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HRAM 09/03/2020 CITY OF FRIDLEY HOUSING AND REDEVELOPMENT AUTHORITY COMMISSION September 3, 2020 Chairperson Holm called the Housing and Redevelopment Authority Meeting to order at 8:00 p.m. MEMBERS PRESENT: William Holm Kyle Mulrooney Elizabeth Showalter Rachel Schwankl MEMBERS ABSENT: Gordon Backlund OTHERS PRESENT: Paul Bolin, HRA Assistant Executive Director Jim Casserly, Development Consultant ACTION ITEMS 1. Approval of Expenditures MOTION by Commissioner Mulrooney to approve the expenses as submitted. Seconded by Commissioner Schwankl. UPON A VOICE VOTE, ALL VOTING AYE, CHAIR HOLM DECLARED THE MOTION CARRIED UNANIMOUSLY. 2. Approval of August 6, 2020 Meeting Minutes MOTION by Commissioner Mulrooney to approve the August 6, 2020 minutes as submitted. Seconded by Commissioner Schwankl. UPON A VOICE VOTE, ALL VOTING AYE, CHAIR HOLM DECLARED THE MOTION CARRIED UNANIMOUSLY. 3. Resolution for Approval of 2020 Tax Levy Taxes Payable for 2021 Paul Bolin, HRA Assistant Executive Director, stated that MN statutes authorize HRA’s to levy properties within their community to support housing and redevelopment efforts. The levy is equal to .0185% of estimated market value. 2021 levy will allow HRA to collect $564,099. Impact on the taxpayer is $127.75 on a $150,000 home, $46.08 on a $249,100 home and $185.00 on a $1M commercial property. Staff Recommends approval of the resolution consenting to the HRA Tax Levy to provide the HRA the ability to fund ongoing and future redevelopment and home improvement efforts. Council will act on this item on September 28, 2020. The levy will be certified and delivered to the County by September 30, 2020. Chairperson Holm recalled ten years ago there was a severe drop in the levy due to the drop in the value of the houses. HRA has done a very good in approving the overall benefits to the city through this levy. Housing and Redevelopment Authority Meeting of September 3, 2020 2 MOTION by Commissioner Showalter to approve the Resolution for Approval of 2020 Tax Levy Taxes Payable for 2021. Seconded by Commissioner Schwankl. UPON A VOICE VOTE, ALL VOTING AYE, CHAIR HOLM DECLARED THE MOTION CARRIED UNANIMOUSLY. 4. Resolution Modifying Redevelopment Plan Creating a TIF District and Approval of Redevelopment Contract. Paul Bolin, HRA Assistant Executive Director, stated that the Holly Center originally started in 1957 and thrived in the 60-70’s with a number of national retailers. In 1980 the Center needed remodeling and the city liquor store and Old Country Buffet moved in. The developer purchased the site and sold the land to the city and the city removed the gas station and made a number of improvements to the area. In the last 10-15 years, the well-known tenants have moved out of the building and the building has begun to deteriorate. The property went up for sale in December of 2018 and no one seemed interested to continue to run the building as a shopping center. In late 2019, Shane LaFave started meeting with the property owner to work out a potential purchase. Mr. Bolin said that the plan is to demolish the building and replace it with 261 housing units and 10,000 sq. ft. of commercial property, possibly a daycare. The site has been a high priority for redevelopment in the last two comprehensive plans. The developer made an effort to keep the building height down on the south and east property to be respectful for single family homes that sit close to this site. TIF District 25 is the first we have created in a few years. The increased assessed value and number of years will capture the new tax value and allow that funding to go back to the developer to help pay for extraordinary expenses like environmental cleanup, utilities, demolition of buildings, changing traffic flow etc. Mr. Bolin stated that the value of the property is $5.0M and overtime the value increases and the developer pays taxes on new value. When the TIF district reaches year 25 or when the district is terminated, everyone shares in the new tax value. The developer is able to assign the TIF note to the bank loan based on the new TIF value. If the value doesn’t reach expectations, the developer is obligated to pay the bank back if the note isn’t fulfilled. The value of this district will be 7x more than the current value, over $36M after development. Jim Casserly, Development Consultant, added that when a tax increment is created you freeze the value of the building at the 2020 value, $5.0M. Only the increment over and above the 2020 value is available to pay expenses to go back to the developer. By creating a TIF District you prevent the decline in taxes and prevent the value from dropping and this only happens in genuine redevelopment projects like this. Commissioner Showalter asked if there was language in the development contract or TIF condition to be guaranteed rent maximums. Mr. Casserly noted that on page 10 of the redevelopment contract there is a provision. We are asking that when the project is completed and fully valued to have an analysis done to show the household income per unit rents and the percent of area median income that is being met. This is an unusual project; housing is being developed in a redevelopment district, so the project doesn’t qualify as a housing tax increment. We don’t know if the note is going to be excessive or not. At Housing and Redevelopment Authority Meeting of September 3, 2020 3 some point in the future we will look back if we provided the correct amount of assistance. A study will be presented to so we have an understanding on how we are meeting area median income for rents. Commissioner Schwankl asked for the amenities for this market to be reviewed. Shane LaFave, Roers, said that the goal is that when anyone walks through the building, they feel like it is a high-end building. Amenities include multiple exterior patios and a dog run outside and dog was nearby. A lot of trees, pergolas and sitting areas looking more like a park setting. Preserving the trees and creating natural barriers. There will be more green space than what exists currently as there won’t be so much surface parking. First floor of the building will have a large club room for residents to gather or reserve, a fitness room along with an area for kids to play in while you work out, a game room for entertainment open for all residents at all times with pool tables and tv’s for residents to gather, space nooks and private areas for residents who work from th home, a package locker system like amazon for people to have packages delivered to. 5 floor amenities include a space with great views to the south, both indoor and outdoor space with grill, fireplace and seating for nice parties and gatherings that can be reserved. Each unit will have 9’ ceilings, their own washer/dryer, stainless steel appliances and high amenities. There will be management presence onsite, 4-5 people employed full time at this building so both office and maintenance staff are present at all times. Commissioner Mulrooney asked for an updated timeline of the construction phases. Mr. LaFave replied that once approved, demolition would start in November and then digging down one story for the underground parking. This will take about 20 months to construct estimating completion in the summer of 2022. Chairperson Holm asked how many underground parking stalls there would be. Mr. LaFave replied 188-190. MOTION by Commissioner Showalter to approve the resolution modifying redevelopment plan creating a TIF district and Approval of redevelopment contract. Seconded by Commissioner Schwankl. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON HOLM DECLARED THE MOTION CARRIED UNANIMOUSLY. MOTION by Commissioner Showalter to approve the redevelopment contract with ROERS Company. Seconded by Commissioner Mulrooney. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON HOLM DECLARED THE MOTION CARRIED UNANIMOUSLY. Housing and Redevelopment Authority Meeting of September 3, 2020 4 5. Approval of Land Sale to Roers Company MOTION by Commissioner Mulrooney to open the public hearing. Seconded by Commissioner Showalter. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON HOLM DECLARED THE MOTION AND THE PUBLIC HEARING OPENED AT 8:49 P.M. Paul Bolin, HRA Assistant Executive Director, stated that back in mid-80’s, when Holly Center undergone some remodeling, some land was purchased by the redeveloper and sold to the city. The HRA ended up with two parcels of land and Roers is seeking to purchase a portion of the property. To make it clean for platting we will sell both parcels to Roers and Roers will then give a portion back to the county for a highway easement. The developer will pay fair market value for the property they will be able to use. Staff is waiting for the county to finalize where the boundaries should be, but it is under 4000 sq. ft. Roers would hold the title and the county highway department would have easement over this, the same as a right-of-way. MOTION by Commissioner Schwankl to close the public hearing. Seconded by Commissioner Mulrooney. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON HOLM DECLARED THE MOTION AND THE PUBLIC HEARING CLOSED AT 8:54 P.M. MOTION by Commissioner Showalter to approve the land sale to Roers Company. Seconded by Commissioner Schwankl. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON HOLM DECLARED THE MOTION CARRIED UNANIMOUSLY. INFORMATIONAL ITEMS 1. Housing Program Update Paul Bolin, HRA Assistant Executive Director, reported this past month one senior loan was issued making a total of 16 loans year to date. The senior deferred loan program is out of funds for the year. Remodel Advisor Visits had one in August making ten year to date. Home Energy Squad Visits had five in August making 34 year to date. ADJOURNMENT MOTION by Commissioner Showalter to adjourn. Seconded by Commissioner Mulrooney. UPON A VOICE VOTE, ALL VOTING AYE, CHAIRPERSON HOLM DECLARED THE MOTION CARRIED UNANIMOUSLY AND THE MEETING ADJOURNED AT 9:00 PM. Respectfully submitted, Krista Peterson Recording Secretary