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HRA 11/09/1995 - 29587/�: CITY OF FRIDLEY 80IIBINQ � REDEVELOPMENT AIITHORITY MEETIATG NOVEMBER 9, 1995 CALL TO ORDER: Chairperson Commars called the November 9, 1995, Housing and Redevelopment Authority meeting to order at 7:30 p.m. ROLL CALL• , Members Present: Larry Commers, Virginia Schnabel, Jim McFarland, John Meyer, Duane Prairie Members Absent: None Others Present: William Burns, Executive Director Barbara Dacy, Community Development Director Jim Hoeft, HRA Attorney Jim Casserly, Financial Consultant Rick Pribyl, Finance Director Grant Fernelius, Housing Coordinator Craig Ellestad, Accountant ^ David Zuk, 122 - 102nd Avenue Carl Zuk, 281 Rice Creek Terrace Dave Ristamaki, 18225 Deerwood Lane, Wyoming, Minnesota Oliver Tam, 1160 Fireside Drive Brad Dunham, Whitney Homes Diane Schommer, 543 Janesville Street APPROVAL OF SEPTEMBER 14 1995 HOUSING AND REDEVELOPMENT AUTHORITY MEETING: MOTION by Ms. Schnabel, seconded by Mr. Prairie, to approve the September 14, 1995, Housing and Redevelopment Authority minutes as written. IIPON A VOICE VOTL, ALL VOTING AYE, CHAIRPTRSON COIKMERB DTCLARED THE MOTION CARRIED IINANIMOIISLY. CONBENT AGENDA: 1. CONSIDER APPROVAL OF CONTRACT FOR PREPARATION OF TRAFFIC, NOISE. AND AIR STUDY. AND PREPARATION OF INDIRECT SOURCE PERMIT APPLICATION 2. CONSIDER APPROVAL OF CONTRACT WITH LARKIN HOFFMAN DALY & LINDGREN. LTD., FOR IMPLEMENTATION SERVICES FOR LAKE POINTE ENVIRONMENTAL PERMITS � HOIISING & REDEVELOPA4ENT AIITHORITY MTG.. NOVEMBER 9. 1995 PAGL 2 �� 3. CONSIDER RESOLUTION PLEDGING INCREMENTS FOR THE SERIES 1995A BOND ISSUE 4. HYDE PARK HOUSING PROGRAM UPDATE 5. HOUSING PROGRAM UPDATE 6. HOUSING REPLACEMENT PLAN AND SCATTER-SITE PROGRAM UPDATE 7. SOUTHWEST OUADRANT BUDGET UPDATE 8. REVENUE AND EXPENSES Mr. Ellestad distributed copies of additional expenses for approval. These additional expenses reflect the pay off of the three-year temporary bonds issued in 1992. These bonds are maturing in December. Mr. Hoeft stated the 1995A bonds are the same type of bond. This is a three-year issue and would have the opportunity for early call and reissue. Mr. Commers asked what expenses are associated with the issuance of these bonds. Mr. Ellestad stated the total allowable expenses budgeted is approximately $10,000. Mr. Commers asked if there was any payment or principal reduction on the original issuance. Mr. Ellestad stated no, there was only interest. This will be only interest also. MOTION by Mr. Prairie, seconded by Mr. Meyer, to approve the consent agenda as presented. IIPON A VOICE VOTL� ALL VOTING AYE, CBAIRPERSON COMMERS DECLARED THE MOTION CARRIED IINANIMOIISLY. ACTION ITEMS: 9. CONDUCT PUBLIC HEAR.ING REGARDING SALE OF PORTION OF 533 JANESVILLE STREET N.E., AND APPROVE RESOLUTION AUTHORIZING THE SALE THEREOF MOTION by Ms. Schnabel, seconded by Mr. Meyer, to open the public hearing. � IIPON A VOICE VOTE� ALL VOTING AYE� CBAIRPERSON CONII�IERB DECLARED `° T8E MOTION CARRIED AND T8E PIIBLIC HEARINt3 OPEN AT 7:35 P.M. HOIIBINa & REDEVELOPMENT AIITSORITY MT�.. NOVEMBER 9. 1995 PA�E 3 � Mr. Fernelius stated the area in question is approximately 1,375 square feet of the parcel located at 533 Janesville Street. One parcel measuring approximately 20 feet x 50 feet would be conveyed to Mr. John Olson at 538 Kimball Street, and another parcel measuring approximately 15 feet x 25 feet would be conveyed to Mr. John Koehler at 528 Rimball Street. Both parties have indicated an interest to pay the HRA $875.00 ($0.60 per square foot) plus any survey and legal costs involved in the transaction. Mr. Fernelius stated the sale was subject to approval of a Lot Split by the City Council. The Planning Commission approved the Lot Split on October 18, and the request will be considered by the City Council at their next meeting. If approved by the City Council, the sale can proceed. Ms. Schnabel asked if there were any easements through these parcels. Mr. Fernelius stated no. No one was present from the public to comment on this item. %� MOTION by �Is. Schnabel, seconded by Mr. Prairie, to close the public hearing. IIPON A VOICE VOTE, ALL VOTINGr AYE, CBAIRPER80N COMMERB DECLARED T8E MOTION CARRIED AND T8E PIIBLIC HEARINa CL08LD AT 7s39 P.M. Mr. Commers stated, since there are no objections or comments, he would recommend approval of the request. MOTION by Mr. Prairie, seconded by Ms. Schnabel, to approve a Resolution to Approve the Sale of a Portion of the Property at 533 Janesville Street N.E. QPON A VOICL VOTE, ALL VOTIN(� AYE, CHAIRPERSON COMMERB DECLARED THE MOTION CARRIED IINANIMOIISLY. 10. CONDUCT PUBLIC HEARING REGARDING SALE OF SIX LOTS. LOCATED AT 5720 POLK STREET, 5973 - 3RD STREET, 5981 - 3RD STREET, 5924 -2ND STREET, 533 JANESVILLE STREET. AND 623 LAFAYETTE STREET. AND APPROVE RESOLUTION APPROVING THE SALE THEREOF MOTION by Ms. Schnabel, seconded by Mr. Meyer, to open the public hearing. IIPON A VOICL VOTL, ALL VOTING AYE, CHAIRPERSON CONIIKERB DECLARED � THE MOTION CARRIED AND THE PIIBLIC HEARING OPEN AT 7:42 P.M. , � HOIIBIN(3 & REDEVELOPMENT AIITHORITY MTa.. NOVEMBER 9. 1995 PAaL 4 Mr. Fernelius stated six sites were advertised for sale under the scattered-site program. Staff advertised for bids in the Twin Cities Builders Association and also placed signs on the lots. From that, staff received approximately 30 inquiries. Staff has received offers on the lots, as follows: 5720 Polk Street - Four offers were received. The high bidder is Whitney Homes with a bid of $20,000. 5924 - 2nd Street - Three offers were received. The high bidder is Tam's Inc. with a bid of $12,000. 533 Janesville Street - Five offers were received. The high bidder is Diane Schommer with a bid of $19,500. 5973 - 3rd Street - Three offers were received. The high bidder is Tam's Inc. with a bid of $6,000. 5981 - 3rd Street - Three offers were received. There was a tie in the bidding with Tam's Inc. and Whitney Homes both bidding $4,000. 623 Lafayette Street - Three offers were received. The high �� bidder is Tam's Inc. with a bid of $18,500. Mr. Fernelius stated, at this point, the high bidders will need to execute a sale and development agreement with the HRA within 45 days or December 24, 1995; and provide proof of a letter of credit. The HRA would then approve the sale and development agreements either in December or January. After the agreements are approved, each bidder would then need to submit their house plans and site plans for the HRA to review and approve. The bidders then must finalize their construction schedule and close on the actual sale of the lots in order to have title to the property. They would then proceed to get the building permits and any other approvals required. Work can then begin with the understanding that the work is to be completed by June 30, 1996. Mr. Fernelius stated staff's recommendation is to award the sale of the properties to the high bidders subject to each bidder agreeing to a sale and development agreement with the I�2A by December 24, 1995. Staff also recommends the HI2A reject the offers received for 5981 - 3rd Street and that this property be rebid with a deadline of December 1, 1995. Mr. Commers asked the location of this lot. Mr. Fernelius stated both the 3rd Street properties are located �"� near the slip-off ramp from University onto 3rd Street. The lots back up to University Avenue. This is a high traffic area and ` there are several multi-family �roperties in that area. There is �� HOU8ING1 & REDEVELOPMENT AIITHORITY MTa.. NOVEMHER 9. 1995 PAaL 5 a concern on the part of the bidders that the house values may not be very high. The bids reflect this concern. Mr. Meyer stated the HIZA has had experience with Whitney Homes. He asked Mr. Fernelius what staff knew about the other high bidders. Mr. Fernelius stated he had done some checking. Mr. Tam is the owner of Tam's Rice Bowl in Fridley. He has built a number of homes, one of which was local. He has submitted some drawings of the potential house plans that he would offer to prospective buyers. He is licensed by the State of Minnesota as a building contractor, and he has provided a list of his materials providers and subcontractors. He is in the process of obtaining a letter of credit from Northeast State Bank. He should be getting approval on that in the next few weeks. If the award is made tonight, he will have 45 days to provide that letter of credit and firm up the house plans to be submitted for approval. Mr. Fernelius stated Ms. Schommer is working with Four Diamond Builders based in Coon Rapids. They have built 15 homes in the two years they have been in business in the $90,000 to $145,000 price range in the northern suburbs. They are a licensed building contractor. According to the City's building official, they have a good reputation. Staff believes all bidders who have submitted bids are responsible bidders. Mr. Meyer asked if, in the case of Ms. Schommer, they were dealing with an individual or a company. Mr. Fernelius stated they were dealing with an individual in terms of a development agreement. The builder will be providing a letter of credit on Ms. Schommer's behalf. She has a building contractor set up who would like to proceed. The builder has submitted plans for a split entry home that he would like the HRA to approve so they can get the building permit and start construction this fall. Mr. Meyer asked why the builder was not the bidder rather than the individual. Mr. Fernelius stated this was not set up as a requirement. The bids were open to anyone who could meet the requirements. The biggest requirement was a letter of credit. Whether the individual or builder provides that letter of credit, the HRA has the security it needs and Ms. Schommer has met the requirements in that regard. ,� Mr. Prairie asked if both names could be put on the agreement. � Ii0II8INGg & REDEVELOPMENT AIITHORITY MTa.. NOVEMBER 9. 1995 PAGS 6 � Mr. Hoeft stated they could but Ms. Schommer will be the only party that is liable. The builder may want to be included on those documents because he will be the one putting out the cash. Mr. Commers stated he presumed Ms. Schommer would live on the property. She has a builder to build her home. He did not see that as being unusual. Mr. Meyer asked, if we are giving a builder property to build a home, why enter into an agreement with an individual. Mr. Hoeft stated the homeowner is buying the lot. Mr. McFarland stated the I�2A is protected by the letter of credit and the mortgage. The HRA has ample collateral. Mr. Hoeft stated the bidder must meet all the requirements. Mr. Meyer asked why staff recommended the property at 5981 - 3rd Street not be sold. Mr. Fernelius stated this was done to get a higher price and to resolve the issue of who will actually get the lot. �, Mr. Meyer stated there is also the option of selecting another bidder than the high bidder. If we wish to award the lot to Habitat for Humanity for $1.00, do we have the option of doing that? Mr. Fernelius stated the guidelines adopted by the HI2A indicates the bids would be awarded to the highest, most responsible bidder. Mr. Hoeft stated, because we have determined through staff's investigation that the two bidders who tied for high bid are responsible, we cannot just kick them out and award the bid to someone else. We have the opportunity to reject the bids in this case because there is a tie and then the HRA could make a policy decision that, instead of putting this property on the floor, they want to donate the property or sell the property for $1.00 to Habitat to Humanity. He did not feel the HRA could do that at this point because that is not how the bids were presented. Mr. Meyer stated, if we have determined a lot is not highly esteemed by the bidders and there is a possibility for Habitat for Humanity coming in and building a house, he would be interested in considering something like that. n Mr. Hoeft stated this has done that a number of times in Columbia Heights where they have a number of new houses under the same '�" type of development contract. They have had some success there. HOIISING & REDEVELOPMENT AIITHORITY MTG.. NOVEMHER 9. 1995 PAGE 7 Mr. Commers asked for comments from the public. Mr. Dunham stated Whitney Homes has the financing approved at the same bank so they do not need the 45 days with respect to their bid on 5981 - 3rd Street. They have a letter of credit for all the lots for which they have bid. He felt Whitney Homes had done a good job on those lots they have done. He provided pictures of the homes built on these lots. He would like to suggest they get the second lot. Mr. Commers stated he was nct sure that would make�a difference in terms of the criteria. They have had good experience dealing with Whitney Homes. Mr. Dunham stated he makes the case that Whitney Homes is responsible and ready. They have all the licenses, the letter of credit, and would not need the 45 days. Mr. Prairie stated the rebid date is December 1, which is relatively soon. Mr. Hoeft stated, with regard to the responsibility factor, staff has made its investigation. On that information, we have made a !� determination that Tam and Whitney are responsible bidders. While he understands Whitney Homes' position, Whitney must remember they were in the same position as Tam's in the last round of bids because we had no experience with them either. Whitney proved to work out well, and the City had success in dealing with them. We do have criteria that allows Tam's Inc. to provide the financing and security in 45 days. If they did not do that and because the award is contingent, the HRA would not then have to rebid these properties but could move down to the next highest responsible bidder. At that point, they could award the bid to Whitney. Because Tam's Inc. in a responsible bidder, we have to allow them to meet the 45 day requirements. If they do not perform, then we have a history to use for any other lots that come up subsequently. Mr. Commers asked if there were any other lots available through the scattered-site program. Mr. Fernelius stated one lot is now available. The goal for next year is to have the same number as this year. Through the housing replacement program, they can do up to ten lots per year. Mr. Tam stated his family has been in Fridley for 23 years operates a restaurant here. They have been operating the restaurant all that time. That shows they are just as �"'� responsible as any others in the community. He appreciated the help and assistance from the City over the years. and all HOIIBIN(� & REDEVELOPMENT AIITHORITY MTa.. NOVEMBER 9. 1995 PAaE 8 � Ms. Schommer stated she made the bid herself. The lot is next door to her mother's house. She has been pre-approved. She has checked the builder. She has given Mr. Fernelius the plans. The house plan that she picked is already built in Elk River, if anyone would like to look at it. She has all the financing and every is set to go. They plan to close on February 29, if everything goes well. She did not know what else she would need. There were no additional comments from the public. OTION by Ms. Schnabel, seconded by Mr. Prairie, to close the public hearing. IIPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERB DECLARED T8E MOTION CARRIED AND THE PIIHLIC HEARIN(3 CL08ED AT 8:03 P.M. Mr. Commers stated staff's recommendation was included in the agenda packet. He asked to make a recommendation to award the lots to the five highest bidders and to withdraw the lot at 5981 - 3rd Street from consideration of the award. Mr. Fernelius distributed a revised resolution which reflects the this information. � MOTION by Mr. Meyer, seconded by Mr. McFarland, to approve a Resolution Authorizing of Sale of Real Property. Mr. Meyer stated he assumed the omission of 5981 - 3rd Street becomes a mute point and that this does not need to be mentioned in the resolution. Mr. Prairie asked if they needed to move to rebid this property by a certain date. Mr. Fernelius stated this could be done by a separate motion. IIPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON DECLARED THE MOTION CARRIED IINANIMOIIBLY. MOTION by Ms. Schnabel, seconded by Mr. Prairie, to authorize the rebidding of the property located at 5981 - 3rd Street with the bids to be submitted by December 1, 1995. Mr. Meyer asked if there was any interest in assigning this lot to Habitat for Humanity. Mr. Prairie felt this would have to be done before the property was open for bids. n Ms. Dacy stated that a Councilmember had suggested the same idea. � Staff concluded that, for the purpose of this process, it would �"`` 80II8ING & REDEVELOPMENT AQTHORITY MTa.. NOVEMBER 9, 1995 PAGE 9 be best to continue the process as outlined and to rebid the property. However, if the HRA wants to identify some of the lots in the scattered-site program for low to moderate income housing program and assign the property to Habitat for Humanity, that is within the HRA's purview. Habitat for Humanity has completed two homes in the City. The first building constructed is in need of maintenance. The second home is newer. Because we have gone so far in this process, staff recommends to continue as outlined. In the future, it is certainly an option. As a word of caution with the housing replacement program, staff wants to include those in the replacement program in order to get the property back on the tax rolls. Lots for Habitat for Humanity would not be tax exempt. She felt a policy statement should be developed. There are costs involved with acquisition and demolition. Mr. Prairie asked, if the HRA were to do this next year, would you want to identify a parcel before bidding. Ms. Dacy stated yes. Mr. Commers stated, if the property were sold through that program, the taxes would not be affected. � Ms. Dacy stated this was correct. Habitat for Humanity indicated to Mr. Fernelius when they made their proposal that they would need at least one year to construct a home in order to put together the volunteer effort. If the City wants to pursue that, perhaps they could find a neighborhood to sponsor a lot and some of the work. This is an opportunity for neighborhood involvement. Staff has not, at this point, had time to put a policy together. Mr. Commers asked if there was any lot criteria required. Mr. Hoeft stated there are currently two properties in Columbia Heights under contract. Habitat for Humanity wants a one-year contract for one property and a two-year contract for the other. They were interested in two other lots but there were some soil concerns so they did reject those two lota. Mr. Meyer stated the HRA was not out nearly as much money on a $4,000 lot as they would be next year on a$15,000 or $20,000 lot. If there is any interest in giving a less expensive lot to Habitat for Humanity, the HRA would not lose as much money. Ms. Schnabel stated they must also consider the cost to acquire the lot and for demolition. This has nothing to do with what the bid is worth. r"� Mr. Meyer stated the HRA goes through similar expenses on all the ` lots. If the lot is given to ii�itat, there would not be extra HOIIBINa & REDSVELOPMENT AIITHORITY MTa., NOVEMHER 9. 1995 PAGIE 10 costs incurred. Mr. Commers stated he felt, in this instance, they were too far into the process to do this. Ms. Dacy stated staff's reason for not recommending that as part of this process is that we have responsible bidders ahead of Habitat. Mr. Hoeft stated in this case there is not a problem because of the tie bid so it does provide an opportunity to make a policy decision before rebidding. He agrees they may be too far into the process. From a policy standpoint and from his experience with Habitat, it may be better to approach them now with regard to some lots we may have available in the spring or summer because we can then have things up and running with them. They sometimes require two years to get something on the lot. The HRA must decide if they want property to sit empty for a period of time or do they want to work with Habitat to get something in place. Mr. Meyer stated he would assume that, if they made a bid, they are ready to go. They may still want two years. Are we saying �, we would preclude any interest in Habitat operation because it may be one or two years? Regarding the statement that we are too far into the process, we are rejecting bids and want rebids by December 1. It is rather odd for us to claim we are too far down the process to reverse our tracks. He brings it up for discussion. It seems that this is an ideal time and an ideal lot to do something for Habitat. Ms. Dacy stated she did not disagree, but there is a policy issue that the FiRA and City Council needs to establish. In meeting with Hyde Park residents, staff has told residents this would be a part of the scattered-site program and that market rate housing would be constructed. Staff has made some assurances to the neighborhood. Staff continues to recommend that the lot be rebid and that staff be directed to establish a policy for the future. IIPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DBC?�ARTD THE MOTION CARRIED IINANIMOIISLY. 11. CONSIDER RESOLUTION MODIFYING THE REDEVELOPMENT PLAN AND CREATING TAX INCREMENT FINAATCING DISTRICT NO. 14 Ms. Dacy stated the property is south of 73rd Avenue. The tract is two lots consisting of approximately 6 acres. The frontage road to the west is the University Avenue service road and 73rd �"'� is to the north. Mr. John Allen of Industrial Equities is proposing a 87,600 square foot, one-story building which would ` span from west to east across the property with loading docks to � ,� HOIIBIN(3 & REDEVELOPMENT AIITHORITY MT(�., NOVEMBBR 9. 1995 PAaL 11 the south. The visitor and employee parking would be to the north side of the building. Ms. Dacy stated this project has been discussed previously. Mr. Casserly met with Mr. Dennis Zylla, who manages Northco Business Partnership. Soil tests have found soil problems throughout the site. Because of these soil problems, they will have to excavate a significant amount of soil from the site and replace it. The most recent figures indicate that up to 27,000 yards of fill would be imported into the site. Mr. Casserly had worked on a soil correction assistance package for 8� to 10� of the project costs which would be approximately $280,000 to $350,000. The assistance would be split with 50�a a grant and 50�5 a loan. In order to provide the assistance, an economic development district is proposed. The site is in a project area. If the HRA extends the life of the district, it would go to the year 2006. The City and the HRA could choose to terminate the district early or 2001 when the grant is recouped. Ms. Dacy stated staff recommends the HRA approve the proposed resolution authorizing modification to the project area and to create a tax increment financing district. Mr. Commers asked what the allocation was between the funds. Is the movement of the storm sewer included in this? Ms. Dacy stated yes, that is included. A storm sewer bisects the site. Northco installed the storm sewer when the property was originally platted anticipating two buildings. The storm sewers would be rerouted so the water goes into a pond toward the south of the site, through a pipe to another pond to the north, and then into the storm sewer system. Rice Creek Watershed District prefers the proposed plan because it takes water through ponds for treatment. The soil correction costs are approximately $350,000 and the storm sewer costs are approximately $40,000. Mr. Prairie asked if there was another TIF district close to this site. Ms. Dacy stated yes. The HRA created a TIF district in 1989 on the site proposed for the liquor store. Northco was looking at an office development but did not proceed. That is TIF district #10. Mr. Commers stated the HRA does not at this time have to make a decision as to the life of the district. Can the HRA make it full term and then reduce the amount of time in the future? Mr. Casserly stated yes. TIF districts are usually set up for the maximum duration. . HOIISIN� Se REDSVELOPMENT AIITHORITY MTG.. NOVEMBER 9. 1995 PAGiE__12_ �\, Mr. Commers asked for a cash flow analysis. Mr. Casserly stated page i1M of the agenda packet shows the cash flow analysis. On the estimated tax increment, there is $0.5 million on this project. He would recommend the HRA keep about 20� of the increment for program expenses which leaves available increment of $420,000 for project expenses. They need to work out the details of the development agreement which would come back to the %�2A in December. After working out the details of the development agreement, he thought the level of assistance would be approximately $300,000. One-half would be a loan and one-half a grant. The loan would be repaid over a period of time. Generally, the first two years accrue interest but defer it, add it to the principal, and amortize the principal over eight years. The project would be fully constructed in 1996 and fully assessed in 1997. They would pay full taxea in 1998. Mr. Casserly stated they would have nine tax increment years. Because of the nature of the district, the last year or two generates hardly any tax increment. This is very much like the project the HRA was doing eight to ten years ago. MOTION by Ms. Schnabel, seconded by Mr. Meyer, to approve a �� Resolution Modifying the Redevelopment Plan for Redevelopment Project No. 1 and the Tax Increment Financing Nos. 1, 2, 3, 6, 7, 9, 10, 11, 12 and 13 to Reflect Increased Project Costs Within Redevelopment Project No. 1, and Creating Tax Increment Financing District No. 14 and Adopting a Tax Increment Financing Plan Relating Thereto. ,—'.� IIPON A VOICE VOTB, ALL VOTING AYE, CBAIRPERSON COMMERB DECLARED THE MOTION CARRIED IINANIMOIISLY. 12. CONSIDER RESOLUTION TO APPROVE CONTRACT FOR EXCLUSIVE NEGOTIATIONS WITH MEPC Mr. Commers stated the HRA reviewed a draft of this contract earlier. He asked Ms. Casserly to review the changes that had been made. Mr. Casserly stated there are only a few changes. They have tried to establish some market values. They have been talking about an office tract and a smaller commercial tract. This agreement tries to lay the groundwork for MEPC to promote and develop the site and to try to continue with the HRA's original concept that it would help with parking treatments if they got the right kind of density. This agreement recoqnizes that the first building that goes in, particularly on the office tract, is probably going to have surface parking. The next building that goes in must have some type of structured parking and will probably have to share the structured parking with the first �'`� HOIIBING & REDEVELOPMENT AIITHORITY MTa.. NOVEMBER 9. 1995 PAGE 13 building. In order to get the first building going in the office tract, they want to encourage MEPC to be as aggressive as they can. We set the parameters that it must be a minimum of three stories. We have had a lot of discussion about this. They are looking to move as quickly as they can but not to build structured parking until the first building goes in. They would sell the site for the first building and then put that purchase price in reserve to put those funds back into the property to help with the structured parking. Mr. Casserly stated the rest of the agreement talks about setting the time frame for such things as developing focus groups, marketing plans, reports back, etc. Mr. Casserly stated one other issue that came up which they stressed is that, on the commercial tract, MEPC feels strongly they need to develop a substantial portion of the commercial tract to provide the amenities to get the kinds of office development they want for the office tract. If the commercial tract is developed first, it is with the office tract in mind and in support of a high quality office development. Mr. Prairie asked for an example of the type of amenities that would be provided. Mr. Casserly stated MEPC had mentioned a banking facility, restaurant, the potential of have a day care facility, and/or the potential of a hotel and lodging facility. Mr. Prairie thought this would be a short, select list. Mr. Casserly stated the amenities would not be retail, but rather service oriented activities. They want to develop focus groups where they invite people in, talk about the development they would like to see, and what kind of amenities are needed to maximize the development. MEPC then would develop a master plan for the site. This will be back before the HRA numerous times. Mr. Casserly stated, at this point, it is important to get MEPC going. They have a willingness to provide support. We do have them on a pretty good time frame. It takes some time to put these things together. From what he has seen, we appear to be in a good development mode these days. There does seem to an increasing need for space and, hopefully, we will be able to take advantage of the low interest rates and the increased need. The goal is to get a first office building under construction by July 1, 1997. If they cannot start by that date, we can get time added on to that. The idea is to have the plans and programs put �--� together next year. � HOIIBINC� & REDEVELOPMENT AIITHORITY MT�.. NOVEMBER 9. 1995 PA�3E 14 Mr. Prairie stated the HRA's original time frame and MEPC's time frame were different. Does this agreement reflect a time frame that is somewhere in between these? Mr. Casserly stated yes. MEPC was looking for two full years. We were looking for a maximum of 1.5 years. We ended up with 1.5 years with an ability to extend it for 90 days if they have signed agreements, etc. Ms. Schnabel stated page 12I stated the agreement shall terminate if a redevelopment contract is not executed by July 1, 1997. Is that this contract? Mr. Casserly stated no. This is a preliminary agreement. We need to enter into a more formal, extensive agreement with them. This agreement protects them and lays out some of the broad terms on how we want the site developed and what they need to do. We will need an extensive redevelopment contract but it is premature to do that at this point. Ms. Schnabel stated this agreement says the construction needs to start on the same day as the termination of the contract. That seems tight. � Mr. Casserly stated the construction date could be moved forward. He left that in there because this will be negotiated as we go along. He sees a contract in place by the end of next year. If things are not going well, he would not want to take the time to work through a contract if they are not making progress. Mr. Commers stated he understands there is a write down of the land with them assuming responsibility for structured parking. We have to define the amount of structured parking. Mr. Casserly stated this was correct. Parking will be a part of the redevelopment agreement. Mr. Casserly stated he is concerned that there is an open ended commitment by the HRA for the infrastructure. Mr. Casserly stated the HRA has the ultimate approval over that. We have to agree to the master plan. If the master plan that we agree to has some reconfiguration of load or utilities, we have to take that into account. The only reason we would want to change is for a better plan. It is open ended, but we have control over that. .Mr. Meyer asked Mr. Casserly to define Class A office space. � Mr. Casserly stated this is difficult to define. ,��� � � v 80U8INGi � REDEVEI�OPMENT AIITHORITY MTa.. NOVEMHER 9, 1995 PAaE 15 Mr. Meyer stated the agreement has something defined as Class A office space but no definition of what Class A is. The building can be up to three stories or 50,000 square feet. That is a small building. This is also saying they can forget the office space for some indefinite time and put up commercial. These things worry him. Once the first office building is constructed and there may be some commercial, the commercial that is put in is dependent on a viable office space already in. The statement that they need the commercial in first does not ring true to him. You do not put in a bank or day care center or restaurant, etc., on empty land. You wait until there are people there. If they were to do this, what is our risk? Mr. Prairie stated the commercial would bother him more than the Class A part because we are going to have a chance to look at what goes in there. However, having commercial before the office seems backward. Mr. Commers stated they could end up with something on the commercial tract that is marginal and nothing on the office tract. Mr. Meyer stated the commercial could also attract something less than Class A. Mr. Casserly stated in the original design we could not develop commercial until a certain percentage of the office tract had been developed or under contract. Of the items negotiated, that was the one MEPC felt the strongest about. It seemed to him you would not want to do the commercial tract until you saw the type of office development. MEPC said it was probably just the opposite. The way they can attract high quality tenants is if they are developing simultaneously parts of the commercial tract so the facilities will be available. MEPC is saying that has been their experience. Mr. Casserly stated they need to sort through the process. There is a master plan in process. The HRA has a tremendous amount of control over what goes in there. Ms. Dacy stated, in the S-2 district, the HRA and City Council must approve any use. If MEPC wanted a day care center first, they would have to do a plat and other issues, and come back here to get HRA approval. The HRA determines if the use is consistent with the goals of the redevelopment plan. The issue of what comes first will be discussed. Mr. Meyer asked, if the I�tA has a veto, what is the sense of this document. /� � 80II8INa & REDEVELOPMENT AIIT80RITY MTa.. NOVEMBER 9. 1995 PAaL 16 Mr. Casserly stated this document protects them. They will be spending money out-of-pocket plus their time. This document is a loose agreement. We could spend more time defining and working through issues. We are still not exactly sure we can accomplish what we want to see on the site. The process being suggested in this document is what has to evolve over the next six months and how we are going to accomplish these things. There is a procesa where the HRA is to do a complete review on or about July 1, 1996. Mr. Prairie stated this is fine as long as this does not mislead MEPC as to what our intentions are. Mr. Commers asked if a statement could be added to Section 2.2.(E) to the effect that this is subject to discussion and mutual agreement of the HRA. Mr. Casserly stated a statement could be more specific and state this is "subject to individual approval by the HRA." Mr. Meyer expressed concerns that this would still give the developer the right to first develop the commercial amenities before having the office use. Mr. Commers stated that is why he recommended modifying the paragraph giving MEPC the authority to develop the commercial tract but making it clear to let them know that we retain very specific project-by-project veto power without having to base it on some kind of reasonable standards. If we do not like it, we should be able to say no even though in other respects it may be appropriate. Ms. Schnabel asked if they wanted to say the commercial could not be developed until they have provided some number of tenants for an office building. Mr. Commers stated that is the issue. MEPC states they need some commercial to get the office. Ms. Schnabel stated she understood they wanted to do the commercial and office simultaneously. Mr. Commers suggested that, once MEPC gets a certain number of square feet released such as 50,000 square feet, the HRA would then release a specified amount of commercial. Is that too complicated? Mr. Casserly stated he did not know how many uses could be made � on the site. He thought MEPC was saying they want the best commercial amenities to attract the best kind of office user. If - that is left to the HRA's discretion, then I think the HRA would �\ �''1 � 80II8IN(� & REDEVELOPMENT AIITHORITY MTG.. NOVEMBER 9. 1995 PAGE 17 be reasonably secure. There will be a consensus between MEPC and the HRA about the amenities promoted. He could put in language to be sure this is at your discretion and control. Mr. Burns suggested the language, "While the office tract is a priority, the HRA will consider commercial development that the developer feels is essential for attracting users of office space." Mr. Prairie stated he did not think having a first class hotel on the site would be a problem. A hotel could function on its own. He was not sure about a restaurant. After that, the issue gets more unclear. MEPC might want to market what they have up front. He could not see a day care center going in first. Mr. Burns stated he was also concerned. He was not sure of the City Council and public's reaction to developing a restaurant before an office development. Mr. Meyer thought Mr. Burns suggestion was good. If we are going to go to a restaurant, are we going to do something by itself on 40 acres where there may be an office? That is not the sort of thing that would attract an office. Mr. Commers asked Mr. Casserly to discuss this with MEPC and see where it leads and then come back. Mr. Casserly asked, because of time, would it be possible for representatives of the HRA to review the language with the understanding that there will be subsequent language that addresses this concern. He would like to revise the document and have it signed in the next few days. Mr. Burns stated he would like to get started. He suggested staff amend the document or the HRA give staff some flexibility where the HRA can agree to everythinq else but this particular section and give Mr. Casserly, Mr. Commers, and him permission to work out the specific language prior to signing the document. Mr. Meyer asked if anyone is concerned about a 50,000 square foot, three-story building that is defined as loosely as Class A. Mr. Burns stated we went into the process in the very beqinning and established these criteria. That is what we told MEPC we wanted as a minimum. If we start changing that now, he thought they would be guilty of reneging on their terms. Mr. Commers agreed that 50,000 square feet is not a large building. Usually these buildings have a 25,000 or 40,000 square foot footprint. � !'� �, HOII8IN�3 & REDEVELOPMENT AIIT80RITY MTt3.. NOVEMBER 9. 1995 PAt3E 18 Ms. Schnabel asked if Mr. Meyer was not comfortable with the controls the HRA has. Mr. Meyer stated he was not comfortable in the sense that the commercial can go first. There should be no allowance that the commercial go first. The office should come first and then the commercial. Mr. Burns made the point which gives the HRA authority to negotiate. He thought they should take a stand that the commercial cannot go first. Mr. Burns stated they can try that and he thought that was reasonable. Mr. Meyer stated, regarding the 50,000 square feet, the HI2A did have a commitment to MEPC last March so that is acceptable. Mr. Commers suggested that Mr. Casserly or Mr. Burns talk to MEPC and see what the best is that they can do. At that point, call each HRA member and take a vote over the phone as to whether the HRA can support it. If the HRA does support, he will sign the contract before the next meeting. While everyone is well intentioned about what will happen, we also want to be careful. Mr. Burns asked the HRA to approve the agreement as it stands with the exception of Section 2.2.(E) which would be amended and �a poll of the members be taken. MOTION by Mr. Meyer, seconded by Mr. McFarland, to approve a Resolution Authorizing Execution and Delivery of a Contract for Executive Negotiations By and Between the Housing and Redevelopment Authority In and For the City of Fridley and MEPC American Properties, Inc., subject to renegotiation of Section 2.2.(E) and approval of the language by the Housing and Redevelopment Authority. IIPON A VOICL VOTL, ALL VOTIN�3 AYB, CHAIRPER80N CO�II+lLRB DSCLARED THE MOTION CARRIED IINANIMOIIBLY. Ms. Dacy provided an example of a brochure and advertisement for the Lake Pointe site. INFORMATION ITEMB: 13. SOUTHWEST OUADRANT UPDATE Ms. Dacy stated the City Council has attempted to talk about the senior condominium component on several occasions but were unable to reach a consensus. Since that meeting, the City Council has been unable to discuss this item for a variety of reasons. Staff will try to discuss this issue with the City Council within the next ten days. She will provide an update at the next meeting. , 80II8ING4 & REDEVELOPMENT AIIT80RITY MTa.� NOVEMBER 9, 1995 PAGL 19 i � Ms. Schnabel stated she had attended the Council meeting where the senior housing component was discussed. Initially, four Councilmembers wanted to keep the condominiums and one was in favor of doing something else. When the meeting was over, this had changed to two Councilmembers who still wanted to keep the condominiums as proposed and three who were willing to consider something else. Mr. Burns stated part of what makes this difficult is that the Councilmembers are waiting for the property condemnation process to end and to be more certain of the numbers. Staff also needs to develop other alternatives to the senior housing issue. Ms. Schnabel stated two Councilmembers had been approached by a number of senior citizens who wanted to have housing, so the Council feels they have made a commitment despite the fact that the dollar amount has changed. They talked about other senior housing in the City but the Council felt this was a good location. Mr. Commers stated he had read the article included in the agenda packet and asked what it was they were saying. � Ms. Dacy stated they are trying to say that Rottlund is working with a senior housing developer on a project in Minnetonka. What the author does not understand is the Minnetonka project is for rental apartments for seniors. In Fridley, we are talking about owner occupied. Ms. Dacy was also not sure if the author was referring to the empty nest housing when talking about costs. � Mr. Commers stated he interpreted the article as saying Rottlund can build 115 senior housing units in Minnetonka but they cannot do so in Fridley unless we subsidize the project. Ms. Dacy stated the development they are talking about is rental. The $115,000 mentioned in the article might be applying to the proposed townhomes. Mr. Commers asked staff to call the development representative and see what they are talking about for this project. Mr. Commers stated he understands that, if they get the Cherrywood Apartments for the same per unit costs as the Reefe award, we will have to add another $250,000 to our budget rather than what we have been concerned about. Ms. Dacy stated this is correct. The Keefe award was not as high as originally thought. They are appealing on the Suh condemnation. HOIISINC� & REDEVELOPMENT AIITHORITY MTa.� NOVEMBER 9. 1995 PAGE 20 OTHER BII8INE86• 14. FRANK�S USED CAR SITE Mr. Burns stated the HRA authorized at the June meeting the purchase of the Frank's Used Car site. At that time, staff did not anticipate purchasing the two lots south of the estate. If we would acquire those two lots to the south of Frank's and the additional two adjacent residential lots, perhaps they could create a residential development in this area. This would total 2.4 acres for possible development. He would like to see a townhouse development. Ms. Dacy would like to see single family homes and/or senior housing. He made some preliminary contacts witYr the owners of these properties. He talked with the representatives of the Gabrelcik estate and negotiated a price for the two additional properties. Mr. Burns stated an addendum was added to the purchase agreement that would require the heirs to take care of the environmental issues including capping a well, removing fuel tanks, cleaning up the ground around the tanks, removing fluorescent lights and ballasts, and removing asbestos, if any. They have capped the well, removed fluorescent lighting and ballasts, removed the � tanks and cleaned the soil. Mr. Burns understands the heirs are about to get a closure letter. The only thing holding this up is the MPCA has concerns about whether the soil has been disposed of properly. Mr. Burns stated, in negotiating with the Gabrelcik's for the two additional lots, he agreed the City could take responsibility for asbestos removal out of the purchase agreement. The attorney for th� family came back with a second addendum in r•esponse. There is no disagreement in principle, but there is some disagreement over the language in the second addendum. Mr. Burns asked the HRA to approve the purchase of the Frank's Used Car site and the two additional vacant lots for $165,000 with the understanding that, before closing on the property, we will have a closure statement and assuming they can work out the language included in the second addendum. Mr. Commers asked if the dispute was over the economics. Mr. Burns stated no. The dispute is in the interpretation of the language. If they get a closure statement from the MPCA, it should be all right. Mr. McFarland asked if they would be assuming liability for any �—� lingering pollution. � �`1 � HOIIBIN(� & REDEVELOPMENT AIITHORITY MTG.. NOVEMBER 9. 1995 PA(3E 21 Mr. Burns stated that is sometYring the attorney would have to clarify. Mr. McFarland stated, in his experience, they had been given a closure statement from the MPCA but it said that, if ground were ever broken, it would have to be re-examined and any pollution found, if any, would have to be cleaned up before construction could begin. He also did not know if the petrol fund transfers from owner to owner. Mr. Commers stated, if we get a contingent closure letter, that opens it up again when starting construction. Mr. Prairie stated this would be at the top of the list of the things for the attorney to consider. Mr. Burns stated the document stated the seller is responsible for capping the existing well, removal of any tanks on the property, removal of all contaminated soil, removal of all fluorescent light bulbs and ballast, removal of all groundwater contamination, and asbestos if any. The seller is to obtain the appropriate documentation as to the completion of these items. Our attorney felt this covers it, but we did waive the asbestos portion. It is possible that, in the future, someone could open the ground and find more pollution after we had acquired the property. We would then be responsible. He thought they were eligible to apply for petrol funds in that instance. Mr. Casserly stated this was correct. As long as it is eligible to be reimbursed by the petrol fund, it does not matter who is the owner. A governmental agency may get a larger reimbursement than the private section. Mr. Meyer stated, if we find pollution at a later time, we are still liable. Mr. McFarland stated, if the petrol fund transfers, the liability is only 10�. He was told the petrol fund does not go along with it. It is possible it will transfer after it has been determined. Mr. Burns stated, in either case, we are not trying to protect ourselves from this type of event. We are saying the family needs to clean up what is there and demonstrate this has been done through a closure statement. We are not trying to claim indemnification from future contamination. If the HRA wants that, this will need to be negotiated. � Mr. Casserly stated, under the current law, the prior owners and everyone who had contributed to the problem are all liable. If � the HRA purchases a site that has pollution on it and the HRA �,. � �^'� 0 HOUBING � REDEPELOPMENT AIITHORITY MTG.. NOVEMBER 9. 1995 PAaE 22 does not worsen it, the HRA is not liable. The problem is that you have a site you cannot do anything with. An HRA does not take on the same liability as other purchasers would take on, but you would have a site you could not use. Mr. Casserly stated, regarding the petrol fund, if there is contamination and it is cleaned up to the degree required in the work plan, there is nothing more one can do. If you find contamination subsequent to closure, that is no different than any purchaser trying to develop a site. Mr. McFarland stated, if you have access to the petrol fund, this fund will make the cost manageable. If the fund will follow to the new owner, it will protect to 90� of the costs. Mr. Casserly stated the only issue becomes whether the contamination is eligible. If it is, it would be reimbursed. Mr. Burns stated the Gabrelcik's have done the clean up. The clean up has been approved. The only issue is the approval of the disposal of the soil removed from the site. The family expects to receive the letter in a few days. The family would like to close on or before December 1. Mr. Commers asked Mr. Burns to ask the attorney to tell us that, if something happens when ground is broken, we have the petrol fund. Mr. Burns stated he had discussed this with Liesch and Associates, and he thought Mr. Davis had said we were protected by the petrol fund as long as it was a petroleum contamination. Mr. Commers stated, if the MPCA letter is contingent, it creates other issues. Mr. Burns stated he will not sign if anything other than a non- contingent letter is received. MOTION by Mr. Meyer, seconded by Mr. Prairie, to authorize the Executive Director to enter into a purchase agreement for $165,000 for the Frank's Used Car site and two adjacent vacant lots, contingent upon receipt of a satisfactory closure letter from the MPCA. IIPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERB DECLARED THE MOTION CARRIED IINANIMOIIBLY. 15. J. R. AUTO SITE Ms. Dacy stated the owner of JR's Auto on University Avenue contacted her regarding the sale of this property. Mr. Schuur, � �OIIBIN(3 � REDEVELOPMENT AIITHORITY MTa.. NOVEMBER 9. 1995 PAGE 23 , the owner, contacted her to determine if the HRA was interested in evaluating the purchase of the property. Mr. Schuur was aware that the HRA had looked at the property earlier as part of a redevelopment plan. Ms. Dacy asked the HRA for permission to further investigate the possible acquisition and to discuss other items such as a Phase I audit. Ms. Dacy stated there are four parcels available. The building is in poor condition. The property may be eligible for tax increment financing. Perhaps staff should investigate this if the HRA would like to use this property in conjunction with the Frank's Used Car site. Perhaps staff could check into this further and come back at the next meetings. Mr. Commers asked what issue would arise if, for examplQ, the HRA would take out a duplex or a residential home. Ms. Dacy stated staff would need to update the housing plan. The City Council recently elected to participate in the Livable Communities Act, which means we are adopting principles that support a balanced housing supply. We have to submit an action plan by June 30, 1996, and initiate and adopt a fair housing ordinance. � Mr. Comm�rs asked, if a duplex was taken out, would they have to replace that housing. Ms. Dacy stated there is no state law requirement, but the attorney is saying to adopt a plan as to how you do provide affordable housing. Mr. Hoeft stated the City of Columbia Heights is looking to establish criteria for a certain percentage of affordable housing so that there is not necessarily replacement housing as long as you do not fall below a certain percentage of affordable housing. Ms. Schnabel asked what was located next to the duplex going east. Ms. Dacy stated there is an apartment building, vacant land, and then single family homes. Mr. Commers asked staff to continue to talking with Mr. Schuur. Mr. Commers stated the HRA has many thing going on requiring up front cash. He would like to see a periodic cash flow statement and asked Mr. Pribyl to provide that information. /�'� ADJOIIRNMENT: � 80II8INa & RED�VELOPMENT AIITHORITY MTa.. NOVEMHER 9, 1995 PAaE 24 �� MOTION by Ms. Schnabel, seconded by Mr. Meyer, to adjourn the meeting. IIPON A VOICB VOTE, ALL VOTINa AYE, CHAIRPER80N CONII�lERB DECLARED THE MOTION CARRILD AND T8E NOVEMBER 9� 1995, HOIIBINa AND REDEVEIAPMENT AIITHORITY MEETINa ADJOIIRNED AT 10i05 P.M. Respectfully submitted, � � '� Lavonn Cooper ���� Recording Secretary �, i��� � � 8 I a N— I N B H E E T / HOIISING AND RLDEVELOPMENT AIIT80RITY MEETING� . November 9, 1995 ,�... ,� � Name Address/Business ��- � ZZ 1 o L ,% L��' C � 1 ��I�C=� � "l�'��� ���E' ��. � �K� ���a� �ee�„��� �-� % o��� � �� ��U�Z ��Z 11 �� �' �-, ' /� � � .� Z.