EDA Agenda - 08/18/2022 (Special)AGENDA
ECONOMIC DEVELOPMENT AUTHORITY (EDA)
Wednesday, August 18, 2022 — 7:30 a.m.
Academy Room, Monticello Community Center
Members: President Steve Johnson, Vice President Jon Morphew, Treasurer Tracy Hinz,
011ie Koropchak-White, Hali Sittig and Councilmembers Lloyd Hilgart and Jim
Davidson
Staff: Executive Director Jim Thares, Rachel Leonard, Angela Schumann, and Hayden
Stensgard
1. Call to Order
2. Roll Call
3. Consideration of Resolution No. 2022-26 Modifying the TIF District No. 1-45 Plan budget
in connection with Deephaven Development's Block 52 Mixed Use Proposal
4. Consideration of authorizing a Right of Entry with Deephaven Development for the
Block 52 development site related to Structure Demolition activities for specific property
addresses 103 Pine Street and 112 West River Street.
5. Consideration of EDA Loans Performance Status Update
6. Adjournment
EDA Agenda: 08/18/22
3. Consideration of Adopting Resolution No. 2022-26 approving a modification of TIF Plan
Sources and Uses of Funds for TIF District No. 1-45 revising specific line items reflecting agreed
upon developer and EDA increment distribution terms (JT)
A. REFERENCE AND BACKGROUND:
The EDA is being asked to modify the TIF Plan for TIF District No. 1-45 approving a modification
revising the Sources and Uses of Funds component. The specific modification adjusts the
"Land/building acquisition" line item and the "Site Improvements/preparation costs" line item.
The modification is needed to align the Sources and Uses lines with the agreed upon increment
amount (terms) in the recently approved (8-10-22) Purchase and Development Agreement. The
Agreement terms provides a total of $2,867,954 in increment payments to the developer for
eligible site costs and $1,351,617 to the EDA for the land costs, both of which are paid out from
the new development increment over a 26 -year period.
As you will recall, the TIF No. 1-45 Plan was approved by the EDA at its June 22, 2022, meeting
and by the City Council at its June 27, 2002, meeting. The City Council will also have to adopt a
resolution authorizing the proposed TIF Plan modification. Staff will present the TIF Plan
modification to the City Council for consideration at the August 22, 2022, meeting. The
modification step is the final TIF approval item that needs to be addressed prior to entering
(signing) into the Purchase and Development Agreement with Deephaven Development. Once
the modification step is completed, a land conveyance closing can take place (the initial steps
preparing for a closing are already in motion). A land conveyance closing date may occur in late
August or early September
Deephaven Development is eager to complete the conveyance closing and begin the structure
demolition work tasks and excavation of the site for the underground parking garage.
Completing those two key work components prior to the onset of winter conditions (late
November -early December), is critical to the project remaining on an efficient schedule.
The proposed budget modification is the only change to the TIF Plan. The proposed modification
does not alter the TIF Plan activities nor the proposed development in any manner. A summary
of the proposed budget modification is included as Exhibit B. (Attachment 1).
It should be noted that with the modification, the EDA will receive approximately 91 percent of
the current taxable market value of the site through the increment payments over the 26 years.
It will receive the increment payments as principal with interest at a rate of 3.0 percent.
Al. STAFF IMPACT: The staff workload related to processing the approval of the
proposed TIF Plan budget modification is minimal. The EDA attorney and Northland
EDA Agenda: 08/18/22
Securities staff as well as the Economic Development Manager and Community
Development Director have time allocated to the budget modification process.
A2. BUDGET IMPACT: The budget impact from the TIF Plan budget modification is
modest. The incurred legal costs will be covered through the developer funded TIF
Escrow account.
B. ALTERNATIVE ACTIONS:
1. Motion to adopt Resolution No. 2022-26 approving a modification of the TIF Plan for TIF
District No. 1-45 revising the Sources and Uses of Funds budget.
2. Motion to table consideration of Resolution No. 2022-26 for further research and/or
discussion.
C. STAFF RECOMMENDATION:
City staff recommends adoption of Resolution No. 2022-26 approving the TIF Plan budget
modification. The budget modification is necessary to revise the Land/building acquisition
budget line and Site improvements/preparation costs budget line reflecting the agreed upon
increment distribution terms between the EDA and the developer. TIF Plan budget
modification is solely limited to the Sources and Uses of Funds component of the TIF Pan and
does not impact the Plan activities nor the development proposal in any other manner. This
is the final TIF approval item remaining prior to the land conveyance step.
SUPPORTING DATA:
a. Resolution No. 2022-26
b. Attachment 1— Sources and Uses of Funds Budget Modification TIF Plan 1-43
2
CITY OF MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY
RESOLUTION NO. NO. 2022-26
RESOLUTION APPROVING A MODIFICATION OF THE TAX
INCREMENT FINANCING PLAN FOR TAX INCREMENT
FINANCING (REDEVELOPMENT) DISTRICT NO. 1-45
WHEREAS, on June 22, 2022, the City of Monticello Economic Development Authority
(the "Authority") approved a Tax Increment Financing Plan (the "TIF Plan") for Tax Increment
Financing (Redevelopment) District No. 1-45 (Block 52) (the "TIF District") located within the
Central Monticello Redevelopment Project Area No. 1 (the "Redevelopment Project"), pursuant to
Minnesota Statutes, Sections 469.001 to 469.047, 469.090 to 469.1081, and 469.174 to 469.1794, all
as amended (collectively, the "Act"), and on June 27, 2022, the City of Monticello, Minnesota (the
"City") approved the establishment of the TIF District; and
WHEREAS, the City and Authority have determined a need to modify the TIF Plan in order
to amend the budget contained therein as reflected in that certain document provided in Exhibit A
attached hereto and labeled "Modification of the Tax Increment Financing Plan for Tax Increment
Financing (Redevelopment) District No. 1-45 within the Central Monticello Redevelopment Project
No. 1" (the "Amendment"); and
WHEREAS, the Amendment is consistent with the redevelopment plan for the
Redevelopment Project; and
WHEREAS, pursuant to Section 469.175, subd. 4(b) of the Act, a tax increment financing
plan may be modified without public hearing or the findings required to be made for the original tax
increment financing plan if the modification does not include (i) any reduction or enlargement of the
geographic area of the project or tax increment financing district; (ii) an increase in the amount of
bonded indebtedness; (iii) a determination to capitalize interest on debt if that determination was not
a part of the original plan; (iv) an increase in the portion of the captured net tax capacity to be
retained by the City; (v) an increase in the estimated cost of the project, including administrative
expenses, to be paid or financed with tax increment from the district; or (vi) the designation of
additional property to be acquired by the authority; and
WHEREAS, the Amendment revises the budget for the TIF District to increase the
amount budgeted for site improvements and preparation costs and to decrease the amount
budgeted for land acquisition and administrative costs but does not increase the total estimated
cost of the project or the total amount of bonded indebtedness.
NOW THEREFORE, BE IT RESOLVED by the Board of Commissioners of the City of
Monticello Economic Development Authority as follows:
1. The Amendment is hereby approved in substantially the form on file in City Hall and
attached hereto as Exhibit A.
2. Upon approval of the Amendment by the City Council of the City, Authority staff is
authorized to forward a copy of the TIF Plan as modified by the Amendment (the
"Modified TIF Plan") to the Department of Revenue and the State Auditor pursuant
to Minnesota Statutes 469.175, subd.4(a).
The City Clerk is authorized and directed to forward a copy of the Modified TIF Plan
to Wright County.
DATED: August 18, 2022
President
ATTEST:
Secretary
EXHIBIT A
ATTACHMENT 1
MODIFICATION OF THE TAX INCREMENT FINANCING PLAN FOR TAX
INCREMENT FINANCING DISTRICT NO. 145 WITHIN THE CENTRAL
MONTICELLO REDEVELOPMENT PROJECT NO. 1
I. Background
The Tax Increment Financing Plan for Tax Increment Financing District No. 1-45 (the "TIF
District") within Central Monticello Redevelopment Project No. 1 (the "Redevelopment
Project") was originally approved by the City of Monticello (the "City") on June 27, 2022
(Resolution No. 2022-64), and by the Monticello Economic Development Authority (the
"Authority") on June 22, 2022 (Resolution No. 2022-17);
The City and the Authority have determined a need to modify the TIF Plan in order to
amend the estimated sources and uses of funds;
Nothing in this modification is intended to modify or supersede or alter the activities
described in the original Redevelopment Program for Central Monticello Redevelopment
Project No. 1. The TIF Plan remains in full force and effect and is not modified except as
described in this modification document.
II. TIF Plan Modification to TIF District No. 1-45
The following sections of the TIF Plan for TIF District No. 1-42 are modified as shown:
Subsection 2.04.3 Estimated Sources and Uses of Funds. Replaced in its entirety
to read as follows:
The estimated sources of revenue, along with the estimated Public Development
Costs of the TIF District, are itemized in Figure 2-1 that follows. Such costs are
eligible for reimbursement from tax increments from the TIF District.
The City and Authority reserve the right to administratively adjust the amount of any
of the Estimated Tax Increment Project Cost line items listed in Figure 2-1, so long
as the total Estimated Tax Increment Project Costs amount, not including financing
costs, is not increased.
Figure 2-1
Estimated Sources and Uses of Funds
Total Modified
Budget
Estimated Tax Increment Revenues (from tax increment generated by the district)
Tax increment revenues distributed from the County 6,973,000 6,973,000
Interest and investment earnings 35,000 35,000
Sales/lease proceeds - -
Market value homestead credit - -
Total Estimated Tax Increment Revenues 7,008,000 7,008,000
Estimated Project/Financing Costs (to be paid or financed with tax increment)
Project costs
Land/building acquisition
Site improvements/preparation costs
Utilities
Other public improvements
Administrative costs
Estimated Tax Increment Project Costs
Estimated financing costs
Interest expense
1,484,100
1,351,617
2,621,758
2,867,954
163,713
50,000
4,269,571
4,269,571
2,738,429 2,738,429
Total Estimated Project/Financing Costs to be Paid from Tax Increment 7,008,000 7,008,000
Estimated Financing
Total amount of bonds to be issued
7,008,000 7,008,000
ATTACHMENT 1
MODIFICATION OF THE TAX INCREMENT FINANCING PLAN FOR TAX
INCREMENT FINANCING DISTRICT NO. 145 WITHIN THE CENTRAL
MONTICELLO REDEVELOPMENT PROJECT NO.1
I. Background
The Tax Increment Financing Plan for Tax Increment Financing District No. 1-45 (the "TIF
District") within Central Monticello Redevelopment Project No. 1 (the "Redevelopment
Project") was originally approved by the City of Monticello (the "City") on June 27, 2022
(Resolution No. 2022-64), and by the Monticello Economic Development Authority (the
"Authority") on June 22, 2022 (Resolution No. 2022-17);
The City and the Authority have determined a need to modify the TIF Plan in order to
amend the estimated sources and uses of funds;
Nothing in this modification is intended to modify or supersede or alter the activities
described in the original Redevelopment Program for Central Monticello Redevelopment
Project No. 1. The TIF Plan remains in full force and effect and is not modified except as
described in this modification document.
II. TIF Plan Modification to TIF District No. 1-45
The following sections of the TIF Plan for TIF District No. 1-42 are modified as shown:
Subsection 2.04.3 Estimated Sources and Uses of Funds. Replaced in its entirety
to read as follows:
The estimated sources of revenue, along with the estimated Public Development
Costs of the TIF District, are itemized in Figure 2-1 that follows. Such costs are
eligible for reimbursement from tax increments from the TIF District.
The City and Authority reserve the right to administratively adjust the amount of any
of the Estimated Tax Increment Project Cost line items listed in Figure 2-1, so long
as the total Estimated Tax Increment Project Costs amount, not including financing
costs, is not increased.
Figure 2-1
Estimated Sources and Uses of Funds
Total Modified
Budget
Estimated Tax Increment Revenues (from tax increment generated by the district)
Tax increment revenues distributed from the County 6,973,000 6,973,000
Interest and investment earnings 35,000 35,000
Sales/lease proceeds - -
Market value homestead credit - -
Total Estimated Tax Increment Revenues 7,008,000 7,008,000
Estimated Project/Financing Costs (to be paid or financed with tax increment)
Project costs
Land/building acquisition
Site improvements/preparation costs
Utilities
Other public improvements
Administrative costs
Estimated Tax Increment Project Costs
Estimated financing costs
Interest expense
1,484,100
1,351,617
2,621,758
2,867,954
163,713
50,000
4,269,571
4,269,571
2,738,429 2,738,429
Total Estimated Project/Financing Costs to be Paid from Tax Increment 7,008,000 7,008,000
Estimated Financing
Total amount of bonds to be issued
7,008,000 7,008,000
EDA Agenda: 08/18/22
4. Consideration of Authorizing a Right of Entry with Deephaven Development for EDA
owned properties and buildings in Block 52 for the purpose of structure demolition
activities specifically for 103 Pine Street and 112 West River Street JJT)
A. REFERENCE AND BACKGROUND:
The EDA is being asked to authorize a Right of Entry with Deephaven Development for
EDA owned properties and buildings in Block 52 for the purpose of structure demolition
activities specifically for 103 Pine Street and 112 West River Street. The Right of Entry is
being requested by Deephaven Development to complete work tasks that are viewed as
critical to keeping the project on an efficient development schedule. The two key work
components that the developer would like to accomplish prior to the onset of winter
conditions are related to site excavation and installing the underground parking
structure. Deephaven Development has informed City staff that if the structure
demolition activities are delayed until mid-September, it may jeopardize the completion
of the underground parking structure this fall and may delay the start date until the
spring of 2023. This delay would also add costs to the project as the basements of the
demolished buildings would need to be backfilled for the winter and then re -excavated
again in the spring (April -May 2023).
At the July 27, 2022, meeting, the EDA approved a Right of Entry with Deephaven
Development authorizing access to the Block 52 properties to complete the Phase II
Environmental Study and the pre -demolition Asbestos -Regulated Materials (ARM)
abatement work tasks. The Phase II Study is expected to be finalized by August 22,
2022, while the ARM work tasks may be completed by August 23, 2022. Deephaven
Development would like to begin demolition of the former church building located at
the 103 Pine Street (MN TH#25) and 112 West River Street buildings on or about August
23 or 24, 2022.
As you will recall, the goal is to have the developer be responsible for the structure
demolition work activities. The Redevelopment Grant awarded to the EDA by MN -DEED
(Department of Employment and Economic Development) is intended to be the source
of funding to pay for completion of the structure demolition activities as well as the
ARM abatement work tasks.
If the EDA authorizes a Right of Entry, Deephaven Development and/or its agents,
contractors and sub -contractors would enter the property -buildings to perform the
structure demolition activities after receiving a demolition permit from the City Building
Official. Deephaven Development must also submit an acceptable demolition plan for
the buildings for approval by the City Building Official, with support from WSB and
Associates prior to permit issuance. The developer will also provide appropriate liability
insurance coverage with the EDA and City as named insureds.
Al. STAFF IMPACT: There is a low staff impact in presenting a Right of Entry with
Deephaven Development for structure demolition activities to the EDA for
consideration.
A2. BUDGET IMPACT: There is a minimal budget impact related to EDA consideration
of authorizing a Right of Entry with Deephaven Development for the EDA owned
properties and buildings in Block 52 to undertake structure demolition activities
specifically for buildings located at 103 Pine Street and 112 West River Street. The
MN -DEED Grant awarded to the EDA is intended to pay for this work activity to be
performed by the developer.
B. ALTERNATIVE ACTIONS:
1. Motion to authorize a Right of Entry with Deephaven Development for the EDA
owned properties and buildings in Block 52 for the purpose of structure
demolition activities specifically for buildings located at 103 Pine Street and 112
West River Street.
2. Motion to table authorization of a Right of Entry for Deephaven Development for
the EDA owned properties and buildings in Block 52 for further research and/or
discussion.
3. Motion of other as determined by the EDA.
C. STAFF RECOMMENDATION:
Staff defers to the EDA regarding the Right or Entry with Deephaven Development for
the EDA owned properties and buildings in Block 52 specifically for the purposed of
completed structure demolition activities of buildings located at 103 Pine Street and 112
West River Street. The developer has indicated that it would be very helpful to start
demolition activities in late August versus mid-September to positively impact the entire
project schedule keeping it as a fall 2022 construction start versus pushing it to the
spring of 2023.
D. SUPPORTING DATA:
A. Right of Entry (format)
RIGHT OF ENTRY
The City of Monticello Economic Development Authority, hereinafter called "EDA"; does
hereby consent and grant to , hereinafter called the "Licensee",
and its agents a license to enter only, for the purpose of
, across the following described lands
situated in the County of Wright, State of Minnesota, to -wit:
■ Block 52 EDA Owned Properties, including buildings noted below
■ 103 Pine Street
■ 112 West River Street
This right to enter shall commence on 2022 and terminate on ,
2022.
Licensee shall accept the Premises in "as is" condition and upon the termination of this
agreement shall surrender the Premises in substantially the same condition in which it was at the
beginning of the occupancy.
Licensee or its agents shall perform all activities on the Premises authorized under this
licensein a safe and professional manner.
Licensee shall indemnify, defend, save, and hold harmless the City and the EDA, its officers
and employees from all claims, expenses, losses or liabilities in connection with Licensee's use of
the Premises or because of any claims or liability arising from any violation of any law or regulation
made in accordance with the law, whether by Licensee or any of its agents or employees.
This Agreement is binding upon the parties, their successors in title or interest, assignees,
and heirs. Licensee shall not assign any of its rights or responsibilities hereunder without first
obtaining the written consent of the Owner.
The license granted by this Agreement is a mere license to use the Premises for the
specified purposes as set forth herein and does not create any estate or interest in the Premises.
Page 1 of 2
(LICENSEE NAME)
Its
STATE OF MINNESOTA )
) ss.
COUNTY OF WRIGHT)
The foregoing instrument was acknowledged before me this
2022, by the
a Minnesota limited liability corporation, on its behalf.
Notary Public
CITY OF MONTICELLO
LM
STATE OF MINNESOTA )
ss.
COUNTY OFWRIGHT )
day of
of
Jim Thares
Economic Dev. Manager/Executive Director, EDA
The foregoing instrument was acknowledged before me this day of
, 2022, by Jim Thares, the City of Monticello, Economic Development
Manager and Executive Director of the EDA, a Minnesota municipal corporation, on behalf of
the corporation and pursuant to the authority granted by its City Council and Economic
Development Authority.
This instrument was drafted by:
City of Monticello
505 Walnut Street, Suite 1
Monticello, MN 55362
Notary Public
Page 2 of 2
EDA Agenda: 08/18/22
5. Consideration of EDA Loan Program Outstanding Loans Status Update (JT)
A. REFERENCE AND BACKGROUND:
A summary report of the various EDA program loans is provided as a update. The
summary table shows the borrower, the original loan amount, outstanding balance,
interest rate and maturity date. The summary information was prepared by the City
finance department.
Al. Budget Impact: None
A2: Staff Impact: None
ALTERNATIVE ACTIONS:
1. No action required
2. Action as determined by the EDA
B. STAFF RECOMMENDATION:
No recommendation. Informational update only.
C. SUPPORTING DATA:
A. Summary EDA loans report
City of Monticello
Status
Name
Address
Balance
Orginal Loan Amount
Interest Rate
# of Years
Start of Loan
Current
Rustech Loan - GMEF
105 West 3rd Street, Monticello
$64,312.36
$75,513.26
3.25%
20
3/1/2018
Current
MontiRV/DSN Loan - GMEF
1101 Elm St, Monticello
$107,796.00
$118,500.00
4.50%
20
5/1/2019
Current
Due North Car Wash - GMEF
682 55th St NE, Buffalo
$138,881.85
$140,954.11
1.25%
20
4/1/2022
$310,990.21
$334,967.37
Current
Bondhus Loan - SCDP
PO Box 660, Monticello
$138,463.21
$201,039.79
2.75%
10
3/1/2019