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HRA Minutes 03-06-2002 . . . MINUTES MONTICli:LLO HOUSING AND REDEVI~LOI'MENT AUTHORITY Wednesday, March 6,2002 - 7:00 p.m. 505 Walnut Street - Bridge Room Commissioners: Chair Dan Frie, Vice Chair Brad Barger, Steve Andrews, Bill Fair and Council Liaison Brian Stumpf Absent: Darrin Lahr and Rick Wolfsteller Staff: Ollie Koropchak and Lori Kraemer 1. Call to Order. Chair Frie called the meeting to order at 7:00 PM. 2. Consideration to approve the February 6, 2002 HRA minutes. A MOTION WAS MADE BY BRAD BARGER TO APPROVE 'n-IE MINUTES OF THE FEBRUARY 6, 2002 HRA MEETING, STEVE ANDREWS SECONDl,:D TIlE MOTION. Motion carried with Bill fair abstaining. " " . Consideration of addinl.': or removing items from the al.':enda. Executive Director Ollie Koropehak removed items Band C and placed them as 4B and 4C on the agenda. 4. Consent Agenda. A. Consideration to adopt a resolution approving the modification of the Redevelopment Plan of CMRP No.1, and establishment of the TIF Plan for 'TIF District No. 1-29 (Housing District). Recommendation: Adopt the resolution approving the modification of the Redevelopment Plan ofCMRP No. I and establishment of the TIF Plan for TIF District No. 1-29. A MOTION WAS MADE BY STEVE ANDREWS TO APPROVE TilE CONSENT AGENDA. BILL fAIR SECONDED THE MOTION. Motion carried unanimously. 413. Consideration to approve authorization to enter into the Contract f()r Private Development among the HRA. Front Porch, and the City of Monticello. HRA Minutes - 03/06/02 . Koropehak advised that Mike Cyr had stated some concerns regarding this item. lie advised the HRA members that one concern was regarding the 7th Street and Minnesota Street right-of-way as Lu' as how the agreernent with the City is written. He also adviscd that hc is purchasing back a portion of 6lh Street with credit he will be issued. Cyr stated that Ruff Auto erected a fence approximately 50 years ago and that it is encroaching into the ROW. According to the contract from the City, it is stated that the City has the right to back out of the agreement with a written notice. I-Ic stated hc has already spent approximatcly $20,000 on this project and hc wants to know what recourse he would have if this wcre to happen, if the City could not get clear title. Ruff has taken the stance that he believcs he has rights to this property. Cyr added that he initially approached Randy Ruff prior to the start of this project, and that Ruff was aware of the encroachment and was willing to work with Cyr in having the fcncc and cars moved. Since that time, RufCs attorney advised that he may have rights to that property. Cyr then stated that he believes that whenever a City street is vacated it has to be offered to property owners on both sides. Cyr advised also that he obtained signatures for the request for the vacation, but then it seenlS Ruff changed his mind. Cyr advised that City Administrator Rick Wolfsteller had written hirn a letter stating that the City would move the cars at Ruff's expense, if the need be. . Bill fair asked Cyr if he was requesting an amendment to the contract, stating that the liRA could not do this without the City's consent and that this would have to be discussed with thc City Attorney. Koropchak adviscd that she had spoken to the HRA Attorney and added that Cyr had received excerpts from the agreement with the developer and the City. The Attorney stated that these are always done with a quit c1ainl deed when it involves public assistance. There is also title insurance which should cover any concerns with a quit claim deed. She did also reiterate that the City could go in and remove the vehicles and bill the owner. Cyr stated that he did purchase some of the property already and that the only thing stopping the project from being able to nlove over 30 feet to avoid the concern with Ruff's fence, is an existing house. Cyr asked the lIRA if they would purchase that piece of property and would they move with him quickly and efficiently to make the project work if that were to would happen. Koropchak asked Cyr if he would be comfortable if the contract would address specifically that the fence on the property would be cleared. The HRA Attorncy stated that there could be specific language added to the contract to establish this. Cyr also added that the streets do not have the capacity to drain the project properly and . 2 HRA Minutes - 03/06/02 . he would need to run the storm sewer much further (approximately 600 feet), stating he initially thought it to be 100 feet. Also there is a slope where they would have to install a large storm sewer and this is adding additional expense. He wondered if the City would help with those added costs which he estimated to be an additional $40,000. Barger asked what the City normally does in thcse cases and Brian Stumpf advised that they install and assess baek to the benefitting properties. Cyr stated he needs to close on the remainder of the property by the end of March. He also asked if the start date listed in the contract could be amended. Stumpf asked if Cyr would like him to talk to Ruff and he stated yes. Bill Fair added that approaching RutT might give him the impression that he has rights to this property. Cyr stated his goal in this matter is to get clear title from the City. Again Koropchak advised that the HRA Attorney did not think that a Warranty deed was the right way to proceed. He suggested Cyr provide language that he would like included in the agreement instead. . Koropchak also stated that regarding Cyr's request f()r increased TIF assistance, he would need to provide another performa prior to adding additional assistance. Chair Frie asked Cyr if his request is to reconsider the Contract if the City is not able to provide clear title, and also would he like Brian Stumpf to approach RutT on this matter, and Cyr stated that was his request. A MOTION WAS MADE BY BtLL FAIR TO APPROVE AUTI-HJRI/ATION '1'0 ENTER INTO TI IE CONTRACT FOR PRIVATE REDEVELOPMENT AMONG THE liRA, TI Ir~ CITY, AND FRONT PORCH ASSOCIATES, L TO WITH CONSIDERATION TIIAT IF TI IE CITY IS UNABLE TO PROVE CLr~AR TITLE TO RANDY RUFF'S PORTION OF TIlE PROPERTY, THAT THEY WOULD RECONSIDER TilE LEVEL OF 'fIF ASSISTANCE. BRAD BARGER SECONDED THE MOTION. The motion carried unanimously. There was further discussion regarding the drainage issue and it was stated that Cyr would have to come back to the lIRA with that request. 4C. Consideration to approve authorization to enter into the Contract fl1r Private Redevelopment among the I IRA, Ilans I lagen Homes, Inc., and the City of Monticello. Koropchak provided additional infonnation regarding the Wild and Scenic Act as it pertains to this item, adding that the Planning Commission would be addressing this as well. Koropchak advised that she had spoken with Hans Hagen's attorney regarding the contract stating that if a lawsuit were to arise due to dehlult, would the HRA be in agreement to go to arbitration. Also asked that if an agreement could not be reached, that . 3 . . . HRA Minutes - 03/06/02 each party pay their own attorney's fees. Koropchak stated that typically the developer would pay for the liRA attorney's fees and her suggestion was to agree to a lawsuit not arbitration, with each party paying their own attorney's fees. Koropchak also stated that Steve Urittlnan had talked to Ilans Hagen regarding the HRA's disappointment with the design change as they were looking li.)r family units versus single units. Hagen stated that high end empty nesters is where the market is. Grittman advised I-Iagen to look at ceiling heights and other changes to make the design more appealing as well. Koropchak also stated that Bret Weiss had reviewed the grading plan and that the front porch on the northeast corner was too close to the street to install the sewer lines, and that there needs to be some accommodations to the grading plan. As the preliminary development agreement expires in April, Koropchak advised the HRA that she would like them to not make any motion at this time and to address this item at the April meeting after the Planning Commission had reviewed it. Steve Andrews asked if the HRA thought maybe another developer might be interested in developing this property and they stated they were sure that there would be. Also asked if they had approached Hans Ilagen on a mix of units and Koropchak advised that she believed they had. Andrews stated that he felt they should really make sure this is what they want to do. Hrad Barger added that it does seem to be the trend in other cities to be marketing more for singles or upsealc empty nesters closer to downtown areas. It was also noted that Hans Hagen is good at what he does and knows the market. A MOTION WAS MADE BY BRAD BARGER TO TABLE ANY ACTTON UNTIL THE APRIL MEETING. STEVE ANDREWS SECONDED THE MOTION. Motion carricd unanimously. 5. Consideration of feedback from the meetinj2 with Block 52 property owners and action to movc rorward if necessary. It was advised that Consultant Mark Ruff, lIRA Chair Dan Frie and Koropchak had mct with Kathy Froslie, Biff Springborg, Stevc Johnson and Kevin Heaton on Wcdnesday, February 27, 2002. The mecting allowed time to gather information fi'om the property owners and to inform property owners of the time clock the HRA is under and the lIRA's need to weigh the best economical site(s) to spend thc tax incrcment. Dan Frie added that he had responses from two of the owners regarding their potential interest, as well as the asking prices tlH their property. Froslie, who owns Lots 4,6, and 14 or I3\ock 52, indicated that she is ncaring retircment and therefore her interest in selling, and that she would like to cash out. 4 III{^ Minutes - 03/06/02 . Springborg. who owns I,ot 3 which consists of a concrete building that is approx 5,000 sq 1'1. with heated storage and a restroom h1Cility, based his selling price on relocation costs or replacement cost of a building that size. lie is willing to sell with rent back for 3 to 4 years before retiring. Frie also stated that they had met with Steve Johnson who owns Lots 10, 13. 15. and 16, and Kevin lIeaton who owns I,ot II, (the liRA owns Lot 12). Both parties are interested in participating in a redevelopment project as partners. Their rate of return would be similar to what they are getting now. Evaluation is based primarily on the income approach to the property. Johnson provided some numbers as well. Heaton added that Preferred Title would expand and is interested in occupying any new building and become a major tenant. It was also added that Lot X, owned by John Poirer, was also a possibility. . Two different potential projects were described, one on north end of the block and one on south. I t was added that the owners of Lots 5 and 9 had not yet responded. A concern was noted by Johnson and Heaton in the method for determining value on the north half of the block, adding that it would be difficult to get a rate of return unless the types of dollars would be retail or high volume such as a restaurant/bar. Their position was that it would probably not be retail or a larger restaurant. but more sll1aller businesses and professional office space. Another concern was how much of the money bonded for is leCt to work with. Koropehak advised that she talked to Mark Ruff of Ehlers and they had not run the numbers yet but would get them to the HRA by the April meeting. Her guess is that it is about $550.000. She added that they do really need to rerun the numbers, especially with the class rates going down. Koropchak was asked to look at replacement costs. espeeially for the Springborg property. Parking in redevelopmcnt will be an issue that needs to be addressed and Koropchak added that the liRA may want to authorize Steve Grittman to eonduet a parking study. Dan rrie asked Steve Johnson if he had spoken to any other property owners yet and he stated hc had, and that there were sevcral people with interest. Johnson added that they are looking fl.)\' direction from the HRA. Brad Barger asked what their idea of a projeet would be, and it seemed that they werc on the same level as the liRA with the idea ofa mixed used of businesses, something that was viable, with low enough rents so that money can be made. Bill Fair asked about a larger business with smaller businesses around it and Steve Johnson stated that would also be a possibility. He also stated that traffie patterns on Highway 25 and County Road 75 would compliment rather than detriment, but that there are design issues. Johnson stated he would do some studies of businesses that currently do not exist in that area and see if they would work at that location. Would target the types of people they would want in that development, rathcr than hoping for someone to come to them. . 5 . . . HRA Minutes - 03/06/02 Fair asked about redevelopment downtown such as an idea of going out for RFPs from people interested in these projects. Dan rrie stated he did not think that with a town our size there would be 111uch interesl. Heaton also advised that they are hesitant to go too J~lr with a project until they know what the lIRA was looking f(JI'. The consensus appeared to be that there is interest in a project on the south side of the block and that they should consolidate properties. They like the idea ofa partnership for owners versus absentee landlords. Barger advised that he feels the HRA needs to secure properties so there is a resource for a project and should look at that first. Frie stated that he felt the Springborg property, and even the Froslie property, had too high of an asking price. Frie added that the HRA is interested in a project and would likc Johnson and lIcaton to work on pursuing potential partners and work with a consultant, and then come back to the HRA. 6. Consideration to discuss f()J' acceptanee the proposed I-IRA goals for 2002. Koropchak advised that at the HRA meeting in February, it was suggested she run some TIF numbers estimating the all10unt of tax increment available from TIF Districts No.5 and 6. These two districts are not subject to pooling restrictions. She also rell1inded them that TIr can no longer be used f())' reereational projects. In running the numbers and beginning in payable 2002, the tax increment is reduccd by about 40% due to the classification rate reductions; however, the property tax remains stable due to the increase in the local tax rate. Koropchak advised that with the liRA's annual meeting scheduled f()r April, Rick Wolfsteller will provide an account of each district and those districts which have bcen closed. It is important to recognize any anticipated T1F District shortf~llls. Also, it is irnportant to pledge surplus tax increment dollars as a measure to secure those dollars as legislators keep amcnding TIF Statutes and our dollars could be lost. She also authorized Mark RuJT to run numbers on other TIr districts. She stated that surplus dollars from Districts 5 and 6 would total $868,977 over the life of thc district, through 2013, and that thcre is also about $556,000 available for industrial land. Bill Fair asked about acquiring industrial land and devcloping it, questioning if the HRA has the reserves fix it or would that stop the HRA from pursuing other projects. Koropchak advised that if the City could acquire land for $10.000 per acre, and there were dollars from reserves to pay for the land and market the land for $1 per acre, it could crcate a TIF Dist fix that amount of acreage and pay itself back for the land and install infrastructure, but the City would have to buy the land at a reasonable price. Fair asked that rather than bcing a property owner, could thc I IRA work with a developer 6 . . . HR^ Minutes - 03/06/02 on providing help with infrastructure. Control of land cost is the key. Coals will be discussed further at the Aprilllleeting. 7. Consideration of authorizing payment of Februarv HRA bills. A MOTION WAS MADE BY BRAD BARGER T'O AUTHORIZE PA YMENT Of THE FEBRUARY liRA BILLS. STEVE ANDREWS SECONDED THE MOTION. Motion carried unanimously. X. Consideration of Executive Director's Report. Koropchak provided her report, adding that the local business wishing to expand was looking at the fall of 2003 and that she would be meeting with them again and had provided thenl with a list of builders. She also added that she had been in contact with Bob Esse and Brad Johnson regarding the former Amoco site and that it is scheduled to be demolished by May I, 2002. The comprehensive plan will be discussed at the Planning Commissions April meeting. Dan Frie added that Shari Harris had called and stated that they had hit a stumbling block at this time. Duane Gates has accepted the offer on his property and they are still working on the other two. Koropchak added that Sunny Fresh Foods/Cargill has agreed to donate a certain amount of dollars since the amount has gone over the initial budget. 9. Committee Rcports. There were no reports. 10. Other Business. Nonc 11. Adjournment. A MOTION WAS MADE BY BRAD BARGER TO ADJOURN TilE MEETING AT 9:15 PM. BILL FAIR SECONDED TilE MOTION. Motion carried. QJ r;:~fl<R_ lIRA Chair ~~n1hA" ..~ Recorder r_~ 7