IDC Agenda 06-21-2001AGENDA
MONTICELLO INDLJSTR[AL DEVELOPMENT COMMITTEE
Thursday, June 21, 2001 - 7:00 a.m.
City Hall - 505 Walnut Street, Academy Room
MF.,MBERS: Chair Dick Van Allen, Vice Chair Tom Lindquist, Don Smith, Kevin Doty, Bill Tapper,
Tom Ollig, Don Roberts, Mike Benedetto, Mary Barger, Susie Wojchouski, Barb
Schwientek, Ellen Perrault, and Dan Olson.
COUNCIL: Mayor Roger Belsaas.
STAFF: Rick Wolfsteller, Jeff O'Neill, John Simola, Fred Patch, and Ollie Koropchak.
IDC MISSION STATEMENT: To maintain and increase the industrial tax base and to
create jobs in the City of Monticello, Minnesota.
Call to Order.
2. Approve the May 17, 2001 [DC minutes.
3. Subcommittee and Other Reports:
A. Marketing -Smith
B. Long-Term, Cooperative Land Use Decisions -Van Allen
C. Membership -Update or acceptance of a Township Board Member as IDC -nember. Smith
D. Mayor's Report -Belsaas
E. Economic Development Report. Attached.
4. Discuss and decision whether the IDC should meet in July and/or August.
5. A. Review and discuss action taken by the City Council relative to the acquisition of the
Chadwick property. See attached Council agenda and minutes.
B. What is the Council's follow-up plan? Is industrial development one of the City Council's
goals?
C. What is the IDC's follow-up plan?
6. How does tax increment financing impact the City taxes? Koropchak.
7. Other business.
a) Chamber Lunch, May 21, 1 1:50 a.m., Monticello-Big Lake Hospital, Program: "Introduction
of Queen Candidates".
8. Adjournment.
MINUTES
MONTICELLO INDUSTRIAL DEVELOPMENT COMMITTEE
Thursday, May 17, 2001 - 7:00 a.m.
City Hall - 505 Walnut Street, Academy Room
MEMBERS PRESENT: Kevin Doty, Don Smith, Bill Tapper, Don Roberts, Mike Benedetto,
Mary Barger, Susie Wojchouski, Barb Schwientek, Ellen Perrault, and
Dan Olson.
MEMBERS ABSENT: Chair Dick Van Allen, Vice Chair Tom Lindquist, and Tom Ollig.
COUNCIL L[AISON ABSENT: Mayor Roger Belsaas.
STAFF PRESENT: Rick Wolfsteller and Ollie Koropchak.
Cal I to Order.
Kevin Doty, appointed as acting chair, called the IDC meeting to order at 7:00 a.m.
2. Welcome and introduction of new IDC members.
New IDC members Barb Schwientek, Ellen Perrault, and Dan Olson were introduced and
welcomed. Each member introduced themself and stated their professional association.
3. Approve the April 19, 2001 IDC minutes.
Don Smith made a motion to approve the April 19, 2001 IDC minutes. Don Roberts seconded
the motion and with no corrections or additions, the minutes were approved as written.
4. A. Marketine Subcommittee Update:
1) Review draft copy of ad for 2002 Community Guide and ratify the decision of the
Marketing Subcommittee to place an ad.
Don Smith, member of the Marketing Subcommittee, gave a brief history of the subcommittee
stating its membership is comprised of HRA and IDC members. The subcommittee funds are
derived via a request from the HRA to the City Council at budget setting time. The
subcommittee elected to place a full page ad (inside back cover) in the 2002 Community Guide
at a cost of $1,250. The guide is distributed by the Office of Economic Development, Chamber
of Commerce, City Hall, local lenders, welcome wagon, real estate, hospital recruitment, etc.
Due to previous discussions and the interest of the Chamber to promote the City of Monticello,
the subcommittee is requesting the Chamber of Commerce split the cost of the ad in the amount
of $625 each. Smith presented a copy of the ad which promotes industrial development within
the City of Monticello. The ad is centered around the Twin City Die Castings project with
quotes by the CEO of the TCDC and the project manager of the general contractor. Barb
Schwientek made a motion to ratify the decision of the Marketing Subcommittee to place an ad
in the 2002 Community Guide at a cost of $1,250 and requesting the Chamber of Commerce to
split the cost. Seconded by Mary Barger and with no further discussion, the motion passed
unanimously.
1
IDC Minutes - 5/17/01
2) Approve IDC Letter to Chamber of Commerce.
Upon the request of the Chamber Director and the direction of the IDC Chair, Koropchak was
asked to draft a letter to the Chamber re-affirming the IDC's agreement within the 1996
Organizational Restructu--e Agreement, stating the IDC ratified the decision of the Marketing
Subcommittee to place an ad in the 2002 Community Guide, and requesting the Chamber split
the cost of the community guide ad ($1,250) at $625 each. As a benefit to the new members,
Tapper gave a brief history of the agreement and the transfer of the $9,640 by the 1DC to the
Chamber. Although undocumented, the intended use of the dollars was for the good of the City
of Monticello stated Tapper. Bill Tapper then made a -notion to approve the letter to the
Chamber of Commerce as drafted. The motion was seconded by Don Robe--ts and with no
further discussion, the motion passed unanimously.
B. Economic Development Report.
Koropchak reviewed the attached report. In addition, it was noted that the HRA and EDA have
received letters of commitment for funding and the "but for" test from the lender of Integrated
Recycling Technologies, Inc. Closing documents are being prepared for an anticipated closing
date of June 12 or shortly thereafter. Delivery of steel is expected around June 25. Secondly,
EDMA is now interested in Monticello as Rockford's mini-num lot size is two acres. Cost of
city owned land $70,000 ($22,000 per acre plus $46,000 per acre in assessments). Looking for
smaller lot size availability in Monticello. Thirdly, meeting with Production Stamping, Inc.
Now looking at 40,000 sq ft building, may be 2001 or 2002 project. To check out availability of
State and Regional funding. Four-acre parcel perhaps located with the extension of Dundas
Road.
Last, a lead from lender. 10,000 sq ft metal building. Welding/fabricator. 5/6 jobs. Lease up
Februar}~ 2002.
C. Mayor's Report.
No report.
mbershio Co-nmittee:
A) Update or Acceptance of a Township Board Member as IDC member.
Smith reported he has left a message with a township board member and has received no call
back. However, Smith stated he just ran out of time and will pursue for an update in June.
B) Letter to Mosford.
For purpose of followup, a copy of the letter to Mr. Mosford relative to IDC decision on the
request for leave of absence was attached.
6. Industrial Land:
A) Short Term, Acquisition of Industrial Land -Update and discussion whether to recommend
proceeding with acquisition of Chadwick/Goeman or to look at other options.
A copy of the cover letter from Chadwick dated May 14 to the Mayor/Council and the April 18
land purchase offer was distributed to IDC members. In the absence of the Chair and Vice
Chair, Koropchak requested direction from the IDC whether to recommend proceeding with the
acquisition of the Chadwick parcels or to look at other options. Wolfsteller recapped the offer
for the entire 180 acres as $3.2 million and $650,000 for gravel rights. The following is a recap
of the IDC discussions: Could the City negotiate a better deal for Parcels A and B in exchange
for re-zoning of Parcel C? Perhaps. However, a re-zone takes a 4/5 vote of the City Council and
2
IDC Minutes - 5/17/01
the MOAA. Commercial development would create a tax base equal to industrial but generally
speaking wages of commercial development are less. How much of Parcels A and B is
developable? Wolfsteller estimated 100 acres of the 143 acres. In addition to the wetlands and
power lines, the acreage south of the proposed West Chelsea Road is currently zoned residential.
Is the acreage lying westerly along I-94 reserved for a folded cloverleaf? What is the incentive
to purchase the wetland? Ponding, offer is $ .02 per square foot. is $30,000+ per acre a
reasonable price for undeveloped land along 1-94? One member stated undeveloped land sold
for $20,000 per acre in Elk River (80 acres consisting of low-land) beyond Walmart and Hwy
169. Another mentioned Big Lake purchased property for $14,000 per acre. Does Chadwick
need the city and is that a benefit for negotiating? Putting numbers aside: How motivated is the
City to make an investment or should the Chadwick Group develop the entire parcel? If not the
Chadwick property, where then? Again, the Chadwick Group needs a zoning amendment at the
City and MOAA level and needs the City to obtain access to the I-94 parcel via West Chelsea
Road. Doty asked the IDC to bring the discussion to a closure, noting the number of years the
IDC has requested the City to obtain land for marketing. Members felt there was room to
negotiate. Don Smith made a motion stating: Again, the IDC sees the need for industrial land
and encourages the City to continue negotiations with Chadwick and requested the IDC Chair
and Vice Chair give input and be present at the City Council meeting of Tuesday, May 29.
Mary Barger seconded the motion and without further discussion, the motion passed
unanimously. As a lobby organization, 1DC members can independently lobby Council
members.
B) Long Term. Cooperative Land Use Decisions -Update on meeting between Benedetto Van
Allen, and O'Neill.
Benedetto stated the group's focus is long term, 20-25 years out. What's best for the area, the
big picture? The first meeting held between Van Allen, O'Neill, and himself centered around
strategies. To get off center, the group will start small with discussions among Franklin Denn,
Township Chair, and Dick Frie, Planning Commission Chair. Others will be added later such as
Pat Sawatzke. Tapper made two suggestions for the group: To use p1f`a model such as Maple
Grove looking at their 20 to 30-year planning and growth in five-year increments. Secondly, to
look across the river for potential growth, town boundaries do cross rivers such as St. Cloud.
Feedback relative to "Is the objective of the Industrial Luncheon being mete"
The iDC recommended the Marketing Subcommittee assess the objective of the Industrial
Luncheon and give it a fresh look as was done with the Industrial Banquet.
Other business.
a) Chamber Lunch, Vintage Grill, May 17, l 1:50 a.m. - ] :00 p.m. Program DSL by TDS
Telecom.
9. Adjournment.
The IDC meeting adjourned at 8:50 a.m.
~ ~ ~C~
Recorder
ECONOMIC DEVELOPMENT UPDATE
JUNE 13, 2001
by Ollie Koropchak
Block 52 -Since the joint meeting of the HRA/Council, HRA Chair Frie and Koropchak
met or spoke with all property owners of Block 52 with the exception of Kathy Froslie and
including Pat Sawatzke to determine their short and long term plans. Additionally, Frie
and Koropchak met twice with Pat O'Donnell, proposed owner, and Mike Cyr, proposed
contractor, relative to the options for redevelopment of Block 52. Based on our
conversations with property owners, the direction from Council and, given the fact, the
preference of the proposed developers was either to redevelop along River Street or
redevelop along Walnut Street at their existing site; the HRA on June 6, 2001 encouraged
the developers to proceed with redevelopment on their existing site. The developer
approached the HRA with the River Street concept knowing of the H12A's interest to
redevelop the block and the project along River Street cash-flowed for the developer
because of the proposed mixed use concept: retail, office, and upscale condos with
underground parking which was consistent with the Comprehensive Plan. A project along
Pine and Broadway would not include housing and underground parking.
Given the interest of certain property owners of Block 52, upon finalizing the TIF
assistance for redevelopment of the Amoco and Front Street sites, and based on the
decision of the Legislators to reduce the tax classification rates; the HRA plans to meet with
interested sellers to proceed with negotiations to acquire in a partnership approach for
redevelopment within two/four years.
The HRA authorized the preparation of the Contract for Private Redevelopment with
Masters Fifth Avenue for redevelopment of the Amoco site. The proposed project is the
construction of 5,700 sq ft restaurant and office facility with second-floor rental apartments
(6 units) and a detached carriage house consisting of indoor parking and second-floor
apartments (2 units). The H12A will reimburse the developer of the lesser: A. the cost to
acquire and demolition the Amoco site, B. not-to-exceed $185,000, or C. the amount of the
"available tax increment" generated from the project during the life of the district. In
addition, the HRA approved up to $45,000 for parking development on adjacent parcels
from surplus funds within the Downtown TIF District.
Based on tax increment cash-flows including the proposed classification rate reductions,
the committed debt on the Amoco site, and the proposed debt on the Front Street site; the
Downtown TIF District has sufficient tax increment to proceed with negotiations for
redevelopment of Block 52.
City Council supported HRA's resolution of eminent domain for the property located at
218 Front Street.
Industrial Development
IRTI -TIF District a roved b Council.
pp y Development Contract agreed upon by City,
HRA, and IRTI. Full building/site plans submitted June 7. Plat approved subject to City
Engineer approval of ponding. It is my understanding the initial project costs have
escalated due to landscaping, irrigation, and ponding. Steve is so busy, he prefers Open
House reception later, not traditional groundbreaking.
The Marketing Team of Van Allen, Barger, Hoglund, Herbst, and Koropchak visited a
manufacturing company in Rogers on June 6. No commitment. Looking to construct a
35,000 - 40,000 sq ft building. 45 new jobs at average wage of $15.00 per hour without
benefits.
Marketing Team of Barger, Hoglund, Doty, Baas, and Koropchak scheduled to visit a
small machine shop in Eden Prairie June 19. Looking at a 10,000 sq ft building. 3-5 jobs
at $20 per hour without benefits. ~-•+ ~' r~ - ~ 'n^ ~-¢- •'-~-~ ~
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In lieu of the two articles in the Minneapo is Tri une on Sunday and onday relative to
tax increment financing, attached is a copy of the Tax Increment Property Tax Data, Taxes
Payable 2000 for Wright County. You will note, the City of Monticello has 14 active TIF
Districts for a captured tax capacity of 3.85% of the city's total tax capacity. Assuming the
Council approved TIF District No. 1-28 and with the HRA adopting a resolution
decertifying TIF District No. 1-12 (Aroplax) on June 6, the city remains at 14 active
districts. In past years, the HRA has used the pay-as-you-go finance method
(reimbursement). Therefore, if the classification rates are reduced, the property owner
pays less property taxes, the HRA collects less tax increment, and the developer is
reimbursed less tax increment ("available tax increment").
GMEF No. 007 -The first Standard Iron balloon payment was paid the end of May 2001
per Loan Agreement.
Hoglund gave lead for potential industry from South Carolina -See attached letter, faxed
lead sheet from CB Richard Ellis on FayMar building for lease and Barger's phone
number. Had call from real estate agent "thanks" and company representative planning to
visit site. 20-30 jobs.
H-Window building -Red Wings Foods elected not to proceed with acquisition. Currently
are working with local lender for potential to construct.
Attached articles from City Business Journal.
Wright County Partnership held a Business Growth 2001 Expo, a resource seminar for
area commercial/industrial businesses on June 12. The seminar included financial and
•
technical resources. The seminar was well planned; however, only a few businesses
attended. Monticello was not allowed to market our loan program which I see as an
additional asset.
Frauenshuh Companies -working with Rockford.
One local manufacturer looking to expand in 2002.
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June 8, 2001
Mr. Charlie Gorman
International Cups
577 International Drive
Bennettsville, SC 29512
Dear Charlie:
It was great talking with you today and hearing of your company plans to expand to Minnesota.
faxed you the information on the 35,000 sq ft facility for lease in whole or part by CB Richard
Ellis and also gave the name and telephone number of Brad Barger who has received city
approval to construct a two 14,000 sq ft manufacturing facilities for lease.
The City of Monticello offers aloes-interest-fixed loan program for manufacturing companies.
The program is available for real estate or machine and equipment needs. We work with
conventional lenders and take a subordinate position behind the lender. Additionally, the City of
Monticello offers affordable housing options and great opportunities for families: excellent school
system and health care facilities, community center and pathway systems, and excellent location
along I-94.
Please review the attached Monticello, We're Open for Business marketing piece and the
community.profile and guide. On your next visit to Minnesota, please stop by the Monticello
City Hall located within the Community Center at 505 Walnut Street. If I can be of further
assistance, please call me at 763-271-3208 or a-mail okoropch(a~,uslink.net.
Sincerely,
CITY OF MONTICELLO
~~ ~ ~
Ollie Koropchak
Economic Development Director
File
Monticello City Hall, 505 Walnut Street, Suite 1, Monticello, MN 55362-8831 • (763) 295-2711 • Fax: (763) 295-4404
Office of Public Works, 909 Golf Course Rd., Monticello, MN 55362 • (763) 295-3170 • Fax: (763) 271-3272
MONTICELLO
FROM C B AiC'r.AnD ELL1S
a ar 1
307 Chelsea Road
Monticello, Minnesota
SMrbume
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(WED) 6. 6' 01 8:24/ST. 8:23/NO. 4863681968 P 2
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Building Features and Benefits
Building Square Footpge:
Total: 35,4t)n s.f.
Office: 3,00 s.f.
Warehouse: 32,400 s.f.
Ciear Height: 18'
Year Built: 199`1
Loading: One dock and one drive-in door
Loo Size: Approximately 3.24 acres
Access: Just off I-44
Other: ^ 5-ton bridge crane
•' •
^ Outside storage
Nathan Arnold
952.924.4855 ^ 3,200 s.f. of mezzaine level space
narnold@cbre.com s -~-.e
~ ~ ` ~ , `~ ~ ~.r~ c. 200 I C 3 F.I C ~1A RD tl L 15. INC. the oboe mrormolion was obroined 6on~ sources bel~e.ad to
` ~ ~~ be ~el~oble, but C9 Rrchord Ellis has not verified n v hot any knowledge regarding the accuracy or compfcveness
~om Simon o! mianwl~on and me kes rno represenrollon or wvrrany concernmo some. Therefore, CB RKhord fl8s discfoims
all 1;oiJ,nes ,n moon. non w~rh eny ~.wccwncm: or m<ompleteness.
52.924.4663
tsimon@cbre.com
FROM C B AiCFiAAD ELLIS
a ar 1
07 Chelsea Road
Monticello, Minnesota
(WED) 6. 6' Oi 8: 24/ST. 8:23/NO. 4863681968 P 3
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~B Richard Ellis, Inc.
7760 France Avenue
Minneapolis, MN 55•
952.924.4600
www.cbre.com
crerAial
Special Features
^ Great visibility and accessibility to I-94
^ Outside storage
^ Infrared heating
FROM C $ AiCHAAD ELLIS
(WED) 6. 6' 01 8:25/ST. 8:23/NO. 4863681968 P 4
CB D Ibchard Elvis
s1,7so,ooa
INDUSTRIAL -IMPROVED
FAY-MAR FACILITY
PRICE
35,400 Sq.Ft.
nRt=c f ftVnFR Rnna
EXCIUSiV'e 307 Chelsea Road Monticello WNght
For Lease ADDRESS -CITY COUNTY
NIA N!A NIA
RENTlMONTH RENT / SQ. FT. / MO. DOWN PAYMENT
SUBMITTED BY: Nathan Arnold 3,000 sf Yes No Yes Ampie
7760 France Ave. So. OFFICE AREA DIVIDE RAIL SPRINKLERS PARKING
Minneapolis, MN 55435 1 DOCK 1 GRND.208/4118 V 2500 A 3 P 18'
OFFICE: Minneapolis/St. Paul LOADING DOORS ELECTRICAL POWER TRUSS HGHT.
254 1.1
PHONE: 952.924-4855 LOT SIZE AND DIMENSIONS MAP PAGE ZONING
04118/2001 013374 Nathan AmoidlTom Simon Bloomington
DATE LISTING NUMBER LISTING SALESPERSON(S) OFFICE
LAND AND STRUCTURES
35,400 SOFT. FREESTANDING BUILDING FOR SALE OR LEASE!
' 3,000 sq.ft. office
' 32,400 sq.ft. warehouse
' 3,000 sq.ft. mezzanine
' Built in 1995
`Tilt-up panel construction
' Infrared heating
' 1 dock door
' 1 drive-in door
' 18' clear height
' S-ton crane
SITE IMPROVEMENTS AND UTILITIES
' Outside storage available
Utilities: Gas/electrlc - MinnegascoCXcel energy
Sewedwater -City of Monticello
TERMS AND TAX DATA
SALE PRICE: $1,750,000
LEASE RATES: $4.25 psf for warehouse3
$9.25 psf for office
TAXES: $43,552
PID#: 155-085-0010-10
COMMENTS
• Exceptional building for sale or lease with great exposure on Interstate 94 in Monticello.
~:a RICHARD EWt, INC. • LICENSED REAL EMATE eRC+ICER
The iniormadon above has been obtahea from souroee bellavetl retlebb. yllNb we do nd doubt Ys acaaacy, we nave not verNbd M and make no guararNee, warranty or represenlauon about ft. n b your
responsibYity to Indepsndenrry conlirm Na eecureey and oompbteneaa. My projediona, opNiona, asaumptbna or eatimatea used are br suampb ony and do not represent the current or future peAormance
of the property. The value of fhb transaction to you dapartds on toff and ot'+er lectors which should he evaluated by your tae, fhancbl and lapel advbora. You end your edvisore should conduct a txreful,
independent Inveetipation of the property b determine to your awbtactbn Nte supadWy of Ina ptopefty for your naede.
Form Pb. 200 Rev 8198
FROM C B AICHAAD ELLIS
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Survey-of Corporate
Real Estate Executives
Overall Ke ..Location
Fac~ors
1'.' Proximity to customers/clients
2. Access to interstate highway
3. Reasonable real estate costs
4. Availability of skilled workers
3. Pro-business government officials
6. Reasonable wage rates
7. Reasonable/stable .utility rates
8. Reasonable living costs
9. Reasonable business taxes
10. Cultural/recreational facilities
Table 3
May 28, 2001
Municipal Economic Development
Officials Ratings of Very Important
t;ommunity Advantages
Community Advantage Ratings as very
important
1. Quality of life_ 72 %
2. Quality workforce 59
3. Good schools 55 %
4. Work ethic 52
5. Transportation access- 51 %
6. Cost of living 48 %
7. Close to markets 48
8. Public safety 46 %
9. Cost of public housing 45
10. Government services 40 %
1 i. Recreational amenities 38 %
12. Proximity to housing 34 %
13. Environmental quality 33
14. Low labor costs 29
15. Cultural amenities 25 °~,
16. Climate - - -' ~ ° 21
17. CEO preference 20
able 4
Analytical Tools and Methods Most
Frequently Used to Evaluate
Community Impacts of Economic
Development Projects
Tools and Methods Percentage
Individual experience and knowledge 50.3
Openpublic meetings 41,7
Tax impact studies 38.1
Planning commission goals 35.1
~ Dollars of private capital invested 35.1
Project hearings board review 34.'7
New business starts 20,2
Company sales increases 16:9
Employment impact studies 15.5
Income and wage multiplier impacts 14.8
Increases in company activity 11.8
Worker training studies 10.8
Business special interest group views 10.6
Neighborhood advisory group views 9.5
Citizen special interest group views 6.9
Survey of citizens 6.7
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O
City Council Agenda - 05/29/0]
7 . Consideration of proposal from Otter Creek, LLC to purchase Chadwick parcel. (JO)
REFERENCE AND BACKGROUND
As you know some months ago the City Council authorized a land swap whereby the
city would trade 60+ acres of city owned commercial land for 120 acres of industrial
land. The swap concept included the option of city purchase of an additional 40 acres of
industrial land at some point in the future. Completion of the deal was delayed when the
property owner requested an additional sum ($800,000) representing the estimated value
of the gravel that could be mined from the site. The attempt to develop a method for
accounting for this value in the deal was the main cause for the delay. While negotiations
were sputtering along, the Chelsea Road project moved forward and the Denny Hecker
Auto Dealership was constructed. Due to the construction of the roadway (developed in
some part for the purpose of serving a potential city industrial park) and due to other
market factors, the value of the property in the owners eyes has increased significantly
since the original deal was formed. The last offer by the developer now places the
land and gravel value at $3,842,000. It is our guess that the high value placed on the
property, especially the freeway portion, reflects interest in use of the property for
commercial businesses. The problem is the that the property is not identified for
commercial use in the MOAA or City plans.
The Otter Creek proposal also allows the city to purchase a portion of the property off the
freeway at a price less than the freeway frontage land, however this area is impacted by
the power line, wetland and is not contiguous to the city. It is not served by gravity sewer
service which means that a significant investment in the utility system will be needed for
this property to be available for industrial development. These factors, combined with
price, make this option less than desirable.
ALTERNATIVE ACTIONS
Motion to accept proposal submitted by Otter Creek and purchase property
accordingly.
The IDC supports acquisition of industrial land but understands that the price of the entire
Otter Creek piece may simply be too expensive. The IDC would support a continuing
search for industrial land. Perhaps negotiations on purchase of the off-freeway portion of
the site should continue or the city should look elsewhere for industrial land.
•
City Council Agenda - 05/29/0]
2. Motion to table consideration of purchase of Otter Creek partnership property.
It is the view- of staff the value placed on the parcel by Otter Creek at this time reflects
interest in the land for commercial uses which are not proposed by the City or MOAA.
Under this alternative the City would leave the door open to purchase of the property at
some point in the future if the price of the land changes to reflect the value of site for
industrial uses.
Otter Creek would be free to attempt to obtain a re-zoning of the property for
commercial use and would also be free to apply for mining permits. Perhaps at some
point in the future a high quality commercial development proposal will be presented that
would be supported by the City Council and MOAA. As you know, commercial
developments can be a great economic benefit to the city because TIF is not usually
employed and the jobs created are decent. If Otter Creek does not obtain the desired
zoning, then the price of the land might change and the city could consider a purchase in
the future.
STAFF RECOMMENDATION
The City Administrator recommends that the City Council table further consideration of
purchase of the entire site for the following reasons:
The price. The cost of the land, for both freeway and non-freeway land, is simply too
high. The economic return on the investment is not justifiable. Although it would be
great to own the land, the city could end up holding the land for a very long time. If the
land value is really as high as proposed by Otter Creek, then that means that there must
be a demand for the land for a productive purpose. Anyone purchasing the land at the
price proposed by Otter Creek is not likely to be purchasing it to sit on it forever.
Ulimately, for the investment to be fruitful, the land will be developed perhaps with city
involvement limited to providing utility and road access.
Other demands for City Dollars. There are other important projects such as street
reconstruction that need to be completed in the next few years. Now may not be the right
time to spend so much of the city's reserves.
Zoning preserves the land for industrial uses. Although it is great to own industrial land,
the fact remains that the land is zoned in both the MOAA and city plans for industrial
uses. Given the price proposed, it does not make sense to pay so much when the land is
protected for industrial uses anyway.
•
City Council Agenda - 05/29/01
Other options for industrial develo ment. Although the Gold Nugget piece is not
identified in the City's comprehensive plan for industrial uses, the possibility exists for
future industrial uses at this site. Perhaps it is time to look at this site for industrial or a
mixed use residential/industrial development.
It it important to note that industrial development efforts and encouragement of industrial
developers should not hinge on whether or not the city owns industrial land. Failure to
purchase this site should not be construed as lack of desire to attract desireable industrial
development to the city. City staff and the IDC should continue in its efforts to attract
industry.
SUPPORTING DATA
Chadwick Proposal
•
t
•
Council Minutes - 5/29/01
7. Consideration of proposal from Otter Creek, LLC to purchase Chadwick parcel.
City staff reviewed the negotiation process on this property and how initially it was proposed
to do a land swap that would involve trading 60 acres of city owned commercial land for 120
acres of industrial land. The negotiation process was complicated by the issue of the gravel
mining on the property. Since negotiations began the land values have increased and the
latest offer by the developer has the land and gravel ~~ahied at $3,842,000. The Council
discussed the cost of providing the infrastructure needed to serve the property and whether
the City could afford to make this kind of expenditure when they were also looking at major
Council Minutes - 5/29/01
expenditures for street reconstruction as well as other projects. In addition there was some
discussion on the proposed use of the land. While it may be that the developer could realize a
greater gain if the property is developed as commercial property, in the City's land use plan
and in the MOAA plan the area is designated for industrial use. The Council noted that land
use designation does set the property aside for industrial development and it was questioned
whether it was necessary for the City to own industrial land or just to have industrial Iand
available for development.
Dick Van Allen from Industrial Development Committee spoke regarding the acquisition of th
property for industrial use. He emphasized the need for industrial development for the City's
tax base especially in light of the potential property tax exemption for Excel Energy. He
asked that the Council give serious consideration to the acquisition of industrial land and to
also set up a task force to resolve the differences between the City's land use plan and the
MOAA land use plan as well as deal with other issues relating to industrial development. He
added that this issue impacts the school district and county as well as the city.
Paul Bilotta representing Otter Creek LLC, reiterated that what began as a simple proposal to
exchange land was derailed by a number of little issues. A lot of effort was put forth by all
parties in attempting to negotiate a land swap.
City Administrator, Rick Wolfsteller, stated that the same incentives, i.e. tax increment
financing, are available regardless of whether the development is through the private sector or
the City. The Council concurred that development of industrial land was important to the
City but felt that this particular parcel was too costly for the City to pursue. The current
zoning for the property preserves the land for industrial use and in light of some major
projects that the City is facing, the cost to acquire this property would take away from funds
needed for these other projects. The Council also discussed other possible sites for industrial
development including the Gold Nugget property, Remmle property and Pfeffer property.
BRUCE THIELEN MOVE TO TABLE CONSIDERATION OF THE PURCHASE OF THE
OTTER CREEK PARTNERSHIP PROPERTY. BRIAN STUMPF SECONDED THE
MOTION. MOTION CARRIED UNANIMOUSLY.
•
-,
•
COMPANY X (TIF DISTRICT I-13)
ESTABLISHED OCTOBER 1993, DECERTIFY OCTOBER 2004 MAXIMUM 11 YEAR
DISTRICT
BASED ON 10 ACRES, 52,000 SQ FT MFG/OFFICE BUILDING
1993 EMV 2000 EMV 1993 OTC 2000 NTC CTC 1993 TR 2000 TR
Land LandBldg Bldg
$1,250,000 $1,720,200 $1,598 $56,987 $55,~89107.~27% 129.176%
TAX INCREMENT IMPACT
TAXES PAYABLE 2000
IMPACT ON TAX BASE
2000 NTC CTC
Wright County $61,736,076 $55,389
ISD NO. 882 $17,880,648 $55,389
City of Monticello $13,278,375 $55,389
IMPACT ON TAX RATES
1993 TR* 2000 TR % OF TOTAL
Wright County 0.311790
ISD NO. 882 0.571500
City of Monticello 0.163130
Other 0.026850
TOTAL 1.073270
0.319530
0.592620
0.356920
0.022690
1.291760
29.05%
53.25%
15.20%
2.50`%
l 00.00
OF CTC
0.0897%
0.3098%
0.4171
CTC
Building
$55,389
$5.5,389
$55,389
$55,389
TAXES
$17,270
$31,655
$ 9,036
$ 1,487
$_55,389
$59,448
• CONTRACT -TIF ASSISTANCE
The HRA and Company X agreed to the level of TIF assistance:
Up to $275,000 NVP at 6% over 9 years for land acquisition and site improvements. Total
principal and interest to Company X estimated at $385,000.
Process: Annually for 9 years
Company X pays property taxes of $75,000 to Wright County Treasurer.
Wright County Auditor pays HRA $60,000 (TC on building only at 1.07 tax rate)
HRA reimburses Company X $54,000
$54,000 over 9 years = $486,000 The HRA would decertify the district early and HRA portion is
distributed to the County, City, School, and Hospital.
BIG LAKE
CITY PURCHASED LAND FOR $5,000 PER ACRE.
TIF PAYS CITY BACK $5,000 x 10 ACRES = $50,000 NPV
TIF PAYS CITY BACK FOR INFRASTRUCTURE $22,500 PER ACRE _ $225,000 NPV
BUSINESS =LAND FOR $1 AND NO ASSESSMENTS.
•