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MINUTES/FINANCE-DEVELOPMENT COMM.
Thursday, September 23, 2004 - 5:15 p.m._______

Members present: Christensen, Hamerlik, Glassheim.
Also present were: Kerian, Greg Hoover, Keith Lund, Peggy Kurtz, Al Grasser, Melvin Pedersen.

1. 2005 Community Development Block Grant Program.
Christensen noted that the committee had received a memo from Greg Hoover, director of Urban Development, regarding the 2005 CDBG Program and memo dated September 17 re. downtown housing development.

Glassheim asked re. summary in the memo of August 31 meeting assumptions: re. b. construction of new housing is preferred over conversion of commercial/retail space to residential use - that why wouldn't it make more sense to convert office units downtown which have no demand into residential units, which have demand. He suggested doing survey of office space before building something new and put some money into conversion.
It was also noted that they would want owner occupied house - that home ownership projects are preferred over rental projects.

After considerable discussion it was noted if money available to participate and to put RFP out for developers and if get no response, it's over and to move on.

Hoover stated he is looking for guidance and if developer looking for how much federal funds he can get, and what want to say is mixed income project that this home ownership as opposed to rental. Glassheim most of downtown is rental with a vacancy rate of 2% and asked why not want rental. Hoover stated it trying to bring mix of other people in who might have commitment to downtown. It was noted there are some fairly expensive rental places downtown.

Lund stated we have about 10 years left re. business assistance and next 5 or 6 years is peak, and income trail out after this period.

There was also discussion relative to taking large sum of money, and do the northend storm sewer improvements because it benefits a lot of people - and use some of this money to affect the goal of the council which is to fix streets and reduce special assessments in those areas where people might qualify.

Glassheim stated fixing streets would be very well received in LMI areas, and that there may be more potential for modest fixing of office space, conversion of office space into rental properties but before giving up idea of housing downtown, not whole $4 million, and would like to have staff put in a little time because it would get more people downtown, reduce number of office vacancies and increase number at the same time and doesn't think that any of these schemes are actually going to keep more businesses in business - doesn't hurt for more people living downtown, both in rental rehab. and construction money and use that if spaces to do it - hope continue with that even if edge away from other project.

Kerian stated re. Bricks and Mortar - dividing $675,000 in some way and instead of looking at the City projects that we say that whether its $275,000 to $300,000 the committee can look at items 1 through 13 and 20 and 21, but $375,000 reserved for City housing opportunities or used for items 14 - 17 and 19 are things we can look at with the $400,000 as a possible plan - that put City items and put in separate pool and not have the committee look at that - and that $375,000 to $400,000 and that is what we are going to do some things with or housing downtown, that is money we want to reserve for separate action and then go ahead with this year's action.

Christensen stated that UD staff have to put some plan together for HUD and be there sometime in March (Lund stated they release the funds in March but due November 15 but they are aware it will be around the first of the year as have had verbal communications), so we don't have to have spending plan out for money we will get from 2006 and up - our short term gets covered and have $1.125 set up and $675,000 left and the $675,000 could be allocated for Bricks & Mortar between $200,000 and $300,000 with the rest of the money being set aside in 2005 for Eliot's projects or for additional rehab housing on buildings on North 3rd Street.

Christensen stated we could really have good LMI, and turn two into one larger and that would be sufficient for 2005 because then have enough money to focus what Glassheim is looking at for 2005 and have planning time for the rest. Kerian stated the other thing she would like to add to that is with the exception of American Dream and take these city projects out. Christensen stated he agrees that if we don't get RFP's we have other option for streets.

Glassheim stated that for $300,000 to $400,000 for 2005 would be set aside for either housing or the city projects and $200 to $300,000 would be set aside for the remaining $1.4 or $1.5 million for applications. Christensen stated $675,000 would be available of which we would suggest, and have to come to agreement on recommendation between $200,000 and $300,000 for Bricks and Mortar and the balance save for things just talking about for housing and if it doesn't happen could reopen the application projects. He stated that the Bricks and Mortar is working and should honor that for this year but they will know that we are considering not using any more of that money going forward until we see what we get on the RFP. Kerian stated the only applications going back to would be city projects.

Lund stated this information is useful in that we know how committee thinking, but can't set this budget until after a 30-day comment period and public hearing near the end of the year, so no decisions can be made tonight nor any final decision be made at council in the next two weeks, but good direction, but what they really need to do is get the 2005 process going, and that there have been discussions on whether they use the existing Citizens Advisory Committee (CAC) or whether we eliminate that and use the finance/development or some other type of council committee to hear applications, rank them, hold a public hearing and we need to develop the next 5-year plan, our existing plan expires at the end of this year, that HUD will not release any funds for 2005 until the 5-year consolidated plan is submitted and those two can go concurrently but the annual plan cannot be approved prior to the 5-year plan. He stated we are in the process and have been for awhile gathering data from lots or organizations and agencies and received sheet showing highest priorities are. Their consolidated plans are written to identify priorities for the next 5 years but not projects, rank high, medium and low, and anything low can't do unless have special meeting but written loosely enough so can do anything that is eligible, but need to have that process as there are public hearings that go with that, the existing Citizens participation plan calls for the CAC to assist in development of both plans. He stated what they need is this group and the city council to determine if that is going to be the process to move forward with or eliminate the CAC and do this in-house with city council. The current 5-year plan includes a citizens participation plan that calls for the CAC to be involved and that is our citizens participation plan, and if want to change that, have to have 30-day comment period before we change it and that we will be approving both of these documents according to our time line on January 5, 2005 whether we use CAC or not, and in that need a 30-day comment period to change it and if use the CAC we have several meetings of orientation and questions/answers and giving them time to review the applications so talking about the same day - and council needs to decide what they prefer.

Christensen stated what he would prefer is if allocate money for Bricks and Mortar for the projects is that there be a CAC for that, because there are a lot of council persons that would like the CAC continue, and as move forward in 2006 there will be some money allocated to them and faced with that we have streets in the city that have LMI and that we want to fix and want to continue to put $250 to $300,000 into Bricks & Mortar for non-profits and that the rest of the money. Hoover stated that there are communities that all they do is infrastructure and housing rehab in low-income neighborhoods, nothing else.

Christensen stated that if Urban off the pressure they have and come to consensus on the 2005 money and don't make any decision on the balance of the money until we see what comes forward. Kerian stated she would like that in the 5-year plan as well and adds value to have a CAC help with the plan, saying that here are the community priorities. Glassheim stated that in both planning and allocating of money are advisors, they may disagree with us and may forward other recommendations which we take into account, but still our choice. Hoover stated the council is the final decision. Hamerlik stated that Urban has intercepted in between before it comes to the council and looked at their recommendations and Urban's recommendations to council have not necessarily been the same. Hoover stated he is not one who wants to have staff make recommendations but want them to go through the CAC process, council tells how they want the money divvied up but it does dis-service to the entire process for Urban to get into contest between CAC and what staff thinks, bad position.

Christensen stated he would like to focus on the 2005 money, $1.8, and have talked about how that would be spent, part of it whether commitments receive $675,000 or more and of that Hamerlik suggested $200,000 and Kerian suggested $300,000 and come to compromise of $250,000 for Bricks and Mortar for non-profits and wait to see to see what happens with the survey to see if there is some housing that could be done downtown with the other $400,000. Glassheim stated it looks like $1.4 worth of Bricks and Mortar applications, non-city Bricks and Mortar applications, and wanted to give fair shake to the existing non-profits in our town who depend upon this, already taken money for admin. and Promenade, etc. but if push $1.4 million into $250,000 - would rather have more than less - and if get $300,000 helps and leaves $400,000.

Hamerlik asked what is the description for program and administration, haven't had that wording. Lund stated that the definition is salary, supplies, overhead, rents , utilities necessary to administer the program - 20% is max. that is allowable for administrative expenses. Hamerlik stated he hasn't seen that wording on other sheets that have this -
Lund stated they didn't provide administration here because only interested in the Bricks and Mortar projects -

Lund stated it is good information to have the thoughts of the committee but can't set your budget until January and have final approval - what they need but sounds like use the existing Citizens participation plan, and which the CAC and development of the 5-year consolidated plan and the 2005 annual action plan - and not sure if they would like staff to make application for x amount to develop and plan a downtown project or downtown redevelopment project and could do that as a recommendation coming out of this committee.

Christensen stated that assuming they $700,000, $300,000 for Bricks & Mortar and $400,000 and would like to use some of the $400,000 to study and try to come up with some developments downtown and if it isn't going to work, then not waste any time on it and go to Plan B. Kerian stated and part of Plan B maybe some of things they are pulling out - city projects. Lund stated what they have done in the past is have a second tier and have projects that were awarded through the budget and if something falls out, move next number up. Kerian stated she would like to keep the Citizens stuff separate and if want to do separate one on Citizens but try to keep the two separate - keeping City requests because CAC not necessarily best ones to decide that but can decide among the non-profits. Christensen stated he agreed. Hamerlik stated it would be well for them to know what we did because they will have less money and should be informed - less money because of previous commitments.

Christensen stated they are helping Urban finish their plan using 2005, trying to figure out if we even have an interest for any public/private development downtown and probably all get done before now and spring of 2005 - get survey and knows there are people on 3rd that would be interested in knowing there is some money available for mix and match to rehab those buildings but meet all the goals for now but don't but don't lose sight of trying to get the interest - if get people in who want to develop some projects but if doesn't work can't say didn't explore it when had opportunity and the money.

Hamerlik asked procedural question, that if this is a sub-committee, is this advisory or go before the council or wait until after the hearings, what are next steps. Lund stated that the matter was referred from the city council to this committee and would like a recommendation in the form of a motion and second to use existing Citizens participation plan, use the CAC for the development of the 5-year consolidated plan and 2005 annual action plan and to exclude the City projects from their review.

Christensen stated that the motion would be that this committee would recommend that for 2005 plan that of the money that would be allocated for 2005would recommend that it be allocated as been talking with $675,000 to $700,000 that being made available x for the Bricks and Mortar and the balance to be held in reserve pending a survey by staff as to developing some type of policy downtown in our existing LMI area and at the same time using some of that money to develop a plan for public/private partnership on city lots, with the balance of the money going forward as you present a plan to HUD that says we are going to explore all these different areas and you can get your priorities and build your plan.

Kerian stated that the balance of the plan for additional years she would like the motion to say that the Advisory Committee continue in the process to help establish the priorities.

Glassheim stated that nothing we do this year obligates the extra money in the future years and determine each year what used for.

Hamerlik moved the motion and Glassheim seconded the motion to establish the Citizens Advisory process, and exclusion -
Hoover stated the motion has two parts - that the CAC participate in the development of the 5-year consolidated plan; and that they review and recommend Bricks and Mortar projects that do not include the City projects of items 14 through 19 and that also we have recommended the expenditure of the $1.8 million as outlined previously - the admin., public service and Promenade and American Dream so that the CAC knows that they are going to have between $250 and $300,000.

Glassheim asked if this motion has the dollar amount reserved for Bricks and Mortar, for $250,000 - Christensen stated he would like it in there because we have made commitments for $1.125. Glassheim asked what process they need to follow is, whether we recommend actual dollar expenditures or wait.

Hoover stated that in the past have pulled out money for admin. which has not been reviewed by the CAC, have pulled out money for Public Services that has not been reviewed by the CAC, that the group can come forward and say this is how the money be divvied up.

Lund stated that the Citizens Participation Plan that exists has the CAC ranking applications and not allocating funding, that is done by the Finance/Development Comm., that CAC rank items 1 through 12 or 1 through 20 as their priorities. Christensen stated that they didn't want CAC ranking City projects. Lund stated that every year they ask how much money they have and we say it is unclear but can let them know how the discussion is going, that we have 21 applications and taking out 6, that they would have 15 applications to rank, and CAC vote on which ones they think should be funded and if don't get a 60% affirmative, they are dropped and not considered, and they rank the balance of the projects and that is all you see, and don't need to get too wrapped up in how much money the CAC have - they have none. Glassheim stated we don't need to include that in this motion - that will be done when we make the final vote on the rankings.

Christensen stated that we have prior commitments of $1.125 million of the $1.8 million and there is $675,000 to $700,000 available.

Glassheim asked if there is something to be said for setting that amount that we are pulling out so that everybody knows what they are competing for - so everybody know how much they are competing for or anything to be said for us recommending to council an amount pulled out for City projects. Hamerlik asked if the UD committee has consensus of certain amount. Hoover stated of the 15 or 16 Bricks & Mortar applications, this is the rank order of importance and comes back to this committee and this committee has further debate - Lund stated that admin. and public service has come back unless previous commitment of previous years.

Christensen stated if we have made promises of $1.125 million, what is there to discuss other than the $675,000 or $700,000 - Glassheim asked how much is available for the CAC to rank about - that if on the Advisory Comm. would like to know what working with and could affect various projects , rather have a recommended amount and if acceptable to staff. Lund stated none of the amounts are final, can't be codified until January 5. 2005.

Hoover stated that CAC participates in the development of the 5-year consolidated plan and they review and make recommendations on the Bricks and Mortar project, exclusive of the City projects. Glassheim stated he would move that adding, and that we recommend that $300,000 be set aside for non-city projects, and the balance of the money being allocated to housing and/or city projects. Hamerlik stated that he would not second the motion because of the $300,000 being set aside.

Hamerlik stated they could go with substitute motion with $250,000. Glassheim seconded the motion, and then moved to amend to $300,000, which died for lack of a second.

Christensen called the question, the motion carried with Glassheim voting against the motion. He stated that the balance of that money being $675,000 or $700,00 will be used for the items Glassheim was talking about, the study and going to the market for an RFP.

Christensen asked Hoover to write that up and e-mail to the committee and Kerian so if any editorial comments all have the opportunity to participate. Hoover stated they would have that information to them in the morning.

The meeting adjourned at 7:00 p.m.

Alice Fontaine
City Clerk