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09-07-2010 HRA MIN SPEC• MEETING OF THE ELK RIVER HOUSING AND REDEVELOPMENT AUTHORITY HELD AT THE CITY OF ELK RIVER (UPPER TOWN CONFERENCE ROOM) TUESDAY, SEPTEMBER 7, 2010 Members Present: Chair Wilson, Commissioners Kuester, Lieser, Motin and Toth Members Absent: None Staff Present: Economic Development Director Catherine Mehelich and Economic Development Assistant Annie Deckert Call Meeting To Order Pursuant to due call and notice thereof, the meeting of the Elk River Housing and Redevelopment Authority was called to order at 6:05 p.m. by Chair Wilson. 2. Work Session Discussion Ms. Mehelich explained that the current DEED Redevelopment Grant Program provides funds for acquisition, demolition and remediation activities, but only for sites that have a private development project in place. The proposed Demolition Loan Program would . provide funds for demolition activities on sites even when there is no imminent redevelopment opportunity or plan. She noted that that the legislative bill for the program still needs to be written and approved. Ms. Mehelich stated that DEED is requesting potential project information from cities in order to support their request for legislative funding that will accompany the bill. She explained that DEED has heard from a number of cities who operate redevelopment programs, that they have buildings that are blighted or substandard which need to be removed but they have no project for the site. The proposed loan program would fund up to 100% demolition cost for qualifying site. The loan would be low interest (2 percent), and interest-free for the first two years. Principle and interest payments would start in year three if the site has not been developed. If the site is developed, the remaining principal and interest up to 50 percent of the loan) could be forgiven based on development benefits. Ms. Mehelich stated that the proposed program may be a potential tool for the HRA's "toolbox". Also, this could be an opportunity for one of EDA strategic plan goals; rehabilitation and redevelopment of deteriorating properties in the city. She noted that the proposed program is not their only option, but staff wanted to open up the topic to the HRA for discussion. Ms. Mehelich explained that the potential projects drafted by staff are for discussion purposes and will not likely meet all of the criteria. She reviewed the criteria which qualifying projects must be able to meet (upon program implementation): • • The property and structures are owned by the development authority (at time of official application); Housing & Redevelopment Authority September 7, 2010 Page 2 • The structures on the property have been vacant for at least one year; • • The structures constitute a threat to public safety because of inadequate maintenance, dilapidation, obsolescence or abandonment; • The structures are not listed on the National Register of Historic Places; • Upon completion of the demolition, the development authority reasonably expects that the property will be improved and these improvements will result in economic development benefits to the municipality. Ms. Mehelich stated that the key qualification is a reasonable expectation for redevelopment of a site. She noted that some of the sites may be best suited for transportation needs, such as right of way. Commissioner Motin asked if there is a time frame in which development is expected to occur. Ms. Mehelich explained that under the program, the loan is interest-free for two years. Commissioner Motin cited the former Elk River Bowl as an example. He asked if the HRA must reasonably expect redevelopment development in three years. Ms. Mehelich stated that it is a factor of the interest and payment process. If there was no development in year three, principal and interest. payments would begin. If redevelopment occurred in year five, the HRA would likely be able to negotiate some type of forgiveness. Ms. Mehelich stated that this program would be another opportunity to address these properties. She noted that there are other strategies to address these types of properties, ranging from more aggressive code enforcement to more of an assertive role by acquiring blighted properties, demolishing them, and holding them for development. She noted that in the case of the former bowling alley, the city was able to negotiate terms to have the • building removed and assess the cost to the real estate taxes for the property. Ms. Mehelich reviewed the following possible sites for discussion: 1. Proctor and Quinn area 2. Former Circle C and house behind it 3. Former NAPA building 4. Former Back to the 50's restaurant building 5. Two homes on east side of Line Avenue -Guenther properties 6. Sites along East Main Street -between Gates Avenue and Highway 169 Commissioner Toth stated he felt the only two sites that met most of the program criteria were the former NAPA and Circle C buildings. He noted that the NAPA building is owned by the Eagles Club. Ms. Mehelich stated she is aware there have been code enforcement discussions with the owner of the NAPA building. Commissioner Toth stated that it would be a deterrent if the buildings must be owned by the HRA in order to qualify for the program. Commissioner Lieser noted that a portion of the NAPA property may be taken by the future Highway 10 road project. Mr. Toth stated that one side of the NAPA building appears to have been burned and a portion of the roof is caving in. He did not see how any of these properties would qualify at this time due to their lack of potential for redevelopment. Chair Wilson stated the HRA is somewhat "handcuffed" by the future Highway 10 project. He stated that in the meantime, these buildings remain an eyesore. • Housing & Redevelopment Authority September 7, 2010 Page 3 Commissioner Moon asked if the HRA can apply for the program loan and then acquire a • building. Ms. Mehelich stated the intent would be to acquire and demolish in order to position it for redevelopment through the use of the grant program. Commissioner Kuester stated that they also need to look at the buildings next to a potential site in order to determine economic development benefit. Commissioner Toth stated that the former Circle C building likely would be impacted by the proposed Highway 10 project, so he did not feel the site would be suitable for redevelopment. Ms. Mehelich explained the difference between the existing redevelopment grant program and the demolition loan program. She stated that the existing program requires that a project results in atax-producing property; whether it is residential, industrial, or commercial; and the demolition program only requires that redevelopment will result in economic development benefit to the municipality. The Commission discussed sites along east Main Street and the Line Avenue properties. Ms. Mehelich stated that the purpose of the workshop was to initiate discussion. She explained that staff would rather have property owner clean up the sites on their own terms. Removing blighted or substandard buildings would help create a clean slate for development, but may require that the HRA take a more aggressive role than they have in the past. Commissioner Motin indicated he was doubtful that a development project would occur • within two years on any of the sites. He stated that the general idea of the program is good. He stated he would like to move forward on removing properties, but did not want the HRA to spend too much time on it. Commissioner Toth asked for clarification on the process. Ms. Mehelich stated that DEED is asking for input on what has been drafted so far. Also, they axe asking for applications for potential projects from cities in order to determine the legislative funding request. Commissioner Kuester stated that the program is somewhat like TIF, and it may be a good idea to use in areas where the city would not use TIF. Chair Wilson asked that staff let DEED know they are interested. Commissioner Kuester suggested naming some small projects. Chair Wilson stated that the HRA was not in a position to specify sites at this time, since DEED may hold the HRA accountable if an award was granted. Ms. Mehelich stated no, that there would be a formal application process and this process is just to help them determine the amount of legislative funding to request. Chair Wilson noted that he will not be able to attend next month's meeting. • Housing & Redevelopment Authority September 7, 2010 Chair Wilson adjourned the meeting at 6:30 p.m. Minutes prepared by Debbie Huebner. .~7 ~~ Tina Allard City Clerk .. .- 1 Stewart Wilso Chair, Housing and Redevelopment Authority Page 4 • •