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HRA Minutes 10-05-2005 . MINUTES MONTICELLO HOUSING AND REDEVELOPMENT AUTHORITY Wednesday, October 5th, 2005 505 Walnut Street - Bridge Room Commissioners Present: Steve Andrews, Darrin Lahr, and Dan Frie Commissioners Present: Brad Barger, Bill Fair Council Liaison Present: Wayne Mayer Staff Present: Rick Wolfsteller, Ollie Koropchak, and Angela Schumann. 1. Call to Order. Chairman Lahr called the meeting to order at 6:00 PM and declm'ed a quorum, noting the absence of Commissioners Barger and Fair. 2. Consideration to apProve the October 5th, 2005 HRA meeting minutes. . MOTION BY COMMISSIONER ANDREWS TO APPROVE THE MINUTES OF THE HRA MEETING OF OCTOBER 5th, 2005, MOTION SECONDED BY COMMISSIONER FRlE. MOTION CARRIED. MOTION CARRIED, 3-0. 3. Consideration of adding or removing items from the agenda. Koropchak added as item 9 considcration to participate in case study rcgarding emincnt domain. 4. Consent agenda. MOTION BY COMMISSIONER ANDREWS TO APPROVE THE CONSENT AGENDA: 1. Consideration to ratify the amendment and second amcndment to thc License Agrecment bctween the HRA, the City, and Rocky Mountain Group, LLC. . 2. Consideration to approve the partial reIcase of the Contract for Private Redevelopment by and between the HRA and Blue Chip Development Company. HRA Minutes 10/05/2005 . MOTION SECONDED BY COMMISSIONER FRIE. MOTION CARRIED, 3-0. 5. Consideration to review proposal and approve hiring LHB to commence preparation of a redevelopment inspection rcport for proposed Redevelopment TIF District No. 1-37. Koropchak reported that the developers had not yet signed the predevelopment agreement and had not provided the required deposit. Koropchak indicated that she and Wolfsteller had met with Chuck and Mike Van Heel, along with Steve Bubul and Mark Ruff. At that meeting, it was discussed that with the projected increment, a $4 million gap remained. Ruffhad also recommended adding more funding for relocation to the developer's budget. Frie noted that the project would probably have to change significantly to make up the gap between what the developer had sought and what Ehlers projected in increment. Koropchak recommendcd not moving forward to hire LHB for the inspections at this point. MOTION OF NO ACTION BY COMMISSIONER FRIE. MOTION SECONDED BY COMMISSIONER LAHR. . MOTION CARRIED, 3-0. 6. Consideration to review and accept: a. Increase in fees by Ehlers & Associates Koropchak stated that Ruff had asked her to discuss with the HRA the alteration in rates for the establishment and management of TIF districts. Ehlers had proposed a rate increase for the coming year, with incremental increases annually after. The Commissioners noted that Ehlers, along with Kennedy and Graven, do the rn(~ority of the TIF work within the metro area. Lahr notcd that Ehlers knows the history of what the City is trying to accomplish. LaIn also noted that Ehlers tends to stay current on TIF laws and regulations. Koropchak referred to previous providers and their track record for the HRA. Frie asked Koropchak if many communities do not use I'll", as Ehlers had stated that Monticello is one of their more active clients. . Koropchak responded that some cites do not use TIF financing, many do not use it as frequently as Monticello. Koropchak referred to the proposed rate chart prepared by Ehlers. Lahr asked about what we are paying now. Koropchak stated that the fee is normally $5000 plus attorney fecs; the final total seems to be in the 2 HRA Minutes 10/05/2005 . range of $7,500. She noted that some redevelopment districts may also incur more expense. Koropehak explained that the hourly rate is for 'ITF reporting and modifications to contracts. Koropchak stated that due to changes in TIF law, each year the City has to pay the County excess tax increment by projections and hope there is no shortfall when decertified. Lahr asked what happens if the City does not agree to the increase. Koropchak stated that then Ehlers will most likely need to consider the client relationship. Korochak stated that the work required by the state legislature grows every year, which may account for some of the increase. Lahr noted that they have proposed only one increase in ten years. Lahr suggested that perhaps a good alternative to what had been proposed by Ehlers, would be to raise the rate once, then not raise it again for a period of time. Mayer questioned the ratio of increase. Mayer and Lahr indicated they do not like the annual automatic adders. Andrews suggested countering at $150.00 for the hourly rate. Lahr asked if this proposed fee structure is just for Monticello. Koropchak stated that she believed that it was Ehlers basic fee structure. She indicated that the TIF district establishment costs are still being paid by City clients. . The Commissioner recommended that Koropchak counter to Ehlers with a $140 hourly rate and with $6750 as the low end cost for economic district creation. MOTION BY COMMISSIONER LAHR TO PROPOSE A FLAT FEE RATE INCREASE FOR EHLERS AND ASSOCIATES BASED ON $140 PER HOUR, AND ON THE NUMBER OF HOURS INCLUDED IN THEIR fLAT FEE SCHEDULE, WITII NO AUTOMATIC INCREASE, BASED ON MONTICELLO'S CURRENT CLIENT RELATIONSHIP WITH EHLERS AND ASSOCIATES. MOTION SECONDED BY COMMISSIONER FRIE. MOTION CARRIED, 3-0. frie suggested recommending to Ehlers that they come back with another proposal using that range. Andrews stated that Ehlers can also estimate projects as they come in. Mayer asked if Lahr wanted a time frame for Ehlers response. Lahr indicated that he did not want to set a deadline, but that in the meantime, Koropchak could research other firms. . ,., .J HRA Minutes 10/05/2005 . Frie asked about other companies who do similar work. Koropchak noted the Springsted is another prominent firm handling TIF. b. Revisions to the Preliminarv Development Agreement Koropehak explained that the Preliminary Development Agreement the BRA uses most often is for economic districts. That agreement format has not changed much, other than what the new deposit may be changed to. l-Towever, the Monticello Business Center agreement, involving the purchase of property, will be changing quite a bit. Koropchak noted the differences between the two different types of agreements. Koropchak discussed the addition of a deadline for project closings within the agreement. . I ,ahr asked why the HRA would extend the term of the project closing. Koropchak stated that if negotiations are not resolved, they have the option to extend at their charge. Koropchak stated that it is easier to get the money up front, and this clause allows them to do so. Lahr stated that his point is that if the developer pays at the end and the contract indicates that they are responsible for all costs anyway, why add another layer. Koropchak stated that it may encourage them to enter into the contract sooner and moves them along in the building process. The extended term option payment is the cost to tie-up the parcel. Lahr stated that it seems like a lot of work when the goal is to simply get developers to cover their costs. Frie noted that there are always delays in any project and so this may be a bit frustrating. The HRA briefly discussed the title issues occurring on the Monticello Business Center. Koropchak noted that there is not clear title on the business park property. The City is questioning why these questions weren't answered prior to closing with Chadwick, with the purchase of title insurance. Frie asked who discovered the problem. Koropchak reported that Dahlheimer's attorney caught it through a survey conducted by Dahlheimer's. However, the City is still hoping to close Monday. The goal of the City is to provide a quick and easy transaction. Frie suggested that title insurance package be supplied by the City. Lahr noted other changes in the agreement relating to the option payment and extension payment. Lahr stated that he is concerned about the administrative issues associated with this policy. . Mayer asked if Lahr is suggesting removing the option altogether. Lahr stated that perhaps the lIRA should instead require more up front and then reimburse. Koropchak asked what happens if plans are made and no progress is made into getting into other agreement. Lahr stated that it is at their expense. Koropchak stated that it is much more difficult to recoup those costs. Lahr stated that is why the City may want to collect more up front. Koropchak noted that the development agreement requires that Koropchak reconcile the costs, and then the 4 HRA Minutes 10/05/2005 . developer than pays those costs, adding a layer of administrative work. Koropchak noted that the BRA had been concerned about scaring buyers of I with higher fees as a mitigation of that proposal. hie noted this agreement is primarily for the Business Center for property purchase. Frie asked if the HRA could exclude the option and leave the rate at $10,000. Mayer stated that if the HRA requires the large deposit up front, that seems to make number 10 null and void. Koropchak stated that the contract also outlines the terms relating to the date of offer. [<'rie asked if other communities are developing business parks and would be in competition with Monticello, where the up-front fee may be a concern. Koropchak stated that there are not many business parks being developed or with much land availability in surrounding communities. MOTION BY COMMISSIONER LAHR TO REMOVE THE EXTENSION OPTION AND TO REQUIRE AN UP-FRONT DEPOSIT OF $10,000 ON THE DEVELOPMENT CONTRACT AS PROPOSED. MOTION SECONDED BY COMMISSIONER FRIE. MOTION CARRIED, 3-0. . 7. Payment of bills. Frie asked if some of the bills related to the Sun Tide project. Koropchak confirmed. MOTION BY COMMISSIONER FRIE TO AUTHORIZE PAYMENT' OF THE BILLS. Mayer asked if moving the stockpile on the Dahlheimer's site cost $70,000. Koropchak stated that the bill was in the amount of $45,000. LaIn clarified that the grading was to be final grading. Koropchak stated that in October, the HRA approved $25,637.50 to remove the stockpile. She stated that the grading bill carne in at exactly the amount within the contract. MOTION SECONDED BY COMMISSIONER ANDREWS MOTION CARRIED, 3-0. . 5 HRA Minutes 10/05/2005 . 8. Consideration of the Executive Director's Report. Koropchak noted that construction of Landmark Square project probably wouldn't start until spring. Koropchak stated that the developer is considering a reduction in the quality of product due to increased costs. Koropchak stated that the bank has provided evidence of financing. Lahr noted for the record that any reduction in the quality has to go back through the Planning Commission and DAT. Koropchak also noted that the project is on a time clock due to agreement deadlines. Koropchsk stated that Rocky MOlUltain, the Dhalheimer's project is now scheduled to close on the ih and that the EDA had closed on the Tapper loan. Koropchak noted the dates and times of the upcoming Fiber Optics and Marketing committee meetings. Koropchak reported that a copy of the response from the State Auditor was in the Commissioners packets. Koropchak stated that A VR was asked to responds to the City's ofTer by the Council meeting on the 14th. . Koropchak reported that Barry Fluth had indicated that the property at 107 Locust Street had come up for salc and had stated that if the liRA is interested in the property, Masters 51h Avenue would do the negotiating. The Commissioners indicated no interest in the property. 9. Committee Reports: None. 10. Other Business Koropchak reported that she had completed a survey prepared by the League of MN Cities which asked for information on eminent domain related to projects other than public improvements. Koropchak had reported on the Front Street project, later known as the Hans Hagen Riverwalk development. Koropchak stated that there are about 18 cities that have used eminent domain for that type of purpose. HRA attorney Steve Bubul expects that eminent domain for economic development purposes will be a subject of much discussion in the legislature. The League is now looking for communities to volunteer to serve as case studies for further discussion and review. . 6 HRA Minutes 10/05/2005 . Koropchak reported that the League sent a summary from her telephone conversation. Koropchak had asked the Mayor's opinion on the issue of eminent domain and the possibility of aeting as a ease study, as it is a community sensitivity issue. The Mayor had responded more in terms of where he saw the City's stance on eminent domain, rather than from the case study perspective. Koropchak noted that acting as a ease study could be very public. The Monticello HRA could be in the newspaper, or called to testify to the legislature on this item. She asked the HRA how they wanted to proceed. Lahr inquired whether the HRA can check off which items they would like to do in terms of providing further information. Koropchak stated that she did not think so. Lahr indicated that he is not in favor of participating. Lahr stated that it is too divisive an issue at this time, and that Monticello does not need that type of exposure. Frie asked how the League believes this study would affect the legislature. Koropchak stated that it provides evidence of legitimate uses. Lar stated that the HRA knows their case well, but he is not sure it would be understood by those without the direct experience in the matter. . McrrlON BY COMMISSIONER LAHR TO NOT TO PARTICIPATE AS A CASE STUDY FOR THE LEAGUE OF MINNESOTA'S REPORT ON EMINENT DOMAIN. MOTION SECONDED BY COMMISSIONER FRIE. MOTION CARRIED, 3-0. 11. Adjournment MOTION BY COMMISSIONER FRIE TO ADJOURN AT 7:10 PM. MOTION SECONDED BY COMMISSIONER ANDREWS. MOTION CARRIED, 3-0. . 7