HRA Minutes 06-06-2001
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MINUTES
MONTICELLO HOUSING AND REDEVELOPMENT AUTHORITY
Wednesday, June 6, 2001 - 7:00 p.m.
505 Walnut Street - Bridge Room
Commissioners Present:
Chair Dan Frie, Vice Chair Brad Barger, Darrin Lahr, Bob Murray
and Council Liaison Brian Stumpf.
Absent:
Steve Andrews
Staff Present:
Ol1ic Koropehak and Lori Kraemer.
Guests:
Brad Johnson, Lotus Realty Services, Inc.
Barry Fluth, Masters Fifth Avenue, Inc.
Mike Cyr, MLC Building and Remodeling
1 . Cal1 to Order.
Chair Frie called the meeting to order at 7:05 pm.
2.
Consideration to approve the May 2, 2001 lIRA minutes.
A MOTION WAS MADE BY BOB MURRAY AND SECONDED BY DAN rRIE TO
APPROVE THE MINUTES OF THE MAY 2, 2001 I IRA MEETING. Motion carried
unanimously.
3. Consideration of adding or removinu items from the agenda. None
4 Consent Agenda.
A. Consideration to adopt a resolution approving decertification ofTIF District No.
1-12 (Aroplax). Recommendation: Adopt resolution decertifying TIF
District No. 1-12 (Aroplax).
B. Consideration to approve rescheduling the July regular meeting date of the HRA.
Recommendation: Approve rescheduling the liRA meeting from July 4,
2001 to July 11,2001.
C. Consideration to approve a resolution adopting the modification to the
Redevelopment Plan f(Jr Central Monticello Redevelopment Project No.1; and
establishing TIf District No. 1-28 within Central Monticello Redevelopment
Project No.1 and adopting the TIr Plan therefore. Recommendation: Approve
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HRA Minutes - 06/06/0 I
the resolution adopting thc modificaiton to the Redevelopment Plan for
Central Monticello Rcdevelopment Project No.1; and establishing TIF
District No. 1-28 with Central Monticello Redevelopment Project No.1 and
adopting thc TIF Plan therefor.
D.
Consideration to approve authorization to enter into a Contract for Private
Redevelopment among the l-IRA, the City, and Integrated Recyeling
Technologies, Inc. Rccommendation: Approve authorization to enter into thc
Contract for Privatc Development among the HRA, the City, and Integrated
Recycling Technologies, Inc.
A MOTION WAS MADE BY BRAD BARGER AND SECONDED BY DARRIN
LAHR TO APPROVE THE CONSENT AGENDA. Motion earried unanimously.
5.
Consideration to extend the effective date of the Preliminarv Developmcnt Agreement
between the HRA and Barrv Pluth and to authorize drafting of the Contract for Private
Rcdevelopmcnt.
Ollie Koropchak provided the staiTrcport advising that sinee the May 2 HRA mceting,
Johnson, O'Neill, and Koropehak met twice relative to the parking requirements and the
WAC/SAC fecs. Koropchak provided copics of the proposed terms and conditions for
purchase of the Amoco site via Johnson as dated May 7, 2001. Koropchak suggestcd to
include a seetion entitled Termination of Lease to avoid business relocation costs.
Johnson said the demolition/aequisition cost are $170,000. According to Johnson, the
first floor 5,700 sq ft of the building has been rcnted.
Koropchak advised the HRA to consider Items for the I IRA to consider whether to extend
the agreement; review proforma and cashflow projcctions; review level of pay-as-you-go
TIF assistance; and authorize the HRA Attorney to draft the eontract.
Brad Johnson, Lotus Realty, advised that they had met with the City rcgarding the
WAC/SAC fees and other eity fees and advised that their potential renter may pick up the
WAC/SAC fees in with the rent. Also discussed parking and the faet that adjaeent
property owners seemed to be willing to diseuss working with them. Johnson stated the
proposcd parking would continuc all the way down the block eventually. Johnson added
that he had spoken with Paulsen, Hammond & Coppey , but stated it is too early to be
talking with them at this stage. Johnson also stated that if they could get free land from
the City and be allowed to be short on parking, they could do the project.
Johnson stated they needed $45,000 to assist them in building public parking, which
could also be Llscd as available cross parking in that area. Also, Koropchak suggested
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HRA Minutes ~ 06/06/01
that once the developer is finned up, the City may ehose to lend the money for
acquisition of the Amoco site as an interim loan, with the developer stating they would
pay this loan back at closing. Johnson stated they would try to secure financing and
leasing in the next 60 days if the HRA gave the go-ahead. At that time they would look
into demolition of the Amoco site.
In further discussing the parking issue, Dan Frie asked about an alternate plan for parking
if one the current owners were not willing to give an easement to them. Johnson stated
they felt confident that they could find the parking.
Koropchak provided the members with a copy of the previous proforma, noting the only
change is that they arc putting two units over the carriage house and thc purchase prices
have increased. Also incrcased amount ofTIF. Koropchak pointed out to I IRA that
bascd off the market values that were provided by Ruff, unlike what their numbcrs show,
projccted TIF - net prcsent valuc is $127,000, a difference of$14,500 annually, their
numbers state $19,300. Koropchak qucstioned the proposed rate of return at 18+%.
Koropchak read the motion from April noting the diffcrencc in the dollar amounts. Thc
additional amount is the $45,000 for parking. SAC/WAC will he assessed by the city.
Brian Stumpf statcd that he was not comfortable with up-fronting the $45,000 f()r the
parking development. Koropchak noted the parking dollars are from TIF District No. 1-
22 excess fund.
A MOTION WAS MADE BY BRAD BARGER AND SECONDED BY BOB
MURRAY TO EXTEND TIlE EFFECTIVE DATE FROM JUNE 6, 2001 TO AUGUSl'
1,2001, WITHIN THE PRELIMINARY DEVELOPMENT AGREEMENT BETWEEN
MASTER'S FIFTH AVENUE, INC. AND AUTHORIZING THE HRA ATTORNEY
TO DRAFT A CONTRACT FOR PRIVATE REDEVELOPMENT. THE PA Y-AS-
YOIJ GO TIF ASSISTANCE IN THE AMOUNT OF THE LESSER OF A) THE COST
TO ACQUIRE THE AMOCO SITE AND DEMOLITION OF THE STRUCTURE, B)
NOT TO EXCEED $185,000, OR C) THE AMOUNT OF THE "AVAILABLE TAX
INCREMENT" GENERATED FROM THE PROJECT fOR THE DURATION OF THE
LIFE OF TilE DISTRICT. IN ADDITION, THE HRA APPROVED UP TO $45,000
FOR PARKING DEVELOPMENT ON ADJACENT PARCELS FROM SURPLUS
FUNDS WITHIN TIf DISTRICT NO. 1-22. Motion carried unanimously.
6. Consideration of an updatc of thc proposed Front Strect redeveloDmcnt proiect and
approve necessary action to proceed.
Koropchak also providcd updated cash flow projections regarding TIF Dist 1-22. The
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Tl F District No. 1-22 excess fund is $690,000 NPV including Front St. acquisition cost.
Koropchak advised that via Ken Helvey, relocation advisor, and O'Connor's attorney,
John Peterson, it appears O'Connor does not accept the HRA offer of $145,383 which
includes the business relocation benefits. Prior to the added relocation benefits, the
HRA's olTer was $130,352. Mr. Helvey informed me this a.m., Mr. O'Connor is looking
for $165,000 to $175,000. With the City Council's position to not condemn property, the
Mr. Helvey has had no leveraging power for negotiation. From Mr. Helvey's
prospective, to do a 90-day quick take at this point may not be worth it when considering
time and cost. Mayor Belsaas was invited to the meeting with Mark Ruff on Monday,
June 4, and HRA Chair and myself will again address condemnation with the Mayor. If
the HRA were to adopt a resolution authorizing condemnation at June HRA meeting, the
90-day quick take begins the day the petition is filed at the County. This brings us into
September. In the meantime, the HRA has lost tax increment revenue due to reduction of
classification rates; with no demolition by June 30, 2001, the parcels will be reinstated at
a higher market value (tax capacity) causing less tax increment generated from the
project; and a one-year delay in the project, again reduces the amount tax increment
collected. The Preliminary Contract with Hans Hagen is cflective through October 2001.
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A letter dated June 5,2001 from Attorney Peterson noting O'Connor's firm offer of
$169,500 was submitted to the commissioners. Koropchak did ask several of the CC
members who were not in favor of condemnation, but thought the lIRA could go back to
O'Connor with half of the dillerence in the olfer from the HRA & the counter offer from
O'Connor. Brian did advise that he would be in favor of condemnation versus paying
that much extra to O'Connor as the feeling is that O'Connor is trying to gain from the
city. Also noted that if condemnation did not occur on this property, this could set
precedence for Block 52 as well.
They also discussed the possibility that the city would end up with O'Connor's attorney's
fees as well and they were aware of this.
A MOTION WAS MADE BY HRAD BARGER AND SECONDED BY DARRIN
LAHR TO ADOPT A RESOLUTiON AUTHORIZING 90-DA Y QUICK TAKE
CONDEMNATION FOR THE PROPERTY LOCATED AT 218 FRONT STREET,
SUBJECT TO COUNCIL'S BLESSING. Motion carried unanimously. A motion to
adopt a resolution authorizing 90-day quick take condemnation for the property located at
21 g Front Street subject to the approval of the City Council. BB/DL. Unanimous.
There was further discussion by Darrin Lahr asking Koropchak to advise Mr. O'Connor
and his attorney of the HRA' s decision. So noted.
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Koropchak also updated the HRA regarding the Schlief house and plans to close on the
contract for deed the week of June 18, 2001 .
Koropchak reviewed the action taken by the HRA at their April meeting in that the
commissioners approved a motion to demolish the Bostic, O'Connor, Schlief, and HRA
structures. The Public Works to move the Schlief garage and the Fire Department
requesting use a of structure(s) for purpose of a "test hum". At the liRA meeting in May
and upon the request and interest of Rich Kline to acquire and move the O'Connor house,
a motion was made to table any action as was premature given the HRA did not own the
property and noting the lIRA requirement to hold a public hearing upon the sale of
property. Koropchak did check with legal counsel rclative to the need for a public
hearing. Since it is the structure only and not the property, and given a city employee is
interested as well as the seller and perhaps others, the recommendation by legal counsel is
for the lIRA to solicit bids and award it to the highest bidder. Again, the Building
Official determined the parcels met the substandard test for estahlishment of a
redevelopment district and the intent was to remove substandard structures not move
substandard structures. A bidding process would not guarantee the whereabouts of the
new site location (city or township) or whom the highest bidder. No action required as
authorized condemnation.
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Koropchak went on to state that currently the HRA owns the Bostic propeliy with a
possession date of June 15, as well as the Reed garage. In conversation with Fire Chief
Scott Douglas, it takes the fire Department a minimum of two weeks to prepare and file
the necessary permits for a "test burn". Therefore, Koropchak asked the HRA to make a
motion to authorize either demolition or for the fire Department to test burn.
A MOTION WAS MADE BY BRAD BARGER AND SECONDED BY DARRlN
LAHR TO AUTI 10RIZE TIlE fIRE DEPARTMENT TO EXERCISE THE "TEST
BURN" ON THE BOSTIC AND REED PROPERTIES, AT NO LIABILITY TO THE
CITY/I-IRA, BETWEEN JUNE 18 AND JUNE 29, 2001, WITH
DEMOLITION/CLEANUP TIIEREAfTER; ADD SCHUEF PROPERTY TO LIST IF
CLOSING DATE COINCIDES. Motion carried unanimously.
Koropchak advised that Rod Dragsten was asked to complete an appraisal of the raw land
of the Carlson property. She also advised that Carlson had left. a voice mail regarding
lawn mowing as they no longer have garage to store mower. and she was advised that it
was her responsibility as stated in the House Lease.
Regarding the Front Street public improvements, Koropchak advised that without an
executed Purchase Agreement with O'Connor, the Council has not been requested to
authorize plans and specs for replacement of the water and sewer lines and Front Street.
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HRA Agenda - 6/6/01
With the proposed classification rate reductions, Koropchak contacted our financial
consultants for advise relative to the need to issue a bond for the properties acquired by
the HRA along Front Street. At one time, the proposed legislation read to qualify for a
state grant to recover for any proposed tax increment deficiency caused by the reduction
in class rates, bonds needed to be issued by June 2. The HRA has invested about
$500,000 of up-front dollars along front Street without the acquisition of O'Connor, it
was the intent to issue a bond about completion of acquisition in order to repay the City
loans. As legislation has not a addressed the issue, the Attorney advised a wait and see
approach.
7.
Consideration of an update of the proposed Block 52 redevelopment project and approve
necessary action to proceed.
Chair Frie advised that they have met, or had conversations with all of the property
owners, except for Kathy Froslie, but ineluding Pat Sawatzke. lie did note that there was
one property owner not interested in relocating.
Additionally, Frie and Koropchak met twice with proposed owner Pat O'Donnell and
builder Mike Cyr. On Monday, June 4, Mark Run~ hie, Cyr, and Koropchak met to
determine site option one or two and gather information fix preparation of a proforma.
Also noted was that the attorneys working with Mike Cyr may want to do a smaller
project on Walnut Street. They advised that Springborg, Johnson, Poier and Heaton were
all interested, although Heaton was interested in something in the future, and not right at
this time.
Mike Cyr noted that the project on River Street that he had previously proposed would
still work and is in compliance with the downtown redevelopment plan and it is a mix of
commercial/residential. Working as well on Walnut Street on a project that the
attorney's currently own without the housing.
Koropchak advised that Mark Run"s recommendation was to move this onto the City
Council at this time.
Cyr stated that his project will work regardless of the Froslie building being there or not,
although the City planner's sketch showed the proposed project with a smaller building.
Cyr stated that if the Ri ver Street site is not available, his cl ients would move it to the
Walnut Street site.
Cyr also noted another group of building owners who may work with the project on the
Broadway and Pine corner where the city council indicated they would rather see a
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project started. Cyr also noted that one ofthc building owners had a nonconforming use
and this could be used as a bargaining tool as well.
The members did discuss the possibility of acquiring Steve Johnson's property now. It
was also stated that the attorney's should be advised of the HRA' s thoughts. Cyr did also
state that it really is the unwillingness of the city council to sell or condemn that they are
unable to go forward with the River St. project. lIRA members recommended to advise
Cyr's elients that the city would be unable to acquire thc properties in that time frame to
meet the September deadline.
Dan frie stated he would be willing to rescarch further the properties that are willing to
sell on Block 52. The HRA would focus their efforts on the willing sellers.
A MOTION WAS MADE BY DAN fRIE AND SECONDED BY BRAD BARGER TO
CONTINUE RESEARCH THE PROPERTIES THAT ARE WILLING SELLERS,
K))-INSON AND SPRINGBORG, AND THE HRA TO FOCUS THEIR EFFORTS ON
TilE WILLING SELLERS ON BLOCK 52. Motion carried unanimously.
8.
Consideration of authorizing. payment of monthly I IRA bills.
A MOTION WAS MADE BY BOB MURRAY AND SECONDED BY DARRIN LAHR
TO AUTHORIZE PA YMENT OF THE MONTHLY HRA BILLS. Motion carried
unanimously.
9.
Consideration of Executive Director's Report.
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St. I Icnry' s - In checking with John Komarek, it appears there is nothi ng new to
report on the proposal to redevelop this site.
Scattered Housing Grant - In talking with Sherri Harris, the next round ofMHFA
applications are due July 13,2001. It is the intent to re-submit the Monticello
application for the proposed affordable housing project along 6th and Minnesota.
The City Council did approve the purchase of the Kauf1Inann property (raw land)
at $45,000 or $4.13 per square foot. This parcel within the targeted project area.
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Small Machine Shop ~ Koropchak working to find a small one acre lot for
construction of a 10,000 sq ft building. Lake Tool not interested in selling extra
lot, Winkelman construction lot will build to suit, and checking with Pfeffer
relative to PUD or subdivision to include the potential relocation of Springborg.
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Twin City Die Castings Company - lIRA members received an invitation to join
the Commissioner of Trade and Economic Development on a tour of the facility.
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HRA Agenda - 6/6/0 I
The State invested a $500,000 grant and sold industrial revenue bonds for this
project.
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Wage Levels - Dan Prie submitted an article from the St. Cloud paper relative to
wage levels.
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Industrial Land Purchase - Council elected to table any action to purchase the
Chadwick property at this time. As you recall, the Council adopted a resolution in
June 1999 to actively pursue acquisition of Chadwick land. The resolution
drafted by the HRA, EDA, and IDC encouraged the Council to purchase the land
at a low price prior to inflation. The HRA and City each committed $150,000 for
a total of $300,000 toward industrial land development and the HRA' s plan was
to commit the remaining tax increment ($400,000 NPV) generated from District
No. 1-5 towards the industrial land development. The combination of thesc
dollars would nearly have covered the gap of the initial swap offer. Both, the City
Comprehensive Plan and the MOAA Plan have the Chadwick parcel idcntilied as
industrial use.
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Production Stamping - Koropchak mct with Les Wurm and presented him with a
uses and sources statement. He wanted her to check out the State and Initiative
funding sources. Looking at a 40,000 sq ft building on 4 acres. Have talked with
Pfeffer. Process seems to be very efficient, Koropchak noted she, Herbst, Mary
Barger, and Ron Hoglund had visited them. May be a 2002 project.
10. Committce Reports: Marketing, Brad Harger. Nothing new to rcport.
Koropchak noted she wanted to call a meeting for the Marketing Committee sometime in
the next 2 weeks.
11. Other Busincss. None
12. Adjournment
A MOTION WAS MADE BY DARRIN LAI IR AND SECONDED BY BRAD
BARGER TO ADJOURN TIlE MEETING AT 8:45 PM. Motion carricd.
~a.:l-&, ~_
HRA Chair
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