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HRA 04/05/2001 - 00009108CITY OF FRIDLEY HOUSING & REDEVELOPMENT AUTHORITY MEETING APRIL 5, 2001 CALL TO ORDER: Acting Chairperson John Meyer called the April 5, 2001, Housing and Redevelopment Authority meeting to order at 7:30 p.m. ROLL CALL: Members Present: John Meyer, Pat Gabel, Jay Bajwa, Members Absent: Virginia Schnabel, Larry Commers Others Present: Scott Hickok, Community Development Director Paul Eisenmenger, HRA Accountant Pat Carline, 5705 Jackson Street APPROVAL OF THE MARCH 1, 2001, HOUSING AND REDEVELOPMENT AUTHORITY MEETING MINUTES: MOTION by Ms. Gabel, seconded by Mr. Bajwa, to approve the March 1, 2001, Housing and Redevelopment Authority meeting minutes. UPON A VOICE VOTE, ALL VOTING AYE, ACTING CHAIRPERSON MEYER DECLARED THE MOTION CARRIED UNANIMOUSLY. CONSENT AGENDA: CLAIMS AND EXPENSES: MOTION by Ms. Gabel, seconded by Mr. Bajwa, to approve the consent agenda as presented. UPON A VOICE VOTE, ALL VOTING AYE, ACTING CHAIRPERSON MEYER DECLARED THE MOTION CARRIED UNANIMOUSLY. DISCUSSION ITEMS: 2. REVIEW AND ADOPT RESOLUTION NO. HRA 1-2001, A RESOLUTION MODIFYING THE TAX INCREMENT FINANCING PLAN FOR TAX INCREMENT FINANCING DISTRICT NO. 9 TO REFLECT A REDUCTION OF THE GEOGRAPHIC AREA OF THE DISTRICT Mr. Hickok stated this is a reduction in Tax Increment Finance District No. 9. The Onan site has been divided into four parcels. In 1998, Onan and Murphy Warehouse joined in a partnership and created a new parcel for a 400,000 square foot Murphy Warehouse facility. In order to put an industry on this site, more clean-up was necessary. This site was cleaned up and was delisted as a federally listed contaminated site. At this meeting, consideration of the removal of the Onan parcel from this district is needed. Since the creation of the district, the Onan site has HOUSING & REDEVELOPMENT AUTHORITY MEETING. APRIL 5. 2001 PAGE 2 experienced a reduction in value of $4,000,000. This means that in order for the district to break even, Murphy or Onan needs to generate an additional $4,000,000. Staff anticipates that the Murphy site will generate between $3,000,000 -$3,500,000 over the life of the district, but that would not break even for the money lost since before the district was created. Staff is recommending that the Onan parcel be separated from the district, in which case they would deal straight with the anticipated gains on the Murphy project. This modification needs to happen this month. Ms. Gabel asked if there was a loss involved in this that has to be regenerated somewhere. Mr. Hickok stated there would be if the Onan parcel was kept in the district. If it is separated, there would be new money generated by Murphy for the City to utilize that. Mr. Bajwa asked what the reason for the loss was. Mr. Hickok stated Onan believed they were being taxed at too high of a rate and have, over the course of time, asked the assessors to reevaluate. As a result, there have been some reductions as a whole that equal the $4,000,000 reduction. Ms. Gabel stated that the bottom line is that the HRA will save money be doing this. Mr. Hickok stated that is correct. Mr. Meyer asked why the taxes were reevaluated. Mr. Hickok stated that for some time, the site where Murphy is was a contamination site and had a value of zero. That left the large L-shaped piece of the Onan project. The Onan industry asked several times for the assessors to come in and reevaluate. They felt that the values were too high based on the criteria the assessors used. In each case, they were able to get a bit of a reduction in the overall value. It was those repeated visits which caused a$4,000,000 reduction in what was originally believed to be the value of the project. Mr. Meyer asked how often the reevaluation of the assessors go on. Mr. Hickok stated it is rare. The size of the industry makes it complex, and the City gives people an opportunity annually to speak about their taxes. The City usually does not hear from industries. Overall, the industrial and commercial properties feel they are at an appropriate rate. Ms. Gabel asked if it is the City's own assessors. Mr. Hickok stated that it is the City's assessors, but they also sometimes meet with County assessors when there is a discrepancy. Ms. Gabel asked if there was one big factor for such a large sum. Mr. Hickok stated it is the retooling of such a large complex, and it is related to a complex formula of values for machinery and the building layout. Mr. Meyer asked if this was over a period of ten years. Mr. Hickok stated that is correct. HOUSING & REDEVELOPMENT AUTHORITY MEETING. APRIL 5. 2001 PAGE 3 Mr. Meyer asked if this would be precedent setting. Mr. Hickok stated it is not. It has happened in other industries and this shows one of the downsides of having the decrease in value show up. It saves what you are paying annually; but from a TIF perspective, it may mean you no longer qualify as is this case. Mr. Bajwa asked if Onan and Murphy would have to agree to this. Mr. Hickok stated they do not but will have representatives at the City Council meeting to discuss this on April 9. MOTION by Mr. Bajwa, seconded by Ms. Gabel, to approve Resolution No. HRA 1-2001, A Resolution Modifying the Tax Increment Financing Plan for Tax Increment Financing District No. 9 to Reflect a Reduction of the Geographic Area of the District. UPON A VOICE VOTE, ALL VOTING AYE, ACTING CHAIRPERSON MEYER DECLARED THE MOTION CARRIED UNANIMOUSLY. OTHER BUSINESS: Pat Carline, Fridley resident, stated that he is against removal of the junkyards. They are viable businesses, and government should not get involved in free enterprise. He does not think taxpayers' money should be used for removing junkyards. Junkyards are a necessary evil. If they are polluting, it is a different story; but they do not know the extent of that pollution. ADJOURNMENT MOTION by Ms. Gabel, seconded by Mr. Bajwa, to adjourn the meeting. UPON A VOICE VOTE, ALL VOTING AYE, ACTING CHAIRPERSON MEYER DECLARED THE MOTION CARRIED AND THE APRIL 5, 2001, MEETING OF THE HOUSING AND REDEVELOPMENT AUTHORITY ADJOURNED AT 7:52 P.M. Respectfully submitted, Signe L. Johnson Recording Secretary