoods that really need some attention. Ms. Dacy showed slides of existing housing in Fridley which need rehabiliation and before and after pictures of a current rehab proj ect . Ms. Dacy stated there are two sets of recommended.solutions--five �'"� primary strategies and several secondary strategies. The five primary strategies as outlined in her memo are: � HOIISINa � REDEVELOPMENT AUTHORITY MTG.� 3EPT. 10, 1992 PAGE 9 1. Develop an "aggressive inspection program" and, in conjunction, research potential ordinance amendments. 2. Scattered site acquisition and abandoned home programs 3. Actively pursue MHFA programs. 4. Institute a"Fridley Rehabilitation Loan Program". 5. Complete a Neighborhood Land.Use Planning process. � Ms. Dacy stated that if they did everything listed in the five programs, it would cost approximately $500,000 per year. Based on Council direction, they are focusing more on a single family rehab program, rental housing inspections and analyzing how that can be approved, and, third, really taking a look at and starting the scattered site acquisition. The missing element in this analysis for the HRA is how the $500,000 fits into its program in terms of budget now that they are approaching a conclusion on the Lake Pointe site. Staff will come back with a better analysis of the budget. Ms. Dacy stated that there are a number of secondary strategies to `..� address. These and other important factors are also documented in her memo. Ms. Dacy stated that a list of issues which the Gity Council and HRA will need to decide in the future as they begin to implement the recommended programs are: 1. Bonds versus banks 2. Big Brother versus Laissez Faire 3. In-house versus contracting out (house) 4. Condemnation versus cooperative acquisitions 5. How tough should we be with prosecution? 6. How much money should we spend for these programs and where should they come from? 7. Sources of funding Mr. Meyer stated the City should define specifically in the Code what constitutes rental housing, both multiple and single family, code violations, and then worry about the inspectors and how the inspectors are going to enforce the Code. This is a terrible power /"� a municipality takes on against its citizens, and they need to be extremely careful to create the rules which the inspectors will � $OIISING & REDEVELOPMENT AIITHORITY MTG., SEPT. 10, 1992 PAGE 10 have the power to enforce. They could be heading into something very bad and very disagreeable for both the City Council and the HRA, because there could be some mass reactions from the citizens to this program, unless the program is very carefully thought out� and aodified and then inspectors hired. Ms. Dacy stated that the City has a current ordinance for rental inspections that is good; but, because the staff does not have the manpower to enforce the ordinance the way it should be, there are a majority of units that are not being inspected for long periods of time. Therefore, a lot of the rental units are going downhill. Ms. Schnabel stated she believed the key is that the City's housing stock, in total, is aging, and the rental units are no exception. If they can try to keep those at least up to date so the health, safety, and welfare of the tenants is protected, that is a key element in an inspection program and it should be one of the HRA's goals of an inspection program. However, she can see that they cannot keep up with the amount of work there is to do with the current staff and they will probably have to hire more staff. Ms. Sc�nabel stated that, in addition to rental housing, there is single family housing stock which, in some cases, is also deteriorating. In those instances, the intent, as she understood ,,.•� it in the meeting with the City Council, was that they should start to address their aging housing stock as well as multiple family and start to look at some programs, not only monetary programs but a maintenance code for the residents, to improve that housing. Mr. Burns stated that if the City requires the potential loan applicant to have a housing maintenance code inspection prior to eligibility for the loan, those items that are identified on an inspection have to be done whether the loan is approved or not. So, anyone who subjects himself/herself to that inspection takes a risk and it could cut down on the number of potential applicants for the loan. Ideally, while they might want to enact a housing maintenance code, there might be some very practical reasons to not want to go that far. Ms. Dacy stated another option is ta go a step further to a point- of-sale housing inspection. Mr. Meyer stated he has a grave concern for creating a big brother monster...enforcing the inspections on multi-unit renters but going easy on the single home renters. That is another way of giving partial law enforcement. There are going to be some very heavy financial burdens on some people that other people are going to escape. It is going to be bad political PR, because the more the City enforces it, the more people are going to be hurt. �^ Ms. Dacy stated she met with Larry Commers, Chairperson, and his comment on the rental inspe.ctions was that he understands the need, HOIISING & REDEVELOPMENT AUTHORITY MTG. SEPT. 10, 1992 PAGE 11 � but wants staff to try to find some kind of program so that if the inspections do turn up specific items that are going to cost a lot of money, there is something that can be made available to the multi-unit owner. ,� Mr. Meyer stated he doesn't object to the principle; he is concerned about the method. Ms. Schnabel stat.ed Mr. Commer's point is well taken that if there are any programs available for rental housing assistance, then they should be looking at those. She believed their original intent was strictly to keep the neighborhoods viable. She is concerned about Fridley's overall appearance and overall viability. Mr. Meyer stated maybe he is focusing too much on how individual inspectors can be arbitrary and capricious in their judgments, but he has seen that in other cities. He just did not want to see the City get into the situation where they create a big brother environment in terms of housing. As Ms. Dacy pointed out, there are many rules and laws already on the books, and maybe they should be re-examining these rules and laws. Mr. Meyer stated he liked the recommended strategy regarding the scattered site acquisition and abandoned home program. � Mr. Burns stated that, hopefully, before the end of the year, staff will have developed some recommendations for scattered site housing. Mr. Burns stated that the HRA has heard a discussion of the five major elements of the progra�. Of these, the three major elements are a housing rehab program, a scattered site housing program, and the beefing up our existing rental inspections. Staff is interested in whether the HRA believes staff is on the right track. Ms. Schnabel stated she believed Mr. Meyer's point about having a maintenance code for single family in effect is important. Otherwise, she thought everything else looked good. 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 September 10, 1992, Housing and Redevelopment Authority meeting adjourned at 10:20 p.m. Res ectfully sub itted, �"`, y Saba Re rding Secretary