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HRA 04/05/2007 - 29535J. n CITY OF FRIDLEY HOUSING AND REDEVELOPMENT AUTHORITY CONIlVIISSION Apri15, 2007 CALL TO ORDER: Acting Chairperson Gabel called the Housing and Redevelopment Authority meeting to order at 7:27 p.m. ROLL CALL: Members Present: Pat Gabel William Holm John Meyer Steve Billings Members Absent: Larry Commers Others Present: Mike Jeziorski, City Accountant Paul Bolin, HRA Assistant Executive Director Jim Casserly, Development Consultant Richard Pribyl, Finance Director/Treasurer APPROVAL OF 1VIINUTES: 1. Approval of February 1, 2007, Meeting Minutes MOTION by Commissioner Billings, seconded by Commissioner Holm, to approve the minutes as amended. UPON A VOICE VOTE, ALL VOTING AYE, ACTING CHAIRPERSON GABEL DECLARED THE MOTION CARRIED UNANIMOUSLY. ACTION: 2. Approval of Expenses MOTION by Cominissioner Billings, seconded by Commissioner Meyer, to approve the Expenses. UPON A VOICE VOTE, ALL VOTING AYE, ACTING CHAIRPERSON GABEL DECLARED THE MOTION CARRIED UNANIMOUSLY. 3. TIF District #19 - Approval of Development Agreement Paul Bolin, Assistant HRA Director, stated as they are aware Industrial Equities is building just under 203,000 feet of new office and warehouse space at 5110 Main Street. This is where Gaurdian Building Products used to be located. There are high costs anticipated for the building demolition which started this past Monday. There are some soil corrections with storm water management needson the site as well. They are seeking $1.5 milliori in pay-as-you-go assistance. The HRA approved the creation of the TIF district on February 1, and Council held a public hearing and granted their approval for the district on February 26. As a collective group the HRA did look at this development agreement at the February 1 meeting and suggested changes. Attorney Casserly has made a number of those changes suggested at that meeting. Really there were just some clarifications that were sought regarding the name for the developer's portion, whether it should be Industrial Equities or John Allen. Mr. Bolin thought there were a couple of terms that were used interchangeably. That has all been standardized. Mr. Bolin stated the size of the proposed building was somewhat in the air at that time. That has been corrected in the development agreement. Defuution of "site plans" was added to the development agreement, and it was claxified that the maximum amount of assistance is the $1.5 million. Additionally, Mr. Allen had asked that underground storm water management storage pond be added as an eligible expense. Since Mr. Allen started working at putting this new development on this site, there have been a number of things regarding storm water that have changed since the existing buildings were on this site with some sewer lines and other easements that run through there. The best way to manage the storm water on this site is to actually go underground with it. That was an expense that Mr. Allen was not anticipating originally. Staff is recommending the HRA approve the resolution that was included in the packets for last month. That would authorize execution of the development agreement between the HRA and Industrial Equities. Acting Commissioner Gabel asked that the minor changes made be highlighted. Jim Casserly, HRA attorney, stated the first one is the correct name of the corporate entity, the owner of the project, and that is Industrial Equities North Yard LLC. They have specific entities for each project just as most developers. The second one is that when Mr. Allen appeared �ast fall he was not sure if he was going to be doing a 242,000 square foot project or a 202,000 one. It turns out it will be the 202,000 square foot project. Third, the site plans are now a defined term. This is an issue that Mr. Meyer raised. Normally we have gotten into various kinds of building plans and construction plans in more detail on housing projects. On our industrial projects, we normally have approved the site plans and had the staff and City address the various kinds of issues raised in the site plans. Now we are going to attach a set of the site plans to the agreement, and they will be incorporated into it. Mr. Casserly stated they further limited the revenue note which is a maximum of $1.5 million for the actual cost of the site improvements less the square footage of the redevelopment property multiplied by $4.00 per square foot. Issues were raised about what if the site improvement costs were not in excess of the $1.5 million or what if the property was purchased for less. The HRA will have copies of the purchase agreements and all of the eligible costs. They will be part of the sworn construction statement that is submitted to staff so they will have 2 all of the information. The HRA will then size the note when we have all the final costs in, and it cannot exceed in any event the $1.5 million. Mr. Casserly stated the fifth item was the issue Mr. Bolin just raised about the underground storage tank for storm water use. There are some unusual issues that go along with this. As he understands it there are a series of issues dealing with various kinds of easements, the width of easements, access to various storm sewers or sanitary sewers. Also, the underground storm storage tank is the method that needs to be employed in order to really utilize this site. Jeff Salzberg, Industrial Equities, stated the one building will be 74,880 feet at 24 feet clear. There will be a lot of glass across the front as well as brick at the main entrances, and it will be fully landscaped across the front. The rear building will be 32-feet clear and that will be more of a rail distribution type use building. Both buildings will be fabcon (sp.) panels with aggregate fmish all the way around. Most of their tenants are more high-end users because they do build nice buildings, and tenants need to pay big rent to get into them. Some of the tenants they have are in New Brighton and consist of a lot of inedical companies. For Corporate Express they were going to build to suit for them on this site, and they expressed their interest in doing their bulk warehousing in the back where they have the distribution building. They are currently over in Arden Hills. Home Depot has expressed interest in the site as a distribution point. IJses like that are what they would see in the rear building. In the front it could be something like cardio companies, stent companies, etc. Commissioner Meyer asked whether the rail spur would be behind the second building? Mr. Salzberg replied, yes. The rear building will have rail up against the backside and then truck court and glass on the sides around the corners on the fronts. Commissioner Meyer asked if they had tenants for these buildings yet? Mr. 5alzberg replied, no, they do not. Commissioner�Holm asked whether both of these buildings are single floor? Mr. Salzberg replied, yes, and are 34-feet clear in the front building (they do not build mezzanines in their buildings) and 32-feet clear for the rear building. Commissioner Holm asked whether they have room for semis to load in that center space or is that for smaller vehicles? Mr. Salzberg replied for full 50-foot semis. He believed the distance is close to 250 feet in between the buildings. Commissioner Holm asked Mr. Salzberg to explain a little bit more about the underground storage of storm water, how does it work? Mr. Salzberg replied at first they tried to do a pond in the back. There is an easement of a sewer pipe going underneath and to actually get around that with the other pipes, it turned out to be a huge cost. Some of the stuff drains out to Main Street and there are some other easements through there that they could not cross with the storm sewer. As he understands it the system that is going in is a bigger pipe. Rather than your 2-foot or 18-inch pipe, and he thinks it is up to 4-feet and actually leeches out of the pipe that would go all the way around the perimeter. The volume is actually capable of staying in the pipes. Once the pipes fill to a certain level, they will eventually start to drain into the main system. Commissioner Meyer asked who is their architect? Mr. Salzberg replied, Jeff Sybrant (sp.) with Architects P.A. Commissioner Meyer asked who is the civil engineer? Mr. Salzberg replied, John Ringo. Commissioner Meyer asked of what firm? Mr. Bolin replied, Plough Engineering. Commissioner Meyer asked who is the constructurion engineer? Mr. Salzberg replied, Louie Holt with Buildings Consulting Group. Commissioner Meyer replied, this is a fairly straightforward agreement and similax to other kinds of agreements the City has been`entered into. It has just been several years since they have actually done a project like this. Acting Chairperson Gabel asked since this is a pay-as-you-go, they do not have to worry about real estate taxes? Attorney Casserly replied, no, it really is self-policing. There is only a percentage of the taxes that actually end up being tax increment. As a matter of fact it is interesting, and it probably got handed out last month, they did a pie chart which they do periodically because they lose track of just how much the State takes out of our property taxes and how much goes to the underlying jurisdictions before you actually calculate what would be tax increment. There is a very common misperception that 80-90 percent of what people pay is going into a tax increment and is being rebated and that is not true. In this instance it will probably not exceed 40 percent and will probably actually be under that. Acting Chairperson Gabel replied they did see that and believed it was about 38.8 percent. MOTION by Commissioner Holm Approving the Development Agreement for TIF District #19. Seconded by Commissioner Meyer. 4 UPON A VOICE VOTE, ALL VOTING AYE, ACTING CHAIltPERSON GABEL DECLARED THE MOTION CARRIED UNANIMOUSLY. INFORMATIONAL ITEMS: 4. Decertification of TIF District #14 — North Park Business Ceater Mike Jeziorski, City Accountant, stated they did have TIF District #14 actually decertify in 2006. They were notified on January 21 to return all unused increment back to the County. That amount is $660,321.76. Of that, 35 percent will be redistributed back to the City of Fridley with the July 1 settlement. 5. Gateway NE Update Mr. Bolin stated he did provide each of them with a handout that shows the cover of this month's Plannin� magazine that actually shows members of the Corridor Housing Initiative who the HRA will be using over the next few months to complete a similar planning process for the Gateway NE area. The City did receive a formal notification letter from the Center for Neighborhoods just prior to the HRA's last meeting stating that their Board had met, and they selected Fridley to be the first suburb they would like to come work with. The City will be getting their services for free. There is a meeting set up with them for this Tuesday where the City will meet with their staff people and try to develop the framework for the process, hope to get some timeframes, and work with them to try and identify some of the stakeholders and others who should be involved in this planning process. They anticipate starting this planning process some time in June. Mr. Bolin stated the area they are talking about would extend from our Gateway East Condominium Project up to 61St Avenue. Since they met last they have closed on both the old Van-O-Lite building and the newer Van-O-Lite building. The City has made an offer to the Oriental House. They seemed quite interested a month or so ago and then they called him yesterday asking if the City could send another copy of the purchase agreement. Sometime in between there the Sikh Society had also made an offer to the Oriental House on their property. However, now the Sikh Society has expressed to the City they would be interested in selling their property to the City as they have purchased property behind the new Target. They have a ways to go before closing on that property and, if that comes to fruition, staff may be asking the HRA in a couple of months to make an offer to the Sikh Society as well. Mr. Bolin stated the Alano Society came in and met with him back in December and stated they would be interested in working with the City and planning for the area, but they would like to stay where they are at. He did hear from the Promotional Products Company that sits just south of the Alano Society. He spoke with them yesterday, and they would like to participate in the planning process. However, at this time they would like to stay where they are at as well as the veterinary hospital. Back in February the City did have discussion regarding the purchase of the Citgo site which is on the north side of 61St. They will recall the appraisal at that time came in quite a bit higher than they had anticipated, there was �ossible contamination, and staff would come back to the HRA in March after they had reviewed the records through the Fire Department and the MPCA. What staffls research showed is that over the years there have been a number of leaks which were documented in a memo the HRA received last month. However, all the leaks had been cleared by the MPCA. He did not think that means all the contamination had gone away, it just has gotten to a level the MPCA does not deem a problem anymore. Mr. Bolin stated they did a little bit of exploration as to what types of financial assistance might be out there to clean up some of the petroleum problems that may exist, and both the Pollution Control Agency and the Department of Commerce have a couple of different programs that may be applicable in this case. If the HRA was seriously considering ma.king a purchase offer on this site, staff would recommend they have a more formal environmental review done before that, including possibly soil borings so they know exactly what the extent of the contamination is on this site. In one of the cases they had reviewed, it appeared that some of the contamination had even traveled across 61St on the Sinclair site. At this point he thinks they could include the a.rea in their planning process, but not necessarily go ahead and purchase that site at this time. Commissioner Holm recalled the assessed value of that property was quite high and the HIZA as a group was a little bit hesitant to make an offer. Obviously it is separate from the other block and there was question as to how they would use that. However, yes, if they can include it into the area that would be fine just for discussion purposes. Acting Chairperson Gabel mentioned she saw something regarding the Corridor group doing something on the Fridley channel? Mr. Bolin replied, yes, they have put together a DVD about how their process works and they gave the City a copy of that about three weeks ago. Brian Strand has gotten it into a regular rotation on the cable channel. Over the next few months as the City starts talking 'about that process more, people will have more of an idea of exactly what it entails. The City does also have extra copies of the DVD if people would like to watch it at home. 6. Northstar TIF Legislation Update Mr. Bolin stated the Fridley station site was left out of the first round of construction for the Northstar corridor. The Rail Authority came up with about a$10 million shortfall. There were a number of things that made the Fridley site more expensive than the rest. Namely, we need a tunnel underneath the rails because of the five rail lines that run through this portion of Fridley. The City's station platform itself is going to be located in the center of the rails. They need a tunnel and essentially three elevators to bring folk� down into the tunnel underneath the tracks and then up to the platform in the center of the rails. Because of the land on the east side of the tracks, between Main Street and the tracks, there is a high cost for the acquisition. Also since Fridley is the last station before Minneapolis, it seemed to have the least cost benefit to it when the federal government did their analysis on it. Fridley was left out of that first round. However, Burlington Northern would still like somebody to come up with the money to at least put the tunnel in underneath their tracks as part of the first round of construction so they can control when they are going to be held up by the construction. They would like to get it all out of the way at one time. � Mr. Bolin thinks Fridley will just keep always falling short on that cost benefit because it is not going to get any cheaper to put the tunnel in or acquire the land. That led to a brainstorming session with the City Manager and a number of sta,ff people and legal counsel and they have been investigating a number of , alternative funding sources to get the tunnel in � and possibly acquire the land on the east side. Jon Haukaas, the public works director, has been working on a couple of grant applications for the tunnel itself. One is through �the Federal Transportation Enhancement funds and another opportunity is through a group called the Transit for Livable Communities who have a few million dollars they are looking to spend around the Twin Cities metro area to enhance transit connection. However, none of that gets the City close enough to getting rid of that $10 million gap. Even if we do not move forward with the actual sta.tion construction this time, the tunnel itself is a good stand-alone project. It gives us an east-west connection that we currently do not have. Those grant applications are going in and could work even if everything else were to fall apart, and we cannot get additional funding. Mr. Bolin stated the proposed legislation that was put together would create a special TIF district for Fridley called a Transit TIF District, and it would be used to help fund the construction of the tunnel, the acquisition of some of the property, the station construction itself, and possibly doing some redevelopment projects around the area. The map that they have before them shows all of the properties that were proposed to go into that Transit TIF District. The legislation that had been drafted and introduced also gives the City the ability to spend funds that are currently being generated in our TIF Districts Nos. 11, 12, and 13. It would allow us to take those excess funds in those districts. Those are all districts that have completed projects and now have these balances sitting there that we cannot spend anywhere else. Mr. Bolin stated this legislation would give us the ability to take those funds and spend them within this new Transit TIF District. If we look at the three funds, the TIF Districts Nos. 11, 12, and 13, and calculate what they could generate over their life span, two of those districts expire in 2018 and District 13 expires in 2025. By being able to tap into those funds would generate 2.4 million over the life of those districts that we could use within this project area. In their packet he did give them more of a written update on what has happened with the actual legislation. On the Senate side a lot of the language was actually taken out of our Bill, and he thinks all they are really left with on the Senate side is the ability to use those funds from those two TIF districts within our proposed transit area. Also they can only spend those funds for the tunnel itself and not for anything related to the station construction. He does not believe at this time they are even able to use that for acquisition. Attorney Casserly stated it is really for the construction of the tunnel under the Burlington Northern Santa Fe raikoad tracks to allow access to a Northstar commuter rail station. Mr. Bolin stated right now the way it is sitting on the Senate side, a lot of things have been stripped out, and it is very restrictive. We have had staff, and one night they even had Commissioner Billings, go down to St. Paul with them for an evening hearing. The Mayor has been spending a great deal of time down there working on this issue as well. On the House side so far the Bill has been left as it was presented. 7 Attorney Casserly stated as they all know things like this get very complicated because they end up in the tax bill, and he assumes the first tax bill is going to be vetoed by the Governor and so they will come back and.do a second tax bill. They have a little subgroup that actually handles local economic development issues of which this is a part of. There will probably be three senators and three house members who will actually be overseeing the portions of the t� bill that deal with these issues. On the House side their problem is the chairman of the tax committee has a project in her district that is so much greater than the combined cost of all the rest of the projects. It is the Mall of America looking for $125 million. The rest of these projects pale in comparison. She is very concerned about setting various kinds of precedents on smaller projects that she would then not have any ability to say, as a practical matter, no to for larger ones. She is very diligent and is trying to figure out some uniform principles that she can apply in reviewing these projects. The committee heard it in the House, they were very receptive and very gracious. They essentially indicated they would work with us and try to figure something out, but they did not know quite what that was. Attorney Casserly stated the real issue here is not just trying to assist with transit. People have become very sensitive to the role of urban renewal and redevelopment and inner suburban and central city areas. They really are becoming conscious of it. When we describe to them the real goal of this, to take advantage and provide some very good redevelopment that would be promoted by the transit stations and put ourselves in a position whereby we can take advantage of it, we have had a very receptive hearing. The reason Senator Chaudhary is genuinely concerned about the direction things have gone is that he really believes it .is the State or it is the Authority or some entity that should really be paying for the cost of these stations. It is hard to argue with that in principle. We have other concerns anc� in order to use this site to the maximum, we have some structured parking issues, land clearance, we have to have access, and that is why we get into this whole discussion of the tunnel. Even if we get legislative approval, this is something the City will be dealing with really over a long period of time. Also, we have to fix up the legislation a little bit. You do not want to create one tax increment district. You only want to create districts and really see some potential development that would help contribute to the overall goals and plans and help create the density. So we have a good start in both bodies and there is just more work that needs. to be done. They are not partisan discussions; these are just some very honest differences of opinion about who should do what, etc. Acting Chairperson Gabel asked Mr. Bolin if he knew when they will know about those . grants? Mr. Bolin replied he knew the deadline was coming up towards the end of April. He would think the Transit for Liberal Communities one was in early or mid-summer timeframe they would hear back on. He thinks the federal one is not until November. Commissioner Meyer stated he is really concerned about their interest in putting a tunnel through regardless of whether or not the station is there. A tunnel should be located exactly where we want it to be with respect to a station. Without the station to be the hub and the reason for the tunnel, it seems to him the tunnel could be put in a more awkward position or location than they may want. The other thing is the maintenance of the tunnel, that is not going to be cheap year after year without certainly a station there to help pay for it in some fashion. There is : going to be a lot of maintenance, guards, electrical, heavy and very expensive equipment such as the elevators to maintain, etc. So it is going to be a constant financial drain. He wonders why we feel we have to have the tunnel there at this time except maybe being an inducement to give us the station. Mr. Bolin stated the tunnel itself could be as simple as a big box culvert that goes in this summer or next summer and the ends are sealed off, and it stays like that until the station is built here. If some of these grant applications are successful, the tunnel actually is in a logical place to tie in a number of our bike trails. We have the regional trail that follows along the west side of the rail right there at 61 St. It would also tie in Stevenson Elementary School with 61 St and allow people to go from that area all the way over to the community center. Engineers have looked at this, as part of our comprehensive planning process, the City has had a couple of neighborhood meetings over the last month, and there seems to be support for putting some sort of pedestrian access in at that part. Commissioner Meyer replied you cannot use the argument for pedestrian access and tunnel and trails, etc. if you are also talking about a box culvert that is going to be blocked off. The two axe not compatible schemes. For a box culvert, if it is so simple to put in, it could be in any time later. He really feels they are being very previous in pushing a tunnel idea through. It can be a very expensive thing and also a tunnel has to be guarded for anyone using that tunnel. There has to be lighting, guards, and maximum concern for public safety because a tunnel is not a very safe conduit. 7. Monthly Housing Report Mr. Bolin stated the HRA loan program seems to be following the trends we keep hearing about that housing is down, etc. Again we see that this month. There was only one loan issued by CEE in Fridley. It was out of the MHFA funds that they had used. That made it only the second loan for this year that has been issued. Remodeling Advisor visits were up. We did have four of those in March, giving us eight total for year-to-date. No calls for Operation Insulation over this past month. Mr. Bolin stated right now we have a total of 83 loans out there that are still active; 71 of those revolving, 12 of them are part of the Deferred Last Chance Loan Program, making a total of about $1.1 million the HRA has out right now. This month the HRA received about $36,000 in payments and $4,000 of that was interest and the rest was principal. Regarding delinquents on our $1.1 million, the HRA has about $6,000 total that is past due right now. Mr. Bolin stated Dr. Burns had asked him to mention he would like to push the regular HRA meeting in May back to Thursday, May 17, and then he would like to have them in a joint session in the City Council just before that. At 6 o'clock he would provide a dinner and ask that they meet with the Council. The purpose of that is to go over the CounciUCommission surveys they may have already received in the mail. He would like to have those back by April 16 if possible, and then he will try to get everything compiled by May 17. G� Mr. Bolin stated the Home and Garden Show was held on February 24. The snow did keep quite a few people away, but about 750 people did attend. The City tried a few different things this year, more seminars and different topics which all seemed to be very popular. The City had them move the City booths back. Last year some vendors complained about being stuck in one of the back rooms of the Schwan's Center. This year they put the City booths back there along with a number of architects who had volunteered their time and also some interior designers. So they really had a resource room where residents could come in and get information on the City's loan programs and then go chat with some of the other architects who would sketch out some ideas for them so it worked out well. Plans are already started for next year's show which will be on February 23 again at the Schwan's Center. Acting Chairperson Gabel stated she did see that they finally got the platting for Gateway. Mr. Bolin replied, yes. That happened about two weeks ago. Even when it was filed there were still some things the County was pointing out, stating they are going to still be coming back to the City, there are a couple of little slivers within there that the City has ownership on and so attorney Knaak will have some quit claim deeds made up and it should be smooth sailing. It does not affect the plat that is recorded. It may slow things up a little bit when Blueprint actually goes to take some of those properties. He did speak with Jeff Magdic of Blueprint earlier today, and he is getting ready to take the next three lots. He is actually meeting with four different groups tomorrow that are interested in a couple of the sites down there. He is also thinking of putting a model home up on that southern block. Commissioner Billings stated the County has appointed an Economic Development Authority Exploratory Committee to review the housing redevelopment activity and the economic development activity within the County and to deternune if there are any needs that are out there not being met. The mission of the study group is to report to the County Board and make their recommendation to either create an economic development authority to give the current Housing and Redevelopment Authority economic development authority powers, seek special legislation if there is no model that really fits our needs, or to recommend doing nothing. The group has met he believes three times now and their next meeting is Apri124 when they will be formulating a recommendation to the County Board and forwarding that to them in May. ADJOURNMENT: MOTION by Commissioner Meyer to adjourn. Seconded by Commissioner Holm. UPON A VOICE VOTE, ALL VOTING AYE, ACTING CHAII2PERSON GABEL DECLARED THE MEETING ADJOURNED AT 8:28 P.M. Respectfully submitted, ��er��P�"° �' Denise M. Johnson Recording Secretary � � CITY OF FRIDLEY SIGN-IN SHEET HOUSING & REDEVELOPMENT AUTHORITY MEETING - Pr �� / �, . �"� Name and Address Agenda Item of Interest