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HRA 12/06/2012 CITY OF FRIDLEY HOUSING AND REDEVELOPMENT AUTHORITY COMMISSION December 6, 2012 CALL TO ORDER: Chairperson Commers called the HRA Meeting to order at 7:02 p.m. ROLL CALL: MEMBERS PRESENT: William Holm Pat Gabel Larry Commers Stephen Eggert OTHERS PRESENT: Paul Bolin, HRA Assistant Executive Director Scott Hickok, Community Development Director William Burns, City Manager Darin Nelson, Finance Director/Treasurer Becky Kiernan, Accountant ACTION ITEMS: 1.Approval of Expenditures MOTION by Commissioner Holm to approve the expenditures. Seconded by Commissioner Gabel. UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY 2.Approval of November 1, 2012 Meeting Minutes MOTION by Commissioner Gabel to approve the minutes as presented. Seconded by Commissioner Eggert. Commissioner Eggert asked for the following corrections to be made: Page three, second paragraph from the bottom, third sentence should read “offer lower and we were not successful.” Page five, first paragraph, first sentence should read “William Burns, City Manager, stated that an article in the May newsletter reported home sales in Fridley were now reporting 41% distressed housing sales compared to 55.6% the end of May.” HRA Meeting of December 6, 2012 2 UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY AND THE MINUTES APPROVED AS AMENDED 3.Review of Draft 2013 Budget Becky Kiernan, HRA Accountant, stated that the final TIF numbers from Anoka County will lead to staff making revisions to the draft budget and then presenting a final version for consideration at the January HRA meeting. Ms. Kiernan stated that the budget is divided into three separate categories. The General Fund covers the bulk of the administrative and overhead costs of the HRA. The Housing Loan Program Fund covers the housing related programs and services (CEE programs, etc.). And the Capital Outlay Funds which include all of the tax increment (TIF) districts. A 2013 draft budget packet including fund balances as of September 30, 2012 and detailed budget sheets for the categories mentioned above has been included in the Authority’s packets. Chairperson Commers asked to review each line item. Ms. Kiernan said that the General Fund revenues decreased by about $29,000 from last year and salaries and administrative charges including benefits remained consistent with 2012. The difference are the professional fees for Jim Casserly as all the fees were combined and taken out of the General Fund rather than allocated to each sub district. This will keep the charges consistent and when the tax increment is received, 10% will be taken off the top for administration fees. Chairperson Commers asked about recovering attorney fees from projects like BAE. Darin Nelson, Finance Director, said that he spoke with Mr. Casserly and the BAE site is allocated separately since that is a new district. The older tax districts are capturing full administrative fees. Chairperson Commers asked if the developer pays the legal fees for the BAE project. Ms. Kiernan replied that is coded as a different project and will be reflected when we review that area. Ms. Kiernan said that expenses for the General Fund are $479,000 for a deficit of $54,000 for the coming year. The Revolving Loan Program shows revenues of $93,800 which includes interest on investment, mortgages and the Home and Garden Show. There is also an estimate for the purchase of land for a possible remodeling demo house. The total expenses are $867,000. Chairperson Commers asked where the reimbursement was from the other municipalities for the Home and Garden Show. HRA Meeting of December 6, 2012 3 Paul Bolin, HRA Assistant Executive Director, replied that the income for the Home and Garden Show will show up as miscellaneous revenues and are received from vendors of the show. In 1995 or 1996 Fridley took on the role of the fiscal agent for this show. The cities made an initial contribution to fund the show. The Authority has kept the excess funds over the years with the agreement that if the show has a short fall the Authority would take care of that. Commissioner Gabel was confused because the budget heading said Home and Garden Show. Mr. Bolin said that the list was not all for the Home and Garden Show. The professional services are mostly for Castle Visions but there is advertising and utility services, for example, that are not necessarily for the Home and Garden Show. Chairperson Commers thought the Home and Garden Show should be kept in one category. William Burns, City Manager, said that the numbers are pretty close; $24,600 for the Home and Garden Show and revenues are $22,500. Something must be in one of the line items that doesn’t belong to the Home and Garden Show. Commissioner Gabel thought it would be nice to keep it separate. Mr. Bolin said that the remodel advisor visits are in that fund too so it isn’t just the Home and Garden Show. Ms. Kiernan noted that these are just estimates, not exact figures. Dr. Burns asked if it was appropriate to have the home remodel demo project in this fund or if it fits somewhere else. Ms. Kiernan replied that the city is using funds from the housing loan program for that project. Ms. Kiernan said that the Lakepoint/Medtronic’s revenues are $727,000 with the tax levy and interest on investments. The expenses are administrative fees and parking facilities with a net income of about $2,000 for next year. Chairperson Commers asked what the city could recapture out of the funds under the state statute for administrative fees. Ms. Kiernan replied 10%. The Winfield district will be decertified at the end of this year. The current balance is $320,000. Chairperson Commers asked if those funds would go to the General Fund. Ms. Kiernan replied that district will be decertified and the funds will go back to the County. HRA Meeting of December 6, 2012 4 Chairperson Commers thought they were going to do something about that. Mr. Bolin said that there were discussions in June with Jim Casserly and Greg Johnson on spending down some of these funds. Staff does have some thoughts on how to get those balances down. Ms. Kiernan said that some balances in other TIF districts are negative and we can use this to balance it out. Mr. Bolin said staff will bring that back to the Authority with the final budget. Chairperson Commers asked when the district closed. Ms. Kiernan answered December 31, 2012 Dr. Burns added that there is a sizable tax petition on Medtronic and it is uncertain how that will affect revenues, but a solution can be negotiated. Ms. Kiernan said on page seven, the Onan district decertification will end in 2015. The tax levy includes $350,000 with expenses of $35,000 or 10%. This leaves an ending fund balance of $1.753M. Chairperson Commers thought a commitment was made to use those funds in other districts, like the BAE project. Mr. Bolin replied yes. Chairperson Commers asked if that would prevent these funds from going back to the County. He asked staff to verify with Mr. Casserly. Mr. Bolin said that the plan is to use these funds for projects. Commissioner Holm thought the Authority had to have legislation that permitted that to happen. Mr. Bolin answered yes, that is correct. Ms. Kiernan stated that University and Osborne TIF 11 will be decertified in 2018. The fund balance is $92,000 with revenues of $60,000, professional fees of $6,000 for a net income of $54,000. This has a balance of $146,000 at the end of December. TIF district 12, McGlynns, didn’t recover tax capacity. Revenues are $40,000 per year with a negative balance of $15,000 at the end of December. 2014 will show a zero balance for that fund. Ms. Kiernan stated that the Satellite TIF district 13 has a negative balance of $4,000 now, the tax levy will turn around this year and interest on investments will be $90,000, expenses HRA Meeting of December 6, 2012 5 th $9,000 ending in a positive balance of $81,000. This district terminates in 2023. The 57 Avenue TIF district 16 shows a negative balance of $95,000 and tax levy of $27,000 for 2013 with administrative fees of $2,700. The net income is $24,000 and ending fund balance is negative $71,000. The Gateway East TIF district 17 will be decertified in 2028. This fund shows a negative $700,000 now, revenues of $30,000, and administrative fees of $3,000 for a net income of $27,000. This district still reflects a negative $673,000 balance. The Gateway West has a $1.5M levy, $9,500 in revenues, $8,400 in expenses reflecting a negative balance of $1.5M at the end of 2013. Commissioner Holm asked if the sale of property was included in those figures. Mr. Bolin said that property closed about a month ago and adding that may change the income. Ms. Kiernan stated that the Main Street TIF district 19 has a fund balance of negative $18,000 with revenues of $116,000 less expenses will be a net income of $104,000. This district needs to be corrected as the income is incorrect. This is a pay as you go so the income will be around negative $15,000. The Gateway Northeast district is just certifying to taxes. Expenses are $311,000, added to the negative, the fund will be negative $1.6M. Commissioner Holm thought that seemed low. Ms. Kiernan replied that some funds were transferred into that district. The Housing and Replacement program shows revenues of $30,000, sale of properties and vacant lots are included in the revenue of $122,000. $500,000 is expected from capital outlay if homes are available. This leaves a negative balance of $758,000 at the end of the year 2013. Ms. Kiernan said that these numbers are just summaries and does not show any of the Authority’s cash balances. Commissioner Holm asked if the net income is negative $54,000 but combined net income is $200,000. Chairperson Commers said that overall the district in terms of where we are is down $2.8M and the General Fund has $7.2M but that is not an offsetting balance. Ms. Kiernan said that the Housing Program has $2.4M in it. Chairperson Commers said that the Authority can transfer out of that fund. Mr. Bolin answered yes. Commissioner Holm asked if the Authority had paid off the loan to the city so that it is gone. Mr. Bolin answered yes. HRA Meeting of December 6, 2012 6 4.Award of Demolition Contract – Housing Replacement Program Paul Bolin, HRA Assistant Executive Director, stated that the Authority worked with the City’s Engineering Department to solicit bids for the demolition of three properties. Staff estimated the bids would be in the $30,000 to $45,000 range. A total of seven contractors purchased the bid packet plans. Four contractors conducted site visits of the properties and two contractors submitted completed bids prior to the bid opening. The low bid was $67,350. Mr. Bolin said that Staff recommends the HRA approve a motion rejecting all bids submitted for HRA Demolition Project #426 as the bids were well in excess of going rates for residential demolitions. Staff further recommends that the Authority authorize Staff to solicit negotiated quotes from two or more demolition contractors and authorize the Chair and Director to enter into a demolition contract not to exceed $45,000. Commissioner Gabel thought this was a short time frame for contractors to present bids. Mr. Bolin said that this time frame is not any shorter than in the past. Part of the problem was that the bids were requested during Minnesota and Wisconsin deer hunting season and Thanksgiving so the city did not get a lot of bids. Two bids were even received after the bidding was closed. MOTION by Commissioner Eggert to reject all bids submitted for HRA demolition project #426. Seconded by Commissioner Gabel. UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY MOTION by Commissioner Gabel to authorize staff to solicit and negotiate quotes from two or more demolition contactors and authorize the Chair, Vice Chair or Director to enter into a demolition contract not to exceed $45,000. Seconded by Commissioner Eggert. UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY 5.Extension of Brokerage Agreement Paul Bolin, HRA Assistant Executive Director, stated that in November of 2011, the Authority signed a brokerage agreement with Premier Commercial Properties to market/broker the GWNE property. Premier has aggressively marketed the property and provided a number of leads. Staff recommends the Authority approve a motion extending the length of the brokerage agreement through June 30, 2013. Chairperson Commers asked if staff had a strategy or plan on how that property is to be divided up. HRA Meeting of December 6, 2012 7 Mr. Bolin said that everything is speculative at this point except at the January meeting staff will bring forward a development agreement for the former Sinclair site. Mr. McNutt would like to break ground this spring and will come before the Authority next month as an action item. Commissioner Gabel did not like the idea of selling only one piece of property. Commissioner Eggert agreed that it is hard to sell the best part first. Mr. Bolin replied that staff has been working with three groups and there is a group out of Florida that owns the Citgo site across the street and they share an architect with Mr. McNutt. They don’t see this building as being a deterrent to what they will be doing. They will be doing retail that would extend south on University Avenue. Staff is also communicating with a housing developer who does upscale rentals who would like to do 50 units of upscale urban housing. A clubhouse to the south would connect to another upscale rental building aimed at the 55+ crowd. These entities would share underground parking. The way things are working out with these groups, the pieces that they want are the ones that will be available. A benefit to the housing development would be retail and the retail developers like the idea of having housing density next to their site. Commissioner Eggert said it is a good idea to start with something nice and it’s not all going to happen at one time. If the development starts with something nice the others will fill in. Commissioner Gabel likes the idea but thought it would be all tied together somehow. She understands that there needs to be a catalyst and maybe this would get the ball rolling. She is hesitant about selling off that piece before the others get rolling. Mr. Bolin replied that Mr. McNutt wants to build this spring and has been talking to staff since June. Chairperson Commers said that the Authority would want the buildings to be architecturally compatible. Mr. Bolin said that all proposals will come before the HRA for approval. Commissioner Eggert said it is difficult to get a single buyer to develop the entire area. The Authority can work on the appearance together. Mr. Bolin added that since the retailers share an architect it will be easier creating a unified look. The goal is to have this function as one campus, even if it is under two different owners. HRA Meeting of December 6, 2012 8 Scott Hickok, Community Development Director, stated that they share an architect. There is an opportunity to do both quadrants of the intersection and for the developments to be reflective of each other. Mr. Bolin said that staff have not found a single group interested in developing the entire site; everyone would like to have the corner and build down from there. This area will likely end up being a mix of retail and housing. MOTION by Commissioner Holm to approve the extension of the brokerage agreement. Seconded by Commissioner Gabel. UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY INFORMATIONAL ITEMS: 1. Housing Replacement Program Update Paul Bolin, HRA Assistant Executive Director , stated that year to date there are 14 loans and 21 remodel advisor visits. Last year at this time we had 10 loans total and the remodel advisor visits last year at this time were 10 so we have increased quite a bit since last year. NON-AGENDA ITEMS: Chairperson Commers said that Dr. Burns has done a lot of work for the Authority and has been professional in the way he handle things which is important to the Authority's success. Dr. Burns has devoted a lot time and has been on top of everything the Authority has done. The Authority will miss Dr. Burns and is sorry to see him go. On behalf of the Authority, he wished Dr. Burns congratulations on his retirement. William Burns, City Manager said that he appreciated the successes they have all had together. ADJOURNMENT: MOTION by Commissioner Gabel to Adjourn. Seconded by Commissioner Eggert. UPON VOICE VOTE,ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED AND THE MEETING ADJOURNED AT 8:11 P.M. Respectfully Submitted, Krista Monsrud 1.44;12r- Mori644& Recording Secretary CITY OF FRIDLEY SIGN-IN SHEET HOUSING & REDEVELOPMENT AUTHORITY MEETING 1)-er-e.fr, (,0( 20% Name and Address Agenda Item of Interest