HomeMy WebLinkAbout1992 08-17 EDAP Work Session EDA WORK SESSION
CITY OF BROOKLYN CENTER
AUGUST 17, 1992
TACK ROOM - HERITAGE CENTER
7 p.m.
1. Call to Order
2. Roll Call
3. Discussion Items:
a. Proposed Development for the Vacant Parcel South of Earle
Brown Commons (Business Contract for Deed)
-This item will be a presentation at the meeting.
b. Willow Lane /Humboldt Avenue North Developments /Financing
Concepts
c. Sales Tax /Food and Beverage EDA Levy
d. Health Department Reorganization
-This item will be a presentation at the meeting.
e. Neighborhood Street Improvement Program
4. Other Business
5. Adjournment
CITY OF BROOKLYN CENTER Council Meeting Date August 17, 1992
Agenda Item Number
REQUEST FOR COUNCIL CONSIDERATION
ITEM DESCRIPTION:
DISCUSSION ITEM: WILLOW LANE /HUMBOLDT AVENUE NORTH
DEVELOPMENTS /FINANCING CONCEPTS
DEPT. APPROVAL:
Brad Hoffman, EDA Coo "dinator
MANAGER'S REVIEW/RECONMENDATION:
No comments to supplement this report Comments below /attached
SUMMARY EXPLANATION: (supplemental sheets attached No)
As you are aware, the EDA has been actively pursuing the purchase of several apartment
complexes. All of the proposed acquisitions have been or are distressed properties or properties
that have been a problem for the City.
Because the EDA has such limited financial resources available to it, its ability to successfully
complete projects such as the acquisition and demolition of an apartment complex is going to be
primarily driven by opportunity (i.e. a willing seller timed with the fiscal capacity of the EDA). The
apartments at 6637 Humboldt, for which the EDA has a purchase agreement, 6715, 6717, 6719 and
6721 Humboldt and 6525 Willow Lane all represent current opportunities for the EDA to address
some of the problems identified in the Maxfield Study.
As the EDA considers the Willow Lane area, there is also a current potential to acquire the Lyn
River apartment complex (84 units) as well as the Brookdale Motel. These two (2) properties need
to be considered in the overall redevelopment of the area east of 252 and south of 66th Avenue.
The EDA has been approached by a representative of the owner of Lyn River about purchasing
his property. The purchase price of 6525 Willow Lane, which is immediately north of the Lyn
River complex, will influence the purchase price of Lyn River.
• Starting from a premise that Brooklyn Center would desire the redevelopment of this area, we need
to address two (2) basic questions. First, what is to become of the site? There are a variety of
options, all of which have different financial impacts on the project. The land could become a
small office complex, a single family residential site, additional park or some form of multi - family.
Second, how much will this project cost and how much will the EDA pay for it? The answer to
this question is tied to a number of factors, few of which the EDA controls.
Back to the current properties being purchased or being considered for purchase by the EDA. The
EDA has agreed to purchase 6637 Humboldt Avenue North at a cost of $90,000.00, plus
approximately $2,000.00 in closing costs. This purchase is scheduled for closing September 1, 1992.
The EDA will pay for this from its fund balance, which is $912,000.00. The use of this property
has not been decided, although several uses have been discussed. The building is currently
occupied. Staff has proposed that the residents be allowed to stay until such time that a use for
the property has been determined. The rents collected would be used to offset any relocation
benefits that might be due.
The apartments immediately north of 6637 Humboldt (6715, 6717, 6719 and 6721 Humboldt
Avenue) are the boarded -up units. Barclay American Mortgage is in the process of acquiring a
clear title to the property. At that time they will turn them over to HUD and the EDA will start
negotiations with HUD for their purchase. The land value, according to assessing, is $80,000.00.
In February 1990, Norwest Mortgage financed the complex to the tune of $449,783.00 and the
foreclosure sale amount was $507,668.86. Obviously, one of the buildings is subject to an insurance
settlement. Our opening position with HUD will be the value of the land, however, I think
$250,000 to $275,000.00 is more realistic. To finance this project, I would propose that the ED
� P J � P P e A
make e a loan from its reserve to the Community Development Block Gran program. o
tY P P gram. CDBG funds
would be programmed back to the reserve fund over a period of time (dependent on the size of
the loan) until the fund is made whole.
Finally, 6525 Willow Lane, which may or may not be owned by Irwin Ketroser, can be purchased
for $375,000.00. I believe the EDA is the only real buyer available but some aspects to the timing
of the purchase are not right. Monday I will cover this purchase in greater detail. If I was going
• to purchase this property as an investor, the price is too high. The units need significant repairs
including a new trash enclosure, parking lot, garage doors, new cabinets, carpeting, door painting,
stucco patching and so forth. At this purchase price, along with the desired repairs, a building
reserve, taxes management costs and return on investment would require rents of $560.00 to
$580.00 er month '
This building just doesn't support this in m o pinion. Rent in
g) pp y p s the low
$400.00 range are more realistic. However, the EDA is not buying this as an investor and you will
need to determine value to the elimination of that building. The EDA does not know the financial
obligations of the owner as they relate to the building, nor even who the owner is. I will cover that
last point Monday evening.
Questions for the EDA to consider include: What message are we sending to other building
owners who fail to maintain their property? If we acquire the building at $20,833.00 per unit, what
impact will that have on future acquisitions? What impact will this purchase have on the City's
ability to enforce our building maintenance ordinance? Can the City, at this point in time, afford
to let the opportunity to acquire and remove one of the very worst buildings in the City pass? Will
the owner really accept a lower price and, if not, what happens if the EDA has to approach him
in the future to purchase the building? Mr. Ketroser approached the EDA. I am sure that the cost
will go up if we wait.
As previously noted, there are several sources of funding available to the EDA to undertake these
activities. We can very easily out spend our resources. First, there is a $912,000.00 reserve fund.
The interest from the fund has provided the EDA with a revenue source on an annual basis to
• undertake approved activities. I would recommend that whenever possible, use of this fund be in
the form of a loan. Second, CDBG funds can be used in certain circumstances. The CDBG
program already funds several programs but there is some limited potential for creating small
($400,000.00 or less) loans to be paid over a period of years. There is an EDA levy which has not
been used in the past because of levy limitations. The EDA levy would generate $183,000.00
annually. In November, the City will receive approximately $400,000.00 from the refunding of our
original first time home buyers program. Monday I would like to discuss how the EDA could use
that money to address some of the apartment issues. There is a potential grant of approximately
$375,000.00 from the State for the acquisition and demolition of multi - family units. Finally, the
potential of a sales tax on food and beverage and bond issues are sources that can be utilized.
Monday evening I will lay out a development concept for Willow Lane and how it can be financed
it as well as the acquisitions on Humboldt. We will also discuss your priorities for projects and use
of financial resources.
RECOMMENDATION:
•
CITY OF BROOKLYN CENTER council Meeting Data Au¢ust I7, 1992
Agenda Item Number
• REQUEST FOR COUNCIL CONSIDERATION
ITEM DESCRIPTION:
DISCUSSION ITEM: SALES TAX /FOOD AND BEVERAGE EDA LEVY
I
DEPT. APPROVAL:
F f9
Tom Bublitz, Assistant EDA Coordinator
MANAGER'S RE
VIEW/RECOM1ViENDATION.
No comments to supplement this report . Comments below /attached
SLrA EV ARY EXPLANATION: (supplemental sheets attached Yes
This item was first discussed at the July 27, 1992 EDA meeting. A copy of the original report
presented at the July 27 EDA meeting is included with this memorandum. Since the initial
discussion, the City Manager met with the Chamber's Economic Development Committee on
August 13, 1992 to discuss the one percent (1 %) tax. Representatives from Brooklyn Center
restaurants were also present at the August 13 Chamber meeting.
The City Manager will be prepared to report on this item in more detail at the meeting.
RECOMMENDATION
CITY OF BROOKLYN CENTER Council Meeting Date July 27, 1992
Agenda Item Number
REQUEST FOR COUNCIL CONSIDERATION
ITEM DESCRIPTION:
LOCAL LIQUOR AND RESTAURANT TAX
DEPT. APPROVAL:
= EDA Coordinator
Signature - title
MANAGER'S REVIEW /RECOMMENDATION: Ace&
No comments to supplement this report Comments below /attached
SUMMARY EXPLANATION: (supplemental sheets attached Yes )
A copy of the special legislation regarding the option for a one percent (1 %) tax on gross receipts of on sale liquor
and food is included with this memorandum. The purpose of the legislation is to provide a local source of revenue
, for "housing projects ", as defined by Minnesota Statutes Section 469.002. A copy of the relevant section of the
statute is also included.
Based on the definition set forth in the statute, and the housing needs of the City as described in the City's housing
plans, staff recommends the following "housing projects" be considered if the City wishes to pursue the 1% tax
option.
1. Acquisition and demolition of substandard single - family properties and the subsequent redevelopment of the
single - family property.
2. Acquisition and demolition of substandard multi - family properties and the subsequent redevelopment of the
property.
3. Moderate and /or substantial rehabilitation of single - family and /or multi - family properties.
4. Items 1 through 3 above are housing projects that are immediate priorities. In addition to these items, it is
also recommended that the City consider additional "housing project" issues, including funding for
neighborhood improvements such as curb and gutter, funding of mortgage programs and other projects
authorized under Minnesota Statutes Section 469.002, Subdivision 13.
The long term use of the 1% tax should be committed to programs that foster neighborhood preservation. As
written, the statute provides the City with a great deal of latitude to address future concerns as well as other
problems identified by the Maxfield Study but not addressed in items 1 through 4.
RECOMMENDATION
No action is requested on this item.
i
1992 REGULAR SESSION C 511
Arc. a
Sec. 30. BROOKLYN CENTER; LOCAL LIQUOR AND RESTAURANT TAX.
Subdivision 1. AU'T'HORIZATION. Notwitthystanding Minnesota Statutes section
A 477A.016 or any other law the city of Brookl n nter � may by ordinance, impose a tax of
ie one percent on the ss recei is on 1 retail on -sales of in )Xicatiniz ii uor and
)n fermented malt bevera es when sot at icens on -sale liquor establishments an
�r municipal liq uor stores within the city an 2 all sales off primarily for consumption
)n on or off the premises by restaurants and Pl aces of re reshment within the city
't Subd. 2. USE OF REVENUES. Revenues received from taxes authorized under
subdivision 1 must be used by the cit y to pay the cost o collectin the tax and to fun `
pYroved I:o;:sir.K projects. Residents of at least 75
e
p ercent of an omeownershi units constructed or rehabilitated bilitated with revenues received
a
under this section must have incomes that are at or below SO rcent of the area me ian
family income adjusted foi famf
ii size as etermined b the department o housing and
urban development. Resident income shall be etermine at the time of occu ancy. For
e the u ses of this section "housing project' shall have the meaning defined in
Minnesota Statutes section 469.002.
:t Subd. 3. REFERENDUM. If the Brooklyn Center city council intends to impose the
Y
liquor and restaurant tax authorized by this section it shall conduct a referendum on the
t issue. The q uestion of im sin the tax must be submitted to the voters at a general
' election. The tax may not be impose unless a majority of votes cast on th question of
imposing the tax are in the affirmative. The commissioner of revenue shall prepare a
suggested form o
question to be presented at the election The referendum must be held
at a general election before December 1, 1992 This subdivision applies notwithstanding
any city charter provision to the contrary.
Subd. 4. COLLECTION. The city may agree with the commissioner of revenue that
a tax im osed ursuant to this section shall be collec tedby the commissioner tog ether
with the tax imposed by Minnesota Statutes, chapter 297A, and subject to the same
r interest, penalties, and other rules and that its proceeds, less the cost of collection, shall
be remitted to the city. By jut 1, 1992 the commissioner of revenue shall provide to the
e cat council an estimate of the cost of collection.
Subd. 5. LOCAL APPROVAL. This section is effective upon compliance by the
overng 0 body of the city of Brooklyn Center with Minnesota Statutes, section 645 021,
subdivision 3.
i S'e�`3t Y OF ELY; SALES TAX.
Subdivision 1. SA UTHOkt' �;- t;tstanding Minnesota Statutes,
section 477A.016 or an other co Wision of law ordinance or city charter, the
city of Ely may, b o� im ose an ad I les tax of u to one percent on sales
tran sactiob e pursuant to ,Minnesota Statutes , c 97 A, that occur within the
cit
Additions are indicated by underline; deletions by 644k" 551
9512
9513 ECONOMIC DEVELOPMENT 469.002
,artment of trade TARGETED NEIGHBORHOOD 469.204 Payment; city matching money;
c development. REVITALIZATION PROGRAMS drawdown; uses of state money.
469.201 Definitions. 469.205 City powers and eligible uses of I
a of projects and 469.202 Designation of targeted targeted neighborhood money.
neighborhoods. 469.206 Hazardous property penalty.
,n of cost of project. 469.203 Targeted neighborhood 469.207 Annual audit and report.
nuance of bonds; revitalization and financing
program requirements.
pans.
onds; presumption.
powers by HOUSING AND REDEVELOPMENT AUTHORITIES
ordinance,
anent for bonds.
rights and 469.001 PURPOSES.
:ional to application The purposes of sections 469.001 to 469.047 are:
.ws and rules.
(1) to
of housing and provide a sufficient supply of adequate, safe, and sanitary dwellings in order
nt authority to protect the health, safety, morals, and welfare of the citizens of this state;
,cipation notes for (2) to clear and redevelop blighted areas;
.PRISE ZONES (3) to perform those duties according to comprehensive plans;
(4) to remedy the shortage of housing for low and moderate income residents, and
of enterprise zones. P blighted to redevelo bli ted areas, in situations in which private enterprise would not act
quirements.
enterprise zones. without government participation or subsidies; and
anon of employment (5) in cities of the first class, to provide housing for persons of all incomes.
_ an d a Public participat p
t and redevelopment p rtici anon in activities intended to meet the purposes of sections 469.001
to 469.047 and the exercise of powers confined by sections 469.001 to 469.047 are pub -
on. - lic uses and a oses for which p rivate prop may be acquired and public money
+�
MEANCING sent. P rP P P P Y Y q P y t
P
m°� tax l
lancing plan, annual History 1987 c 291 s I i
P.
:irements; housing
469.002 DEFINITIONS.
Subdivision 1. Generally. In sections 469.001 to 469.047 the terms define i
d m this
" disputes o ver section have the meanings given to them herein, unless the context indicates a different
on pooling; five -year - meaning.
q of tax increment. Subd. 2. Authority "Authority" means a housing and redevelopment authority
created or authorized to be created by sections 469.001 to 469.047.
ent bonding 1
penditures for Subd. 3. City. "City" means a home rule charter or statutory city. --
>d revitalization. " Subd. 4. State public body. State public body" means an city, commis-
Y• P Y Y Y, Y,
ects.
NEOUS ECONOMIC ` Sion, district, authority, or other political subdivision or instrumentality of this state.
PMENT POWERS
evelopment wY Subd. 5. Governing body. "Governing body" means the council, board of trustees, Q„
will subdivisions and _ or other body charged with governing any state public body. -
s of other states. --
operty taxation for Subd. 6. Mayor "Mayor" means the mayor of a city. °••
velopment.
t bureaus; first class Subd. 7. Clerk. "Clerk" means the clerk of a city or the officer of any other state
public body charged with the duties customarily imposed on the clerk of a city.
,unicipal market first Subd. 8. Area of operation. "Area of operation" means, in the case of an authority
>d revitalization _ created in and for a city, county, or group of counties, the area within the territorial
rst class "ties. - — boundaries of that city, county, or group of counties.
;r municipal
rehabilitation loans. e mployment. lands to promote America, the D of Housing Subd. 9. Federal government. "Federal government" includes the United States of
o f i e ` A and Urban Development, or any other depart-
` ��,` p g
- :formation and ,�� ment, agency, or instrumentality of the United States of America.
atutory cities.
for publicity; Subd. 10. Federal g.
legislation. "Federal legislation" includes the United States
g
ard; first class cities. 4 Z , Housing Act of 1937, United States Code, title 42, sections 1401 to 1440, as amended
erttstng resources; through December 31, 1989; the National Housing Act, United States Code, title 12,
and or third class. ti
on for ver ' t !' sections 1701 to 1750g, as amended through December 31, 1989; and any other legisla-
atut f°ttrtn tion of the Congress of the United States relating to federa! assistance for clearance or
,g to , rehabilitation of substandard or blighted areas, land assembly, redevelopment projects,
ns to regional or local or housing.
•r
Subd. 11. Blighted area. "Blighted area" means any area with buildings or
mom %Y
469.002 ECONOMIC DEVELOPMENT 9514 9515
improvements which, by reason of dilapidation, obsolescence, overcrowding, faulty The term "
arrangement or design, lack of ventilation, light, and sanitary facilities, excessive land as then provides
coverage, deleterious land use, or obsolete layout, or any combination of these or other 1, 1951, as pres
factors, are detrimental to the safety, health, morals, or welfare of the community. Subd. 15. 1
Subd. 12. Project. "Project" means a housing project, a housing development proj- any work or unc
ect or a redevelopment project, or any combination of those projects. The term "pro- families. This w
ject" also may be applied to all real and personal property, assets, cash, or other funds, ments, the acgt-
held or used in connection with the development or operation of the project. The term future for house
-- n 469.012 -
authorized
b section ,
"project" also includes an interest reduction program Y new or existing
subdivision 7. or personal pros
work or undertaking to water servi(
project" ' me
ans an g ers ,
"Housing Subd. 13. Housing project. g p J Y
gP J
provide vide d
ecent s afe dwellings
r persons of low income and their fami- - - health, recreatic
and g
d sa
nitary d ellin fo P
!� °• lies. Subd. 16. 1
(„ Such work or undertaking may include acquisition or provision of buildings, land, the governing b
equipment, facilities, and other real or personal property for necessary, convenient, or •�G of approving su
t desirable appurtenances, streets, sewers, water service, utilities, site preparation, land- redevelopment
{ soaping, administrative, community, health, recreational, welfare, or other purposes. opment or rede
is "Housing project" also includes the planning of the buildings and improvements, _ tionship to deft
the acquisition of property, the demolition or removal of existing structures, the con- [ : general land us{
struction, reconstruction, alteration, and repair of the improvements and all other work Subd. 17.
in connection therewith. their families" r
_ Subd. 14. Redevelopment project. "Redevelopment project" means any work or { { {� without financi
- undertaking: s = overcrowding.
{ (1) to acquire blighted areas and other real property for the purpose of removing, Subd. 18.
preventing, or reducing blight, blighting factors, or the causes of blight; income and the
_ (2) to clear any areas acquired and install, construct or reconstruct streets, utilities, ;` to cause privatc
and site improvements essential to the preparation of sites for uses in accordance with i " - supply of decer
�.. the redevelopment plan; I means.
(3) to sell or lease land so acquired for uses in accordance with the redevelopment - Subd. 19.
j plan; interim certific<
(4) to prepare a redevelopment plan, and to incur initiation, planning, survey and to sections 469.
other administrative costs of a redevelopment project, and to prepare technical and #_ Subd. 20.
financial plans and arrangements for buildings, structures, and improvements and all improvements
1 other work in connection therewith; or or used in conn
im (5) to conduct an urban renewal project. The term "urban renewal project" may therein, include
include undertakings and activities for the elimination or for the prevention of the �' Subd. 21.
development or spread of slums or blighted or deteriorating areas and may involve any includes any be
I work or undertaking for that purpose constituting a redevelopment project or any reha- with the author
(. bilitation or conservation work. For this purpose, "rehabilitation or conservation Subd. 22.4
work" may include (i) carrying out plans for a program of voluntary or compulsory for the developr
repair and rehabilitation of buildings or other improvements; (ii) acquisition of real agency or appr
property and demolition, removal, or rehabilitation of buildings and improvements for the future u:
thereon where necessary to eliminate unhealthful, unsanitary or unsafe conditions, the general lanc
lessen density, reduce traffic hazards, eliminate obsolete or other uses detrimental to to time by the
the public welfare, or to otherwise remove or prevent the spread of blight or deteriora-
eeded
Subd. 23.
tion, to promote historic and architectural preservation, or to provide land for n.. as otherwise de
i
ti! public facilities; (iii) installation, construction, or reconstruction of streets, utilities, preferences, or
parks, playgrounds, and other improvements necessary for carrying out the objectives federal financia
of the urban renewal project; (iv) the disposition, for uses in accordance with the objec- Subd. 24.
r� tives of the urban renewal project, of any property or part thereof acquired in the area
I of the project; provided that the disposition shall be in the manner prescribed in sec- tance payment:
1 ':a�' 469.047 for the des osition of property in a redevelopment project United States
tui t,r bons 469.001 to P
_�_.. .
•�� area; (v) relocation within or outside the project area of structures that will be restored History: E
and maintained for architectural or historic purposes; (vi) restoration of acquired prop-
erties of historic or architectural value; and (vii) construction of foundations and plat- 469.003 CM
forms necessary for the provision of air rights sites. Subdivisio
1. :��
9514
9515
ECONOMIC DEVELOPMEyr .69,003
o� wding, faulty
cilitIes, excessive land The term "redevelopment project" also means a redevelopment project initiated
ation of these or other as then provided by law and approved by the governing body of the ci
of the community. 1, 1951, as prescribed by Minnesota Statutes 1949, section 462.521. ty prior to July
ing development proj- Subd. 15. Housing development project. "Housing development project" means
ejects. The term "pro- any work or undertaking to provide housing for persons of moderate income and their
cash, or other funds, families. This work or undertaking may include the planning of building and improve-
the project. The term ments, the acquisition of real property which may be needed immediately or in the
3 by section 469.012, future for housing purposes, the construction, reconstruction, alteration and repair of
new or existing buildings and the provisions of all equipment, facilities and other real
irk or undertaking to or personal property for necessary, convenient or desirable a
come and their fami- ems, water service, utilities, site preparation, landscaping, administ
health, recreation or welfare or other purposes. communit
on of buildings, land, Subd. 16. Redevelopment plan. "Redevelopment plan" means a plan approved by
-ssary, convenient, or the governing body, or by an agency designated by the governing body for the purpose
to preparation, land- of approvin g such p lans y
or authorized b law to do so of each city �.
e, or other purposes. redevelopment project is to be carried out, which plan provides an outline for the devel-
and improvements, opment or redevelopment of the area and is sufficiently complete (1) to indicate its rela-
structures, the con- tionship to definite local objectives as to appropriate
its and all other work to
general land uses and general standards of development aorredev'elopm(ent_ Indicate
T Subd. 17. Persons of low income and their families. "Persons of low income and
means any work or their families" means persons or families who lack a sufficient income to enable them,
without financial assistance, to live in decent, safe, and sanitary dwellings, without
overcrowding.
urpose of removing,
blight; ; T Subd. 18. Persons of moderate income and their families. "Persons of moderate
income and their families" means persons and families whose income is not adequate r
i streets, utilities, to cause private enterprise to provide without governmental assistance a substantial
in accordance with supply of decent, safe, and sanitary rY housing at rents or prices within their financial
I t 0 velopment
Subd. 19. Bonds. "Bonds" means any bonds, including refunding bonds, notes,
interim certificates, debentures, or other obligations issued by an authority pursuant
lanning, survey and to sections 469.001 to 469.047.
cpare technical and
provements and all Subd. 20. Real property, "Real property" includes all lands, together with
improvements and fixtures thereon, and property of any nature appurtenant thereto,
newal project" may or used in connection therewith, and every estate, interest, and right, legal or equitable,!
therein, including terms for years.
prevention of the &` Subd. 21. Obligee 1
rid may involve any includes an b gee of the authority; obligee. Obligee of the authority" or "obligee" IN ■
project or any reha- Y bondholder, and the federal government when it is a party to any contract
)n or conservation .- with the authority.
'ary or compulsory 22. General plan for the development of the locality as a whole. "General plan '
for the develo p g s
acquisition of real � agency or approved of the locality as a whole' means a plan adopted by a local tannin
and improvements Y pproved by the governing body of the city establishing objectives
unsafe conditions, for the future use of land in a locality, or if no such plan has been adopted or roved,
Ises detrimental to the general land use proposals for the development of the locality established from time �
blight or deteriora- "` to time by the local planning agency or by the governing body of the city. 1 �
de land for needed s, Subd. 23. Veterans. "Veterans" has the meaning given in section 197.447, except
)f streets, utilities, as otherwise defined in a contract with the federal government providing for veterans'
out the objectives -�R preferences, or as may be required by any federal law or regulation as a condition of
nce with the objec- federal financial assistance for a project. '
.quired in the area Subd. 24. Section S program. "Section 8 program" means an existing housing assts-
velopment project United States Code title 42
prescribed in sec- lance payments program under section 8 of the United States Housing Act of 1937,
.., , , section 1437f, as amended through December 31, 1989. ; ?
_at will i red prop- restored History: 1987 c Z91 s Z; 1990 c 532 s 2,3
of acquired } a
adations and plat- '.
469.003 CITY HOUSING AND REDEVELOPMENT AUTHORITY.
Subdivision I. Preliminary city findings and declaration. There is created in each
i
CITY OF BROOKLYN CENTER EDA Meeting Date 8/
• Agenda Item Number 3'�5
REQUEST FOR COUNCIL CONSIDERATION
ITEM DESCRIPTION:
PROPOSED NEIGHBORHOOD STREET IMPROVEMENT PROGRAM
DEPT. APPROVAL:
Sy Knapp, �birector of Public Works
MANAGER'S REVIEW /RECOMMENDATION:
;✓�'.:V.a e ra... - e��,,;,,F i .s >
No comments to supplement this report Comments below /attached
SUMMARY EXPLANATION: (supplemental sheets attached Yes
• The concept of a program to upgrade residential streets within Brooklyn Center
was discussed with the City Council on October 7, 1991. At that time
consideration was given to initiating a 1 -mile pilot improvement project in 1992.
Because of the demands on staff time from the Financial and Service
Prioritization process, and other special assignments, it became impossible for
our staff to develop that program for implementation in 1992.
In the detailed report attached, staff now recommends initiation of a 2 -mile
pilot improvement project in 1993. To make this possible, it is necessary to
have the Council give preliminary approval as soon as possible so that staff ma
proceed with needed engineering work (surveys, televising of sewers, preliminary
development of plans and specifications, and cost estimates), citizen
involvement, and financing.
If, after reviewing this report informally at the August 17 EDA meeting, the
Council expresses an interest to proceed with this proposal, we will request the
Council, on August 24, to formally consider a resolution which would:
1. Establish the project.
2. Begin survey work to gather data to prepare plans and specifications
and cost estimates.
3. Retain an appraiser to estimate the value added to properties from
street reconstruction and curb and gutter installation.
4. Retain a landscape architect to develop concepts for distinctive
neighborhood aesthetic improvements.
S. Explore street lighting alternatives with NSP and the landscape
architect.
6. Televise the sanitary sewers in the two areas proposed for the pilot
project.
7. Explore funding mechanisms utilizing GO bonds, special assessments,
and other sources of funds, including further refinement of an
Assessment Stabilization Program.
8. Direct staff to initiate the process of citizen involvement through
an "expanded" Earle Brown Neighborhood Advisory Committee, at a
meeting to be held in September.
•
r
August 13, 1992
TO: G. G. Splinter, City Manager
FROM: Sy Knapp, Director of Public Works
SUBJ: Proposed Neighborhood Street Improvement Program
We have, on various occasions, discussed with the City Council and other groups the concept of a
Neighborhood Street Improvement Program, to reconstruct the approximately 80 miles of residential
streets in Brooklyn Center. The purpose of this memorandum is to provide an updated and refined
proposal for further review and input.
BACKGROUND
The City of Brooklyn Center has historically provided a high level of maintenance (patching,
sealcoating, etc.) on all City streets. Because the average age of the City's residential streets exceeds
30 years, the cost of maintaining these streets is rising rapidly. Our ability to maintain an acceptable
level of service is declining. The number of employees in our Street and Park maintenance divisions
has been reduced from 25 in 1980 to 20 in 1992. Also, two employees spend the bulk of their time
on signs and striping, and a third spends several months a year as the tree /weed inspector. In
addition, we will be required to take on even more storm sewer maintenance, (our storm sewer
system is also aging, and State and Federal mandates will require increased operations and
maintenance levels), further reducing the personnel available to provide basic street maintenance
services.
One major factor which contributes to the deterioration of the City's streets is the lack of concrete
curbs and gutters. While the decision not to install curbs and gutters may have been effective at the
time of initial development, the long -term reality is that streets without curb and gutter deteriorate
faster.
The lack of curb and gutter has other, aesthetic impacts. The "Brooklyn Center Housing Market"
study prepared in 1989 by the Maxfield Research Group cited the "unkempt appearance" of blocks
without curb and gutter, and the "worse visual image" of the Southeast neighborhood as compared to
adjacent areas in north Minneapolis, where curb and gutter is in place.
PROPOSED PROGRAM
The proposed Neighborhood Street Improvement Program would reconstruct all residential streets in
the City, including installation of curb and gutter, over an approximate 20 year period.
Reconstruction would vary from simple overlays to total reconstruction, depending on the type of
Page 2
improvement needed. The cost per mile could vary from $200,000 to $500,000, not including utility
improvements, or other improvements such as improved street lighting or landscaping.
It is our recommendation that:
• All proceedings regarding street improvements be conducted in accordance with Minnesota
Statutes, Chapter 429, which is the basic law regarding public improvements where a portion
(at least 20% of the cost of an improvement) would be specially assessed to abutting property
owners. Under this procedure, the remaining portion of project costs can be financed through
the sale of general - obligation backed revenue bonds.
• The Council consider establishment of a program to "buy down" the special assessments of
low income property owners (i.e. - an "assessment stabilization" program).
• Utility improvement costs be charged to the appropriate utility fund, i.e. - the water, sanitary
sewer, and storm drainage utility funds.
DISCUSSION
The following are several items to be discussed: Where appropriate, I have made a recommendation
as to the direction in which we should proceed. These discussion items are: 1) The review process so
far and the next steps; 2) Identification of tentative sites for 1993; 3) Review of project costs;
4) Funding mechanisms; and 5) Assessment stabilization.
Review Process and Next Steps
An initial proposal was discussed by the Council at its October 7, 1991 meeting. At that time, staff
recommended consideration of a pilot program in the southeast neighborhood for 1992. The Council
directed staff to discuss the proposed program with the Earle Brown Neighborhood Advisory
Committee (EBNAC), and requested that information regarding costs and financing options be made
available.
The proposed program was discussed with the Earle Brown Neighborhood Advisory Committee at its
meeting on November 14, 1991. The members expressed interest in the concept, and suggested that
it be brought to the attention of a wider group of residents. Each member nominated several
individuals to comprise an "extended" Advisory Committee.
Because of the demands on staff time of the Financial and Service Prioritization process, the idea of a
pilot project in 1992 was put on hold. However, staff are now prepared to recommend a two mile
pilot project for 1993. To pick up where the process left off, we would propose to review the
pilot program proposal with the City Council in August, and with the "extended" Earle Brown
Neighborhood Advisory Committee in September. A meeting with the EBNAC has been
tentatively scheduled for September 17 at the Earle Brown Elementary school.
The Council may wish to have other terms of resident input, or review by other commissions,
committees, or task forces. However, if a pilot program is to get off the ground in 1993, the survey
crews must begin their work by early September so that we can develop plans and specifications this
winter.
Page 3
There are other items of information needed to prepare a complete picture of the proposed program,
some of which would require Council approval for the expenditure of funds.
1) Of primary concern to property owners will be the question of whether or not street
reconstruction with installation of curb and gutter will add to the value of their homes.
We've had a preliminary meeting with Brad Bjorklund, one of the few appraisers in
Minnesota who are experienced in this type of appraisal. He has performed this type of
analysis many times before in many cities, and has indicated that he could provide such an
analysis on 4 -6 typical homes for a total of $5,000- 6,000.
I recommend that we address the value -added question up front, immediately, as it has great
bearing on our ability to market the program, and on the question of the appropriate level of
special assessments. Therefore, I would propose to request the Council to authorize hiring
Bjorklund, at a cost not to exceed $6,000, to perform a valuation analysis to be complete,
hopefully, by the time we go to the extended Earle Brown group.
2) I believe that any neighborhood improvement program should be a comprehensive program.
Therefore, I recommend hiring a landscape architect to develop concepts for neighborhood
aesthetic improvements. These improvements could include the development of a distinctive
neighborhood identity utilizing signs, decorative lighting, plantings, and other means. If the
Council agrees to this need, we will obtain a proposal for such services.
3) In our initial discussion with the Neighborhood Advisory Committee, several members
expressed a need for additional street lighting in the neighborhood. There are two options we
could pursue: the City could purchase and install decorative lighting, as we did in the Farm
area street improvements, or we could contract with Northern States Power. NSP has several
types of decorative lighting available. In the latter case, the City pays a monthly rental and
operations charge. This is the route we went on West River Road and 69th Avenue. I am
working with NSP to develop cost estimates.
4) It has been the City's policy to, when making a street improvement, make any needed public
utility improvements. To properly evaluate the sanitary sewers in the areas proposed for a
pilot project, we should televise them all. I propose to request the Council for authorization
to obtain proposals for this service.
Tentative Areas For 1993 Pilot Project
The Maxfield study suggested that from a housing market standpoint, the southeast neighborhood is in
most need of improvement. The Council last year agreed that the first project should be a 'highly
visible' area of the southeast neighborhood, to generate resident enthusiasm.
City Engineer Mark Maloney has defined several areas in the southeast neighborhood, each of which
contains approximately one mile of residential streets (see Attachment 1). 1 believe that we could
reasonably accomplish a pilot program of two miles of streets in 1993, (i.e. - two of the outlined
sections on the map.) I recommend that priority consideration be given to selection of two of the
following four areas (7, 8, 10, and 11), for the following reasons:
Page 4
• Areas 1 through 5 abut 57th Avenue, which has substantial drainage problems. The
City's Local Water Management Plan consultants will be providing detailed
recommendations for correcting drainage in the area, but those recommendations will
not be available in time for the 1993 construction season. Therefore, I recommend
that those areas not be considered for 1993.
• Area 6 has recently been sealcoated.
• Two alleys in area 9 were repaved a few years ago, and residents were charged
substantial special assessments, for which they are still paying. In addition, Humboldt
Avenue is a County Road, and it would be difficult to negotiate County participation
on a 2 -block segment on short notice.
• 1 have recommended area 8 because it has need for sanitary sewer and water utility
work. While area 7 has also recently been sealcoated, it too has some utility problem
areas including, but not limited to:
- A need to replace both the sanitary sewer and storm sewer, and probably the
water main, on James Avenue.
- Other spot repairs (or major repairs ?) to all three utility systems.
In addition, it is best to make the areas to be improved as contiguous as possible, to
resolve storm drainage problems over as large an area as possible.
• Areas 10 and 11 are ideal candidates for improvement. They are in high- visibility
areas; there is a need for utility improvements; there are drainage problems to be
addressed.
Review of Project Costs
Early in the process of conceptualizing this program, City Engineer Mark Maloney estimated the cost
of various levels of street improvements. Depending on the type of improvement needed, he
estimated that the cost per mile would range from $200,000 to $500,000, or an average of $300,000
per mile. This cost represents street improvements only, and does not include the cost of utility
improvements, street lighting, landscaping, or other improvements.
Mr. Maloney has reviewed areas 7 and 8 and 10 and 11, and has developed a more refined cost
estimate. This is not a formal Engineer's Estimate, which would require more detailed surveys and
analysis, and would not be available until this winter. A rough estimate of the cost of the
improvements for each area is shown below:
Page 5
ESTIMATED STREET ESTIMATED UTILITY TOTAL
IMPROVEMENT COST IMPROVEMENT COST ESTIMATED COST
ONLY (Water Mains, Sanitary (Does not include
Sewers & Storm Sewers) lighting, landscape,
etc.)
Area 7 $385,000 $215,000 $600,000
Area 8 $325,000 $357,000 $682,000
Area 10 $280,000 $182,000 $462,000
Area 11 $280,000 $235,000 $515,000
Funding Mechanisms
Street improvement costs only, for a first -year, two -mile pilot program, based on the estimates
provided above, would be approximately $600,000 to 700,000. At an average of $300,000 per mile,
an annual four mile program would cost approximately $1.2 million for street improvements, plus
additional costs for utility and other improvements. Other improvements might encompass street
lighting, landscaping, sidewalks, trails, neighborhood park improvements, and street sign
replacement.
There are several options for funding. Various cities use various of these options.
1) Special assess 100 percent of all the costs, including utility costs.
2) Special assess 100 percent of the street improvement cost only, pay the cost of the utility and
other improvements from other sources of funds, such as utility funds and local state aid
funds.
3) According to the existing special assessments for street improvements policy, special assess
1/3 the cost of the street improvements, and fund the other 2/3 plus utility and other costs
from other sources of funds. Under current policy, a 1/3 cost special assessment would be
approximately $1,525. This would result in a monthly cost to the homeowner of $20 -25 the
first year, and about $10 per month in the fifteenth year.
4) Pay 100 percent of the street improvement cost from other funds. One possible source would
be a general obligation bond issue. This would require a referendum vote.
I don't believe that options 1, 2, or 4 are feasible, leaving us with option 3, which is existing policy.
Public Utility funds could appropriately be used to finance utility improvements. Since these
improvements have not been anticipated in previous utility rate studies (except for storm drainage
Page 6
utility), there would be a moderate impact on water and sewer rates. This impact will be explored
more fully in the utility rate reviews conducted in October. Local state aid funds could be used,
consistent with existing policy, to finance any sidewalk or trail improvements, or to pay a larger share
of the cost of those streets requiring more expensive improvements.
Chapter 429 of the state statutes allows the use of general obligation bond proceeds to supplement
special assessments if at least 20 percent of the cost of the improvement is financed by special
assessments to property owners. One factor to consider in using this type of funding mechanism is
the danger of setting the assessment rate too low. If unanticipated problems occur during
construction, increasing the project cost, the proportion to be assessed could fall below 20 percent.
Or, if many non - assessable items such as landscaping, lighting, or other aesthetic improvements are
added to the costs to be paid from bond proceeds, the percent of total cost paid from assessments will
fall. It is imperative to bear this 20 percent minimum AND the total project cost in mind when
establishing a special assessment rate. Accordingly, we recommend that, if an analysis by a
qualified independent appraiser indicates that the benefit received by property owners is equal to or
greater than the amount which would be derived by assessing 1/3 of the street improvement costs,
then the basic existing
ZD
policy should be maintained, possibly with minor revisions, plus consideration
of an Assessment Stabilization program.
Assessment Stabilization
The Council has expressed concern several times in the past over the impact of special assessments on
low- income families and seniors. A special assessment deferment program is by law available for
seniors and persons who are totally disabled, but there are no programs available generally for low -
income property owners.
Some other cities have pioneered programs of special assessment "buy downs" for low income
families. These cities, such as St. Cloud and Bloomington, use other city funds to reimburse property
owners for a portion of the special assessment, prorated based on income.
The concept of the Assessment Stabilization Program is more fully explained in Attachment 2. Our
very rough estimate of the cost to the City of such a program is $36,000 to $51,000 for the pilot two -
mile program, and $72,000 to $102,000 for the full four mile program.
One possible source of funds for this program is the one percent food and beverage sales tax. Use of
the sales tax is limited to housing projects as defined by statute. Curb and gutter projects are
included within that definition.
SUMMARY
I recommend that on August 24, the City Council give approval to developing a more detailed
feasibility study for a two mile pilot Neighborhood Street Improvement Program for 1993. At that
time, we would request authorization from the Council to continue work in the following areas:
1) Begin survey work to gather data to prepare plans and specifications and cost estimates.
Page 7
2) Retain an appraiser to estimate the value added to properties from street reconstruction and
curb and gutter installation.
3) Retain a landscape architect to develop concepts for distinctive neighborhood aesthetic
improvements.
4) Explore street lighting alternatives with NSP and the landscape architect.
5) Televise the sanitary sewers in the two areas proposed for the pilot project.
6) Explore funding mechanisms utilizing GO bonds, special assessments, and other sources of
funds, including further refinement of an Assessment Stabilization Program.
We also propose to initiate the process of obtaining citizen input through the Earle Brown
Neighborhood Advisory Committee, at its meeting September 17, and we request suggestions from
the City Council for expansion of the citizen participation process.
Note In addition to presenting this report to the City Council for formal consideration on August
24, we also plan to submit a recommendation to hire a consulting firm to develop a City -wide
Pavement Management Program (PMP) at that same meeting. This item is noted because it
would appear to be directly related to the issue of initiating a street improvement program. On a
long term basis, it certainly is ( i.e. - the PMP will be used as a major tool in selecting priorities
for annual street maintenance and reconstruction programs). However, we do not expect results
from the PMP to be available soon enough to allow them to be used to select areas for a 1993
street improvement program. We certainly will plan to utilize the results of the PMP to assist in
selecting street improvement areas in 1994 and thereafter.
Respectfully Submitted,
Sy Knapp;, Director of Public Works
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Conceptual Assessment Stabilization Program
Neighborhood Street Improvement Program
Two Person Household
$2,000
a�
3
0 $1,500 Option 1
pa Amount of Assessment Paid By Owner
b
51,000
Option 2
$500 Option 3 Foption 4
$0
HUD 1991 Low Income Limit "Moderate" Income Limit
($500) 2- Person Household = $19,200 = $30,400
$0 $3,000 $6,000 $9,000 $12,000 $15,000 $18,000 $21,000 $24,000 $27,000 $30,000 $33,000 $36,000
Household Income
Based On Current Assessment Policy
Four Mile Per Year Program
The graph shows the part of the average $1,523 assessment which would be paid by a two person household.
Estimated Annual
Cost To City:
Option 1: The City would pay 100% of the assessment for households with incomes less than the low income limit. No $71,600
subsidy would be provided to households with income greater than the limit. (Meets CDBG guidelines.)
Option 2: The City would pay a prorated amount of the assessment for households with incomes less than the moderate $53,200
income limit. (Does not meet CDBG guidelines.)
Option 3: The City would pay 100% of the assessment for households with income less than 50% of the low income limit, $73,000
and would pay a prorated amounts with incomes greater than 50% of the cap but less than the moderate income
limit. (Does not meet CDBG guidelines.)
Option 4: The City would pay 100% of the assessment for households with incomes less than the low income limit, and $101,000
pay a prorated amount of the assessment for households with income greater than the low limit but less than the
moderate limit. (Meets CDBG guidelines.)
ATTACHMENT 2