HRA Minutes 11-09-1998
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HRA Minutes - 11/9/98
MINUTES
MONTICELLO HOUSING AND REDEVELOPMENT AUTHORITY
MONDAY, NOVEMBER 9,1998 - 6 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, Jeff O'Neill, Executive Director Ollie Koropchak.
Guest:
Mayor Bill Fair
1. Call to order.
Chair Steve Andrews called the meeting to order at 6 p.m.
2.
Consideration to approve the October 14. 1998 HRA minutes.
A MOTION WAS MADE BY DAN FRIE AND SECONDED BY BOB MURRAY TO
APPROVE THE MINUTES, AS WRITTEN, OF THE HRA MEETING OF OCTOBER
14, 1998. Motion carried unanimously.
3.
Consideration of adding item to the agenda.
No agenda items added.
4. Consideration to adopt a resolution awarding the sale of $7.425.000 Public Proiect
Revenue Bonds. Series 1998.
Executive Director Ollie Koropchak introduced the item stating the Dan Greensweig,
City Attorney, and Rusty Fifield, Ehlers & Associates would provide background
information and answer any questions the HRA may have.
Ms. Koropchak also reminded the public that although it was a public meeting, it was not
a public hearing and therefore not open for public input.
Dan Greensweig, City Attorney, gave a brief description of the transaction that would
occur between the HRA and the City of Monticello. The City would lease the land on
which the Community Center would be built to the HRA pursuant to a Ground Lease.
The HRA would then lease the land and facility back to the City pursuant to a Lease-
Purchase Agreement. The City would be responsible for construction, operation and
maintenance ofthe Community Center. The HRA would issue the bonds with Firstar
Bank of Minnesota acting as trustee thus taking the HRA out of the transaction with no
BRA Minutes - 11/9/98
active role.
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Mr. Greensweig stated the HRA would need to execute the resolution authorizing the sale
of the bonds.
Dan Frie inquired as to whether or not the HRA was entitled to the real estate. Mr.
Greensweig replied that the HRA was not entitled to the real estate.
Brad Barger asked what the ramifications would be if the new City Council taking office
in January, 1999, elected not to proceed with the project.
Mr. Greensweig stated expenses have already occurred and the contract awarded to the
low bidder, Donlar Contractor of St. Cloud. However, the contract itself has not been
signed. It would cost the City money to untangle the process already in place. He stated
that in all likelihood there would be significant litigation that would take place. For
example, City Hall has already been sold and the City offices would either have to
negotiatc with the new owner or move elsewhere. It is very difficult to be specific;
however, the further the City get in the process, the more expensive it becomes to undue.
Bob Murray stated the City Council had told the HRA the building option they wished to
build and it was now the job ofthe HRA to provide the funding for the community
center.
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Brian Stumpf, Council Liaison, stated after the first of the year, he would take a good
hard look at this issue.
Steve Andrews responded that what would happen after the first of the year was
speculation. Politicians have stated before things that they are going to do and then not
followcd through with it.
Bob Murray felt the HRA should not be looking at that what will happen after the first of
the year; but what the present City Council has rcquested of the BRA which is providing
the funding for the new community center.
Dan Greensweig stated that the BRA was faced with a policy decision. The lease would
limit the risk to the HRA.
Rusty Fifield stated that they had received only one bid for the sale of the Revenue
Bonds, Series 1998 due probably to the size of the project. He distributed a hand-out
outlining the costs associated with the bond sale. The interest rate came in at 5.4915%
which was higher than hoped for due probably to the volume of bonds in the market.
The original estimate ofthe bond sale was $6,960,000. The increase in the bond sale is
due to actual construction bids verus estimated costs.
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HRA Minutes - 11/9/98
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Rusty Fifield went over the Projected Tax Impact. He stated that at $6,960,000 the tax
impact would be 2.74% net increase, or $42 on a $120,000 home. At $7,460,000 revenue
bond issue, the tax impact would be 3.19% net increase or $48 on a $120,000 home.
Rusty stated that the HRA had three choices.
1. Approve the bond issue at $7,460,000.
2. Approve a smaller bond issue.
3. Rej ect the sale of the bonds and plan another course of action.
If rejected, it is hard to say whether or not interest rates will go lower or higher at a later
date.
Rusty stated the HRA's bond rating is Baal for Lease Revenue Bonds and A3 for GO
Bonds. Because of the financial condition of the City, their ratings are excellent.
Dan Frie asked whether or not there a negative impact on the HRA would result if they
do not make their bond payments.
Rusty Fifield stated the trustee would take action if the City were not to renew their lease.
There would be no financial consequence to the HRA.
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Brad Barger asked for Rusty Fifield's opinion regarding the community center were
something negative to happen at the Council level in January 1999.
Rusty Fifield commented that ifthe HRA and City were to proceed and then in January
the Council were to decide not to continue with their lease, there would be serious
consequences in the Bond Market and Construction Market. The 1999 Budget has been
approved and therefore it would have to take effect in 1999 for the budget in year 2000.
By that time there would be significant costs already occurred.
Bob Murray asked who would be liable if the project is stopped in January 1999. This
action could result in a lawsuit against the City.
Brad Barger wanted to know if the project were delayed until January would it be
possible to end the project at this point.
Rusty Fifield stated that it is one thing to say that someone would end it, but once it starts
it will be hard to end.
Darrin Lahr asked about the audit.
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Rusty Fifield stated that he had called the auditor's office and had not received a call
back. He is assuming that the audit is not complete.
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HRA Minutes - 11/9/98
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Bob Murray stated that target dates for the community center have been set and that
delaying the project could possibly mean not having the National Guard's participation.
Their participation accounts for 15% of the total costs.
A MOTION WAS MADE BY BOB MURRAY AND SECONDED BY DAN FRIE TO
ADOPT A RESOLUTION A WARDING THE SALE OF $7, 460,000 PUBLIC
PROJECT REVENUE BONDS, SERIES 1998. Discussion was held on the motion.
Brad Barger stated the HRA had established a cap of $9,400,000 and he felt that this cap
had been totally ignored.
Bob Murray stated the $9,400,000 was an estimate in the concept plan. A number of
modifications were made to the building plan that increased the costs. Example, allowing
for a second floor addition in the future. All modifications were approved in steps.
Brad Barger stated that the goal was to cut $500,000 from the $9,400,000 figure. What
happened?
Bob Murray stated the City Council approved a higher dollar amount and the HRA's
position is to provide funding for the City.
Brad Barger stated that three members of the new Council could undo what the HRA
does.
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Brad Barger wanted to know what part the audit plays in this process.
Dan Greensweig stated that the auditor is not looking at the wisdom of building a
community center; but if all the procedures were followed and he is confident that they
were.
Dan Grcensweig stated the bids have been awarded and ifthe project does not proceed
there would probably be some type of litigation.
Steve Bubul commented on the letter that Brian Stumpf, Council Liaison, passed out to
HRA members. He stated he had not had a chance to look at the letter and would need
time to review it. Mr. Bubul said potential bond holders needed full disclosure. He
requested a ten minute recess to review the letter and determine what would need to be
disclosed to the potential bond holders.
HRA meeting recessed at 6:50 p.m. Reconvened at 7 p.m.
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Steve Bubul reviewed the letter and felt that the HRA should authorize full disclosure and
to meet again in a week to approve or not approve the final sale. He felt the BRA should
reject the bids and authorize the financial advisors to negotiate a bond sale with full
disclosure.
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Brad Barger asked if interest rates would go up with full disclosure.
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Rusty Fifield stated that it would raise the risk to investors and that someone would
purchase the bonds but at a higher interest rate.
Bob Murray asked about the legal implications on the motion on the table without full
disclosure.
Steve Bubul stated that without full disclosure there would be legal ramifications.
Steve Andrews asked if the full disclosure and negotiation for the sale of the bonds could
be done in a week.
Rusty Fifield stated that the sale of these bonds are a difficult issuance and prefers to
meet again in a week to allow time to solicit additional baekers.
Bob Murray asked what the risk was to the City without full disclosure.
Steve Bubul stated that there are security laws and that the HRA must provide a full
official statement of risks that the potential investor would face.
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Bob Murray stated that the information provided to the bond bidders was current up to
the point of the letter which had just been provided to the HRA. He felt any change
should corne from the City Council.
Darrin Lahr questioned whether or not the new information being withheld could present
problems in the future.
AFTER DISCUSSION ON THE MOTION, BOB MURRAY STATED THAT HE WAS
WITHDRAWING HIS MOTION TO ADOPT A RESOLUTION AWARDING THE
SALE OF $7,460,000 PUBLIC PROJECT REVENUE BONDS, SERIES 1998.
Rusty stated that the l:-IRA should do one of the following:
1. Motion to reject the bid.
2. Proceed to negotiate the sale of the bonds with full disclosure.
3. Consider proposal before the HRA.
A MOTION WAS MADE BY BOB MURRAY AND SECONDED BY DAN FRIE TO
REJECT THE BID PROPOSAL. Voting for Bob Murray, Dan Frie, Darrin Lahr, and
Brad Barger. Opposed Steve Andrews.
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A MOTION WAS MADE BY DAN FRIE AND SECONDED BY BOB MURRAY TO
AUTHORIZE FINANCIAL ADVISOR TO ENTER INTO NEGOTIATIONS, WITH
FULL DISCLOSURE, FOR THE SALE OF $7,460,000 PUBLIC PROJECT
REVENUE BONDS, SERIES 1998. Voting for Dan Frie, Steve Andrews, Bob Murray,
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HRA Minutes - 11/9/98
and Darrin Lahr. Opposed Brad Barger.
Rusty Fifield stated that the sale of these bonds are a difficult issuance and prefers to
meet again next week to give him time to round up additional backers.
Darrin Lahr set a meeting date of Wednesday, November 18, 1998, at 6 p.m.
Executive Director Ollie Koropchak suggested tabling the remaining agenda items.
5. Consideration to accept or denv a counter-offer for purchase of the propertv located at 218
Front Street.
Item tabled.
6. Consideration to hear a concept plan for redevelopment of the North Anchor area.
Item tabled.
7. Consideration to authorize payment of monthly HRA bills.
Item tabled.
8.
Consideration of executive director's report.
Item tabled.
9.
Other Business.
None
10. Adjournment.
A MOTION WAS MADE BY BOB MURRAY AND SECONDED BY DARRIN LAHR
TO ADJOURNED THE MEETING AT 7:17 P.M.
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