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EDA Agenda 06-22-2004 . 1. 2. 3. 4. . 5. AGENDA MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY Tuesday, June 22, 2004 - 4:00 p.m. City Hall - Academy Room MEMBERS: Chair Bill Demeules, Vice Chair Barb Schwientek, Roger Carlson, Robbie Smith, Clint llerbst, Ron lloglund, and Darrin Lahr. STAFF: 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. Bruce Cochran, WSB, Inc. Call to Order. Consideration to approve the June 15,2004 EDA minutes. Consideration of adding or removing agenda items. Consideration to review the revised 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 lor 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. . . . . MINUTES MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY Tuesday, June 15,2004 - 4:00 p.m. City Hall - Academy Room MEMBERS PRESENT: Chair Bill Demeules, Vice Chair Barb Schwientek, Clint Herbst, Ron lloglund, and Darrin Lahr. MEMBERS ABSENT: Council members Roger Carlson and Robbie Smith ST AFF PRESENT: Treasurer Rick Wolfstellcr and Executive Director Ollie Koropchak. GUESTS: John Simola, Public Works Director, Bruce Cochran, WSB, Inc, and attach cd list of Block 35 property owners. 1. Call to Order. Chair DcmeuIes called the EDA meeting to order at 4:00 p.m. declaring a quorum. 2. Consideration to aoprove the April 27.2004 EDA minutes. Ron Hoglund made a motion to approve the April 27, 2004 EDA minutes. Sccondcd by Clint Herbst and with no corrections or additions, the minutes wcre approved as written. '" .). Consideration of addinQ or removing aQcnda items. Thc Executive Dircctor requested the addition of one item under 7. Other Business: Review of preliminary loan application from Water Monitor, Inc. 4. Consideration to review the Feasibility Study prepared by WSB. Inc. for authorization to proceed with allcy and plaza improvements to Block 35. Koropchak noted the Feasibility Study before the EDA was a f()llow-through ofthe EDA and City Council action authorizing WSB, Inc. to complete a Feasibility Study for Block 35. Commissioners were reminded of their original goals and ohjectives, informed of the property tax delinquency for 2002, 2003, and first one-half of 2004 for one property, that the unrestricted parking spaces (designated loading zones) were not identified in the Maintenance Agreement, and that the EDA Attorney comments will be distributed. Bruce Cochran, WSB, Inc., gave a brief background of his experience in projects similar to Block 35 and noted he was recently hired by WSB. Having concept designs from Planner . . . EDA Minutes - 06/15/04 Grittman and observing the area first-hand, the Study was prepared and presented with thrce options. Each option varied in costs from $265,000 to $307,000 mainly due to the location of the catch basins and alley materials. Cochran was unaware of the EDA budget of $145,000 which he felt for a first analysis was an advantage. The commissioners and property owners compared the cost options and identified line items to reduce costs. The Study included costs to be paid by the private sector for drainage connections between roof tops and catch basins ($17,000) and costs associated with sanitary pipe for the Masonic Temple ($2,700). They discussed the option of bituminous versus concrete for alley replacement. Public Works Director Simola noted with the Aggregate Base Class 5 Mod proposed for the bituminous alley, he could support the use of bituminous. He also informcd attendees that the biggest difference besides costs is the life expectancy (25 years for bituminous versus 50 years for concrete). Participants agreed that the location of the catch basin along the curb cut of the plaza area was not the best option for accomplishing the goal to improvc roof and alley drainage problems; although. it was the cheaper option. Location of thc enclosed consolidated common trash containers was discussed relative to safety and visibility concerns at Walnut Street and proximity to power lines versus conveniencc to users. Others items mentioned were the location of the keystonc retaining wall planters, plaza material options, and the necd to locate gas linc and telephone boxes. It was the consensus of the commissioners and the property owners to reduce the overall costs and requested WSB to address the following items: 1. Grading levels for drainage flow to determine location of catch basins. 2. Usc of bituminous for alley replacement. 3. Plaza material options othcr than pavers: Exposed aggregate, stamped concrete, and colored concrete. 4. Planter dcsign and location. 5. Trash containcr location. 6. Vegetation. Brucc also noted some flexibility in the contingency and 28% indirect costs. A meeting was scheduled for Tuesday, June 22, 2004, 4:00 p.m. to review the revised costs. Schwientek requestcd at the next meeting thc Executive Dircctor providc information as to other EDA funds available for this project in addition to the $145,000. A copy of the EDA Attorney's comments were distributed and Attorney Agosto was asked to comment from the perspectivc of Block 35. 5. Consideration to request the City Council to authorize WSB. Inc. to desi!2:n thc proiect and go out for bids and specs. Not applicable. 6. Considcration to authorize Drcparation of a Contract t(.Jr Dcvelopment between the EDA and said Block 35 property owners. Not applicable. 2 . . . EDA Minutes - 06/15/04 7. Other Business. Koropchak reviewed a preliminary loan application from Water Monitor, Inc. requesting $900,000 of public/community funding for working capital and operating costs fCJr location of a inbound customer service/billing center. The company has toured the building on Thomas Circle previously occupied by Fingerhut. The owner of the building ,Winkleman Builders, prcfers to lease rather than sale and ran a D & B on the company which was marginal. Koropchak noted that the following items did not comply with the GMEF Guidelines: USES OF PROCEEDS: Working Capital. FINANCIAL, METI 100: GMEF must be used as secondary source to conventional lender. BUSINESS ELIGIBILITY: Industrial. Koropchak noted no credit analysis has been completed but noted the company's decision would be based on community investment. Koropchak asked the commissioners if they concurred with the analysis by the Director that this preliminary loan application from Water Monitor, Inc. did not comply with the GMEF Guidelines. The EDA commissioners concurred. The EOA was informed that Barry Fluth withdrew the Landmark Square II project due to timing and monetary reasons and that TOLD Development Company working on behalf of Walgrecn's withdrew from the Block 52 site due to high cost of acquisition and unwilling sellers. Walgreen's remain very interested in Monticello and are looking at alternative downtown sites as well as sites south of 1-94. 8. Adiournment. Bya consensus of the EDA commissioners, the meeting adjourned at 5:30 p.m. u~~~0~ Ollie Koropchak, Recorder 3 c\?~~O~, . ~ XarR'n S (Vh'7er4-er- [;US(( W'I{L"v /I / ~&77--- , " /-. _z,c/t'~'l--' 'j I 1~~6 5~ r;Z&d' ;;;k / ~moC~J0~ ) . . \f\cl ~ \ S ,d QJ'OJ 1 / Lf L/ //1 'I fA). MI-II<ft<j. /..,;' lIaunJ- Le--f' / c ,~ A.-' f,.J? I /~C lv, p~,p[/ Iv~ Y IV'Z w ii3W?- /tfy w #roq~~;: / Ol:, 'fa.. c0, ~ . . . EDA Agenda - 06/22/04 4. Consideration to review the revised Feasibility Study prepared by WSR. Inc. for authorization to proceed with allev and plaza improvements to Block 35. A. Reference and back2: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 detlne 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 le)[ 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: I. 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 ] 00% commitment from property owners and a Maintenance Agreement in recordable lrom addressing the following: Unrestricted parking spaces (designated loading zones), common trash, snow plowing, and landscaping. Once the FDA 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 Agcnda - 06/22/04 B. Alternativc Action: 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. Rccommendation: 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. Docs the EDA penalize all because of one? This is a policy question for the EDA. D. Supporting Data: . Maintenance Agreement with attorney comments.. . 2 . . . Kennedy:. & Grave'n CHARTERED 470 Pillsbury Center 200 South Sixth Street Minneapolis MN 55402 (612) 337-9300 telephone (612) 337-9310 fax http;//www.kenneuy-graven.com BETH MERCEI~-TAYLOR Attorney at Law Direct Dial (612) 337-9283 Email: bmereer-taylor(ll]kennedy-graven MEMORANDUM To: Ollie Koropchak and City of Monticello EDA From: Beth Mercer-Taylor, Kennedy & Graven, Chartered Date: June] 5, 2004 Rc: Block 35 Maintenance Agreement As requcsted, I have reviewed the Block 25 Maintenance Agreement, which Ollie Koropchak indicated has been signed by the relevant owners of property on Block 35 in the City of Monticello (thc City). This agreement is inadequate to ensure that the property owners will maintain the Bloek 35 property for several reasons, discussed below. If maintenance is a critical issuc for the City and thc Economic Development Authority of the City (the EDA) as the expenditure of remaining downtown revitalization funds is considered, then a more detailed agreement or agreements between the property owners and the City should be drafted and executed. Alternatively, the City, EDA, and propcrty owners should consider ereating a Special Services District, described in the latter part of this memo, to create a legal mechanism for the City to charge property owners for the maintenance of improvement to Block 35. I can provide much more information about that alternative, which has been used by several other city clients. Issues with the Current Contract The Block 35 Maintenance Agreement is signed by the individual property owners, yet the Agreement obligates a group, referring to the property owners as "they." The legal obligations of each ofthesc owners to this collectivc group is not clear. What would happen to owners who voted against paying into the maintenance program, for various reasons? If an individual owner refused to pay for a sharc of thc maintenance, would that EMT-249345v I MN325-17 . owner be individually in default? Would all the owners be in default? Could the City then assess that owner, or even all of the owners? In order to give the EDA and the City the right to cure defaults, the EDA and the City need to be parties to the Agreement. Consideration on both sides should be stated. The City cannot assess property owners for maintenance that has not been provided, as there is no legal authority to do this. A special service district under Minnesota Statutes Section 428A.0 1, further described below, would otTer a way for the City to Icvy service charges on property owners, and the statute provides a means for the City to collect unpaid charges. The agreement statcs that an agent shall be employed for snow and trash removal, but that "they" (the owners) shall replace and maintain improvements on the property as well as landscaping. It is not clcar what level of replacement and maintenance will be acceptable and who will decide whether what has been done is acceptable. If the owners, cither individually or collectively, do not agree with the City or EDA regarding acceptable maintenance, it is not clear whether or not a dcfault has occurred. . Unless this Agreement is recorded and made a covenant to the deeds of the individual property owners, successors in interest and assigns will not be legally bound. A buyer without notice of this contract would not be bound by it. The contract needs to clarify that current property owners will guaranty that successors and assigns will take over the responsibility and sign the contract, and ifnot, that the current property owners would continue to be bound. This Agreement does not handle the various problems between thc owners themselves, or between the owners and the EDA and City that could arise. Without guidance from the contract, such disputes would have to be resolved in court, with increased risk of an undesirable outcome for everyone involved. Special Service District Alternative Minncsota Statutes Section 428A.0 1 through 428A.I 0 1 (the Act) provides authority for local units of government, in cooperation with eommereial and industrial property owners, to implemcnt speeial service districts to finance special serviees beyond those ordinarily provided throughout thc City. "Special services" are defined as having the meaning used in a given city's ordinancc, but exclude those services not typically provided throughout the city from the general fund. Services that are typically provided throughout a city may be included if there will be an increased level of that service in the district. See MINN. STAT. 9 428A.Ol subd.3. The Act defines a "special services district" as "a defined area within the city where special services are rendered and the costs of the special services are paid from revenues collected from service chargcs imposed within that area." MINN. STAT. S 428A.OI subd. 4. Special services districts may only include cOll1mereial, industrial, public utility, and vacant properties. . EMT-249345v I MN325"17 . . . Before a city may adopt an ordinance enacting a special service district, a public hearing must be held. The hearing has to bc preccded by two notices in the official newspaper of the city two weeks apart. In addition, notice must be mailed to each owner of land within the district. MINN. STAT. S 428A.02 subd. 2. All property owners that will be subject to the service charge must be allowed to be heard at the hearing. MINN. STAT. 9 428A.02 subd. 1. The ordinance may be adopted by the governing board of the city at any time within six months after the conclusion of the hearing. MINN. STAT. S 428A.02 subd. 2. The city can impose service charges as long as thcy are rcasonably related to the services provided. The charges must be "as nearly as possible proportionate to the cost of furnishing the service, and may be fixed on the basis of the service directly rendered, or by referencc to a reasonable classification of the typcs of premises to which servicc is furnished, or on any other equitable basis." MINN. STAT. 9 428A.02 subd. 3. The charges must also be imposed on the basis of the net tax capacity of the property on which the service charge is imposed. MINN. STAT. S 428A.05. Any affected landowner may file a written objection asserting that their land should not be subject to the charge. The city's governing body has the ability to exempt complaining landowncrs from the charge if: (1) they will receive scrvices that are already provided throughout the city to thc same degree, (2) the property is exempted, or (3) neither the landowner's property nor its use will receive a benefit from the proposed special service. MINN . STAT. 9 428A.02 subd.4. Before the eity can start any of these proceedings, at least twenty~ five percent of the owners of the land area that would be subject to the charge and owners of at least twenty- five percent of the net tax capacity of the area must fi Ie a petition requesting a hearing on the proposed action. MINN. STAT. S 428AOR. In addition, after a city has approved an ordinance creating a special service district, they must mail a summary of it to each property owner within the district. If more than thirty-five percent of the property owners or holders of greater than thirty-five percent of the net tax capacity file an objection within forty-five days of the city's approval of the ordinance, it does not become effective. MINN. STAT. S 428A.09. Therefore, the landowners have a power to commence and a veto power. Lastly, the Aet has a sunset provision that makes it expire on June 30, 2005. MINN. STAT. 9 428A.I 01. FMT-249345v I MN325-17 . 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 "Subject 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 ofthe undersigned Owners or their assigns; and That, should the Owners default under this Agreement, the City may cure the default after a I a-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 thi.s . S- \_ \f\ <".J C (' Agreement; and ~. ~<:.A'>~d, ~o+ That this Agreement shall commence September 1,2004 and terminate September 1, .-B 2014. b~ vCV ~-U Executed by the Owners on the dates recorded below. . . . '~?- EDA Agenda - 06/ts/04 5. Consideration to request the City Council to authorize WSB, Inc. to design the project and 20 out for bids and specs. A. Reference and background: This agenda item 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 specs. This would appear on the next Council agenda, June 28, 2004. The last step after going out for bids and specs is for the Council to award the bid. I believe it is the goal of everyone for this project: AI1ey, 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. Supporting Data: None. . . . ),').. EDA Agenda - 06/B/04 6. Consideration to authorize preparation of a Contract for Development between the EDA/City and said Block 35 property 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: I. 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. Supporting Data: None. . . . EDA Agenda - 06/22/04 7. Other Business: Attachment A. Balloon payment due from Mainline Distribution. Attachment B. Letter to Water Monitor, Inc. Attachment C. Loan fee collected from WSI and invoice for amortization run. NO ACTION NECESSARY, INFORMATION ONLY. . . . June 18, 2004 GMEF Loan No. I-IS - Original Amount $100,000 Mainline Distribution 9530 Fallon Avenue, Monticello, MN Balloon Payment Due June 1,2004 Last Monthly Payment received March 1,2004 End Balance April I, 2004 Accrued Interest April (Past Due) Accrued Interest May (Past Due) Accrued Interest June (Past Due) Subtotal Plus Additional Accrued Interest of $13.65 per day* Total Balance Due $85,429.02 $ 409.34 $ 409.34 $ 409.34 $86,657.04 * Example if you make balloon payment on June 21 (21 X $13.65 = $286.65) Ollie Koropehak 763-271-3208 ~~ Vif' \; ~\ (} f\ ~ 1. N, . ~.~. LiliLd June 16, 2004 ~ yV ~~ v\uG 0 ~\\ MONTICELW Mr. Steve Haas Chief Finaneial Officer Water Monitor, Inc. 2500 West County Road B Minneapolis, MN 55113 Re: Economic Community Development Projeet/Funding for Customer Service/Billing Center. Dear Steve: . Thank you for completing and returning the preliminary loan application for the Greater Monticello Enterprise Fund (GMEF). It was my pleasure to have met with you, Randy Mortcnsen, and Noel LaBine. As Executive Director to the Monticello Economic Development Authority (EDA) who approves the GMEF loans, I reviewed the preliminary loan application from Water Monitor, Inc. for consistency and compliance of the guidelines set forth in the Business Subsidy Criteria of the EDA. Unfortunately, your preliminary application did not meet the following criteria: A. FDA USE OF PROCEEDS: Real property acquisition and development, real property rchabilitation (expansion and improvements), and machinery and cquipment. Your $900,000 public funding request included working and operating capital uses only. B. EDA FINANCING METHOD: GMEF loans are for use as a secondary source of financing that is intended to supplement conventional financing (bank financing). C. BUSINESS ELIGIBILITY: Industrial businesses. . At the EDA meeting of June 15,2004, the commissioners concurred with the Executive Director's analysis that thc preliminary loan application from Watcr Monitor, Inc. was not consistcnt nor did not comply with the EDA Business Subsidy Criteria. However, that is not to say the BOA would not welcome your customer service/billing center and/or corporate office to Monticello. Monticello City Hall, 505 Walnut Street, Suite 1, Monticello, MN 55362-8831 . (763) 295-2711 . Fax: (763) 295-4404 Offiee of Public Works, 909 Golf Course Rd., Monticello, MN 55362 . (763) 295-3170 . Fax: (763) 271-3272 . . . Mr. Haas June 16, 2004 Page 2 Lastly, enclosed you will find the return of your original Confidentiality Agreement Information and the 2003 and 2004 Balance Sheets. Should you have any questions, please call mc at 763-271-3208. Sincerely, ECONOMIC DEVELOPMENT AUTHORITY IN AND FOR THE CITY OF MONTICELLO, MINNESOTA C) ~~ \t\ ell 0 ~ j) ~~ -- Ollie Koropchak Executivc Director Enclosures c: Noel LaBine, Economic Development Partnership of Wright County Tom Ollig, TDS Telecom Bruce Thielo/l, Mayor FDA File v Iii I, iJ f1 U ~;) i'J U\!,. rii\~fi>: I, . Invoice 042104 Description application fee . No: 18127 4/23/04 City of Monticello ':;;':'-'?"-~"-'-'---'-"':'':"'" ~:'" W""-;I J :\ I JinJ :") 1'1 Ui\II:::;: fll C eH_, 1-) I I/, I ,) I ) I r:::::::1110::W\I, :1C):\I) i,r~)",:;;:,:(), i\/I~,! ~'\:'I: .'~~1(}:J /;';:.1":'~'~::';"!:':\()1) Date: 4/23104 No: 18127 018127 Amount 200.00 Discount 0.00 Net Amount 200.00 ~~jc (\ r4 U Amount: 200.00 i, >:;((~::::l.~ ~:1.'\~1;( ':UII\Ii\, l\ilI'l :):,dJl.,i 1'';'.I!I)'.lIO 018127 Amount: ************200.00 Two Hundred and nol I 00 Dollars********************************************************************** Ay to the ~rder of City of Monticello Economic Development Authority 505 Walnut St Suite I Monticello MN 55362 II- 0 ~ 8 ~ 2 711- I: 0 9 ~ 0 ~... a 981: ')1..~ ~ L~1/ .r~"",,,,,,,,,,.,,,,,:, .,,/,. - 200 ~ bOil- . . Monticello ~ E;:S) f\ 505 Walnut Avenue, Suite 1 Monticello, MN 55362 May 10, 2004 ~, c itc-~ ~, C)... ~ \\'Me;c1 U MC100-01 General Invoice # 22306 Professional Services 4/13/2004 MTR 4/28/2004 MTR Hours Amount Mtg on annexation ..,..... c:~ 1 50 Amortiza\tipr,!Jor35~k t: t) If'\ - '} c~~ 0 . \.-\ ~'J S 0 \, .,~ \ c\ q ~:50 \J) "7,,1,.. X "-\,"--' , Total Due This Month: Status of Account: _gurr~.El~_. 30Day? $250.00 $0.00 60 Days "__ 90 pays _ $000 $0.00 18750 62.50 2.00 $250.00 120+ q9~__. Tot'!ll $0.00 $250.00 . PLEASE KEEP WHITE COpy FOR YOUR FILE AND REMIT PINK COpy WITH PA YMENT TO: . EHLERS & ASSOCIATES INC 3060 Centre Pointe Drive Roseville, MN 55113-1105 651.697.8500