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EDA Agenda 06-15-2004 . 1. 2. 3. 4. . 5. . AGENDA MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY Tuesday, June 15, 2004 - 4:00 p.m. City Hall - Academy Room MEMBERS: Chair Bill Demeules, Vice Chair Barb Schwientck, Roger Carlson, Robbie Smith, Clint Herbst, Ron Hoglund, and Darrin Lahr. ST AFF: Treasurer Rick Wolfsteller, Executive Director Ollie Koropchak, Recorder Angela Schumann. GUESTS: John Simola, Public Works Director and Al Loch and other Block 35 property owners. Call to Order. Consideration to approve the April 27, 2004 EDA minutes. Consideration of adding or removing agenda items. Consideration to review the feasibility Study prepared by WSB, Inc. for authorization to proceed with alley and plaza improvements to Block 35. Consideration to request the City Council to authorize WSB, Inc. to design the project and go out for bids and specs. 6. Consideration to authorize preparation of a Contract for Development between the EDA and said Block 35 property owners. 7. Other Business. 8. Adjournment. . . . MINVTES MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY Tuesday, April 271\ 2004- 4:00 p.m. Academy Room Members Present: Chair Bill Demeules, Clint Herbst, Darrin Lahr, Barb Schwientek, Roger Carlson, Ron Hoglund Absent: Rohbie Smith Staff Present: Executive Director Ollie Koropchak, T'reasurcr Rick WoIfsteller, Public Works Director John Simola, and Recorder Angela Schumann Guests: Bruce Hamond - VisiCom; Pat Jensen- GWJ, LLC; Block 35 property owners I. Call to Order. Chair Demueles called the meeting to order at 4:00 p.m. and declared a quorum. 2. Consideration to approve April 20th. 2004 EDA minutes. A MOTION WAS MADE BY LAHR TO APPROVE THE MINUTES Of TIlE APRIL 201\ 2004 EDA MEETING. DEMEULES SECONDED THE MOTION. CARLSON AND HOGLUND ABSTAINED DUE TO ABSENCE AT SAID MEETING. MOTION CARRIED. 3. Consideration of adding or removing items from the agenda. None. 4. Continued - Consideration of a request from Aroplax Corporation to extend balloon payment date for GMEF Loan No. 016. Steve Bubul did not recommend the extension of the balloon payment. Koropchak stated that Aroplax had indicated that they are able to re-finance without the extension, they were just researching all options available to them. Koropchak indicated that Aroplax withdrew their request. Demeulcs noted that there are provisions that allow the EDA to refinance such loans if needed. . . . EDA Minutes - 01/27/04 5. Consideration of a request from VisiCom to extend the baIloon payment date of DMRF Loan No. Ill. Koropchak indicated that VisiCom had a downtown revitalization loan. They have completed a rehabilitation of their property at 200 West Broadway. The halloon payment for the loan is due on May 1 S\ 2004. The remaining balance on thc loan is $6073.01. If the balloon payment date is extended, applicable interest would be added to that amount. Bruce Hamond is asking for an extension of the balloon paymcnt date in order to accommodate a new project on south side of Broadway. Hamond presented the project plan to the EDA, indicating that a second building would be breaking ground in three months. There would now bc two separate building structures, totaling 6000 square feet. Hamond is requesting the cxtension until the conventional lender approves new loan for the proposed construction. He indicated that the project would also include new fayades for both buildings. The second building would includc apartments on second floor. Hamond approximated that VisiCom would need an extension of approximately six months, pending appraisal. A baIloon extension to November 1 st would accommodate that timeframe. Herbst asked if the plan I1amond had presented had been reviewed by Councilor with planning staff. Hamond replied that he had reviewed plan with the Building Official, Fred Patch. Hamond indicated that any concerns on potential parking issucs had been addressed. They wiIl be re-using the current parking footprint. Koropchak indicated that extending the baJloon payment would also allow time for the appropriate stafl review as noted above. MOTION BY HOGLUND TO APPROVE THE EXTENSION OF BALLOON PA YMENT DATE f'ROM MAY 1,2004 TO NOVEMBER 1,2004, fOR THE LOAN AGREEMENT BETWEEN THE MONTICELLO EDA AND VISICOM, INC., DATED APRIL 10,2001, SUPPORTED BY LENDER'S LETTER AND THAT THE DMRF GUIDELINES DO NOT ADDRESS BALLOON DATE EXTENSION. MOTION SECONDED BY CARLSON. MOTION CARRIED. 6. Consideration of a rcquest from GW J, LLC to extend the Compliancc Date of GMEF Loan No. 019. Pat Jensen, representativc from GWJ, was present to address the EDA on the extension of the compliance date. Koropchak reviewed the GMEF Loan and the conditions set f<xth as a part of the loan. The loan criteria included a commitment to job creation and wage level. Each year, by law, companies in receipt of the loan are required to report on those items. Koropchak stated that the commitment for this loan was three jobs. Koropchak reported that they have hired two employees, with wages above what they had anticipated in the original tcrms of the loan. As they are currcntly in default under the original terms fix employment, GWJ is requesting an extension of the "Compliance Date" in order to create thc additional job. 2 . . . EDA Minutes-01/27/04 Koropehak is recommending approval of the extension to August 30, 2005 to allow GWJ to come into compliance. Koropchak stated that it is likely that the dcfault in employment is most likely related to thc cconomy. ./cnsen indicated a portion of the business has been sold o1T, while another arca of the business is cxpanding. Jensen reported that the first quarter report on busincss was the bcst it had been in approximately 3 years. MOTION BY SCHWfENTEK TO APPROVE AN EXTENSION OF THE COMPLIANCE DATE FROM AUGUST 30, 2003, TO AUGUST 30, 2005, WITHIN TI IE LOAN AGREEMENT BETWEEN GWJ, LtC AND THE MONTICELLO EDA DATED AUGUST 30, 2001, FOR GMEF LOAN NO. 019. MOTION SECONDED BY HERBST. MO'l'ION CARRIED. 7. Consideration to review Block 35 facade improvement concept and costs, contract, final site improvement concept, public/private ratio for approval of EDA funding and to requcst Council to approve thc concept and to order a feasibility study. Koropchak revicwed the staff report, indicating that the project had begun in April of 2002. The property owners and City staff have worked to dcvclop a concept that works for all parties. Koropchak reiterated somc of the guidelines for the downtown revitalization project. Additionally, the EDA had identified specific improvement goals and objectives for Block 35. Koropchak referred to July's financial package and the latest site improvement concept. Al Loch spoke on behalfofBlock 35 property owners. Loch provided an overview of the project to date. Loch statcd that each roof within the block had serious water issues, which would cost approximately $1400 to fix, pcr building. The water problems are directly related to storm and water lines and catch basins. Loch indicated that until thc City had determined where the catch basins would be, providing the EDA with an estimatc was difficult. Loch reported that with thc decision on the locations, it was determined that 4 of 8 buildings can share common lines. This results in an approximate cost of $14,800 for 6 lines. Loch stated that the estimate for garbage services would include service for all businesses, as well as vacant building and lot, and any renters. Service was estimated based on dumping twice a week. The project plan layout does not account for how services could be condensed in the new design. llerbst asked if the Masons are in favor of building upgrades. Loch indicatcd that the Masons had said no to awning, but had agrccd to the underground improvcments. All other property owners have now signed a contract for awnings. Masons did not want to rcmove canopy, which has accounted for their lack of agrccment. A concept image for what the awning would look like was presented. 3 EDA Minutes-OI/27/04 . Hoglund indicated that awnings served the primary purpose of hiding roof lines. Herbst and Hoglund stated that they did not see the Masons refusal as a reason to hold up the proj cct. Loch indicated that it was their understanding that the awnings would be the last improvement, occurring sometime in August or September, after all other construction had been completed. Koropchak inquired whether evcryone was on board in terms of the maintenance agrcement. I,och indicatcd that Brad Larson and Jim Agusto had put the agreement together. At this time, only the Masons and Brad Larson need to sign. Loch stated that landowncrs are listed by lot number so that the agreement continues with the propcrty in the event of sale. Koropchak inquired why a commenccment date was included in the agreement. Agusto indicated that the maintenance agreement needed some kind of term limit as it couldn't be perpetual. Koropchak stated her concern regarding the possible sale of property and the agreement being recorded against the property. Agusto indicated that instead, the agreement is binding to the owner, not the property, even in the event of sale. It also states that the City has the right to assess should a property owner default on the terms of the agreement. . Lahr inquircd whether there would be any statement that further defines what the actual improvements will be. Augusto indicates that the agreement only covers what the City is improving. Koropchak inquired whether DA T had reviewed the plans. Wojchouski indicated that no final plan had been submitted. EDA commended the property owners on their effort. Koropchak stated that the EDA needed to determine if their goals as listed in the staff report had been met. These include making a determination whether the ratio had been developed based on a more extensive package of fayade treatments. Koropchak stated that it would appear, based on the cstimates provided, that the City investment is at a 3 to I ratio. Koropchak suggested that if the EDA is interested in proceeding, a right-to-enter document would be needed from property owners stating that the City can procecd with improvements on private property. Larson indicated that a temporary construction easement would be needed for this purpose. Larson also suggested that the FDA attorney would need to review those documents as well. Koropchak also recommended that the EDA set a date in terms of completion date for the fayade. Koropchak stated that as the EDA is considering use of public dollars, it should be noted that one of the property owners is delinquent in paying property taxes. . Karen Schneider inquired whether the fact that property values would go up as a result of the improvements can be considered as an oiTset to the ratio. Koropchak stated that there is no set ratio the property owners needed to meet on the project, she would just like this 4 EDA Minulcs-OI/27/04 . to be noted in terms of the consideration of public purpose. Koropchak outlined the process for moving forward as noted in the staff report. Carlson inquired who would be paying for feasibility study. Koropchak stated that it had been included in the original funding estimate for engineer fees. Herbst inquired how mueh funding was originally intended. Koropchak stated that $145,000 had been allotted for this project, as well as another $30,000 for the City parking lot. Herbst indicated he was not concerned about the ratio of public/private dollars as much as whether the merits of the project warranted funding input. Herbst stated that the EDA can't fault the property owners for seeking the best rate in order to keep costs down. It was asked what would happen if the bids and project came in much higher than expected. Koropehak indicated that at that point, the City and EDA would need to determine if the project goes forward. Koropchak noted that the improvement project numbers had come from WSB and Public Works a few years ago. In regard to design, Koropchak indicated that the City Planner, Steve Grittman, recommended that the garbage container and islands stay as is. Koropehak indicated the trees and shrubs could be removed. The container size may be reduced based on number of times garbage is removed. It was noted that under new contract, all propel1y owners and renters would use the same garbage removal serviee. Loch indicated that may save money. . Loch asked if the five points addressed in the report meet the required criteria. Oemeules indicated that the City would need to get firm numbers and address the deliquent tax property owner situation. Loch inquired whether that issue should put the entire project on hold, as it is out of their hands. Herbst indieated that it just rolls over and devalues it for re-sale. Demeules stated that it does call in to question whether they can affi.mi to do the awnings if they can't pay their taxes. Loch clarified that the tenants are paying for some and the landowners are paying for some, however, the maintenance agreement is signed by the land owner. Herbst stated that the projeet is far enough along to complete the feasibility study. Demeules indicated that the City would need to move forward with the study to obtain firm project estimates. Koropchak clarified that at this time, the EDA is asking Council to look at the concept as provided and to authorize a feasibility study on its merits. Koropchak also recommends establishing a timeframe for completion. Wolfsteller asked what kind of doeumentation would support that improvements would actually be made. Larson indicated a simple consent agreement with the fee owner of the property could be executed, by whieh if the improvement is not completed, the City can complete the work and assess thc cost back. Herbst and Lahr agreed that sueh an agreement would definitely be needed. . Koropchak clarified that the process to follow will be to proceed with the feasibility study, then establish a design, go out for bid, then accept bids, and finally eommence project work. 5 . . . EDA Minutes - 01/27/04 MOTION BY HOGLUND TO REQUEST THAT COUNCIL APPROVE THE CONCEPT FOR BLCOK 35 IMPROVEMENTS AND AUTHORIZE A FEASIBILITY STUDY. MOTION SECONDED BY SCHWIENTEK. MOTION CARRIED. Koropchak indicated that this would be placed on the Council agenda for May 10th. Loch inquired what the next steps would be. Koropchak indicated that the group would not meet until the feasibility study comes back. That date is estimated to be June 10th. It is likely that a date of August 1 st is the earliest construction commencement date. 8. Consideration to elect 2004 officers. MOTION BY I-IERBST' TO NOMINATE THE CURRENT EDA OFFICER SLATE TO INCLUDE BILL DEMUELES AS CHAIR, BARB SCHWIEN'fEK AS VICE CI lAIR, RICK WOLFSTELLER AS TREASURER, RON HOGLUND AS ASSISTANT TREASURER, AND OLLIE KOROPCHAK AS SECRETARY FOR 2004. MOTION SECONDED BY CARLSON. MOTION CARRIED. 9. Consideration to review year-end FDA financial statements. Activity Report. and proposed 2004 Budget. Koropchak reported that cash flow projections for 2004 indicate a beginning cash balance of approximately $924,000. The combined principal and interest payments due and loan fees are approximately $257,700. Koropchak noted that the Mainline and Aroplax loans will be coming due later in 2004. With estimated expenditures of $602,000, the projected cash balance as of Dccember, 2004 is $580,000. Total 2003 asscts and liabilities on the balance sheet are estimated at $1,396,631.42. Koropchak noted total revenues for 2003 werc at $106,639.01 and expenditures were at $72,177.25. Koropchak rcported that based on projections, the expected cash balance at December 2004 would be close to $579,866.64. Lahr inquired why 2003 and 2002 interest income/investments appeared on the statements. Wolfstcller indicated that they were not shown on previous statemcnts; this report illustrates the actual amounts fi.)f those years correctly. Herbst indicated that paymcnt back to Liquor Store could be held off in order to accommodate a potential large projcct. Koropchak also reviewed the EDA Activity Report and noted that the report includes a summary of EDA loans. That summary includcs information on the original loan, principal paid, balance remaining and interest paid. Also illustrated in the report are investment interest earnings. 6 . . . EDA Minutes - 01/27/04 MOTION BY LAHR TO ACCEPT THE 2003 YEAR-END FINANCIAL STATEMENT AND ACTIVITY REPORT FOR SUBMISSION TO THE CITY COUNCIL ON MAY 10, 2004. MOTION SECONDED BY HERBST. MOTION CARRIED. 10. Consideration to review year-end balances of the GMEF. DMRF, UDAG, and ERG Funds. Koropchak provided an update on other fund halances, including those for GMEF No. 017 and 0018, which wcre pre-paid in 2003. Koropchak reminded the EDA that although GMEF Loan No. 021 and 022 were approved in 2002, the loan closings and disbursements took place in 2003. She noted that the EDA showed a loss of $27,866.00 for the TJ Martin loan. Balloon payments for Aroplax, Mainline and VisCom arc due in 2004. Koropchak noted that all GMEF loan payments are current. Koropehak reported that no disbursements have been made from the Downtown fund. Koropehak stated that the total dollars availahle to thc EDA for GMEF and DMRF programs is approximately $574,198.55, after disbursemcnt of the WSI loan. 11. Consideration for amendment to the Business Subsidy Criteria and Bylaws of the EDA. MOTION BY SCHWIENTEK TO ACCEPT THE BUSINESS SUBSIDY CRITERIA OF THE EDA AS WRITTEN. MOTION SECONDED BY HOGLUND. MOTION CARRIED. 12. Exeeutive Dircctor's Report. Koropchak reviewed her report, providing an update on the proposed Chadwick property purchase. The purchase negotiations continue to move forward. Council tahled approving authorization of entering into the Purchase Agreement until further contract details werc resolved. Koropchak noted that the closing for the GMEF Loan to WSI Industries had been schedulcd and on clarified for EDA members that the 4-A rating indicated a high credit rating for the company. 13. Other Business. None. 7 . . . 14. Adjournment. MOTION BY LAHR TO ADJOURN AT 6:45 PM. MOTION SECONDED BY HOGLUND. MOTION CARRIED. Angela Schumann, Recorder 8 EDA Minutes - 01/27/04 . . . EDA Agenda - 06/15/04 4. Consideration to review the Feasibility Studv prepared bv WSB. Inc. for authorization to proceed with alley and plaza improvements to Block 35. A. Reference and backe:round: At the April 24, 2004 meeting, the commissioners requested the City Council approve the concept and authorize preparation of a feasibility for alley and plaza improvements to Block 35. Before proceeding any further, the EDA wanted to determine if the preliminary cost estimates were within their budget of $145,000. At the May 10, 2004 Council meeting, the council members did authorize WSB, Inc. to prepare the study. A representative from WSB, Inc. or John Simola, Public Works Director, will review the prepared study with EDA members and guests at the meeting. Additionally, the EDA requested the Block 35 property owners to further define their improvement costs and per individual property, and for the EDA Attorney to review the Maintenance Agreement prepared by Block 35. This has been requested. The Executive Director reported at the last meeting that one of the parcels was delinquent on their property taxes. In a recheck June 10,2004, the taxes remain delinquent for years 2002 and 2003, and the first half of 2004 are not paid. Again these were the original goals and objectives of the EDA for Block 35: 1. Create a customer friendly parking and plaza-like rear entrance. 2. Consistent and eye-focus cosmetic facade design 3. Roof and alley drainage improvements 4. Relocate and consolidate trash into enclosed and detached containers. 5. Ratio of public to private investment. (1 :35:1.0) Additionally, the EDA requested a 100% commitment from property owners and a Maintenance Agreement in recordable from addressing the f(JlIowing: Unrestricted parking spaces (designated loading zones), common trash, snow plowing, and landscaping. Once the EDA has reviewed the study, determined its feasibility to proceed and reviewed the commitment of the Block 35 property owners, the EDA then needs to consider the following action and next two agenda items. . EDA Agenda - 06/15/04 B. Alternative Aetion: 1. A motion authorizing to proceed with the alley and plaza improvements to Block 35. State reasons. 2. A motion to not authorize proceeding with the alley and plaza improvements to Block 35. State reasons. 3. A motion to table any action. c. Recommendation: The City Administrator is concerned about the ratio of public to private dollars particularly if the private dollars continues to decease. Also, Wolfsteller has concerns about using public dollars to finance private infrastructure on a property with delinquent property taxes. Ooes the EOA penalize all because of one? This is a policy question for the EO^' D. Supporting Data: . Maintenance Agreement with attorney comments and EOA finance package. Study to be distributed at meeting as well as defined costs by property owners. . 2 . . . BLOCK 35 MAINTENANCE AGREEMENT WHEREAS, the undersigned are owners of property located in Block 35 of the City of Monticello (hereinafter "Owners"); and WHEREAS, the Block 35 property subject to this Agreement is south of the Block 35 buildings and north of the Block 35 alleyway (hereinafter "Subjeet Property"); and WHEREAS, the Monticello Economic Development Authority (hereinafter "ED A") and the City of Monticello (hereinafter "City") desire to invest in the revitalization of the Block 35 Subject Property; and WHEREAS, the EDA and the City seek to protect their revitalization investment in Block 35 by requiring that the Owners execute a maintenance agreement among themselves; and WHEREAS, the Owners desire to accept the EDA and the City revitalization investment in the Subject Property; NOW, THEREFORE, the Owners agree: That they shall replace and maintain EDA and City improvements made on the Subject Property; and That they shall employ an agent to remove snow and trash for the benefit of all the Owners; and That they shall replace and maintain all landscaping installed by the EDA and the City on the subject property; and That they will administer their duties under this Agreement by a majority vote of the undersigned Owners or their assigns; and That, should the Owners default under this Agreement, the City may cure the default after a 10-day notice to the Owners; and That the defaulting Owners consent to be assessed by the City for its costs of curing the default; and That they, along with their successors in interest and assigns, shall be bound by this Agreement; and That this Agreement shall commence September 1,2004 and terminate September 1, 2014. Executed by the Owners on the dates recorded below. . . . Page 1 of 1 Ollie Koropchak From: Mercer-Taylor, Beth [bmercer-taylor@Kennedy-Graven,com] Sent: Tuesday, June 08,20046:17 PM To: Ollie Koropchak Cc: Bubul, Stephen J, Subject: EDA maintenance agreement I took a quick look at the maintenance agreement this afternoon, which Steve passed along to me, and had a couple of questions about what constitutes a default on the part of the owners. I've got meetings tomorrow from 10-11 am and from 3:30-5:00 pm, Maybe we could talk for a few minutes at a time that is convenient for you in the middle of the day? Let me know -- Beth Mercer-Taylor Attorney Kennedy & Graven, Chartered Phone: 612-337-9283 Fax: 612-337-9310 bmercer- tay lor@kennedy-graven.com 6/9/2004 . I . ~tt..V\~ Pr. (This a proposal created and offered by the Monticello Eeonomic Development Authority (EDA) to foster a partnership with a portion of the owners of Block 35.) BLOCK 35 AND EDA PARTNERSHIP FINANCIAL PACKAGE USES OF FUNDS - Based on estimates. Common Area - Parking to rear of buildings, plaza, trash improvements (with sidewalk and curb) Replace alley and add a second catch basis (Without engineer fees or cost to slope private surface to match alley) (Engineer fees/sloping) Block 35 Public Parking Lot Improvements Cosmetic Facade Improvements to rear of buildings Swiecichowski (Dino' s) Monticello Lodge #16 (Vacuum Center) Loch Jewelers and (l sl National Bank of Elk River) Schneider (previous Office Supply) Agosto (Law Office) Schneider (Vacant Lot) Larson Properties (Carlson Travel/Carlson Agency) Schneider (Drapery Center and Pizza) McCarty (Computer/Mexican Grocery) Subtotal of Rear Cosmetic Facade Improvements TOTAL USES OF FUNDS $ 15,100.00 $ 21,100.00 $ 17,500.00 $ 18,000.00 $ 10,500.00 $ 20,500.00 $ 10,500.00 $ 16.500.00 $ 75,000.00 $ 50,000.00 $ 20,000.00 $ 30,000.00 $129,700.00 $304,700.00 . . . EDA Agenda - 06/15/04 5. Consideration to request the Citv Council to authorize WSB. Inc. to design the oroiect and 2:0 out for bids and soecs. A. Reference and background: This agenda itcm assumes the EDA moved to proceed with the project. The EDA must now request the City Council to authorize design of the project and to go out for bids and spccs. This would appear on the next Council agenda, June 28, 2004. The last step after going out for bids and specs is tC)f the Council to award the bid. I bclieve it is the goal of everyone for this project: Alley, plaza, parking lot and facade improvements to be completed in 2004. B. Alternative Action: 1. A motion requesting the City Council to authorize WSB, Inc. to design the project and go out for bids and specs.. 2. A motion to not request the City Council to authorize WSB, Inc. to design the project and go out for bids and specs. 3. A motion to table any action. C. Recommendation: Alternative No.1. D. Supportin2: Data: None. . . . EDA Agenda - 06/15/04 6. Consideration to authorize preoaration of a Contract for Develooment between the EDA/Citv and said Block 35 prooertv owners. A. Reference and background: As you recall at the last meeting, even Attorney Brad Larson agreed that a simple Development Contract between the EDA and the property owners be prepared outing what the EDA/City agrees to do and what the property owners agree to do including commencement and completion dates for public and private improvements. B. Alternative Action: 1. A motion to authorize the EDA attorney to prepare a Contract for Development between the EDA/City and said Block 35 property owners. 2. A motion to not authorize the EDA attorney to prepare a Contract for Development between the EDA/City and said Block 35 property owners. 3. A motion to table any action. c. Recommendation: Alternative No.1. D. Suooortinf: Data: None. ___.____~_ - "....:.IC _ ._,""",--, _~~_ - - -----...-..--