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HRA 02/02/2012 - 31316CITY OF FRIDLEY HOUSING AND REDEVELOPMENT AUTHORITY COMMISSION February 2, 2012 CALL TO ORDER: Chairperson Commers called the HRA Meeting to order at 7:05 p.m. ROLL CALL: MEMBERS PRESENT: MEMBERS ABSENT: NONMEMBERS PRESENT Larry Commers William Holm John Meyer Pat Gabel Stephen Eggert Paul Bolin, HRA Assistant Executive Director Becky Kiernan, Accountant William Burns, City Manager Jim Casserly, Development Consultant Eric Myers, St. Paul Area Association of Realtors SPECIAL REPORT: REAL ESTATE YEAR END REVIEW Eric J. Myers, Government Affairs Director, St. Paul Area Association of Realtors, presented information on the trends in the real estate market in 2011 and reviewed expectations for 2012. Mr. Myers said that Fridley's median home price is $120,000 compared to a median price of $150,000 in the metro area. Overall the numbers of new listings and closed sales are moving along well. Fridley has had strong home sales over this past year. Mr. Myers said that in 2010 a home sold in 122 days after it was on the market; this number rose 23% to 151 days in 2011. This is still a decent time frame to sell a home and when the number gets into the 175-200 day range there is a concern. One of the reasons that this number rose was because in 2010 there was still a tax credit on the books for buyers. Overall Fridley's closed sales continue to be strong and the median sale price will eventually return and head back into a positive direction. Chairperson Commers asked if there was a break down report like this for every community in the area. Mr. Myers answered yes; just contact him and he can create a report for individual areas. Information is also available online at www.spaar.com. William Burns, City Manager, said that in terms of value Fridley's homes, for tax purposes, are 18 months behind in values. These values are used for legal reasons and distressed sales cannot be included in the valuations. Please keep this in mind when looking at the website. City of Fridley Housing and Redevelopment Meeting of February 2, 2012 Commissioner Holm thought that the foreclosure rate seemed to be higher than what was reported. He asked if there were properties that were in foreclosure that have not yet hit the market. Mr. Myers said that there is no simple way to track the foreclosure rate. There is no tracking of foreclosures other than watching the delinquent numbers. Banks are holding on to properties and releasing them in small chunks. ACTION ITEMS 1. Approval of Expenditures MOTION by Commissioner Holm to approve the expenditures as presented. Seconded by Commissioner Meyer. UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY 2. Approval of January 5, 2012 Meeting Minutes MOTION by Commissioner Holm to approve the minutes as presented. Seconded by Commissioner Meyer. Chairperson Commers noted on page four, first paragraph, second sentence to delete the second "represents 46% of each tcrx dollar paid by this development. " And on page seven, seventh paragraph, to change "casing" to "taking". UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MINUTES APPROVED AS AMENDED 3. Public Hearing and Consideration of Resolution Authorizing Sale of 4757 2"d Street NE MOTION by Commissioner Holm to open the public hearing. Seconded by Commissioner Meyer. UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY AND THE PUBLIC HEARING OPENED AT 7:55 P.M. Paul Bolin, HRA Assistant Executive Director, said that the Authority purchased the home at 4757 2"d Street in November of 2010 for $80,000 and spent $60,000 to renovate the home. At the time the project was started staff expected to list the home, last April, in the $140,000 to $145,000 price range. After a number of delays the home was not able to go on the market until October. Mr. Bolin said that the home was listed for $139,900 and in the months that the Authority has owned the property, median sale prices have decreased by 12.1%. Over the course of this past year, the percent of the original asking price received has averaged 85.8% and homes have been on the market for an average of 151 days before receiving an offer. City of Fridley Housing and Redevelopment Meeting of February 2, 2012 Mr. Bolin said that despite the barrage of dismal statistics, staff is happy to report that this home has outperformed all of the statistics and a purchase offer has been made on the property. It took 119 days to get an offer worth 94% of the original asking price. The terms of the sale are as follows: Home Sale Price: $137,000 Seller Concessions � 5_891 Final Price: $131,109 Mr. Bolin said that staff is recommending an adoption of the resolution authorizing the sale of the home located at 4757 2"d Street for the terms described above. MOTION by Commissioner Holm to close the public hearing. Seconded by Commissioner Meyer. UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY AND THE PUBLIC HEARING CLOSED AT 8:00 P.M. MOTION by Commissioner Holm to adopt the resolution authorizing the sale of 4757 2"d Street NE for the price of $131,109. Seconded by Commissioner Meyer. UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY INFORMATIONAL ITEMS 1. Update on Potential Redevelopment of 4800 East River Road Paul Bolin, HRA Assistant Executive Director, said that the Blight Analysis was done on the property located at 4800 East River Road and LHB found the properties to be substandard. The Building Code deficiencies totaled more than 15% of replacement cost and a substantial renovation is required to correct conditions. The estimated replacement cost is $179,468,500 and the cost to correct deficiencies is $40,475,000. This is 23% of the replacement cost. Mr. Bolin said that the Authority is scheduled to consider approval at the AprilSth meeting followed by a hearing held by the City Council on April9th. The Wilson Development Group has been working with RER to identify potential relocation costs. Chairperson Commers asked about the hazardous substance sub-district and if it required a hearing by the Council. Mr. Bolin answered yes and that hearing would also be on April9tn Chairperson Commers asked if the Authority would need a joint meeting with Council to discuss any of these proceedings. William Burns, City Manager, said that there is a joint meeting scheduled in May if that timing would work. Chairperson Commers noted that sometimes a joint meeting is scheduled for a big project. He just wanted to make sure that Council understood the hazardous substance sub-district. City of Fridley Housing and Redevelopment Meeting of February 2, 2012 Jim Casserly said that the information that was provided to the Authority was very specific about the hazardous material and there is a separate schedule that deals with the sub-district. Chairperson Commers said he just wanted to make sure that the Council understands the financial implications. He asked for an update on the relocation issues. Mr. Casserly said that preliminary conversations have been held with Mr. Wilson; he has visited the site and met with them and is starting to analyze the implications so any relocation costs can be worked into the budget. He provided the following short statement for the term sheet with RER. Relocation Benefits: The Redeveloper will provide relocation services and benefits for all eligible parties on the Redevelopment Property. The Redeveloper may, in lieu of funding such services and benefits for an eligible party, provide a written waiver by that party. Such waiver must be in a form acceptable to the Authority. The Redeveloper will indemnify the Authority and the City for any relocation liabilities arising under applicable law with respect to any portion of the Redevelopment Property. Chairperson Commers asked if the Authority had any liability as a consequence. Mr. Casserly said that the Authority does have a liability even though they are not the acquirer. The Authority is making an investment in the site and the project would not proceed without investment in this site. Part of the site investment will be relocating some of the existing facilities and that is not an issue that can be avoided. This issue has come up in Fridley before and in a number of cities; it is clear that the Authority is financially liable. Mr. Casserly said that this project is more complicated because people can probably stay there until their leases expire. This is part of the negotiation process and it is not a typical relocation effort. Chairperson Commers asked if similar, reasonable locations could be found within the community. Mr. Casserly said that there are other tenants that will be there for quite some time. The question is at the end of their normal lease period would they have any ability to receive assistance. Those are the kinds of issues we will be looking at and we want to make it clear that the most of the costs the Authority will not be responsible for. Chairperson Commers asked how the relocation charge of $500,000 would be handled. He asked if that was above the tax increments they would receive. Mr. Casserly answered no. Dr. Burns noted that BAE Systems announced moving to Kentucky long before this project started. They also intend to move their equipment and we should not have to pay for that. Mr. Casserly answered that is correct. The redeveloper must have that clearly stated in their agreements. City of Fridley Housing and Redevelopment Meeting of February 2,2012 5 Dr. Burns said that should limit the relocation costs. Mr. Casserly said that the only liability would be for small tenants. We plan to bring a draft terms sheet back to the Authority in March. The other issue with the hazardous sub-district is that it can't be certified until the paperwork is received from the MPCA. We will deal with everything on a month to month basis for the next 5-6 months. Chairperson Commers asked how long it would take to get certified. Paul Hyde, Real Estate Recycling, said that they have been talking to the Navy and BAE Systems and will work together on the cleanup plan. It is unknown what we will find and where it will go. Nothing can be done until the phasing of the development is complete. Today a meeting was held with engineers to submit the development plan. The project can be developed in four phases. Once we get a sense of the phases, then we can work with Mr. Casserly in terms of cash flow. Then we can go to the State and talk to the Pollution Control Agency. Chairperson Commers clarified that this is a generic plan that would be amended as the project goes along. Mr. Hyde answered yes. Chairperson Commers asked how the tax increment worked into that plan. Mr. Casserly said it would be using existing tax capacity that would come into the Authority like it normally does. The base would be reduced down to zero and the current market value would be captured. A different kind of arrangement is used when a sub-district is created. 2. Housing Loan Program Update Paul Bolin, HRA Assistant Executive Director, said that from December 15 through January 15 two RLF loans were closed and one other loan was closed making a total of three year to date. There were two remodeling advisor visits during that time making a total of two year to date. Mr. Bolin said that they are working with Mike Torkelson on the University Avenue Properties and leads have been slow. ADJOURNMENT MOTION by Commissioner Holm to adjourn. Seconded by Chairperson Commers. UPON VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED AND THE MEETING ADJOURNED AT 8:35 P.M. Respectfully Submitted, in■ I'/A44`4C(' Yg Krista Monsrud Recording Secretary CITY OF FRIDLEY SIGN-IN SHEET HOUSING & REDEVELOPMENT AUTHORITY MEETING Name and Address Agenda Item of Interest rJ H/eo S �GA4 2