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HRAM 10/06/2016 CITY OF FRIDLEY HOUSING AND REDEVELOPMENT AUTHORITY MEETING OCTOBER 6, 2016 Chairperson Commers called the Housing and Redevelopment Authority meeting to order at 7:01 p.m. MEMBERS PRESENT: Larry Commers William Holm Pat Gabel Stephen Eggert Gordon Backlund OTHERS PRESENT: Paul Bolin, HRA Assistant Executive Director Wally Wysopal, City Manager Jim Casserly, Development Consultant Paul Hyde, Hyde Development ACTION ITEMS: 1. Approval of Expenditure. MOTION by Commissioner Holm to approve the expenditures as presented. Seconded by Commission Eggert. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. 2. Approval of September 1, 2016 Meeting Minutes. Commissioner Gabel asked for the following changes to be made: (1) Page 6, third paragraph, second sentence, "To avoid that really what staff" she believed it should read "To avoid that what staff. . . ." (2) Page 6, fourth paragraph, should be corrected to read, "Mr. Bolin referred to Request for Proposals (RFP) in the memorandum. Attorney Casserly and he have had some discussions, and it may end up being referred to a Request for Qualifications. . . ." (3) Page 6, fifth paragraph, second sentence, eliminate the second sentence and then complete the paragraph stating, "Staff has a lot of soil reports and different environmental reports done. They can get out into the market place and share that Housing and Redevelopment Authority Meeting of October 6, 2016 2 information along with the other site constraints with the development community." (4) Page 7, fifth sentence, should read, "Then ideally, staff. . .maybe recommend a couple of developers the HRA. . . ." (5) Page 9, second paragraph, last sentence, should read "He encourages staff to consider taking a look at that." (6) Page 9, fifth paragraph, should read, "because one of the concerns at those meetings was if the parking garages would be difficult to put in there." Commissioner Backlund said page 2, paragraph 5, should read, "He is curious of what the process is as one goes into the seven-county pool and the rest of the money comes back here for fiscal disparities." Commissioner Eggert referred to page 2, paragraph 3. He asked if the dollar amount should be $408,000. Paul Bolin, HRA Assistant Executive Director, repliedthe amount should be $408,000 and not $480,000. Chairperson Commers asked the minutes be approved subject to corrections at their next meeting. 3. Approval of Administrative Contract - Home & Garden Show. Paul Bolin , Assistant Executive HRA Director, said for the last 19 years, the HRA has been the fiscal agent on behalf of the cities of Blaine, Mounds View, and Columbia Heights for the Home & Garden Show. The revenues from the booth rentals cover the expenses for the show. Since 2005, they have worked with Castle Visions to perform the administrative tasks. The Home & Garden Show members would like to work with Castle Visions for the 2017 Home & Garden Show which is going to be held on Saturday, February 4, at the National Sports Expo Center. Staff recommends approval of the contract authorizing the HRA to work with Castle Visions. MOTION by Commissioner Holm to approve the Administrative Contract - Home & Garden Show. Seconded by Commissioner Gabel. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. 4. Approval of Resolution Supporting Grant Application - DEED Redevelopment Paul Bolin, Assistant Executive HRA Director, stated Hyde Development is getting ready to do the clean-up needed to build Phase 4, the final phase of the Northern Stacks project. Mr. Hyde has identified the need for approximately $3 million in grants to complete this work. These Housing and Redevelopment Authority Meeting of October 6, 2016 3 grants would come from Met Council and from the State's Department of Employment and Economic Development. The grants require that the funds go through the HRA, which happened with the previous three phases of this project. Mr. Bolin stated the first grant program is DEED's Contamination Cleanup Program. This provides money for investigating and developing a Response Action Plan and then doing contamination clean-up that would go along with that plan. Mr. Hyde is seeking about $2 million from DEED for this particular program. Mr. Bolin stated the other program is the Met Council's Tax Base Revitalization Account (TBRA) Program. This is additional money for investigation and cleanup of contamination on the site. They are looking at approximately $950,000 from this program. Mr. Bolin stated the HRA has helped Mr. Hyde with these applications during the previous three phases and they have obtained nearly $6 million. This is Phase 4. Mr. Bolin stated staff recommends the HRA adopt two resolutions, one resolution for DEED's Contamination Cleanup Grant, and the other resolution under a separate motion approving the application to Met Council's TBRA Program. Paul Hyde, Hyde Development, stated they have started and now completed two buildings in Phase I which are on the south side of the park. The second building which is a 135,000 square foot office warehouse building was just completed last week. It is 100 percent occupied. In fact, they leased the building right as they were starting it. That is how much demand they are seeing. They did not have enough clean-up work done to be able to start another building any sooner than what they are doing now. They are starting their fourth building, in the Phase 3 site, which is what they call Northern Stacks 3. That started construction last week. Mr. Hyde stated hey have completed three buildings. All are 100 percent occupied. They are starting their fourth building which is the Northern Stacks 3 building. They will finish the clean- up of the Phase 3 site this fall. They have another few weeks to wrap that up. Now they are focusing on getting the clean-up grant applications in on November 1 for the Phase 4 portion of the site. Mr. Hyde stated in terms of their environmental clean-up, they have had Certificates of Completion issued for the Northern Stacks 1 building which was the first project. They have a request for the Certificate of Completion for the BAE Building and expect it by the end of the year. Shortly, they will submit their request for the third Certificate for the Stacks 2 building with Trio and MV2. They expect that Certificate to be issued in the first quarter of next year. Mr. Hyde stated so far everything is moving along, probably faster than what they told the HRA it would when they first started. It all seems to be going well. They are seeing really good activity from the leasing market. It may have started a little slower than what they hoped with the first building. That is typical of it being the first project on a much larger park. The old BAE building was still out there. It did not look great. They were talking about a vision that was harder for people to see--especially tenants. Once they got the BAE project done, people really Housing and Redevelopment Authority Meeting of October 6, 2016 4 could see what it would look like. They started Stacks 2 and filled that up immediately. They have not had another site ready to offer another building until the Stacks 3 project. Mr. Hyde stated they continue to do work marketing the boiler room for tap rooms. He thanked the HRA for their legislation as it helps out a great deal. That is the first thing any potential tenant asks when they walk in. They think the space is amazing and ask if the City has passed the ordinance. Now they are now able to reply, yes. People are interested in the very tall ceilings in the boiler room. It is very open and bright with a lot of windows which they are going to add. It has enormous history, not only with the site but with the stacks. They have had a showing with a different brewing company every other week. They have a lot of activity, and he hopes to have somebody in there next summer. Mr. Hyde said to wrap up, they have had three buildings built in full and all are open. They are starting their fourth project which will be ready in the spring of 2017. They will continue working through Phase 3 this winter and spring, trying to get those buildings filled up. Now their focus is on cleaning up the Phase 4 site, and that is the reason for their grant application. . Last summer they did the environmental investigation of the Phase 4 site, and they are preparing their grant application. They have already submitted their clean-up plan to the Pollution Control Agency. Staff at the Pollution Control Agency has indicated they will approve it in time for their November 1 application deadline. Commissioner Commers stated to Mr. Hyde he certainly deserves a lot of credit for developing this project. It is a little bit surprising, as it has come faster than they originally thought. There must be a great demand out there. Mr. Hyde replied it is really interesting. Their primary competition is in Rogers and Otsego. There has been an enormous amount of new product put up out there. He thinks it is a result of a lot of Wall Street capital that is interested in making some development returns and not just mortgage returns. Here they have won for people who want to be close to downtown, close to the employment base, close to transit, and close to their customers. If you have two employees and want the cheapest place to store boxes, this is not their project. If you want to have an in- field site location, they are the only game in town. They have been fortunate enough to launch their project with a good economic cycle. That along with getting the BAE project underway, has shown some momentum, and people who are tenants now see other people who are there. They have buildings to show them. They can see what it will look like. Commissioner Commers stated they look forward to them being able to get it finished. He asked if that would be next year. Mr. Hyde replied, depending on the economy, he thought it would be two to three years unless something happened and they slow down. They are really in good shape and they would not have been able to do any of this without the HRA getting that first development agreement put together which launched this whole project. Commissioner Gabel asked how it went when they got into the plating shop. Housing and Redevelopment Authority Meeting of October 6, 2016 5 Mr. Hyde replied two different things happened on Phase 3. There really have been almost four completely different sites environmentally which has been interesting. Phase 3 had two areas that had been historic concerns. One was called the paint shop which was just south of the boiler room and something BAE was focused on cleaning up. The other was the plating shop which was the Navy's issue. Neither party had ever had a chance to do anything about it because the building covered it. Once the building came up, they warned people they were going to have a summer to go in and solve the problem or else they were going to cover it with something else, BAE and the Navy spent their own money and addressed the paint shop and the plating shop. They excavated the soils and they met the cleanup standards. The cleanups are done, and the project is underway. Mr. Hyde said they have cleaned it up and treated it to the standards required by the agencies. Now they are looking to de-list another portion of that site. They have de-listed the soils. They have not de-listed the middle part. They are looking at working on that now that those two areas have been cleaned up. That may take a year, but now that the cleanup work has been done, that is a possibility. Commissioner Gabel asked if they have moved any of the soil. Mr. Hyde replied, absolutely. He cannot tell her the volumes but both in the paint shop and the plating shop, somewhere between 10,000 yards or so was excavated and treated. Some was taken off-site. Some treated soil met industrial standards, and he believed they used it under their parking lots. Commissioner Backlund asked if that would relieve any contingent liability that may exist after the project is completed. Mr. Hyde replied he cannot speak for those companies or those parties. The motivation was to spend some dollars to cut off future liability. He thought the motivation was that this was the only time in the next 50 years when there was going to be a hole in the ground. Commissioner Backlund stated he would assume the Navy would be anxious to do that to limit their liability. Mr. Hyde replied, again, he cannot speak for the Navy. His suspicion is they saw an opportunity to address the plating shop soils. Commissioner Gabel stated according to the MPCA they still have liability even if they have agreed to some extensive liability of the soil under one of those rooms. She forgot which one it was. That has been their baby for a long time. Commissioner Backlund stated that would be a risk assessment that they would be assuming, and they probably decided it was the least risky. Chairperson Commers stated he would think so and it is clean. Housing and Redevelopment Authority Meeting of October 6, 2016 6 Commissioner Backlund stated it is a great idea. Commissioner Gabel stated it is a very good deal for this community to have that cleaned up. MOTION by Commissioner Holm to approve the Resolution Supporting Grant Application - DEED Redevelopment. Seconded by Commissioner Gabel. UPON A VOICE VOTE, ALL VOTING AYE, COMMISSIONER COMMERS DELCARED THE MOTION CARRIED UNANIMOUSLY. 5. Approval of Resolution Supporting Grant Application - Met Council TBRA MOTION by Commissioner Holm to approve the Resolution Supporting Grant Application – Met Council TBRA. Seconded by Commissioner Gabel. UPON A VOICE VOTE, ALL VOTING AYE, COMMISSIONER COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY. Informational Items 1. CEE Housing Programs Update. Paul Bolin, Assistant Executive HRA Director, stated the numbers for loan programs and the Remodeling Advisor were much better than they have been for the past few years. They would like to see that continue. They are already at 16 loans for the year to date. Last year they only had 11. Remodeling Advisors had 5 last year, and they are already at 11 this year. They are starting to see positive impacts from those few changes they made last year to the loan program. The Home Energy Squad visits continue to be popular. They did 20 of those in September, and those numbers will go up over the next couple of months as well. They continue to get good feedback from the residents about the program. Chairperson Commers asked if there is still a $50 charge for the Home Energy Squad. Mr. Bolin replied the program is the same as it has been for the past few years. 2. Locke Park Pointe RFQ. Paul Bolin, Assistant Executive HRA Director,the Request for Qualifications was made available on September 16. They had 17 different development groups ask for copies. They had a mandatory pre-submittal meeting yesterday, and there were 8 developers represented at that meeting. They had local developers but also had a development group from Indianapolis, one from New York, and one from Kansas City. Mr. Bolin stated out of those 8 developers, there was a real nice mix of specialties. They all seemed to have done some different mixed use developments, but they did have one group that specialized in senior buildings. There were some that have been doing condos in the north loop Housing and Redevelopment Authority Meeting of October 6, 2016 7 and are now looking at this area. They had other groups there that had done office projects, residential projects, and retail projects. They were not sure how this would be received in the marketplace, but there are some people who are pretty excited about it. Mr. Bolin stated the real test will be at 12:00 p.m. on October 19 to see how many of these 8 have responded to the questions the City has asked. At yesterday's meeting, the developers had an opportunity to ask questions of the City's environmental consultant and soils person they have been working with. The developers have had a lot of access to all the different studies the City has done on this site over the past 1 ½ years. They have made everything available to the developers, and they are available for questions from them through next Wednesday. Chairperson Commers stated he noticed in the minutes Commissioner Backlund had raised the issue of every unit being the same and asking for some diversity. Was there any discussion or did he get any sense from the developers what they are talking about? Is it going to be a uniform type of patio home all the way through? Mr. Bolin said they did not get any of that feedback from those groups yesterday. He did not think anybody wanted to share their vision. When they refer to patio homes, they are really talking about the single-level homes such as what those in Blaine. These are nice owner- occupied homes where you have everything you need on one level. One of the groups they were talking to stated their homes start at $310,000. They are very nice homes, and they would be a buffer between the denser development to the north and the single-family neighborhood to the south. Chairperson Commers stated there are a bunch of patio homes on County Road I and I-35, right off the freeway in Shoreview. Mr. Bolin stated Fridley has some across the street in the Christenson Crossing neighborhood. Most of the homes there are two stories, but within the two stories, you have everything you need to live on the main floor. Patio homes are not a new product. They are just smaller single- family homes on smaller lots. Since staff does not know the market. They are looking to find the right development partner or partners and work with them to come up with a project that works for everybody. Mr. Bolin stated after they get the proposals back on October 19, staff will go through and see if there are one, two or three of them that seem to be better than the others. Then they would like those groups to have an opportunity to meet with the HRA Commission in November. Staff would ask the HRA to make a decision at their December meeting. 3. Existing City Hall Update Mr. Bolin stated there was a memo regarding the current City Hall and some ownership maps in the packet. The purpose was to let the HRA know of some of the challenges they will have in disposing of this site. If a new City Hall is constructed on another site, it will likely not be until late 2018 or some time in 2019 before City staff would be moved out of the current building. Housing and Redevelopment Authority Meeting of October 6, 2016 8 Mr. Bolin stated it is important they start working on this now. The City proper owns the building and the plaza in front, but the HRA owns the rest of the land around City Hall. The HRA owns land around the building immediately south of City Hall. They also own almost half of Fairview's parking lot on the other side of Fourmies Avenue. There are agreements with these different bodies on all those parcels. Jim Casserly and Vicki Loher-Johnson's office is working on this so when the time is right, they can dispose of the property either to their neighbors or to some other interested party. Mr. Bolin stated the next step is going to be having appraisals done for the parcels. They will do an appraisal of the City Hall property, the Fire Department parking lot, and the City's parking deck. They will look separately at the parking lot that surrounds the building just to the south and the parking lot on the other side of Fourmies Avenue. Once they have those values, they can sit down with the City Manager and discuss how to dispose of this between the City and HRA. Attorney Casserly pointed out it would take a lot of fill to get this site back up to grade with the neighboring properties. There are a lot of things they need to figure out over the next several months; however, they are months away from making any sort of recommendation to the HRA. Chairperson Commers asked if the City had any title insurance on this property. Mr. Bolin replied they just had a lot of work done. Chairperson Commers stated it would go way back to when it was initially acquired or built. Jim Casserly, Development Consultant, said at one time he was on a school board, and they had an issue with the county and city as to who owned what. It took many years of effort to readjust all the property values. It is not a foregone conclusion that is going to happen quickly. Chairperson Commers stated the agreements they have entered into may or may not cause some kind of permanent disability to being able to sell free and clear. He would think there would have been along with the initial title opinions, some kind of protection. Attorney Casserly replied he does not know if there is title insurance. There may have been, but the issues that have been raised are really not title insurance problems. These are all encumbrances and leases they have entered into as an Authority and have encumbered property that it owns. Chairperson Commers asked if there were boundary issues or other issues. Attorney Casserly replied, there is one little one and has to do with the property that is to the north. It is a question of ownership of the retaining wall and subterranean rights. It is all in agreements. A number of these things are where the adjacent property has the right to exercise the option to purchase. It may be prudent for the HRA at some point to talk to them about exercising their option. They have rights for the next 50-60 years. There are all kinds of obligations the HRA has to clean up the parking area and there are a number of things they are supposed to do for some years. They may want to see if there is some way they can try and resolve those issues. Housing and Redevelopment Authority Meeting of October 6, 2016 9 Attorney Casserly stated most of the issues that have arisen are ones they have entered into to facilitate either the developers to the north and south of them to provide adequate parking that they do not have exclusive rights to. If the HRA is going to sell its property, the appraiser has to know how much property is available to park and how much or what kind of other encumbrances there are on some of this ownership. With respect to the survey now, there was a fourth supplemental opinion which was just a little touch up on one of the issues. The survey is now in excellent shape. Attorney Casserly stated with the current survey and with the title opinion commitment that exists now, the appraiser will have all the information they need. He referenced a notebook he had which contained all the documents impacting the property the City and HRA owns. It is about 500 pages. They just have to sort these out. Chairperson Commers replied they have talked about some of these issues before. For example, the office building next door, the maintenance of that parking lot, the plowing of that parking lot has come up many times as has the strip of land by the clinic. That would be the most recent agreement. There should be records related to each one of these events and how they got resolved at the time. Attorney Casserly replied they have all of the documents. They certainly have the time to sort these out. They had recommended having an appraisal done. They really do not know what kind of values they are talking about in today's market. Chairperson Commers stated he also noticed that on the First American Title insurance Company commitment, they do talk about the issuance of an ALTA Owner's Policy. As they say a lot of these issues are not covered by the policy. That should be analyzed completely because now that he looks at it closer, it looks like there was a policy issued. Attorney Casserly said this appears to be a commitment to issue a policy. Chairperson Commers stated this would be the first upfront document. The policy would then follow, along with the commitment itself which is continued with schedules. Attorney Casserly stated they spent a lot of time with the surveyor when they knew this needed to be addressed. Paul Bolin and the City Manager strongly suggested they start identifying these issues and start addressing this so that when the appropriate time comes, and that may be a year from now, they will be in a position to do something. Commissioner Backlund asked Attorney Casserly, if the 500 pages of document are akin to an abstract. Attorney Casserly replied, not exactly. These are leases, development agreements, cross easements; all of which the HRA or the City have entered into as it impacts all the different parcels. Housing and Redevelopment Authority Meeting of October 6, 2016 10 Commissioner Backlund asked Attorney Casserly if there has ever been an abstract for this property. Attorney Casserly said he is sure there has been. Commissioner Commers replied, Anoka County usually keeps the abstracts. If there is one, it might be in the County's office. Commissioner Backlund stated at least they could tie it back to some fixed point in time. Attorney Casserly stated any time you have redevelopment, you are going to have all these kinds of issues. There are access roads in here. At some point you are going to have to either dedicate those or make sure the access works for whoever purchases it as well as for the adjacent properties. Commissioner Backlund stated it seems as though at some point in time some of the County revenue was somewhat loose in the way they issued some of these properties. Attorney Casserly replied with the development that occurred just to the south of City Hall, there was a real emphasis to try and get that developed, and that led to working out all kinds of parking issues. Adjournment: MOTION by Commissioner Eckert to adjourn the meeting. Seconded by Commissioner Backlund. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON COMMERS DECLARED THE MOTION CARRIED UNANIMOUSLY AND THE MEETING WAS ADJOURNED AT 7:56 P.M. Respectfully submitted, Denise M. Johnson Recording Secretary