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HRA 10/04/2012 CITY OF FRIDLEY HOUSING AND REDEVELOPMENT AUTHORITY COMMISSION October 4, 2012 CALL TO ORDER: Chairperson Commers called the HRA Meeting to order at 7:00 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 Jim Casserly, Development Consultant Darin Nelson, Finance Director/Treasurer Becky Kiernan, Accountant ACTION ITEMS: 1.Approval of Expenditures MOTION by Commissioner Eggert to approve the expenditures. Seconded by Commissioner Gabel. UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY 2.Approval of September 6, 2012 Meeting Minutes MOTION by Commissioner Gabel to approve the minutes as presented. Seconded by Commissioner Eggert. Commissioner Gabel asked for the following corrections to be made: Page 2, last paragraph, first sentence should end with “465 Mississippi Street to build another home.” Page 4, second motion, should read “MOTION by Commissioner Eggert to approve the consideration of a resolution authorizing the sale …” Page 6, fourth paragraph, second sentence should read “He asked if the homes were meeting building code requirements.” Page 6, fifth paragraph sentence should end with … “banks have been good at taking care of these issues.” Page 6, sixth paragraph, fifth sentence should read “The Authority has been fortunate…” UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY AND THE MINUTES APPROVED AS AMENDED 3.Approval of 2013 HRA Meeting Dates MOTION by Commissioner Eggert to approve the 2012 HRA Meeting Dates. Seconded by Commissioner Gabel. UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY 4.Approval of TIF District #21 GWNE Paul Bolin, HRA Assistant Executive Director, stated that the area to be included in TIF District 21 will include the properties immediately north of the Gateway East town homes up to and including the Citgo Gas Station. The area is approximately six acres and includes 11 different properties. The first demolition took place in 2009 and that started the time clock ticking to create the tax increment district. Mr. Bolin stated that the modifications to the TIF plan incorporates the project costs and increased the bonding authority from the GWNE development. The district creation is necessary for the Authority to recover its investment in the GWNE area. Mr. Bolin reviewed the following assumptions: Phase I: 4500 square feet of office/commercial with construction commencing in 2013; Phase II: 4500 square feet of office/commercial, 50 units of rental housing and 8 units of single family housing with construction commencing in 2014; Phase III: 50 units of rental housing and 8 units of single family housing with construction commencing in 2015; and Phase IV: 8 units of single family housing with construction commencing in 2016. $12M of Value upon completion. Staff recommended approval of the resolution modifying the existing TIF Plans and creating TIF District #21. City Council is scheduled to hold a public hearing and will be asked to adopt a similar resolution Monday, October 8th. Jim Casserly , Development Consultant, reviewed the plan with the Authority. The estimated tax increment is based on the construction Mr. Bolin described to take place over the next 3-4 years. If all that development occurred with the inflation rate used, the HRA could have $8.5M of tax increment over a 26 year period. The project cost for the land and building acquisition and site improvement costs will be paid from the revenues that are being generated. Also built in is the administrative cost of 10%. Another resolution will be coming for the inter-fund loan to take into account some additional costs that will be occurred on this site. Chairperson Commers asked for explanation of how the estimated interest expense worked. Mr. Casserly replied that the original inter-fund loan for the project did not have any interest at all, it was at zero. The reason was because we didn’t know when revenues would be available so we didn’t want to keep compounding the amount that was old. That is why no interest was originally put in there. Chairperson Commers asked what the bonding ability was to repay the Authority. Mr. Casserly replied that if the Authority wanted to issue a debt to recover expenses it would have to be authorized because it is in the plan. We always put an amount in there to issue debt not to exceed that amount. Chairperson Commers asked if the Authority didn’t bond to pay back the Authority they would just collect the money from the TIF over the term. Mr. Casserly replied that if the Authority wished to have an infusion of capital on the HRA fund, that is how it would be done. Chairperson Commers asked where the commercial, office, rental etc. development was based upon. Mr. Bolin replied that the development scenario came from the discussions staff has had with different developers in the last few months that have shown interest in this property. Staff are working on a development agreement with one of them who is looking to put up to 4,500 sq. ft. of retail on the Sinclair site. Staff also has a group that is looking at the owner occupied town homes and is developing drawings for staff to review. Commissioner Eggert said this looked like a conservative plan given the environment. Mr. Bolin answered yes. Commissioner Gabel asked when it was decided to include the Citgo Gas Station because she thought the cleanup costs were going to be too high. Mr. Bolin replied that staff is not going out to purchase the station but have included it in the district so when it is redeveloped the city is able to capture the increment it will generate. Commissioner Gabel clarified that HRA is not committing themselves to going in there and doing something with the Citgo property. Mr. Bolin answered no; we are not obligating ourselves to that property, just to take advantage of the taxes generated by the site when it is redeveloped. The city has spent money doing environmental work on that site and because of that, it seems reasonable to include it in the district and recover some of those costs. Scott Hickok , Community Development Director, stated that City Council is considering the second reading of an ordinance to rezone the Citgo Station to a C2 Zoning to allow for development on that property; right now it is hard to market that property with the current zoning. Commissioner Gabel asked if staff have heard anything about the grants that were coming up. Mr. Hickok answered he has not heard anything on the grants. The last round that went in they responded within a month and this time it has been well over a month. He is guessing that there were a lot of good applications and they are still deciding how to allocate the funds. Chairperson Commers asked if construction is not complete before 2017 if that would reduce the increment. Mr. Casserly answered yes. The projections are optimistic as we have a high inflation factor added to the numbers after it’s constructed. We already spent the money and want to make sure if we are fortunate to get the revenues we reimburse ourselves. 4% is the maximum interest rate that can be used on inter-fund loans. This rate can be varied from year to year but has been at 4% for last several years. MOTION by Commissioner Gabel to approve the TIF District #21 GWNE. Seconded by Commissioner Eggert. UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY 5.Approval of Modifications to Inter-fund Loan for TIF District #21 Paul Bolin, HRA Assistant Executive Director, stated that staff has identified $31,631 in additional eligible expenses and the potential of acquiring an additional property for approximately $400,000. Staff recommends approval of the attached resolution, modifying the inter-fund loan between the HRA General Fund and HRA Fund #474 – TIF District #21. Jim Casserly, Development Consultant,said that the resolution is reasonable and clear. The original inter-fund loan was for $4.3M and we spent in excess of that so we have to increase the size of inter-fund loan. This increases the amount along with the interest rate of 4% makes the duration of the loan uniform with the duration of the tax increment. MOTION by Commissioner Gabel to approve the Modifications to Inter-fund Loan for TIF District #21. Seconded by Commissioner Eggert. 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 since last meeting staff purchased one additional home and heard back this morning on 5909 Main Street. Staff purchased this lot for $55,000 and the house has an assessed value of $89,000. This property is one half block from the Rail Station and the home is in poor shape. Staff also purchased the property at 587 Ironton Street for $40,000 which is two houses away from a lot we purchased a year ago. The demolition of these three properties will take place in late November/early December. Once the demolition of these lots is complete, staff can get the lots out to the builders to look at for purchase. Mr. Bolin stated that HRA had some lots next to each other on 2 ½ Street and by combining the lots there are now two 60’ lots on that street. The lot split goes to the Planning thth Commission on October 17 and on November 5 to the City Council. Mr. Bolin provided an update on the homes under construction at 561 Ironton Street which closed last Friday and the home on 551 Ironton Street will close tomorrow. The home on 434 Liberty Street is near completion; just the driveway and yard finish work is left. The buyer is anxious to close and move in. The foundation is in at 381 Ironton Street and the lumber should be delivered to the site today. The lot at 465 Mississippi Street is already sold and they are ready to break ground. Last month staff sold the lot to Home Detail at 5745 Third Street and is working on the closing of that lot. Commissioner Eggert asked if staff had any luck finding any more homes to purchase. Mr. Bolin replied that there isn’t a lot out there to look at. This week there was a 40’ wide lot with a home on it available but it is not a buildable lot on its own. The home next to it won’t be coming up for sale any time soon and it doesn’t make sense to pursue the lot. Staff will keep looking. 2.Housing Loan Program Update Paul Bolin, HRA Assistant Executive Director, said that two loans were closed in September making a total of nine loans year-to-date. There was one remodeling advisor visits in September making a total of 19 year-to-date. Commissioner Gabel asked if there was an update on the Sun Newspaper and the distribution of it. Mr. Bolin handed out explanation of the requirements and the Sun Focus does meet or exceed the requirements. Commissioner Gabel said that she could not find a copy of it. Mr. Bolin stated that the notice doesn’t need to reach 100% of the community. Any resident interested in getting the Focus can call the Focus. Chairperson Commers asked if there was a record of who gets the paper because of the advertising. Darin Nelson, Finance Director, said that the Sun Focus will mail a copy to residents and the legal notices are published on the city website. Commissioner Gabel didn’t think we were serving the public when people don’t get the paper. William Burns, City Manager, said that part of the issue is cost. Mr. Bolin said that there is the option of putting the notice in the Star Tribune but again you run into the same issue; you have to have subscription to that. The Focus is, for the most part, a free paper and made available at different locations throughout the community. It is available at the local library and City Hall. Dr. Burns said that smoke testing for sanitary sewers lines will be done and this will turn up some illegal connections with a cost to the home owner. This may be an incentive for people to utilize the HRA loan program to repair or replace illegal sanitary sewer lines. The city is getting hit with surcharges so the city has to act to get as much out of our system as possible. The city is waiting for rain to do the flow system analysis. Mr. Bolin added that if a home owner is interested in a loan for sewer/water line repair an application for the loan must be done before the work. Commissioner Gabel asked about crisis situations. Dr. Burns answered that there may be some circumstances that happens, where the home owner can be assessed, but then they would pay the city interest rate. Mr. Nelson said the city interest rate is 5 ¾ to 6 ½% over a 10 year payback. Dr. Burns said that when the smoke test is done, the smoke is non toxic. ADJOURNMENT: MOTION by Commissioner Eggert to Adjourn. Seconded by Commissioner Gabel. UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED AND THE MEETING ADJOURNED AT 8:05 P.M. Respectfully Submitted, Krista Monsrud Recording Secretary CITY OF FRIDLEY SIGN-IN SHEET HOUSING & REDEVELOPMENT AUTHORITY MEETING bc+0196 . ti, a old Name and Address Agenda Item of Interest