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HRA 03/17/1994 - 29570CITY OF FRIDLEY �� HOIISING � REDEVELOPMENT AIITHORITY MEETIN(�� MARCH 17, 1994 ____________________________________________________..__----____-- CALL TO ORDER: Chairperson Commers called the March 17, 1994, Housing & Redevelopment Authority minutes to order at 7:30 p.m. ROLL CALL: Members Present: Larry Commers, Virginia Schnabel, John Meyer Members Absent: Duane Prairie, Jim McFarland Others Present: William Burns, Executive Director of HRA Barbara Dacy, Community Development Director Rick Pribyl, Finance Director Grant Fernelius, Housing Coordinator Craig Ellestad, Accountant Councilmember Steve Billings Jim Casserly, Consultant Doug Mayo, Westminster, Inc. Bruce Nelson Jim Thomson, 411 - 67th Avenue N.E. Scott Lund, 580 -.69th Avenue N.E. APPROVAL OF FEBRUARY 3, 1994. HOUSING & REDEVELOPMENT AUTHORITY MINUTES: MOTION by Ms. Schnabel, seconded by Mr. Meyer, to approve the February 3, 1994, Housing & Redevelopment Authority minutes as written. IIPON A VOICE VOTB � ALL VOTING AYE, CHAIRPER80N COIrII�lERB DECLARL�D T8E MOTION CARRIED IINANIMOIISLY. 1. CONSIDER APPROVAL OF RESOLUTION AUTHORIZING EXECUTION OF DEVELOPMENT CONTRACT, WESTMINSTER. INC.: Ms. Dacy stated that the development contract proposes the conveyance of a grant to Westminster in the amount of $87,000. This request is slightly different than previous development contracts with a grant request. Usually the HRA provides the grant after completion of the structure and the issuance of the certificate of completion. This project is different in that the major source of financing is HUD, and HUD is providing the capital grant to Westminster to construct the building. The assistance would be made in two payments. Slightly less than half of the funds would be made at the time the first draw is made against the ,� HOIISING & REDEVELOPMENT AIITHORITY MEETINa. MARCS 17. 1994 - PAGE_2 �"� HUD grant, and the remaining portion of the funds would be conveyed to Westminster at a later time. Ms. Dacy stated the contract is structured such that it provides assistance via a land writedown. However, the funds, in essence, would be used for what the contract defines as "quality enhancements". Schedule D in the development contract identifies those enhancements. Those enhancements essentially consist of both architectural enhancements and landscaping and irrigation improvements. Ms. Dacy stated the $83,000 represents about 3� of the total project costs. Through the tax increment, the HRA will recover its assistance over a period of about 3 1/2 years. In total, Mr. Casserly has projected that through the remaining part of the district, about $250,000 of tax increment will be created as a result of the project. Mr. Commers asked the status of the project in ternas of actually going forward with construction. Mr. Doug Mayo, Westminster, Inc., stated they are still waiting for their permanent financing from HUD, and he expected a commitment from HUD in about, one to two weeks. After that commitment, it will r,.� take about one month for the loan to close with HUD so they are looking at construction beginning around May 1. Mr. Meyer asked the type of materials for the exterior construction, interior furnishings, amenities, etc. Mr. Mayo stated it is a three-story, 51-unit, building of wood frame construction with brick veneer. There are gables and false chimney enhancements as requested by the City. Regarding the interior amenities, there are lounges on each floor serviced by an elevator. There is a community room with a small kitchen on the first floor. There is a common balcony on the second floor and a patio on the back side of the first floor for tenant use. Mr. Meyer asked about air conditioning. Mr. Mayo stated that part of the capital grant advancement from HUD will be for air conditioner sleeves, and part of the tax increment from Fridley will be for the purchase of air conditioners as HUD does not cover air conditioning. All units and common community spaces will be air conditioned. Mr. Meyer asked Mr. Mayo to describe the method of selecting tenants for the building and the requirements of tenants. Mr. Mayor stated there are basically two criteria for tenant � selection: (1) One member of the household must be 62 years of �"� HOIISINa & R1�DEVELOPMENT AIITHORITY MEETINa, MARCH 17. 1994 - PAGE 3 age or older; and (2) The tenant(s) must be low income--criteria set by HUD which is about $15,000-16,000 per year. Mr. Mayo stated that regarding the tenant selection, they have been maintaining an interest list of people who have heard about the project, and about 200 names are on that list. They will start marketing the development about 90 days before the completion of the project. They will contact all the people on the interest list. They will advertise through newspapers, senior centers, and other organizations that service the elderly. Applications will be taken on a first-come/first-serve basis and incomes will be verified to make sure the applicants are income-eligible. Mr. Meyer asked if any priority can be given to Fridley residents. Mr. Mayo stated that because of the nature of federal involvement, they cannot give priority to any group. However, most of the interest has come from people living in Fridley or in surrounding communities, or from people who lived in Fridley at one time and want to move back into the community. He expected that most of the tenants will be people from Fridley or the northern surrounding suburbs. Ms. Schnabel asked about the approximate date of completion for the �,,,� proj ect . Mr. Mayo stated that if they are able to begin construction in early May, they anticipate completion by early December. Mr. Mayo stated Westminster created a separate entity by the name of Norwood Square, Inc. HUD requires that they create a separate non-profit entity to serve as the owner of the property. Norwood Square, Inc., will be the actual receiver of the loan from HUD and will be using the funds for tax increment. Westminster is the sponsor and developer of the project and will provide property management. Norwood Square, Inc., is affiliated with Westminster, Inc., in that Westminster appoints the Board of Directors. Right now, all the Board of Directors are members of the community. Once the project is up and operating, residents will also be members of the Board of Directors. MOTION by Mr. Meyer, seconded by Ms. Schnabel, to approve "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 Norwood Square, Inc." and to authorize the Executive Director and Chairperson to execute the development contract. IIPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED IINANIMOIISLY. � � HOIIBING & REDEVELOPMENT AIITHORITY MEETIN�. MARCH 17. 1994 - PAGE_4 Mr. Bruce Nelson, President of Norwood Square, Inc., stated that on behalf of the other members of the Board of Directors who could not be present at the meeting and the future residents of this building, he wanted to thank the HRA for its support of this project. A lot of people have put in a lot of work to put this project together. 2. tAWARD BID FOR LAKE POINTE MAINTENANCE PROJECT: Ms. Dacy stated the low bidder for the Lake Pointe development maintenance project for 1994 was Innovative Irrigation with a bid of $20,999. Staff recommends that the HRA award the bid and authorize the contract with Innovative Irrigation. MOTION by Ms. Schnabel, seconded by Mr. Meyer, to award the bid and authorize execution of the contract with Innovative Irrigation for 1994 Lake Pointe maintenance in the amount of $20,999. IIPON A VOICE VOTE, ALL VOTIN(� AYE, CHAIRPER80N COMMERB DECLARED THE MOTION CARRIED IINANIMOII3LY. 3. CONSIDER AGREEMENT FOR LEGAL SERVICES WITH CASSERLY MOLZAHN & ASSOCIATES. INC.: � Mr. Commers stated the only issue he would raise is that there should be a provision in the contract which requires a certificate of insurance. Mr. Casserly stated he can provide that. MOTION by Ms. Schnabel, seconded by Mr. Meyer, to approve the "Agreement for Legal Services Between the Fridley Housing and Redevelopment Authority (HRA) anr] Casserly Law Office, P.A." with the added provision that requires the submission of a certificate of insurance. UPON A VOICE VOTE, ALL VOTINa AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED IINANIMOIISLY. 4. CLAIMS AND EXPENSES: MOTION by Mr. Meyer, seconded by Ms. Schnabel, to approve the check register (checks 25042-25078) with the exception of check 25054 which was voided. IIPON A VOICE VOTE, ALL VOTIN(3 AYE, CHAIRPERBON COMMERS DECLARED THE MOTION CARRIED IINANIMOIISLY. 5. UPDATE ON SCATTERED SITE PROGRAM: 560 Hugo Street N.E. � HOIISING & REDEVBLOPMENT AIITHORITY MEETING. MARCH 17. 1994 - PAGE 5 Mr. Fernelius stated that staff's attempts to negotiate with the owner have been unsuccessful, and the owner is no longer interested in pursuing negotiations. 513 Fairmont 8treet N.E. Mr. Fernelius stated this matter is now in the hands of the City Attorney and the City's Code Enforcement Officer who are pursuing action to have the building demolished. 187 Lonqfellow 8treet N.E. Mr. Fernelius stated this is a one story single family home, 480 square feet, without a basement which was built in 1940. The lot is a buildable lot. The property has been inspected and there are substandard electrical, wiring, plumbing, and mechanical systems. It has old windows and doors and a number of structural deficiencies. In the opinion of the inspector, the property should be demolished. Improvement of the structure would cost more than the structure is worth. In all likelihood, the City would deny a building permit if the owner did apply. Mr. Fernelius stated the property has been appraised, and staff would like authorization from the HRA to proceed to negotiate an � offer with the property owner within 10� of the appraisal amount. 8280 Esst River Rosd Mr. Fernelius stated this is a one story single family rambler about 900 square feet in size. The lot is a buildable lot. The property has been visually inspected from the outside, and it appears to have some structural problems and has lacked deferred maintenance. Mr. Fernelius stated the property has been appraised, and staff would like authorization from the HRA to proceed to negotiate an offer with the property owner within 10� of the appraisal amount. Mr. Commers asked how these numbers fit within the HRA's overall budget. Mr. Fernelius stated that both properties fit within the general parameters of the budget for general acquisition which was about $50,000 per property. MOTION by Ms. Schnabel, seconded by Mr. Meyer, to authorize staff to negotiate an offer of purchase within 10� of the appraised amounts with the property owners of 187 Longfellow Street and 8280 East River Road. n IIPON A VOICE VOTE, ALL VOTING AYE, CBAIRPERBON COIyIIdlERS DECLAR�D THE MOTION CARRIED IINANIMODBLY. � � HOIIBING & REDEVELOPMENT AIITHORITY MEETINa. MARCH 17. 1994 - PAGE_b 6. 1994 HOME FUND APPLICATION: Mr. Commers stated that in 1993, the HRA applied for and received $70,000 in HOME funds which were matched with $17,500 in HRA funds for the housing rehabilitation program. He stated that these funds are being provided again this year, and he could see no reason for staff not to go ahead and make another application. Ms. Dacy stated staff did anticipate this application, and a matching amount was put into the current 1994 HRA budget. She stated staff will proceed with the application. 7. CONSIDER TIF REOUEST FROM SCOTT LUND: Ms. Dacy stated Scott Lund, owner of Rite-Way Mobile Home Repair, is proposing to build a 13,000 square foot industrial office/ware- house building which he will own and maintain. Mr. Lund has applied for SBA fundinq. He is also currently going through the process for approval of a plat request and a rezoning request. Ms. Dacy stated Mr. Lund has submitted preliminary numbers and the cost of the project. Staff advised him of the HRA's policy about tax increment financing assistance which is up to 50. In this case, staff is recommending a pay-as-you-go approach, and 50 of Mr. Lund's initial cost estimate of the project costs is slightly less than $20,000. Mr. Lund has received additional information from his contractor about the cost of the project, and he is going to have to increase the cost of his financing amounts with SBA. Ms. Dacy stated that staff is looking for concurrence from the HRA to proceed with negotiations with Mr. Lund. This project is located in the Onan district. Assisting this project meets the "But-For" test and the tax increment financing requirements. The Onan district is about four years old, and assisting this project is going to enable the HRA to continue to receive tax increment back from the County according to state law. Mr. Commers asked about the use for the building. Mr. Lund stated he is a contractor in the business of transporting and installing mobile homes. He has been located on Central Avenue for the last 21 years between two locations, and he has outgrown these facilities. He stated this new building will be primarily for his business. Mr. Commers asked how many people Mr. Lund employs. Mr. Lund stated he has 11 full time employees and in the summer months he hires 4-6 part time people. This new building will � increase his operation significantly. One criteria for SBA SOIISINa & REDEVELOPMENT AIITHORITY MEETINa, MARCB 17. 1994 - PAGE 7 � - financing is the creation of new jobs, and he anticipates 68 new full time hires with this new facility. It was the consensus of the HRA members that staff proceed to negotiate a development contract with Mr. Lund for this project. 8. UPDATE ON RICE PLAZA DEMOLITION: Ms. Dacy stated the demolition of Rice Plaza has been completed. 9. REVIEW STATUS OF SOUTHWEST OUADRANT PLANNING: Ms. Dacy stated staff would be making a presentation to help the HRA start thinking about redevelopment of the southwest quadrant. The purpose of the discussion is have the HRA answer the following questions: 1. What is the HRA's desired land use scenario? 2. What is the acceptable level of subsidy to achieve the desired land use scenario? 3. What is the desired timeframe to accomplish the preferred development plan? � Ms. Dacy stated staff will be making this same presentation to the - City Council on Monday, March 21. Ms. Dacy stated she would briefly review the major comments staff received from interviews with housing developers, and she would show examples of some of their developments. From the interviews, staff was able to develop three scenarios on which to base the HRA's discussion. It also enabled Mr. Casserly to make some tax increment analyses to give the HRA a feel for the range of the options. Ms. Dacy stated Mr. Casserly will present and review a chart showing the tax increment that would be necessary for each type of scenario. She will finish with a brief presentation about some of the design and land use issues. Ms. Dacy stated there are four major points that came out of the interviews with the housing developers: 1. Housinq is a viable land use with special attention to site design and amenities. They talked about townhomes, condominiums, and apartments. 2. Commercial development would be limited to neiqhborhood oriented uses and less than 25,000 square feet. Because ^ of the current state of the commercial market, obviously the 100,000 square foot strip mall is no longer a � � HOIIBING & REDLVELOPMENT AIITHORITY MEETIN(�, MARCH 17, 199A - PA(�]3 8 reality. Instead, they heard that a smaller commercial building mixed with housing might be more appropriate. 3. owner-ocaupied unite �ould be in entry level market. The entry-level market being priced at $80,000-110,000. 4. Rehabilitation of abutting apartment buildinqs should be incorporated 3nto redevelopment. The developers pointed out the condition of surrounding land uses, specifically, the apartment buildings to the west which are at an age of the life cycle where they need rehabilitation. Ms. Dacy reviewed examples of developments for Rottlund Development, Bel Aire Construction, Laukka/Jarvis, and George Sherman & Associates. Rottlund Development specializes in an owner-occupied townhouse development. Bel Aire Construction (Jim Winkels in cooperation with LaNel Financial Group) has already done a schematic for the southwest quadrant which is a model for the mixed use approach--a commercial building in the northeast corner of the site at the intersection of University and Mississippi 5treet, two three-story apartment buildings, rental townhomes in the southeast corner of the site. This developer brought to staff's attention the fact that they might want to include the apartment buildings in the redevelopment for rehabilitation. Laukka/Jarvis specializes in three-story condominium developments at a higher density. They were a little more cautious about the site. George Sherman & Associates' primary experience has been in rental and in the affordable housing market. Ms. Dacy stated Mr. Casserly based his analysis on the models proposed by Rottlund Development (townhomes), Bel Aire Construction (apartments/commercial), and Laukka/Jarvis (owner-occupied condominiums). Mr. Casserly reviewed the "Comparison of Proposals" he had prepared. He stated each proposal has its pros and cons, but it gives the HRA an idea of what could be done on the site. He believed they might need to have a little more understanding of the market to see if the condominium approach would be saleable. Ms. Schnabel asked if the market for townhomes was very strong. � Ms. Dacy stated the developers seemed to think that the townhome market is very strong. There are seniors, empty-nesters, and i"'� HOIIBING & RED�VELOPMENT AIITHORITY MEBTING. MARCH 17. 1994 - PAGE 9 single, professional people who are looking for alternative housing. Ms. Schnabel stated she would like to know more about the condominium market. Ms. Dacy stated she had prepared some design recommendations for any one of the three options: 1. Require building designs which are compatible to existing developments, but have a timeless, classic appearance; avoid "dating" the development. • Colors of the building materials; traditional versus contemporary • Architectural features: chimneys, roof slopes, fences, balconies, window designs • Types of building materials: Brick has been the theme in the Center City District (although different colors). 2. Locate the buildings to reverse the suburban parking lot ^ appearance. Do not isolate the development from the rest of the intersection. • Northwest and northeast corners already have large parking lots. • Replicate the location of the Target Office building near the corner of the intersection. • Create a'�center�� of activity and mass versus a void of wide open spaces. • Housing units should face Mississippi Street; commercial building in immediate corner. • Prioritize underground parking garages to avoid future deterioration of detached garages. 3. Name the development with the theme or word Mississippi. It will connect Mississippi Street (Main Street) with our natural resource, the Mississippi River. 4. Install interior walking paths and areas for private recre�tion; consider a small public space? 5. Install compatible lighting systems with existing light ^ standards along street. /--� HODBINa b REDEVELOPMENT AIITHORITY MEETING. MARCiI 17. 1994 - PAGE 10 6. Install extensive landscaping treatments to welcome and soften appearance; decorative fencing instead of chain link fence or a vegetative fence. 7. Site can handle a variety of densities and building sizes and masses. Mr. Burns stated the basic question is: Does the HRA accept housing as the land use for the southeast quadrant? Ms. Schnabel stated she has given this a lot of thought. It is her feeling that they are getting nowhere fast by waiting for a commercial development, and she is beginning think that they should go to residential of some type. She believed that if strip commercial is still viable for Fridley, then the northeast property (10,000 Auto Parts) would have developed quicker even with financing problems. Ms. Schnabel stated that even though they may call this area their downtown area and would like to see it as a commercial area, she did not think it will happen. There has been an explosion of commercial development north of Fridley near Northtown, and that seems to be the hot spot for commercial development, leaving the southwest quadrant kind of dangling. Part of that is economics, � but part of it could be that Fridley's Center City area is not viewed. as a good commercial site by commercial developers. Therefore, the HRA should consider redirecting their focus for the southwest quadrant. She now believed that residential is more viable, and she would support multiple housing on this site. Mr. Meyer stated he is familiar with the Rottlund townhome development on 85th and East River Road. It is very popular, it looks nice, and has marketed well. However, he is trying to visualize that type of townhome development in the southwest quadrant. This is a block landlocked by existing commercial, access, and heavy traffic. Mr. Meyer stated the HRA's previous hopes for the southwest quadrant back in the days of the Louis Lundgren pr.oposal were for residential, and the commercial would have come along as part of the residential. That was the HRA's ideal for that corner, and he believed it is still a valid dream. Mr. Commers stated the HRA has always looked at a mi�ced development on this site, and the emphasis has always been greater on the residential than the commercial. He stated he did not have any fundamental problems with what staff has presented; however, he believed the site could support a little commercial. He did not know that they would want $70,000 townhomes on the site, and he was not sure that they could market $125,000 condominiums. The bigger factor is how much money can they eat? i"� �� � 80II8ING � REDTsVELOPMENT AIIT80RITY MEBTING, MARCH 17. 1994 - PAGL 11 Mr. Burns stated he believed a residential development would undoubtedly give a"shot in the arm" to the commercial businesses across the street in Holly Center. Mr. Meyer stated that brings up a concern on his part, and that is that he is not eager to create competition for Holly Center. Holly Center has had problems in the past, which shows the fragility in the heart of Fridley. By encouraging commercial, would they create a blight area similar to Rice Plaza? Mr. Commers stated he did not believe the HRA had ever put a big emphasis on commercial. It was always the service-type businesses with some type of residential. Ms . Schnabel stated there was one proposal for commercial at street level and all residential above. Occasionally, the reference to senior housing has come up. With the Westminster development, what is the City's saturation point in terms of gearing toward senior housing or low income housing? Ms. Dacy stated that in terms of low income housing (which is the specific market for the Westminster project) , there is a three year waiting list for housing at Village Green. The fifty units proposed by Westminster will not significantly impact that list. She believed there is always a market for low income housing. Maxfield, in the housing study, said Fridley had an initial demand for market rate housing of about 100 units with an additional 200- 300 units by the year 2010. Mr. Commers stated Casserly's analysis, projects. He stated position again. he is not happy with the numbers in Mr. and how these numbers would work with other the HRA should probably review their cash flow Mr. Burns stated he would like the HRA to answer the three questions if they are prepared to answer them, and staff needs to know how fast the HRA wants them to move on this. It is still possible to do a 1994 project, but they first need to do an appraisal on the Suh property and begin acquisition negotiations. This is a very important issue for the HRA, and he can understand if the HRA would like to take another month to make a decision. Ms. Schnabel stated she would like to get the input from the City Council and the other HRA members. Mr. Meyer asked why the urgency for getting something going in 1994. He believed it is a good idea to get an appraisal on the Suh property now, but why rush into anything? There are a lot of things fernaenting. Employment is edging up, the economy is strengthening up a little, and there might be a new look on various developments by the end of 1994/1995. Once they commit themselves � HOIISING & REDEVELOPMENT AIITHORITY MEETI1dG� MARCH 17. 1994 — PAGE 12 to a land use, it is gone. He would like to see them hold off during 1994. Mr. Commers stated he, too, did not feel the same sense of urgency as the staff seems to feel. Mr. Casserly stated this is a pre-1979 district and as time goes by, depending upon what the Legislature does or does not do, that may limit a little bit their options because they may not have the duration they want in order to generate the tax increment. Mr.�Casserly stated if residential seems to be the desirable use, there are some things going on in the marketplace today which are certainly attractive--low interest rates and some demand. Depending on the type of housing, it might require less subsidy on the part of the HRA. On the negative side, once the HRA selects the use for that corner, that is probably going to be the use for many decades. Ms. Dacy stated that because of its size (10 acres), the southwest quadr nt is the largest piece of land area available for a resid�tial or mixed use development to satisfy the housing demand or housing needs as identified by the housing study. In addition, there is some pressure in terms of one of the existing landowners. ^ Mr. Commers stated he is in favor of getting an appraisal on the Suh property, because he is very concerned about what the cost of that land will be. Mr. Burns stated that if they are not going to do any negotiating yet this year, an appraisal would be worthless. Mr. Commers asked if they could have the City Assessor look at the property. Councilmember Billinqs stated that he would encourage the HRA to not throw away their vision because they feel some time pressures. In the final analysis, they are making a decision on a land use that will be there for many years, and it is a decision that needs to be made very carefully. Councilmember Billings stated that referring to the Bel Aire proposal, it does not show access back into the Sylvan Hills neighborhood. They need to keep in mind that there needs to be some type of northern access into that neighborhood, because past experience shows that the neighborhood does want that access. Mr. Burns asked if it would be beneficial to organize some tours with the City Council and HRA members to some of the developers� other projects. � Mr. Commers stated that might be a good idea. HOIIBING & REDTsVELOPMENT AIITHORITY MEETING, MARCB 17. 1994 - PAGE 13 n Mr. Commers stated he would have no objection to continuing this discussion until the April 7, 1994, meeting. He would also like staff to provide the HRA with the applicable portions of the Maxfield housing study for their review. Ms. Schnabel stated she also would like to see some market value figures on the Suh property. ADJOURNMENT: MOTION by Ms. Schnabel, seconded by Mr. Meyer, to adjourn the meeting. Upon a voice vote, all voting aye, Chairperson Commers declared the motion carried and the March 17, 1994, Housing and Redevelopment Authority meeting adjourned at 10:35 p.m. R sp ctfully s mitted, �tn Saba Recording Secretary � �