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HRA Minutes 08-07-2002 . . . MINUTES MONTICELLO HOUSING AND REDEVELOPMENT AUTHORITY Wednesday, August 7, 2002 - 6:00 p.m. 505 Walnut Street - Bridge Room Commissioners: Chair Hrad Barger, Vice Chair Steve Andrews, Darrin Lahr, Dan Frie and Council Liaison Brian Stumpf. Bill Fair Rick Wolfsteller, Ollie Koropchak, and Lori Kraemer. Ahsent: Staff: Guests: Mark Ruff, Ehlers & Associates, [nc. Jim McComb of McComh Group, Steve Johnson. and Kevin Heaton. Kathy Anderson, KKE Architects [ . Call to Order. Chair Barger called the meeting to order at 6:05 pm and declared a quorum. 2. Consideration to approve the June 27. 2002, I-[RA minutes. A MOTION WAS MADE BY DAN FRIE TO APPROVE nlE M[NlITES OF THE I-IRA MEETING ON JUNE 27. 2002. STEVE ANDREWS SECONDED THE MOTION. MOTION CARRIED UNANIMOUSLY. "l ., . Consideration of addinl!; or removing items from the agenda. . Ollie Koropchak advised of a request hy Mike Cyr f()r an amendment to his Pri vale Redevelopment Contract . City Budget requests hy liRA 4. C:onsent Agenda. A. Consideration to approve a resolution approving the decertification of Tax Increment District No. 1-14 of the City of Monticello. Recommendation: To approve resolution approving the decertification ofTIF District No. 1-14. H. Consideration to approve a resolution adopting a modilication of the Redevelopment Plan for Central Monticello Redevelopment Project No. I, establishing TIF District No. [-31 within Central Monticello Redevelopment Project No. I, and adopting a T[ F Plan therefor. (Applicant, UMC) Recommendation: To approve resolution adopting modification of the Redevelopment Plan for Central Monticello Redevelopment Project No.1, estahlishing TIF District No. 1-31. Don Tomann stated he was excited to be moving to the City and looking forward 2 . E. . HRA minutes - 08/07/02 to working together. Andrews asked Tomann what his time frame was and he stated approximately April 2003 for occupancy, with the shell ofthc building up hefore winter. Koropchak advised that drawings Ii'om Olson were dropped ofT l()f review. Tomann advised that parking in the front of the building would include landscaping and vegetation for screening from the road. c. Consideration to approve entering into the Contract for Private Development among the HRA, the City, and Terrace & Mary Tomann Family Limited Partnership. Recommendation: To approve entering into the Contract I()r Private Development. D. Consideration to approve a resolution adopting a modification of the Redevelopment Plan for Central Monticello Redevelopment Projcct No.1, estahlishing TIP District No. 1-32 within Central Monticello Redevelopmcnt Project No. I, and adopting a TIF Plan therefor. (Applicant. Production Stamping, I nc.) Recommendation: To approve resolution adopting a modification of the Redevelopment Plan establishing TIP District 1-32. Consideration to approve entering into the Contract fi)f Private Developmcnt anlOng the HRA, the City, and Wurm Partnership L.L.P. Recommendation: To approve entering into the contract among the I IRA City and Wunn Partnership LLP. A MOTION WAS MADE BY DARRIN LAfIR TO APPROVE THE CONSENT AGENDA AS WRITTEN. STEVE ANDREWS SECONDED THE MOTION. MOTION CARRII':D UNANIMOUSL Y. 5. Consideration to review and discuss the revised McComb Development Feasibility Financial Analysis, to hear proposed development plans bv the Development Team, and to negotiate level of TIF assistance fCll' the proposed project. Koropchak introduced Kathy Anderson, KKE, Jim McComh, Kevin Heaton, Steve Johnson, and Frcd KaUer (representative for the owners). Jim McComb advised of the changes made to the first analysis and that since the last HRA meeting they have worked at putting togcther information with thc development team, adding that they are working with Brad Hainey of the Bainey Group, as their contractor. Kathy Anderson, KKE, providcd a site plan stating this would be a phased approach starting with a 34,000 sq. ft. building with lobby entry to the o11icc portion, retail on the first level and upper floors to he offices. The first phase is on the corner of Broadway and Hwy 25. Anderson stated there will be 179 surface parking spots, 48 underground, for a total of 227 spaccs. They will be using a eontrolled sign package with strict guidelincs in . 3 HR^ minutes - 08/07/02 . place. She advised therc would be views of the rivcr on the back side upper levcl and also stated that there would be a gap betwccn the new and existing buildings whieh would allow some daylight. Barger asked if this meets the city's requircmcnts for parking stalls and Anderson statcd these meet general standards but does not know about the city standards, stating they would be 60 f(Jl)t bays. Anderson stated phase 2 would be 32,900 sq. ft., and construction time line, fi'om start of construction on phase one to completion, is approximately 18 months. Fred Katter, Pineapple Managcmcnt Co., owners representative for redevelopment, statcd that he works with communities and owners and is involved in all phases of the project. He provided some background and advised that he handles environmental matters as well as acquisition of grants from State and other resources to assist the City in 1i.nancing. . McComb stated their objective at this mccting was to go through the changes in the report and move J()rward on discussions. Regarding construction costs. he statcd the design doesn't change square f()otage numbers significantly. Parking tabulation was changed based on design. They added W. Broadway and re-striping of Walnut St., and organized the parking on the municipal lot. McComb stated they ended up with more parking than in the original report, stating they had left 3X spaces on the southwest corner for the buildings that remain on the block, using 3.5 spaces per thousand J()r their calculations. Steve Andrews questioned how the parking demands relate to the actual requirements by the City and McComb stated he did not know, but had looked at what works with these types of businesses. Klatter added that this is supported by the 1'1'1-<: and parking Jar their tenants is a great concern to them as well. Andrews also asked if they are borrowing parking spaces from any other businesses and they stated no. They also included II spaces on the north side of Broadway and 58 on Walnut Street. Barger asked if current busincsses on Walnut Street had been included and he stated no. Kathy Anderson, KKE, said in comparison to Arbor Lakes Development in Maple Grove for mixed uses, it is typically 4 spaecs per thousand. Regarding the development costs the only change was in construction, which is approx. $800,000 less than what was previously estimated. For income profl.mna they decreased the rcnt for retail and office tenants. Retail is $15 per sq. ft., offieeis $12.5 per sq. n. stating a reduced income but also reduced the mortgage amount as well. Net rent is paying lor realcstate, gross rentll.)r tenant is not net, but Jar retail is $22.10 and office is $19.60, stating the tax per sq. n. would be amongst the highest in the City. They stated thcir taxable value would be $5.9 million, taxes at $171,000 for both phases. Rick Wolfstcller asked if they had conversations with the County Assessor to verify the value as he felt it seemed high. McComb felt it was valued at $110 per sq. ft., the mortgage is now $5 million and without assistance it would be about $2.7 million, stating the financial gap is $1.4 million without parking and $1.5 million with parking.. . Mark Ruff, Ehlers and Associates, asked there was a breakdown of the two phases and McComb stated there is not. It was stated the trigger point to hegin phase 2 would be 4 HRA minutes - 08/07/02 . leasing. McComb stated one of the things that could be done is a market study to determine what would be the appropriatc rental rate. Barger asked how they establish the land value since they already own the land and it was noted that land has a value that has to be incorporated into the project. Fred Klatter added that the financial institution requires appropriate value on the land, stating that this is an expense that has already been paid. It was also advised that Johnson and l-lcaton wi II have an appraiser val ue it. Mark Ruff asked McComb to explain the parking costs and how they arrived at that nmnber, and also asked what the cost would be for thc land that still needs to be acquired. McComb stated it is 2 times the assessed value which is what MnDOT uses to calculate. lie also did not know what the properties could be acquired for. Dan Frie askcd about the municipal fces on the soft costs listed in their analysis and McComb stated it was their assumption that was that the City might want to contribute those to the developer. Some communities don't charge sac/wac for rcdevelopment. Wolfsteller stated the City would still calculate it in somewhere, but where the money would comc from he does not know. He also stated that the City does give credit for existing uti lities. . Mark Ruff stated he agrees that the biggest issue would be to get a value from the assessor to base these calculations on. Pat Sawatzke, neighboring business owner. stated he was also concerned with parking and that he did not want to lose any of his spaces. McComb asked that the HRA make a motion to move forward on the Development Agreement, but Lahr stated that they need to look at the lcvel of TIF assistance first and thc Assessor's information will determine that. RufT statcd that a certain Llctor will bc acquisition. Barger noted they arc all in agreement that they want the project to go forward, but the HRA can only do what is within their means as far as the level of assistance. McComb stated that they would bc comfortable in letting the HRA dctermine the level of assistance at a later time. ^ MOTION WAS MADE BY DAN FRIE TO ENTER INTO A PRELIMINARY DEVELOPMENT AGREEMENT WITH STEVE JOHNSON AND KEVIN IlEA TON. STEVE ANDREWS SECONDED THE MOTION. MOTION CARRIED UNANIMOUSL Y. There was further discussion by McComb asking if the HRA wanted them to conduct a market analysis but the HRA stated that should be something the owners request and pay for, and stated also that thcy could look at the recent new buildings f(H that type of information. Barger asked if the companies that they hirc to lease the buildings would or should have that information. The developers should be the ones that are interested in that information, not the 11 RA. . It was the consensus that they would move forward and meet again at the Septembcr 5 . . . HR^ minutes - 08/07/02 meeting. 6. Consideration to authorize payment of lIRA bills. A MOTION WAS MADE BY DAN FRIE TO AUTHORIZE PAYMENT OF THE HRA BILLS. DARRIN LABR SECONDED THE MOTION. MOTION CARRIED UNANIMOIJSI.Y. 7. Consideration of Executive Director's Report. Koropchak provided the report and added information regarding the Carlson house stating that ashestos was found, bids were received for removal with Veit coming in lowest at $2,500. She also noted that the Front Street project came in ahove the Engineer's estimate. Front Porch Koropchak advised that Mike Cyr has asked for an amendment to his contract stating that the interest starts to accrue as soon as money is advanced and Cyr is asking fl.w the $12,300 to be changed to "1()t" general site or stump removal", which moves his accrual date. Koropchak believes the bank will advance the money. Cyr stated his expenses are COIning in higher than expected. Koropchak stated the lIRA is not to act as lenders, but approving TIr for gap financing only. It would cost the liRA to amend the contract and they suggested asking Cyr to pay f()t" the cost to amend, stating it did not seem feasible. The consensus of the HRA members was to not amend the contract. Magestic Heights/CMIIP - another developer is looking at the project to see if the costs could be reduced. The Planning Commission would have a special meeting on August 12 if this developer was ahle to construct at a lower cost. BUDGET' update. Koropchak reminded the HRA that last year the Council had discussed whether the city would put more money in reserves for industrial land and it was stated that the HRA had not requested any money. She asked if there were any requests she should include in the budget. There was discussion on the amount of money to request, noting that the City would match this amount. BRAD BARGER MADE A MOTION FOR TilE lIRA TO COMMIT $100,000 FROM THE HRA GENERAl, FUND AND MATCH FROM THE CITY TO BE USED FOR INDUSTRIAL LAND. DAN FRIE SECONDED THE MOTION. MOTION CARRIED UNANIMOUSL Y. Koropchak also advised that she would not he using Ken Helvey's services any further regarding the Front Street/Hans Hagen project. 6 . . . HR^ minutes - 08/07/02 g. Committee Reports. None 9. Other Business. None 10. Adjourn. A MOTION WAS MADE BY DAN FlUE AND SECONDED BY STEVE ANDREWS TO ADJOURN TIlE MEETING AT 7:40 P.M. MOTION CARRIED UNANIMOUSLY. HRA Chair 7 . . . MINUTES HRA WORKSHOP Wednesday, August 7, 2002 5:00 p.m. Present: Chair Brad Barger, Vice Chair Steve Andrews, Darrin Lahr, Dan hie, Council Liaison Brian Stumpf: Rick Wolfsteller, Ollie Koropchak, Mark Rutland Lori Kraemer Absent: Bill Fair Koropchak advised that the purpose of the workshop was to review the reviscd numbers within the McCombs Development Feasibility Financial Analysis with Mark Ruff: Ehlers & Associates, for input and to dctermine level of TIF assistance for redevelopment of Block 52, prior to the f1RA meeting at 6:00 p.m. The members discusscd rclocation of tenants in Steve Johnson's building when the leases run out and who's responsibility that would be. Koropchak adviscd that Springborg had sold his building and business to another party. Mark Ruff, Ehlers and Associates, summarized his thoughts on the analysis and stated his thought was that it may possibly take the City donating land, paying all site costs, demolition, gradi ng, installation of parking lot and $200,000 to make the project work. RutT stated the higher costs of the project are mainly due to underground parking and the 111ix use of tenants. Ruff did advise the J IRA to question McComb why the land that is already owned by Johnson and J-Ieaton is included in the cost of the development. The HRA stated they would be comfortable staying with their standards and funding the same as they have f\)r other projects. They further discussed the amount of assistance they would be comf(Jrtable in offering and Ruff advised to request that they gct a more accurate value on the project lI"om the Assessor.