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HRA Minutes 08-01-2001 . . . MINUTES MONTICELLO HOtJSING AND REDEVI~~LOPMENT AUTHORITY Wednesday, August 1,2001 - 7:00 p.m. 505 Walnut Street - Bridge Room Members Present: Chair Dan frie, Vice Chair Brad Barger, Steve Andrews, Darrin Lahr, and Bob Murray Absent: Stall: Guests: City Council Liaison Brian Stumpf Rick Wolfsteller, Ollie Koropchak, and Lori Kraemer. Brad Johnson, Lotus Realty Services, Inc. Barry Fluth, Masters Fifth Avenue, Inc. Pat O'DonnelL Smith & Associates Mike Cyr. MLC Building and Remodeling 1. Call to Order. 2. Vice Chair Brad Barger called the meeting to order at 7:00 p.m. Chair Frie then arrived. Consideration to approve the July 23, 2001 sDecial liRA meeting minutes. A MOTION WAS MADE BY DARRIN LAHRAND SECONDED HY STEVE ANDREWS TO APPROVE TIlE MINUTES Of TilE JULY 23, 2001 SPECIAL lIRA MEr,:TINCi-. Motion carried unanimously. It was noted by Ollie Koropchak, Executive Director. that the rninlltes of the regular HRA meeting of July I 1,2001 were not available and would be provided at a later date. 3. (~onsidcration of adding or rcnloving iteITIS fr0111 the al!enda. 4. 5. Koropehak stated that Mike Cyr wished to add a short presentation, this was listed as 78. Koropehak added an update regarding the annual city budget, this was listed as 9B. Consent Al!enda. N/ A Consideration to authorize II RA Attorney to draft a Contract fi.Jr Private Redevelomnent Agreement between the HRA and Smith & Associates. (Pat O'Donnell). Ollie Koropchak provided the staff reporting advising that at the July HRA meeting, Mike Cyr, proposed builder for the redevelopment project of the Smith legal fInn, made a concept and financial presentation to the HRA. The J IRA approved the preliminary \-IRA Minutes - 08/0]/01 . concept fi.x Project I (office building) and Project II (joint parking). No level ofTIF assistance was defined and it was suggested fix the developer refine the numbers. '['he parking requirement issues were referred to the planning staff. Additionally, Cyr submitted a copy of letters of intent for shared parking and option to purchase storage building. Koropchak also provided the cashtlows which retlect the new class rates, as well as a summary of Cyr's financial numbers of July 11. At a staff Ineeting among O'NeilL Johnson. Cyr, and Koropchak, it was determined through calculation of the existing and proposed building space the number of parking spaces required. The shortage was 23 stalls at $1 AOO'oo $32,200. Assuming the City would allow a cross casement, the parking devclopment costs including parking for Amoco site and contribution totaled $172,200. $140,000 development I $32,200 deficiency = $172200 - $45,000 approved = additional request of $127,200 for parking. Lastly, the City prefers to sell the 4,505 sq ft lot at a cost of $20,000 or $4.439 per sq ft rather than provide an casement. For comparison, the HRA purchased the Fluth lot (9,608 sq ft) on Broadway in 1997 f(x $50,000 or $5.20 per sq ft. . Koropchak added that Mark Ruff had previously advised the members that the TI F assistance becomes one of policy: Docs the liRA consider the housing substandard'! Is the land price reasonable? Docs the City want redevelopment? What is a reasonable price for parking? Koropchak added that the TIF cashl10w numbers t{Jr the recent bond sale included the projection or ne\y projects or tax increment. Mike Cyr was present to inform the lIRA ofrefined construction numbers and request. He provided revised project summaries. He noted that they had also looked at reducing the size of the building as an option as well. Cyr noted the approximate gap was the same for both buildings. Cyr also provided a summary regarding shared parking including the $45.000 which was assumed to be coming from the II RA funds already committed to parking development as part of the Amoco site project. Cyr advised that the approximate gap would be $95,000. Mr. Pat O'Donnell stated that the proposed one story building was not their first choice but was looked into due to the opposition they were receiving regarding their two story building project. It was stated that the one story would only be large enough for their finn at its present size. Koropchak then provided '1"1 F cash flow inf(Jrmation f(n their review. It was stated by Cyr, 0' Donnell and Johnson that the parking would be deficient if both projects were to move fCJrward, according to the city's ordinance, although the parking demand would be at different times of the day. It was again stated that there is an administrative perceived parking problem. . Koropchak advised that the developer needs to COlnmence construction by September. 2 . . . liRA M inutes ~ 08/0] /0 1 To encourage redevelopment, the lIRA needs to determine level ofTIF assistance for the building project or parking project, both projects, or either project. If the HRJ\ can determine the amount of TIF assistance, this will aid the developers with their decision to proceed or not to proceed, and allows the details within the Contracts to be determined by I.egal Counsel. It may be best to direct staff to place the parking issue on the Council agenda given the decision of Council relative to the Town Centre project. Cyr advised that according to the city's comprehensive plan and counting the on-street parking, they would actually have over the required amount of parking spots and that this is strictly an interpretation issue in whether to count on-street parking. Bob Murray suggested the lIRA pick a level of assistance and forward that on to City Council for review and possible modification. Darrin Lahr added that the request is fiJr either $140,000 or $160,000, taking no taxes for 20 years, and that this would generate no income to lIRA. A MOTION WAS MADE BY DARRIN LAIIR AND SECONDED BY STEVE ANDREWS APPROVING T1-IE USE OF TAX INCREMENT FROM THE SMITH BUILDING PROJECT IN AN AMOUNT UP TO $124,000 FOR QUALIFYING REDEVELOPML':NT COSTS AND THE USE OF TAX INCREMEN'r FROM THE TIF DISTRICT 1-22 SURPLUS IN AN AMOUNT UP TO $45.000 FOR PARKING DEVFI.OPMENT COSTS. ADDITIONALLY, THE HRA AGREES TIIAT TilE USE OF TilE PUBLIC PARKING LOTS ARE NOT MAXIMIZED AND TIIAT TilE PARKING STALL REQUIREMENTS WITHIN THE CCD DO NOT ENCOURAGE DOWNTOWN REDEVELOPMENT, AND THEY SUPPORT INCLUDING ON- STREET PARKING AS PART OF THE PARKING STALL REQUIREMENT FORMULA; THEREFORE, TIlE lIRA RECOMMENDS THE CITY COUNCIL WAIVE THE $33,000 PARKING DEFICIENCY FEE AND Tf-H~ lIRA WILL REIMBURSE THE CITY UP TO $20,000 FOR THE CITY LOT FROM TIF 1-22 SURPLUS IF NEGOTIATIONS WITH THE DEVELOPERS rAIL. TIll,: DEVELOPER TO NEGOTIATE '1'1 IE ACQUISITION OF THE STORAGE GARAGE. Motion carried unanimously. 6. Consideration to extend the effective date of the Prcliminary Development Agreement or to authorize execution of the Contract f(Jr Private Development by and between the HRA and Masters Fifth Avenue, Inc. Koropchak advised that at the HRA meeting, Lotus submitted a list of comments relative to the draft copy of the Contract. Most of these were comments only and things for the developer to tie up. Koropchak advised Johnson that regarding the administration fcc, it increases each time the developer changes the Contract. Lotus was present at the June I-IRA meeting when the commissioners approved the level of Tlr assistance. Typical interest rates are between 8 to 9%. Koropchak advised the new TIF cashflow runs indicate a reduction in tax increment from $124,000 to $92,000. Mark Ruffs comment " -, . . 7. . HRA Minutes - 08/01/01 last month relative to Lotus' revised proforma: Given the housing tax capacity didn't change that much, the developer's taxes will be less, the mortgage amount should decrease not increasc. The Preliminary Developmcnt Agrcement was executed initially on August 2, 2000, that's one year ago. Koropchak notcd that if the developer does not have a signed purchase agreement and lease agreement, the H RA might consider the use of TI F with another developer. Koropehak did ask Brad Johnson if there was a signed agrccment and he advised that he is still waiting for a letter from the owner of the Amoco site who, Johnson added, seems to be agreeable, rcgarding contamination on the sitc. Contract was finished earlier in the week. They will not sign the agreement until they receive this letter. Johnson also added that they need to know what the estimated administration fecs would be and Koropchak stated them to bc estimated at least $10,000. Johnson stated he would like this estimate added to the developers agreement. A MOTION WAS MADE BY BRAD BARGER AND SECONDED BY BOB MURRA Y 'TO AUT I IORIZE EXECUTION OF THE CONTRACT FOR PRIV ATE REDEVELOPMENT BETWEEN THE liRA AND MASTERS FIFTH AVENUE, INC., AS AMENDED. Motion earricd unanimously. There was further discussion regarding the sale of the city's lot possibly to Barry Fluth for $20,000, as part of both the Cyr and Fluth projects, although it was statcd that this is not an HRJ\ decision, but rather should be forwardcd to the City Council. Consideration to authorize HRA Attorney to draft a Contract for Private Redevelopment betwccn the HRA and MLC Building and Remodeling. Koropchak adviscd that this item is related to the two abovc items and !nay be irrelevant if items one and two are not authorized. It appears if the level of assistance are determined and agreed upon by the developers, an independent Contract with Mike Cyr would guarantee the construction of the parking lot in a timely manner. This agreement would outline the joint parking agreement, cross easements, need to acquire the storage garage and city lot and is tied to the developmcnt oCthe Amoco and Smith sites. It was discussed that this !nay be done through the attorneys as an addendum to the contracts. Koropchak suggested getting O'Donnell and Fluth together regarding this agreement No action by the HRA was nccessary. 78. Request for Concept Approval for Redcvelopment and Construction and Request for Funding Approval for Redevelopment and Construction. Mike Cyr approaehcd the liRA asking f()r assistance of up to $100,000 to purchase and 4 . . . HRA Minutes - 08/01101 demolish a blighted property in order to build three market rate twinhomes at a sales price of $150,000 to $170,000. Koropchak stated that the liRA needs to determine if this is an area that can be a qualifying district and if this could be a housing district or redevelopment district, although she added that redevelopment would not cash flow with just one home. Koropchak will check into this. Cyr stated these will be owner/occupied homes and added that there is a vacant lot next to this home but it is part of the lot on the other side and the owner was not willing to split at this time. although he added that the owner would sell both. Cyr stated the selling price was too high at this time. The members stated that this seems to be a worthwhile project but Koropehak would need to verify that it qualifies. Dan hie also asked if there were other options available for financing. Koropchak stated number need to be run. Bob Murray asked what other information she needed from Cyr in order to run numbers and see if this project qualifies. Koropchak stated that she needs to check on legislative changes. The Inembers felt this process should start with Cyr and Koropchak getting together and running numbers. Cyr stated his time frame was 60 days bcf()re he had to act. Steve Andrews stated a possible option to create one TIF district to include the scattered housing district with a project such as what Cyr is proposing. Cyr added that he Inay be interested in working on that scattered housing project with this project. but it was noted that the liRA needs to wait on word regarding the application already submitted for to the State. They advised Cyr to come back at the September meeting. Koropchak was advised to work the numbers and provide them to both Cyr and the liRA prior to the September meeting. Bob Murray noted that he will not be at the September meeting. 8. Consideration of an update on projects withinrIF District No. 1-22. a) O'Connor - July 26, Helvey - Talked with Attorney Peterson who stated not eager to bring to trial. was meeting with O'Connor on July 27. Now that in legal proceedings, the liRA will require more documentation about business. Ifelvey will call on Aug 1 if new inf()rmation. Koropchak noted that the attorneys advised that it was probably not a good economic idea to go fl1rward with the condemnation, the members stood with their previous decision. b) Hans I lagen meeting - It is our goal to have a Contract executed with Hans by October 10, 200 L as this is the date the Preliminary Agreement expires. It was decided given the eminent domain process. the we wait and go out for plans and specs f()f the water/sewer/road replacement in DecemberlJanuary. People thought we'd get better prices. A PUD would be required. Ilans prefers and thinks overall costs will be lower if 5 . . . 9. 9B. IIR^ Minutes - 08/01101 the entirc site can bc cleancd-up and hrought up to 100% compaction (pad finished site) at onc timc. Nccd to call Amcrican Testing or Braun for cost estilnates. Will be a spring 2002 project. Approximately 1,800 sq ft livable space, selling price $185,000. Expectcd build-out time one year. c) Fire Department - Fire Chief Douglas asked ifthc liRA would consider reimbursing thc Firc Departmcnt fi.1r heverages and pizza following the test burn. See attached invoices $192.90 and $86.26. l-Ie also mentioned cost of straw bales but haven't received invoices. Additionally. the HRA is requested to reilnburse Bob Warner for window pane damaged during test burn. House next to Bostic. Requested use of Reed and Bostic garage fix ventilation drill. Schlid to be moved to Public Works next week. d) One year from now, the Carlson's will have vacated the house along the river. c) Once the II RA gets the Amoco, Smith, Hagen projects off the ground, we'll need to see what dollars are left, if any, prior to beginning discussions with Steve Johnson. She asked the members if it was still their desire to work on Block 52 after these projects are up and running. The HRA feels that the ordinance regarding parking needs to be looked into. Consideration to discuss amending the wage level criteria within the Rusiness Subsidy Criteria of the HRA and calling for a puhlic hearing. At the July HRA meeting, the comlnissioners were advised of the IDes question: Why does the city use tax payer's dollars to assist a business who pays non-livable wages? Because of the long agenda and lack of information, the commissioners tabled the item and requested further research of other community's wage Icvel criteria. The St. Cloud newspaper reported $12.25 average per hour without benefits. The Wright County Partncrship as Icast $10.00 per hour without benefits. Currently, Monticello is at $9.00 per hour without benefits. Generally speaking, the wage levels for local funding applications do exceed the local wage level criteria. Koropchak provided the wage and job survey results of 2000. Chair Frie provided thc liRA information on income levels needed to qualify for mortgages. 80b Murray stated that one of the goals of the city was to incrcase the value of the homes in Monticello, which has been accomplished. The mell1hers stated they had no interest in amending the wage level criteria at this time. All wcre in agreement. City Budget Update Koropchak stated that the date to get budget request inflmnation to Rick Wolf5teller was no later than August 8. She also advised of some changes in the legislation that affect the 6 . . . HRA Minutes - 08/01/01 budget as well. It was asked if there was anything the liRA members requested to be added to the budget and to think about it. Brad Barger asked ahout dollars for land acquisition f(Jr industrial purchases and Koropchak stated the I I RA could pledge dollars to this fund as well. 10. Consideration of authorizing payment of month Iv HRA bills. There was discussion regarding the request hy the Fire Department to reimburse them for refreshments, etc., and it was stated that they would prefer to have future bills pre- authori7ed. A MOTION WAS MADE BY STEVE ANDREWS AND SECONDED BY DARRIN LAHR TO APPROVE THE PAYMENT OF THE MON'rHLY liRA BILLS. Motion carried unanill1ously. 11. Executive Dircctor's Report. a. Quick TIt' Reports - Thc annual reports are duc at the State Auditor's Ot1lce on August I. A balanee sheet has been added to the report and a few other changes. Good checks and balance between Rick, I, and City Auditors. Summarized vcrsion printed in the Monticello Times, August 9, by law. SCll1i~annual 200 I pay-as-you-go payments due August I, 200 I - For your information, copy of the checks mai led. Tax incrcmcnt f()r July 2001 the lIRA received per district. Raindance, Lakc Tool, and Aroplax were late on payment so no increment. All three are now paid in full. Aroplax - Last month I reported I'd check with Aroplax relative to the late payment of the TIF Deficiency. The 200 I deficiency was paid and Paul Schoen requested the HRA consider not requesting thc payment in 2002. I believe 2002 would be their last payment. As you recall, the HRA just decertified the district. When I finish the Quick TIF Reports, I will hring it back to the HRA for a decision, if no shortfall exists. MCC - Although Murray is a representative on the Community Center Advisory Hoard, the attached is the second quarter 2001 report as presented hy Kitty to the Council on ./uly 23. EDMA Company - SBA application submitted for approval. EDA loan approved for $30,000. No TIF. 10,000 sq. ft, north of Lake Tool. Production Stamping on hold. Need to check about Red Wing Foods. Good 60,000 sq ft industrial lead from Olson General Contractors. 50/50 chance company will relocate from current location. Good lead tor I!- Window L1cility. Marketing Committee met July 26. To call Lccy Design for meeting relative to hrochure update and costs. Decided the IDC Luncheon not mccting it's objcctive. Will write ohjective and plans for husiness retention and expansion visits by IDC beginning Octoher. Decided MOAA decisions long-way off. Will get update b. c. d. c. f. " o. h. 1. I. 7 12 13 14. HRA Minutes - 08/01/01 from Chamber on Fall Banquet date and speaker at August IDC meeting. k On vacation August 7 through 14. Committee Reports: Nothing further to add. Other Business. None Adjournment A MOTION WAS MADE BY BRAD BARGER AND SECONDED BY STEVE ANDREWS TO ADJOURN THE MEETING AT 9:35 PM. Motion carried. HRA Chair E. g V4Rerder