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HRA Minutes 06-27-2002 . . . SPECIAL MEETING MINlJTI'~S MONTICELLO HOUSING AND RRDEV~~LOPMENT AUTHORITY Thursday, June 27, 2002 - 6:00 p.m. 505 Walnut Street - Bridge Room Commissioners: Chair Brad Barger, Dan Frie, Bill Fair and Council Liaison Brian Stumpf Staff: Ollie Koropehak and Lori Kraemer Guests: Jim McComb, Steve Johnson, and Kevin Heaton 1. Call to Order. CHAIR BRAD BARGER CALLED THE MEETING TO ORDER AT 6:10 P.M. AND DECLARED A QUORUM. 2. Consideration to approve the June 5 and June 18.2002, liRA minutes and June 17,2002, liRA Summary. A MOTION WAS MADE BY BILL FAIR TO APPROVE 'THE MINUTES OF TilE JUNE 5. 2002 REGULAR lIRA MEETING. TilE JUNE 18,2002 SPECIAL liRA MEETING, AND THE SUMMARY OF TilE JUNE 17,2002 MEETING. DAN FRIE SECONDED THE MOTION. MOTION CARRIED UNANIMOLJSL Y. ., -) . Consideration of adding or removing items hom the agenda. Koropchak removed Item 5 from the agenda and added consideration to authorize entering into a preliminary agreement with Product Stamping. 'fhis was placed as item 8. Koropchak also added a request by Kennedy & Graven. This was placed as item 13. 4. Consent Agenda. None 5. Consideration to approve awarding the bids lor Front Street liRA Site Grading. Koropchak and Bret Weiss, WSH & Associates, advised that bids were read at City lIall earlier that day. Weiss advised there were six bids ranging from $67,913 to $108,326 with Veit & Company being the low bidder. Weiss stated these were all competitive bids and recommended awarding the bid to Veit & Company. Dan Frie asked if it was typical to award the bid to the lowest bidder or to consider local bidders. Weiss stated that typically they do award to the lowest bidder unless there are previous problems with that bidder. lIe also added that Veit & Company is considered a local business and that they do a lot of work in Monticello. HRA Minutes - 06/27/02 . A MOTION WAS MADE BY BiLl, FAIR AWARDING THE HID FOR THE FRONT STREET HRA SITE GRADING TO VEIT & COMPANY IN THE AMOUNT OF $67,913.00. DAN FRIE SECONDED TIlE MOTION. MOTION CARRIED UNANIMOUSL Y. It was stated by Koropchak that the work will begin after July 4, 2002. 6. Consideration to review the completed McComb Development Feasibility Analysis for Block 52 and authorization to proceed Jim McComb advised the HRA of how they arrived at their numbers. Koropchak questioned if the parking included landscaping and lighting and McComb stated landscaping and drive aisles, but no lighting. McComb advised of the approximate costs depending on which parking alternative was chosen. . Fair asked based on this analysis where do the owners go to talk realistically about the financing of the project and McComb stated he has referred them on to a mortgage broker. They have also been speaking with KKE regarding building/construction costs. Barger asked about square footages and types of uses, questioning if they have researched what types of uses would go in to this type of building and McComb stated that was not an authorized study at this time, but hc does know of some types of uses, just not how many. He advised that professional uses would be on uppcr t100rs and that they would need to see how much intcrest this generates, stating there is interest now, but they feel it will take a new building to generate. I-Icaton stated they will be taking approximately 5,000 sq. ft. for their business to begin, and advised that they may start with contCrence rooms on the main level and small oilices on the upper t100r. Fair stated that he sees the II RA involvement as somewhat of a faeilitator for the downtown revitalization plan and that this project could be a cornerstone. Barger asked if there wcre any relocation costs figured in this analysis and McComb stated they were not included. Fair felt it was beneficial for the partners to handle relocation costs versus the HRA getting involved. Johnson stated that the leases would be ending near the time the project would be started which would eliminate relocation costs. Frie asked if phase 2 of the parking was in compliance with the city's ordinance and McComb advised that he did not check the ordinance, stating he used 3 Y2 spaces as a number fix his analysis. . They asked Johnson ifhe knew of Spring borg's intent /participation and he stated he believes that Springborg is open to talking but does not know how much he will ask for his building. Also added that Poirer may be an interested party and that Froslie is not interested at this time. Fair asked McComb to clarify the development fee listed in his analysis and what is actually covered under that. McComb statcd this is a standard part of the proforma, and that it includes such things as managcment of the project. Fair thought that a project of this magnitude needs to be kept moving along and closely monitored. 2 . . . HRA Minutes - 06/27/02 The lIRA felt that the numbers in this proposal were high and Johnson stated they agreed, adding that this is just at coneept stage right now and they also need some questions answered. lIe also stated that they have been asking Koropehak how much funding is available and that this will help them determine what they can proceed with. Johnson added that this is a project that will bendit the city, businesses and schools as well. Barger advised that generally an applicant needs to go through the but-for test first, advising the HRA of what the costs are, showing where they are short, and the lIRA will make a determination from there. Frie asked Johnson if what they are asking is that the HRA finds a way to fill the gap of 1.3 million and they stated that is basically what they are looking for. Frie stated he was in f~lvor of the conccpt and would like Mark RuiT of Ehlers and Associates to look at it and advise the HRA, stating he was in f~lVor of the project if it is feasible. Koropchak advised that she had provided this same information to Grittman and Weiss. Bargcr asked Koropchak if there had been any feedbaek from staff yet and she stated no. Shc also added that the gap shown isjust on the development of the property, not parking. Frie asked if they would still be responsible for relocation costs even if the leases were up. Koropchak also stated the dollars would have to be up-front, not pay as you go, and advised that if the HRA does up-front they would need to make sure the project gets done at a specified time. Barger asked McComb why thc land acquisition costs were included since they already own the land, and McComb advised that the land costs had to be included to make the ratc of return numbers work. Fair stated he would like stafT and Ehlers to rcview and come back with a report on feasibility. He would like a time table fronl the applicants as well. Johnson said that it would make sense to be have the building rcady when the current leases expire, adding that it might make sense to start the project in 2003 and phase 2 in 2004, one year to build and move in. It was advised that money needs to be expended by August of2004. It was discussed that they would like to see something from the applicants and city staff in 60 days, and they will discuss further at the August meeting. Johnson asked for specifics that they would like at that meeting and Fair stated perhaps getting input from financial people; Koropchak advised that the lenders will require a 80% commitment for funding. McComb stated that typically a broker would go out and get interested tenants versus completing a market study. It was thc consensus of the lIRA members to get input tt'om city staff and Mark Rutl as well as more information from the applicant including floor plans and lender information. 7. Consideration to approve authorization to enter into the Contract for Private Development among the CMHP, the HRA. and the City. Koropchak updated the BRA on the status of the project and fair asked when it was proposed to start. Koropchak advised that they needed to have 5 units completed by December of2002 with the remaining 6 by December 2003. StafTis still reviewing the 3 . . . HRA Minutes - 06/27/02 design and it was noted that there has been a request to include basements which is still being looked into. Koropchak stated there are 9 detached units proposed along Minnesota Street and the 2 on 6th Street are to be twin homes. She also advised that CMHP is requesting to have 3 finished units this year instead of 5. A MOTION W AS MADE BY DAN FRl1.: TO APPROVE AUTlIORIZA TION '1'0 ENTER INTO TilE CONTRACT FOR PRIV ATE DEVELOPMENT AMONCr '1'1 IE liRA, THE CITY, AND TI-II~ CENTRAL MINNESOTA Il0USING P ARTNERSI-lIP, AMENDING 'rHE CONTRACT TO STATE THREE COMPLETED UNITS BY DECEMBER 2002. I3ILL FAIR SECONDED TI-]E MOTION. MOTION CARRIED UNANIMOUSLY. 8. Preliminarv al2:reement with Production Stamping. Koropchak advised that Les Wurm of Production Stamping signed the preliminary agreement and provided a deposit. She is asking the HRA to authorize entering into this agreemcnt stating that Mark RufT has advised this as well. A MOTION WAS MADE BY BILl, FAIR AUTI IORIZING THE HRA TO ENT[~R INTO A PRELIMINARY AGREEMENT FOR PRIVATE REDEVELOPMENT WITII PRODUCTION STAMPING. DAN FlUE SECONDED TIlE MOTION. MOTION CARRIED UNANIMOUSLY. 9. Consideration of a request f()r a Ictter of explanation as to the decision of the HRA not to pay business movinQ costs. Koropchak provided a copy of the check issued to Michael O'Connor and cover letter to Ilcfvey as dirccted by the lIRA, stating that Mr. Helvey has requested a letter from the II RA explaining why they elected not to pay f()[ the business moving costs, adding that they may wish to appeal this. It was the consensus of the HRA to provide a letter stating that thcy would rcquire proof that the business existed and if it did, that the business was operating at this location. It was discusscd that if it is found that thcre was a business and it was operating at this location, it was opcrating without the necessary conditional use permit and was in violation of city ordinance as it was a noncomforming use in the Central Community District. The liRA advised Koropchak to preparc this letter. 10. Consideration to authorize paymcnt of HRA bills. A MOTION WAS MADE BY DAN FRIE TO AUTIIORIZE PAYMENT OF THE I-lRA BILLS. BILL FAIR SECONDED THE MOTION. MOTION CARRIED UNANIMOUSL Y. 4 . . . I IRA Minutes - 06/27/02 11. Considcration of Executive Dircctor's Report. Koropchak providcd thc report adding a rcquest from a real cstate agent asking if the I-IRA would be intercstcd in acquiring a substandard property on Linn Street. It was the consensus of the members that they had no intcrcst. 12. Committee Reports. Nonc 13. Other Business. Koropchak stated that she had spoken with Dan Greenwieh who asked if the llRA would have any concern with him represcnting the HRA, EDA and the City. The HRi\ had no conflict with this as long as they wcrc not double billcd. 14. Adiournment. A MOTION WAS MADE BY BRAD BARGER TO ADJOURN TI IE MEETING AT 8:00 P.M. DAN FlUE SECONDED THE MOTION. MOTION CARRIED UNANIMOUSL Y. ~ 5