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HRA Minutes 10-14-1998 . . , MINUTES MONTICELLO HOUSING AND REDEVELOPMENT AUTHORITY WEDNESDAY, OCTOBER 14,1998 -7:00 P.M. Members Present: Chair Steve Andrews, Vice Chair Bob Murray, Brad Barger, Dan Frie, and Darrin Lahr. Council Liaison: Brian Stumpf Staff Present: Rick Wolfsteller and Executive Director Ollie Koropchak. Guest: Mayor Bill Fair 1. Call to order. Chair Steve Andrews called the meeting to order at 7:00 p.m. 2. Consideration to aoprove the Seotember 23. 1998. Special HRA minutes. A MOTION WAS MADE BY BRAD BARGER AND SECONDED BY BOB MURRA Y TO APPROVE THE MINUTES, AS WRITTEN, OF THE SPECIAL HRA MEETING OF SEPTEMBER 23, 1998. Motion carried unanimously. 3. Consideration of adding items to the agenda. No agenda items added. 4. Consent agenda. A. Consideration to approve a Subordination Agreement between the HRA and Firstar Bank of Minnesota. B. Consideration to ratify execution of the Partial Release of Purchase And Development Contract and to authorize execution of the Consent to Easement. A MOTION WAS MADE BY DARRIN LAHR AND SECONDED BY DAN FRIE TO ACCEPT THE CONSENT AGENDA. Voting in favor: Steve Andrews, Bob Murray, Darrin Lahr and Dan Frie. Abstaining, Brad Barger. Motion carried. 5. Consideration of items removed from the consent agenda for discussion. None -1- . . . HRA Minutes - 10/14/98 6. Consideration to adopt a resolution calling for the sale of the Revenue Bonds. Ollie Koropchak, Executive Director, introduced Mark Ruff, Ehlers & Associates, to cover this agenda item. Mr. Ruff explained that the additional $10,000 added to the original request is the result of revised cost estimates of the bond issuance. The HRA Lease Revenue Bonds are generally issued at a slightly lower rate than current G.O. rates. Brad Barger asked how the Monticello Citizens Group's audit request could affect the sale of the bonds. Mr. Ruff stated that hopefully the audit will be completed before the bond sale. Construction bids are scheduled to be opened on October 29, 1998. Rusty Fifield & Mark Ruff will attend the City Council Meeting on November 2, 1998. At that meeting, the City Council will take action on the bids for the construction of Community Center. Mr. Ruff suggested that the HRA also attend the November 2 City Council meeting. The HRA must decide whether or not to proceed with the bond sale if the audit has not been completed. Mr. Ruff stated that the state auditor has no enforcement power; however, someone could bring action against the City. If legal action is pending, it could mean the bonds would not have a tax-exempt status. Mr. Ruff explained that the ripple effect of the audit could be tremendous. Chair Andrews asked when the City might expect an answer from the auditor. Mr. Ruff stated the auditor knows that the bids for the Community Center will be opened on October 29, 1998. Also, that the sale ofthe bonds will be November 9, 1998. Mr. Ruff stated the bidders on the bonds typically make their decision the day before the sale of the bonds. The first meeting with the auditors will be on Tuesday, October 20, 1998, and it is unknown, at this time, what the audit agenda will be. Members of the City staff, state auditor's office and the citizen's group will be present at the first meeting. Also, it was stated that the petition for the audit will be a disclosure item on the sale ofthe bonds. The date of the sale of the bonds stands. Mr. Ruff stated that it is possible that someone could request a lawsuit to stop the sale of the bonds. They would, however, have to post a bond to cover possible financial damages the City would incur with the delay in issuing the bonds. Ifthe bids received arc acceptable, the HRA can sell the bonds before the state auditor's report is completed. However, Mr. Ruff stated the HRA might want to make their decision as to whether or not to proceed with the sale of the bonds before the November 9 HRA meeting. If the Council were to decide not to award the contract, then the HRA would recommend not to proceed with the sale of the bonds. -2- . HRA Minutes - 10/14/98 Mayor Bill Fair stated that on November 2, the City Council will accept the bids and decide whether to award the contract. Brad Barger asked if the bids came in low, would the bond sale in turn be less. Mr. Ruff stated that there are many add-on items and the City would possibly add from this list. Mr. Barger also thought the original estimate for the HRA bond sale was $6,500,000 with a project cap at $9.4 million. At that time, the small group had requested that the cost be reduced $500,000. The question was asked as to why the City Hall square footage increased as well as the cost. Darrin Lahr inquired about the HRA's bond rating. Mr. Ruff stated that the City has a lot of overlapping debt; school, hospital and water treatment plant. This overlapping debt affects the bond rating. Mr. Lahr voiced concern the overlapping could possibly affect future bond sales. Mr. Ruff stated those bond ratings do affect the interest the City pays. Mr. Ruff, also, stated that the rating agencies do not like rapid growth. They feel that too fast a growth puts a burden on the City's services. Their rating will also look at what's happening with the NSP Nuclear Plant. There could possibly be different ratings for each bond issue. . Executive Director, Ollie Koropchak, stated that the HRA would have to call a special meeting for November 2, 1998, if more than two members were going to be present. A MOTION WAS MADE BY BOB MURRAY AND SECONDED BY DAN FRIE TO APPROVE THE RESOLUTION PROVIDING FOR THE SALE OF $6,960,000 PUBLIC PROJECT REVENUE BONDS, SERIES 1998. Motion carried unanimously. A special HRA meeting was set for November 9, 1998, at 6:00 p.m. to award the sale of the bonds. Additionally, the HRA agreed to call a special HRA meeting of November 2, 1998, at 5:00 p.m. in order to be present at the Council meeting for consideration to award the construction bids for the community center as recommended by Mark Ruff. 7. Consideration of a response to the HRA offer for the prooertv located at 218 Front Street and authorization thereafter. Executive Director Ollie Koropchak stated that a letter had been mailed to Ms. Otten on September 8, 1998, at the HRA direction, offering a purchase price in the amount of $81,000 with a three-year option at a non-refundable annual fee of $1 ,000, the sum of which would not be applied to the purchase price. The purchase price would increase 4% annually at the anniversary date of the option agreement. . -3- . HRA Minutes - 10/14/98 Deb Otten spoke on behalf of her brother, who owns the property, stating that she thought the offer of $81 ,000 for the home was too low. She asked the HRA to consider $86,000 and the HRA purchase the property by January I, 1999. The home is currently being rented on a month-to-month lease and she will let the renters know the HRA's decision. Bob Murray asked if the HRA were to give reasonable notice would they still have to pay relocation costs. Ollie Koropchak stated that if the HRA has rental property, they have to notify the owners/tenants regarding relocation benefits. Steve Andrews asked whether or not the HRA would have to pay relocation costs if the owner terminated the lease agreement. Executive Director Ollie Koropchak will check with the City Attorney regarding relocation costs. Dan Frie inquired as to whether or not the house has ever been on the market and Ms. Otten stated that it has not. However, an investor has expressed an interest in the property. Brad Barger asked whether or not Ms. Otten would consider a contract for deed. She stated that there are too many headaches with renters. The option was a good thing, but the money is eaten up by insurance, taxes and upkeep. Dan Frie asked if the BRA put more money upfront whether that would help defray these costs. . Again, Ms. Otten asked for a purchase price of $86,000. Darrin Lahr stated that if Ms. Otten received a purchase price of$81,000 with an increase of 4% annually, the purchase price would go up approximately $3,500 the first year. Mr. Frie suggested an amount of $3,000 upfront and then no further upfront monies. A MOTION WAS MADE BY DAN FRIE AND SECONDED BY DARRIN LAHR TO INCREASE THE BASE PRICE TO $84,000 WITH A ONE TIME UPFRONT FEE OF $3,000. Bob Murray suggested that the HRA increase the annual option payment to $2,000 of which $1,000 would be non-refundable and $1,000 would be applied to the purchase price. DARRIN LAHR AMENDED THE MOTION OF DAN FRIE TO INCLUDE A PURCHASE PRICE OF $81,000 WITH AN INCREASE ANNUAL OPTION PAYMENT OF $2,000 OF WHICH $1,000 WOULD BE NON- REFUNDABLE AND $1,000 WOULD BE APPLIED TO THE PURCHASE PRICE. MOTION SECONDED BY BOB MURRAY. Motion carried unanimously. Executive Director Ollie Koropchak will send Ms. Otten a letter stating the HRA current offer. . -4- . . . HRA Minutes - 10/14/98 8. Consideration to reschedule the HRA regular meeting of November 11. 1998. Ollie Koropchak explained that because the next regular HRA meeting of November 11, 1998, is also Veteran's Day, the HRA is asked to reschedule their regularly scheduled meeting. A MOTION WAS MADE BY BOB MURRAY AND SECONDED BY DAN FRIE TO RESCHEDULE THE REGULAR HRA MEETING OF NOVEMBER 11 TO NOVEMBER 9,1998, AT 6:00 P.M. Motion carried unanimously. 9. Consideration ofHRA Commissioners interest to attend the Minnesota NAHRO Conference. Brad Barger and Ollie Koropchak expressed an interest in attending the Minnesota NAHRO. 10. Consideration to authorize oavment of monthly HRA bills. A MOTION WAS MADE BY BOB MURRAY AND SECONDED BY BRAD BARGER TO AUTHORIZE PAYMENT OF THE MONTHLY HRA BILLS AFTER THE FINANCE DEPARTMENT HAS CHECKED TO INSURE THERE WERE NO DUPLICATE BILLS. 11. Consideration of Executive Director's Report. Executive Director Ollie Koropchak went over the items of her report. She stated that NSP sent a check in the amount of $8,000 to be applied to the cost ofthe marketing brochure. Ollie Koropchak stated that Ms. Barbara Schlicf is interested in leasing the property at 3 Walnut Street as of December 1,1998. Ms. Koropchak will check Ms. Schliefs references. If everything checks out, she will proceed with leasing the property. Darrin Lahr asked Ollie Koropchak to check on whcthcr or not the HRA has spent thc 1998 $35,000 from thc City for downtown redevelopment. 12. Consideration of committee rcports MCP - Stevc Andrews reports that Ms. Tcresa Washburn spoke to the MCP board and stated that she felt the MCP should work with what the City has at this time and not pursue a community-identity at the present time. -5- . .. . " HRA Minutes - 10/14/98 Markcting - Darrin Lahr showed the HRA a draft copy of the markcting brochure stating that thc final brochure will be unveiled at the Octobcr 27, 1998, roc Banquet. The HRA was plcascd with the draft copy of the brochure. Executive Director Ollie Koropchak will inform Brad Johnson that the November 9th meeting will be a short meeting and perhaps he should make his presentation to the Parks Commission in November and come before the HRA at another time. 13. Other Business None 14. Adjournment A MOTION WAS MADE BY STEVE ANDREWS AND SECONDED BY BOB MURRA Y TO ADJOURN THE MEETING AT 8:30 P.M. Motion carried unanimously. L, -6-