Agenda - Council Work Session - 04/08/2014

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CC Work Session 2. 3. Meeting Date: 04/08/2014 Title: Discuss Dissolution of HRA Information Purpose /Background: Note: This topic was on the March 25th City Council Work Session; however, because all of Council were unable to be present, this case was rescheduled for discussion this evening. The Council directed staff to set forth a process for dissolving or otherwise eliminating the Ramsey Housing and Redevelopment Authority. First, in order to accomplish that goal, all of the existing HRA assets and debts must be dealt with in accordance with state law. As part of that process, the City must decide who is to hold title to the assets once the HRA no longer exists. Second, the Council must decide which powers to confer upon the EDA. In regard to real estate holdings, the HRA currently owns 28 parcels. The balance sheet of the HRA, reflective for the period ending December 31, 2013 shows the following: $12.4 million of land held for resale, two internal loans (payable to water and sewer funds) in the amount of approximately $4.6 M and cash and investments of approximately $417,000. The HRA has no full -time employees to deal with, nor does it have any bonded debt. However, the current budget of the HRA ($208,000) covers a percentage of personnel costs, general liability and the city portion of the maintenance of the parking ramp. These funds will need to be supplanted by other budget dollars. The real estate can be transferred to either the City or the EDA. If to the City, the Council retains control of it but must pass an ordinance before the parcels can be sold, as required by the Charter. If all parcels are up for sale, one ordinance could be used for them all. If the parcels are transferred to the EDA, all housing development and management powers relating to those parcels or projects must be transferred with the parcels. I am not aware of any particular management issues with these parcels that would be of concern. If the real estate is to go to the EDA, the transfer can be undertaken by Council resolution. The EDA can be required to accept the transfer. There is no public hearing, nor is action by the HRA required. This process would be undertaken as the first step. At that point, the HRA essentially becomes inactive, except for collecting the existing levy. If the real estate is to go to the City, it will transfer along along with the rest of the assets, as described below. Toward the end of the year, the Council will hold a public hearing on dissolving the HRA. An ordinance can then be passed dissolving the HRA, at which time all property, cash, assets, etc. are transferred to the City and become City property. By statute, "all cash or other funds transferred to the city shall be used exclusively for permanent improvements in the city or the retirement of debts or bonds incurred for permanent improvements." Upon transfer of the property and assets, the HRA can no longer levy taxes, which is why this process should wait until the end of the year. A certified copy of the ordinance must be furnished to the State. Second, the Council must decide which powers to confer upon the EDA. Note that the Ramsey EDA's enabling resolution does not provide it with HRA powers, but it could (Resolution #98 -11 -280 Enabling the Creation of an Economic Development Authority in the City of Ramsey, Minnesota is attached). The EDA, therefore, cannot currently initiate an HRA levy. The enabling resolution can be modified at any time if the City so desires. The existing EDA enabling resolution provides the EDA with full statutory EDA powers, which, of course, include the ability to purchase and sell land, but no HRA levy powers are included, that power being retained by the City Council.