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HomeMy WebLinkAbout2010 11-08 CCM Work Session MINUTES OF THE PROCEEDINGS OF THE CITY COUNCIL /ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF BROOKLYN CENTER IN THE COUNTY OF HENNEPIN AND THE STATE OF MINNESOTA WORK SESSION NOVEMBER 8, 2010 CITY HALL — COUNCIL CHAMBERS CALL TO ORDER The Brooklyn Center City Council /Economic Development Authority (EDA) met in Work Session called to order by Mayor /President Tim Willson at 7:28 p.m. ROLL CALL Mayor /President Tim Willson and Councilmembers /Commissioners Kay Lasman, Tim Roche, Dan Ryan, and Mark Yelich. Also present were City Manager Curt Boganey, Public Works Director /City Engineer Steve Lillehaug, Director of Business and Development Gary Eitel, and Carla Wirth, Timesaver Off Site Secretarial, Inc. Also present: Bob Thistle GARBAGE HAULER REPORT Discussion continued on the garbage hauler report. Councilmember /Commissioner Roche stated he knows it may not be a popular decision but he believes the MPCA numbers are accurate and organized collection would reduce the number of garbage truck trips, increase safety, attract families, and support the Council /EDA's strategic goals. City Manager Curt Boganey advised of the other communities currently looking at this issue, one focusing entirely on the environmental sustainability aspect. Councilmember /Commissioner Ryan stated he applauds any kind of arrangement that addresses efficiency and cost efficient delivery of service and is not opposed to looking at a managed system, if his questions can be answered to his satisfaction. Councilmember /Commissioner Yelich commented that moving to a new system involves a two - year process, is not a trivial undertaking, and he agreed with Councilmember /Commissioner Roche that the Council/EDA was not elected to make popular decisions but to do what is right for the City. He noted another option would be a franchise approach. Mr. Boganey explained how other cities with organized collection have distributed accounts based on the company's current percentage of business within their city. Councilmember /Commissioner Ryan raised the option of using an RFP process to accept the four best bids based on service level, options, price, and other reasonable criteria that addresses 11/08/10 -1- the needs of the market. Mr. Boganey advised that is typically the way organized collection is carried out by a city. Councilmember /Commissioner Lasman supported first finding out whether organized collection was cost effective before spending staff time to develop a strategy. Ma or /President Willson stated it was the ma'orit consensus of the Council/EDA to move Y J Y forward and look further at the option of organized collection. Mr. Boganey stated staff will develop a strategy and method to determine cost comparisons for consideration by the Council /EDA at a future meeting. CITY HALL RETREAT Mr. Boganey requested Council /EDA direction on a date for the annual Council /Staff retreat when goals will be set and orientation provided for the newly elected Member. He stated staff would like to present year -end results at the Council/EDA's January Work Session. The Council /EDA discussed available dates and it was the majority consensus to schedule the annual Council /Staff retreat on either Saturday, February 12 or 26, 2011. The Council /EDA agreed with the suggestion of Mr. Boganey to use Mr. Salverda as the facilitator since he was already familiar with the City and would provide continuity. Councilmember /Commissioner Roche suggested topics for discussion including the Opportunity Site redevelopment, City -wide open house working in tandem with the Minneapolis Realtors Association, and whether the Brooklyn Center school district should be folded. He noted the school district has had seven failed referendums and low test scores so it may be better for Brooklyn Center to align itself with a more successful school district. HOUSING IMPROVEMENT AREA POLICY Mr. Boganey requested Council/EDA direction regarding establishing a policy to govern the use of Housing Improvement Areas in the City. The creation of a district would allow the City to fund the cost of improvements to common elements of housing structures. He advised that the Mallard Creek Homeowners Association expressed an interest in establishing a Housing Improvement Area. Mr. Boganey reviewed recent changes in the State Statute that raised threshold requirements and minimized the chance the project would not move forward. If approved, staff recommended a requirement for a 56% petition and waiver of veto rights to assure the project cannot be vetoed after the City has invested significant time and expense. It was noted this legislation will sunset in June of 2013. Mr. Boganey reviewed the process that would be used, noting it was fairly involved with strict time frames. The project would be funded through the sale of bonds and the costs assessed against the individual property owners to be paid with their taxes. If not paid, the assessment would become a lien against the property. Mr. Boganey noted that many of the City's 11/08/10 -2- townhomes are aging and this method may be the only option for some townhomes to finance this type of improvements, especially in today's credit environment. Mayor /President Willson asked how the City would recoup staff and administration costs since multiple associations may request this program. Mr. Boganey advised those costs are fully recoverable and would be paid by the association by requiring the posting of a security or bond. Mayor /President Willson asked whether City staff would handle the administration of this process and purchasing bonds. If so, he asked what other tasks staff would not have time to do. Mr. Boganey stated an option is to hire a professional to handle the administration instead of using City staff. Bob Thistle introduced himself and stated this process provides an option for associations who have not put aside sufficient maintenance costs. However, the process is labor intensive, specific, and the statutes are very prescriptive in terms of what has to happen and deadlines. He explained that some cities have determined a flat percentage to cover administrative costs that is applied to the project. Another approach is to set it up as an independent cost center and track all staff time, but is more difficult. Mr. Thistle advised that the statutes are clear that an independent financial study must be completed that ascertains the association does not have the financial wherewithal in the normal market and "but for" the City's assistance, the project could not go ahead. He explained the process that would be followed once the financial study was completed. Mayor /President Willson asked who would qualify for the improvement and about units that have been foreclosed or under bank ownership. Mr. Thistle speculated that someone would still have the ownership, even if the bank, and the City could levy a special assessment against that unit which would be paid when the unit is sold. He clarified that the assessment is against the property unit, not the individual. Mr. Boganey stated that the significant costs at the beginning of the process for the financial analysis and independent inspection would be borne by the association up front and not incurred by the City. He recommended the City indicate which firms could be used for the financial analysis. It was noted that the City's expenses would not start until later in the process. Mr. Thistle stated the association would be required to provide specific information on unit ownership. He explained that some cities fund the project through a housing fund or community development fund with repayment through assessments while other cities issue bonds. He indicated it would probably not have an impact on the City's bond rating. Mr. Boganey noted it is not unlike the City's typical street reconstruction projects where bonds are sold and the costs assessed. Councilmember /Commissioner Ryan stated there is an interest in maintaining the City's housing stock, which includes townhomes and rental units, and asked if these projects could be funded through TIF District #3. Mr. Boganey answered in the affirmative. Mr. Thistle stated the question is whether that is the best use of those TIF funds. 11/08/10 -3- Councilmember /Commissioner Lasman asked how the Council /EDA would be assured the project is a good investment and the units were not in need of additional maintenance. Mr. Thistle explained a cost benefit analysis would assure a comprehensive inspection of all units, noting they can only use this method of funding once. Mayor /President Willson asked if an ordinance is needed for each association. Mr. Thistle stated an ordinance would cover an area that may include more than one association. Mayor /President Willson asked if there would be an impact to the City's total bonding authority. Mr. Boganey stated these projects will not have such an impact. Mr. Thistle concurred and advised this would use housing authority revenue bonds that would not count against the City's general obligation tax capacity unless the City has to put money into the project because people were not paying. Councilmember /Commissioner Yelich noted that most townhome associations have an organizational structure to collect and set aside funds to cover property maintenance issues. He asked if some townhome associations were irresponsible or their business model flawed. Councilmember /Commissioner Yelich noted that some projects the City has undertaken, like the Center Pointe property, have not been positive and he was hesitant for the City to get involved with an association that was not well managed. In addition, he was skeptical about financial analysts who speculate and make assumptions on what the future will bring but just want to get the project funded. Councilmember /Commissioner Yelich asked whether the City should be involved at all and if a private resident could request general obligation bonds to put new siding on their house. Mr. Thistle explained that to participate in this program, the townhome associations would be required to give up its ability to be independent, an independent financial analysis would be required, and the City would decide if the project would move forward. In addition, each year of the assessment, the association is mandated, by statute, to prepare and submit independent financial studies to the City. Since the assessment is a lien against the property the City would be paid, even if someone "walks away," when the property is resold. Councilmember /Commissioner Yelich expressed concern that the City will have to wait for payment, impacting cash flow, due to the high number of units on the market. Mr. Thistle explained that the unit owner has to make payment for four years or the property would go to the City and banks have historically paid the taxes because it doesn't want to lose the property. Mr. Boganey stated if the Council /EDA decides to move forward with this program, it would be for the purpose of preserving the City's housing stock and may achieve a second strategic goal of preserving the neighborhood. Councilmember /Commissioner Roche asked if the association is empowered to take the unit owner to court and file a lien if an individual owner is not current with payments. Mr. Boganey stated the association may have some rights if an owner is not meeting its obligation but that is aside from the assessment which would be paid through taxes. Councilmember /Commissioner Ryan stated both Mr. Thistle and Mr. Boganey have indicated that the City has means of recovering cost through assessments as long as a 56% petition and 11/08/10 -4- waiver of veto rights is required. He felt it was not a matter of past failures but the need to assure maintenance of the City's housing stock and avoiding blighted conditions. Councilmember/ Commissioner Ryan stated on that basis, and subject to obtaining more specific information, he is willing to consider this program. Councilmember /Commissioner Lasman stated there is always some risk involved in this type of project but she supported moving forward, to operate it conservatively with checks and balances in place, noting it will avoid larger problems later on. She suggested consideration of a higher percentage requirement, 60 %, to assure unit owners were more committed, became stakeholders, and were committed to the project. Mayor /President Willson stated his support to move forward subject to addressing concerns to not subsidize, assure the City can recoup all costs, and not put the City at risk. Councilmember /Commissioner Yelich stated he remains very hesitant, felt it would be better to let the market deal with these issues, and did not think assumptions were necessarily true. He did not believe the City should be getting in the business of providing financial services because private companies already provide financing. Councilmember /Commissioner Yelich stated it is the City's business to put standards in place, impose and enforce those standards, but not to finance them. Mr. Thistle stated if authorized, the next step would be for staff to review the policies of other cities to be sure the expectations are clear from both sides. He acknowledged that questions remain to be answered including the matter of associations that have a high percentage of rentals. Mr. Boganey stated the "but for" test is very important and gets to the concerns expressed by Councilmember /Commissioner Yelich. He clarified that if the private sector will respond to the need, the Statute indicates the City cannot move forward with that project. It was the majority consensus of the Council /EDA to direct staff to draft a policy to govern the use of Housing Improvement Areas, established under Minnesota Statutes, Section 428A for consideration by the Council/EDA. ADJOURNMENT Councilmember /Commissioner Lasman moved and Councilmember /Commissioner Roche seconded adjournment of the City Council/Economic Development Authority Work Session at 9:01 P.M. Motion passed unanimously. 11/08/10 -5- STATE OF MINNESOTA) COUNTY OF HENNEPIN) ss. Certification of Minutes CITY OF BROOKLYN CENTER) The undersigned, being the duly qualified and appointed City Clerk of the City of Brooklyn Center, Minnesota, certifies: 1. That attached hereto is a full, true, and complete transcript of the minutes of a Work Session of the City Council of the City of Brooklyn Center held on November 8, 2010. 2. That said meeting was held pursuant to due call and notice thereof and was duly held at Brooklyn Center City Hall. 3. That the City Council adopted said minutes at its November 22, 2010, Regular Session. � City Clerk Mayor 11/08/10 -6-