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HRA 10/06/2005 - 29597� CITY OF FRIDLEY HOUSING AND REDEVELOPMENT AUTHORITY COMMISSION OCTOBER 6, 2005 CALL TO ORDER Chairperson Commers called the Housing and Redevelopment Authority meeting to order at 7:30 p.m. ROLL CALL Members Present: Larry Commers Virginia Schnabel Pat Gabel William Holm William Bums John Meyer Others Present: Paul Bolin, Assistant HRA Director Scott Hickok, Community Development Director Gay Cerney, HRA Counsel Paul Eisenmenger Richard Pribyl APPROVE PLANNING COMMISSION MEETING MINUTES - September 1, 2005 MOTION by Commissioner Holm, seconded by Commissioner Schnabel, to approve the minutes as presented. UPON A UNANIMOUS VOICE VOTE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED. CONSENT AGENDA: • Consider Claims and Expenses MOTION by Commissioner Gabel, seconded by Commissioner Meyer, to approve the consent agenda. UPON UNANIMOUS VOICE VOTE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED. ACTION: • Approve Addition to Veit Contract Mr. Bolin reviewed approval from the September 1, 2005 meeting where HRA awarded demolition contract to Veit Companies for an amount not to exceed $89,628. Veit began the pre-demolition asbestos and hazardous materials removal on September 16th and found additional asbestos in the ceiling (vermiculite) of the property located at 271 57th Place. The removal of this additional asbestos has added $6,490 to the contracted amount. The storm on September 21 st knocked down a number of large trees and branches on the Gateway West properties. Staff has asked Veit to remove these trees and branches. This is another additional cost of $1,700. ^ Staff recommends HRA formally approve the additions to the Gateway West demolition contract with Veit companies. MOTION by Commissioner Holm, seconded by Commissioner Schnabel to approve the additions to the Gateway West demolition contract with Veit companies. October62005 Page 2 of 9 � UPON UNANIMOUS VOICE VOTE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED. • Approve Terms Agreement with Blue Print Homes Mr. Bolin reviewed the approval from last month where HRA approved staff to begin work on drafting a development agreement between Blue Print Homes and the HRA for the Gateway West project. Legal counsel and staff drafted a development agreement and provided a copy to Blue Print Homes for their review. Blue Print Homes requested some changes to the contract, specifically upgrading the utilities, landscaping allowances and the structuring of the $700,000 land payment. Blue Print Homes has requested that they be allowed to purchase 2-3 lots initially for model home construction and then the remaining lots would be purchased as buyers become interested in the builders homes. The HRA's legal counsel made this change and a new copy has been given to Blue Print Homes. Staff recommends that the HRA approve and sign the development terms agreement. This agreement will serve as the foundation for the development agreement to be brought forward at the HRA's November meeting. Chairperson Commers questioned the change that was made regarding the builder asking to pay for the land in installments and how the process will work. Ms. Cerney noted that the specific information was on page 4 of the new contract. Blue Print Homes would pay for the first three lots and three months later they would purchase another two lots. An installment of finro lots every quarter will continue until all the land is developed. Chairperson Commers questioned if any lots were more prime than others and if this should be a ^ concern as the land is developed. Mr. Bolin stated that the developer will have a difficult decision deciding where to start as all the lots have equal value. The south block has many mature trees but the utilities lines have not been installed and the north lot has utilities and is ready for construction. At this point Mr. Bolin does not see this as a concern but the builder may prefer to start building where the utilities are already installed. Commissioner Meyer asked for clarification of the purpose of the terms and agreement and if it was just a preliminary agreement before the final agreement is completed. Mr. Bolin clarified that the preliminary agreement is created to get the issues from both sides on paper before the final agreement is developed. By gathering all the information for a preliminary agreement HRA can make sure that all their issues are included so the final agreement will be agreeable by everyone. A preliminary agreement has been presented in previous projects and is a simple summary of the final agreement. Commissioner Meyer wanted to make sure that if HRA signed the preliminary agreement that it would not prejudice HRA from the final document if changes needed to be made between the preliminary and final agreement. Ms. Cerney confirmed that this preliminary agreement is not a legal binding document but a draft created to guide us to come to terms on the final document. Creating a Terms and Agreement document is a two step process and once the preliminary agreement is approved, 90-95% of the document is complete. Commissioner Meyer questioned if the developer will only buy 2-3 lots in the beginning of the process what is the legal status of the balance of the lots. Initially the developer was going to purchase all of the ^ lots upfront. Ms. Cerney commented that this is not a typical process for a developer. Currently the developer is unable to finance all of the properly upfront. There are some choices HRA has to offer the developer. Currently the document is set up to sell the land to the developer in installments. The developer would October62005 Page 3 of 9 �--�, buy three lots upfront and purchase a minimum of two lots quarterly until the land is developed. The alternative would be to deed the developer the entire property at once and pay in installments through the right of reverter. The developer is required to build on the property and it would be recorded in the deed against the properties and HRA could take the prope►ty back if the developer did not meet the terms as stated in the contract. Commissioner Meyer stated that HRA has a vested interest to see all the property developed by the same contractor. He questioned if Blue Print Homes has the finances to complete this project if they cannot purchase all the land as originally agreed upon. He shared concerns what would the status of Gateway West be if the developer was not able to complete the project and HRA had to hire a different developer to complete the project. Ms. Cerney commented that staff has done a lot of research on Blue Print Homes and were very impressed with the projects they have reviewed. Gateway West is a smaller project than the projects staff has researched and in the past Blue Print Homes has not experienced any financial problems. This does not mean that the Gateway West project will be an easy financial task for the developer, but history confirms that Blue Print Homes has not had any financial difficulties completing projects. If HRA is concerned about Blue Print Homes not completing the development, the land may be able to be purchased up front from the developer via a security deposit such as a letter of credit. Commissioner Commers questioned the purpose of the reverter provision. Ms. Cerney clarified that a reverter concept is offered on a limited basis. The developer would apply for finro or three lots at a time and we can take back lots if they do not build as contracted. Mr. Bolin commented that the reason for structuring payments as defined in the preliminary agreement is that it is good business for the builder not to extend themselves so far financially. HRA has already �� owned this land for 10+ years and we are seeing no return on our investment. By selling the builder three lots, we will soon have three nice homes available for sale. Mr. Bolin is very optimistic that people will see Blue Print model homes and want to build on Gateway West. We may even see a point where the builder will buy more than two lots per quarter. Mr. Hickcok stated that Blue Print Homes is also very optimistic about the Gateway West project and that we may be on the conservative side with this project. This builder has experience in this market and is confident the lots will sell. Commissioner Commers shared several concerns regarding this property and the homes to be developed. If HRA sells a few lots at a time, which ones will be sold first? If the builder defaults on the payments would the land be platted out? If the developer defaulted on the contract would we have a problem finding a qualified developer to build similar homes? Mr. Hickcok commented to the extent that we are letting out pieces of our property but the information we know about the builder and the property is that the land would be platted out and is for single family homes. The quality of the homes will be great and if the entire development does not sell or the developer backs out, we have qualified staff to find a developer to complete the project. Commissioner Holm questioned when the plat would be complete. The land is valued at $700,000 but we don't know if it will be divided into 14, 15 or 16 lots. Mr. Bolin stated that currently it looks like the development will be divided into 16 lots. By the end of November we should have the final drawing. Mr. Burns questioned if earnest money or a letter of credit would be acceptable with the builder. If the � developer only owns the first three lots, doesn't the builder have to have site control in order to initiate the � plat agreement and who would control the sale of future lots? Mr. Bolin stated that HRA is the initiator of the plat and the developer would pay for the plat drawing. October62005 Commissioner Holm questioned how many lots are on the north side verses the south sides. Mr. Bolin stated that there are seven lots on the north side and 9 lots on the south end. Page 4 of 9 Commissioner Gabel recommended that the first three lots purchased should be together in continuous order. Commissioner Schnabel asked if we have seen any plat proposal for the 16 sites and what the width of the lots will be. Mr. Bolin stated a few years back a preliminary drawing was completed and Kurth Surveying said there would be enough room for 16 lots. The width of the lots will range from 61 to 80 feet with most of the lots in the 61 to 65 feet width. The Hyde Park area allows a 60 foot wide lot. If a private developer owned the land, this would be allowed but being HRA owns the land we would need HRA approval to continue with this plat drawing. Commissioner Schnabel agreed with Commissioner Gable on selling lots in continuous order and also agrees that a letter of credit should be brought forth. Commissioner Gabel agreed that this development would improve the neighborhood but shared concerns regarding the variance of the lot sizes with some lots being 60' and others 80'. Also, originally the lots were going to sell for $50,000 a lot. If the development is divided into 16 lots, the value of the land is $800,000 verses $700,000. What will happen to the difference? Mr. Bolin clarified that the original bid of $50,000 per lot was an estimate staff applied to each lot. The more staff looked at the value per lot; a developer could come in with a four lot plat and develop the area � for $200,000. Since then staff has decided to value the land at $700,000 to avoid any such misunderstanding. Blue Print Homes will pay per lot but if the plat drawing is for 16 lots the value of each lot would be 16 divided by the $700,000. Mr. Hickcok stated that from the first negotiations with Blue Print Homes, the value of the land has been based on $700,000. Commissioner Commers asked for clarification on the budget and where we stand for public improvements. Mr. Hickcok referred to the budget sheet included in the packets. Some numbers included $300,000 for site improvements, $100,000 utilities and $100,000 for streets and sidewalks. Mr. Bolin stated that some of the actual figures should come in under budget. Commissioner Commers asked if we could see the budget verses the actual numbers for this project at the next meeting. Commissioner Meyer shared concems that HRA will not be able to review the plat agreements prior to the final agreement. Mr. Bolin shared a rough draft he received last week with the HRA to alleviate any concems. The lots will vary in size throughout the development. He also shared examples of 60' lot homes and explained that this neighborhood will be very complimentary and offer a variety of unique homes. The builder does not build the same home twice and expects to sell the homes between $250,000 and $300,000. Commissioner Gabel shared concems that a 60' lot would be real close together and maybe the � development would be better based on 14 lots verses 16 lots. Mr. Hickcok stated that it is important to remember that this is a premier developer and it should inspire other development or improvement in existing homes. This should enhance the neighborhood and it is a positive aspect that the developer can build a quality home on 60' lots. It will inspire others that HRA is October62005 Page 5 of 9 .—� using existing land to create a new pattern or theme in a neighborhood. It should reflect that we are interested in a diverse housing stock. He stated that the builder is looking forward to meeting the HRA council. Blue Print Homes is a very experienced builder and knows the market. Commissioner Commers suggested that the developer come in and we hold a special meeting to answer the questions and concerns of the HRA council. This meeting could provide some comfort and clarification to the HRA council. Mr. Hickcok stated that as the developer looks at this project, they have numbers to meet as well. He supported the idea to hold an additional meeting to review the plat drawing and address any comments and concerns to the builder. This should not slow down the process. Commissioner Commers asked if we should have a list of questions to give the developer so he can have time to prepare for the meeting. Commissioner Holm commented that he did not see the risk involved in how the financial structure is set up. As the agreement reads, the developer is obligated to pay HRA a minimum of two lots per quarter. If the builder defaults on the contract and has no substantial assets, we could be in trouble, but that is not the likelihood. Regarding the 60' lots, there are a lot of developments in the inner-city that build on 50' lots and the homes are very attractive. A final comment is regarding the decorative fence that is required along University Avenue. What is the length of the fence, where will it go etc? Commissioner Commers appreciated all the comments and asked that a special meeting be held to have the builder come in to discuss these concems. Commissioner Meyer asked if the developer has done any soil testing or have we completed this already, and had several other concerns. He said the current preliminary agreement is too vague and �� needs to be more specific. He suggested that the final agreement require more construction specifications so we have a better idea of what the potential home owner will be getting for their investment. Mr. Bolin stated that soil testing has not been done at this site. Commissioner Burns questioned if we needed to approve the preliminary terms and agreement contract that was up for action. He considered the preliminary agreement tool to help shape the final agreement. He said the concerns that have been addressed are not about what was in the contract, but more about what was missing. If we signed the agreement, it would not conflict with the ideals for the project. Mr. Bolin said we could postpone the action plan to approve the preliminary terms and agreement. Ms. Cerney clarified that the point of the preliminary term sheet is before a lot of time and money is invested in the final agreement, issues can be addressed. At this point it would be helpful to put this off another month and plan a special meeting so we can start on a definitive agreement. If the HRA met bi- weekly rather than monthly it would be easier to work out the concerns. Commissioner Holm asked to schedule a meeting in two weeks to resolve these issues. The developer would be asked to participate in this special meeting. Commissioner Commers stated that at this meeting we would discuss the method of payment, review the size of the plat, decorative fence, and quality of construction, zone site improvements and clarity any other issues that have been discussed. HRA wants this project to be successful and done properly. Mr. Bolin will ask the developer to come in on Tuesday October 18�' at 7:00 p.m. to discuss the issues of ^ the HRA council. MOTION by Commissioner Schnabel, seconded by Commissioner Meyer to table the Terms Agreement with Blue Print Homes until the October 18�' Meeting. October62005 Page 6 of 9 � UPON A UNANIMOUS VOICE VOTE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED. • Approve Purchase of Parking Permits and Signage for City Hall Parking Ramp Mr. Bolin stated that this past spring the engineering firm of Bonestroo, Rosene, and Anderlik (BRA) was hired to conduct future parking needs analysis for the SE quadrant of Mississippi and University Avenue. BRA conducted a number of parking counts over a number of different days to identify peak demand times and locations. The study showed that the parking problem was only a perceived problem as parking stalls are always available in the lower level of the ramp. It is suggested that it is not a parking problem but a management problem. The recommended course of action is as follows: o Sign every stall in the lower level- "Employee Parking Only - Permit Required" o Sign northern-most row of upper level- "Ciry Hall Visitor Parking Only 7:30 - 5:00 a.m. o City Manager to instruct all employees to park in lower level of the ramp HRA, as owners of the lot, will need to pay for the signs and parking permits. The anticipated cost of the signs and parking permits are estimated at $1,500. Natalie Pfeffer, property manager for the Fridley Plaza Clinic Building, agrees that this solution would be beneficial to the tenants and visitors to her building. Additionally, two lower level parking stalls would be designated for use by Columbia Park for overnight parking of their two mail delivery pickups that have parked in the lower level for a number of years. Staff requests that HRA approve a motion authorizing staff to order the necessary signage and parking permits, pending approval of the City Council to proceed with signing the parking lot. Commissioner Commers questioned how much office building parking space is used by the clinic. �,.� Currently it appears that the increased office space has created additional parking problems. Mr. Bolin replied that this will free up additional parking spaces. In the last two years complaints have decreased and people are parking in other areas. Commissioner Schnabel asked to suggest CPMG employees parking in specific areas to free up parking for our customers. Mr. Bolin noted that this was discussed but CPMG currently pays HRA $800 a month to park in our ramp. Commissioner Meyer asked for clarification on who would pay for the permits each year. Mr. Bolin stated that he did not anticipate renewing the parking permits annually. This would be a one time charge and the permit would be something to hang from the employee rearview mirror. The cost for all the signs and permits would be approximately $1,500. HRA would be responsible to pay for these signs and permits. MOTION by Commissioner Holms, seconded by Commissioner Gabel to purchase parking permits and signage for City Hall parking ramp. UPON A UNANIMOUS VOICE VOTE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED. . Columbia Park Parking Lot Reconstruction Assistance Request Mr. Bolin stated that Columbia Park Medical Group (CPMG) requested that HRA provide them with $166,000 towards their parking lot project. CPMG asked HRA to reply back by October 3, 2005 and ,� whether or not HRA participated CPMG would continue with the construction. Staff recommends that HRA formally deny CPMG's request for financial participation in their parking lot reconstruction project. Staff further recommends that the HRA authorize staff to explore the possibility of selling the HRA's portion of the parking lot to CPMG for a fair price, and without impacting the City's ability October62005 to park in the lot when necessary. Page 7 of 9 Commissioner Commers had some questions regarding of how much CPMG has increased the capacity of the building tenants. They have added several services to the building but have not increased the parking lot size. Mr. Pribyl stated that with the capital improvements that have been completed it was related to the office building and not the CMPG. HRA is not involved with this situation. Commissioner Commers asked if any others objected to exploring the possibility of selling HRA's share of the parking lot. Commissioner Holm did not have a problem in selling the property but did not think it was necessary to complicate the issue by retaining parking rights for City of Fridley employees. Commissioner Burns shared concerns of the future parking needs in the area with Target Operation Center operating in a much higher density. We do not know today the impact this will have in the area. A traffic study stated parking will be sufficient, but he suggests waiting to sell the property until we have a feel for how this transition will impact us. Commissioner Commers agreed that we should be in no rush or time frame to sell this property. This would be something to consider in the future. Currently there is no developing happening in the area and we can hold off on selling the property for now. Currently how many parking spaces do we need on a daily basis? Mr. Bolin inquired that there are 166 lower level parking spots available in the lower level. There is usually plenty to spare. MOTION by Commissioner Schnabel, seconded by Commissioner Meyer to formally deny CPMG's request for financial participation in their parking lot reconstruction project. INFORMATION ITEMS • Islands of Peace Update Mr. Bolin stated that staff is working with Bancor Group to create a final version of the letter of undertaking. This is a preliminary agreement to allow staff to compile more information to create a final version. Last month HRA authorized staff to make an offer to purchase the property at 6000 East River Road. The property owner has a failed septic system and had approached the City about an interest in purchasing the property. Staff worked with Wilson Development to draft the purchase agreement and relocation benefits. The offer was verbally accepted for the Appraised value of $235,000 plus $4,900 in relocation benefits. We are waiting to get signed purchase agreement returned. A blight analysis will be complete once the signed purchase agreement is retumed. Staff will be asking that the HRA and Council approve a blight resolution that will allow the home to be demolished shortly after to avoid the ongoing costs that would arise from vandals, looters and trespassers. Commissioner Schnabel asked if the property is currently occupied by one of the owners. ^ Mr. Bolin stated that it is currently occupied and they are looking forward to moving. He also mentioned that on Tuesday a 12 unit building at 151 Island Park Drive was listed for sale for $789,000. This building would fall in the Islands of Peace project and asked if any action should be taken place on this property. October62005 Page 8 of 9 �--� Commissioner Burns asked what Mr. Bolin would recommend regarding the property at 151 Island Park Drive. Mr. Bolin suggested notifying the developer that the properiy is for sale but currently the timing is not right to purchase the property. Commissioner Commers asked how the light rail station will tie into the Island of Peace project. Mr. Bolin stated that the task it is to determine if there is any way to connect the two projects. If they could be connected the Island of Peace Project could be eligible for additional transportation grants and funds. Currently this is not defined but they are looking for ways to link the sites to make it more attractive for the grants. Commissioner Commers asked if the area around the rail property has been purchased by anyone yet. Mr. Hickcok commented that negotiations are ongoing. A manufacturer is interested in purchasing some of the property and the County HRA may be interested in buying some of the area. • Northstar Rail Corridor Update Mr. Hickcok reviewed the drawing of the Northstar Rail Corridor. He discussed the finro components of the projects discussions. One is the "third rail" line that is needed to meet the growth expectations and the other is the discussion of who will own the land surrounding the East Station Site. It is believed that the County will purchase the east and west station sites and the rail authority will reimburse the County for those portions that are required to accommodate the commuter rail and its associated activities. The Rail Authority will purchase the station sties and a blended combination of options one and two along with the City HRA purchasing the portion of the east station site that would be suitable for transit oriented �� development /residential. As mentioned earlier, no action is required of the HRA at this time. A discussion to evaluate the level of HRA interest in participating in this development would be helpful so that staff can further discuss with Northstar representatives and in the future draw some conclusions about ownership and who will take the lead in the transit oriented development. Commissioner Schnabel questioned if a buffer will be built for existing houses so they would not see the rail corridor. Mr. Hickcok stated that the cost of the land is expensive for landscaping. The original thought was to have residential urban housing design having the parking deck accessible to the building tenants. Commissioner Burns questioned if the county HRA purchases the development the levy of the city and county would compete with each other. Mr. Hickcok commented that it would be unrealistic that the county HRA would retain the property too long before they find the next owner. Commissioner Gabel asked for clarification on the FTA funds to pay for parking. Mr. Hickcok clarified that the FTA funds will be for surtace parking, not deck parking. Surface parking uses more land around the area and is more costly. We will continue to update HRA with other aspects of this project. The final decisions will be made in 2006 with early phase construction starting in 2007. • Monthly Housing Report � Mr. Bolin stated that there were two loans for the month which increased the total to 18 for the year. The total budget for the year is $625,000 and we are at $604,000 year to date. October62005 Page 9 of 9 �--� A mailer has been sent out to homeowners to promote programs. They are working with the senior center to put together energy conservation presentations. OTHER ITEMS: Commissioner Schnabel commented the City of Fridley working all hours to take care of the residents affected by the September 21St storm. She appreciated the dedication to get the city back in shape. She wanted to express her thanks and gratitude. /_1�a1�1�1:�►1�'il�►�i� MOTION by Commissioner Schnabel, seconded by Commissioner Gabel to adjourn meeting. UPON A UNANIMOUS VOICE VOTE, CHAIRPERSON COMMERS DECLARED THE MEETING ADJOURNED AT 10:30 P.M. Respectfully Submitted by, -� ,�����`���/��v'.�" � Krista Monsrud Recording Secretary � ��'1 �`°� � � CITY OF FRIDLEY SIGN-IN SHEET HOUSING 8� REDEVELOPMENT AUTHORITY MEETING �C ��' � � �t��S ---------------------------------------- ---------------------------------------- Name and Address ------------------------ ------------------------ Agenda Item of Interest