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HomeMy WebLinkAboutEDA MIN 03-24-09ECONOMIC DEVELOPMENT AUTHORITY (EDA) MINUTES OF THE REGULAR MEETING MARCH 24, 2009 The meeting was called to order at 7:00 pm by President-Gary Peterson. Members Present: Gary Peterson, Bruce Nawrocki, Marlaine Szurek, Gerry Herringer, and Bruce Kelzenberg. Members Absent: Tammera Diehm and Bobby Williams Staff Present: Walt Fehst, Scott Clark, Sheila Cartney, and Shelley Hanson. PLEDGE OF ALLEGIANCE- RECITED CONSENT AGENDA 1. Approve the Minutes of February 24, 2009 2. Approve the Financial Report and Payment of Bills for February per Resolution 2009-10 Nawrocki wanted a correction made to the February minutes on page 2 under concerns expressed by the members to include: Would the programs have income restrictions that could affect low to moderate income households. Nawrocki also questioned several vendor payments on the List of Bills Paid. Motion by Szurek, seconded by Nawrocki, to approve the Consent Agenda items as listed with the correction noted. All ayes. MOTION PASSED. EDA RESOLUTION 2009-10 RESOLUTION OF THE COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY (EDA) APPROVING THE FINANCIAL STATEMENT FOR FEBRUARY 2009 AND PAYMENT OF BILLS FOR THE MONTH OF FEBRUARY 2009. WHEREAS, the Columbia Heights Economic Development Authority (EDA) is required by Minnesota Statutes Section 469.096, Subd. 9, to prepare a detailed financial statement which shows all receipts and disbursements, their nature, the money on hand, the purposes to which the money on hand is to be applied, the EDA's credits and assets and its outstanding liabilities; and WHEREAS, said Statute also requires the EDA to examine the statement and treasurer's vouchers or bills and if correct, to approve them by resolution and enter the resolution in its records; and WHEREAS, the financial statement for the month of February 2009 and the list of bills for the month of February 2009 are attached hereto and made a part of this resolution; and WHEREAS, the EDA has examined the financial statement and the list of bills and finds them to be acceptable as to both form and accuracy. NOW, THEREFORE BE IT RESOLVED by the Board of Commissioners of the Columbia Heights Economic Development Authority that it has examined the attached financial statements and list of bills, which are attached hereto and made a part hereof, and they are found to be correct, as to form and content; and BE IT FURTHER RESOLVED the financial statements are acknowledged and received and the list of bills as presented in writing are approved for payment out of proper funds; and BE IT FURTHER RESOLVED this resolution and attachments are to be made a part of the permanent records of the Columbia Heights Economic Development Authority. Economic Development Authority Minutes Page 2 March 24, 2009 BUSINESS ITEMS 1. Housing Program Discussion Clark stated he wanted to have a discussion regarding three potential housing programs to address the housing foreclosure crisis we are experiencing. He provided a table of potential funding sources and maps depicting the number of foreclosures and rental properties as information for the discussion. Clark stated that we have had 493 foreclosures since 2007. Thus far, 154 of these properties have been sold. It is anticipated that we will see 100 additional foreclosures by the end of 2009, which will mean that 10% of our single/double family housing will have gone through a foreclosure process. Clark explained that most of these properties are selling at $.55 on the dollar compared to the Estimated Market Values. The banks are dumping these properties at reduced prices, and in an "as is" condition, which don't accurately reflect the real value of the property. As a result, these sales are having a negative affect on the market values for entire neighborhoods. Clark pointed out the areas of the city hardest hit by these foreclosures. He noted that the area south of 45th Avenue, between University and Central and the Sheffield area are the worst with 12-20% of the homes in foreclosure, respectively. The foreclosures bring another problem as many are being bought by investors, and are being turned into rental properties. This is increasing the percentage of rental property in the city, which the city was trying to curb before this crisis happened. The city has gained 62 new rentals since September of 2008, most due to investors buying foreclosed properties. Clark went on to explain that while we are getting into those properties that are obtaining rental licenses and a small percentage of the foreclosed homes that meet the criteria set in our Abandoned/Vacant Property Ordinance, it still leaves a large number of homes that are not being inspected to ensure minimum code standards. If properties do not fall into one of these categories, we have no control over the fact that houses in very poor condition are being sold and re-occupied without deficiencies being corrected. For this reason, staff is suggesting various housing programs be implemented to deal with this crisis. One program by itself will have minimal impact. But if several of the programs are implemented we could make more progress toward the goal of maintaining and/or improving the housing stock in our city. The three programs recommended for consideration are establishing a scattered site housing TIF District, using Anoka County levy monies to start a down payment/rehab incentive program in conjunction with FHA 203K loans, and to re-examine the RIBS program for a particular timeframe, to be determined, to get us through the crisis we're currently in. Clark told members that out of the 363 foreclosed properties presently on the market, only 80-90 have met the criteria of being declared Abandoned/Vacant to prompt an inspection. These properties have been posted. Fourteen houses have been inspected thus far. Clark said about 60% need minor corrections, 20% need a couple thousand dollars in repairs, and approximately 20% are in very poor condition with severe structural or hazardous issues. There are properties that have been inspected that will need to go through the condemnation process. Economic Development Authority Minutes Page 3 March 24, 2009 Walt told members that the scattered site program was very successful in Robbinsdale. He said they replaced a couple hundred homes over a period of time and that it helped revitalize neighborhoods. Even though the rules to establish these districts have changed, he knows the overall reward this program can have on a city. The first thing we need to do is identify the source of funding. If TIF monies generate approximately one million, it could be used to buy up properties. Clark said it is possible to purchase up to 20 homes if we could pick them up for about $50,000 each. The City will need to wait one year from the last purchase to establish the district. The City would have these homes immediately demolished and the base would go down to land value and would allow more for greater TIF dollars. This would clear blight throughout the city's neighborhoods. Peterson suggested a small committee be formed to decide if a property is a good value and recommend whether to purchase it or not. Cartney responded that staff has been aggressively making preliminary offers, but all offers are subject to City Council approval. Up to this point, if it was approved, then funds had to be found in order to complete the sale. If we establish this program, the money would be available to allow staff to move more aggressively and to negotiate purchase prices in a quicker fashion. The problem staff is starting to encounter is that banks and mortgage companies are slow in responding to offers because they're so backlogged with all the properties in foreclosure at the present time. Peterson asked what it would take to de-certify the Downtown TIF district and get this program started. Clark stated it would take about 3 weeks or so to coordinate with Ehlers and our Finance Dept. to establish exactly how much money would be available. The C-8 District has one additional year of funding before de-certification and can be an additional source of revenue to compliment the existing fund dollars. Herringer stated we would be facing more competition as private entities and investors will start buying up the toxic mortgages as credit loosens. He thinks the city needs to move in haste if we hope to purchase homes in poor condition, at a reduced price, for the purpose of re-developing the sites. Nawrocki questioned how many homes we are actually getting in to inspect. Clark told him we have gotten into 14 abandoned properties and 62 new rentals out of the 493 properties that have been, or are in foreclosure. This is only a small number and that is why staff is recommending the Council look at initiating the RIBS program again. Clark understands this is a political issue, but suggested a 3 year sunset clause which would get us through the worst of the foreclosure caused turnover. Szurek felt the Council will face the same opposition it did last year. Clark stated that a lot of incorrect information was voiced at that meeting and caught people off guard. He felt a number of things are different this year than last year. He said we were still in a more typical market last spring and the foreclosure crisis is now affecting every neighborhood and every home's value. He thinks that if staff articulates the program differently, the Council will better understand the Ordinance so that any incorrect information can be addressed, and in turn, people will be more receptive. The fact that we have done some inspections on abandoned properties has given us some knowledge and experience to help answer questions. Economic Development Authority Minutes Page 4 March 24, 2009 Clark stated that the scattered site program will only address approximately 20 homes throughout the city, and the down payment/rehab Pilot Program would only help about 30 homes. That is why he thinks we should look at a Point of Sale (RIBS) program also, at least on a temporary basis. Peterson agreed the public is getting more knowledgeable about the problems this crisis is bringing to local neighborhoods and how it is affecting them personally as their property values drop. He feels the general public will be more receptive this time around especially if the Council sticks together for the betterment of the community. He said that any of the Council members who had questions or reservations about the Ordinance should speak to staff to get a better understanding of it. Clark suggested holding educational sessions for residents before it goes to Council to help curtail incorrect information being passed around. Herringer asked if there was any way to expand on the present definition of abandoned/vacant properties to allow us to inspect more of those homes. Clark said the attorney helped establish the criteria in the Ordinance and warned that we cannot single out a specific category of houses without some definition. Peterson thought staff should look into the details of the funding first, then talk to the commission/council members that weren't present for this meeting, and to then schedule a couple of educational forums to answer questions from the public. Nawrocki had concerns regarding the additional expense of the inspection that the sellers would incur if they put their home on the market. He wanted clarification as to what items would need to be corrected prior to the sale of the house. Clark explained that items are looked at and rated as: meets minimum code; needs to be repaired or replaced; or, hazardous--needs immediate correction Items or comments may be noted on the inspection checklist-but that doesn't mean they necessarily need to be repaired or replaced. The third program staff recommends is using Anoka County Levy money for a Pilot Program similar to one Brooklyn Center has started. People purchasing a foreclosed property using the FHA 203K program would be eligible for a 0% loan for 3.5% of the acquisition price plus the amount to rehab, up to a maximum amount of $6,000. Sheila reviewed the criteria staff is recommending. Herringer suggested not offering the pro-rated payment option for the first 3 years of ownership to encourage homeowners to stay in the home and stabilize the neighborhood. Economic Development Authority Minutes Page 5 March 24, 3009 Nawrocki asked who administers the 203K loans. Cartney explained any of the large banks and mortgage companies can offer this type of loan. It is a type of FHA or HUD mortgage. Nawrocki was also concerned with using TIF de-certification money for just housing. Clark stated that housing is our main concern at this point, and that action needs to be taken for the well being of the community. Nawrocki also said he is against double-digit tax increases and using all this money towards these programs, especially since we are facing the loss of the LGA funding. Kelzenberg asked how much relief homeowners would get if we didn't use the TIF monies for these programs. He was told it would amount to approximately $20/property. Kelzenberg thought the money would be better spent in these housing programs to improve our neighborhoods. Nawrocki then expressed concern that we should wait until we know what Anoka County is going to do, and that we may be duplicating efforts. Clark said that Anoka County hasn't made any decisions yet on their programs, and the amount of help Columbia Heights will receive is in competition with other Anoka County cities. The programs they are looking at will probably affect 10-15 homes at the most. We need to look at more than just that number in order for there to be a noticeable improvement. Peterson thought we should be in control of our own City and do what we have to do to improve things, and not wait for help that may or may not be there. Motion by Kelzenberg, seconded by Szurek to move forward with all three programs and bring more information to the Commission with the following items understood: 1. That no formal action will be taken to implement the programs until more information is provided 2. A strategy will be established for review of all these programs. Staff will develop an implementation strategy for 1) Scattered Site Housing; 2) a Rehabilitation Program in conjunction with 203K program; and 3) Staff will also bring back more information on a housing inspection program to the ne~t meeting for discussion. 3. Staff will talk to the commission/council members who were not in attendance tonight. All ayes. MOTION PASSED. 3. Administrative Report Clark reported that Mike Bjerksett will re-apply for HUD 202 project funding for the project at 39th and Huset Pkwy. Staff inet with Senator Chaudhary and the Senate Tax Committee regarding the Bill introduced to increase the 5-year Rule for the K-Mart Site Tax Increment District. There will be another meeting April3rd with the House Tax Committee and Carolyn Laine to introduce the Bill in the House. Vice-Chair Bobby Williams, in the absence of the HRA Chair, has called a Special HRA meeting for Monday, March 30th at Parkview Villa at 6:30 pm. This meeting may replace our regular April meeting. The purpose of the meeting is to amend the Capital Fund Account to accept money from HUD as part of the Stimulus Package. Parkview Villa will receive $130,000 for improvements, and the amendment must be made before April lOth in order to qualify for the money. Economic Development Authority Minutes Page 6 March 24, 2009 Nawrocki asked how the project at 37th and Central Ave is going. Clark said there hasn't been any recent progress on this. Clark said he would know more about the 47th and Central Ave project within the ne~t 2 weeks. He will keep the members updated on the status. He also said the final retainage payments have been made for the Sullivan Shores project and that the project is now complete. The meeting was adjourned at 9:00 pm Respectfully submitted, Shelley Hanson Secretary