Loading...
HRA Minutes 03-07-2001 . . . MINUTES MONTICELLO HOUSING AND REDEVELOPMENT AUTHORITY Wednesday, March 7,2001 - 7:00 p.m. 505 Walnut Street - Bridge Room Members Present: Chair Darrin Lahr. Vice Chair Dan Frie, Brad Barger, Bob Murray and Council I,iaison Brian Stumpf. Ahsent: Steve Andrews Oftlcers: Treasurer Rick Wolfsteller. Executive Director Ollie Koropchak, and Recorder Lori Kraemer. GUI'srs: Brad Johnson, I,otus Realty Services Sheri Harris, Central Minnesota llousing Partnership, Inc. Steve Budd, Jntergrated Recycling Technologies, Inc. Mark Ruff. Ehlers & Assoc. 1 . Call to Order. Chair Darrin Lahr called the meeting to order at 7:00 p.m. 2. Consideration to approve the HRA minutes of Februarv 7,200]. A MOTION WAS MADE BY BRAD BARGER AND SECONDED BY DAN FR]E 'ro APPROVE THE MINUTES OF TilE FEBRUARY 7,2001 liRA MEETING. Motion carried with Bob Murray abstaining. 3. (~onsidcrati()n to add or renlove iten1S froIll the atlenda. Koropchak removed Item 8 from the agenda. 4. Consent A~enda. None 5. Continued - Consideration to hear progress relative to research of purpose/ohiective and funding fix a scattered housin!! pro!!ram, explanation of MHF A fundin!-':, and authorization to enter into the Preliminary Development Agreement. Ollie Koropchak, Executive Director. provided the staff report noting that Sheri Harris and Mark Ruff were present to answer questions the members may have. The HRA elected not to indorse the use of TI F at the Fehruary meeting as they had questions which staff was unable to answer. The Monticello grant application was submitted for the February 9, 200] deadline with the use ofTIF pending. Harris advised that the application made the lirst cut and they would he advised if the I-IRA qualiJied for the loan by April 26. She also advised of other - 1- H RA Agenda - 3/7/0 I . cities such as Brainerd and Long Prairie, that arc active in this type of scattered housing program. The liRA was asked to compare the TIF application against the "["IF policies prior to considering the preliminary approval for use of TI F and authorization to enter into the Preliminary Developlnent Agreement. As suggested previously, it was reconunended that the $5,000 deposit he waived as the applicant is a non-profit housing agency. llarris provided clarification of how MHF A funding works, as wcll as stating that the HRA's application is for a construction loan, not a grant, which would he used for construction, dcmolition, and acquisition of homes. Ilarris eXplained that they are a non- profit corporation which has been around fix ahout 10 years, and they arc a continuum of housing services for affordable housing. Harris also provided costs for the members to revievv. RepaYlnent to the HRA. would be upon sale of the tirst home, noting that MHF A would request to keep the money until the ninth home was sold. Harris stated that the process would he to sign contracts in May and then they would have 20 months to acquire, demolish, construct and sell the homes. She noted that they would he acquiring five parcels and constructing nine units. Sheri also provided some hackground inll)fmation on the program. CMHP has already established resources that help the huyer receive assistance, which is in place in this region, and are also working with lenders to obtain the 6.5% mortgage rate (at 5.5% at this time). . The members asked Harris if the $46,000 income was what they would be targeting and she stated that it is the typical income fiJr a Eunily of four that they would he targeting. Harris advised of GAP financing, 80% of the statewide median financing: applicants need to qualify and if there is still a gap in what the owner can afford, this is GAP linancing which is like up front equity to the huyer and may he used for closing costs if necessary, 0 percent interest loan which would he paid back. The City has no liability if the homes do not sell. Ilarris also advised that with the acquisition of the existing homes there would be no relocation costs as they would be voluntary sales. and MI-IF A would do the upfront work. There is a developers fee of $2500 per hOlne. The members also asked Brian Stumpfifthe City Council had any guidance fix TIF assistance for housing and StUlnpf stated no. . Mark Ruff. Ehlers and Associates. provided some input as well. He noted that this would be upli'ont financing and stated several options for the HRA to consider such as bonding or asking the City to grant the HRA a loan. Rufrs recommendation was for debt financing, eXplaining that it is easier. He also advised that there is a redevelopment grant progranl, which is a grant and not a loan, that is availahle through DTED. Ruff asked how important is this project to the liRA as there is a risk involved with upfronting the money, but also noting that the HRA could supplement this district with other districts if needed. Ruff stated there is a reasonahle chance of getting the money back as long as the owners continue to pay their property taxes. and stating that this is a redevelopment project. The members asked Ruff about security and Ruff stated that the security would be that the homes were built. -2- \-I RA Ag.endn - 3/7/0 I . Harris adviscd that they provide thc technical assistancc to thc HRA. proposing to act as the developer/builder. The lnembers also asked if it was possible to ask a higher sale price ancl target people with higher incomes. Harris advised that upon initial sale there is a restriction on thc sale price. noting that if utilizing this program. they need to stay at this sale pricc. Long term people can sell to whomever they want to and aftcr the first sale. the value is not limited. JefT(YNeill advised that CMIIP would need to go through the PUD process through the Planning Commission and City Council which would take about 60 to 90 days. at which time the liRA could review the concept plans f(Jr the proposcd development. CfNeill also asked llarris if she recommended CM liP go f()rward with the site design process and she stated that she would havc a bettcr scnsc alter their March 19th mceting. . The lnembers then discusscd if it was possible for the liRA to do their own GAP financing. and Ruff advised that the risk would bc that the home sclls at the cost and not loweI'. then who would get the money. Dan Fric states that it may bc a bcttcr option than what is proposed. Frie stated that if the HRA provided the second gap. they could incrcase the selling price and then bccomc the third mortgagc. noting that the HRA would not be paid until the home was refinanced or would resell. Thc members questioncd if taking the sale pricc up would be comparable in this area and Frie stated it would be. stating basically it's increasing the lot price. Rick Wolfstcller questioned what \vould happen if the acquisition pricc changes and Ilarris stated it \vas a possibility but kels thcre is room fl1r that. Ilarris also explained again that they do the building. marketing and ask locally for lenders help. They arc constantly qualifying buyers under their scattcred housing program. The members kit that this sounds like a f~\ir deal. but again the concern would be security that the homes bc built. They also askcd if this would be a good area of town for this project and it was stated that it was. with O'Ncill stating it is one ofthc roles of the liRA to rernove substandard housing and providc affordable housing. City Council will be involved as well with waiving fees. Ilarris noted that the strength of the application is improved if the liRA approves this and that she would call and advise ofthc I-IRA's dccision. . A M(YTION WAS MADE BY DAN FRIE AND SECONDED BY BRAD BARCiER TO APPROVE THE PRELIMINARY CONCEPT FOR USE OF TIF IN TilE AMOUNT OF $125.000 NPV TO ASSIST WITII A SC'AcrrERED HOUSING PROJECT AND TO WAIVE TilE $5.000 DEPOSIT FEE. '('HE SELLING PRICE PER UNIT WAS SET AT $131.000. AN INCREASE FROM THE $120.500. TilE DIFFERENCE TO BI<: USED AS GAP FINANCING TO RECOVER ANY TIF SIIORTFALL cro FINANCE ANY ACQUISrrlON COST OVERRUNS. AND/OR TO REIMBURSE CITY FEES. THE DEPOSIT FEE WAS W AlVEI) BECAUSE CENTRAL MINNESOTA 1I0USING PARTNI:RSI-IIP (CMlIP) IS A NON-PROFIT STATE AGENCY. TilE TIF FINANCE METHOD IS UP-FRONT AND THE SECURITY IS TilE Il0MES ARE CONSTRUCTI':D. A II0USINC, TIF DfSTRICT FOR OWNER-OCCUPIED -3- . . . liRA Agenda - 3/7/0] HOUSINn IS A QUAI JFIED HOUSINn DISTRICT AND TilE INCOMI.: RFSTRICTIONS APPLY TO TilE ORIGINAL OCCUPANTS ONL Y. Motion carried unani mously. 6. Continued - Consideration to hear an update relative to proieet concept fiJr redevelopment of the Amoco site and authorize the use of TI F for Phase I and/or II of project area. Koropchak provided further information which shc rcceived from Brad Johnson the day before regarding phases I & II and advising that the extended date of the preliminary agreement was up as of this datc. Koropchak also added that the members had stated that if no plan and '1'1 F direction within 30 days. the HRA would open the site up to other developers. Koropchak and Johnson provided information regarding the plans for Phase I which include acquisition of the AnlOCO site and hack-half of sites F. F and G as noted on the sketehes. Johnson states the plan is to construct a 5,700 sq it first story of which a restaurant will occupy 3,500 sq It. with the second tloor consisting of 6 apartments. and lastly a carriage unit with 6 garage stalls. Johnson states he is still concerned ahout SAC/WAC charges and parking requirements. To close they need to have 5()% leased. currently have a restaurant that has heen working with them t~)r approximately 4 months. Johnson advised that there are 3 lots to the east of the Amoco site that they suggest the City create into parking. Johnson states they are asking the lIRA fl.)!' pay as you go assistance. gap in financing would be ahout $35,000. and would look to the City to provide SAC/WAC and parking for restaurant portion. Would pay back the lIRA/City at closing and then the HRA would pay them TIF. In Phase II they would simply go out and secure a loan as the plan would be for housing. which would possihly he later in 200 I or into 2002. Johnson discussed again the draw for a rcstaurant downtown which hrings the people there. Mark RulTstated that with the liRA's involvcment the risk is the liRA is stuck owning the Amoco site. Ruff stated another way to look at this is that they are asking f{)r free land. basically the cost of acquisition/demolition. and for that they are taking some risk on pay as you go. O'Ncill eXplained the parking deficiencies in the downtown area, and Johnson again proposed that the City provide public parking area behind the Amoco site. hie asked Pat Sawatzke, a do\vntown business owner who was present at the meeting, how full the parking lot hy his business is on average. This parking lot is City owned and was apparently paid for by the business in that area for them to use. Sawatzke stated it varied depcnding on the businesses operating in that area. at this time it is not full at all. Koropchak added that the TIF dollars are expended for acquisition/demoltion. so TIF could not be used to help pay fiJr the parking. -4- . . . H RA Agenda - 3/7/01 Lahr added that it is a great anlount of money to expend, and the members questioned if they should concentrate more on development of land at the other end of town, but noting that there are issues there as well. Murray questioned how much the City really wants this area to be parking and not a business that would generate taxes. It was decided that the need is to extend the agreement and then to move forward. Ruff added that the HRA needs to eomc up with what is acceptable to them to make this project \vork. The members felt that possibly Johnson nceded more time and also needs to work with City staff on the SAC/W AC fees and parking issues. A MOTI()N WAS MADE BY BOB MURRA Y AND SECONDED BY DAN FRIE TO L:XTEND TIlE CONTRACT FOR REDEVELOPMENT rOR 30 DA YS. There was further discussion by Lahr that he fCIt thc contract should not bc cxtended and the HRA should opcn it up for another developer. Motion carried 3 to I with Darrin Lahr voting in opposition. Therc was a further comment by Lahr asking stafTto formally inform the City Council of this issue regarding the cost ofredcvcIopment and O'Ncill advised that parking would be coming bef<.ne the Council on March 26. 7. Consideration to hear a prcsentation for use of TI F assistance for an industrial I~\cility and authorization to enter into the Preliminary Developmcnt AQreement. Koropchak provided the staff report noting thc presence of Mr. Steve Budd, President. Integrated Recycling Technologies. Inc.. and his contractor Tom Feaski ofTricon Inc.. who arc requesting TIF assistance for land write-down. The Prospect 'Team of Fred Patch. Mayor Belsaas, Kevin Doty, Ron lloglund, and Koropchak visited thc cxisting plant in Rogers, noting that the company recycles platinum group metals from spent auto catalyst. They have been in business since 1993 and have outgrown their spacc in Rogers. The company proposcs to purchase 2 acres orI -I property along Fallon A venue to the imll1ediate north of Pipclinc Supply. The 10,000 sq ft steel structure consists of production and office spaec. The company plans to crcate 5 new jobs for the City of Monticello within two years. Koropchak provided the members with the uses and sources and staled that based on the preliminary TIF estimates. the amount of estimated 'flF assistancc recommended is $40.000 NPV over 9 years (rcilnbursement) and the City makes the up-front local match of $9,000 (cstimatcd utility connections). noting the TIF Cashllow ran by Ehlcrs were done arter execution of the Preliminary Devclopment Agreement and $5,000 deposit. Budd stated that all work is done inside and thcre would be no outdoor storage. I-Ie also added that the emissions are very low and they arc not required to have a permit. They -5- . 9A . 9B. . II RA Agenda - 3/7/0 I would like to build as soon as possible. They are also working with Pfeffer regarding platting of the property. The lllembers also asked if there were any restrictions in this area and it was stated that it's zoned 1-1 and has no restrictions; if the building lllects code. it" s acceptable. Scott Douglas of the fire department was also there and questioned if the building would have sprinklers installed. Mr. Budd stated they would not be installing them but that they would run a water line in the building should they ever grow larger than 18.000 sq. ft. were it would then be required. A MCHION WAS MADE BY BRAD BARGER AND SECONDED BY DAN FlUE TO AUTIIORIZI::: ENTERING INTO THE PRELl MINAR Y AGREEMENT. SUBJECT TO COllNCIL PRELIMINARY APPROVAL AND CASHFLOWS BY L.:! IU~RS. AND AUTHORIZING PREPARATION or TIF DISTRICT NO. 1-28. Motion carried unanimously. Carlson Purchase Agreement and Lease Al.!.reement status. Koropchak provided the report and informed the people in the audience of this item. noting that liRA Attorney (Jreensweig informed her that he had spoken with the Carlson's Attorney who informed that his client agreed to the changes of the February liRA meeting. Attorney Greensweig felt the HRA could proceed \vith the acquisition of the O'Connor and Bostic properties. Contacting the liRA Chair and based on the HRA's strategy relative to the counter-offers for the O'Connor and Bostic properties, the II!(A Chair suggested to wait with moving forward on the counter-otTers to O'Connor and Bostic until the Purchase and Lease Agreements arc executed by the Carlsons. Koropchak advised that Attorney Greens\Veig will e-mail the agreements to her. The HRA officers executed the Purchase Agreement with attached exhibits which was mailed on February 28 to Attorney Peterson. As you recalL the Purchase Agreelnent stated a closing date of on or before April 1,2001. Attorney Cireensweig has requested the updated abstract be submitted to him in anticipation of the closing. In a cover letter to Attorney Peterson. I tactfully highlighted the proposed closing date to expedite getting the executed document returned. Koropchak advised it was a matter of them signing the documents the next day and returning tbenl back to her. C)'Connor and Bostic status. (YConnor called Koropchak on February 26. asking again where things were at and she requested Ken I Iclvey give him a courtesy call. Ken did talk to Bostic on March 6: he suggested because of the delayed process and change in Inarket that an update on the comparable housing be completed. Koropchak advised him to proceed. The seller. by rights. has 90 days to find comparable housing. Helvey indicated we can meet the June 30.2001 date by giving notice between March 15 and 30. Helvey will be contacted immediately to proeeed with counter-offers upon receiving the executed Carlson document. -6- . . . 9C. 9D. II RA Agenda ~ 3/7/0] Financin!2. flJr Front Street acquisition and dcmolition. Korpchak noted the closing date on or before 4/1 /0 I. Mark Ruff suggested financing the acquisition and demotion through a loan hom the City at a low intercst: need to determine thc purchase amount; also asked Rick Wolfsteller to suggest a rate that he was comfortable with on a term of 15 years. Wolfsteller advised 6.5% interest rate ftlr 15 years. subject to getting the purchase agreclncnt. It was also suggested that perhaps after redcvelopment of Block 52 commercial area. a bond lnay be issued. Ruff suggested a resolution relative to jinancing the acquisition be drafted by Kennedy & Graven It)). adoption by the I-IRA. In conversation with Attorney BubuL he suggested a Loan Agrecmcnt between the City and HRA for $275.000. at an interest rate and term of years to be dctermined. be approved. After ./uly 31. 2002. the )--IRA will hold a public hearing and sell the property to the City ft)!' $35.000. Because the parccllies within the 100-year flood plain. the parcel can not be built upon. The Loan Agreernent will be on the City Council agenda March 12. A MOTION WAS MADE BY DARRIN LAI-IR AND SECONDED BY DAN FRIE TO ADOPT A RESOI JJTION APPROVING PURCHASE Or: PROPERTY I.OCA TED AT 225 FRONT STREET. WIllI TI,:RMS AND CONDITIONS AS PREVIOUSLY APPROVED. AND A LOAN AGREEMENT BETWEEN TilE CITY AND lIRA FOR $275.000 AT 6SX) INTEREST FOR 15 YEARS. Motion carried unanimously. Consideration to accept letter of termination "or I- louse I.case located at 3 Walnut Street. Koropchak inftlnlled the lnelllbers that sometime ago Brandon Link. tenant. was contacted rclati ve to the I--IRA plans f(lr redevelopment of the area. Periodic updates were related to'the tenant. Brandon infcmned me on Fcbruary 26. he would be suhrnitting a letter of termination with an effective vacating date of March 31. 200 I. It was noted that monthly rent was $650 and the first month rent was ftlrgiven in lieu of repairs and paint. In addition. the I .ease Agreement called ft)r the tenant to deposit a $500 security deposit and the last rnonths rent. The last month' s rent of $650 will be applied toward the March rent and upon vacating the property. the $500 security deposit will be returned to Brandon. Brandon nlentioned his roommate may wish to rent if the I IRA is not planning to demolish right away. lie was intCmllcd the roommate would need to fill out an appl ication for review and would be rcquircd to pay thc tirst and last months rent and the $500 security deposit. A MOTION WAS MADE BY DAN FRIE AND SECONDED 8Y 8RAD BARCiER TO ACCEPT TI I1~ I.ETTER or TERMINATION FROM BRANDON LINK FORTI IE I ICHJSI': I.LASE I_()CATED AT 3 W AI_NUT STRI':ET. Motion carried unanirnously. -7- . . 9F. . I-j RA Agendn - 3/7/0 I 9E. Request It)r Proposal It)r North Anchor. At the liRA meeting in r:ebruary, the lIRA dcnied the request for Steve Grittll1an, City Planner. to prepare design concept sketches (drawings) for the North Anchor (Block 52, Lots 7 through 15 with some flexibility). Estimated eosts was $2.000 to $3.000. The purpose to develop a vision. put goals into words and pictures. Instead. the liRA requested city staff prepare a draft copy of a request 1t)r proposal fix the North Anchor. Grittman. O'NeiIL and Koropchak met and began to definc the project for the RFP determining the project area. boundaries. mixes or uses. and if parking is determined hy use. It was detennined in order to draft the RFP. the project and boundaries need to he defined. Once the boundary is defined, a survey is needed in order to supply to developers. Upon contacting thc I IRA Chair 1t)r authorization to proceed with 'Taylor Land Survcys to prepare a survey at an estimated cost of $1.500, the Chair preferred 1-1 RA action and further discussion. At the February meeting, the HRA also suggested that meeting with property owners of Block 52 should begin. Koropchak advised that a meeting between Steve Johnson. Lahr. and Koropchak was set for March 9. and that Kjellbcrg and Springborg were contacted but need to call back. Koropchak also left two voice messages with Froslie. Koropchak adv'ised that the survey ordcred is for Block 52 and Walnut St. Rivcr St. and Pine St. Frie also concurred that there should be discussions with the property owners to sce their interest. Pat Sawatzke. business owner. stated that he had sonle concerns regarding a proposal from Mike Cyr. Cyr had contacted some of the businesses to infi_mn them of his proposal. as well as a mecting with Darrin Lahr. Jeff ()"Ncill and Koropchak on March 2nd. Chair Lahr authorized the survcy. Cyr provided sketches or his proposal and also stated that he had also made courtesy calls to the owners letting them know that therc would bc a survcy of the area. Sawatzke's concerns were of parking. obstructing his view of the river/park. and also he felt that this would restrict the businesses on what they can do as they will have reduced parking. It was stated repeatedly that this is too preliminary and the survcy is ft)!' elevations and parking issues only at this time. Koropchak advised of decisions the I IRA nceds to makc and Mark Ruff noted that the I IRA is on the right track and that their approach makes sense. A MOTION WAS MADI~ BY DAN FRIl~ AND SECONDL~D BY BOB MURRA Y RATIFYING TilE AUTHORIZATION OF TI IE SURVEY AND PA YMENl OF $3,000 TO $4.500 FOR SAID SURVEY. Motion carried unanimously. Ilans IlaQen Update. At this point. thcre has been no further contact with IIansHagen. Koropchak decided to wait until alicr the March meeting. since the liRA does not have control of the sites. It is -8- . . . 9G. II RA Agenda - 3/7/0 I planncd that Mark Rull O'Neill and Koropchak will meet with him. Front Street Improvemcnts Site review stall set a workshop date of March X. 5 :00 p.m. with Council Il:)r establishing an assessment policy for street improvements and infrastructure replacement. This Illr the areas of East 71h Street. Cedar Street and Front Street. llowever. Council was not req uested to call a spec ialmeeti ng. Instead. stalf meeting March 8 from noon to 2 :00 p.n1. Seventh Street and Front Street Reconstruction Feasihility Study for Council March 26. Would he nice to have for meeting with Ilans Ilagen. 10. Consideration to discuss industrial land accluisition options and to develop an action plan to address the short and Ion!..'. term need Il:l!' industrial land including acquisition of lane\. At the HRA meeting in February. the commissioners reviewed the lIRA L:eonomic Ikvelopment Plans for 200]. One goal listed was to explore the idea to request the Planning Commission to address the (iold Nugget parcel as industrial zoning. At that point. the commissioners requested this issue he on the March liRA agenda. Chair I .air and Barger attended a Marketing Committee meeting on March 2 and reported on the discussions and future direction. It appears the I-IRA and IDC have a common goal to develop an action plan to address the short and long-term need for industrial land including the acquisition of land. Mayor states their intent to go Il:Jrward but did not state a plan to acquire. IDC will meet again next week to discuss with Planning Commission and Council members. Oarrin Lahr discussed the Goeman/Chadwick property acquisition which is not clone yet. It was asked if the IDC and/or liRA he of assistance in acquiring this property or some other property Il:lr industriallancl. O'Neill stated the Chadwick swap is still active. sent out another counter oller and they will be countering back. They will then negotiate the val ue of the property and the City wants the additional 40 acres. C;ravel issue was not discussed at beginning; it is not being discussed at this time. O'Neill states they informed Chadwick they wanted something to prcsent to the Council on the 26th of March. R.egarding Gold Nugget. the Planning Commission looked at it and stated on 2 occasions that they still ICel it should be residential and not changed. The Council had the opportunity to have the Planning Commission look at this item again also. O'Neill suggested getting certain people such as members of II RA/I DC/MOAA. together to discuss the option of industrial/residential. Lahr asked if the Council were to ask the Planning Commission to re-zone. could they and O'Neill stated yes. He noted that the process starts at Planning Commission level with public hearings first to rnake COll1ll1entslfindings, noting that the Council can do as they want. Lahr also added that iniliating discussion on Gold Nugget at this time it may change negotiations with Chadwick. which could be either a positive or a negative. -9- HRA A�(yenda - 3/7/01 HRA recommendation is to move toward the Chadwick property. The members discussed the possibility of the HRA going to the IDC meeting and stating their desire to work with them toward the acquisition of the Chadwick property, also stating that if a deal cannot be made in 60 days it should be opened up to looking at other properties. A MOTION WAS MADE BY DARRIN LAHR AND SECONDED BY DAN FRIE TO RECOMMEND STAFF FIND COST PER SALEABLE ACRE FOR THE DEVELOPMENT OF THE CHADWICK PROPERTY. Motion carried unanimously. This to be brought to the next meeting. 11. Consideration to authorize payment of the monthly HRA bills. A MOTION WAS MADE BY DAN FRIE AND SECONDED BY BOB MURRAY TO AUTHORIZE PAYMENT OF THE MONTHLY HRA BILLS. Motion carried unanimously. 12. Consideration of Executive Director's Report. H -Window is closing its doors, employees given notice of last day being -3 /16/01. Koropchak has been in contact with Babcock who states the building is up for sale and the business has been sold to someone in Wisconsin. The bond was retired. Additionally, the HRA agreed to reimburse them for site improvements; semi-annual payments from 1995 to 2003 - $40,000 still owing in payments, the company is in default of their contract which Koropchak will advise of no further reimbursement. If H -Window sells that building and requests the HRA to assign to the new owner, the HRA could do that. 13. Committee Reports - None 14. Other Business - None 15. Adjournment. Chair Darrin Lahr adjourned the meeting at 10:30 p.m. IRA?Chiair !� /1-1 �,' d" g��� cor er