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07-15-1991CITY OF RICHFIELD, MINNESOTA HOUSING AND REDEVELOPMENT AUTHORITY MEETING JULY 15, 1991 HRA MEMBERS PRESENT: Tom Harms; Joan Helmberger; Ivan Ludeman; Vern Luettinger; Lawrence Wozniczka STAFF PRESENT: Jim Prosser, Executive Director; Steven Devich, Administrative Services Director/Acting City Clerk; Byron Wallace, Community.Development Director; Bruce Palmborg, Housing & Redevelopment Coordinator; Bruce Nordquist, Housing Supervisor The meeting was called to order by Chair Harms at 7:04 p.m. APPROVAL OF MINUTES M/Luettinger, S/Helmberger to approve the minutes of the Regular HRA Meeting of June 17, 1991 and the Special HRA Meeting of July 8, 1991. Motion carried 5-0. It was noted that the minutes of the Regular HRA Meeting of June 10, 1991 have not yet been submitted for approval. Commissioner Wozniczka submitted a change for the minutes of the July 8 meeting. Item #1 OPPORTUNITY FOR CITIZENS TO ADDRESS THE HRA No one wished to address the BRA. ITEM #2 CONSIDERATION OF RESOLUTION AUTHORIZING SUBMISSION OF APPLICATION TO HUD WHICH REQUESTS ALLOCATION OF SECTION 8 HOUSING PAYMENT ASSISTANT. HRA LETTER NO. 22 Executive Director Prosser reviewed HRA Letter No. 22 regarding consideration of resolution authorizing submission of application to HUD which requests allocation of Section 8 Housing Payment Assistant. Chair Harms asked if we are making money on this program. Executive Director Prosser responded that while there is more revenue,, we are not making money. However, we are not losing as much money as we were under the previous program structure. Commissioner Ludeman asked how we arrive at the number fifty units. Housing and Redevelopment Coordinator Palmborg responded that it relates to converting existing units that are in the program. We are not looking for a net increase in units. HRA Meeting Minutes -2- July 15, 1991 There was general discussion regarding vouchers and the waiting list for Richfield. M/Ludeman, S/Luettinger that the following resolution be adopted; that it_be_spread in the resolution book and that it be made art of these minutes: HRA RESOLUTION N0. 424 RESOLUTION RELATING TO AUTHORIZING HOUSING PAYMENT ASSISTANCE APPLICATION Motion carried 5-0. This resolution appears as Resolution No. 424 in HRA Resolution Hook No. 3. Item #3 CONSIDERATION OF AUTHORIZING EXECUTION OF COMPLETION CERTIFICATES TO MARV ANDERSON HOMES, INC. FOR EXPANDED NEW HOME PROGRAM PROPERTIES AT 7223 AND 7145 JAMES, 1016 AND 1020 MILDRED DRIVE, 6425 15TH AVENUE AND 7320 FIFTH AVENUE. HRA LETTER N0. 23 Executive Director Prosser reviewed HRA Letter No. 23 concerning consideration of authorizing execution of completion certificates to Marv Anderson Homes, Inc. for Expanded New Home Program properties at 7223 and 7145 James, 1016 and 1020 Mildr~l~Drive, 6425 15th Avenue and 7320 Fifth Avenue. Commissioner Wozniczka asked for a summary of what each house sold for, what they were expected to sell for and the return on each one. Housing and Redevelopment Coordinator Palmborg responded that one would be provided. M/Luettinger, S/Ludeman to authorize execution of completion certificates to Marv Anderson Homes, Inc. for Expanded New Home Program properties at 7223 and 7145 James, 1016 and 1020 Mildred Drive, 6425 15th Avenue and 7320 Fifth Avenue. Motion Carried 5-0. Item #4 CONSIDERATION OF AUTHORIZATION TO IMPLEMENT EXPANDED NEW HOME PROGRAM REVISIONS. HRA LETTER NO. 24 Executive Director Prosser reviewed HRA Letter No. 24 regarding consideration of authorization to implement Expanded New Home Program revisions. Commissioner Wozniczka asked if staff considered simplifying the procedure further than stated here, with the City serving as a clearing house. He asked what the City was offering here or giving away. HRA Meeting Minutes -3- July 15, 1991 Mr. Prosser responded that the program was selling lots at a written down market rate and merely offering lots for sale to builders. He stated that the marketing effort is an important component of that program. Commissioner Wozniczka asked if the program under Tax Increment District is open to everyone who wants to sell their home. Housing and Redevelopment Coordinator Palmborg stated that the issue is not the price but rather the condition and eligibility under State statute. Commissioner Wozniczka asked if we are adding staff. Mr. Palmborg answered no, the same staff will be used. Chair Harms asked if this free market approach was the one we used with the Marv Anderson company that wasn't working. Commissioner Wozniczka said he doesn't feel we should be building on speculation. Chair Harms stated that is what the new program states, that we are not building "spec" homes. Commissioner Ludeman reviewed the spec homes on Mildred Avenue and did not like the design. He said value must be high enough to make the tax increment work. Commissioner Wozniczka asked why we are able to make the increment work at an $85,000-95,000 sale price range while we were asking more in the $120,000 range in the past. Mr. Palmborg responded that the sales price wasn't driven solely by tax increment and explained other considerations. He stated that the $85,000-95,000 still keeps us whole and that there was also a shakedown process which we went through. Commissioner Wozniczka asked if there was a sheet that shows that a $85,000-95,000 property provides adequate tax increment. Each property should stand on its own. Mr. Palmborg responded yes, it does, but we are looking at the program in the aggregate of all home values in the program. Executive Director Prosser stated we would preclude some development if each stood on its own. We cannot guarantee full interest repayment, as said before, we are looking at appreciating neighborhoods. Chair Harms stated that he saw three elements to this strategy: 1) generate buyer interest, 2) generate builder interest, and 3) monitor cost to prevent falling behind. Some higher valued properties such as the Nilson property allow for some lower valued development of specific parcels. HRA Meeting Minutes -4- July 15, 1991 Commissioner Ludeman stated that he wanted to see data on costs for running averages of properties. Commissioner Wozniczka asked if any builders have been shown these proposed guidelines. Mr. Palmborg answered no, but there is considerable input from builders and realtors in the field. Commissioner Luettinger asked Executive Director Prosser to expand a little more about the specifics of the marketing program. Executive Director Prosser explained the marketing effort in greater detail, including media, target group and marketing concept. M/Luettinger, S/Helmberger to authorize implementation of Expanded New Home Program revisions. Motion carried 4-1 (Wozniczka opposed). Commissioner Wozniczka stated that the program is too complicated and tells him nothing. He said this body needs to know more specifics before we embark on a marketing program and for those reasons he opposed it. Executive Director Prosser said we will continue our local advertising plus expand the marketing as noted here. Commissioner Ludeman asked if builders have buyers, why do we have to market to buyers. Executive Director Prosser responded that not all have buyers. Chair Harms responded to Commissioner Wozniczka by saying he strongly disagreed with his statements. We do not have the builders and buyers knocking at our door to build these homes, so we need to get general information out to prospective buyers. He said this is the essence of marketing the program. There was general discussion regarding the advertisement process to be used by Sable Advertising. Commissioner Ludeman stated that we should be sure to secure the rights to all advertisements. Executive Director Prosser responded that we intended to do so. Item #5 CONSIDERATION OF RESOLUTION ESTABLISHING JUST COMPENSATION AND AUTHORIZING PURCHASE OF 7639 EMERSON AVENUE. HRA LETTER N0. 25 Executive Director Prosser reviewed HRA Letter No. 25 regarding consideration of resolution establishing dust compensation and authorizing purchase of 7639 Emerson Avenue. HRA Meeting Minutes -5- July 15, 1991 Commissioner Wozniczka stated that on January 22, there was an item before the HRA on the maintenance of these properties and there was to be a report. Executive Director Prosser stated that the interim reports on the progress of this issue have been provided. Commissioner Wozniczka asked if the property will be demolished or kept vacant. Executive Director Prosser responded that there is no intent to demolish this property. Chair Harms asked when we may start renting these properties out. Executive Director Prosser responded that there was no answer at this time. Working with the State on this issue is very difficult. If we did not intend to lease for at least one year, it is not financially advantageous to do so. Thus it is unlikely that we will be renting the properties. Mr. Palmborg stated that every home has costly code violations that must be corrected before they could be rented. Commissioner Wozniczka stated that he was satisfied that MSA funding is paying for the maintenance on the properties. M/Helmberger, S/Ludeman that the following resolution be adopted; that it be spread in the resolution book and that it be made part of these minutes: RESOLUTION NO. 426 RESOLUTION ESTABLISHING JUST COMPENSATION AND AUTHORIZING PURCHASE OF REAL PROPERTY LOCATED AT 7639 EMERSON AVENUE Motion carried 5-0. This resolution appears as Resolution No. 426 in HRA Resolution Hook No. 3. Item #6 CONSIDERATION OF LEGISLATION TO EXEMPT ILN REDEVELOPMENT PROJECT FROM PAYMENT OF FISCAL DISPARITY CONTRIBUTIONS. HRA LETTER N0. 26 Executive Director Prosser reviewed HRA Letter No. 26 regarding consideration of legislation to exempt ILN redevelopment project from payment of fiscal disparity contributions. Executive Director Prosser addressed the topic of windows of opportunity which is likely to be created with the completion of the Mega Mall. HRA Meeting Minutes -6- July 15, 1991 Chair Harms asked if we were to go with this recommendation could we still end up paying the fiscal disparities out of the district if a package provided adequate cash flow to do so. Executive Director Prosser responded, yes, we could still do so. Commissioner Helmberger asked if there is a timeframe on doing this. Executive Director Prosser responded that there was no specific date except that the legislature is back in session next January. The impact on the taxpayers outside of the district would be significant until the development occurs. There was general discussion concerning the timing of this option and of the taxes levied because of it. Commissioner Helmberger asked what the process was for proceeding with this legislation. Executive Director Prosser explained the process. Chair Harms stated that in the past we have always said that =chess districts pay for themselves. He said this new pproach to fiscal disparities contributions troubled him. However, from a pure business perspective, we need to provide all tools potentially available to us. He could support the program if staff has the procedures and protocol that when the shift to taxpayers is to occur there would be a point public hearing with the City Council showing the effect on properties within the community. Commissioners Helmberger and Luettinger agreed with the concept. Commissioner Wozniczka stated that he couldn't support this in any way. He said we should work harder with the owners in the ILN now without looking for "freebies." We could be more creative by letting present owners upgrade and develop their properties. Commissioner Luettinger stated that he remains opposed to piecemeal development and that the right development in the ILN will help the whole community. Commissioner Helmberger also stated that she was opposed to piecemeal development. Executive Director Prosser stated that it comes down to your vision of the area. Commissioner Ludeman asked what Mitsubishi would have to do to upgrade their area. Community Development Director Wallace stated there would be about $150,000-200,000 of upgrading necessary. HRA Meeting Minutes -7- July 15, 1991 Commissioner Ludeman stated that he has mixed feelings on this. He said we have told people TIF districts would stand on their own but he is not in favor of piecemeal development. The public impact of raising taxes on residential to favor business development will generate a lot of reaction. He told Commissioners he is not strongly opposed to this legislation. Commissioner Wozniczka stated that it will be ten years before the business picks up to fill the area. In the meantime, let the present owners upgrade for that period of time. Commissioner Luettinger stated that he disagreed and that it would not be fair to then allow these owners to upgrade their properties at this time. Commissioner Wozniczka asked Mark Ruff of Publicorp if they had prepared a report to the City on this fiscal disparities issue. Mr. Ruff responded that they used a common computer model used in other metro municipalities which simulated fiscal disparities impact. There was general discussion on the net impact of the fiscal disparities election change. M/Harms, S/Luettinger to recommend to City Council that they support the legislation to chance election and develop procedure and protocol ~ Implementation of the legislation will be dependent upon completion and approval of protocol and procedures. Motion carried 4-1 (Wozniczka opposed). ITEM #7 EXECUTIVE DIRECTOR REPORT Executive Director Prosser reported on the following items: MAC: The City is working on an agreement with MAC on the procedures for a buyout for New Ford Town/Rich Acres areas. Hub/West: We continue to progress forward at a very slow pace in completing this closing. There have been as many as 28 attorneys working on this agreement. ILN: We continue some discussions with the Richfield Trust Company regarding the Cloverleaf property. Item #8 CLAIMS AND PAYROLLS Commissioner Ludeman suggested an hourly rate for attorneys. HRA Meeting~Minutes -8- July 15, 1991 Executive Director Prosser stated that we already do so. The cost showing up includes the work on the Bradley property. This billing includes two month's billing. Most of the Bradley costs will be reimbursed. Commissioner Ludeman suggested looking at the potential for an in-house attorney. . Chair Harms responded that for the kind of funds we were looking to spend we would not get someone with the background and expertise needed for this type of work. Commissioner Wozniczka said he was surprised to see the checks for $3.7 million and $292,000 related to relocation. Executive Director Prosser responded that the approvals are here but the $3.7 million check will not be released until closing. Commissioner Wozniczka was concerned that the amount for Snyders had changed from $25,000 to $50,000 to $292,000. He questioned the HRD's legal counsel's work quality. M/Ludeman, S/Helmberger that the following claims and payrolls be approved: FIRST WESTERN BANK Checks: 2595-2686; 9887-9902; 10543-10583 1041 Section 8 Motion carried 4-1 (Wozniczka opposed). ADJOURNMENT $4,479,996.66 $ 60,000.00 The meeting was adjourned by unanimous nsent at 9:10 p.m. i _ Date Approved : 8/ 19/ 91 ,~ , ~'~,~~ ~ _ ,~ omas Harms Chair Steve L. Devich Acting City Clerk am s D. Prosser utive Director