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HRAM 05/01/2014 CITY OF FRIDLEY HOUSING AND REDEVELOPMENT AUTHORITY COMMISSION May 1, 2014 CALL TO ORDER: Chairperson Pro Tem Gabel called the HRA Meeting to order at 7:03 p.m. ROLL CALL: MEMBERS PRESENT: William Holm Pat Gabel Stephen Eggert MEMBERS ABSENT: Larry Commers Gordon Backlund OTHERS PRESENT: Paul Bolin, HRA Assistant Executive Director Scott Hickok, Community Development Director Jim Casserly, Development Consultant ACTION ITEMS: 1.Approval of Expenditures MOTION by Holm to approve the expenditures as presented. Seconded by Commissioner Eggert. Commissioner Holm asked if some of the expenditures were to pay taxes. Paul Bolin , HRA Assistant Executive Director, replied yes. UPON A VOICE VOTE, ALL VOTINE AYE, CHAIRPERSON PRO TEM GABEL DECLARED THE MOTION CARRIED UNANIMOUSLY 2.Approval of April 3, 2014 Meeting Minutes MOTION by Commissioner Holm to approve the April 3, 2014 Meeting Minutes as presented. Seconded by Commissioner Eggert. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON PRO TEM GABEL DECLARED THE MINUTES APPROVED 3.Approval of the First Amendment to the Redevelopment Contact with Fridley Land, LLC Paul Bolin , HRA Assistant Executive Director, stated that this project is generating a lot of interest from prospective tenants. The success of the project requires changes to the development agreement. The HRA Grant funds for MPCA RAP approved for cleanup are needed sooner. Staff Housing and Redevelopment Authority Meeting of May 1, 2014 2 recommends approval of the resolution, authorizing execution and delivery of a first amendment to the contract for redevelopment between the Authority and Fridley Land, LLC Paul Hyde , Developer, stated that things are going faster than they thought when this was originally set. They are busy trying to keep pace with the market demand for the product. Looking at the four phases they will start with phase one which is a bulk warehouse start in the next few weeks and there are six prospects interested in this first phase. Mr. Hyde stated that the second building, an office warehouse, has two prospects interested. They are ready to start doing some work out there in the next few weeks. The footings could go in the second or third week of June. If the lease demand keeps up they will start the office warehouse building too. There is also a potential to do something up there with the existing tenants in the building. If that goes through that will happen this year too which is why they are requesting to speed up some of the grants. Mr. Hyde said that this change request is coming forward because there is an accelerated market demand than when the original planning started. Originally they thought it would take 2-3 years to find interested parties and now it may all happen in 2014. The cleanup plan is approved for phase one and they are now in the process of doing testing for phase two to start sometime in July of this year. Jim Casserly , Development Consultant, added that the summary of tax increment analysis is in the format that has been followed in the last two years. This format assumed 1,600,000 sq. ft. to be developed with over $85m total market value with an average market value of $53.46 per sq. ft. The increment available to the Authority to pay for eligible expenses is $16.7m. The hazardous sub district would create $4.5m. Mr. Casserly stated that the revised analysis shows the total amount of space has increased up to approximately 1,725,000 sq. ft. and the market value increased to over $108m or nearly $63 per sq. ft. That will generate over $23m for expenses but is capped at $20m. The grants stay the same. The only way there can be less than what is projected is if the entire site was reduced below the market value. As the buildings are torn down the market value will increase. There is minimal risk with the sub district. Mr. Casserly stated that they are trying to manage the funds coming from the Authority’s general fund as there are a number of demands on the Authority resources so they will try to limit the amount of grants that will be out at any one time. The only change is the speed in which the grants will be made. There are still safeguards in place and the integrity of the redevelopment contract will be maintained. Commissioner Holm drove by the site today and noticed the asphalt parking lot; he asked if there would be a grass area beyond the fence. Mr. Hyde replied that is part of the phase one area, where the cleanup and redevelopment will start. Commissioner Holm asked in phase two what part would remain where they are planning to demolish part of the existing building and put up a temporary wall to separate the buildings. Housing and Redevelopment Authority Meeting of May 1, 2014 3 Mr. Hyde replied that in phase two there is an opportunity to provide space for the existing tenants in the existing building. In order to do that they would need grants this year to help with the demolition of a portion of that building. That was something they thought was a year away and it may happen this year. That is why they are asking the Authority to speed up the process so they can keep up with the demand. Commissioner Holm asked if they would leave the old part of the building. Mr. Hyde replied that the southern ¾ will be demolished and the northern ¼ would remain. That is something they are working on now to see if they can make that happen. The timing will be this year if it will work. Chairperson Pro Tem Gabel asked if that is an economically a good thing because refurbishing the building would be very costly. Mr. Hyde replied that at this point there are pieces in that building that are so costly to replace it is economically inefficient to rebuild for some of the things inside that building. If they leave ¼ free standing it will still cost money but will cost less money for those tenants that need the space. It gives a new building on the site a year or two ahead of schedule. Commissioner Eggert asked if outside of the changes in phase two, if any other changes are forthcoming. Mr. Hyde replied there are none so far. The phase two scope change is plenty enough for them to work through. The speed that will happen while they are cleaning up and redeveloping the phase one site is a lot. On the environmental scope nothing has changed and on the market demand everything they thought they would see, they are seeing. They will show the market they are coming out the ground and that will be the first domino that will get this entire thing working. This will be the first step and he can’t wait to see the market reaction. This project won the best in real estate award two weeks ago. It was a unanimous decision due to the complexity of the project. Commissioner Eggert asked when the leases would be signed so it can be announced to the public what is coming. Mr. Hyde replied that there are six prospects for the bulk warehouse which is more demand than thst they can deliver. The timing of all six is 4 quarter this year or 1 quarter of 2015. Commissioner Holm asked on page 12/13 if there was a definition of minimum improvements. Mr. Casserly replied that is in the redevelopment contract but the only changes are the sq. ft. of the minimum improvements. Commissioner Holm said that it looks like the building being demolished is also under construction on the top of page 13. Mr. Casserly replied that conveys when the grant is available and that is for phase three activities. It will be upon the completion of the building of phase one, footings are commenced for both phase Housing and Redevelopment Authority Meeting of May 1, 2014 4 one building and phase two wall is under construction. If this goes quickly it may be clean up in phase three before there is a certificate of completion issued for the phase one building. Commissioner Holm thought the wording should be changed because it sounds like the building is being demolished but also under construction. Mr. Casserly will see if the wording can be changed. He is trying to describe that there has to be a wall that is definitive and separating the rehab space from the demolished space. He will look for better terms to describe that kind of wall. Chairperson Pro Tem Gabel said that the Authority could end up giving out $3.5m in grants real fast in the next year. She asked if this can be accomplished with the intra fund loan from the HRA general fund. Mr. Casserly replied yes. Chairperson Pro Tem Gabel asked what cash was on hand. Mr. Casserly replied that there are adequate amounts in the general fund to make these advances. Chairperson Pro Tem Gabel noted that the HSS will accumulate slowly at $332,000 per year. Mr. Casserly replied yes, that is taxes generated on the property. There are two different levels of funding. The HSS is capturing the existing taxes and then there is the new value that is generated and that is what goes for the revenues and other eligible activity. Chairperson Pro Tem Gabel asked if the Authority administered the grants or who has the funds. Mr. Hyde replied that the grant funds are from DEED and Met Council and remain with the agencies. They will send a draw request to the Authority who will send the funds to the environmental contractor. Chairperson Pro Tem Gabel asked what the total was in the grants. Mr. Hyde replied $800,000 from DEED for cleanup, Met Council cleanup total is in the $550,000 range and DEED infrastructure grant was $500,000. They received 100% of what was asked for. Chairperson Pro Tem Gabel asked about the walls because the drawing looked like the walls were the lot lines. Mr. Hyde explained that they will be cutting a hole through the building and building a new wall to make the building stand on its own. The rest of the building south of that line will get torn down over nine months. Chairperson Pro Tem Gabel asked if the Authority was in good financial shape to be releasing funds early. Housing and Redevelopment Authority Meeting of May 1, 2014 5 Mr. Casserly replied that they are sensitive to that and they have talked internally about updating the cash flows because of other opportunities that may be coming. Commissioner Eggert asked what people would see visually during construction. Mr. Hyde replied that cranes will be used to set the steel and the precast for phase one and two. There will be all sorts of iron on the site while doing the cleanup work. They are close to awarding a cleanup contractor. There will be a lot of activity when people drive by. Chairperson Pro Tem Gabel asked what will happen if any surprises come along as they are moving along with the demolition process and construction. Mr. Hyde replied that the last project in Fridley they ran across buried barrels and they stop the work, sample what is found, call pollution control and come up with plan to handle it. Their job is to do the right thing and not slow the project down. Surprises will happen somewhere on this 122 acres. They have a contingency plan. MOTION by Commissioner Holm to approvethe First Amendment to the redevelopment Contact with Fridley Land, LLC. Seconded by Commissioner Eggert. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON PRO TEM GABEL DECLARED THE MOTION CARRIED UNANIMOUSLY 4.Public Hearing and Authorization of Sale, as part of Redevelopment Agreement, of Gateway Northeast Property to Cielo Partners, LLC MOTION by Commissioner Eggert to open the public hearing. Seconded by Commissioner Holm. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON PRO TEM GABEL DECLARED THE MOTION CARREID AND THE PUBLIC HEARING OPENED AT 7:44 P.M. Paul Bolin , HRA Assistant Executive Director, stated that Trident Development has asked that th consideration of this item be continued until the June 5 HRA Meeting. They are still waiting for comments and approval of the agreementfrom their bank. Mr. Casserly added that they have no control over some of the timing of this and they are anxious to get started. Commissioner Eggert said that it can be hard to get everyone to sign off and this request is not unusual. Mr. Casserly said that there may be some changes to be brought back to the Authority. MOTION by Commissioner Eggert to continue the public hearing until June 5, 2014. Seconded by Commissioner Holm. Housing and Redevelopment Authority Meeting of May 1, 2014 6 UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON PRO TEM GABEL DECLARED THE MOTION CARRIED UNANIMOUSLY 5.Public Hearing and Authorization of Sale of 5909 Main Street MOTION by Commissioner Holm to open the public hearing. Seconded by Commissioner Eggert. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON PRO TEM GABEL DECLARED THE MOTION CARREID AND THE PUBLIC HEARING OPENED AT 7:52 P.M. Paul Bolin , HRA Assistant Executive Director, stated that Shermer Homes, of Dayton, submitted a lot reservation agreement to build a new home on the lot located at 5909 Main Street Ne. Staff has not received a copy of the proposed home design, but expect it will meet the HRA’s criteria based on other homes Rick Shermer has built. This home will have two bedrooms, two bathrooms and may have a detached garage. Provided the proposed home meets HRP’s criteria, staff recommends approval of the resolution, authorizing the sale to Shermer Homes. The home fits in well with existing homes in neighborhood, is a new investment in neighborhood and the proposed home design is consistent with HRP Guidelines. Chairperson Pro Tem Gabel asked how much the home will sell for. Mr. Bolin replied $220,000. Chairperson Pro Tem Gabel asked if it was okay to have a detached garage on this lot. Mr. Bolin replied yes, this is one of the alleyways that is maintained. Most homes have access to that alleyway. MOTION by Commissioner Holm to close the public hearing. Seconded by Commissioner Eggert. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON PRO TEM GABEL DECLARED THE MOTION CARREID AND THE PUBLIC HEARING CLOSED AT 7:57 P.M. MOTION by Commissioner Holm to authorize the sale of 5909 Main Street to Shermer Homes. Seconded by Commissioner Eggert. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON PRO TEM GABEL DECLARED THE MOTION CARRIED UNANIMOUSLY rd 6.Public Hearing and Authorization of Sale of 5735 3 Street MOTION by Commissioner Holm to open the public hearing. Seconded by Commissioner Eggert. Housing and Redevelopment Authority Meeting of May 1, 2014 7 UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON PRO TEM GABEL DECLARED THE MOTION CARREID AND THE PUBLIC HEARING OPENED AT 7:58 P.M. Paul Bolin , HRA Assistant Executive Director, stated that Home Detail Builders has submitted a rd lot reservation agreement to build a new home on the lot located at 5735 3 Street. The builder has been designing the home with their buyer. The home will be 2600 sq. ft., four bedrooms and four bathrooms. This will be a two level home with a walkout on the back of the home. The exterior will utilize a blend of maintenance free materials and incorporate shakes and stone on the front of the home. Mr. Bolin stated that Home Detail are the builders of four of the other homes on this block. Staff recommends approval of the resolution, authorizing the sale to Home Detail for $30,000. This is a new investment in neighborhood and the proposed home design will be consistent with HRP Guidelines. Commissioner Holm asked if there were any issues related to the alignment with the other homes because of the curve in the street. Mr. Bolin replied that the front yard setback is 25’. Scott Hickok , Community Development Director, added that there is a provision that talks about the setback and to be further back or closer to the road. The developer will take advantage of the better setback on the curve of the roadway. If the home is set forward it can be no more than 6’ set back from the adjacent home. Chairperson Pro Tem Gabel asked about 5725 where it curves more. Mr. Hickok said that is a deep lot and has a nice setback. There is a range of about 12’ to shift a home forward or back. The developer will take advantage of a larger front yard and set back by 5735 or no more than 6’ set back from the adjacent home. MOTION by Commissioner Eggert to close the public hearing. Seconded by Commissioner Holm. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON PRO TEM GABEL DECLARED THE MOTION CARREID AND THE PUBLIC HEARING CLOSED AT 8:07 P.M. MOTION by Commissioner Holm to authorize the sale of 5735 Third Street to Home Detail. Seconded by Commissioner Eggert. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON PRO TEM GABEL DECLARED THE MOTION CARRIED UNANIMOUSLY 7.Approval of Resolution Adopting Rosenberg’s Rule of Order (2011) as Parliamentary Procedures for the Housing & Redevelopment Authority Housing and Redevelopment Authority Meeting of May 1, 2014 8 Paul Bolin , HRA Assistant Executive Director, stated the City Council, HRA and all Commissions have used Robert’s Rules of Order as their parliamentary procedures since the City was incorporated. Over time, Robert’s Rules have expanded and many cities have switched to Rosenberg’s Rules. These rules are designed for small boards and councils of 5-7 people. Staff recommends approval of resolution adopting Rosenberg’s Rules of Order MOTION by Commissioner Holm to adopt the Rosenberg’s Rule of Order (2011) as Parliamentary Procedures for the Housing and Redevelopment Authority. Seconded by Commissioner Eggert. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON PRO TEM GABEL DECLARED THE MOTION CARRIED UNANIMOUSLY ADJOURNMENT MOTION by Commissioner Eggert to adjourn. Seconded by Commissioner Holm. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON PRO TEM GABEL DECLARED THE MOTION CARRIED UNANIMOUSLY AND THE MEETING ADJOURNED AT 8:11 P.M. Respectfully Submitted, Krista Peterson, Recording Secretary