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HRA 01/09/1997 - 29794� /"� CITY OF FRIDLEY HOUSING & REDEVELOPMENT AUTHORITY MEETING JANLTARY 9, 1997 CALL TO ORDER: Chairperson Commers called the January 9, 1997 Housing and Redevelopment Authority meeting to order at 7:35 p.m. ROLL CALL: Members Present: Larry Commers, Virginia Schnabel, John Meyer, Jim McFarland Members Absent: Duane Prairie Others Present: William Burns, Executive Director Barb�ra Dacy, Community Development Director Craig Ellestad, HRA Accountant Jim Casserly, Financial Consultant APPROVAL OF DECEMBER 12, 1996, HOUSING AND REDEVELOPMENT AUTHORITY MEETING: MOTION by Ms. Schnabel, seconded by Mr. McFarland, to approve the December 12, 1996, Housing and Redevelopment Authority minutes as written. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON CONNIl�RS DECLARED THE MOTION CARRIED UNANIMOUSLY. CONSENT AGENDA: 1. RESOLUTION DESIGNATING OFFICIAL DEPOSITORIES FOR THE FRIDLEY HOUSING & REDEVELOPMENT AUTHORITY 2. REVENUE AND EXPENSES Mr. Ellestad distributed copies of the check register #26196 through 26207, and copies of a memo dated January 9, 1997, listing additional expenses for approval. Mr. Meyer asked for what the checks to First Trust and National City Bank were written. Mr. Ellestad stated these represent the semi-annual payment from the bonds. The 1985 bond expires in a few years, and the other is a payment on the 1990 bond. /� Mr. Meyer asked for what the bonds were issued. � � � HOUSING & REDEVELOPMENT AUTHORITY MTG., JANUARY 9, 1997 PAGE 2 Ms. Dacy stated the 1990 bond is a refinancing bond. The 1985 bond is a refunding of an earlier bond for project area one. MOTION by Mr. McFarland, seconded by Mr. Meyer, to approve the Consent Agenda as presented with the check register #26196 through #26207 and additional expenses as presented in the January 9, 1997, memo. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON CONIl�IERS DECLARED THE 1�TION C.ARRIED UNANIMOUSLY. ACTION ITENIS: 3. CONSIDER A RESOLUTION DETERMINING THAT A CERTAIN PARCEL IS OCCUPIED BY A SUBSTANDARD BUILDING AND IS TO BE INCLUDED IN A TAX INCREMENT FINANCING DISTRICT; 218 - 57TH PLACE Ms. Dacy stated the purpose of the resolution for this property is to preserve the HRA's option for creating a tax increment financing (TIF) district in the future. It does not commit the HRA to create a district but stated the HRA acknowledges that this structure is hazardous and substandard. Because of those conditions, the building has to be taken down. By removing the building now, we solve many of the safety issues. The resolution preserves the option for the HRA to declare the site as a TIF district. There is no commitment to create a district, but to preserve the option for the future. As you know, the TIF laws require the City Council to create the district, and the City Council has to pass a similar proposal. Staff is asking them to evaluate such a resolution in January. Ms. Dacy stated staff is recommending approval of the resolution. There is no commitment to.the HRA for money or funds, nor does it tie the HRA to create a TIF district. Mr. Meyer stated this is a rather unique process that a property is condemned as a hazardous building and the tenants forced to move out. Ms. Dacy stated this is unique. This action was undertaken by the City Council upon complaints around this property. The property was inspected, and it was determined that the building had structural defects, hazardous waste and/or paint was stored in the basement, and a number of other conditions existed pertaining to debris. Sanitary conditions in the building were such that it required going through this process. We did remove another structure under this statute on Fairmont Street several years ago. Mr. Meyer stated he thought this an interesting tool that could be r.--, HOUSING 6 REDEVELOPMENT AUTHORITY MTG., JANUARY 9, 1997 PAGE 3 applied to other properties that we have heretofore purchased which were substandard in many areas. Evidently, we have had to gain access to this particular building. Ms. Dacy stated there is a difference between this structure and the scattered site structures. For this structure, we had to go to court and show evidence that this did apply to the hazardous conditions statute. This is not a tool we can use for the scattered site acquisitions, and this tool should be used carefully because the quality and integrity of the structure must meet strict criteria as set in the statute. Mr. Commers stated he thought the real distinction is that this is used where the property is abandoned rather than where the property is still occupied as in the scattered site program. Mr. Meyer stated this property apparently had been occupied and the tenants evicted. Ms. Dacy stated one unit was vacant. The landlord did not respond to requests to improve, and the remaining tenants left. Mr. Meyer stated he appreciated the distinction between this site � and the scattered sites. However, it does illustrate that this is a tool that can be used. He was thinking of one property in the scattered site program where the bedroom was in the basement, and the City got permission to inspect the inside to ascertain the condition. Did they get a court order before they knew the conditions inside or how did that work? � Ms. Dacy stated she believed the landlord had permitted the inspector access to the site and staff proceeded to take appropriate action. Mr. Fernelius worked more closely with this and can verify the steps taken. If the landlord had not permitted access, the City would have had to prove to the judge that there was a significant defect. Mr. Nleyer stated he realized there was a difference but there may be a gray area in between that would show it a useful tool to use condemnation in lieu of some of the other methods used in the scattered site acquisitions. Mr. Commers stated, since the resolution has no economics attached to it, it seems appropriate to proceed. MOTION by Mr. Meyer, seconded by Ms. 5chnabel, to approve a Resolution Determining that a Certain Parcel is Occupied by a Structurally Substandard Building and is to be Included in a Tax Increment Financing District. � HOUSING & REDEVELOPMENT AUTHORITY MTG., JANUARY 9, 1997 PAGE 4 UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON CO1�RS DECLARED THE 1�TION CARRIED UNANIMOUSLY. ' 4. LINDSTROM METRIC REQUEST FOR TIF ASSISTANCE Ms. Dacy stated Lindstrom Metric is now located west of the railroad tracks and east of Ashton Avenue. They are looking at a vacant five-acre site west of Main Street, north of 81st, and south of 83rd. Lindstrom Metric wants to build a 60,000 square foot building on this site. She believed their existing site is about half the size. There are poor soils on the proposed site. Lindstrom Metric contacted her regarding TIF assistance for soil correction. Unless the HRA feels otherwise, she and Mr. Casserly will work with the company to prepare a development contract that would propose a 5� grant and a 5% loan, similar to other soil correction requests that were approved in the last year. Mr. Lindstrom has not filed a TIF application as yet. The purpose of this memo is to inform the HRA that we had this discussion and that this is a proposal we would like to bring to you in February or March. A unique aspect of this development is that Mr. Lindstrom does not want to construct a new building until he sells the existing site. He would like the ability to use the TIF assistance for up to two years. She did not have a problem with that. The �, procedure is set up such that the developer has the burden to construct the building and get a certificate of completion. At that point, we issue the checks for the loan and the grant. The HRA does not need to take action at this time. Mr. Commers suggested, to the extent that there is going to be an expansion to the business, he would like to see a commitment as to where the business will create new jobs and what he expects that will do over a reasonable period of time after the new building is constructed. Mr. Casserly stated that information is now a statute requirement for projects assisted with tax increment. The HRA is required to enter into an agreement in which there is a certain amount of net job increase. Those are to be negotiated and must be complied with or the tax increment assistance has to be returned. Mr. Commers asked if this will be the first one negotiated. Mr. Casserly stated no. This has been done on several. This has been a part of the development agreements. Mr. Commers stated he did not remember that issue coming up in the past. He asY�ed staff to go back and let the HRA know what the agreement has been for the last few requests they have had. � Mr. Casserly stated he would make copies of that specific �•., HOUSING & REDEVELOPMENT AUTHORITY MTG., JANUARY 9, 1997 PAGE 5 condition. Mr. Commers asked if we have a method of verifying. What do we do to see if the agreed upon increase of jobs has been met? Mr. Casserly stated a form has been prepared by the Minnesota Department of Economic Development which must be filled out and submitted to us and to the state. Mr. Commers asked that, if any of these forms have been submitted thus far, please provide the HRA with a copy. Mr. Casserly stated this has not yet been done. The law just went into effect. The recording requirement is within two years after the date of issuance of the certificate of completion. No one is within that timeframe yet. Ms. Dacy stated they did require that with the McGlynn proposal. As a condition of that grant, they are required on an annual basis for two years to verify they have created jobs. We can do that with these proposals as well. 5. PROPOSAL BY STEVE LINN TO REHABILITATE DICK'S WHEEL AND TIRE, AND REDEVELOP A PORTION OF 57TH AVENUE Ms. Dacy showed on an aerial map the location of 57th Avenue west of University, Dick's Wheel and Tire, the substandard building discussed as part of item #3, a private home and a vacant piece of land next to Main Street. Holiday Plus is to the south. Ms. Dacy stated Mr. Steve Linn of Linn Companies is negotiating with Holiday Plus, who owns the Dick's Wheel and Tire building, to operate a Goodyear franchise on this property. Mr. Linn is also interested in acquiring the duplex site at 218 - 57th Avenue, the single family home, and the vacant area. He has a purchase agreement with the owner of 218 - 57th Avenue, and has contacted the owner of the single family home. He plans to acquire, remove and demolish, and build a strip mall on this site. He was originally thinking of putting in a video store and a fast food restaurant, but is now thinking of having only a video store. Ms. Dacy stated Holiday Plus has advised Mr. Linn that they need to put the negotiations on the back burner for a while because Holiday Plus is working on a deal with Mr. Applebaum and working on acquiring a sporting goods chain out of Detroit. Mr. Linn is still interested in pursuing a redevelopment project in this area. He is thinking of applying for TIF assistance, and he would have to make an application to do this. A TIF/redevelopment district would have � to be created in order to accomplish what he is proposing. Staff does not know what level of assistance Mr. Linn is requesting nor /"1 � � HOUSING & REDEVELOP'MENT AUTHORITY MTG., JANUARY 9, 1997 PAGE 6 does staff know the gap. Mr. Linn will act as the developer. Ms. Dacy stated staff is bringing this to their attention to let the HRA. know this will be on a future agenda. Staff must find out what the gap is. There is also a land use issue which the City Council will have to evaluate as well as the neighborhood. The area is zoned C-2, General Business. It is a permitted use and would not require a rezoning. To create a TIF district, public hearings must be held prior to the final decision. Mr. Meyer asked how much more traffic can 57th Avenue take. Ms. Dacy stated Home Depot contracted with BRW for a traffic analysis as a result of the construction of Home Depot. BRW did a very good analysis which outlined four or five options to improve 57th. The key is to reduce the access points along 57th. The second suggestion was to create either a turning lane down the middle of 57th for left turns. There were several options for signalization of intersections in the center and create a median along the alignment to allow breaks for 3rd Avenue traffic. They have not gone to the next step on the study because the land uses on the north and south sides will affect the traffic on the street. There will also be more traffic over time. She believed the City Council and the HRA would have to evaluate a series of land use alternatives. Mr. Burns stated, because this property has frontage on two streets, it would appear that any building would have to be long and narrow. Do the codes allow the type of center being proposed by Mr. Linn? Ms. Dacy stated staff has not see a site plan so she cannot give a good answer. For Dick's Wheel and Tire, all they need to do is occupy the building. Mr. Meyer stated is appears that 57th Avenue is shaping up as more of a problem. Plans are to improve access to 57th Avenue from I- 694 because there is a problem with access to 57th now. This is one more thing added. If, for example, we would not allow a TIF district because of the fact that we are using that as a device to reduce traffic, could someone else put a strip mall on that site without a TIF district? Ms. Dacy stated yes. A private entity could do this. Mr. Meyer stated the HRA would not gain anything by trying to prohibit a strip mall. Ms. Dacy stated that is the issue that would have to be evaluated. In creating a TIF district, you have to meet several tests and � HOUSING 6 REDEVELOPMENT AUTHORITY MTG., JANUARY 9, 1997 PAGE 7 without that redevelopment would not occur. Mr. Commers requested staff to proceed with caution because the use of TIF funds for assistance on a strip mall is not a priority in terms of planning. Make sure that Mr. Linn understands that. Ms. Dacy stated another issue with a redevelopment district is the removal of blight and inappropriate land uses, and increasing the value. While the HRA has not assisted, there is a condition of substandard properties and a redevelopment district is a tool to accomplish that. Secondary to that is what is the end use? That is also a key question. Ms. Schnabel asked the nature of the house. Is it a viable structure? Ms. Dacy stated she did not have adequate information. The house is a typical single family home for the area and is occupied. Ms. Schnabel asked if staff knew if Mr. Linn has an option for that property. Ms. Dacy stated Mr. Linn has contacted the owner, who has expressed ^ a willingness to sell. 6. FRIDLEY EXECUTIVE CENTER UPDATE Ms. Dacy stated Mr. Commers had forwarded information to staff about the office, commercial and industrial markets in the metro area. She is now reviewing that information. She has scheduled a meeting with MEPC for an update for this month. Ms Dacy stated she talked with Merrill Busch who has the copy finalized for the brochure. The only missing piece is some pictures. They hope to complete this quickly. Mr. Meyer asked if there had been any interest in the site. Ms. Dac� stated yes. One proposal was for a 50,000 square foot and that was sent out in the beginning of January. There are three interested proposals for the site at this time. 7. MISSISSIPPI STREET AND 3RD STREET CONSTRUCTION UPDATE Ms. Dacy stated the cost overrun that was not anticipated was $34,106 that was identified within the past two or three weeks. The issues surrounding the RAO Manufacturing easement area were identified to us early in the project and do not amount to a significant cost. However, the most recent information was n significant. Mr. Flora is meeting with the consultant tomorrow and �� HOUSING & REDEVELOPT�NT AUTHORITY MTG., JANUARY 9, 1997 PAGE 8 contacting the County. Before going to the City Council, he is trying to reduce the cost to the HRA and reduce the amount of the change order. All of the other items were anticipated to a certain extent. Mr. Commers asked Mr. Meyer for his opinion of the items on the list. Mr. Meyer stated he read the list and he can see that these were unexpected expenses. Some projects have more than their share. He was surprised that BRW is going to or has contributed soinething to this. Is that because some of the work had been done that had been done unnecessarily on their direction and this is now a compensation for that? Usually, the rule of thumb is that, if work needs to be done additionally which was not foreseen in the bidding process, it is certainly legitimate to ask the owner to pay for it. If these items were things that were not foreseen, that does not usually constitute a claim against the consultant. Usually, it is a claim against the consultant if work was done on the direction of the consultant. It is rather broad. There is no definite situation. If there is work that needs to be done, the owner would have to pay for it anyway in order to do the job right. But, if the consultant made an error and work had to be redone because of ^ misdirection, that is another story. Ms. Dacy stated BRW is admitting liability in terms of some items. Their payment to RAO was a combination of that factor and the issue of constructing the wall, irrigation, easement acquisition at $2 per square foot, etc. There were a combination of factors that lead them to pay a certain amount. It was their inspectors that made the call to complete the additional milling, binder, wear course, and base course work which was a significant part of the overrun. Part of the issue is that the inspector made the call on the street and did not talk to a City employee. In retrospect, the decision to do that work was probably a good one from an engineering standpoint, but it was a unanticipated cost for which the City did not have the ability to make a decision. That is the reason Mr. Flora is pursuing BRW on this issue. Secondly, the County is getting a better road. Because of that, Mr. Flora is evaluating if the County is amenable to sharing those costs as well. Mr. Meyer stated the items did not constitute work that needed to be redone. They were improvements that were necessary. He is surprised that BRW is being asked to contribute under that circumstance. We have a vested interest in being fair and following the usual accepted understood procedures. OTHER BUSINESS: � �^� HOUSING � REDEVELOP'MENT AUTHORITY MTG., JANUARY 9, 1997 PAGE 9 8. 1997 BUDGET NIr. Commers asked the status of the budget. Ms. Dacy asked if the HRA wanted to schedule a work session one hour before the February meeting to review the budget. Mr. Commers asked if the object would be to go over the figures for approval at the March meeting. Ms. Dacy stated yes. The HRA may be able to approve the budget the same evening or perhaps in March. Mr. Commers stated the members would need time to review the proposed budget. Ms. Dacy stated that last year a draft budget was handed out about one month before, the discussion took place before the meeting, and the budget was approved that night. Mr. Commers stated he thought the HRA should have a work session. Mr. Meyer stated the way they proceeded last year seemed to work. Mr. McFarland asked that the budget be mailed to members in advance of the meeting in order to them to review. Mr. Commers asked staff to mail the budget to members a few weeks ahead of time and schedule a 6:30 p.m. start time before the next meeting. 9. CONSIDER PROPOSAL TO SHARE REMODELING ADVISOR SERVICES WITH CITY OF BLAINE Mr. Commers asked why they would want to make this position a full- time position and incur the additional expenses. Ms. Dacy stated staff advertised to continue the position as part- time. The pool of applicants applying was not satisfactory and did not come close to the experience and expertise we had established. Mr. Van Nelson was unique in that he had a personal situation that allowed him to work part-time. Staff was not seeing a similar quality candidate in the pool. They looked for ways to make the position more attractive. Blaine asked if we would like to share the position. She thought this should be considered because, if this were a full-time position, they would attract a higher quality candidate with experience. However, to answer the question, staff does not want the HRA responsible for a full-time position. The idea is to hire on contract which would be conditioned upon having � a service agreement in place with Blaine where Blaine would pay 40% �.-.� HOUSING � REDEVELOPT�NT AUTHORITY MTG., JANUARY 9, 1997 PAGE 10 of the 40-hour work week. Staff came up with the 60/40 split because they were planning to come to the HRA as part of the budget to increase the Remodeling Counselor hours to 24 hours per week to handle the load created through the loan program. If for some reason we get halfway through the contract and Blaine decides to pull out, then the HRA is under no obligation to continue the employee at 40 hours per week. Staff felt this would be a way to get better applicants and still preserve the options. Mr. Commers asked, if this person is going to be an independent contractor, why assume health and dental insurance. Ms. Dacy stated this person would not be an independent contractor. 5he believed the personnel director calls this an unauthorized contract employee. This person would be considered an HRA employee. If they are a Fridley HRA. employee and work 40 hours per week, we are required to provide benefits. Trying to find an independent contractor will be problematic because we will have to require the insurance certificate and we may pay a higher hourly rate. We would be paying for a consultant rather than a contract employee. As an example, the Section 8 coordinator for the City is a contract employee working 32 hours per week and receives benefits. We receive reimbursement from the Metropolitan Council � on this position. This would be a similar method but having Blaine take on 40� of the cost. Mr. Commers stated this is a tremendous increase. Ms. Dacy stated the increase was going to go up $4,000 per year from the increase in hours from 20 hours to 24 hours. Because it does become a full-time position, it does have benefits. That represents an additional $5,000. That totals $9,000. That is after Blaine's share is subtracted. They want to get a remodeling counselor on board before the remodeling fair in April. Mr. Commers asked if staff could continue to look. Ms. Dacy stated they could. She is not hopeful that they would be able to find someone on a part-time basis that is of the quality of the person they had before. Mr. Burns stated the labor market has become more of a buyer's market and employees have more of an advantage. They are seeing fewer applicants for part-time jobs, and they are having to pay more. Staff have already gone through the recruiting process once. In order to have quality people, he thought they had to address the marketplace. He thought this is what Ms. Dacy was doing. He is not in favor of recklessly putting on full-time employees. In this case, he thought this arrangement would give them flexibility and �� that the person must understand that when we are done the job is � � HOUSING & REDEVELOPT�NT AUTHORITY NlTG., JANUARY 9, 1997 PAGE 11 over with. Mr. Meyer asked if any of the applicants were retirees. This could be a good opportunity for a retiree. Ms. Dacy stated she could not answer that question. Mr. Fernelius has spent more time on applications. Mr. Meyer asked what kind of quality they were looking for in a new person. Ms. Dacy stated the minimum qualifications include a degree either in housing or architecture or a degree program with an emphasis on design. Staff would evaluate practical experience in the building trades as well. Mr. Van Nelson has a degree in architecture. The remodeling counselor is not designing projects or telling people exactly how to do thing. They are commenting, identifying options and helping find alternatives. Applicants in the first pool did not come close to the first set of applications that they had. There are rehab specialists out there. However, this most recent attempt to find them did not produce a candidate that was qualified. Mr. Commers stated there are also inspectors who see if the codes are met. He did not know how much of a full-time job that was. That may be a source. Mr. Meyer stated he was listening to the comments regarding quality. A person may not meet your criteria as far as experience. For example, you are not going to find anyone with a degree and/or with experience looking for a part-time position. It depends on what we are expecting this person to do. Ms. Dacy stated the person must also be knowledgeable about'housing and building products. Mr. Meyer stated it does not necessarily follow that these types of duties would require a degree but rather a good amount of practical experience. He is wondering whether they are looking for someone who just does not exist. He is sure that the labor market is another influence. Do we need that type of person to extent of precluding applicants? They should also be looking for a person who has been around with experience in home construction. Ms. Dacy stated that is not the only qualification. If an applicant has building trade experience, that is part of it. Mr. Fernelius' recommendation to her was that the candidates were not acceptable even to interview. � Mr. Meyer asked who was in Blaine. �...� HOUSING � REDEVELOPMENT AUTHORITY MTG., JANUARY 9, 1997 PAGE 12 Ms. Dacy stated under the proposal the Fridley HRA would be responsible for hiring, determination, etc. The person would work 24 hours in Fridley and 16 hours in Blaine. Mr. Burns stated they would be service contracting with Blaine. Ms. Dacy stated they have a termination clause of one month. It is more prudent for us to be in charge of the hiring and firing, and Blaine agreed. Mr. Burns asked if they could sell services to a third community if there was not enough business. Ms. Dacy stated this was possible that they could do that. These programs are getting a lot of attention. She would not be surprised if other communities would be interested in the service. Mr. McFarland asked, if you were to find a person to work as an independent contractor for both cities, would he/she work for $30,000 to avoid the employer/employee relationship. In lieu of the benefits, would they require more money? � Ms. Dacy stated, in their experience, the rate would go up to between $20 and $30 per hour so that person can cover the cost of the benefits. It is cheaper to hire than to pay a consultant's cost. Mr. Commers stated he thought Blaine should pay a higher rate because Fridley would be taking responsibility and taking on the potential liability. He thought 40% of the reqular hourly rate is not quite fair. An enhancement to the rate would be in order to cover such items as administrative expenses. Ms. Schnabel asked if this person would be working for the City of Blaine or the Blaine HRA. Ms. Dacy stated she did not know. She will check. If the HRA is comfortable for staff to proceed to do the advertisements, they would have to come back for approval of the position and the candidate. If something happens in between, the HRA will be informed. Mr. Commers asked if the members had any objections to advertising the position. The consensus of the HRA was to proceed. Mr. Commers asked staff to keep open the possibility that they might find someone part time. Mr. Meyer stated, if the applicants are not acceptable, it might be n necessary next month to reassess the criteria to see if the � HOUSING & REDEVEIAP'N�NT AUTHORITY MTG., JANUARY 9, 1997 PAGE 13 criteria are excessive and we are therefore excluding persons who might qualify. 10. FIRST-TIME HOMEBUYER PROGRAM Mr. Commers stated this item, for informational purposes, relates to the report from Ms. Dacy relating to the Anoka County HRA and the first-time homebuyers program that the County is instituting through the MHFA. The bottom line is that it is staff's recommendation that we do not participate because there is not enough information and no track record for performance. Ms. Dacy stated staff is recommending to continue with the MHFA program and, in the meantime, look at what the Anoka County HRA is doing. 11. AUTHORIZATION TO APPLY FOR 1997 HOME FUNDS Mr. Commers stated we have participated in this program for the last few years. The recommendation is to authorize staff to make application for fund. This would require matching funds and we have always provided that. He has thought this program to be successful and fair. If we do get a grant, there would be a i''1� required match. Ms. Dacy stated she did not get the notice until Monday of this week and the deadline is early. Staff does need a motion from the HRA to authorize staff to apply. MOTION by Ms. Schnabel, seconded by Mr. McFarland, to continue this program and to authorize an application to the County for $75,000 in 1997 HOME funds. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON CON�lERS DECI�ARED THE MOTION CP,RRIED UNANIMOUSLY. ADJOURI�NT : CHAIRPERSON CONIl�RS DECLARED THE JANUARY 9, 1997, HOUSING AND REDEVELOPT�NT AUTHORITY MEETING ADJOURNED AT 8:50 P.M. Respectfully submitted, d Lavonn Cooper Recording Secretary �