Loading...
HRA 01/09/2003 - 00027916CITY OF FRIDLEY HOUSING AND REDEVELOPMENT AUTHORITY MEETING JANUARY 9, 2003 CALL TO ORDER: Chairperson Commers called the January 9, 2003, Housing and Redevelopment Authority meeting to order at 8:38 p.m. ROLL CALL: Members Present: Larry Commers, John Meyer, Pat Gabel, Virginia Schnabel, Jay Bajwa Members Absent: None Others Present: Grant Fernelius, Assistant HRA Director William Burns, Executive Director of HRA Scott Hickok, Community Development Director Rick Pribyl, Finance Director Paul Eisenmenger, HRA Accountant Jim Casserly, Development Consultant APPROVE THE DECEMBER 12, 2002, HOUSING AND REDEVELOPMENT AUTHORITY MEETING MINUTES: Ms. Schnabel stated that on page 6, paragraph 5, line 2, the word "pond" should be changed to "bond." MOTION BY Mr. Bajwa, seconded by Ms. Schnabel, to approve the December 12, 2002, Housing & Redevelopment Authority minutes as corrected. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. CONSENT AGENDA CLAIMS AND EXPENSES MOTION by Mr. Meyer, seconded by Ms. Gabel, to approve the consent agenda. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. ACTION AGENDA 2. CONSIDER MODIFICATION TO LOAN SUBORDINATION POLICY Mr. Fernelius stated that this issue was discussed at the December 14th HRA meeting. Staff recommended modifying the existing policy to allow individuals to both refinance as well as what they take "cash out" also take equity out for other activities. HOUSING & REDEVELOPMENT AUTHORITY MEETING, JANUARY 9, 2003 PAGE 2 Mr. Fernelius stated staff has structured the resolution to reflect that policy discussion. The concept the HRA agreed to at the last meeting was that they will not prohibit cash-out refinance transactions for activities unrelated to home improvements. However, the policy will place limitations on how much equity can be borrowed. For example, if someone wants to refinance and take equity out for more improvements to the home, the Authority will subordinate its mortgage assuming the combined loan to value ratio does doe not exceed 100 percent. If on the other hand the borrower wants to refinance and take equity out for other things, the Authority will subordinate its mortgage assuming the combined loan to value ratio doesn't exceed 90%. Staff recommends approval of the resolution. Mr. Meyer stated he thought this was a good compilation. Mr. Bajwa stated staff did a fantastic job. MOTION by Mr. Meyer, seconded by Ms. Schnabel, to approve Resolution HRA 1-2003, A Resolution Modifying the Comprehensive Housing Rehabilitation Program. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. 3. CONSIDER AMENDMENT TO CONTRACT WITH CEE (CENTER FOR ENERGY AND ENVIRONMENT) FOR DISCOUNT LOAN PROGRAM. Mr. Fernelius stated that the proposed amendment would extend the length of the contract through the end of this year. As background information, under this program the Authority helps write down the interest rate on loans that are made by CEE and sold to MHFA. Originally, the contract was supposed to terminate at the end of 2001. Staff is proposing that the contract be extended through the end of this year. It may be that the program ends before then, but this would give staff some flexibility. Ms. Gabel asked if money was budgeted for this. Mr. Fernelius replied, yes, they had set aside $50,000. MOTION by Ms. Gabel, seconded by Ms. Schnabel, to approve the extension to the Discount Loan Program Origination Agreement with the Center for Energy and Environment through December 31, 2003. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. 4. CONSIDER PARTICIPATION IN 2003 MHFA 1ST TIME HOMEBUYERS PROGRAM THROUGH ANOKA COUNTY. Mr. Fernelius stated the City has participated in this program since 1993. They have participated both on their own, as well as through Anoka County. In past discussions, staff has evaluated the merits of each arrangement. For example, by joining in the County's application the City has access to a larger pool of funds. On the other hand, an independent program secures a minimum allocation of funds for the City, albeit a smaller amount. Last year, as an the Authority received an allocation of $360,000. Two loans were made as a result of that. HOUSING & REDEVELOPMENT AUTHORITY MEETING, JANUARY 9, 2003 PAGE 3 Staff is recommending that the City join in the County's application, although no specific action is needed by the HRA; this is just information unless the HRA directs staff otherwise. Mr. Commers stated he believed the general consensus of the HRA was to again join the County's application. Mr. Bajwa asked if the allocations would stay the same or about the same. Mr. Fernelius stated if they went on their own, it probably would. It's a complicated formula that takes into account the population and percentage of low and moderate income residents. So, they wouldn't get any more money than they did last year if they applied again on their own. INFORMATION ITEMS 5. UPDATE ON MINNESOTA NAHRO 2003 LEGISLATIVE AGENDA. Mr. Fernelius stated Minnesota NAHRO is the Minnesota Chapter of the National Association of Housing Redevelopment Officials, which is an advocacy group for HRA's throughout the state. Minnesota NAHRO has adopted a Legislative Agenda for the 2003t State Legislature. The group takes a very proactive role in either sponsoring, supporting or monitoring legislation. The attached agenda highlights issues for 2003. The central focus is more housing-related. There are a couple of issues related to tax abatement and tax increment financing. Mr. Fernelius stated the other issue is the DTED Redevelopment Fund. That is a fund that the Governor proposed last year, but it did not happen. There were no funds for 2002. NAHRO supports a bond appropriation to continue funding this program. Mr. Fernelius stated this is just an information item. He wanted to keep the HRA up-to-date on what one of their advocacy groups is looking at in terms of the next legislative session. Mr. Commers stated it appeared that a number of the issues look like they would be beneficial to the HRA's position. For example, he thought that one of the sources of funds Mr. Fernelius was talking about on the Gateway West was the DTED. Mr. Fernelius replied, yes, assuming that program would be funded in 2003. Mr. Commers asked Mr. Casserly what input he could provide relating to what is going on with the Legislature, i.e., the real estate tax going up. Mr. Casserly replied the new Governor's initiative on development is going to be tax-free zones. He did not think that is going to have any relevancy to the HRA. The theory is that tax-free zones could be established outside the metropolitan area, designed specifically using indices for poverty and unemployment that want to develop in zones, and encourage businesses to relocate in them. These are primarily geographical incentives. The businesses in these zones would be exempt for 12 years from property tax, corporate excise tax, and sales taxes on products that they use. It is a very interesting concept. Apparently it has been done in Michigan, Massachusetts, and Pennsylvania. Mr. Casserly stated it appears the only assistance the HRA may get for any more activities is if the bonding bill was passed. In essence this is the same bonding bill as last year. They are talking about doing that in the next six weeks. Those seem to be the major initiatives. There is a HOUSING & REDEVELOPMENT AUTHORITY MEETING, JANUARY 9, 2003 PAGE 4 lot of talk about affordable housing, growth, and economic development, but not much about redevelopment. Mr. Casserly stated he believed there are some things they are going to be able to do in terms of some housing issues. Some of the things they will be looking at is trying to get the ability to use more current tax increment districts that have some services and be able to use those services for more affordable housing. Mr. Commers replied that would be good for them. He stated he thought the Governor had a very active HRA in South St. Paul. Mr. Casserly replied that South St. Paul indeed has a very active one. He stated he was at a reception recently for the new State Auditor, and there were some nice discussions regarding goals. The new State Auditor does not have any animosity towards these types of development activities. She is very outspoken and sees herself as not being confrontational with cities. She has obviously been the mayor of a very large city for a long period of time; and while she is not a big fan of tax increment, she has, in fact, supported and voted for tax increment. So, at the administrative level, they may have a kinder, gentler approach on some things. Apparently, there have been a couple of changes already with some cities with letters that have been issued by the State Auditors Office so some rethinking has already been going on. Mr. Commers asked if the State Auditor charges them for keeping their tax increment money. Mr. Casserly replied it is statewide. It's 34 hundredths of 1 percent. Mr. Casserly stated they would probably be coming back to the HRA in March or April to ask them to make some adjustments to some of their budgets and address some of the issues. One thing they have to remember is that the auditing reporting has changed over the last 3 to 7 years. They are now approaching each tax increment district and need a separate balance sheet, and these districts should have never been established. The legislative session is probably not going to give a whole lot to help. 6. MISCELLANEOUS UPDATES Mr. Hickok stated the Commission appreciation dinner this year will be held at Joe DiMaggios. The dinner is to recognize all the hard work done by the HRA and other commissions. Mr. Hickok stated the North Metro Garden Fairwill be held on Saturday, March 1, from 9 a.m. to 3 p.m. That is a fun event. It is a nice opportunity for people who are planning to do something to their house or garden to talk to vendors. For the staff working, it is a nice opportunity to meet some of the citizens of the community. There is generally a great Fridley resident turnout and it is really worth attending. Mr. Fernelius is working with the Mounds View staff right now to put it all together. He encouraged the HRA members to attend. Mr. Hickok stated the payment for condemnation damages to Fred Oreel on the Hardee's property, 289 57th Avenue is bad news. That project went so well, back when it was happening that it was a shame to add this cloud over it now. All the properties settled after negotiations on obtaining right-of-way. All except Hardees. Hardee's just simply did not come to the table. The irony of the situation became very clear when we finally got into condemnation; Hardees wanted to set their "damage" stakes high, when what the project really meant to their site is that they got a great deal of site improvements. The City feels they improved Hardee's visibility from I-694 to HOUSING & REDEVELOPMENT AUTHORITY MEETING, JANUARY 9, 2003 PAGE 5 the intersection. Hardees' request was $180,000 for the loss of their access, which under the law there is no payment obligation, provided the hey still have suitable access for their needs. They do have an ingress and egress onto Third Street and actually a much preferred site circulation plan according to Burger King. Nonetheless, it seems that was weighed into the final decision which makes the City want to appeal, and they are going to appeal. Mr. Hickok apologized for the 11th hour announcement. They didn't even have a meeting to discuss this and, in retrospect, he would have liked to have told the HRA about this in October or November. But, frankly, it was at a staff ineeting with Dr. Burns most recently where they were trying to analyze where the money would come from. So, basically they split it down the middle between the City budget and the HRA budget. The City will be appealing and will hold out hopes that a jury will see that this was really an enhancement. And, of course, if they settle for something less than what they have paid out, they will get some refunds. Mr. Commers stated the only issue he saw is this was not an HRA condemnation and asked if it was okay for them to pay. Mr. Casserly replied it is an infrastructure improvement in their tax increment district. Mr. Pribyl stated this is a legitimate expense for tax increments. The only issue is what was budgeted in that budget. They would go back and actually modify it at some time. Ms. Schnabel asked that according to the memo, the announcement of the award was done on August 22. She stated they haven't heard anything about it until tonight. If there was a potential that money was coming out of the HRA budget, shouldn't the HRA have been made aware of this before, especially when they were talking about the budget for next year? Mr. Hickok replied that, absolutely, that is the perfect situation. Had he anticipated it was coming out of the HRA budget, he would have alerted them back in September or October at the latest, once they knew the award was announced and what the dollar amount was. However, it came out of a staff ineeting prior to a hearing where basically they were forcing a payment of 75 percent. The City Attorney was setting up the appeal, was talking to Hardees' attorney, and the City Attorney had basically told Mr. Hickok to hold off. They were paying a $2.99 penalty a day, but the interest was offsetting that so they were okay. The City Attorney said don't pay it until you need to and, frankly, when it got down to where was the money coming from, Dr. Burns suggested it be split down the middle between the HRA and the City. 7. MONTHLY HOUSING REPORT. Mr. Fernelius reported there is no loan servicing report. They did not get the report in time. Ms. Schnabel commented she saw in the delinquency reports for the third quarter, it is actually up a little bit from the second quarter and wondering if they are going to be experiencing more delinquencies. Mr. Fernelius stated their rate has gone up. They seem to have hovered around 10 percent which is the number they use for accounting and budget purposes. So, they are consistent with that. How that compares with the industry average, he didn't know; but that will be available at the next meeting. HOUSING & REDEVELOPMENT AUTHORITY MEETING, JANUARY 9, 2003 PAGE 6 ADJOURNMENT MOTION by Mr. Meyer, seconded by Ms. Schnabel, to adjourn the meeting. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED AND THE JANUARY 9, 2002, HOUSING AND REDEVELOPMENT AUTHORITY MEETING ADJOURNED AT 9:18 P.M. Respectfully submitted, Denise M. Letendre, Recording Secretary