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HRAM 01/02/2020 CITY OF FRIDLEY HOUSING AND REDEVELOPMENT AUTHORITY COMMISSION JANUARY 2, 2020 Chairperson Holm called the Housing and Redevelopment Authority Meeting to order at 7:00 p.m. MEMBERS PRESENT: Elizabeth Showalter Gordon Backlund Kyle Mulrooney Rachel Schwankl MEMBERS ABSENT: William Holm OTHERS PRESENT: Paul Bolin, HRA Assistant Executive Director Dan Tietner, Finance Director Jim Casserly, Development Consultant Action Items: 1. Approval of Expenditures. MOTION by Commissioner Showalter to approve the expenses as submitted. Seconded by Commissioner Schwankl. UPON A VOICE VOTE, ALL VOTING AYE, CHAIR PRO TEM MULROONEY DECLARED THE MOTION CARRIED UNANIMOUSLY 2. Approval of December 5, 2019 Meeting Minutes. Commissioner Backlund asked for David Ostwald to be removed from the attendance on page one. MOTION by Commissioner Backlund to approve the minutes as amended. Seconded by Commissioner Schwankl. UPON A VOICE VOTE, ALL VOTING AYE, CHAIR PRO TEM MULROONEY DECLARED THE MINUTES APPROVED. 3. Approval of Resolution Designating Official Depositories. Commissioner Backlund noted on the signature of authority page it should read two of three individuals. Paul Bolin, HRA Assistant Executive Director, said he would have that changed in the resolution. Housing and Redevelopment Authority Meeting of January 2, 2020 2 Commissioner Schwankl noted that William’s name is spelled incorrectly in the signature block. MOTION by Commissioner Showalter to approve the Resolution Designating Official Depositories with the amendments discussed. Seconded by Commissioner Schwankl. UPON A VOICE VOTE, ALL VOTING AYE, CHAIR PRO TEM MULROONEY DECLARED THE MOTION CARRIED UNANIMOUSLY. 4. Approval of Resolution Designating Official Newspaper. Paul Bolin, HRA Assistant Executive Director, stated that the Minneapolis Star Tribune would be the secondary official newspaper if there is a notice that needed to meet a specific deadline, but the Blaine/Spring Lake Park/Columbia Heights/Fridley Live, formerly Fridley Focus, would be the official legal newspaper. MOTION by Commissioner Backlund to approve the Resolution Designating Official Newspaper. Seconded by Commissioner Showalter. UPON A VOICE VOTE, ALL VOTING AYE, CHAIR PRO TEM MULROONEY DECLARED THE MOTION CARRIED UNANIMOUSLY. 5. Approval of Terms Sheet Pre-Development Agreement – Roers. Paul Bolin, HRA Assistant Executive Director, stated that Shane LaFave of the Roers Companies, a development group specializing in housing and mixed-use projects, to discuss the potential for Authority assistance in redeveloping 6530 University Avenue. Roers Companies would like to purchase, demolish and replace this property with 220 units of rental housing and potentially limited retail space. Roers Companies is in the due diligence phase of purchasing the property form the current owner. In order to complete the project, they will require assistance and are seeking a preliminary agreement on terms from the Authority. The term sheet was drafted by Attorney Casserly & Johnson and reviewed by staff and Roers. Staff recommends the Authority approve the preliminary terms sheet. The agreement will provide Roers the confidence they need to move forward with the project. Commissioner Mulrooney asked what the next steps would be. Shane LaFave, Roers Companies, replied that an offer will be made to the seller and they will work together with staff to develop something the HRA would desire to have on that site. Construction may start sometime this summer with a 14-16 month construction period. Commissioner Showalter asked if low rent would be considered. Mr. LaFave replied that this project is not designed for high renters, they are trying to hit middle range renters. Housing and Redevelopment Authority Meeting of January 2, 2020 3 Commissioner Showalter asked if something could be memorialized in the terms about the rent. The shopping center currently has high traffic and serves a variety of people, including low income individuals. She is uneasy about using city money to replace the area with something that would not serve the same people who use the area today. Mr. LaFave replied that he is comfortable putting in something about 80% of market rents. They want to offer affordable housing but not to have tenants go through all the income qualifications. Commissioner Mulrooney asked about the retail/commercial presence, if it would be on the lower level or where would it be. Mr. LaFave replied that the first floor would have retail and the retail would be visible from the intersection. Commissioner Backlund asked if any of the area would be tax exempt. Jim Casserly, Development Consultant, replied that the property cannot become tax exempt. The property is redeveloped to generate taxes so for 26 years it cannot be tax exempt. Commissioner Schwankl asked if $650,000 is the maximum needed or if he anticipated a larger gap. Also, would the loan be guaranteed personally? Mr. LaFave replied that the amount of the loan depends on construction prices. This request was made on where we think the construction price will be. Yes, the loan is guaranteed personally but they don’t know who the lender will be yet. Mr. Casserly added that this is just evolving over the last few weeks. He asked what a reasonable period of time was needed to determine feasibility. 120 days or 180 days? Mr. LaFave replied 150 days. Mr. Casserly stated that this is just approval of the term sheet. He will add 150 days to enter into a feasibility and redevelopment plan. MOTION by Commissioner Backlund to approve the Terms Sheet Pre-Development Agreement – Roers. Seconded by Commissioner Schwankl. UPON A VOICE VOTE, ALL VOTING AYE, CHAIR PRO TEM MULROONEY DECLARED THE MOTION CARRIED UNANIMOUSLY. 6. Approval of Loan Servicing Agreement CEE. Paul Bolin, HRA Assistant Executive Director, stated that since 1996 the HRA has contracted the servicing of its loan portfolio to the Community Reinvestment Fund (CRF). Over the past few years, the quality of service they provide has been declining. This resulted in several cities, and the Center for Energy & Environment (CEE), looking for alternative groups to service their loan Housing and Redevelopment Authority Meeting of January 2, 2020 4 portfolios. CEE is a non-profit agency responsible for administering the HRA’s housing rehabilitation programs. The Authority has contracted with CEE since 1996 to oversee the housing programs. Partnering with CEE, allows the HRA to outsource most of the administrative functions, including program marketing, loan processing, underwriting, loan closing, and disbursements to the contractors. Mr. Bolin said that CEE is able to provide technical assistance to Fridley homeowners on such topics as remodeling, energy conservation, indoor air quality and related subjects. The partnership with CEE allows the Authority to leverage outside dollars and customize loan packages to meet individual homeowners’ circumstances. CEE has a large loan portfolio of their own and for years had CRF servicing their portfolio. Due to the decline in the quality of the servicing, CEE decided to begin servicing their own loans and offering the service to cities that have existing relationships with CEE. There are efficiencies in having our loans underwritten, issued and serviced by the same group. The charges for the servicing are the same or less than what we have been paying CRF. Over the next several months, we will move our existing portfolio from CRF to CEE. Staff recommends that the Authority approve the loan servicing contract with CEE to begin loans issued after January 2, 2020. MOTION by Commissioner Showalter to approve the Loan Servicing Agreement CEE. Seconded by Commissioner Backlund. UPON A VOICE VOTE, ALL VOTING AYE, CHAIR PRO TEM MULROONEY DECLARED THE MOTION CARRIED UNANIMOUSLY. th 7. 5 Amendment to the Development Agreement with Sherman and Associates. Paul Bolin, HRA Assistant Executive Director, stated that Sherman Associates is building the apartments by the rail station. The third building is proposed on the site and they are seeking bonding through federal funds. They have applied for funding previously and each time they keep moving up in funding priority. The State has made changes to the funding, last time everyone got small amounts of funding that was not very helpful but now they are giving out larger amounts. They have submitted an application today and should hear back by January 15 if they get the funding. If they are not successful with funding, these projects would get priority for the next round of funding in August. Staff is recommending extending the date to August 31, 2020 to give them an opportunity to apply for the next two rounds of funding. th MOTION by Commissioner Schwankl to approve the 5 Amendment to the Development Agreement with Sherman and Associates. Seconded by Commissioner Showalter. UPON A VOICE VOTE, ALL VOTING AYE, CHAIR PRO TEM MULROONEY DECLARED THE MOTION CARRIED UNANIMOUSLY. Housing and Redevelopment Authority Meeting of January 2, 2020 5 Informational Items: 1. Housing Programs Update Paul Bolin, HRA Assistant Executive Director, reported that the Loan Program ended with 24 loans this year which is the most loans since 2004. The increase in loans this past year is mainly from the senior deferred loan program. Remodel Advisor Visits had 17 visits compared to anywhere between 3-11 visits over the previous five years. Home Energy Squad had 59 in 2019 which is up from 50 in 2018 and 55 in 2017. People continue to have interest in that program. Adjournment: MOTION by Commissioner Backlund to adjourn. Seconded by Commissioner Schwankl. UPON A VOICE VOTE, ALL VOTING AYE, CHAIR PRO TEM MULROONEY DECLARED THE MOTION CARRIED UNANIMOUSLY AND THE MEETING ADJOURNED AT 7:40 P.M. Respectfully submitted, Krista Peterson Recording Secretary