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HRA 11/04/2004 - 00027907CITY OF FRIDLEY HOUSING AND REDEVELOPMENT AUTHORITY NOVEMBER 4, 2004 CALL TO ORDER: Chairperson Commers called the November 4, 2004, Housing and Redevelopment Authority meeting to order at 7:30 p.m. ROLL CALL: Members Pesent: Larry Commers John Meyer Virginia Schnabel William Holm Members Absent: Pat Gabel Others Present: Scott, Hickok, Community Development Director Paul Bolin, Assistant HRA Director Richard Pribyl, Finance Director Paul Eisenmenger, Accountant APPROVAL OF MINUTES: October 7, 2004 MOTION by Ms. Schnabel, seconded by Mr. Holm, to approve the minutes as presented. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. CONSENT AGENDA: • Consider Claims & Expenses (28120 — 28141) MOTION by Mr. Holm, seconded by Ms. Schnabel, to approve the Consent Agenda. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. ACTION: Chairperson Commers stated an additional handout was received this evening relating to Gateway West and he moved that matter from item 7 to item 3. HOUSING AND REDEVELOPMENT AUTHORITY MEETING — OCT 7, 2004 Page 2 of 9 • Approval of Preliminary Budget — 2005. Mr. Bolin stated the purpose of tonight's presentation is to provide an overview of the proposed 2005 HRA budget, including projected revenues and expenses and fund balances. Also to highlight emerging budget issues, respond to questions, and schedule formal action for the December 2, 2004 HRA meeting. Mr. Bolin explained that the HRA budget is divided into three categories: the General Fund for administrative and operating expenses; the Special Revenue Funds for the housing programs; and the Capital Outlay Fund for tax increment financing districts, redevelopment projects, and the Housing Replacement Program. The budget document provides summaries for each fund group, plus an aggregate report (all funds). Each fund group summary includes projected revenues and expenses for 2005, comparative information from prior years, cash balance and fund balance projections, and budget detail information. Reviewing the Revenue Funds, Mr. Bolin explained they are projecting total revenues of $5.9M for 2005 which is a$1,140,939 increase or 23.5% more than 2004. The bulk of this increase ($700,000) comes from the projected sale of Gateway West property. The HRA tax levy is projected to increase by $29,000, or about 9%. Additional increment will be created as a result of 2003 legislation which changes the way tax increment is calculated. We are also expecting additional increment of $653,000 in 2005. The balance of revenue increase is due to increased market value in C/I projects (e.g. produces more increment). We are projecting total expenses of $4.9M for 2005, Mr. Bolin explained. This is a $207,290 decrease or 4% less than 2004. The reductions in personal services, capital outlay and transfers to the city account for the reduction of expenses. Capital Outlay Transfer to City (Debt Service) Personal Services Other Services & Charges Supplies TOTAL $2, 653, 984 $1,787,429 $ 252,260 $ 261, 550 $ 675 $4, 955, 898 Mr. Bolin reviewed the significant capital outlays as follows: Medtronic Project Gateway West Housing Replacement Program Shamrock (Onan-Murphy) McGlynn's Linn Development (57t" Av.) $1,414,000 $ 676, 500 $ 325, 000 $ 87, 000 $ 38, 000 $ 16, 000 The total debt service payment in 2005, Mr. Bolin explained, is $1,700,000 and is paid from the following TIF districts: HOUSING AND REDEVELOPMENT AUTHORITY MEETING — OCT 7, 2004 Page 3 of 9 Moore Lake (TIF #2) $ 100,000 North Area Industrial (TIF #30 $1,600,000 Mr. Bolin stated the 2005 Budget Issues are identical to last year and include the Medtronic project. For our cash position, we need to carefully evaluate future redevelopment projects and the impact on resources and to evaluate partial transfer of funds in the Revolving Loan Fund back to the General Fund. For the debt service, we need to keep in mind future debt service obligations: between 2007 and 2009 TIF districts #1, #2 and #3 are set to expire while the debt service obligations will continue through 2012. We're keeping $3M in the General Fund and we must carefully watch the fund balances. In conclusion, Mr. Bolin stated we will need continue to monitor HRA resources, carefully evaluate future redevelopment opportunities and whenever possible, leverage local resources with outside dollars (e.g. CDBG, state, regional), and any time we can get dollars from the Met Council, we should look at that as well. Chairperson Commers asked for a breakdown on the capital outlay expense for parking facilities. Mr. Eisenmenger explained most of that is for Medtronic's parking facilities. Chairperson Commers stated the $150,000 for parking lot assistance with the Columbia Park Medical Group has not been approved this expenditure and felt it was premature to designate that as a budget expenditure. Mr. Eisenmenger stated in his discussions with Mr. Hickok they came to the conclusion that there is a possibility Columbia Park Medical Group will come up with the required documentation showing what they've been doing with the funds they receive from the HRA. So they decided to put this in the budget in the event that happens and the HRA approves it. He added that this is a proposed budget and the item can be removed. Ms. Schnabel commented that it may be premature because it is not known what's going to happen in terms of all the parking spaces. We may need that money, but this may not be the right dollar amount. Mr. Eisemenger stated it is not necessary to pass a resolution for the HRA budget so we would not be stuck with the figures in this budget. Chairperson Commers felt that to anticipate what projects may be approved is probably not a good way to proceed. The HRA does have reserve funds available to utilize once the project is approved. Mr. Pribyl stated Chairperson Commers raised a good point. Once an item is identified, there might be some expectations. HOUSING AND REDEVELOPMENT AUTHORITY MEETING — OCT 7, 2004 Page 4 of 9 Chairperson Commers questioned the capital outlay expenditures on page 26 which differs from the amount on page 27. Mr. Eisenmenger will review and correct. Ms. Schnabel referred to page 4 and questioned how they arrived at the proposed fund balance for 2005 being over a million dollars over 2004. Mr. Bolin explained that approximately $700,000 of that is projected from lot sales in Gateway West. Chairperson Commers pointed out other discrepancies in the budget that need to be reconciled. Ms. Schnabel stated we have a$1.5 M revolving loan program, but the proposed fund balance is $3.6M. She questioned why the HRA is carrying so much more money. If the HRA is not required to keep that amount of money, or if it's not coming from some place that's dedicated, is it possible to drop the $3.6M down and use that money in some other program. Mr. Pribyl responded that these are policy issues the members can deliberate. There is no requirement that this fund carry that level of cash and one of the things discussed is whether or not the HRA should pay back the City that loan. If there is some other area the members feel has more importance, there isn't anything that binds them to holding that money in that fund. Ms. Schnabel questioned the Lake Pointe expenditure. Mr. Eisemenger stated this is for the Medtronic parking facilities. According to the development agreement with Medtronic, the HRA is required to pay 90% of tax increment received to Medtronic for their parking lot facilities. Chairperson Commers questioned how much longer the tax increment payments to Medtronic last. Mr. Eisenmenger responded that they start to go down in 2012. Mr. Holm questioned if the HRA can exceed the approved budget if a project comes up they would like to pursue. Chairperson Commers stated it is his understanding that there are no legal requirements the HRA follow the budget, but it's something they've always attempted to do. Chairperson Commers questioned the $4.9M expenditure for the 2005 budget compared to the proposed expenditure on page 4 in the amount of $5.184M. And on HOUSING AND REDEVELOPMENT AUTHORITY MEETING — OCT 7, 2004 Page 5 of 9 the revenue side, he questioned the difference between $5.999M compared to $6.325M. Mr. Eisenmenger explained that the expenditure figure on page 4 includes inter-fund transfers, specifically a$200,000 transfer from the general fund to the Scattered Site Housing Fund program. As to the difference on the revenue side difference, he referred to page 2, Other Financing Sources and Uses, which reflects the $200,000 transfer and an additional transfer of $127,429 into the housing districts. He explained that what he does each year is take a portion of the annual tax levy that the HRA receives which goes into the general fund and then he takes out the exact amount of the principal and interest payments on the $1.5M loan from the City and transfers that to the housing funds to be paid to the City. • Gateway West Status (November 3rd memo) Mr. Bolin explained this past Tuesday staff met with Jim Casserly, Gay Greiter, and Dan Wilson (our relocation expert) to develop an action plan that will allow the HRA to acquire the 4-plex property at 5955 3rd Street in a timely, legal and cost effective manner. Another purpose of this meeting was to alleviate some of the concerns that members of the staff had regarding moving forward with condemnation of this property. These concerns included payment of relocation benefits, disparate population impact challenges, condemnation blight. At this meeting there was a consensus of the HRA's legal counsel and relocation expert that it is unlikely the HRA would have any negative ramifications from these concerns if the quick-take were required to acquire the property. All the indications the City has indicate that this building is not occupied so there are no relocation benefits to be paid and there are no disparate population impact challenges. As for condemnation blight, the HRA's long history with the property and the Gateway West redevelopment project give the Authority the eminent domain powers to acquire the property based on the fact that the HRA has determined that this property is needed for the redevelopment project. Mr. Bolin stated that legal counsel asked staff to seek permission from the HRA to authorize them to proceed in drafting a final offer letter to the owner of the 4-plex. This letter will once again ask that staff be allowed inside the building to do a proper appraisal and begin to discuss a possible price to acquire the property. This letter will assure all steps have been taken in the event that condemnation becomes necessary. Legal counsel will report the results of their offer letter prior to the HRA's December meeting. If an agreement can't be reached with the property owner, staff will be asking for authorization at the December meeting to move ahead with the quick-take condemnation process. Ms. Schnabel questioned the steps of a quick-take condemnation. Chairperson Commers explained all this means is that once the petition is filed, the City can take possession of the property within 90 days. HOUSING AND REDEVELOPMENT AUTHORITY MEETING — OCT 7, 2004 Page 6 of 9 Mr. Holmes questioned if the letter to the owner of the 4-plex will advise the owner that if there is no response, condemnation proceedings would begin. Mr. Bolin replied that the letter would include that information. Mr. Meyer asked if staff has been able to progress in their efforts with the owner of the 4-plex. Mr. Bolin explained that staff has not been able to get into the building; the property owner won't respond to any letters. Mr. Meyer stated the HRA would be going into this on a rather generalized blight without specifics regarding the building. Mr. Bolin explained the property does not need to be blighted to be a part of the redevelopment project. Overall, 50% of the properties in the project areas must be considered blighted and we are well past that. Chairperson Commers commented that staff does know that from a property valuation point of view that the 4-plex is questionably inhabitable and there is no rental license. Mr. Meyer questioned if there is any way to get into this property; fire, police, inspectors. Mr. Bolin explained that this was part of the discussion with legal counsel; there is no way to use the police or fire powers to make a blight determination for condemnation. That would be a conflict; using the police department to further the HRA's agenda. The police chief was involved in the meeting with legal counsel and he made it clear that they do not want to be put in that position. Unless the fire department gets a call, they cannot enter the property. If there were an active rental license, the rental inspectors could enter the property, but as it stands we don't have any legal standing to access the property. Mr. Hickok commented this is a very odd mix of circumstances. Even if there were a resident who invited the City into the 4-plex, that's all that would be necessary. But there are no residents. He stated the owner has basically said he is uninterested in talking, there's no one in the building to invite us in and the curtains are drawn. Unless there is cause to go inside, such as safety of the neighborhood, the police don't get involved. MOTION by Mr. Holmes, seconded b� Ms. Schnabel, to authorize staff to prepare a final offer letter to the owner of 5955 3r Street. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. HOUSING AND REDEVELOPMENT AUTHORITY MEETING — OCT 7, 2004 Page 7 of 9 INFORMATION ITEMS: • Agreement between HRA & City regarding Assistant Executive Director position. Mr. Hickok stated at the last meeting the City Attorney requested that there be a contract that solidifies the relationship between the HRA and City staff. It was discovered that a document exists that was signed in September 1979 which has been included in the HRA's packet and which can be used as a base for the new contract. Chairperson Commers suggested that on Page 3 Paragraph F be changed to include "other legal counsel retained by the HRA." He also asked about Paragraph 3C in which the City is disclaiming any coverage for the HRA members. Mr. Pribyl stated that paragraph is not correct. The HRA members are covered under the city's policy. Chairperson Commers also pointed out the last sentence which states "It shall be the responsibility of the City together with the Authority to ensure that any insurance policies and workman's comp policies provide coverage for the professional and clerical staff and commissioners." Ms. Schnabel referred to statement on Page 2 at the top "the Executive Director". She questioned if that is referring to Paul or Scott and recommended the entire document be updated. • Update on Fridley Housing Forum #3. Mr. Hickok stated at the October 14t" Housing Forum, 45 residents were in attendance. The results of a survey handed out showed that 74% believed the housing forums were a good way to reexamine housing and determine if policy changes are needed. The format for this meeting was more of a question and answer session. There will be a written transcript of the questions made available to the HRA at their next meeting. Staff is preparing for the fourth and final housing forum scheduled for November 18. • Update on Loan Program Detail. Mr. Bolin stated at the October meeting there was a request for particulars of the Home Improvement loan program. The HRA currently offers the loan program through a contract with the Center for Energy and Environment. The properties eligible are one to four unit owner-occupied residential structures. There area income limits based on household size and are set at 115% of inedian area income, not to exceed $80,000. These limits are the same as used by the Minnesota Housing Finance Agency with the exception of the $80,000 cap. Last April, the interest rate was lowered to 4%. The HOUSING AND REDEVELOPMENT AUTHORITY MEETING — OCT 7, 2004 Page 8 of 9 interest rate for the program has been indexed to 1.25% less than the housing finance agency's fix-up fund interest rate which is currently at 5.25%. The minimum loan amount is $500 and the maximum is $35,000 and the loan can be for up to 20 years. The loans given out by the HRA are secured by a mortgage and payments are made directly to the contractor, or if it's a do-it-yourself project, directly to the homeowner upon providing receipts. Every dollar going out of our housing program is directly invested into a home in Fridley. The eligible improvements for this program include plumbing, electrical, code compliance, heating, air conditioning, energy improvements and accessibility. Also eligible are exterior improvements such as siding, roofing painting concrete, windows, driveways and garages. Ineligible improvements would be recreational items such as pools, spas, hot tubs, and patios, gardens, fireplaces, and storage sheds. Since the changes were made this year, the combination of attractive interest rates, higher income limits and the marketing that has been done this past year has resulted in the quadrupling from 4 in 2003 to 16 in 2004. • Parking Study of Area Around City Hall. Mr. Bolin explained the prospect of a credit union purchasing the Target property next door lead to a number of discussions. The HRA owns the parking lot immediately adjacent to the Target building and has been leased back to Target. That agreement is in affect until 2014. At that time, Target or whoever the owner of the property is at the time, can purchase the lot outright. There is a provision in that agreement that gives the HRA the right to construct a parking ramp over a portion of that lot and this past summer the credit union was asking the HRA to sell them the lot and waive the right to construct a parking ramp in the future. The credit union has since backed out of purchasing the building. What staff has done is taken a look at the parking in areas occupied by Target NOC, City Hall, Fridley Professional Building and Columbia Park. They wanted to do this before another potential buyer for the property. The effort was to identify any deficiencies in parking based on code compliance and anecdotal information. The staff utilized a number of aerial photos, proposed parking plans, field surveys and interviews to comply the data. Target has 291 parking stalls. Immediately adjacent to City Hall there are 178 parking stalls. The Fridley Professional Building just south of City hall has 48 parking stalls and Columbia Park Medical Center has 212 parking stalls. Mr. Bolin explained that the figures show that all the properties except Columbia Park Clinic would fail to meet the typical code requirements for parking. Overall in this area there is a deficiency of about 114 parking stalls. Because the properties were zoned S- 2 and were master planned with shared parking to avoid over-parking in the area, they were not required to meet the typical commercial parking ratios. Target is short 21 parking stalls; City Hall is short 10 and the Fridley Professional Building is short 87 stalls. City Hall and the Target building may not be quite as short of parking as they appear if you base it on the square footage of the buildings. HOUSING AND REDEVELOPMENT AUTHORITY MEETING — OCT 7, 2004 Page 9 of 9 Mr. Bolin further explained that Columbia Park has approached the City about reconfiguring their lot and size of stalls in order to gain 34 parking stalls. The City Hall facilities manager receives a number of complaints about the lack of parking, especially on rainy and snowy days. The Fridley Professional Building does a yearly survey of all their tenants and the number one complaint has always been a lack of parking close to the building. Staff recommends that a thorough analysis be performed prior to any agreement to eliminate the option of a parking ramp next door. To that end, staff further recommends that the HRA authorize staff to identify parking analysts and return with a recommendation for a contract in early 2005. Chairperson Commers stated staff should proceed with identifying parking analysts and determining the costs for their service. • Monthly Housing Report Mr. Bolin explained that this past month 4 loan applications were processed and 2 were closed. To date in 2004, there have been 16 loans closed on. Also, there seems to be more and more requests for loan packets, so the message is getting out that there is money available for property improvement. For October, the Operation and Insulation completed weatherization work for one resident. The Remodeling Advisor met with 4 residents in October. ADJOURNMENT: MOTION by Ms. Schnabel, seconded by Mr. Holmes, to adjourn. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MEETING ADJOURNED AT 9:10 PM. Respectfully submitted by, Rebecca Brazys Recording Secretary