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HRA 11/10/1994 - 29577J �� C� 2 �,���'� Y 1T'S,l � �i7 80II8INa & REDBVELOPI�lENT AIITSORITY MELTING, NOVEMBLR 10� 1994 CALL TO ORDER: Chairperson Commers called the November 10, 1994, Housing and Redevelopment Authority meeting to order at 7:35 p.m. ROLL CALL: Members Present: Larry Commers, Jim McFarland, Duane Prairie, John Meyer Members Absent: Virginia Schnabel others Present: William Burns, Executive Director Barbara Dacy, Community Development Director Jim Casserly, Financial Consultant Grant Fernelius, Housing Coordinator Craig Ellestad, Accountant James Hoeft, HRA Attorney APPROVAL OF OCTOBER 24. 1994, JOINT HRAjCITY COUNCIL MEETIATG: ^ MOTION by Mr. Prairie, seconded by Mr. Meyer, to approve the October 24, 1994, Joint HRA/City Council minutes as written. IIPON A VOICE VOTE� ALL VOTINa AYE, CHAIRPERSON COA�lERB DECLARL�D THE MOTION CARRIED IINANIMOIIBLY. APPROVAL OF OCTOBER 24� �994, HOUSING AND REDEVELOPMENT AUTHORITY MINUTES• MOTION by Mr. Meyer, seconded by Mr. Prairie, to approve the October 24, 1994, Housing and Redevelopment Authority minutes as written. IIPON A VOICE VOTE, ALL VOTING AYE, CHAIRPSR80N COMMERB DBCLARED THE MOTION CARRIED IINANIMOIIBLYs 1. APPROVE REOCCUPANCY OF FORMER 10.000 AUTO PARTS BUILDING, BY JIM YUNGNER: 6525 UNIVERSITY AVENUE N.E. Ms. Dacy stated the reason this item was being presented for discussion is first because the zoning is S-2, Redevelopment District. The language for the S-2 district enables the Planning Commission, City Council, and Housing and Redevelopment Authority (HRA) to review uses to see if it is consistent with the redevelopment plan. Second, the owners of this business have expressed an interest in being part of the redevelopment project --�, that Mr. Lowell Wagner is attempting to pursue. � �'`� HOIISYNa & REDEVSI,OPMSNT AIITHORITY MT�.. NOVEMH�R 10. 1994 PAG� 2 Ms. Dacy stated staff has on a temporary basis been working with the owner on�the occupancy of the building. When Ms. Dacy became aware of this use, the owner said The Gym would occupy the building and sign a lease for three years. She thought three years was a significant time frame of which the HRA should be aware. The Planning Commission and the City Council have reviewed the zoninq issues and site issues, and have approved occupancy of the building under the current zoning. Of issue for the HRA is whether or not this occupancy would affect the redevelopment in any way. Staff feels it will not hamper redevelopment. The improvements the petitioner is making to the building are more cosmetic and will not add aignificantly to the value of the building. Mr. Wagner is aware of the three-year lease and, if he needs to break the lease, he will have to compensate. Ms. Dacy stated, regarding the longer term impact of whether that use should be in that building and in the redevelopment in the future, staff recommended, and the Planning Commission and City Council agreed, that it is to early to approve. There are issues regarding parking which staff wants to evaluate if the project is to proceed. Staff are hoping whatever we do in the Southwest Quadrant will spark an additional demand for retail uses on that corner, and we are not prepared to say it is okay for this business to occupy a significant part of that building. Stipulation #6 that the Council included p�eserves our rights to the approval of the use �n redevelopment. Ms. Dacy stated, if the HRA has an objection of the type use, now is the time to let the petitioner know that you do not want them in the building. Mr. Yungner went to the Planning Commission and City Council meetings in September. The Gym �is now at 261 Commerce Circle and focuses on weight training and body building. They have begun work on the inside of the building and have painted the outside improving the temporary appearance. Staff recommends the HRA approve the re-occupancy of the building with the six stipulations as follows: 1. The petitioner shall. apply for the appropriate building, plumbing, and mechanical permits to complete remodeling as proposed. 2. The petitioner shall stripe the parking lot; parking stails are 10 feet wide ancl 20 feet long, or 18 feet long if the stall abuts a curb stop or landscaped areae 3. The dumpster shall be screened on all sides. 4. The parking lot shall be kept free of weeds and grass. HOIIBINa & REDEVSLOPIKBNT AIITHORITY MTa.. NOVEMSER 1Q. 1994 PAa� 3 n 5. Landscaped area to the north shall be kept trimmed in an attractive manner to provide screening from the residence to the north e 6. Inclusion of the proposed use in the Fridley Town Square redevelopment project shall be reviewed by the City Council, Planning Commission, and Housing and Redevelopment Authority prior to execution/approval of the development contract for the project. Mr. Prairie asked how many locations does The Gym have. Ms. Dacy stated she thought they had facilities in Plymouth, Fridley, Champlin, and Bloomingtone Mr. Meyer asked if the police had any negative comments. Ms. Dacy stated the police had no complaints. They were happy the building would be occupied. Mr. Commers asked if Mr. Wagner intended to include The Gym if he develops the property. � Ms. Dacy stated Mr. Wagner is willing to evaluate including them if the City is comfortable with it. Also, Mr. Wagner does not want to lease a significant part of the building to them because of parking concerns and to allow for additional tenants. Mr. Commers asked where the HRA is with Mr. Wagner. Ms. Dacy stated, although Walgreen's have not said in writing they are not interested in the site, Mr. Wagner is looking for a similar-type anchor tenant. He no longer has any written aqreements on the three properties. He had a verbal agreement with Mrs. Swanson. Apparently, the option agreement on the single family homes has expired. Mr. Commers asked if we had any commitment to Mr. Wagner as far as what the HRA would do in terms of assistance. Mr. Dacy stated there is no development contract executed. The HRA did approve a concept assistance up to $300,000. If he comes in with the exact same proposal, it would be on the table. If the proposal is different, we can negotiate. Mr. Commers aslced how long that agreement is kept open. Ms. Dacy stated it will be kept open as long as the HRA wishes to do so. ,� HOII8IN�3 & REDLVELOPMENT AIITHORITY MTa.. NOVEMHER 10. 1994 PAaE 4 �� � Mr. Casserly stated the HI2A has no legal relationship to make that offer at this point. It is just that we have not dealt with anyone else. The last discussion about a proposal was approximately 18 months ago. Mr. Commers stated The Gym may be fine but his concern is that this may not be the kind of project to put that kind of funds into. He would imagine there could be scenarios where they might want us to continue on that level and he wants to be sure the HRA is protected. Mr. Burns stated, as he recalled, the sum of $300,000 is tied to the Fitch buyout which is no longer relevant to the project. Therefore, the $300,000 proposal would not necessarily be relevant. Mr. Casserly stated this was also based upon the option agreements which are no longer available. This kind of use generally tends to have a lower square foot lease payment. He was not sure how the financing would work. Ms. Dacy stated part of Mr. Wagner's question to the HRA is what your concerns are about the lease. He is aware this use is not �,.� what was contemplated three or four years ago. If the HRA does not want to see this use, that is okay. The petitioner wants to know this up front. This will also give them time to locate the business elsewhere. We have told them we will not carte blanche approve the use in the redevelopment of trie buildinq. There are issues with parking. Mr. Wagner is concerned that, because of the nature of use and the fact that most customers work, customers come after 5:00 p.m. and occupy many parking spaces. We are concerned about other possible uses in the building and that there may be corresponding peak use. Mr. Commers asked, if someone decided it was appropriate, is there anything anyone could do. Ms. Dacy stated the S-2 zoning gives the HRA, Planning Commission and City Council the discretion to determine whether or not the use is consistent with the redevelopment objectivese Mr. Commers asked, if the HRA says this is not consistent with our long term objectives, where does that leave use Ms. Dacy stated she did not think anyone objects to The Gym occupying the building on a temporary basis. �What she is hearing is that the HRA may not want them as part of the redevelopment plan. If so, we need to let them know. �"^, Mr. Meyer stated he cannot see setting ourselves up for problems. - Down the line, someone could demand us to keep the low rent, but HOIIBINa & REDEVELOPMENT �IITHORITY MT�.. NOV8M8$R 10. 1994 PAGB 5 �`, we can handle that. It sounds as if it would be okay. Mr. Commers stated this would tie up the buildinq for three years. He did not think they would get the development done in three years unless there is a buy out of the lease. Mr. Meyer asked, if something significant is to happen on that corner, this business would have to qo. In the interim, there is someone occupying and keeping up the building and striping the parking lot. Mr. Prairie asked if there was discussion on the length of the leasee Two years would be easier for the City. Ms. Dacy stated there was not a detailed discussion on the length of the lease. That was between The Gym and the owner. Mr. Commers asked if staff were asking for HRA approval. Mr. Burns stated it was an option not to take action but also not veto the request. Mr. Meyer thought that through no action they would be giving � consente Ms. Dacy stated, if the HRA does not want to formally approve, the zoning district states the Planning Commission and City Council can review and approve and, as long as there is a written Housing and Redevelopment Authority report on the project plan and considerations. If the HRA wants to �ay, given the Planning Commission and City Council approval is good 'enough, that is fine. Mr. Hoeft stated, as he read the statute and to follow up on what Ms. Dacy said, right now the property is sitting there and the HRA is the appropriate body as far as deciding whether a temporary use or a use outside the plan fits into the redevelopment proposal. Therefore, the City Council would have authority over the zoninq code as far as whether the use complies or does not. The proposal is here for the HRA's review and opinion. He thought staff would be looking for approval or disapproval on a formal level. This would come before the HRA if it was part of a redevelopment plan. Because this is not a part of an actual redevelopment, he does not think there needs to be a formal action by the HRA. The zoning question is for the City Council to resolve. This is here because there is a desire by staff for informal discussion as to the HRA�s concerns. Mr. Commers stated staff is asking the HI2A whether we have any ^ input as to whether or not, if that corner is redeveloped, that this would be a part of the redevelopment. HOIIBINa � REDEVELOPMENT AIITHORITY MTd.. NOVSMSER 10. 1994 PAaE 6 � Ms. Dacy stated, if the IiRA feels strongly that they do not want to see this use as part of the redevelopment plan, staff and the petitioner want to know nowe Mr. Prairie asked what is wrong with waiting and seeing. Mr. Meyer asked if the HRA would be committing themselves to The Gym being part of the redevelopment plan. Ms. Dacy stated the first question is whether or not the HRA has a problem with The Gym occupying the building for three years. Mr. Commers stated this was the City Council�s decision and they are okay with that. Ms. Dacy stated the next question is whether the i�2A is comfortable with The Gym in the new buildinq after redevelopment. Mr. Commers stated he would prefer not to have that kind of facility there. Mr. McFarland asked, if they turn down the request, will The Gym move in temporarily. � Ms. Dacy stated they would be there as long as they can. They are fully aware that they may have to move in one year or perhaps two years. Mr. Prairie asked how long has that building been without a permanent tenante Ms. Dacy thought it had been at least six years. Mr. Prairie stated he would say maybe to this use. Mr. McFarland stated he had no opinion either way. Mr. Meyer stated Mr. Wagner will not guarantee they will be in the redevelopment. If it makes sense for the redevelopment, then it may make the whole thing work. We cannot make any guarantees. Mr. Commers stated he does not want to see it if there is a lot of traffic. Perhaps we could get a retail use there. He is just not enthused with having this use as an anchor for that project. Mr. Prairie stated a fast food business has a lot of traffic but short term parking. This may have different parking needse Mr. Commers stated the consensus of the HRA is to take a look at � it when the time comes. �OIIBINa & REDEVELOPI�ENT AIITHORxTY MTG.. NOVRMHER 10, 1994 PAQE 7 n 2. DISPOSITION GUIDELINES FOR SCATTERED-SITE ACOUISITION PROGRAM Mr. Fernelius stated his memo included in the agenda explains the process staff recommends usinq in selling the properties. Staff considered several methods of disposing of the property 3ncluding to list the properties with a real estate agent, which was not considered as desirable; to post a sign and take offers on a first-come, first served basis; or, the one we are recommending, to take sealed bids on the properties for the following reasons: 1. By law, the I�2A must sell its property for an amount which takes into consideration the fair market value. By utilizing a sealed bid approach, the market will in effect establish the price. This does not mean that the HRA is obligated to accept the offer/s. � 2. State law also requires the HI2A to conduct a public hearing before it can convey the property. By selling all of the lots at the same time, we can conduct one hearing. 3. The HRA has the opportunity to take offers from the general public and potentially receive more offerse � Mr. Fernelius stated by using a sealed bid process, we think that a market will be created and, therefore, we will meet that requirement. The HRA needs to conduct a public hearing before it can actually approve the sale of the property. It makes sense as a practical matter if we can have one public hearing for all the properties. It also offers the opportunity to get more offers and to appear from a public perspective to be �ore open. Mr. Fernelius stated, after bids are acceptecl, the HI2A would conduct a public hearing to review the bids and formally award the sale of each lot to the highest, most responsible bidder. There is some flexibility if there is some discomfort with one of the bidders. We would also enter into a development agreement for each individual property which would spell out such things as the time when the project is going to be completed, the type of home to be constructed, a performance bond, a provision allowing the HRA to prevent a builder from selling the property until he has completed the improvements, etc. Mr. Fernelius stated staff has prepared guidelines which were included with the agendao He thought it was a process which would meet the statutory requirements. This process only applies to what are considered buildable lots. Of the eight properties acquired, two are considered non-buildable and are not covered under these guidelines. Staff are still considering options for ,-� those two properties and will return a recommendation at a later date. 80IISINa 6 RED�VELOPMENT AIITHORITY MT�.. NOVEMB$R 10. 1994 PAQ$ 8 r"1 Mr. Fernelius stated staff recommends approval of the quidelines as presented and to authorize staff to put the properties up for sale. Mr. Commers stated he presumed that when the properties were acquired we got all the titles, abstracts, �tc. What is the estimated expense for the sale of these lots?� Mr. Fernelius stated they had budgeted $50,000 per property which included acquisition. Staff has stayed within that budget, but there are some costs over and above for demolition. Mr. Comiaers asked if their were going to be costs incurred? There will not be any realtor commissions. Are there taxes to be paid? Mr. Fernelius stated there may be some costs involved in drafting a development agreement. Because we did not meet the July 1 deadline, the property is considered taxable for next year. We will need to pay taxes for 1995 at least through the date of closing. Mr. Hoeft stated most of the taxes on these properties are �.,� insignificant. The costs would be the cost of drafting the development agreement. He was not sure of restrictive covenants or if that is included in the development agreement. That issue is not resolved. There may be other miscellaneous closing fees. Those costs will be relatively insignificant. The costs up front will be to draft the development agreement and covenant. � Mr. Commers asked how these will be policed to make sure the developer complies. Mr. Hoeft stated, in Columbia Heights, through a development agreement they are controlling what the hou8e is going to look like through detailed plans which must be pre-approved by the City before a building permit is issued. Once the building permit is issued, they tied up the certificate of occupancy with the final inspection and sign off by the City. Mr. Meyer stated they are asking for sealed bids for the lot. We are concerned about the future use on the lot. In the sealed bid operation, we have no control over what is going to be on that lot. We will pick the high bidder, then decide what is proper, and then award the contract. We don't know durinq the bidding process what kind of operation will be built on that lot. It seems that we should have some restrict3ve covenant in the original bid or outline of what is to be built there. This should be in the bid process and not wait until negotiating after a bid. � �� %''� HOII8IN6 & RED�VELOPMENT AIIT80RITY MTa.. NOVSMHBR 10. 1994 PAaS 9 Mr. Commers stated we are not just selling a lot but, perhaps we should do as in other developments, say this is the lot and we want to see what will be placed on that lot. Mr. Fernelius stated we would certainly make potential bidders aware of our guidelines and all of this information would be available to them so they know what our expectations are. He did not think there would be any surprises. Before we convey the property, the development agreement could address those concerns. It is true we would be negotiating after accepting their offer, but we would have the ability to say we don't 13ke what they are proposing. We could choose not to sell them the lot. Mr. Commers stated not selling puts us in a different position. Mr. Hoeft agreed. But the way we would address this is, in the bid process, there is a page called Design Guidelines. The way he suggested they try to address that is that the bids be awarded upon the sale of the properties contingent upon a development contract. We could call it a sale agreement and redevelopment contract. The property is not transferred until the City has received specific plans and have reviewed and approved those planse If the plans are not approved, the sale does not take place. He thought this could be incorporated into the bid process. Mr. Meyer stated his experience with qovernment bids is that it takes a lot to eliminate a low bidder. Jim Casserly stated the point is well made, but what you do is incorporate in the bid process the fact that the property is going to be sold subject to these conditions. Mr. Meyer stated, as an example, a developer wants to purchase four properties and he has the high bid. But, we decide to give the contract to the second high bidder, and the first bidder does not like it and takes us to court. Mr. Hoeft stated a responsible bidder has to match their bid proposal with the specifications. An independent review will show whether the bidder meets the criteria set forth. If they meet all the criteria, you will have a hard time calling them an unresponsible bidder. Mr. Commers asked if potential bidders would expect asaistance from the HRA. Mr. Fernelius stated no. Ms. Dacy referred to the Design Guidelines and asked if there were issues about which the members had concerns. HOIISING � REDEVTsLOPMENT AIITSORITY MTa.. NOVSMB$R 10. 1994 PA6S 10 � . Mr. Meyer stated he is concerned that this 3s after the fact. We go from a very objective method of selling the lot and then go into a qualifications thing which is subjective. Then we go into the real subjective situation to decide whether or not the bidder is going to put the kind of house on the lot that we want. Beyond the initial objective part, we have steps of subjectivity to judicate and he is concerned we could find ourselves in a legal turmoil. Mr. Hoeft stated he heard Mr. Meyer saying we are selling the property in step one and this is step two. We are saying there is only one step which is to sell the property subject to this agreement and, if you do not comply with that agreement, you do not get title to the property. Mr. McFarland asked, if a private party buys the lot, are they subject to the standards of the City's zoning code. Mr. Fernelius stated there are zoning requirements to be met. These requirements would exceed the standards the zoning requires. . Ms. Dacy stated that is to ineure we get a good home on the � property of a size and value that is an asset to the neighborhood. We could be subject to a lot of criticism if we did not do this. The objective of this program is to remove the blight. Mr. McFarland asked if the HRA's requirements would drive down the price of the lands Ms. Dacy stated staff has tried to present this with the image that the HRA is out there owning and selling the lots and that we want to recommend some type of controls so we get a fairly high value on the house and spur the neighborhood. If we did not have controls, we could be subject to other issues. Mr. Prairie'stated, if the value would be somewhat higher, it would be okay. If it is way out of comparison for the next lot, then he was not sure it was a good idea. Mr. McFarland stated he did not think the requirements were that strict. The only thing is the lot is to be fully sodded. He did not think this was generally done. It is generally the front yard only that is soddedo He also thought they would want a two- car garage and one and a half bath. Mr. Hoeft stated the builder will take into consideration the restrictions on the property. The builder knows they do not have � control over the lot next door. If someone next doo= puts up HOIIBIN� � REDEVELOPMENT AIITHORITY MTa.. NOVSMHSR 10. 1994 PAaE il n what you might consider a substandard house, he �ill have a hard time selling his. Ms. Dacy stated the other issue is by law tYie I�tA must have a public hearing before selling the lot�. We must notify the neighbors of the hearing. She felt sure the neighbors would be at the public hearing asking questions about what will happen on that lot. Mr. Meyer stated he thought he had heard the whole deal is not consummated until such time the person's house ha� been approved by the HRA. That is not what he understood this to say. "Once award has been made by the HRA, each buyer will enter into a development agreement with the HRA to establish the following . .." He questions the opening words "Once the award has been made . . . �� Mr. Hoeft stated the award is not to sell the property outright. The award is made based upon the specifications of the bid. Mr. Meyer stated he sees an offer to buy a vacant lot. There is nothing in this statement to tie that to the design guidelinese �..� Mr. Casserly stated they do not have to go through a aompetitive bidding process for this program. There is another way to do that which is similar to commercial-type redevelopments. You could have an appraisal on the property and sell at that price. We can say what we want on that lot before they get title, we enter into an agreement, and a building permit is issued if the plan is approved. This is really no different. Instead of putting a price on the lots, we are suggesting they bid on the lots with these criteria, Mr. Meyer stated he thought the bidding process makes sense. He is trying to tie one thing to what he thinks to be the important part which is the design guidelines. He did not understand where legally, if someone fills out the form as presented, that he/she is tied to comply with any guidelines. Mr. Casserly stated the specifications are in the packet. They don't need to spell out that the home needs to match certain drawings. It is not necessary to get that specific. The award is not to sell the property outright. The award is for the sale of property subject to the development agreement they are told they must enter into and which must be approved by the City. If they do not, they do not get the property. Ms. Dacy stated it is a matter of informing the potential bidder of the guidelines. The bid package includes all the information �, including the design guidelines. HOIIBIN� & REDEVBLOPMENT AIITHORITY MTa.. NOVEMBBR 10. 1994 PA�B 12 �, Mr. Hoeft stated he was still comfortable with the title, nOffer to Buy a Vacant Lot". In the third paragraph, there is language they could add to make it clearer that this is subject to the development contracte Mr. Commers asked how a buyer gets financinq �ithout title to the property. ' Mr. Hoeft stated, once the sale and development agreement are entered into, the bidder takes that agreement contract to get the financing. Mr. Commers asked how they can secure a mortgage. Mr. Hoeft stated they take a guarantee from the title company who has title to the lot. Mr. Commers stated he does not want a lot tied up if a contractor defaults. Mr. Hoeft stated they could have a problem at any point in the process. That is why we need to review who is submitting the bids. � Mr. Prairie agreed with Mr. Meyer. If someone puts in a bid and we agree, we must take the high bidder. Mr. Hoeft stated the bidders are required under statute to have a performance bond. Mr. Prairie stated, even if we thiri]c they are marginal, we will have to accept the bid. Mr. Hoeft stated, if they require a specific level of performance bond and the bidder meets it, we have security from the bond company. The HRA may want negotiate, but this would be a good way to start the process. Mr. Meyer stated he thought it a good idea to take bida. When making plans and specifications, everything must be there. What staff has presented is vague. He wants to see on the forms that the bidder is to sign that they should agree to build a residence on this lot in accordance with the design guidelines and this shall be part of the negotiation process. Not to negotiate after the contract has been awarded. Mr. McFarland referred to page 2F, conduct public hearing. At the hearing, the HRA is to review the offers and give to the highest, most responsible bidder. %'1 HOIIBIN� & RED�VSLOPMgNT AIITSORITY MT�.. NOVEMH�R iQ. 1994 PAa$ 13 � Mr. Fernelius stated we are considering their offer but before we convey title the bidder must enter into a development agreement which spells out exactly what is to be put on the lot. If it is acceptable, we execute the agreement and go through the steps to close and convey title. We are not obligated to go with a particular bidder if we are not comfortable with them. If there is a problem, we do not convey the title. Mr. McFarland felt there were enough safeguards. On page 2F, nothing is final until after the hearing. Mr. Meyer asked the definition of the phrase, p... after the aware is finalized. . ." Mr. Casserly the award is not to sell the property. The award is to sell the property subject to the items as outlined. Mr. Meyer suggested the addition to the Offer to Buy a Vacant Lot of the wording which specifies the buyer shall construct a house on this property that shall meet the design guidelinese Mr. Fernelius stated the language could be changed to address these concerns. The guidelines �ere developed to bring before ,� the HRA for comment. Mr. Hoeft stated they will modify so there is no question and make sure every document states what we are after. Mr. Meyer stated asked why hardboard siding materials were not acceptable. Mr. Fernelius statecl the guidelines are based on those of the City of Crystal who operates a similar program. We are striving for maintenance free siding so that is why hardboard and masonite sidings were excluded. That is something that requires paint and maintenance. We are asking the bidder to construct a quality, maintenance free home. Mr. Meyer stated hardboard siding has gotten some bad names. It has improved over the years. A major contractor uses that on homes. He would like staff to check on this to see if hardboard siding is the standard for the industry. . Mr. Commers asked the Commission if they preferred to move the packet subjeet.to being redrafted or have staff bring it back. MOTION by Mr. Meyer, seconded by Mr. Prairie, to approve the disposition guidelines for the scattered site acquisition program with the understanding that staff will incorporate the � suggestions as discussed. xOIIBINa & R8D8VELOPMENT AIITHORITY MTa.. NOVEMHER 10, 1994 PAaB 14 � Mr. Meyer asked if the $500 earnest money was per lot. Mr. Fernelius stated it is spelled out in the bidding procedures that each offer must include $500 earnest money per property. IIPON A VOICE VOTE, ALL VOTINa AYE, CHAIRPER80N CO�RB DECLARED THE MOTION CARRIED IINANIMOIIBLY. Mr. Casserly referred to the memo from the City of Crystal. He is working to put together a program in Crystal which is like what Fridley is doing. This program suggests that a city go out and buy old properties, generally bliqhted parcels. The city is then clearing those parcels and selling them to new users. What has happened in this program is that there are very few resources. One can get CDBG funds, get a levy, get some money out of the state, but there is nothing for this kind of acquisition. One of the few reso`urces the HRA has is to try to create a tax increment district. This takes us back to the purest use of tax increments - buying blighted, under used properties; clearing them; and putting something of more value on them. There are a couple problems in law at this time in doing the original tax increment concept. ,..,� Mr. Casserly stated one is the Local Government Aid Fund. They took the values of the sites that Crystal is acquiring and put in what they thought the value of the future homes on those sites would be. They assumed the City would do this for five years, so there would be 25 homes involved in this program. We then create a single tax increment district and, at the end of each year, keep including additional homes. Over a period of the life of this district, one could raise about 2/3 of a million dollars. We are assuming the values of future homes to be $80,000 to $120,000. If you get higher value homes, you can generate additional increments. What we would like to accomplish with this program is to have an orderly proqram where we take sites acquired, put those parcels to a very special kind of tax increment district, capture the increased value from putting new homes on those parcels, and pledge that money for reuse in the program. What is going to happen is that we will need these funds to keep•recycling. i�1e are probably going to have to do a� we have already done - use surplus revenues toward housing program, probably have to do a levy and find funds to place in the program. This is one more funding source. We are trying to get approval that the concept of the program makes sense. He will be working with several folks to introduce legislation. He thought Fridley could profit from this type of program. We get rid of the local government aid penalty. Some of the sites that were acquired would not qualify in a redevelopment district because they have been cleared. The reasons to create a tax �''1 increment district no longer exists because the site is clear. When creating a housing distr_ic* ar�d �ou could put these into a HOIIBINa & RBD�VELOPI�ENT AIITHORITY MTa.. NOVEMBER 10. 1994 PAa$ 15 � housing tax increment district, you then run into all the lot income guidelines so the only kind of housinq that can go into the district would be for people whose income meet the guidelines. That may work for some, but the HRA is working to get diversity of housing. The HRA 3s trying to take out dilapidated housing and get higher value housinq. Mr. Casserly stated we therefore need a separate kind of tax increment district in a housing replacement tax increment district so we have some versatility in dealing with suburban housing renewal replacement objectives. If the state acts on this, it could be misused by wealthy communit�ies. It would be nice to have it limited to cities such as Crystal, Richfield, Fridley, etc. because those are the communities engaged in these programs. This goes back to why tax increment was originally put into the statutes and for what its original use was intended. You will be involved in a housing replacement cycle and need to make sure that needs do not outstrip resourcess Any resource you can get is worth pursuinge Mr. Casserly stated, if we cannot include the parcels we are talking about now, he thought they should do this program for the next group. Everything acquired would technically meet the � development criteria. There are problems with being able to move funds around and there is a five-year limitation to spend funds. He would like to draft a bill that strips out the restrictions but yet makes the use limited. These are funds that would be used solely in the program. Mr. Commers asked what the cost would be to the.HI2A for that. Mr. Casserly stated he would like to share that with the communities that would like to participate and allocate his time between them. Any housing program administration costs will be far in excess of what is allowed in the statutes. This is a program that will generate some revenues. He will draft legislation, come back and ask for a resolution to authorize the legislation. Commission felt this sounded like a good program and one they felt they should support. MOTION by Mr. Prairie, seconded by Mr. Meyer, to authorize Mr. Casserly to go forward to develop legislation for a housing replacement tax increment district. IIPON A VOICL VOTL, ALL VOTIN(� AYE, CHAIRPEItBON COl�IERB DBCLARED THE MOTION CARRIED ONANIMOIIBLY. � 3. APPROVE CONVEYANCE OF RIGHT-OF-WAY ALONG 8280 EAST RIVER -_ ROAD N.E. 80IISINa & REDEV�LOPMENT AIITHORITY MTa.. NOVEMH$R ip. 1994 PAaE 16 �"1 Mr. Commers stated he did not know it had been the practice to convey a right-of-way without cost. Ms. Dacy stated this is what the Department of Public Works has advised. The xx� aia ao this in the Mississippi Street area at the Southwest Quadrant. Mr. Commers stated 3,000 square feet is worth a few thousand dollars. What does that do the remaining area and what are the building requirements? Ms. Dacy stated the minimum lot area is 9,000 square feet. The remaining lot will exceed that. Mr. Commers stated, otherwise, we would have had two lots. By conveying this property, we will be down to only one lot. Ms. Dacy stated Mr. Fernelius talked to Anoka County about that. Fdhen we bought the property, because of the lvcation on a busy street, we talked about splitting the parcel into two lots. We agreed not to do that because we felt we could get a better price and a nicer home if we kept it as a larger lot. �„� Mr. Fernelius stated he talked to the County, who said our failure not to make plans was a damage for which we could not be compensated. They did make a offer to pay for this piece of property, but it is my understandinq the City conveys the right- of-way at no cost. Ms. Dacy stated the offer based on their appraisal was $4,400. 5he had a conversation with Mr. Flora. His recommendation was that we continue that policy. That does not mean in the future you need to adhere to that. The County portion on that segment has been controversial. His point is to cooperate with the County. Mr. Commers asked the difference between selling one lot versus being able to sell two lots. Mr. Fernelius stated the difference is speculation. Mre Commers asked the selling price for a 9,000 square foot lot. Mr. Fernelius stated a lot of this size might sell for $10,000 to $15,000. Ms. Dacy stated this is also along a busy highway. Staff thought it better to package it as one lot and have a nicer looking home. She cannot answer what the difference in sellinq price would be. r� She thought the approach was good because, if 3,000 square feet � HOIIBINa & REDEVSLOPMENT AIITHORITY MT�.. NOVEMHBR 10. 1994 PAd� 17 � is going to be taken, in order to sell that lot, we�would want to preserve as much as possible. Mr. Commers asked if the HRA could get a resolution from the City Council telling us that this is what they do and that is what they recommend we do. If that is a policy, he would like to see that policy. Someone ie telling us we should give this for nothing because that is the City policy. If that is true, he would like to get something from whoever makes that policy saying so. He has no problem conveying the property at no cost if that is the policy, but he sees nothing that says this. He would like something in our record to show what the issue is and who has made that poli�y. Mr. McFarland asked if this was typical practice of all cities in Minnesota. Ms. Dacy stated no. Mr. Flora advised Ms. Dacy that, in his experience in the City on improvement projects, the City has provided the right-of-way at no cost. Mr. Prairie stated he was sure that cities, counties, and the state do this��all the time. If the City receives property and ,.� the County receives property, it is then a wash. There are other things they swap. Mr. Burns stated this is an administrative policy that has been required by the County. Mr. Commers stated that then should be uniform throughout the Countye Mr. Fernelius stated, in conversation with Mr. Mike Kelly, Mr. Kelly mentioned the owner to the north of the property owned by the HRA made the same claim to split the property. That owner had no plans on the drawing table and the County told him they would not pay additional compensation for his inability to divide the property. Mr. Commers stated, if that owner does not want to cooperate and wants to hold out, he can tell the County to condemn the property and he will then get the full value. We do not want to get into that. He is asking to find out what the policy is, to make sure we are being treated the same as everyone else, and if that is our policy have the Council decide that is the policy they want to follow. Mr. Burns stated there are so many agenda items and issues, and this adds to the jam and the process. He did not think it was � really necessary. The City provided land to the County when the HOIIBINa & REDEVSLOPMENT AIITHORITY MTa.. NOVBMS$R 10. 1994 PAaB 18 n fire station was built on East River Road. Before we do it, we should find out by what authority we have done so in the past. Mr. Meyer stated another way of looking at it is that all of know it will make a better City to have turn lanes there. If there is a way we can aid by giving several thousand square feet, it is a good trade to get a portion of Eaat River Road cleaned up. He thought it an inexpensive way to improve East River Road. Mr. Burns stated he thought it is fair and legitimate to asked that we convey this property from the City to the County and that it is either implicit or explicit is some agreement. It may be a part of the joint powers agreement. Staff will look at that before asking the City Council to proceed with a policy on this item. Mr. Commers stated he agreed the bottom line is that we will give the property to the County. Irrespective of the cost, the HRA will do what is necessary to improve that street. He is not opposed to conveying the property to the County, but he wants to get it straightened out as to how and why this is qoing on. Mr. Burns stated he thought what exists is that the County has a � list of guidelines that are used for any construction project. He thought the right-of-way was referenced in the joint powers agreement entered into before starting into the project. The difference here is that we are not involved in the construction of the street. That is why the i�tA is not beinq asked to sign a joint powers agreement. Mr. Commers asked staff to check on this and report back to the HRA at the next meeting. Mr. McFarland stated it seems strange that we buy this scattered site in May and, in this case, make a 3,000 square foot contribution to the County. Ms. Dacy stated staff did not know this at the time the property was acquired. Initially, we thought we would get something back alsoe MOTION by Mr. McFarland, seconded by Mr. Meyer, to accept the recommendation of staff to approve the of 2,970 square feet for the right-of-way at 8280 East River Road at no coste IIPON A VOICE VOTE, ALL VOTINa AYE, CHAIRPERSON COMMERB DECLARL�D THE MOTION CARRIED IINANIMOIISLY. � � ,�-"1 � HOIIBINa & RLDEV�LOPMENT AIITHORITY MT�.. NOV�lB$R 10. 1994 PA�� 19 4. REVENUE AND EXPENSES Mr. Ellestad presented the expenses, additional expenses needing approval, and i�tA portfolio inventory as requested at the last meeting. MOTION by Mr. McFarland, seconded by Mr.• Prairie to approve check register #25332 to #25339 and the additional expenses as submitted. IIPON A VOICE VOTE� ALL VOTIN(� AYF, CBAIRPTR80N COI�IIKERB DECLARED THE MOTION CARRIED DNANIMOIIBLY. 5. FOLLOW-UP INFORMATION REGARDING THE HOME PROGRAM Mr. Commers asked how many applicants from last year were completed. Mr. Fernelius stated the 13 from last year were completed. This year, of the 23 approved, perhaps 6 actually are completed. Keep in mind that we did not start the program until July. There are inspections and application processing that need to be done. The majority are under way. Mr. Meyer asked if staff had gotten any feedback on the contractors doing the work and if there were any negative commentse Mr. Fernelius stated staff had not gotten negative comments in terms of this program. Everyone ha� been, he thought, satisfied and pleased with ACCAP. ACCAP made a special effort to make our people a priority. They started in with the inspections and made sure everything was done in a timely fashion. They have done a very satisfactory job with the program. Mr. Fernelius stated, in the other programs, they have not seen the applications we would have liked. They will look at those programs and see if they can determine a way to improve them. Mr. McFarland asked if the Average Household �Income was the average income or total household income. Mr. Fernelius stated this was the total household income and includes income from all sources. This program is the deferred payment grant program so part of the loan is forgiven and the remainder is not repaid until the house is sold. Mr. Commers asked what that income level meant. Does this mean that 10� of the population in the City is at this level? HOII8INC3 I� RBDEVSLOPM�NT AIIT80RITY MT�.. NOVEMHER 10. 1994 PAaE 20 � Mr. Fernelius stated he did not know the statistics. HUD would look at someone earning this level as very low income. Ms. Dacy stated staff can bring to the next meeting a chart of how the City breaks out on income. 6. UPDATE ON DEMOLITION BIDS FOR 550 HUGO STREET. 677 HUGO STREET. AND 683 GLENCOE STREET Mr. Fernelius stated this is an information item. The information includes a summary of the bids. On this particular bid project, they ran into a problem in that the properties contain asbestos in some form. The Federal regulations have changed and the regulations are much stricter in disposal of those materials. In the future, staff will have a consultant look at these properties and determine if there is asbestos or other hazardous materials to have it removed if necessary so there is no delay. On this project, we now have a delay of about 20 days so demolition will not get started until the end of November. Some of the final grading may not be completed this fall. Mr. Commers stated, if you do this before acquiring the property, � it may have a bearing on the value of the house. 7. MONTHLY HOUSING REPORT Mr. Fernelius stated the summary is for the HRA•s information. There are some applications in the process for the Home Mortgage Assistance Program. The lender is having some problems in getting in touch with people and getting them to follow through on what they need to do. This is one of the programs to be evaluated to see what changes need to be made in order for it to be successful. 8. iTPDATE OAT ANORA COUNTY HRA Ms. Dacy distributed copies of a memo from Mr. Casserly regarding the Anoka County.HRA. Mr. Casserly stated he attended a meeting with County officials. Some questions were raised and he essentially repeated in the memo the questions that were asked to him. Can the County establish a tax increment dietrict in the City without HRA or City Council approval? Can the County HRA do an economic development project, a redevelopment project, and/or housing redevelopment projects? As a practical matter, they cannot do anything without City Council or HRA appsoval. The enabling legislation that authorized their authority has a local approval provision in it, and that local approval is very specific. The question is whether they should establish a County HRA. HOIIBINa � REDEVELOPMEI�T'1' AIITHORITY MTm.. NOVI�MH$R 10, 1994 PA�E 21 � Mr. Commers stated, even though we may levy taxes, the County HIZA can tax us for whatever projects they do even if they do not do anything in the City of Fridley. Mr. Casserly stated this was correct. It is the same theory that we do an HRA project in one ward of the City, we can tax the entire City. They are subject to the same restrictions and cannot levy at a greater rate than what the HRA can levy. Mr. Casserly stated, if they want to proceed,� it.is worth the City and the HRA looking at what it is they are trying to do and find out if there are ways to cooperate. He thinks they would be looking at housing projects. Mr. ]Prairie asked if this was being considered becauae there are areas in the County that are not covered by an HRA. Mr. Casserly stated he was not sure. Mr. Burns asked if they planned to take over the Section VIII programs. Mr. Casserly stated this may be. There will be interaction with ^ the metro, county and local HRA's and he suspects there will be legislative discussion to find more resources for housinq programs to be promoted by HI2A's. It may make more sense to put the HRA at the County level. Mr. Burns stated the basic conflict is that our motivation is to improve values. He thought the potential County motivation is for social service goals rather than property values. Mr. Commers asked if the City Council had adopted a position in support of or in opposition to a County HRA. Mr. Burns stated the Council has not adopted a position. There has been informal discussion. Ms. Dacy stated the County has formed a committee. The City Council may wait until there have been some meetingse 9a REVIEW OF EXPENDITURES FOR REDEVELOPMENT OF THE SOUTHWEST QUADRANT AND LARE POINTE Ms. Dacy stated, at the last meeting, the HRA asked staff to put together some proposed expenses. Staff put together expenses for professional services needed for the Southwest Quadrant and potential costs if we cannot negotiate an acquisition price with� the Suhs. �, HOIIBING � RBDEVEI�PMENT AIITHORITY MT�., NOVEMH�R 10. 1994 PA�E 22 � Ms. Dacy stated the Phase I audit came back late last week. Because of the tanks on the automotive building were removed in the early 1980's prior to current regulations, Mr. Leisch recommends we do soil sampling to assure there is no contamination. Based on previous experience, the costs can range from $2,000 to $10,000. There were three tanks removed. It may be possible that we will not have condemnation costs or attorney fees for the Suhs. Ms. Dacy stated staff are recommending hirinq Clark Engineering to update the survey on the ten acres. The City has a 1985 survey, but much has changed. Mr. Commers asked if this survey would be final. Ms. Dacy stated this is a boundary survey. This survey would be used for the plat. � Ms. Dacy stated the meetings on the I�ke Pointe property are going very well. They are getting good feedback. At most of the meetings, the typical question is, "Do you have a Phase I audit on Lake Pointe?" She got a quote from Mr. Leisch for a Phase I audit for $2,473. Between 1949 and 1957, the site was used for a � bus garage. There may not be a need for an audit. �� Ms. Dacy stated a survey is requested for Lake Pointe. They will need to reset the boundary corners in order to replat the survey. The work may go faster based on the field notes Sunde Land Surveying has to date. The City does not have an as built survey for what is on the property. The boundary survey may not cost as much as quoted. Staff is requesting authorization to get this wrapped up with an amount up to $7,700. MOTION by Mr. Prairie, seconded by Mr. Meyer, to authorize staff to hire Clark Engineering to do the survey for the Southwest Quadrant, to approve a Phase I audit for Lake Pointe, to approve a Phase II audit for the Southwest Quadrant, and to authorize the survey for the Lake Pointe property. IIPON A VOICE VOTE, ALL VOTING AYE, T8E MOTION CARRIED IINANIMOIIBLY. 10. UPDATE ON LARE POINTE MARKETING l_ 1�15 � Y � `2 ��=� �l �1�5 �i` �j `"t �� Mr. Burns stated they haci a visit from a potential user last week by Mr. Nath, head of the Torchwood Group. This group owns 27 Burger Ring restaurants and is the company who has the Burger King at 85th. They employ 1800 people and have office space located west of Sheraton Park Place at I-394 and Hiqhway 100. Their lease runs out at the end of 1996, and Mr. Nath is very interested in approximately 50,000 square feet of office space on HOIIBINa � REDEVSLOPMSNT AIITHORITY MT�.. NOVEMHER 10. 1994 PAaB 23 � the Lake Pointe site. He would like it to be. a contemporary design and promises this would be Class A office space. Based on comments made by others, he has the financial wherewithal to do this. The question is whether or not we want a project that is as small as 50,000 square feet as a first project on this site. Part of Mr. Nath's motivation is that he lives in North Oaks and this location is convenient. Mr. Prairie stated this is smaller than what they had envisioned. Mr. Burns agreed. He discussed this with the City Council, and they felt that it might be all right if we put them on the east side where we had planned to put the hotel, bank and restaurant. He thought the site originally thought to be a bank site might be a good location. There are about eight acres on the east side that is separated from the main body of land by the access road. Mr. Prairie asked what the developers think about the importance of the first building going up. Mr. Burns stated he thought it has to set the tone for the rest of the development. He thought it would make a difference if they put this building on the smaller property. ^ Mr. Prairie asked if there had been any conversat3on with Medtronic. Mr. Burns stated he had not talked to them in the last month. The last time he spoke with them, they were evaluating their five-year building plan. There was no formal commitment. ° Mr. Prairie stated Medtronic had a list of things they were going to do and he thought they had accomplished all of those things. They are building around the world. Mr. Burns stated staff did induatrial retention visit to them this summer and at that time they were in a holding pattern with their local headquarters and employment base in the City. They are doing some reorganization to get a higher productivity with fewer employees. He did not get the impression they were looking for a new corporate headquarter site. Mr. Meyer suggested staff talk about this with the market consultants. The question regarding the first building on a site is an important question. Mr. Burns stated he thought this was a question they should raise with the marketing consultant. He did not think moving th�is to the east side would hurt their chances. ,�-� Mr. Commers stated this is a very visible site. SOIISINa � RFDEVBLOPI+�ENT AIITHORITY MTa.. NOVEMHER 10. 1994 PAa$ 24 � Mr. Prairie asked if this would be a place for a hotel. Mr. Burns stated there would still be room for a hotel. Mr. Nath is proposing a three-story, 50,000 square foot building. Mr. Meyer stated he thought it would be good to have a neutral type of business at the entrance. If built there, it sets the tone for whatever comes into the site. . Mr. Burns stated he is assuming we can work with Mr. Nath on the architecture and get a consensus on the style. Would we want to deny this project based on the size? Mr. Prairie stated it depends on what the experts tell us. Mr. Commers stated they should question the experts to see what they think. Mr. Burns stated he will bring in the market consultants. Mr. Prairie thought there was much vacant office space. Mr. Burns stated the vacancy rates is less than 10� right now. � If someone wants 10,000 square feet, they have a hard time getting it. He is also hearing that some of the easy deals for Class A office space are no longer available. There is a market for Class A space and there may also be a market for Class B office space. Mr. Prairie asked if they would be optimistic to see if someone would come in. � Mr. Burns stated the best strategy may be to wait and see the results of the advertising campaign. On the other hand, this is a substantial project. Mr. Meyer stated the memo covers some things talked about. The design criteria should be prepared for the buildings in order to insure the quality of the architecture will be consietent throughout the development. This implies that we should get design criteria established by which to judge a proposal. Mr. Burns agreed. He also thought they need to be discussing some financial options for making land available to prospective tenants. Mr. Casserly stated our analysis was done on the baeis of having one developer. We can have more than one developer but we then need to do some of that ourselves. If this is a hiqh quality ^ building, it could set the tone. The problem is going to be n � ;�1 HOIISINa & REDEVSLOPMENT AIITHORITY MTa.. NOVEMHER 10, 1994 PAaE 25 figuring out the parking. That is where we will need help from the professionals. Mr. Meyer stated he thought it would be intere�ting to ask the consultant if it would be profitable to have an architect do a campus plan, do prospective builders want that, and how will parking be handled on the site. Mr. Burns stated they may want to consider a parking ramp. Mr. Meyer stated, when we get to that point, we need an overall plan. There is also the problem with the series of pads already there. It will be a miracle if a prospective builder uses those pads. Mr. Commers asked staff to continue getting information. 11. UPDATE ON ACCAP�S APPLICATION TO MHFA Ms. Dacy stated the memo was for their inforn�ation. The application is underway. OTHER HII8INE88 12. HRA PROPERTY TAXES Mr. Commers stated, on the two properties that the HRA leases out, the HRA must pay taxes. He did not think this true. Ms. Dacy stated, on the Dairy Queen, we were reimbursed for taxes. On the fast food property, we have been paying the property taxes. Mr. Ellestad stated, since we are leasing and this is a business corporation, we are collecting the taxes from theme Mr. Commers stated this is an ad valorem real estate tax on this property and this should be assessed as a tax directly against the tenant. Mr. Casserly stated he would look into that. 13. JOINT MEETING Ms. Dacy stated she included a letter sent to the developers on the joint meeting. The next meeting will be December 5th with the City Council and the regular HRA meetinq will be on December 8th. If there is a lack of regular items, the regular meeting can be cancelled. n HOIISINa � REDEVELOPMENT AUTHORITY MTa.. NOVEM88R 10. 1994 PAa$ 26 14. CONIlKENT RECEIVED REGARDING THE SOUTHWEST OUADRANT Mr. Commers stated a citizen has talked to staff and is suggesting that we talk to the developers to consider building a skyway across the intersection of Mississippi and University and that the senior housing have some retail space on the ground level for the seniors. MOTION by Mr. McFarland, seconded by Mr. Meyer, to adjourn the meeting. IIPON A VOICE VOTTs � AI.L VOTINC,� AYE � CHAIRPER80N CO1�ER8 DECLARED THE MOTION CARRIED AND THE NOVF�LR 10 � 1994 � HOIIBIAT�3 AND REDEVELOPMENT AIITHORITY P�EETIN� ADJOIIRNBD AT 1Os30 P.M. Respectfully submitted, C� � �` l�Ut/ Lavonn Cooper �..� Recording Secretary ,�