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HRA 06/05/2003 - 00027957HOUSING AND REDEVELOPMENT AUTHORITY MEETING JUNE 5, 2003 CALL TO ORDER: Vice-Chairperson Schnabel called the June 5, 2003, Housing and Redevelopment Authority meeting to order at 7:32 p.m. ROLL CALL: Members Present: Virginia Schnabel, John Meyer, Pat Gabel, Jay Bajwa Members Absent: Larry Commers Others Present: Grant Fernelius, Assistant HRA Director Scott Hickok, Community Development Director Paul Eisenmenger, HRA Accountant Bob Barnette, City Council member Dwight N. Snow, 290 — 58th Avenue NE David & Kathy Harvet, 13362 Partridge Street NW, Andover Bill & Margie Talley, 281 57th Place NE Raymond Hegna, 5770 3�d Street NE APPROVE THE MAY 1, 2003, HOUSING AND REDEVELOPMENT AUTHORITY MEETING MINUTES: The following correction was made to the minutes: page 3, last paragraph, 4th line, change $160,000 to $190,000. MOTION BY Ms. Gabel, seconded by Mr. Bajwa, to approve the May 1, 2003, HRA minutes as amended. UPON A VOICE VOTE, ALL VOTING AYE, VICE-CHAIRPERSON SCHNABEL DECLARED THE MOTION CARRIED UNANIMOUSLY. ACTION ITEMS: CLAIMS AND EXPENSES Ms. Gabel asked what are the administrative expenses paid to Anoka County? Mr. Eisenmenger replied that is the fee that Anoka County charges the City for administering the TIF Districts. Mr. Bajwa asked about the receipts ($280,911) from Old Republic. Mr. Fernelius replied that is for the refund of the escrow proceeds for the Penk/Peterson project. They had escrowed money for a project that never materialized and so those funds were returned to the HRA. Mr. Meyer asked about the many 2003 loans with Tamarisk. What are they doing with Tamarisk. Tamarisk is a hospice organization. It is the first time he has seen any transactions between them and Tamarisk. HOUSING & REDEVELOPMENT AUTHORITY MEETING, JUNE 5, 2003 PAGE 2 Mr. Fernelius replied Tamarisk was given a loan back in the mid to late 90s to help them with their facility at Central Avenue and Mississippi Street. The loan was for about $10,000 and Tamarisk is now making payments back to HRA on that loan. MOTION by Mr. Meyer, seconded by Ms. Gabel, to approve the Claims and Expenses. UPON A VOICE VOTE, ALL VOTING AYE, VICE-CHAIRPERSON SCHNABEL DECLARED THE MOTION CARRIED UNANIMOUSLY. 2. ANNUAL MEETING AND ELECTION OF OFFICERS Because Mr. Bajwa has moved out of the City of Fridley leaving a vacancy on the HRA, and because of the absence of Mr. Commers, the HRA members agreed to postpone the annual meeting and election of officers to the July 10th meeting. MOTION by Mr. Meyer, seconded by Ms. Gabel, to postpone the annual meeting and the election of officers until the July 10, 2003, meeting. UPON A VOICE VOTE, ALL VOTING AYE, VICE-CHAIRPERSON SCHNABEL DECLARED THE MOTION CARRIED UNANIMOUSLY. 3. CONSIDER DECORATIVE LIGHTING REPAIRS ON MISSISSIPPI STREET Mr. Fernelius stated Jon Haukaas, Director of Public Works, had prepared a memo outlining a request to repair the decorative lighting along Mississippi Street. Those are the globe-type lanterns that are in the boulevard. Apparently, in the mid-1980s through the early 1990s, the HRA was responsible for paying for those lights. The HRA didn't pay for the ongoing operation, such as electricity, but they did pay for the initial cost of installing the lights. Now, due to the repair work done over the years, new wiring is needed. Staff is recommending that the HRA approve a proposal from Kilmer Electric to replace the wiring and reconnect the lights at a cost of $6,121. Ms. Gabel asked if the HRA would always be responsible for this cost. Mr. Fernelius replied that based on the research they have done, it appears the HRA was responsible for the initial installation. However, it is not clear to him whether or not the HRA is obligated to pay for this kind of ongoing cost into the future. His understanding is that the HRA would pay for this, but they would research this issue further. However, they are having a hard time finding the files when this project was originally constructed. Ms. Gabel replied if the HRA said "no", who would be the next party in line to pay for the streetlights? Mr. Fernelius stated the City would obviously be the next logical party. He pointed out that the HRA has paid for lighting on other projects, such as East Moore Lake Drive and 57th Avenue, so that would be consistent with past actions. Mr. Meyer replied this is a minor maintenance item and a major miracle only $6,000 is being charged for the electrical repairs. Ms. Schnabel recalled there was a time when they studied the University Avenue corridor and improvements. Part of that study was at the intersection of Mississippi and University where HOUSING & REDEVELOPMENT AUTHORITY MEETING, JUNE 5, 2003 PAGE 3 they talked about putting pavers out in the street, decorative work to designate the walkway patterns and such. Did they actually pay for the lights originally, or did they just recommend the style that was to be used? She, too, doesn't remember the project and how they got involved in installing that lighting. Mr. Fernelius stated it appears there were several projects along Mississippi Street. In the mid- 80s, lighting was installed on the northwest quadrant where Holly Center is, and the HRA was involved in paying part of that and then the City assessed the property owner for a portion of that lighting cost. The HRA was also involved with improvements along the south side of Mississippi Street through the Christianson Crossing development, and he believed there was some lighting that was done. In early 1993, he believed some additional work was done on the east side of Mississippi Street. He believed it was related to landscaping and lighting improvements along Mississippi on the east side of University Avenue. It appears the HRA was responsible for those costs. Ms. Schnabel asked how long the stretch is along Mississippi Street. Mr. Fernelius replied roughly 7,000 linear feet of wire. He believed it is all of the decorative lights along this intersection. Mr. Hickok, Community Development Director, stated the contractor has looked at each of the fixtures to see the extent of future issues, and this request would bring them current and clear up problems that they see now or in the foreseeable future. Right now this would cover the light fixture improvements at the intersection. Ms. Gabel asked if he would anticipate a 15-20 year life span for these repairs? Mr. Fernelius stated the lighting was installed in 1985-86, and now, 17 years later, they have to do this work. The problems are with the lights not working and working intermittently, so this new wiring will fix that. MOTION by Ms. Gabel, seconded by Mr. Meyer, to approve the decorative lighting repairs on Mississippi Street in the amount of $6,121. UPON A VOICE VOTE, ALL VOTING AYE, VICE-CHAIRPERSON SCHNABEL DECLARED THE MOTION CARRIED UNANIMOUSLY. 4. AUTHORIZE STAFF TO PREPARE REQUEST FOR PROPOSAL ON GATEWAY WEST. Mr. Fernelius stated the consensus at the Joint HRA/City Council meeting on May 1 was pretty strong that the single-family option seemed to be most appealing. Two individuals expressed some reservation about moving ahead with the single-family option and preferred waiting. But the majority of the HRA and Council members at the joint meeting seemed to support the single- family option. In terms of the next steps, the HRA has two options: (1) To proceed with an RFP, which would be prepared by staff and reviewed by the HRA at its next meeting in July. If acceptable, then staff would send the RFP out to developers to solicit proposals for a single-family development. They would expect to have those RFP's back some time in August to review at the September HRA meeting. (2) To look at expanding the redevelopment area near Werner's Furniture. At the last meeting, there was some discussion about including the Werner Furniture site in this HOUSING & REDEVELOPMENT AUTHORITY MEETING, JUNE 5, 2003 PAGE 4 RFP. However, at best, there is only room to include two homes on that site. There is the possibility of expanding that project area to the north. There are four single-family homes immediately north of the site and a four-plex that appears to be vacant. This option would expand the number of new lots that could be created and possibly draw in more interest from single-family developers. Practically, he did not believe they are going to attract big builders/developers to a five-unit development, but a larger project area could probably attract more interest. Pursuing a larger project would mean delaying action on the Frank's Used Car site. They would need more time to analyze that, determine if that is appropriate, and if there is any interest in doing that. Mr. Fernelius stated both the City Manager and he talked to Chairperson Commers who expressed some interest in looking at the Werner site option. Ms. Gabel stated she drove by the four-plex building, and it does still appear to be vacant. If the City chose that option, what kind of liability are they up against in terms of housing? Obviously there is nobody to move or relocate. Mr. Fernelius replied that would be part of their analysis. Clearly they wouldn't have the relocation issue with an empty building. But in terms of some of the other housing-related issues they have talked about in the past, they would need to analyze that. Mr. Meyer asked if they could go ahead with the RFP process, and add the Werner site if they find that is feasible? Mr. Dwight Snow, 290 — 58th Avenue NE, stated he believed there is somebody living in that four-plex building and renovating it. Ms. Gabel stated she believed they all want to do a quality project, if that means waiting for a short amount of time so they can include the Werner site, too. Ms. Schnabel stated it is her understanding that the Werner site by itself is not quite large enough for two homes. Mr. Fernelius stated that is correct. They would have to vacate the north half of 59th Avenue to create a second lot. Part of the issue there also is the alley that runs behind the homes near the fence along University Avenue that still provides access to several of the homes to the north. They would need to preserve that and then provide access out onto the portion of 59th Avenue that would still remain. There are some site planning issues that make that option less than desirable and maybe suggest that they might want to look at a larger development that would provide a cohesive site plan layout. Ms. Schnabel asked if is it better to wait and put all this in together in one package for a developer or is it just as easy to do one now and the second one at a later time? She is trying to think in terms of selling this to a developer as a project. Mr. Fernelius replied he couldn't tell them from experience because they haven't done a project similar to this. He can use some of the other larger development projects they have used. For example, they attracted two different groups of developers on the Christianson Crossing development and the Gateway East projects. The Christianson Crossing site (114 units) attracted Rottlund, a larger developer. Rottlund was not interested in the Gateway East site of 28 units. Rottlund has a certain overhead cost that is involved in doing a development that they can't recover when doing a smaller project. It is probably fair to say that even on a smaller development project, a larger builder would probably be less interested in 5 single-family lots as HOUSING & REDEVELOPMENT AUTHORITY MEETING, JUNE 5, 2003 PAGE 5 opposed to something that may include 12-15. The more units/lots they have to sell, the more likely they are to recover their costs. Staff's initial thought at this point in time is to at least analyze the option and maybe talk to a developer to see if there is any interest in a larger site. Ms. Gabel stated there is no rush on this. They are not going to lose anything by sitting on it. Mr. Fernelius replied, no, they are under no deadline to do anything. There have been some questions about the building, the former Frank's Used Car Lot building, which he knows is an extreme eyesore and it has been tagged by graffiti in the last month. They are prepared to repaint it if the decision is to hold off. If the decision is to move ahead and tear it down, then the clock starts ticking. The minute they take it down, they have three years to actually do a project. That is why the building has remained standing since 1995 when the HRA purchased the property. Ideally, if they do move ahead with the Werner project and make some kind of commitment one way or another on that development, they could then take that building down relatively quickly. Until they make that decision, it is probably wise to keep the building up. Mr. Dave Harvet, 13362 Partridge Street NW, Andover, asked what information is missing from Gateway West that the City doesn't know about at this time. Ms. Schnabel stated that as Mr. Fernelius has indicated, it is a matter of the streets, the access for the other houses, whether or not that apartment should or could be included in this project, etc. Those are the kinds of things they are looking for so they can decide whether or not to proceed. Mr. Harvet asked if there is an estimated timeframe. This has been going on since 1996. Mr. Fernelius stated that, ideally, they would like to make some decision within the next couple of months. That involves contacting the property owners and getting an idea as to whether they are interested in selling, probably doing appraisals to find out what the properties are worth. He would expect they could make a decision within the next couple of months. What he really sees as the issue is not so much the Frank's site as it is the Werner site. The staff recommendation at this point is not to expand the Frank's site. Ms. Schnabel stated that based on the meeting they had with the City Council last month, they had pretty much concluded that all they were going to do was develop the Frank's site and, whether that is five or six homes. Then at the end of the meeting someone brought up the Werner site and even up to the apartment building, too. That is how this started a new dialogue concerning the Werner site. They have the commitment on the Frank's site pretty much in place, and she doesn't think there is any interest in going further than that. Funding is a main issue. They just can't get money to do anything more than that right now, but maybe there would be an opportunity to clear out the Werner site and add some more to it so maybe they can go with a little larger package with a developer. Mr. Harvet stated that at this time the two homes on 57th Avenue are not part of the planning. Ms. Schnabel replied that is correct. Ms. Fernelius stated if they are going to look at the Werner site, then they should hold off on preparing the RFP. The other piece is communicating with the neighborhood, and they will probably need to send out a letter and let people know what direction they are going. He believed they have demonstrated throughout this process an interest in keeping the neighborhood informed and including them in the process and they want to continue to do that in the future. HOUSING & REDEVELOPMENT AUTHORITY MEETING, JUNE 5, 2003 PAGE 6 Ms. Gabel stated her concern is that everybody in the neighborhood understands that it is going to be single-family homes that they are doing, and she believed everybody does. Ms. Schnabel stated the HRA would hold off until staff has had a chance to look at the Werner site and whatever issues may come up with that. If they can add this site to the whole package, they will do so; otherwise they will just proceed with the Frank's site. INFORMATION ITEMS: 5. CLARIFICATION ON UNUSED ESCROW FUNDS RELATED TO FRIDLEY MAIN L.L.C. Mr. Fernelius stated this is the $280,000 they had talked about earlier. The HRA had asked how they could use those funds? Those funds are classified as tax increment meaning they are restricted funds so there is a limitation on how they can be used. They can't just plow them back into their general fund and use them for ordinary HRA-related activities. As he understands it, they have to set up a reserve account in that tax-increment district; and those monies will be used toward payment on the bonds. This is just a clarification that legally they can retain the funds and use them for that purpose. 6. FOLLOW-UP ON UNITED DEFENSE SITE. Mr. Hickok stated that at the May 1St HRA meeting, the Council and HRA talked about the future of the United Defense site, which is shared with the Navy. The joint Commission/Council survey asked how the Council and Commissions felt about the planning for this future development that may occur. There was a very good discussion and a mix of answers, and the feedback back to staff was that they should certainly keep their contacts and discussions open with United Defense. There was some interest in possibly bringing in a consulting planner to lay out a master plan for the site. Mr. Hickok stated the Murphy Warehouse people were interested in what the City would think about creating an outdoor storage opportunity that would allow them to do some trans-shipment from rail to truck on either the United Defense site or the Navy portion of the site. They also discussed the recent Code modification that allows M-2 Industrial Districts to allow outdoor storage. However, there was a strong consensus of the 10 members in attendance that they should not introduce new outdoor storage to the site that is not relative to the existing uses on the site. From that direction, staff went back to Murphy and let Murphy know that. Mr. Hickok stated that opened a very interesting discussion with Bill Gregor who is the real estate person in charge of real estate decisions on the United Defense portion of the site. Bill Gregor was very interested in this discussion, and he would like their staff and City staff to get together and talk about whether there is any possibility of them working together and coming up with a master plan; a concept that then puts a proactive spin on what would happen in the future in terms of development. Mr. Hickok stated no action is required by the HRA at this time. Staff wanted to update the HRA and ask that they give them a little more time to talk to Mr. Gregor and his staff about the future of a master planning concept and what he sees as the possibility of the two staffs working together on something like that. Staff will likely come back to the HRA for some action at the July meeting. If it looks like there is a planning activity that both staffs can agree on and is something that would be in the benefit of the City, staff will make a recommendation to the HRA. Otherwise, staff will continue to update the HRA. HOUSING & REDEVELOPMENT AUTHORITY MEETING, JUNE 5, 2003 PAGE 7 7. MONTHLY HOUSING REPORT Mr. Fernelius stated this is the customary report that covers loan origination activity for the month of May. No new loans were issued during the month of May. The second page is a summary of their loan servicing that shows the breakdown of the principal and interest payments they have received. They have received net funds of $115,000 for the month of April; they have not yet received a report for the month of May. Mr. Fernelius stated the final two pages provide a summary of activity in the Remodeling Advisor and Operation Insulation programs. They had light activity during the month of May, which was not a surprise. This is a busy time and people aren't interested in talking about insulation in June. Both programs are administered by CEE (Center for Energy & Environment). Ms. Schnabel asked if there is a breakdown that shows how much the program costs the HRA to administer. Mr. Fernelius replied he could provide that information at the next meeting. Ms. Schnabel stated that in terms of numbers of visits and then the amount of work that is done, is this paying or non-paying program? Maybe they never intended that it be a paying program, but she is just curious as to what it is costing them for what they are getting. Mr. Fernelius replied that is a good question and he can provide that answer for the HRA at the next meeting. He will tell them that they only pay per visit, so if there is no activity, they are not paying for the service. Ms. Schnabel stated that it is then possible that out of the visits, only one party may sign up to take advantage of the program in terms of the dollar amount. The HRA doesn't know if others have gone out on their own and done their own work or not. Mr. Fernelius replied that is correct. The work would be insulation, weather-stripping type of work that CEE would actually coordinate. So, in some cases, the homeowners will take the recommendations and do the work on their own. Ms. Schnabel stated it appears that there are three loans that are delinquent. Are those houses for sale and/or are they still owner-occupied? In other words, is there some underlying reason that is causing this delinquency to occur? She believed they should be aware of what is going on. Mr. Fernelius replied he would follow up on that. 8. INVOLVEMENT IN MINNESOTA SOLUTIONS GROUP Mr. Fernelius stated that since 1998-99, the City has participated in a group called "Minnesota Solutions", a group of about two dozen cities throughout the state, most of them metro, that are involved in advocating issues related to housing and redevelopment. These issues are primarily related to the Legislature. The City contributes $1,200 per year, and that covers all of the activities for the 2004 Legislative Session. He believed it is a good group. Mr. Fernelius stated he had a copy of a memo from Bonnie Balach, Executive Director, outlining some of the issues that went on at the Capitol. It wasn't a good year on the redevelopment front, from a program/funding perspective. They did see some progress in the areas of tax- increment financing, not so much in new monies but in technical corrections to the tax- HOUSING & REDEVELOPMENT AUTHORITY MEETING, JUNE 5, 2003 PAGE 8 increment financing laws. One of those changes will benefit the HRA directly in terms of the amount of tax increment they receive. So that is a good piece of news that they can take from this past legislative session. Mr. Fernelius stated staff believes this is a very good organization. It's a reasonable amount of money, and it is important to stay connected to other communities and other people who are interested in these issues. They are essentially the lone voice over at the Capitol on pure redevelopment-type issues so it is important they continue to stay out in front. Staff is recommending approval of the contribution. Ms. Schnabel asked when he says the lone voice; does he mean the City of Fridley? Mr. Fernelius replied he didn't mean the City of Fridley. He means collectively the cities like Fridley that belong to Minnesota Solutions. There are some other professional organizations out there interested in housing issues, but this group really focuses more on redevelopment, contamination cleanup, etc., the kinds of issues that they face as an older first-ring suburb. It's more focused on some of the issues affecting Fridley. Ms. Gabel stated she believed they have to do this, because there is so much competition for so few dollars. Clearly if they are not out there asking for those monies, then they certainly are not going to get them. They are going to have to participate in the process. Mr. Meyer stated thinking about all the City of Fridley's and HRA's lobbying efforts at the Legislature, this of course is one, and Jim Casserly and his company are also over there. Do they have other organizations that are lobbying for Fridley and cities like Fridley for their special concerns? Mr. Fernelius replied they do belong to NAHRO, the National Association of Housing and Redevelopment Officials. That would probably be the most closely related group similar to Minnesota Solutions, but again their focus is fairly broad. It includes both public housing, assisted housing, that sort of thing. Redevelopment is one piece of what they do. Minnesota Solutions really focuses on the redevelopment side. They are involved in other organizations and he doesn't know how much lobbying they do. Minnesota APA (American Planning Association) is a group that the City's planning staff is involved in. He doesn't know how much work they do at the Capitol; he suspects some. There are other groups out there that are advocating for city issues, but each of them takes a different focus. Minnesota Solutions really talks about the redevelopment piece; and he thinks that is one of their pressing concerns here in Fridley. Ms. Gabel stated lobbyists tend to be very parochial. That is their purpose. Mr. Meyer asked Mr. Fernelius if they have any major or minor overlaps in efforts/dollars/ personnel, etc., at the Legislature? Mr. Fernelius stated he didn't think so. This is a very small amount of money. Even if there is some overlap, it's always nice to have an additional voice. It's important to have more than one person talking to an issue. Mr. Hickok commented if there were ever sessions for overlap, these last few sessions would have been time to do that. MOTION by Ms. Gabel, seconded by Mr. Meyer, to approve the payment of $1,200 to Minnesota Solutions. HOUSING & REDEVELOPMENT AUTHORITY MEETING, JUNE 5, 2003 PAGE 9 UPON A VOICE VOTE, ALL VOTING AYE, VICE-CHAIRPERSON SCHNABEL DECLARED THE MOTION CARRIED UNANIMOUSLY. ADJOURNMENT MOTION by Mr. Meyer, seconded by Ms. Gabel, to adjourn the meeting. UPON A VOICE VOTE, ALL VOTING AYE, VICE-CHAIRPERSON SCHNABEL DECLARED THE MOTION CARRIED AND THE JUNE 5, 2003, MEETING OF THE HOUSING AND REDEVELOPMENT AUTHORITY ADJOURNED AT 8:35 P.M. Respectfully submitted, Denise M. Letendre, Recording Secretary