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HRA 06/06/2013 CITY OF FRIDLEY HOUSING AND REDEVELOPMENT AUTHORITY COMMISSION June 6, 2013 CALL TO ORDER: Chairperson Commers called the HRA Meeting to order at 7:00 p.m. ROLL CALL: MEMBERS PRESENT: Larry Commers Pat Gabel Stephen Eggert William Holm Gordon Backlund OTHERS PRESENT: Paul Bolin, HRA Assistant Executive Director Scott Hickok, Community Development Director Darin Nelson, Finance Director Becky Kiernan, Accountant Jim Casserly, Development Consultant Greg Johnson, Development Consultant Paul Hyde, Hyde Development 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 May 2, 2013 Meeting Minutes MOTION by Commissioner Gabel to approve the minutes as presented. Seconded by Commissioner Backlund. UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY 3.Election of Officers MOTION by Commissioner Holm to nominate Larry Commers as Chair and Pat Gabel as Vice Chair. Seconded by Commissioner Backlund. HRA Meeting of June 6, 2013 2 UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY MOTION by Commissioner Backlund to cast the ballot voting as nominated. Seconded by Commissioner Holm. UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY rd 4.Public Hearing and Consideration of Resolution Authorizing Sale of 5801 3 Street NE MOTION by Commissioner Eggert to open the Public Hearing. Seconded by Commissioner Backlund. UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY AND THE PUBLIC HEARING OPENED AT 7:04 P.M. Paul Bolin, HRA Assistant Executive Director, said that there continues to be a lot of interest in the lots the Authority has for sale. Novak-Fleck Builders has submitted a lot reservation agreement to build a new home on his lot. They are working with a buyer to finalize the home design and the home will have 4-5 bedrooms and two bathrooms. Due to timing issues with HRA Meeting dates, the plan has not been finalized. Mr. Bolin stated that Novak-Fleck Builders has built six homes on Authority owned lots over the past year. They are extremely easy to work with and deliver the product as promised. Provided the home plan submitted meets the HRP requirements, staff recommends approval for the sale of this property to Novak-Fleck Builders for $30,000. Commissioner Gabel noted that it is a larger home. She asked what the selling price would be. Mr. Bolin replied $225,000. MOTION by Commissioner Holm to close the public hearing. Seconded by Commissioner Gabel. UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY AND THE PUBLIC HEARING CLOSED AT 7:06 P.M. rd MOTION by Commissioner Backlund to approve the sale of 5801 3 Street subject to plan approval by staff. Seconded by Commissioner Gabel. UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY rd 5.Public Hearing and Consideration of Resolution Authorizing Sale of 5765 3 Street NE HRA Meeting of June 6, 2013 3 MOTION by Commissioner Gabel to open the Public Hearing. Seconded by Commissioner Backlund. UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY AND THE PUBLIC HEARING OPENED AT 7:08 P.M. Paul Bolin, HRA Assistant Executive Director, stated that this is the third lot Home Detail Builders has purchased from the Authority in the past year. Home Detail plans to build a two-level home with approximately 1,500 finished square feet. The home will have 4 finished bedrooms and 2 finished bathrooms. The exterior of the home will utilize a blend of maintenance free materials and will incorporate shakes and stone on the front of the home. The home is being designed to blend in with the existing homes found in the Gateway West project area. Staff recommends approval to authorize the sale of the lot to Home Detail Builders for $30,000. Chairperson Commers asked if the plan was to build 1,500 sq. ft. above ground. Mr. Bolin replied that is correct. Commissioner Gabel said that she had been into the other home on Third Street and the rooms were very small. She was concerned with the size of the bedrooms. Mr. Bolin noted that these homes are being built to meet the desire of the buyers. There is a demand for these homes. People like this layout even with the small bedrooms. The Authority doesn’t want five homes that look identical next to each other. The builder is meeting with an architect and has unique designs that will break up the block. Commissioner Gabel was more concerned with the livability in a small space. She would like to see the designs when they are completed. Commissioner Backlund asked if the basement went under the garage. Mr. Bolin replied the basement is only under the main living area. MOTION by Commissioner Holm to close the public hearing. Seconded by Commissioner Gabel. UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY AND THE PUBLIC HEARING CLOSED AT 7:16 P.M. rd MOTION by Commissioner Eggert to approve the sale of 5765 3 Street. Seconded by Commissioner Backlund. UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY nd 6. Public Hearing and Consideration of Resolution Authorizing Sale of 4656 2 Street HRA Meeting of June 6, 2013 4 MOTION by Commissioner Gabel to open the Public Hearing. Seconded by Commissioner Backlund. UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY AND THE PUBLIC HEARING OPENED AT 7:17 P.M. Paul Bolin, HRA Assistant Executive Director, said that this is the third home that Boulder Contracting has constructed on HRA property lots since last summer. Boulder Contracting plans to build a modified split level with approximately 1,900 finished square feet of living space. The home will have 4 finished bedrooms and 2 finished bathrooms. The exterior of the home will utilize a blend of maintenance free materials and will incorporate shakes and stone on the front of the home. This property was just purchased in March so the home is still standing. Hazardous materials were removed 2 weeks ago. Staff received bids from contractors for demolition of the home and Buberl Recycling came in as the lowest bid. Buberl Recycling can demolish the property in the next 10-14 days and then Boulder Contracting will close on the property within 3 weeks from today. Staff recommends authorizing the sale of the lot to Boulder Contracting for $30,000. Commissioner Gabel asked if Buberl Recycling has been used before. Mr. Bolin repliedyes. Commissioner Holm asked if the garage would be removed. Mr. Bolin said it will be removed and it is not worth saving. Commissioner Backlund asked if the alleyway would be vacated at some point. Scott Hickok , Community Development Director, said staff decided to analyze vacating alleyway’s on a case by case basis. Home owners can bring a petition and Council will consider vacation at that time. MOTION by Commissioner Gabel to approve Buberl Recycling as the contractor to demolish the home not to exceed $9,450. Seconded by Commissioner Eggert. UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY MOTION by Commissioner Eggert to close the public hearing. Seconded by Commissioner Gabel. UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY AND THE PUBLIC HEARING CLOSED AT 7:21 P.M. nd MOTION by Commissioner Backlund to approve the sale of 4656 2 Street. Seconded by Commissioner Gabel. HRA Meeting of June 6, 2013 5 UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY 7.Approval of Term Sheet – Hyde Development Paul Bolin, HRA Assistant Executive Director, stated that Hyde Development is purchasing the BAE site and it is heavily contaminated. There is still employment on site of less than 400 people. In order to redevelop this site the developer needs assistance to pay for extraordinary costs that are associated with this type of development. The Authority agreed to create a special hazardous sub district and TIF district to help the developer with costs. Currently the value of this site is $12- $13M and when Hyde Development finishes the development it will have 1.6M sq. ft. in new buildings on the site and the new value will be over $85.0M. Mr. Bolin stated that the item before the Authority tonight is to approve the term sheet. This is an outline of the different responsibilities that the Authority and Developer have in moving forward with this project. The term sheet spells out the level of assistance the Authority is willing to give and defines the terms and conditions on how to move forward with the project. All of the information in the term sheet will come forward in a development agreement at the August meeting. Commissioner Eggert asked staff to update the Authority on the project. Paul Hyde, Hyde Development, said that they have been working on this for 1 ½ years and it is easiest to summarize the update as three different buckets of things to get ready for the closing. Bucket one is to figure out costs and how to pay for the costs; bucket 2 is to figure out what the redevelopment and design will be and bucket 3 is the environmental review process. The plan is to purchase the site at the end of June. Before the closing can take place, we need to prove to the lender that we are able to pay for the lots. Once the term sheet is approved, the bank loan can be approved and the redevelopment can begin. Commissioner Gabel asked for clarification on the area that will be purchased. Mr. Hyde said that parcel three is the vault and owned by BAE. It has heavily impacted soils and we are not buying that site; just parcels one and two. Commissioner Holm asked if they would be going through four phases. Mr. Hyde answered yes; they are working around the fact that there is 2.0M sq. ft. of existing building that has leases to five tenants through December 2015. Nothing can be done until the leases expire so we will start on the south side and then work on phase 3 and 4 when the leases expire. Commissioner Backlund asked if the information provided are the best estimates at this time. Mr. Hyde answered yes; that is nature of these projects, the planning has to start somewhere. This is a template and game plan on how we will work together. The specifics will unfold as the project unfolds. HRA Meeting of June 6, 2013 6 Chairperson Commers asked if the letter of intent or term sheet would be further refined when the actual development agreement is presented. Jim Casserly , Development Consultant, replied yes; the term sheet is 8-9 pages and the development agreement will be upwards of 30 pages. This is an abbreviated version and the development agreement will be in more detail. Commissioner Gabel asked how the superfund site would be handled. Mr. Hyde replied that this is the fourth superfund site he has developed. This site is governed by the federal and state EPA and MPCA. BAE and the Navy have been overseeing the soil and groundwater for many years. Now something new will be built in there and we need to be able to build new buildings on this superfund site. There will be a significant clean up underway and new buildings will be developed on this site. Everything must be approved by the MPA before any development can happen. Commissioner Eggert asked how the development plan was coming along. Mr. Hyde said that someone has been selected and it will be made public in a week or so. The timing of this redevelopment is terrific and there currently is a demand for new buildings. He interviewed an architect today and will choose a development contractor. This information will be released once the closing takes place on the site. The plan is to develop something that is sustainable with not just one tenant. We would like 20-30 diverse portfolio of users on this site. MOTION by Commissioner Gabel to approve the term sheet. Seconded by Commissioner Eggert. UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY 8. Amendment to Broker’s Agreement – GWNE Paul Bolin, HRA Assistant Executive Director, stated that in November 2011, Premier Commercial Properties were selected to assist the Authority in marketing the Gateway Northeast Properties. Premier had experience in the local market place, not just as a property broker, but as a developer and property manager. The group also had key contacts with some of the market segments likely to move to the site. Mr. Bolin stated that the listing agreement included Exhibit A, which was a map of the HRA owned property. At the time the Authority did not own the Fridley Animal Hospital and that site should now be added to Exhibit A, as the Authority now holds the title to the property. Staff recommends the Authority add the Fridley Animal Hospital Property to Exhibit A of the Gateway Northeast Property Listing Agreement. Chairperson Commers asked what the expiration date was on the listing agreement. Mr. Bolin replied the end of June 2013. HRA Meeting of June 6, 2013 7 MOTION by Commissioner Gabel to amend the broker’s agreement to include the Fridley Animal Hospital. Seconded by Commissioner Eggert. UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY INFORMATIONAL ITEMS: 1.GWNE Site Plan Paul Bolin, HRA Assistant Executive Director, said that the Fridley Animal Hospital was th purchased on May 29 that the first month's rent check has been received; they will lease through the end of August. This property will be included in the site plan put together by Roger Fink and the Trident Development Group. Roger Fink, Trident Development Group, said that they have looked at the contiguous section of available lots which total about 5 ½ acres. Land planning considerations were taken into account st and this area has primary traffic access and an intersection at the north end where 61 intersects. The existing underground utilities could be expensive to abandon or rearrange. The property has a relatively long and narrow depth to it which is perfect for apartments. Part of the land planning consideration is the rear property lines of the neighbors to the east where a mature neighborhood is located and the yards have privacy fences. They are considering realigning the existing frontage road. The plan would be to not create a “s” curve but continue straight and curve around. They may also create public open spaces at 61st and University and continue with building improvements south of that area. The plan shows three separate apartment buildings and the road access would run between the buildings and highway right of way. That way there is some vehicular access to both sides of building. Due to the number of units and site constraints they will look at underground parking in addition to surface parking on site. Mr. Fink said that the green space at north end is to offer some outdoor green space for renters to enjoy. This space would be a private amenity for a park like setting and transit connection or bus station; they are open to suggestions on the green space. They would like to create something unique in the green space. Mr. Fink said that the apartment complex would consist of a three story building; three separate buildings. The style would be an urban, high density type of structure. The buildings to the north and south would be smaller buildings with 54 units each. The middle building would be a 96 unit building for total of 204 units. These numbers could change as the project goes along. Mr. Fink stated that a demographic and market demand study was done to see if there is enough need for rental in this area. The market analysis looked at Fridley, Mounds View, Spring Lake Park, Coon Rapids, and Blaine; about 226,000 people. The study looked at target market renters 65 years of age or under who has an annual household income of $40,000 or more. Within that entire market area households are projected to increase by 1,381 by 2018. According to the analysis about 25% of that household income will choose to rent rather than own. About 19,000 renter households currently meet that same demographic area. Of those 19,000 about 5% will turn over and choose to relocate their rental location. Using this criteria, the increase demand by 2015 HRA Meeting of June 6, 2013 8 is approximately 1,085 rental units needed. 313 units are under construction in that trade area. We anticipate we can attract to this site 20% of the demand or 203 units. Mr. Fink said that another market study is needed for the 55+ population demand. A lot of independent seniors, not assisted living, are looking for a lifestyle change. They will look at active seniors to add to this market study. Mr. Fink stated that if the Authority likes this concept plan, they would like to move forward with the next step. There is a contingent purchase agreement, title work, survey work etc. entered into a hand shake agreement a month ago to figure out the site challenges. The market study would be updated and they would refine the site plan, final plat etc. Commissioner Gabel said that the neighborhood met to talk about ideas on what they wanted to see there and some housing ideas arose that included some retail on the bottom level. She asked if there was any consideration for a coffee shop or dry cleaners. Mr. Fink said that multi-family housing is their business model. There was a developer looking to do commercial development at the north end of the site and they were not able to attract interest from retailers. Retail has not been considered here because housing is our specialty. Commissioner Gabel stated that the housing would be open to all age groups, not just 55+. Mr. Fink replied that they are still evaluating what the target market will be. The market study from a year ago did not speak to a specific demographic. They will redo the market study to include an analysis for the 55+ households. Commissioner Gabel asked what the rental fee is for a $40,000 household income. Mr. Fink said that Fridley rent levels average $1.25 sq. ft. per month. There is a lot of competition at 99 cents to $1.10 per month. New Brighton is at $1.40-1.60 sq. ft.; this is not low rent but achievable rent for that income range. One bedroom rental units will be around $950-$1,050 per month and includes heat, sewer, water and trash. Two bedroom rental units will be around $1,150- $1,375 and three bedrooms $1,625-1,650. This rent structure may change and the tenant would pay for heat which would lower the rent. Commissioner Holm asked if the market study would be completed before they proceed in making one building a senior building only. Mr. Fink replied that if the market study indicates there is a strong market for 55+ they would consider that. Commissioner Holm asked about the setbacks from University Avenue where the fence is currently located; did they envision a service road on west side adjacent to the fence line. Mr. Fink replied that the concept is to upgrade the fence with the iron/brick look; they would like to continue something similar to that look. Commissioner Holm asked if that roadway was necessary. HRA Meeting of June 6, 2013 9 Mr. Fink was not sure. Commissioner Holm asked if the parking space underground was for all tenants. Mr. Fink replied that one stall per unit would be available underground. Additional parking space would be available on surface parking. Commissioner Holm asked what the city requirements were because when there is less surface parking it looks nicer. Scott Hickok , Community Development Director, said that because this is in the transit overlay district it relaxes the parking requirement and the second vehicle could be replaced by other means. Working professionals that live on a transit line may use other means of transportation. One car per unit is required and there is flexibility on the second vehicle. Commissioner Backlund asked if this development would have common areas, party rooms etc. Mr. Fink replied yes; there will be an elevator, party room, fitness club, vending, storage, and laundry. Commissioner Backlund asked about the area in between the building on the north and middle if there could be green space in that area. Mr. Fink replied yes, they could look at that as a possibility. Commissioner Backlund said that the green areas are limited because of parking. Mr. Fink said that they are open to looking at options. They would like to have flexibility with parking because usually requirements are 2.5 parking spaces per unit. They have asked the architect to consider two parking spaces per unit. Commissioner Eggert asked about the private fences on the back side and if they thought of a treatment to deal with the variety of fences. Mr. Fink said that they have not given that area much thought. Commissioner Holm asked what the next step is. Mr. Bolin said that tonight was just a fact finding mission for questions and comments from the Authority. The next steps would be to start to discuss a preliminary purchase agreement and talk about the terms sale down the road. Mr. Fink has been working on this for about a year. There are some site constraints and the survey work has been done for almost the entire site. The next step would be an agreement that gives Mr. Fink the reassurance that if he delivers a product the Authority would work on a plan with him. Commissioner Backlund asked if the utilities were city or Met Council sewers. HRA Meeting of June 6, 2013 10 Mr. Bolin said that it is city utility services in that area. Mr. Hickok said that the appraised value came back on the Citgo Gas Station site and it was too high to make the offer. The site has size characteristics of 1020 sq. ft. and the developer would be encouraged to rezone the property to C2. Right now people think the City owns this property and tree trimmers are dumping limbs on the property. This causes a developer additional cost all the time. The building right now is a liability and it is best to tear it down and then it looks like the site is paid attention to. A site that is mowed and groomed doesn’t get dumped on. Chairperson Commers said that development to the north would be enhanced if something like this went in. 2.Housing Loan Program Update Paul Bolin, HRA Assistant Executive Director,stated that in April they closed on one revolving loan making a total of four year to date. There was one remodel advisor visit in that time frame totaling three year to date. ADJOURNMENT: MOTION by Commissioner Backlund to Adjourn. Seconded by Commissioner Gabel. UPON VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED AND THE MEETING ADJOURNED AT 8:30 P.M. Respectfully Submitted, Krista Peterson, Recording Secretary