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HRA 07/02/1998 - 29828�"� CITY OF FRIDLEY HOUSING � REDEVELOPMENT AUTHORITY MEETING JULY 2, 1998 CALL TO ORDER: Chairperson Commers called the July 2, 1998, Housing and Redevelopment Authority meeting to order at 7:30 p.m. ROLL CALL: Members Present: Larry Commers, Pat Gabel, John Meyer, Jim McFarland Members Absent: Virginia Schnabel Others Present: Grant Fernelius, Housing Coordinator Jim Casserly, Financial Consultant Craig Ellestad, Accountant Mike and Jackie Egan Jim Glidden, D/B/A Homes "R� Us �'� Mr. Tucker, Alliance Home Values, Inc. Bill and Joan Clark APPROVAL OF MAY 7 1998, HOUSING AND REDEVELOPMENT AUTHORITY MEETING MINUTES� OM TION: by Mr. Meyer, seconded by Mr. McFarland, to approve the June 4, 1998, Housing and Redevelopment Authority minutes as presented. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. CONSENT AGENDA: � • • • .,� • > • • • , - • ,- • It was staffs recommendation that the HRA establish Larry Commers as Chairperson and Virginia Schnabel as Vice-Chairperson for the 1998-1999 term. : ,�• s►� .- n An list of additional expenses for HRA approval was distributed by Mr. Ellestad. HOUSING & REDEVELOPMENT AUTHORITY MTG, JULY 2, 1998 PAGE 2 MOTION by Mr. McFarland, seconded by Ms. Gabel, to approve the Consent Agenda as presented. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. ACTION ITEMS: 3. PUBLIC HEARING TO CONSIDER SALE OF HRA VACANT LOTS: MOTION by Mr. Meyer, seconded by Mr. McFarland, to open the Public Hearing at 7:32 p. m. UPON A VOICE VOTE, ALL MEMBERS VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY AND THE PUBLIC HEARING WAS OFFICIALLY OPENED AT 7:32 P.M. Mr. Femelius, Housing Coordinator, explained that this is the first step in the process of redeveloping the HRA vacant lots. The purpose of the Public Hearing is to identify the sites which will be sold and the selling price of each lot. Mr. Femelius stated there were a total of five sites for sale. The sites were sold �'� on a first-come/first-serve basis. Offers were received on all five sites; however, only four projects will be reviewed by the HRA at this time. Mr. Femelius presented the addresses, listing price, and sale price for each of the five lots. In some instances, the sale price of the Iot is lower than the listed price. The reason for this is that City staff made some concessions in order to achieve some design issues. The cost savings to the buyer will actually be put back into the property. He stated staff recommends that the HRA approve the resolution which authorizes the sale of the residential lots by the HRA. MOTION by Ms. Gabel, seconded by Mr. Meyer, to close the Public Hearing at 7:43 p.m. Mr. Commers stated that information regarding the property located at 530 Hugo Street is not included in the memorandum dated June 28. It is, however, included in the Resolution. Mr. Femelius stated the information was inadvertently deleted, and should be included as a part of the sites to be sold. UPON A VOICE VOTE, ALL MEMBERS VOTING AYE, CHAIRPERSON n COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY AND THE PUBLIC HEARING WAS OFFICIALLY CLOSED AT 7:43 P.M. HOUSING & REDEVELOPMENT AUTHORITY MTG, JULY 2, 1998 PAGE 3 � MOTION by Mr. McFarland, seconded by Mr. Meyer, to Adopt Resolution No. 9- 1998, A Resolution Authorizing the Sale of Residential Building Lots by the Housing and Redevelopment Authority in and for the City of Fridley, Minnesota. UPON A VOICE VOTE, ALL MEMBERS VOTING AYE, CHAIRPERSON COMI�IERS DECLARED THE MOTION CARRIED UNANIMOUSLY. 4. CONSIDER APPROVAL OF REDEVELOPMENT CONTRACTS FOR SCATTERED SITE PROGRAM: Mr. Femelius explained that this is the second step in the process of selling the HRA's vacant lots whereby the HRA considers the actual house plans and development contracts for the individual builders. Mr. Fernelius stated each builder has entered into a Participation Agreement which reserves the site for 60 days. Within that time, the builder must find a buyer for the property, prepare the plans and specifications and arrange for construction financing. Each of the builders will be entering into a separate development contract with the HRA which specifies all of the details of the transaction including the lot price, the closing date, the date of construction start and completion, etc. Once the agreements are approved by the HRA, the builders will have a 45 day period in which to actually enter into the contracts and � close on the properties. At the closing, the builder will pay cash for the property (the HRA will not carry any financing on the land). The HRA will require a minimum home value. Construction on the homes will need to be started no later than October 15, 1998 with a completion date by February 15. 1999. All site work must be completed by May 15, 1999. Staff has reviewed all of plans and negotiated with the builders for certain design features and improvements to the properties. He reviewed the minimum design standards Established by the H RA. 530 Hugo Street: Mr. Fernelius noted that Jackie and Mike Egan will be both the builder and buyer of the property (they are working with a general contractor who will do most of the construction) and will be acting as the developer and signing the development agreement. The lot price is $25,000. The minimum home value on this site is $110,000. They are proposing a split-entry home, with finro bedrooms, 1 3/4 baths with a three-car attached garage. A site plan was provided to indicate the location of the property as well as plans depicting the design of the proposed structure. Mr. Meyer asked what kind of electrical capacity is required for the homes. � Mr. Femelius stated it would be in compliance with the City Building Code. HOUSING & REDEVELOPMENT AUTHORITY MTG, JULY 2, 1998 PAGE 4 � Mr. Meyer stated he believed some standards should be incorporated into the agreements to assure a first class heating and electrical system. He also believed that the HRA should consider requiring air conditioning. Mr. Fernelius stated the HRA has not experienced problems in the past and he did not feel they would be operating in good faith with the buyers if they started adding costs at this time. He believes that the City Building Code addresses many of the concems that Mr. Meyer has about these projects. If there are requirements that would be more desirable than what the minimum requirements are, the HRA could look at that for the future, but he could not recommend doing so at this time. Mr. Meyer stated that the HRA has made some requirements which would upgrade the aesthetics of the properties. He feels the electrical and mechanical systems are just as important as the aesthetics. Furthermore, he does not believe the Building Code addresses the electrical amperage and the BTU's for the fumace. Mr. Femelius stated he believed adding a lengthy specification list would deter builders from participating. Ms. Egan stated when they talked with the heating contractors, there were � standard guidelines that they were required to meet. She provided Mr. Femelius with a copy o� the energy calculations for the property. Mr. Casserly stated he does not feel there are any issues which are not covered or addressed in the city building code. He would, however, be happy to obtain further information and report back to the Board. Mr. Commers suggested that Mr. Femelius and Mr. Casserly review some of these issues and see if perhaps upgrades in the electrical and mechanical systems should be considered. MOTION by Mr. McFarland, seconded by Ms. Gabel, to approve Resolution No. HRA 10-1998, A Resolution Authorizing Execution and Delivery of a Contract for Private Redevelopment by and between the Housing & Redevelopment Authority in and for the City of Fridley, Minnesota, and Michael J. Egan and Jackie S. Egan. UPON A VOICE VOTE, ALL MEMBERS VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. 5857 Main Street N.E.: � � Mr. Femelius explained that on this particular project, the buitder has not identified a buyer, but it would be required prior to executing a development HOUSING & REDEVELOPMENT AUTHORITY MTG, JULY 2, 1998 PAGE 5 � contract. The lot price for this parcel is $20,000 with a minimum home value of $95,000 (land and structure). Mr. Glidden, D/B/A as Homes "R" Us, is proposing to build a split-entry design with two bedrooms and 1 3/4 bath, with 1,092 square feet and a two car garage. Diagrams were provided to show the design of the proposed home. Mr. Glidden noted that the standard electrical requirements are 100 amp service. With anything higher, they charge an additional $300 to $400/50 amps of service. Typically for a house of this size, 82,000 BTU's would suffice. Most builders put in an 82% efficiency fumace. This is adequate to keep a home warm. He stated he feels it would be very difficult to legislate higher mechanical and electrical levels and keep homes in the affordable range. MOTION by Mr. McFarland, seconded by Mr. Meyer, to approve Resolution No. HRA 11-1998, A Resolution Authorizing Execution and Delivery of a Contract for Private Redevelopment by and between the Housing & Redevelopment Authority in and for the City of Fridley, Minnesota, and James A. Glidden D/B/A Homes "R" Us. UPON A VOICE VOTE, ALL MEMBERS VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. ^ 5925 Main Street N.E. Mr. Femelius stated the builder of this property is proposing a two-story home. The lot price is $18,670, with a minimum home value of $95,000 (land and structure). The home will consist of three bedrooms, two baths,.two car garage and be approximately 1,624 square feet. A diagram was provided to show the design of the proposed home. Mr. Tucker, Alliance Home Values, Inc., noted that a buyer has recently been identified for the home. He noted that as a builder, when he has an electrician come in, he asks them to determine the amps which would be necessary assuming the entire home is finished. The heating calculations are completed in this manner as well to determine what is needed in terms of a heating unit. MOTION by Ms. Gabel, seconded by Mr. McFarland, to approve Resolution No. HRA 12-1998, A Resolution Authorizing Execution and Delivery of a Contract for Private Redevelopment by and befinreen the Housing & Redevelopment Authority in and for the City of Fridley, Minnesota, and Alliance Home Value. Inc. UPON A VOICE VOTE, ALL MEMBERS VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. ,r� � 1545 75th Avenue N.E.: HOUSING & REDEVELOPMENT AUTHORITY MTG, JULY 2, 1998 PAGE 6 � Mr. Femelius explained that this builder is proposing a one story rambler design with three bedrooms, two bathrooms and a finro car garage, with approximately 1,450 square feet. The lot price is $29,000 and the minimum home value is $130,000 (land and structure). A diagram was provided to show the design of the proposed home. Mr. Clark, the buyer of this home, stated it is his feeling that if the HRA begins legislating BTU limits, it may take away the rights of the homeowner to include something that they would like to include. MOTION by Mr. Meyer, seconded by Ms. Gabel, to approve Resolution No. HRA 13-1998, A Resolution Authorizing Execution and Delivery of a Contract for Private Redevelopment by and befinreen the Housing & Redevelopment Authority in and for the City of Fridley, Minnesota, and Sussel Corporation. UPON A VOICE VOTE, ALL MEMBERS VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. 5. CONSIDER ACQUISITION OF 5839 THIRD STREET N.E.: Mr. Femelius explained that this properly is located in the Hyde Park neighborhood at the comer of 58th Avenue and 3rd Street. The home was � moved from Richfield in 1995 and is a split level home, approximately 1,100 square feet. The original plans were to fix up the house and occupy it; however, the owner ran into financial di�culty and apparently walked away from the property. The bank has initiated foreclosure on the property and anticipates that they will have clear title by July 2nd. Staff has been through the property and determined that a substantial amount of work would need to be done in order to make the home habitable (estimated $45,000 worth of improvements). This property has been the subject of many complaints over the past two years. The bank is willing to sell the property for $43,000. Staff has some concems that a contractor may acquire the property and do the minimum number of improvements. � � Mr. Casserly stated that the bank has agreed to pay the $7,000 in delinquent water bills which were certified to the taxes. In essence, the HRA at closing would pay $34,000 for the property ($43,000 less $9,000 [delinquent water bills - $7,000, and unpaid taxes -$2,500]). The land is valued at $27,600. MOTION by Ms. Gabel, seconded by Mr. Meyer, to authorize the purchase of property located at 5859 Third Street N.E. in the amount of $34,000 with MidAmerica Bank paying all delinquent taxes, water bills, and miscellaneous costs. HOUSING & REDEVELOPMENT AUTHORITY MTG, JULY 2, 1998 PAGE 7 � Ms. Gabel stated she has personally viewed the property and believes it would be in the best interest of the City to acquire it. UPON A VOICE VOTE, ALL MEMBERS VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. After some discussion, it was the general consensus of the HRA that the City should exercise some reasonable code enforcement activity before the HRA steps in to purchase the property. 6. CONSIDER ACQUISITION OF 621 LAFAYETTE STREET: Mr. Femelius noted that this property is in the Riverview Heights neighborhood and is immediately adjacent to the 611 Lafayette property which the HRA acquired earlier this year. The home is a one-story rambler with one bedroom and a total of 400 square feet. It has a one-car detached garage. The lot is a non-conforming.lot, and, if purchased, the home would be demolished and the lot would need to be combined with the 611 Lafayette property in order to create a buildable lot. The property has been appraised for $57,000 with a$22,000 land value. The owner has agreed to sell the property for $55,000. Mr. Meyer stated the home is small, but it is excellently maintained. It is not a � detriment to the neighborhood or to the Fridley housing stock. Therefore, he does not agree with stafPs recommendation to purchase the properly and demolish it. � Mr. Femelius stated it is staff s feeling that this property could be combined with the 611 Lafayette property in order to create an opportunity for newer market rate housing. The other option would be for the HRA to subdivide the 611 properly and try to sell it to the adjacent property owners. Ms. Gabel asked what the HRA paid for the property at 611 Lafayette. Mr. Femelius stated the HRA paid $10,000; however, the house had been destroyed by a fire. Ms. Gabel asked if the HRA is ever able to recoup the costs associated with the Housing Replacement Program. Mr. Femelius stated the City can recapture some of the increase in the new taxes, but the program is an expensive program. Ms. Gabel stated she would like to have an opportunity to drive by the property. HOUSING & REDEVELOPMENT AUTHORITY MTG, JULY 2, 1998 PAGE 8 � Mr. Commers suggested that Mr. Femelius contact the adjacent property owners to see if they would be interested in purchasing a portion of the 611 Lafayette property and furthermore, if purchasing a portion would indeed make their lots "buildable" lots. MOTION by Mr. Meyer, seconded by Ms. Gabel, to table further discussion on the purchase of the property at 621 Lafayette Street until the next HRA meeting. UPON A VOICE VOTE, ALL MEMBERS VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. 7. CONSIDER ACQUISITION OF 5845 2-1/2 STREET N E• Mr. Femelius explained that this property is located in the Hyde Park neighborhood. It is a one story rambler with three bedrooms and a total of 816 square feet. The property has a basement and a 1-1/2 car detached garage. The house has suffered from deferred maintenance and has severely deteriorated roofing and siding. Additionally, a significant amount of mold and mildew has accumulated throughout the house, with deterioration to the walls and ceilings. There is also evidence of water problems in the basement which are deteriorating the block foundation. � Mr. Femelius stated the lot is 50' X 100' and is considered substandard for new construction. The property was appraised at $54,000 ($20,000 land). The owner has agreed to sell for $48,600. The HRA would likely demolish the home and hold on to the property until an opportunity became available to purchase an adjacent property. MOTION by Ms. Gabel, seconded by Mr. McFarland, to authorize the acquisition of property located at 5845 2-1/2 Street N.E. in the amount of $48,600. Mr. Meyer agreed that the house should be acquired, but wondered if the HRA should pay $48,600 for the properly. Mr. Femelius responded that the price is well below the appraised price and he was informed that there is a big market for homes under $60,000. Mr. Commers asked if Fridley has looked into a Truth-in-Housing Ordinance. Mr. Femelius responded that it is a matter that has been discussed, however it has not been determined that it is worth pursuing. UPON A VOICE VOTE, ALL MEMBERS VOTING AYE, CHAIRPERSON /'� COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. HOUSING & REDEVELOPMENT AUTHORITY MTG, JULY 2, 1998 PAGE 9 ^ 8. RATIFICATION OF ACTIONS BY HRA AT ITS EMERGENCY MEETING OF JUNE 26 1998 AND OTHER ACTIONS CONSISTENT THEREWITH: Mr. Casserly distributed a copy of Resolution No. HRA 8-1998 ratifying the action taken at the Emergency meeting of June 26, 1998. The resolution also addresses the Contract for Exclusive Negotiations that was approved but not acted on and will revoke the resolution adopted in January. MOTION by Mr. Meyer, seconded by Mr. McFarland, to adopt Resolution No. HRA 8-1998, a Resolution Ratifying a Prior Resolution and Revoking all Previous Authorizations for Execution and Delivery of Certain Contracts. . UPON A VOICE VOTE, ALL MEMBERS VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. Mr. Casserly explained that the HRA has attempted to make it clear to Duke Realty that they do not have an agreement with Medtronic and that the HRA is trying to determine what is being proposed and that their agreement has been negotiated and discussed. In the event that the HRA is unable to resolve issues with Medtronic, the HRA would want to continue discussions on this property with them again. �� INFORMATION ITENLS:_ 9. TIF REQUEST FOR PENK/PETERSON PROPERTY ON MAIN STREET• Mr. Casserly noted that this item is being brought forward for informational purposes and to bring the HRA up to date on what has occurred. The site has severe soil problems. The site has had development proposals in the past; however, none have materialized due to the tremendous site improvement costs. The owners of the property are contracting to have some of the poor soil removed and replacement soil in. They have had a lot of discussion with Zintas, a uniform business, who are looking to expand their facilities. The company expects a substantial increase in employment over the next few years and they would be interested in a 50,000 to 60,000 square foot building. A building of this nature would likely increase the taxes 10 times from what is being paid on the site now. The current owners have approximately $300,000 to $400,000 worth of expenses in the site. The soil corrections have been estimated between $250,000 and $400,000. The site is estimated to be worth around $350,000 to $400,000. Mr. Casserly stated five to six years of tax increment would be necessary in order to make this project work. His suggestion to the owners would be to sell � the site and that the HRA contract with the user of the site. The end result � would be the same as previous projects have been done. HOUSING & REDEVELOPMENT AUTHORITY MTG, JULY 2, 1998 PAGE 10 � OTHER BUSINESS Mr. Commers stated that a copy of the Monthly Housing Program Summary was included in the agenda packet. Mr. Femelius noted that staff has not overlooked the loan servicing/delinquency issue that has been discussed in the past. He noted that this will be included on the agenda for the month of August or September. ADJOURNMENT• MOTION by Mr. Meyer, seconded by Ms. Gabel, to adjoum the July 2, 1998, Housing & Redevelopment Authority meeting at 9:35 p.m. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. Respectfully submitted, ����� �, � r D. Saeflce � Tama a � Recording Secretary � � �I CITY OF FRIDLEY SIGN-IN SHEET HOUSING & REDEVELOPMENT AUTHORITY MEETING a � �� Name and Address Agenda Item of Interest � ^ o� P � .�al� h%� �'�i�i�✓ �'v�/� � ��. _ �'�A. �� .� �� �� � �� .� �� � . �.� �/� � . 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