EDA Agenda 06-19-1997AGENDA
MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY
Thursday, June 19,1997 - 7:00 p.m.
City Hall
MEMBERS: Chairperson Ron Hoglund, Vice Chairperson Bazb Schwientek, Assistant
Treasurer Ken Maus, Clint Herbst, Roger Cazlson, Bill Demeules, and Darrin
Lahr.
STAFF: Treasurer Rick Wolfsteller and Executive Director Ollie Koropchak.
GUEST: Rusty Fifield, Ehlers and Associates, Inc.
Mayor Bill Fair
Kevin Doty, Mazquette Bank
Tom Lindquist/Cazol Vogel, First National Bank of Monticello
Rita Ulrich, MCP Project Manager
1. CALL TO ORDER.
2. CONSIDERATION TO APPROVE THE MAY 28, 1997 EDA MINUTES.
3. CONSIDERATION TO REVIEW FOR APPROVAL THE PROPOSED GUIDELINES
FOR ACOMMERCIAL/RETAIL FINANCE PROGRAM AND THE
RECOMMENDATION FOR COUNCIL APPROVAL THEREAFTER.
4. CONSIDERATION TO DETERMINE FUNDING SOURCE FOR THE
COMMERCIAL/RETAIL FINANCE PROGRAM AND THE RECOMMENDATION
OF A REQUEST FOR FUNDS.
5. OTHER BUSINESS. ~w.r.~.lge.'~
6. ADJOURNMENT.
C:
MINUTES
MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY
Wednesday, May 28,1997 - 7:00 p.m.
City Hall
MEMBERS PRESENT: Chairperson Ron Hoglund, Vice Chairperson Barb Schwientek,
Assistant Treasurer Ken Maus, Roger Carlson, Bill Demeules, and
Darrin Lahr.
MEMBERS ABSENT: Clint Herbst.
STAFF PRESENT: Rick Wolfsteller and Ollie Koropchak.
GUEST: Mayor Bill Fair
Rusty Fifield, Ehlers & Associates, Inc.
Rita Ulrich, MCP Project Manager
Doug and Karen Schneider
Judy Kruse
1. Call to Order.
Chairperson Hoglund called the EDA meeting to order at 7:00 p.m.
2. consideration to approve the Apri129~1997 EDA minutes.
Barb Schwientek made a motion to approve the April 29, 1997 EDA minutes. Seconded
by Ken Maus and with no corrections or additions, the minutes were approved as written.
3. Consideration to hear of rehabilitation plans from downtown property owners.
Koropchak introduced Doug and Karen Schneider owners of downtown property leasing
to Monticello Carpets and Karen Kustom's Drapery and the unoccupied Stella's Cafe.
Also in attendance was Judy Kruse, owner of the property and former operator of Dmo's
Deli. Invited but unable to attend the meeting was Keith Kjellberg, owner of the Walnut
Street property which formerly leased to Monticello Carpets.
Doug Schneider informed EDA members that he contacted the city inquiring to the
availability of improvement or replacement assistance. Additionally, he reported of an
interested office tenant for the cafe property; however, the building needs a new roof and
the inside gutted and brought up to code. The high cost for the improvements does not
provide a return on the investment. Doug gave this example: $10,000 for a new roof and
•
EDA NIINUTES
MAY 28, 1997
$10,000 for interior. If the original property's worth is $30,000 plus $20,000
improvements, the shell is now at $50,000. Add an additional $15,000 for furnishings. It
just doesn't work. Lastly, the MCP-Design Committee talks about rehab of the building
exterior and the potential of back door entrances for parking accessibility. Schneider
indicated to redesign the roof line to eliminate the run-off and ice build-up at the back of
the stores would be cost prohibitive. The Schneider's felt the city should help the local
people with experience because if a building is fixed-up it creates a building for someone
to move into.
Judy Kruse informed members that she was opening a deli (take-out) and gift shop next
Tuesday. Additionally, she told members of the high costs associated with the application
for a commercial loan through the banks. Even with the number of years she'd been in
business, the bank still requires security or collateral making it difficult for a small business
or start-up business. Perhaps funding for administrative requirements could eliminate
some barriers. After securing a loan for the interior, one still has to deal with the exterior.
Some assistance to help established business operators as renters appear not to care
continued Kruse.
A grant could be used for financing costs or to write-down a loan for exterior design of
retarl/ofi7ce businesses. Funds could be used to purchase property, rehab property, or to
establish a business. Rehab loan tied to design guidelines.
Members discussed Bill Grassel's plan for Domino's Pizza and his purchase option on the
parcel destroyed by fire. One property owner expressed dis-satisfaction with the
Domino's delivery because it utilizes too many parking spaces and is a safety hazard.
Mayor Fair asked if the increased value or TIF caused by rehabilitation could be recycled
as seed money? As a general practice, do cities waive costs such as inspection fees?
Rusty responded to both questions as options for consideration.
EDA members expressed thanks and appreciation to property owners for taking the time
to appear before the EDA. Property owners were informed that the community is
interested in developing a program which meets the business community's need; however,.
it doesn't happen over night. EDA members were pleased that business owners were
interested in making improvements and that some may have potential tenants.
4. Consideration to review loan Quidelines as.provided by Rus Fifield and to determine the
approach and the tvpe of local commerciaUretail funding,program desired
Schwientek felt any program developed should be kept simple and that the EDA and city
should realize or accept the risk. Other comments: Have phased development, matching
2
EDA MIl~TUTES
MAY 28, 1997
dollars as grant, create something that makes one want to go downtown, provide gap
financing, and utilize the new tax bill "tax abatement".
Chairperson Hoglund asked for input from EDA members and staff: Schwientek thought
enhancement of store fronts appeared to be a common thread. Demeules asked if the
EDA was the right committee`I The EDA has broad powers and a sense of experience in
loan program administration; therefore, the EDA appears to be the best bang-for-the-
buck. Fifield expressed to provide collateral for a bank increases the complexity and
expo sure.
EDA members asked "what do other communities do?" Fifield informed EDA members
he was not real successful in obtaining guidelines from other communities. Fifield was
more interested in knowing what the EDA or Monticello wants to do and what were the
EDA's or community's objectives? The EDA will be in the front-line as far as risk even
with a participating lender. The dollars put into a project could increase the tax value;
however, the dollars must be considered as a "city investment". Hoglund thought
perhaps gap financing for bankers fees and funding for exterior improvements which
supported the MCP's objectives would be appropriate.
Mayor Fair said the council needs to understand for the city to be a partner in
redevelopment takes risk and the EDA needs to show leadership to the council though
marketing the program to parcel owners of interest. Draw a boundary line for focus.
Schwientek felt the size of loan is best determined by the EDA rather than the Council and
staff can work with the developers and the banks to determine something that's general
and feasible. The MCP to draft the rehab or redevelopment plan. Fifield added it takes
"realization" to start a collection of small buildings or inventory which creates or
generates business or the starting of a domino effect. Ulrich informed members that the
revitalization plan is pretty general. The plan to be adopted into the comprehensive plan
and design guidelines to be developed into the comprehensive plan via performance zones.
Carlson felt the the EDA might apply dollars toward the bank loan fees and secondly to
develop a matching fund for exterior store fronts. Fifield added to do "gap financing" may
not make the project work as there may not be a sufficient amount of equity available.
The EDA must look for a program to remove the economic bamers, maybe a combination
of grant/loan which meets the public objective. Koropchak noted the importance of
developing a program as an "incentive" rather than "gap financing" to encourage a
developers to redevelop therebye creating activity in the downtown area.
Maus summarized some of the community objectives as:
1. To be used as an incentive to create redevelopment and increase business and
pedestrian activity in the downtown area.
3
EDA MINUTES
MAY 28, 1997
2. To be used in a focus area (such as block).
3. To be used by property owners.
4. Funds for matching grant to improve the front and backs of buildings.
5. Project must meet design guidelines of the revitalization plan.
A commissioner added some downtown lots may require new construction. Fifield
responded perhaps those projects are best served by the use of TIF as rehab results in
smaller market value gains. It was also mentioned if the city is committed to the
revitalization plan perhaps the EDA or HRA should consider being the developer or
owner of a facility.
Fifield told EDA members the community input from both the property owners and the
commissioners in attendance this evening was of value to him to begin drafting the
guidelines for a revitalization funding program.
5. Other Business.
The commissioners set the next meeting of the EDA for Thursday, June 19, 1997, 7:00
p.m. Guidelines to be submitted prior to the meeting.
6. A~j'ournment.
The EDA meeting adjourned at 9:30 p.m
1~ ~-
Ollie Koropchak, Executive Director
•
4
EDA AGENDA
J[JNE 19, 1997
3. consideration to review for approval the proposed guidelines for a commerciaUretail
finance rogram and the recommendation for council approval thereafter.
To be drafted and submitted by Rusty Fifield, Ehlers and Associates, Inc., prior to the
meeting.
•
•
1
JUN 17 '97 020?PM EHLERS & ASSOCIATES
•
•
Memo
TO: Monticello EDA
From: Rusty Fifield
Subject: Guidelines for Financial Assistance
Date: June 17, 1997
P.2i4
I have prepazed and attached draft guidelines for financial assistance and incentives in the
downtown azea. I want to emphasize the "draft" nature of the guidelines. The guidelines are not
a final product proposed for your acceptance. They are concepts that address the issues we have
discussed at your recent meetings. At your June 19th meeting, we will try to shape the guidelines
into a final product.
My rationale for the proposed guidelines include the following:
^ The assistance and incentives should address both public objectives and private needs.
^ The programs must make best use of limited public funds.
^ The programs should not substantially increase the difficulty of redevelopment for the
EDA or the property owner.
^ These programs are targeted at existing buildings and smaller projects. They do not
preclude the use of tax increment financing or other forms of financial assistance.
I look forward to receiving your comments on Thursday.
Ehlers and Associates, Inc.
2950 Norvvest Center ¢ 90 South Seventh Street
Minneapolis, Minnesota 55402
(612) 339-8291 ~ FAX (612) 339-0854
rusty@~e hlers-i nc.com
JUN 17 '97 02~07PM EHLERS & ASSOCIATES
Monticello EDA
Financial Assistance and incentives for
Downtown Revitalization
June 19, 1997
Purpose
P.3i4
a~
The Monticello Downtown and Riverfront Plan provides a guide for development in
the downtown area. As part of its efforts to implement the Plan, the Monticello
Economic Development Authority (EDA) offers financial assistance and incentives to
property owners.
This program seeks to promote the revitalization of downtown Monticello by:
^ Enhancing storefronts and facades in accordance with the design guidelines in
the Plan.
^ Encouraging the rehabilitation of building interiors to bring them into
compliance with local codes and ordinances.
^ Encouraging building rehabilitation to provide space suitable for the proposed
use.
^ Providing funding to close the "gap" between financing needed to undertake
the project and the amount raised by equity and private loans.
^ Providing economic incentives to locate businesses in the Downtown.
~,~.~~.
Target Area ,~o ~"'
These financial incentives and assistance will be available within the planning area
described in the Downtown and Riverfront Plan. Preference will be given to property
located i'~ • "74 ~ S~ a~i.
Facade Grants
The EDA may provide matching grants in an amount up to $2,500 jamount?] for
eligible improvements to the front facade and signage. Matching grants in an amount
up to $2,500 [amount?~ will also be available. for eligible improvements to promote
improvements to the rear sections of buildings. ~~~,,,~, c,.~~ ~ `''~'~J
^ Improvements must comply with all applicable design guidelines, codes and
ordinances.
^ The grant will match private investment up to the stated limit.
^ Grant funds will be provided after completion of the improvements.
^ Applicants will provide the EDA with documentation of the actual cost of the
improvements.
•
JUN 17 '97 0z~07PM EHLERS & ASSOCIATES
P.4i4
Rehabilitation Loans
The EDA may provide loans for the rehabilitation of existing buildings. The
maximum loan amount is the lesser of 25% of total cost of the improvements or
$20,000 [amount?].
^ hprovements must comply with all applicable design guidelines, codes and
ordinances.
^ Applicants must provide proof of financing for costs not funded by the grant.
^ The maximum term of the loan is~n years [term?]. - w ~~*}' ~° °~~"`
^ The interest rate on the loan will be two percent (2%) below the Prime Rate.
[The current Prime Rate is 8.50%.] The EDA may reduce the interest rate to
encourage the reuse of a currently vacant building, the retention of an existing
business, or the creation of a new business.
Tax Ab~z~ement
~l Property owners may request the abatement of the city portion of property taxes for a
period not to exceed five (5) years. [NOTE: A new State Law allows cities, counties
and school districts to individually abate property taxes for up to 10 years.]"
^ Property tax abatement will only be available in conjunction with an overall
plan for the improvement of the property.
^ The property cannot receive assistance from tax increment financing. The
EDA will request that the HRA remove the property from any existing TIF
district.
^ The EDA will recommend that the City Council under the statutory process
needed to implement the abatement.
Fee Reimbursement
The EDA may grant reimbursement of fees associated with undertaking development
projects in the downtown area. The amount of the reimbursement will be the
equivalent of ten percent (10%) of the total cost of the improvements up to a
maximum of $500 (amount?]. Fees eligible for reimbursement include building
permits, ,~ d other city inspections and
land use ordinances.
^ Reimbursement will be made after completion of the improvements.
^ Reimbursement will be based on documentation of actual improvement costs
and fees paid.
•
2
i EDA AGENDA
`~ JUNE 19, 1997
4. Consideration to determine funding source for the commerciaUretail finance program and
the recommendation of a request for funds.
A. Reference and Back~ro
It is my assumption that Rusty Fifield will suggest source of fund options available to fund
a commerciaUretail program One of those options may be monies from the EDA,
therefore, I've enclosed a copy of the sources of funds available to the EDA. This is
provided as information only and not intended to promote utilization of the once
designated pool of monies for the Greater Monticello Enterprise Fund. However, funding
for the commerciaUfinance program may be a partnership among the city, EDA, and HRA.
Also, remember each of these government entities have the power to levy.
Again, enclosed is a copy of the sources of funds available to the EDA and the 1997 Cash
Flow Projections of the EDA.
•
•
MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY
SOURCES OF FUNDS
December 31,1996
GMEF Cash Balance $275,328.17
UDAG Cash Balance $ 68,896.12
SCREG-Aroplax Cash Balance - $129,483.04
Subtotal $473,707.33
Less Liquor Fund Reimbursement $ 25,000.00
TOTAL AVAILABLE FOR 1997 $448,707.33
•
MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY
GREATER MONTICELLO ENTERPRISE FUND (GMEF)
1997 Cash Flow Projection
BEGINNING CASH BALANCE, January 1997
RECEIPTS
Appropriations, Expected -
SCERG $100,000.00
Notes Amortization Payments -
Tapper Inc. ($736.07 Mo.) 8-97 $ 5,888.56
Notes Receivable $ 70,989.14
Muller Theatre -0-
SMM, Inc. ($316.32 Mo.) 11-97 $ 3,479.52
Notes Receivable $ 41,350.00
Aroplax Corp. ($1,241.73 Mo.) 12-99 $ 14,900.76
Custom Canopy, Inc. ($269.03 Mo.) 6-98 $ 3,228.36
Standard Iron ($795.49 Mo.) 7-01 $ 9,545.90
Vector Tool ($380.18 Mo.) 11-00 $ 4,562.16
Tapper's II ($760.36 Mo.) 4-01 $ 9,124.32
SELUEMED ($1,031.01 Mo.) 9-03 $ 12,372.12
Interest Income - Investment $ 5,000.00
can Fees $ 600.00
Miscellaneous S 1.000.00
TOTAL RECEIPTS
TOTAL BEGINNING BALANCE AND RECEIPTS
EXPENDITURES
GMEF Loans
T.J. Martin, Inc $ 50,000.00
Kleer-Flo $ 70,000.00
Other $ 80,000.00
Notes Payable - Liquor Fund* $ 25,000.00
Legal Fees $ 1,000.00
Service Fees S 80.00
TOTAL EXPENDITURES
EXPECTED CASH BALANCE, December 1997
* Review for authorization to reimburse October 1997
$275,328.17
5282,040.84
$557,369.01
5226,080.00
$331,289.01