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HRA 05/03/2001 - 00009111CITY OF FRIDLEY HOUSING & REDEVELOPMENT AUTHORITY MEETING MAY 3, 2001 CALL TO ORDER: Chairperson Commers called the May 3, 2001, Housing and Redevelopment Authority meeting to order at 8:00 p.m. ROLL CALL: Members Present: Larry Commers, Virginia Schnabel, Pat Gabel, John Meyer Members Absent: Jay Bajwa Others Present: Grant Fernelius, Housing Coordinator Scott Hickok, Community Development Director Rick Pribyl, Finance Director Paul Eisenmenger, HRA Accountant James Casserly, Development Consultant Mike Juaire, PMJ Group, Inc. Brad Johnson, Legacy Communities APPROVAL OF THE APRIL 5, 2001, HOUSING AND REDEVELOPMENT AUTHORITY MINUTES: MOTION by Mr. Meyer, seconded by Ms. Schnabel, to approve the April 5, 2001, Housing and Redevelopment Authority meeting minutes. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. CONSENT AGENDA: 1. APPROVE PHASE 3 OF THE HOUSING REPLACEMENT PROGRAM (RESOLUTION NO. HRA 2-2001): 2. CONSIDER ACCESS ALTERATION REIMBURSEMENT AGREEMENT WITH ASHLAND, INC. FOR GATEWAY EAST PROJECT: 3. CONSIDER CONTRIBUTION TO MINNESOTA SOLUTIONS FOR 2002 LEGISLATIVE SESSION: 4. CLAIMS AND EXPENSES: Mr. Commers asked if there were any questions regarding the items for the Consent Agenda. Ms. Gabel stated that she read the memo regarding Minnesota Solutions. It brought up a question for her that talked about an appropriation of about $1,500,000 for the biennium. Is that to run Solutions versus the total grant to DTED? Mr. Fernelius stated that the $1,500.000 refers to the DTED Redevelopment Account. That is a separate program. HOUSING & REDEVELOPMENT AUTHORITY MEETING. MAY 3. 2001 PAGE 2 Ms. Gabel asked if it was the program where they apply to get grant money. Mr. Fernelius stated that is the program which has been cut to $1,500,000, and now has been cut to zero. It is a resource in the future and it is not good when the legislature cuts that. Mr. Meyer asked if item #1 could be removed from the consent agenda. MOTION by Ms. Schnabel, seconded by Mr. Meyer, to approve the consent agenda as amended with item #1 to be placed at the end of the Action Agenda. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. ACTION ITEMS: 5. CONDUCT PUBLIC HEARING REGARDING SALE OF 5800 2ND STREET AND 1015 MISSISSIPPI STREET AND AWARD SALE OF PROPERTIES TO PMJ GROUP ET. A. AND LEGACY COMMUNITIES L.L.C.: MOTION by Ms. Gabel, seconded by Ms. Schnabel, to open the public hearing. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED AND THE PUBLIC HEARING WAS OPENED AT 8:15 P.M. Mr. Fernelius stated that the purpose of the hearing was to review the proposed sale and development of these vacant lots. The first site, 1015 Mississippi Street, is located on the corner of Mississippi Street and Highway 65. The lot is 107 feet wide by 250 feet deep with approximately 26,750 square feet. This was acquired by the HRA in 1998 through the Scattered Site Redevelopment Program. A house and a garage were demolished. The City had received two proposals to develop homes on this site, but both were unsuccessful. The current proposal has been submitted by Legacy Communities, L.L.C., based in Chanhassen, MN. They are proposing to build a 1,540 square foot one story ramblerwith an attached two- car garage. The house design does meet the criteria established for the program. This house would be constructed using modular construction and placed on a permanent foundation. This is a new venture for the Fridley HRA, because they have not utilized this type of construction in the past. Brad Johnson, representative of the developer, can answer questions regarding the construction. The house will be valued between $180,000 and $200,000 and will be purchased by Larry Podany, a Fridley resident. Mr. Fernelius stated that the second site is located at the corner of 58th and 2nd Street in the Hyde Park neighborhood. The lot is 80 feet wide by 129 feet deep. The site was acquired in 1997 by the Scattered Site program. PMJ Group submitted a proposal to build a 1,248 square foot one story rambler and an attached two car garage. This is a three bedroom design with a living room, kitchen/dining room, two full bathrooms and a master bath. A stick frame construction will be utilized, and the lot will be sold for $26,500. The home will have a minimum valuation (lot included) of $125,000. The house will be sold to Daniel Garvey and Suzanne Juaire. Mr. Fernelius stated staff recommends that the HRA award the lots to those separate parties and take separate action on the development agreement as described later in the agenda. HOUSING & REDEVELOPMENT AUTHORITY MEETING. MAY 3. 2001 PAGE 3 Mr. Commers asked if they had any other modular built homes in Fridley. Ms. Gabel stated there is one on 7th Street with a brick farade down on the bottom. The Appeals Commission granted a variance for that house. Mr. Johnson stated that this unit will be manufactured in Ladysmith, WI. The only difference in the process of building it is that the foundation is put in and it takes one day to assemble the house on the site and another 25 days to finish the house. The specifications meet all the codes. This is a house with 2' by 6' construction with vaulted ceiling. They are anxious to do this one in Fridley. In Chaska, they are currently producing 300 homes in a subdivision where the prices will range from $150,000 to $200,000. Their business is generally multi-family housing and modular construction. These are built in about a week in the factory and is a different process. They do not need many trades to get this built, and the site work is about half the cost. Mr. Commers asked if electricians and plumbers are needed. Mr. Johnson stated licensed plumbers and electricians are needed. These are pre-approved with the State of MN to the codes that the State has previously set for electrical. Ms. Schnabel asked how many pieces the house comes in and where is it trucked from. Mr. Johnson stated that it comes in two pieces and is trucked from Ladysmith, Wisconsin. Mr. Meyer asked if the State of Minnesota requires pre-fab permits. Mr. Johnson stated this is approved at the State level with a State inspection. The things to be concerned about like the hooking up of the sewer and water is done by local people and done quickly. Mr. Meyer stated there is quite a difference in price with these two houses. Mr. Johnson stated that one has more square footage, a jacuzzi, a great room, and bigger bedroom. Mr. Mike Juaire, PMJ Group, Inc., stated that Suzanne Juaire is his sister and Dan Garvey is her fiance. He is building this home for them for a wedding present. Mr. Commers asked if he had built any other homes in Fridley. Mr. Juaire stated that he built a duplex in 1998 and a four-plex last year on 4th Street. The duplex was a roll-in project. Mr. Johnson was not involved with this project. Mr. Meyer asked if it would be standard construction home. Mr. Juaire stated that it is. He had built some of those since 1975. Mr. Commers asked if he is satisfied with Mr. Johnson's work. Mr. Juaire stated he was. HOUSING & REDEVELOPMENT AUTHORITY MEETING. MAY 3. 2001 PAGE 4 MOTION by Ms. Schnabel, seconded by Ms. Gabel, to close the public hearing. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE PUBLIC HEARING WAS CLOSED AT 8:39 P.M. MOTION by Mr. Meyer, seconded by Ms. Schnabel, to approved the sale of 1015 Mississippi Street to Legacy Communities, L.L.C., and 5800 2nd Street to PMJ Group Inc. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. 6. CONSIDER CONTRACTS FOR PRIVATE REDEVELOPMENT WITH PMJ GROUP ET. AL. AND LEGACY COMMUNITIES L.L.C: Mr. Fernelius stated that as part of each sale, they will enter into a contract for private redevelopment with each party. This agreement is used and outlines the obligations of the HRA and the buyer. It spells out the terms and conditions of the sale for the land. The lot price is $39,500 for 1015 Mississippi Street. They have a minimum value of $116,000. They set a closing date of May 15, 2001. That may change slightly based on the April 5 HRA meeting. The construction start date will be June 1, 2001 and a completion date of August 1, 2001. The developer will pay cash at closing. The developer at 5800 2nd Street is PMJ Group, Inc., and Dan Garvey and Suzanne Juaire. The lot price would be $25,100 with a minimum value of $125,000. The closing date will be no later than June 1, 2001. The construction start date will be no later than July 1 and hopefully be completed no later than October 1, 2001. The terms would be cash at closing. Staff recommends approval of the resolutions in the agenda. Mr. Commers stated that it is nice to bring some new homes into Fridley and this may be another good thing for the city. MOTION by Mr. Meyer, seconded by Ms. Schnabel, to approve Resolution No. HRA 3-2001, "A Resolution Authorizing Execution and Delivery of a Contract for Private Redevelopment By and Between the Housing and Redevelopment Authority in and for the City of Fridley, Minnesota, and PMJ Group, Inc., and Daniel Garvey and Suzanne Juaire". UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. MOTION by Ms. Gabel, seconded by Ms. Schnabel, to approve Resolution No. HRA 4-2001, "A Resolution Authorizing Execution and Delivery of a Contract for Private Redevelopment By and Between the Housing and Redevelopment Authority in and for the City of Fridley, Minnesota, and Legacy Communities, L.L.C.". UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. 7. CONSIDER MODIFICATION TO HRA STAFF RESPONSIBILITIES AND SALARY RESTRUCTURING: Mr. Commers asked for clarification of the expense of the Housing Director. HOUSING & REDEVELOPMENT AUTHORITY MEETING. MAY 3. 2001 PAGE 5 Mr. Hickok stated this is modifying the position previously held by Ryan Jendro as the Remodeling Advisor. This would be changed to Housing Assistant. Part of the philosophy here is that there is an incredible amount of work to be done in assisting Mr. Fernelius with redevelopment projects. This is more than a half time position on projects and prep work. There are meetings with contractors, etc. One concern is that over the past five years, four very good people have been in this position. Staff is not asking for full time with this proposal, although that would be okay. In the past, these people did not have benefits, and now there is the opportunity to give benefits. The benefits may keep a good person here, and he/she could work on other projects. Mr. Commers stated that with three-quarters time, someone may not be able to work along with this position somewhere else. What would be the difference in cost if they had someone full- time? Mr. Hickok stated that the cost is in the benefits. Dr. Burns felt that he would like to present three-quarters time. They can track this position either way. Mr. Commers asked what the incremental cost would be with only another eight hours added as the benefits are there already. Mr. Hickok stated that the addition of eight hours is the major cost. The three-quarter position with benefits is at $39,855. Ms. Schnabel asked what they are asking per hour for wage. Mr. Hickok stated that it is $17.50 per hour. Mr. Fernelius stated that when this was discussed with the Executive Director, they decided to try the three-quarter position with advertising and see what they had for candidates and base the decision on that. They would then consider a full-time position. Mr. Meyer stated they have had a revolving door with this program because they are picking up younger people between jobs who go on to better things. Now is it realistic to attract a first line person in this position who has some vision of longer term continuity with the City but only give three-quarters time? Mr. Commers stated that the qualifications include a degreed person in the field. Mr. Meyer asked why a person would be interested in three-quarters of a salary? Mr. Hickok stated that with the changing model of the household and juxtaposition of babysitting, some people indicate preference to three-quarter time to not have daycare. However, they may need to do full-time. Ms. Gabel asked if CEE was charging us for the remodeling work. Mr. Fernelius stated, yes, they were. Ms. Gabel asked if the work at full-time could be done by this other person for the same increment? HOUSING & REDEVELOPMENT AUTHORITY MEETING. MAY 3. 2001 PAGE 6 Mr. Fernelius stated that changing the focus of this position entirely will focus on housing and have broader responsibility. CEE has resources and people on staff to provide these services. This is on a service basis with us only paying when they provide the service. Ms. Gabel asked who she would call to gather information for remodeling. Mr. Fernelius stated that it would be himself, this new position, or contacting CEE directly. The HRA is billed for the remodeling advice if CEE provided the information and the loan origination fee. Ms. Gabel asked if they were creating a gap for citizen's questions to be answered. Mr. Fernelius stated they are trying to avoid that gap and broaden the responsibility and more staff to assist callers. Mr. Hickok stated that the benefit is to build depth among the staff inembers and share responsibility. Mr. Meyer asked if the person would only handle the red tape involved in loans. Mr. Fernelius stated the person would also assist in Scattered Site and remodeling fairs and that sort of thing. Mr. Meyer asked if they would have anyone on staff to help people with remodeling questions. Mr. Fernelius stated that the intent is to strengthen and improve the resource with CEE which currently administers the loan program. This individual can provide whatever referral they need to provide. They have more staff familiar with the services they can offer. Mr. Meyer stated they will not have help for citizens except through CEE with solving citizens' particular remodeling questions. Mr. Hickok stated that the call will still end in help with the design field. They will talk to someone who is responsible and Fridley has a contractual relationship with them. They will receive help from the person who takes them through the design process and then take them to the closing table and help process the loans. They would not consider any drop-in customer service. Ms. Schnabel asked if the job functions would be transferred to the CEE person. Mr. Fernelius stated that is correct. Ms. Schnabel stated that Mr. Fernelius' job description is very involved. What is Mr. Hickok's responsibilities as Community Development Director? Mr. Hickok stated that he oversees the building, housing, and planning divisions. They wanted to create a team approach to problem solving in the redevelopment area. His job is to communicate with the other staff inembers to get redevelopment projects done. Ms. Dacy did an excellent job at that. As they get into redevelopment projects, they become isolated and focused with dealing with those issues to get the project put together. They want to create a process whereby the Community Development Director is still over the Assistant Executive HOUSING & REDEVELOPMENT AUTHORITY MEETING. MAY 3. 2001 PAGE 7 Director of the HRA. I would share responsibilities in redevelopment projects. This frees up time to think about other redevelopment priorities and set out on some other goals and objectives. There is short-range busy activity and more long-range things they get involved with. It opens up long-range opportunities and broadens each one of our positions where it would feel like they are introducing more than a three-quarter time position. Each would have an expanded role with better efficiency and depth with all Staff. Ms. Schnabel asked if he would be involved with Scattered Site Housing. Mr. Hickok stated that he would be supervising it, and much of that will happen because of the Housing Specialist. Redevelopment can be complex and the team is helped through all processes. Ms. Schnabel stated that it appears Mr. Fernelius' duties involve a lot of duties that Ms. Dacy, the former Community Development Director, did. That led her to ask how Mr. Hickok was involved. It is important to understand this so they know who to direct the HRA's questions to and for the public. Mr. Hickok stated that the day to day stuff is overwhelming and the longer range goals set out for Commissions do not get touched as they should. That is where he will be with the goals set. Ms. Schnabel asked if the HRA could see his job description. This set-up should work very well, but since the salaries come out of the HRA's budget, the HRA needs to be informed of the different roles. Mr. Commers asked how much time Mr. Hickok spent on HRA's matters. Mr. Hickok stated that it is about sixty percent (60%). There is a balance there because he is new to the position and timing is everything. Mr. Commers asked if the budget will become Mr. Fernelius' responsibility. Mr. Fernelius stated that was correct. Mr. Commers stated that it would be good to have his job description. Ms. Gabel stated that she likes the overall concept but is still bothered by this extra layer they are adding. She is not feeling reassured that this will be seamless and the consumer is not going to notice any difference. Where is CEE located? Mr. Fernelius stated that they are in Minneapolis. They have a person who comes out every Tuesday night from 5:00 p.m. to 7:00 p.m. as part of the service package to the City. They also schedule other times when they can come out and meet with a resident on site so the resident does not have to go out of town. CEE has a dedicated phone line that people can call. They try to be very available and customer service oriented. Mr. Hickok stated that when a call comes in, they publish information with the Remodeling Advisor's number on it and that same type of publication will happen for that number. Also, other staff inembers will forward the caller or give the number for the direct dial for CEE. Here they will be given the number for the direct dial for the advisor and an appointment will be set HOUSING & REDEVELOPMENT AUTHORITY MEETING. MAY 3. 2001 PAGE 8 up. If it is Wednesday afternoon that works best for the individual, that afternoon the Advisor will visit the site and go over the issues. Ms. Gabel asked what the fee to the HRA would be. Mr. Fernelius stated it is $125 per visit. Ms. Schnabel asked if they could wait a month so they could receive Mr. Hickok's job description to approve this. Mr. Hickok stated that they were a couple months out in this issue, and Mr. Fernelius has taken on a lot of the responsibilities. Ideally, it should be acted on now, but the HRA needs to feel comfortable with it. MOTION by Ms. Schnabel, seconded by Mr. Meyer, to table this item until the next meeting. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. 8. APPROVE PHASE 3 OF THE HOUSING REPLACEMENT PROGRAM: Mr. Fernelius stated this is adding six additional sites and amending the budget for that program. Mr. Commers asked Mr. Casserly for the highlight of this approval. Mr. Casserly stated that in working with Mr. Fernelius, they anticipated some of the costs incurred. These are shown on the budget before Exhibit 1 in the packet. This should be on page 11. This would make an estimate on the aggregate for these numbers because these represent cost of acquisitions, and they just use estimates on some of these costs. They have to estimate on the high side because we do not know until we get involved in each acquisition. Mr. Fernelius stated that most of these expenses have already been incurred. The five sites included as parcels are already owned by the HRA. Mr. Commers asked what the numbers for the land on Exhibit 3B starting at $33,761 reflect. Mr. Casserly stated that would be under the Housing Replacement Program Phase III Assumptions. Mr. Commers asked what they are assuming there. Mr. Casserly stated those are the current market values of the parcels. Mr. Fernelius stated this is a tax increment analysis of what these six sites will generate. Mr. Commers asked what TIF would generate. Mr. Casserly stated that they would generate in TIF when all these projects are built out, and they use an average of $153,000 per unit with eight units. They estimated the annual taxes of each unit of just over $2,069 to have annual taxes of $16,549 and estimated annual available HOUSING & REDEVELOPMENT AUTHORITY MEETING. MAY 3. 2001 PAGE 9 tax increment of $12,666. The district is limited to 15 years and has available increment of $6,333 semi-annually assuming no inflationary increase with some $211,000 increment generated over the fifteen year period going to help with the expenses of the program. Ms. Schnabel asked if this was based on today's tax program that may change tomorrow. Mr. Casserly stated that was correct. Mr. Commers asked if they could know what they put into this program and know what they generated back out in terms of tax increment. They would then know the shortfall on the residential properties. Mr. Pribyl stated this is set up as a separate fund to track annually. They can project out to where they will be in the future. Mr. Fernelius stated that they have also done that with the housing programs. Mr. Pribyl stated that the housing loans are set up in a separate district to monitor for a revolving fund to continue loaning out loans. Mr. Commers stated that the scattered sites are not in a district. Mr. Pribyl stated those are set up as a separate district to monitor those by themselves. Mr. Fernelius stated that it does not include the sale of the land income. They did not do sources and uses to show that. Mr. Commers stated that it would be helpful to see where they stand now and what it is costing to do this. MOTION by Ms. Schnabel, seconded by Mr. Meyer, to approve Phase 3 of the Housing Replacement Program. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. OTHER BUSINESS: INFORMATION ITEMS: 9. GATEWAY EAST GROUNDBREAKING CEREMONY: Mr. Fernelius stated this is scheduled for May 15, 2001, at 4:00 p.m. Invitations will be forthcoming to all Commission members and City Council as well as others. 10. UPDATE ON 2001 HRA BUDGET PREPARATION: Mr. Fernelius stated they hope to have the budget for the next meeting. HOUSING & REDEVELOPMENT AUTHORITY MEETING. MAY 3. 2001 PAGE 10 Mr. Commers stated they should be able to categorize the development in some type of descriptive category as well as the rest of the operating budget. They understand the budget could change. 11. MONTHLY HOUSING REPORT: Ms. Schnabel stated that normally there is a delinquency included. Mr. Fernelius stated this one was an abbreviated version, and he apologized for that. ADJOURNMENT MOTION by Ms. Gabel, seconded by Mr. Meyer, to adjourn the meeting. Seconded by Mr. Meyer. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED AND THE MAY 3, 2001, MEETING OF THE HOUSING AND REDEVELOPMENT AUTHORITY WAS ADJOURNED AT 9:47 P.M. Respectfully submitted, Signe L. Johnson Recording Secretary