Committee Minutes

Minutes Finance/Development Committee
Tuesday, June 14, 2005 - 4:00 p.m._______

Members present: Christensen, Glassheim, Hamerlik.
Also present: Keith Lund, Meredith Richards, Greg Hoover

1. Downtown Development Proposals.
Keith Lund, Urban Development. stated they have an update - Dakota/Crary and MetroPlains projects, have had conversations with the developers and letting them know things that they need in terms of proformas and as far as the re-proposal on Site #2 have asked for drawings so can see what it will look like. He stated they spoke to Kevin Ritterman this morning and reported what Mr. Swanson's opinion was in terms of having to re-issue the RFP and that was not necessary. He told us that they are considering changing their proposal on Site #4 to apartments (Site #4 is University Avenue), just received that information this morning. Regarding timing they would still like to get in the ground on University Avenue and Site #2 is the one they are pursuing on faster track (Site #2 is parking lot). He stated intended to have a meeting last week to review some of the information but they called that they wouldn't be ready and asked to set that aside to this week or next and are waiting or them to get back to us. He stated they have had two conversations with that developer and hope to be back to committee in two weeks with some information.

There was discussion relating to condos vs. apartments, that apartments on University Avenue (Site #4) may be better. Christensen stated if they pursue apartments on University site, whether we could use CDBG money to assist them as long as they have x number available for LMI. Mr. Lund stated CDBG funds could assist in the acquisition of adj. property and could be used for site work (as long as in the name of the City, utility work) but CDBG funds can't be used to construct housing whether owner occupied or rental; in the past they have discussed using HOME funds as HOME funds can be used and that was the purpose of them - to build affordable housing.

Mr. Lund stated they have asked developer to put into their budget and proforma the cost of acquisition and that would increase the cost of the project. There was also some discussion re. relocation benefits which if CDBG funds are in the discussion, would have to notify anyone living in that building that they were eligible for relocation benefits whether the project moved forward or not; that once start discussing the potential acquisition of the property, that may have CDBG funds in the development or HOME funds (federal funds) we need to provide relocation benefits and have been really careful about not bumping up against that.

Mr. Lund stated they've asked each of the developers to prepare a proforma as if the City were not involved to demonstrate that a gap exists, that if you can finance it without us then do so but we anticipate that they will show a gap and how would we best address that gap. It was noted if LMI could afford $750/month. Mr. Lund stated that fair market rent for a 2-bedroom is not quite that high, that fair market rent is about an average in town and $750 for 2 units isn't out of line.
Mr. Lund stated they are asking everyone for their numbers to try to determine whether the sales price they are asking is appropriate and if it is a LMI project then have additional things to talk about in terms of subsidizing but if a market transaction we should be looking at market sales prices and market rents.

Glassheim asked about Site #2, if they are committed to doing it once we get all through this or do they decide they don't want - Mr. Lund stated re. letter of understanding that says we are going to negotiate in good faith to produce a good product pursuant to their proposal. Glassheim stated neither party will sign off on it until they are ready to - Mr. Lund stated that if they do that will have to decide sooner than they want to get in the ground because there is acquisition, demolition, etc. on the site but those things will happen at the same time unless the developer insists. .

3. Rental Rehab Program.
Mr. Lund stated they had distributed a draft of the rental rehab program description, have $750,000 in funds available for LMI and market-rate projects and are proposing that the rehab program be located within the renaissance zone initially, that assistance is in the form of loans, market projects are charged with 4% interest rate and LMI projects are no interest and deferred, loans are on dollar for dollar match by the property owner, project must request a minimum of $10,000 of assistance for City to participate and have at least $5,000 in improvements per unit; projects and loans are subject to approval of the Urban Development director, with appeals directed to this committee if the applicant desires. He stated the $750,000 grant consists of $175,000 for LMI projects and $575,000 for market-rate projects; and we are continuing to receive payments on those projects.

He stated the City of Grand Forks received $1 million CDBG grant from the State of North Dakota after the flood that was used for supplemental rehab program and have a grant agreement with the State that allows us to revolve those projects into other rental projects but does carry all the CDBG requirements so 51% of the units in those projects must be LMI and carry the federal identity with them and must comply with all subsidy regulations. The City of Grand Forks received a rental rehab grant from HUD, the program has been completely closed out and those funds are no longer tracked and unencumbered; and that is a good source of funds for market rate project which they are proposing here; they have lost their federal identity in terms of requiring LMI and we can do those projects but not required to.

Christensen asked if they had any area in the renaissance zone that they would like to think about using these funds. Mr. Lund stated that there has been discussion about eligible activity in conversion of commercial to rental and a few calls from property owners that have either vacant space or some commercial space they would like to convert and the core of downtown is of primary focus and entire renaissance zone in general, they would advertise the availability of funds and ask owners to make application (copy of ap. in packet), on a first come, first serve basis.

Hamerlik asked if they were going to have a report on the number of buildings as to the size of the frontage so that they could reserve some for commercial and those they don't reserve for commercial could go apartment wise. Mr. Hoover stated they went over the preliminary data and there are 5 along Kittson and another 17 under 2000 sq.ft. Mr. Lund stated there are a lot of 25 ft. frontages of buildings that cover majority of the lots and those are standard buildings on S. 3rd, that frontage was discussed. Mr. Lund stated whatever is allowable pursuant to code that the rental rehab program be allowed for eligible activities if the city council determines that main level housing isn't allowed; thinks we should be consistent in how we operate the program and what the City Code allows. Mr. Hoover stated before we implement this we need to come back and have the council consider 3 or 4 options on housing on first level, get that sorted away before we announce this program. Glassheim stated it may free up some funds to make a few more conversions on the main floor, have to keep that in mind when setting parameters. Mr. Hoover stated there may be some people who want to come in and fix up the rentals they already have. Glassheim stated we could just say for second floor - the purpose of this is to convert second floor office space into housing (that was in fact the purpose). It was noted that each property owner will have to make a determination and charge a certain rent to service the debt and make a business decision. Hamerlik stated the rents are going to be higher than they are now and demand may not be as great, esp. if students, and have to work out parking for that and no parking enforcement on Saturdays.

There was some discussion re. renovating the parking ramp built in the 70's or late 60's and that there is money in the Parking Fund, cash carryover, CDBG works for parking - need security - don't have enough parking so have to direct people into those ramps. Glassheim asked if they would be better off spending money on a guard than on other amenities, although cost of a security guard during school hours quite expensive; and noted there is a guard there now around lunch time and 3:00 o'clock and at time that there is a lot of foot traffic out from the school

Christensen stated that as sites develop - there is lot behind Lola's to make it safe for employees. Mr. Lund stated he had been thinking about what they can do to renovate that parking lot after use for staging area for phase 4 of the flood project, that he had conversation last week with engineering and would be available for renovation late next year, probably summer of '07.
Hamerlik stated when he was on the School Board Central High School parked down there and nothing but problems, and that is when they negotiated for the use of lot across from the civic auditorium, 2/3rd's of that lot. Mr. Lund stated the School District has considered and talked about purchasing the lot across from the parking ramp that is now owned by Alerus Financial, they have discussed with Urban Development the theory about purchasing or leasing the parking lot down by the river and actually putting a security station down there to watch over students coming and going, different discussions have occurred over the use of that lot, it would be an eligible activity for CDBG as LMI area after done being used by the project and is something he would like to do to renovate that, put up lights, changes to the north side of that block, either coming out of 1st Avenue or 2nd Avenue nicely designed walkway and handicap accessible to that parking ramp.

2. Renaissance Zone expansion.
Mr. Hoover submitted report on the expansion of the renaissance zone and that State Law allows us to add 9 blocks to the 22-blocks, have to be contiguous to the other blocks that are currently available, that he went back and staff looked at three options: north, south and west areas that were contiguous to the current zone and then evaluated them as best they could in line with the goals and objectives of the redevelopment plan for approval by council and accepted by the State. He stated they haven't come to any conclusion, looking for some guidance from the committee as to which of those options (staff report included maps showing various areas).

The committee did not make any decisions and deferred this item until such time as they have an opportunity to review the proposed districts.

4. Adjourn.

The meeting for June 28 was rescheduled to Wednesday, June 22 at 4:00 p.m. as Mr. Lund and Mr. Hoovers would be out of town - discussion items would be the downtown housing ordinance and downtown housing proposals. The committee adjourned at 5:45 p.m.

Alice Fontaine
City Clerk