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HRA Minutes 12-07-2005 . MINUTES MONTICELLO HOUSING AND REDEVELOPMENT AUTHORITY Wednesday, December 7, 2005 - 6:00 p.m. Bridge Room - Community Center Commissioners Present: Chair Darrin Lahr, Vice Chair Dan Frie, Brad Barger, and Bill Fair. Commissioners Absent: Steve Andrews Council Liaison: Wayne Mayer. Staff: Rick Wolfsteller, Ollie Koropchak, and Angela Shumann. Guest: Mark Ruff, Ehlers & Associates, Inc. 1. Call to Order. Chairman Lahr called the meeting to order and declared a quorum. 2. Consideration to approve the November 2,2005 HRA minutes. . Due to lack of a quorum of the Commissioners present at the last meeting, the Commissioners could not approve the minutes. MOTION BY COMMISSIONER BARGER TO TABLE ACTION ON THE NOVEMBER 2, 2005 MINUTES. MOTION SECONDED BY COMMISSIONER FAIR. MOTION CARRIED, 4-0. 3. Consideration of adding or removing items from the agenda. Koropchak added the following as additional items under number 10. A. Approving certificate of completion for Tapper's loan. B. Authorizing payment on contract for deed on Otter Creek Crossing. C. Authorizing payment for overages for fiber optics consultant. 4. Consent Agenda. MOTION BY COMM]SSIONER FAIR TO APPROVE THE CONSENT AGENDA. . MOTION SECONDED BY COMMISSIONER BARGER. MOTION CARRIED, 4-0.. I-IRA Minutes 12/07/05 . A. Consideration to approve ratification of the Third Amendment and to approve the Fourth Amendment ofthe License Agreement between the HRA, the City, and Rocky Mtn Group, LLC. 5. Consideration to adopt a resolution requesting the City Council of the City of Monticello call for a public hearing on a modification to TIF Plan for TIF District No. 1-6. a Redevelopment District. Koropchak explained that the HRA would be requesting that the Council call for the public hearing, as the modification for TIF district is a similar process as establishment of a TIF district. She noted that the modification notice will go to the County. The public hearing will be held in February. Lahr clarified that the rcason for the modification is that the HRA would bc changing thc budget of the district. Koropchak confirmed. Lahr asked ifthe HRA had to report what the dollars would be spent for. Koropchak stated that information should be noted. Ruff indicated that the State law requires that when creating a new district, the HRA is required to notify the County, but the HRA docs have the opportunity to move the linc items within budget. Ruff reported that after this district was set up, the State came up with a new formula for handling excess tax increment. In esscnce, the State does not want the district to have excess tax increment. By notifying the County and holding the public hearing, the HRA satisfies the letter of the law. Ruff stated that City has the ability to spend the increment anywhere in the project area; it doesn't need to be spent specifically in the district. . Fair asked how many years were left in this district. Koropehak stated that there are 8 years left in this district. Barger asked what the district was originally created for. Koropchak stated that it was for the acquisition and clean-up of the Maus Foods property. Koropchak referenced that were two more redevelopment districts that had been created that were still active. MOTION BY COMMISSIONER FAIR TO ADOPT A RESOLUTION REQUESTING THE CITY COUNCIL OF THE CITY OF MONTICELLO TO CALL FOR A PUBLIC HEARING ON A MODIFICATION TO THE TIF PLAN FOR TIF DISTRICT NO. 1-6. MOTION SECONDED BY COMMISSIONER BARGER. MOTION CARRIED, 4-0. 6. Consideration to review and discuss excess increment calculations for each active TIF District and authorize direction if necessary. Koropchak reported that Ehlers was running calculations on the excess increment generated in all districts, due to new legislation requiring that the HRA must complete an excess increment calculation at the end of each year. The HRA is to make payments on the increment on an annual basis. . Ruff stated that the new legislation is essentially to aid the State government to find ways for communities to pay back tax increment when they do not have uses for it. Ruff cited district 1-2 (Metcalf Larson) which decertifies in 2010 as a district of most serious consequence in relationship to this law. Ruff recommended a minor budget modification 2 HRA Minutes 12/07/05 . within the next 2-3 years. Ruff stated that what he would prefer to do would be to come back in 2006, with recommended modification for any applicable districts. Ruff briefly reviewed the other districts. lIe stated that the Construction 5 district seems to have sufficient budget authority and produces the greatest amount oftax increment for other downtown projects. Ruff indicated that district would decertify in 2012 and could produce $1 million in tax increment. Barger asked why the district generated so much more than the Larson district. Ruff stated that it had to do with the original obligations and likely the drop in taxes for rental properties. Koropchak noted that Construction 5 is a rental project. Ruff stated that in that case, the main reasoning would be because of expenses. Ruff stated that the Raindance district may generate $500,000 in excess increment. The remainder of the economic districts may require no adjustment, or only minor adjustments to budget. There may be a small amount in each that could be available for other economic development projects. Ruff stated that it may be easier just to turn the money back. Ruff stated that the districts with excess are the older districts. He stated that as mentioned, they could modify them all at one time, and this process would require the notification. IIowever, it was important to get district 1-6 completed according to the new legislation, and also gave him an opportunity to spend some time discussing the new laws and what Ehlers would like to accomplish in the coming year. . Koropchak stated that it was her understanding that when a district generates excess increment, unlike in previolls years, the lIRA was required to pay the COllnty back annually. She asked if what Ruff is saying is that if the budgets are modified, then the HRA does not have to do that annually. Ruff confirmed that to be correct. Ruff stated that Ehlers would put a report together and indicate what cash flows would be on a cumulative basis, so that the HRA would have better idea of what they would like to do with potential excess. Lahr commented that the HRA would be better off having an understanding of what it would like to do with the money. Ruff agreed that dollars should be held more tightly to the outlined goals of the City. Ruff stated that he would come back to the February HRA meeting with the updated information on the other districts. 7. Consideration to hear request by Ehlers to further discuss their proposed fee increase outlined in the October 12. 2005 letter. Koropchak indicated that she had written to Ruff regarding the HRA's decision on the proposed fee schedule. . Ruff stated that the philosophy for Ehlers has been that if a client isn't comfortable with a bill, they wouldn't send it. That being said, Ruff indicated that there is a need to deal with the equity issue. While Ruff stated that he is comfortable with the decision of the HRA, he felt it important to address that issue. Ruff stated that the hourly rate for other projects is $175 per hour, and therefore, he does have a concern about equity. 3 HRA Minutes 12/07/05 . In h is response letter, Ruff stated that he had proposed an alternative. Ruff referenced that work on community projects could be charged a different rate than internal analysis, for example. Lahr stated there is an appreciation ofthe relationship, and the HRA's decision on the rate was not reflective of service. Lahr noted that the proposed increase would have been substantial and stated that he is not comfortable with automatic adders. Lahr commented that the automatic increases tend to get forgotten and keep adding up. Lahr asked Ruff if the Monticello BRA was out of line with other communities' rates 5 years ago. Ruff stated they were low. Lahr asked what parity would be. Ruff stated that he is comfortable at a $140 internal rate and then $175 for developer-related work. Fair asked about what percentage of work completed by Ehlers was internal. Ruff responded that it was very little. Fair clarified that the fees are charged back to the developer. There is a tlat fee for creation ofthe district. The hourly rate is only used rarely. Lahr clarified that developers are rarely paying these fees anyway. Barger stated that the initial package is a flat fee. Frie stated the increase is substantial, even if paying it rarely. Frie asked how close actual fees came to what was on deposit. Koropchak stated that generally, fees are closer to $10,000. She noted that the HRA had made a decision to collect later rather than collect a larger deposit up front. . Wolfsteller stated that the two-tiered rate was common with other communities. Fair stated that he was comfortable with the two different rates. Barger asked for rough percentages for fixed expenses including the City and developers. Ruff stated that fixed costs make-up approximately 85-95%. Ruff stated that although the initial deposit is a flat rate, the expenses generally depend on the number of parcels. The $7,500 - $9,500 expense is based on the same scale. Currently, the HRA's tlat rate for district creation is between $4,500 - $5,500. Ruff stated that due to new regulations, the administrative costs have gone up. Koropchak asked if the lIRA approves reimbursement to $175, would the flat fee also go up. Ruff stated that flat fees on district creation would go up to $7,500 - $9,500. Koropchak noted that the current deposit required is $7,500, which is also to include attorney fees. Koropchak reported that at the project end, the HRA bills for expense overruns. Koropchak concurred on the amount of monitoring and follow-up work that needed to be done. Lahr stated that tlat fee is the fee, and what the HRA is discussing now is the overage and the split between HRA fee and developer fee. Lahr noted that most expenses are covered under the TIF creation fee. MOTION BY COMMISSIONER FAIR TO APPROVE AN INCREASE IN FEES FOR EHLERS AND ASSOCIATES TO $140 PER HOUR FOR INTERNAL EXPENSES AND $175 PER HOUR FOR EXPENSES PASSED THROUGH TO THE PROJECT DEVELOPER. MOTION SECONDED BY COMMISSIONER BARGER. MOTION FAILS 2-2, WITH LAHR AND FRIE IN DISSENT. . Lahr stated he would be more comfortable going back to Ehler's original proposal. Frie agreed. 4 HRA Minutes 12/07/05 . MOTION BY COMMISSIONER LAHR TO APPROVE AN INCREASE IN FEES FOR EHLERS AND ASSOCIATES AS PROPOSED, WITH A RATE OF $150 PER HOUR, WITH ANNUAL INCREASES TO BE APPROVED BY THE HRA. MOTION SECONDED BY COMMISSIONER FRIE. MOTION CARRIED, 4-0. 8. Consideration to discuss term expiration dates of HRA Commissioners. Koropchak rcported that Commissioner Darrin Lahr's term is up in 2005. Koropchak stated that the Mayor has stated that all Commissions are doing wcll and if those serving want to consider continuing, he was happy with that. Koropchak statcd that a recommcndation will go to Council on January 9th. Lahr stated that he would consider an additional term. 9. Consideration to authorize payment oflIRA bills. Koropchak referred to a recent Ehlers bill, noting that she did not send it through for payment as she hadn't seen a finished product. Koropchak stated that she didn't want to authorize payment until that time. Ehlers has prepared resolutions and is prepared to send the info to the County. . Barger asked about the Kennedy & Graven bills relating to the Dahlheimer's purchase. Koropchak stated that she had asked them to spl it the invoice out for title issues versus contract work, which would be forthcoming. Fair asked whether the title insurance should have covered these charges. Barger stated that the title work shouldn't be paid for. Koropchak noted that it is not only the City but also Dahlheimer's who are incurring costs related to the title issues. She stated that there had been 19 items I isted on title letter. Thc primary issue had been the tcmporary access easement, which doesn't show up on a plat. Koropchak statcd that they had finally cleared that up. MOTION BY COMMISSIONER LAHR TO PAY THE BILLS, WITH THE EXCEPTION OF THE KENNEDY & GRA VEN INVOICE, FOR WHICH THE HRA REQUESTS AN ITEMIZED BREAKOUT RELATED TO OTTER CREEK/DAHLHEIMER'S EXPENSES. MOTION SECONDED BY COMMISSIONER FRIE. MOTION CARRIED, 4-0. 10. Consideration of HRA Exccutive Report. Koropchak noted that thc HRA closed on the Dahlhcimer propcrty. Mayer stated that the tiber optics task force will bring an RFP to thc City Council for approval at thc next meeting. Mayer stated that much time had been spent formulating the RFP and determining how responses should be structured in order to determine servicc options. . 5 HRA Minutes 12/07/05 . Fair asked if the task force's consultant recommended the companies who will receive the RFP. Mayer stated that the consultant had completed a large amount of research on service providers. Some of the service providers probably would just bid partially on the project. Fair asked about franchise rights and liability in attracting customers. Wolfsteller stated that the City's current franchise contracts do no give those companies automatic rights. Mayer stated that the RFP is expected to be released in mid-December with responses back towards end of February. The task force hopes to select a proposal within a month. Mayer stated that Monticello is being looked at as an innovator in this area. Koropchak stated that she had no report on the AVR negotiation. It is her understanding that they are still pursuing the idea of locating in industrial park. Wolfsteller stated that the attorney's feeling is that they want to locate here, but it is a question of money at this point. Fair asked about the commissioner's decision in terms of a statutory requirement. Koropchak stated it may be March or May before they reach a decision. Wolsteller stated that the Commissioners haven't valued the property yet. Frie asked if the City had input on who the Commissioners were. Wolfsteller stated that they did have that opportunity. Koropchak pointed out that the requested changes to the HRA's preliminary development agreement had been completed. Lahr asked Koropchak to check on language that seemed to be conflicting within the document regarding the deposit and it refundability. . Koropchak reported that she had a voicemail from Mike Van Heel who stated that the group interested in redeveloping The Times block is still reviewing their project. Koropchak noted that they will be billed for the City's consultant's time. A. Approving certificate of completion for Tapper's loan. Koropchak explained Tapper's had completed the minimum improvements per the contract and the building department had issued the certificate of occupancy. Koropchak stated that the minimum improvements were to be completed by December 12,2005. MOTION BY COMMISSIONER FAIR TO APPROVE THE CERTIFICATE OF COMPLETION FOR 'fHE CONTRACT FOR PRIV ATE REDEVELOPMENT BETWEEN THE HRA, TAPPER'S HOLDINGS, LLC, AND STRATEGIC EQUIPMENT AND SUPPLY. MOTION SECONDED BY COMMISSIONER FRIE. MOTION CARRIED, 4-0. B. Authorizing pavment on contract for deed on Otter Creek Koropchak reported that this is the actual payment as required by the contract-far-deed on the remainder ofthe 120 acres of the Otter Creek land. Koropchak noted that the City and I-IRA had each paid $500,000 for first 35 acres. The first required principal & interest payment is due in December. While the contract is between City and Chadwick, the HRA will be making payments. Koropchak reported the annual payment is $231,113.32. . 6 . . . ERA Minutes 12/07/05 MOTION BY COMMISSIONER BARGER TO AUTHORIZE PAYMENT IN THE AMOUNT OF $231,113.32 ON THE CONTRACT FOR DEED FOR OTTER CREEK CROSSING. MOTION SECONDED BY COMMISIONER FAIR. MOTION CARRIED, 4-0. Koropchak stated that the funds come out ofthe HRA general fund. C. Authorizing payment for overages for fiber optics consultant. Koropchak stated that the task force has been working with the consultant, and the Council had approved for her work to continue. [t was estimated at that time that the additional cost would be about $1500. The adjusted invoice is $2125.00. Koropchak stated that the City will pay $1500 ofthe invoice. Koropchak stated that she is bringing it forward to the lIRA to see jfthey would like to pick up cost overruns, as an economic development expense. Koropchak noted that the task force would not be where it is without her expertise. MOTION BY FAIR TO AUTHORIZE PA YMENT IN THE AMOUNT OF $625.00 TOW ARD EXPENSES FOR THE FIBER OPTICS CONSULTANT. MOTION SECONDED BY COMMISSIONER LAHR. MOTION CARRIED, 4-0. II. Committee Reports: NONE. 12. Next HRA meeting - Wednesday. January 4, 2006. 13. Ad iournment. MOTION BY COMMISSIONER BARGER TO ADJOURN. MOTION SECONDED BY COMMISSIONER FRIE. MOTION CARRIED, 4-0. 7