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HRA 09/04/2003 - 29523CITY OF FRIDLEY /"�. HOUSING AND REDEVELOPMENT AUTHORITY MEETING SEPTEMBER 4, 2003 CALL TO ORDER: Chairperson Commers called the September 4, 2003, Housing and Redevelopment Authority meeting to order at 7:30 p.m. ROLL CALL: Members Present: John Meyer, Virginia Schnabel, Larry Commers, Bill Holm Members Absent: Pat Gabel Others Present: Grant Femelius, Assistant HRA Director Scott Hickok, Community development Director Richard Pribyl, Finance Director Paul Eisenmenger, HRA Accountant Jim Casserly, Development Consultant Dan Wilson, Wilson Development Services Charles & Connie Olson, 5917 3�d Street NE Mark Larson, 5923 3rd Street NE APPROVAL THE AUGUST 7, 2003. HOUSING AND REDEVELOPMENT AUTHORITY ��"� MEETING MINUTES: MOTION by Ms. Schnabel, seconded by Mr. Holm, to approve the August 7, 2003, HRA minutes as written. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. CONSENT ITEMS: 1. CLAIMS AND EXPENSES MOTION by Ms. Schnabel, seconded Mr. Holm, to approve the claims and expenses as presented. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. 2. CONSIDER HRA TAX LEVY FOR TAXES PAYABLE IN 2004 Mr. Meyer asked that this item be moved to Action Items on the Agenda. ACTION ITEMS: 3. CONSIDER GATEWAY WEST PROPERTY ACQUISITIONS �"\ Mr. Grant Fernelius, Assistant HRA Director, said that tonight's action is to consider the acquisition of three homes on the east side of the 5900 block of 3`� Street. Those properties are HOUSING & REDEVELOPMENT AUTHORITY MEETING, SEPTEMBER 4, 2003 PAGE 2 located on the corner of 59�' and 3`d Street. The properties included are 5917, 5923, and 5925 3`� Street. At the August 7, 2003, meeting, HRA authorized staff to begin negotiations with the � property owners. There are five sites in total, four single-family homes and one four-unit apartment building. Three of the owners agreed to negotiate with HRA and staff; one owner was not interested in selling at this point in time (5931 3`� Street). The apartment owner has been difficult to deal with, and staff has not been able to communicate with that individual. He stated he would continue to try and reach the apartment owner. Mr. Fernelius stated that since the August HRA meeting, appraisals have been ordered, and staff has been working with a relocation consultant, Dan Wilson, Wilson Development Services, and his staff to prepare estimates on relocation costs. Once all the information was assembled, staff prepared conditional offers to the owners that were based on the appraised value of the property plus relocation benefits. Owners were offered relocation benefits that are consistent with the Uniform Relocation Act with the contingent purchase agreements. Three owners were willing to accept the offers. Some other conditions of the offer is that the closings would take place on or before November 1, 2003, and the owners have the option of remaining in the properties through June 30, 2004, under the condition that they would pay the taxes and utility costs. The offer was valid for a period of 30 days and the offers are subject to HRA approval. Mr. Fernelius stated the compensation packages included the appraised value, moving costs, closing costs on a new home, and replacement housing payment. The replacement housing payment is additional compensation that is provided to help the displaced owner purchase a comparable replacement dwelling. This replacement housing payment assistance is based on the cost differential between the old home and the cost of a functionally, equivalent home. For instance, if the price of the old home is $150,000 and a comparable replacement dwelling may be $175,000, the cost differential is $25,000. $25,000 would be the maximum ceiling of the �, replacement housing payment. Mr. Fernelius reviewed the summary of offers as listed in the August 29, 2003, staff report, page 4. He stated there are some technical issues that need to be worked through, so there may be some minor revisions to the agreements, but there are no substantial changes. Mr. Fernelius stated that beyond the action tonight, the Authority needs to decide what it wants to do with the other parcels. Staff s intent is to try and negotiate with the apartment owner. Since the owner at 5931 3`� Street is adamant about remaining on the property, the recommendation is to not take any additional action with that individual. Mr. Femelius stated the Authority should decide to proceed with the apartment or pursue the development of the parcels that would be included in this larger project area. Staff is not prepared to make a recommendation on this issue as more evaluation needs to be done. Mr. Fernelius stated that staff is recommending that the Authority approve the acquisitions and authorize the Chairperson and Executive Director to enter into purchase agreements with the sellers. Mr. Meyer asked Mr. Femelius if the Authority goes ahead with the three residences, but holds off on the fourth residence and the apartments, is the Authority acting too soon? Mr. Femelius answered that he did not think so, because staff has negotiated in good faith with all the property owners. He believed that if the Authority �backed away", the agreements already made might be in jeopardy. It would be difficult to come back and reacquire the �` properties. At some point, the remaining single-family home would be acquired and, hopefully, the negotiations with the apartment owner would be successful. However, he did not know how HOUSING & REDEVELOPMENT AUTHORITY MEETING, SEPTEMBER 4, 2003 PAGE 3 long that process would take, but if the Authority wants to proceed with a larger Gateway West � project, holding off right now would not be advisable. He would recommend moving ahead with the acquisitions. Mr. Commers stated that according to his experience, the owners' ability to stay in the homes without paying a rental value from now until they give up possession is not generally the normal practice. Insurance on the properties needs to be maintained, and there may be other additional expenses because of the owners remaining in the properties. Mr. Jim Casserly, Development Consultant, stated there were no issues with the purchase agreements. The only concern was the agreement to rent back. This is not an uncommon practice, particularly with commercial properties. The problem with this type of arrangement is that this is a little bit of an inducement to enter into the agreement, so this can be considered a finance term. One concern is the fact that the HRA becomes a landlord; therefore, there is an agreement that essentially says when the seller stays in the properly, the seller is responsible for everything. Those are the issues that need to be addressed. Mr. Commers stated that is why there is usually some rent collected to cover those kinds of contingencies. Mr. Casserly stated that it should be absolutely clear that the HRA does not do improvements, maintenance, or repairs. The properly is as it was sold to the HRA, it is rented back as it is. The provisions that need to be added are if the property becomes uninhabitable, the occupant has to move, but the HRA is under no circumstances responsible for anything that goes on with that property. The sellers are not looking for the HRA to do that for them. He did not think there ,� would be any argument with the sellers on this point. Mr. Dan Wilson, Wilson Development Services, stated he wanted to confirm what Mr. Casserly said is that the transaction as presented to the property owner is that the HRA has no responsibility in terms of maintaining the house. If there are any repairs to be made, it is at the owner's expense. The property owner's understanding is that this is an inducement financially, but any maintenance, repairs, etc., is not the City's problem. Mr. Casserly stated they do not want to create a full-scale lease arrangement; they just want to address the addendum that is in the agreement. The property owners would have to pay taxes into the next year. The agreement has been worded carefully so that the property has to be vacated by June 30, 2004. The property tax payment could be deemed a"rent payment" for the payment of the first one-half taxes for the year 2004. Mr. Commers asked where is the tax payment in the documentation? Mr. Femelius stated it is not reflected in the agreement, which would need to be added. It was made as part of the written offer. Mr. Commers stated he did not see it in the rental addendum. Mr. Femelius stated that change would be made and would be added to the addendum. Mr. Commers asked if staff recommended this item be approved subject to further changes that are approved by Mr. Casserly. �� Mr. Fernelius said that was correct. HOUSING & REDEVELOPMENT AUTHORITY MEETING, SEPTEMBER 4, 2003 PAGE 4 Ms. Schnabel asked about existing mortgages on the properties, if there were any, they wouid be paid at the date of the sale? The seller will pay the mortgage at that time and any � assessments. Therefore, if they rent back, there is no additional mortgage payment due? Mr. Femelius said that was correct. Mr. Holm stated he was wondering if there is agreement with the sellers that they agree to these terms. Mr. Femelius said that was correct. Mr. Mark Larson, 5923 3`� Street, stated the way it has been described at the meeting is exactly the way he understood the offer. The neighbors at 5917 3`� Street are here also and they understand it the same. They are required to carry insurance on the property. Ms. Connie Olson, 5917 3`� Street, stated it was her understanding that this was part of the package to allow them to stay through the spring. She has done a lot of landscaping and does not want to leave it behind. Her preference is that they leave soon. They found three homes they like, but have lost all three of them, because they could not act quick enough. Interest rates have gone up, and they have a lock on an interest rate now and it is not going to last. Anything the HRA could do to assist them would be greatly appreciated. They have taken good care of the property and will continue to do so. She stated the HRA might not want empty homes there either. Mr. Commers asked Mr. Femelius if the homeowner, not present at the meeting, understood the transaction. ^ Mr. Femelius stated they have talked with the other owner who understands the transaction and is in agreement with the proposal as presented. MOTION by Mr. Holm, seconded by Mr. Meyer, to approve the Gateway West Property Acquisitions. Mr. Commers commented that in the past it has been the policy to not acquire properties for the purpose of holding them for any lengthy period of time, and they adhered to that policy. However, they have looked at redeveloping this side of the street and it has been a part of their long-term plans, but generally the HRA does not make this kind of transaction. Mr. Femelius stated that, historically, the HRA has not done this; however, this project is unique. These smaller projects present some unique challenges particularly when it comes to trying to acquire properties. Under an ideal scenario, they would have liked to present all five at one time, but that did not happen. The intent, practice, and goals for this project are understood. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. Mr. Fernelius said it was staff s intent is to come back at the next meeting with an update and recommendation on the remaining properties, whether the HRA should proceed with those properties or initiate development of the properties that are already owned. � HOUSING & REDEVELOPMENT AUTHORITY MEETING, SEPTEMBER 4, 2003 PAGE 5 4. CONSIDER HRA TAX LEVY FOR TAXES PAYABLE IN 2004 �"� Mr. Meyer stated that the HRA has utilized a tax levy to help support housing rehab programs. He thought it was $5.00 to $10.00 per year for an average home, but the summary says the lery is going to cost $25.00 per year for a home valued at $175,000 which is the average home in Fridley. That amount of money is equal to about $250,000 a year plus. City officials said that the City of Fridley is in dire straights financially by the State government, which has caused cutting fire, laying off valued staff, curtailing maintenance, and sending out fire personnel with less than safe equipment and these types of things. In addition, it is strongly proposed that Springbrook Nature Center be closed. Springbrook Nature Center is one of the crown jewels of the City. To the best of their ability, they have to try to save the Nature Center. The $25.00 per year represented by this levy is about the amount of money needed to run Springbrook Nature Center per year. Mr. Meyer suggested that the HRA forego the levy for the next year and strongly urge the City Council to put the Springbrook Nature Center on the ballot in November and the HRA's part would be forego the HRA tax levy. He stated he is offering that as an item for discussion. Mr. Grant Femelius, Asst. HRA Director, stated that from a staff perspective, the Springbrook issue is a very sensitive issue. In terms of the HRA levy, the comment is that the HRA tax levy is the only significant resource that the HRA generates on an annual basis, and it is a resource that is used to support the housing rehab program. The HRA has no other mechanism for generating revenues beyond any interest earnings, and much of that is tied to the tax increment program. In terms of the tax levy, it does have value and is an important resource for the HRA. If this discussion were deferred, then the HRA levy for 2004 would be frozen at the 2003 level if �� it were not adopted this evening because of the September 15 deadline that this levy has to be submitted to the County Auditor. Timing is very important. City Council is going to act on the Springbrook Nature Center issue on Monday night. Mr. Jim Casserly, HRA Attomey, stated there are a couple of issues that are political, legal and financial issues. The legal issue is that the HRA has pledged that all resources it has available to it to the repayment of debt. Instead of going out into the bond market, the HRA borrowed from the City fund balances this sum of money and have committed all of their resources to repay it. When the analysis was done to show that they would be solvent and responsible, they assume that the levy would be utilized to repay the debt that they have to the City. They could be paying the debt to a third party and if they were, they would probably not be having this discussion at all, because it is clear that this is the obligation they have. Mr. Casserly stated the political issue is that the State has already cut the HRA's redevelopment resources by 30% to 40% out of all of their existing tax increment districts. When the State levied a property tax starting two years ago, the State exempted itself from the collection of tax increment and that meant their commercial, industrial projects that were inside their tax increment districts contribute 30 to 40% less to their programs. The HRA reduction is already 30 to 40%. If the levy is eliminated, and the 30 to 40% state funds are eliminated, the program is already cut. Mr. Casserly stated the third issue is how does the City Council prioritize dollars. The HRA has the opportunity to have a levy; the City may have additional restrictions about how much they can raise. These are the concems that are in front of the Authority. �`�`� Mr. Commers asked is the referendum that they are seeking to pass to fund Springbrook Nature Center for any period of time? Is it just for this year'? HOUSING & REDEVELOPMENT AUTHORITY MEETING, SEPTEMBER 4, 2003 PAGE 6 Mr. Richard Pribyl, Finance Director, stated those questions have not been answered yet. There are about five different options that the City Council will be considering this coming � Monday. At Monday's City Council meeting, the Council will decide if the referendum will go to the voters this fall. Mr. Commers asked Mr. Meyer if forgoing the levy would be a permanent thing. Mr. Meyer stated it wouldn't have to be a permanent thing, because, hopefully, there will be a change in the way the State treats municipalities. He believed that the Springbrook Nature Center and entire park system contribute to making Fridley a desirable place to live. Ms. Schnabel said she appreciated Mr. Meyer's passion about Springbrook Nature Center, but how is the HRA going to repay a loan that is owed to the City that has a balance of almost $600,000 without any additional money? The money is borrowed from the City and it is owed back to them. If that payment is not made, that will hurt the City financially also. If the Authority agreed with Mr. Meyer's proposal, what if the City tums them down, then there is not money coming in to pay the debt that is owed. The HRA will not be able to solve the problem, but it is the City Council's problem. The HRA is already hurting because the State has already reduced the HRA funds. Mr. Commers stated the .0014% that the HRA has the statutory right to levy, that results in a collection of approximately $247,000 per year. The HRA's payment on the City's million and one-half dollar loan, which is now down to $600,000, is about $87,000 a year. Is that correct? What do they do with the difference? Mr. Pribyl stated that is correct. The difference is put in the general fund and is producing � revenue for dealing with HRA's operating costs within the general fund. Mr. Commers asked if the HRA has variable assessment, can it be reduced for a year and increase it back for the next year? Is there any flexibility? Mr. Casserly stated they could request the Council to do a levy for the HRA. You could do a dollar amount or a percentage amount. The dollar amount cannot exceed the amount based on the percentage and they can ask for less than the amount that is authorized by statute. The Council can also reduce the request, so the HRA can ask the Council, and the Council can determine that they will only provide for one-half of that amount. There is flexibility on both sides. Mr. Commers said that the payments are what they have been making out of the levy, and that is what they have been using to pay down the note. At that rate, the note has another five or six years before it is paid in full. Mr. Casserly stated that the HRA has been paying more than the required amortization, which is why the principle has gotten down so far. Mr. Commers asked if this is an amortized note. Mr. Casserly said it is based on a payment plan and is amortized over the term of the note. As you engage in housing activities, you quickly start to exceed your allowance of funds that are generated by tax increment receipts. Without the amounts coming in from this levy, the HRA may be in some difficult situations in terms of paying administrative expenses, which means �"'�` staff and City support. HOUSING & REDEVELOPMENT AUTHORITY MEETING, SEPTEMBER 4, 2003 PAGE 7 Mr. Commers stated he also understood that the legislature has done something with tax �, increment financing, and are they going to recapture a significant amount? Mr. Casseriy stated they are going to have additional resources, because Anoka County was interpreting a memorandum from the Department of Revenue that said they did have to adjust the basis of the tax increment districts. As class rates change, they didn't change in the underlying properties in tax increment districts, which means cities in Anoka County didn't get the full amount of increment. Language has been drafted that requires Anoka County to readjust the class rates in some of these districts. The funds will not be recaptured, there will be a continuing additional amount coming in starting in 2004, but the additional amount will not come close to recovering the amount already lost. Mr. Commers asked Mr. Pribyl to explain the HRA revenues. Mr. Pribyl stated the HRA general fund is basically non-tax increment type activities, that is where the levy goes. There is property tax revenue of $219,893 that was received in 2002. Mr. Commers asked after paying expenses and paying the City. Is there a balance of $94,000? Mr. Pribyl stated there is an excess of $239,000 in the general fund. Mr. Commers commented if we decided to lower the levy limit, it looks like we have enough operating funds to be okay. Mr. Pribyl stated that is correct, but it also depends on the HRA's level of activity. Based on the ,r-°� activity incurred in 2002, there should be enough operating funds. Mr. Commers asked when the levy has to be certified. Mr. Pribyl stated that it has to be to the City Council on September 8, 2003, for their approval, so it can be certified to the County by September 15, 2003. Mr. Holm stated that he understood the concerns about Springbrook, but is very concerned about mixing up the two issues. A good portion of the HRA's income comes from investments, and that has declined from 2001 to 2002 primarily because of reductions in interest rates. That will have an impact on their financial condition; what will they have in expenses versus revenue. He believed that the assessment is needed in order to continue the HRA's business. He preferred to continue with the tax assessment. Mr. Meyer stated there could be ways to encourage the City Council by offering them the omission of the HRA tax levy so they'll put the referendum on the ballot in November. If there is no funding for this year, all the staff for the Nature Center will be gone for this year. Ms. Schnabel stated that as matter of policy, the HRA should not forego the levy and continue to make the payments on the loan. She could not support the idea of giving the HRA levy money to Springbrook Nature Center. Mr. Meyer stated that the HRA could borrow more money to hold them over until such time they agreed to pay the loan back. The payment could be deferred. �"°` Mr. Commers stated that the HRA could reduce the levy some and make some contribution to Springbrook, but it is hard to work it out on a short notice and work out what would be fair and whether the HRA should do it in the first place. The HRA should not be jeopardized, and there HOUSING & REDEVELOPMENT AUTHORITY MEETING, SEPTEMBER 4, 2003 PAGE 8 is not enough time to make this type of decision. The HRA is not in a position or authority to donate money to Springbrook. � A discussion continued whether HRA should give money out of its funds to help contribute money to Springbrook. Mr. Scott Hickok said that cutting back on HRA fund is cutting back on programs and personnel. The HRA could look at the value of the HRA program and how that benefits redevelopment in the City of Fridley. Springbrook is an important issue, but they have to understand the delicate balance of exchanging one staff for another staff and programs for other programs. MOTION by Ms. Schnabel, seconded by Mr. Holm, to approve Resolution HRA 2-2003, A Resolution Adopting a 2003 Tax Levy Collectible in 2004. Ms. Schabel asked if the motion to approve the HRA levy passed, would Mr. Meyer agree to have a resolution passed in support of a referendum by the HRA? Mr. Meyer stated that any expression of support would be appreciated by the Springbrook cause. Mr. Commers indicated that the HRA could tell the City Council how they personally feel about the Springbrook issue, but thought that a formal resolution would set precedence and may not be appropriate for the HRA. Ms. Schabel stated that the HRA as a body has been independent of the City Council's issues and decisions. The HRA does meet periodically with the City Council to discuss issues. �--� Mr. Commers asked if the levy was certified tonight, could the HRA give up some of the funds at a later date? Mr. Casserly said that the levy would have to be re-certified, and that is possible until almost the end of the year. Mr. Pribyl stated that what is required to be certified to the Council by September 15 is a preliminary levy. The levy cannot be increased, but the final levy can be reduced by December 15, 2003. Mr. Commers stated in view of that, it is in the HRA's best interest to support the preliminary levy; and if there are second thoughts, the HRA can always vote differently on the final levy. Ms. Schnabel and Mr. Holm agreed it would be a good idea to pass the preliminary levy at this time. UPON A VOICE VOTE, COMMERS, SCHNABEL, HOLM VOTING AYE, MEYER VOTING NAY, CHAIRPERSON COMMERS DECLARED THE MOTION PASSED 3-1. INFORMATION ITEMS: 5. CDBG FUNDING REQUEST FOR GATEWAY WEST Mr. Femelius stated that in the past, the County has provided the HRA to recapture some � CDBG dollars; and they are in the process of administratively approving the funding and also approving it through the various Committees at the County. It is anticipated that it will be HOUSING & REDEVELOPMENT AUTHORITY MEETING, SEPTEMBER 4, 2003 PAGE 9 approved within the next couple of weeks and that will help with the Gateway West project. The ^ funds are dedicated to the Gateway West project. 6. UPDATE ON SEAL COATING OF COLUMBIA PARK OFFICE BUILDING PARKING LOT & POTENTIAL EXPANSION OF COLUMBIA PARK CLINIC PARKING LOT Mr. Fernelius stated the plan is to defer the seal coating and expansion of the parking lot until next year. It is too late in the year to have that work completed. Mr. Hickok explained that there were slight modifications to the site surrounding the clinic, and the modifications would yield an additional number of parking stalls so there would be 57 stalls in excess of what the code requirements would be. Their plan is not to alter the public street that cuts through the development, but instead to take the green space surrounding the edge of the parking lot and to utilize that for additional parking space. This is being done in conjunction with an addition to their facility. The plans have not yet been received; however, they are looking at the northwest corner of the building having a pharmacy and on the east side of the building having a two-story expansion. The parking lot revision would help them have the number of stalls necessary for that addition, plus excess stalls to help alleviate the parking congestion. A minor modification of the master plan will need to be made for this development. Mr. Commers asked if there is any financial relationship befinreen the HRA and the clinic. Mr. Hickok stated there is in the agreement parking overlaps. Per the agreement, at such time the Target building would need additional parking, the HRA has the ability to do an expansion and commit the funds. However, the HRA would need to finance that project. If there were n financial agreements in the area being talked about, that would have to be researched further prior to next meeting. Mr. Fernelius offered clarification and said that the least that the HRA has is only with the office building. There is no lease agreement or redevelopment agreement with Columbia Park Clinic, but the effect on the HRA is that the HRA has the ability under the S2 Zoning District to approve their plans, because they are involved in redevelopment activities in general. 7. AMENDMENTS TO HRA TAX INCREMENT PLANS Mr. Casserly said this item is presented as an update and to make sure the HRA is in compliance with various kinds of OSA requirements. This is done every couple of years and needs to be done by the end of the year. 8. MONTHLY HOUSING REPORT Mr. Fernelius stated that under Loan Origination, there was one Ioan originated during the month of August for a total of eleven years to date with a combined value of $112,036.00. This year has been disappointing from a loan origination standpoint. Part of that may be related to the economy and additional marketing may need to be done. The loan servicing report is a two- piece report. One section addresses the principal interest collections, which were $48,000 for the month of July. One section addresses the delinquencies, which was about 4% of the portfolio. Mr. Commers asked about the delinquency policy. /�`\ HOUSING & REDEVELOPMENT AUTHORITY MEETING, SEPTEMBER 4, 2003 PAGE 10 Mr. Fernelius said the delinquency policy establishes some guidelines and options for the Authority in dealing with delinquent loans. That policy was adopted in 1997 and outlines options ,^ that the Authority has in dealing with loans that are chronically delinquent. Mr. Commers asked about the loans that are 60 days late. Mr. Fernelius said that the practice is that they wait until the property is sold. Mr. Fernelius stated the last page is the breakdown on the activity of the Remodeling Advisor and Operation Insulation programs. There have been 18 appointments through the Remodeling Advisor for 2003, and there have been 15 appointments for Operation Insulation. 9. PRESENTATION ON 2003 FINANCIAL STATEMENTS Mr. Pribyl, Finance Director, stated that under balance sheet, this is regarding the general fund, which covers all the non-tax increment activities. In the general fund there are cash investments of $6,526,584, accounts receivables of $61,268, interest receivables of $40,714, mortgage receivables of $14,945. Due from other funds $2,281,038 — over the past years, the general fund has supported the deficits in the capital project funds. If capital projects develop surpluses, then we can repay the deficit amount from the general fund. The general fund carries the receivables for those loans that are for capital projects funds. Of the total assets of $8,931,875, there are debt reservations -$3,000,000 reserved for debt service, $5,000,009 is unreserved. He reviewed the 2002 totals for the funding categories. Special revenue fund — this fund handles all transactions for the housing loans issued. In this fund, there are cash and investments of $2,650,094, mortgage receivables � (deferred portions beyond a year $1,463,994), loans payable to the City of $654,793. There is a reserve of $1,463,000 for the amount of receivable on the mortgages. Capital Project Funds — This set of funds tracks all the tax-increment related revenues and expenses. The laws that govem these are based on the year that the district was created and will have its own set of rules according to what State Statutes were involved at that time. Cash and investments of $4,284,861, cash with escrow of $463,637. Mortgage receivables $147,627, accounts payable $248,977 (these are project payments that pass beyond year-end). InterFund loans payable (the actual liability that goes back to the general fund) is $2,281,038. This is the loan received from the general fund to support the deficits is those capital project funds in the past. Income Statements — on the general fund statement of revenues and expenditures, there are property taxes from the levy of $219,893, interest income of $151,184. There has been a severe hit on interest income over the years based on the interest rate requirement — homestead credit of $23,000, mortgage interest earnings of $9,500, parking lot rent of $9,600, sales real estate $61,000, some miscellaneous income of $14,000 and transfers of $94,000, expenditures for personal services of $83,417, supplies and other charges of $233,000, capital outlay of $27,000. The general fund actually handles all the HRA's activities that are non-tax increment. Mr. Commers asked where are the payments to the City? Mr. Pribyl stated that would be under supplies and other charges for the administrative overhead for staff, which is treated as a charge to the HRA. !"'` � HOUSING & REDEVELOPMENT AUTHORITY MEETING, SEPTEMBER 4, 2003 PAGE 11 Special Revenue Funds — There are no property taxes, there is interest income of � $48,814, mortgage interest of $88,308 and some miscellaneous income of $9,800, supplies and other charges of $61,772, interest expense of $34,724, and transfers out of $2,400. This is the fund type that handles all of the housing loans. Capital Project Funds — Tax increment received of $2,564,321, which is a decrease from 2001. In 2001 tax increment received was $3,146,000, which reflects the change in class rates and what the legislature enacted. Interest income of $82,000, homestead credit of approx. $40,000, some mortgage interest of $1,400, sale of real estate $5,500, miscellaneous income of $23,000, expenditures, supplies and other charges $76,000, capital outlay $371,347,000, developer assistance of $837,000, transfers to the City related to debt service $1,655,000, another small transfer to general fund of $3,300. Mr. Commers asked if there would be any more reductions in tax increment funds. Mr. Casserly said that 2002 would have already incurred the reduction. There will be a little more reduction due to some housing because there is still a class rate decrease for some apartment projects. Mr. Casserly said that in 2003, because of the full valuation of Medtronic, there might be a little more increment in 2003. Mr. Commers asked if the special revenue funds were dedicated, they could not be used for other things. ��� Mr. Pribyl stated the special revenue fund is the housing program that was created, so there is some latitude. The Capital Project funds are made up of tax increment and State Statute restricts you as far as how those funds are utilized. There is latitude in the General Fund and Special Revenue Fund. Mr. Pribyl stated that the HRA has unreserved, undesignated funds of $5,900,000. If the HRA was to cease operations tonight, and if they were able to liquidate everything in the balance sheets, the HRA would have $5,900,000 that is available for spending at the HRA's discretion. Mr. Commers asked if the reserve is something that has been arbitrarily set up. Mr. Pribyl stated that the reserve is funds designated for the future as far retiring bonds. Mr. Commers commented that the reserve is then arbitrary. Mr. Casserly stated that part of the reserve is a result of the class rate compressions that have existed. Because of debts that have been issued, they were anticipating paying that based on the laws that were in effect at the time they issued the debt and they did not need that kind of reserve and because of what happened in 2001, it then means they do not have enough resources coming from those districts to actually pay the debt incurred for those districts. So they now have to dip into our general fund to make it available. If class rates change or if there is a substantial inflationary increase, they may not be able to reserve that amount. Mr. Commers asked what the $10,000,000 mutual fund was. � Mr. Pribyl stated that for both the City and the HRA, based on the interest rate environment they are in, they have actually shortened up investments so they can ride the yield curve. There is $10,000,000 at the end of the year that was generating 1.7% interest. The reason why it is HOUSING & REDEVELOPMENT AUTHORITY MEETING, SEPTEMBER 4, 2003 PAGE 12 there is because when the interest rate environment turned, they can move with the interest rates. � Mr. Commers asked what is the process for the selection of that fund? Is there an investment committee? Mr. Pribyl stated that the City does not have a committee, but they actually utilize two or three consultants to help protect municipal investors. Mr. Pribyl stated that the City and the HRA has an investment policy. Mr. Commers asked if Mr. Pribyl would provide a copy of the policy to the Authority. 10. LAND ON OLD CENTRAL BETWEEN JOE DIMAGGIO'S AND NORTH TO SANDEE'S RESTAURANT Mr. Scott Hickok, Community Development Director, stated this item came in recently, and he would like to bring it to the Authority's attention. A developer is looking at constructing a 55-unit condominium building that would wrap itself around the Sandee's building, and they were looking to find the appropriate zoning for that site. That site is identified in the City's Comprehensive Plan as a redevelopment district up to Mississippi Street along both sides east and west of Central Avenue. Advice that staff gave them is that if they are just looking at the site that wraps itself around Sandee's, any zoning would be difficult to obtain because it would be spot zoning. Staff encouraged them to look at the Comprehensive Plan, use that as a guide, and talk to Ziebart about a comprehensive rezoning of the land from East Moore Lake Drive up to Mississippi in that segment (the %2 block that borders Central Avenue). � Mr. Hickok stated there have been good discussions. Advance Companies has agreed to the rezoning. Ziebart needed more information, but is enthusiastic about the rezoning. Staff is recommending S-2 redevelopment district, which is the district that allows some flexibility in terms of design. It is very much like this quadrant or the quadrant across the street. It is typical of a redevelopment area and is dependent on a master plan more than strict terms that are spelled out in zoning. The HRA will be seeing the master plan for that development as it moves forward. The HRA will be asked to consider what we might want to be doing for master planning the southern portion of that block as well. In terms of long-range planning, it gives options for redevelopment in that area. The City owns a piece of property befinreen Ziebart and Advance and that property would need to be considered in this rezoning request. ADJOURNMENT: MOTION made by Mr. Meyer, seconded by Ms. Schnabel, to adjourn the September 4, 2003, HRA meeting. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE SEPTEMBER 4, 2003, HRA MEETING ADJOURNED AT 9:40 p.m. Respectfully submitted, �� Kathy Fi cher �%- Recording Secretary �