EDA Meeting Minutes - 3/27/2024MINUTES
REGULAR MEETING - ECONOMIC DEVELOPMENT AUTHORITY (EDA)
Wednesday, March 27, 2024— 7:00 a.m.
Academy Room, Monticello Community Center
Commissioners Present: President Steve Johnson, Vice President Jon Morphew, Treasurer
Hali Sittig, 011ie Koropchak-White, Rick Barger, Councilmember
Tracy Hinz, and Mayor Lloyd Hilgart (joined the meeting at 7:13
a.m.)
Staff Present: Jim Thares, Angela Schumann, Vicki Leerhoff
1. General Business
A. Call to Order
President Steve Johnson called the regular meeting of the Monticello EDA to order
at 7:06 a.m.
B. Roll Call 7:00 a.m.
Mr. Johnson called the roll.
2. Consideration of Additional Agenda Items
None
3. Consent Agenda
A. Consideration of Resolution No. 2024-06 su000rtine Wright Countv Economic
Development Partnership (WCEDP) Funding from Wright County
Jim Thares, Economic Development Manager, presented the item. The Wright
County Board of Commissioners is reevaluating funding to the Wright County
Economic Development Partnership (WCEDP). The WCEDP leadership team is asking
City Councils and/or EDAs to adopt a resolution showing their support in continuous
funding.
JON MORPHEW MOVED TO APPROVE RESOLUTION 2024-06 SUPPORTING WRIGHT
COUNTY ECONOMIC DEVELOPMENT PARTNERSHIP REQUESTING CONTINUED
FUNDING FROM WRIGHT COUNTY, TRACY HINZ SECONDED MOTION. MOTION
CARRIED UNANIMOUSLY.
4. Public Hearing
None
5. Regular Agenda
A. Consideration of Business Subsidy Pre -Application Review — Fairfield Marriott
Hotel Proposal
Jim Thares, Economic Development Manager introduced the item. There is an
application to build a Fairfield Inn on the 3.5-acre Deephaven site which was the top
recommended choice in the 2023 Hotel Market Study. Mr. Thares provided an
overview of the $16,000,000 proposal. The applicant is requesting Tax Abatement
to fill a gap in their available funding. This is a pre -application, and a final review will
be presented to the EDA on April 10th with a score for final approval to move to City
Council or table.
Thares introduced Rod Thompson, Ted Thompson, and Ted Christianson from
Monticello Hospitality Group, LLC (MHG). The MHG is also in discussions with a
restaurant group which they have worked with in the past to have a facility attached
to the hotel.
Rob Thompson presented their application. The full application, if supported, would
allow tax abatement to be a portion of the financing, to be used in the financing for
the development of a 4 story, 98-room hotel. Due to substantial increases in labor
and material pricing, the cost per room has increased from 95k to 150k over the past
5 years. This increase is also having an impact on room charge rates. The hotel
construction cost increases and the expected mid -level room occupancy in the
Monticello market is projected to result in a return on investment below industry
standards and is thus the reason for the request to seek Tax Abatement.
It was also noted that the Marriott brand has a loyalty program which they feel will
help draw people to this hotel and the community. The facility would have a pool,
and three or four small meeting rooms which can be opened to make larger spaces.
Typically, they work with two restaurant chains and are confident they will be able
to build a restaurant to connect this to the hotel building. Projected employment is
25 to 30 full and part-time employees, with a total payroll estimated to be between
$800,000 to $1,000,000 +/-. Rob Thompson said that there is an advantage to being
the first in the Pointes at Cedar District and are committed to the esthetics of the
facility along with the required landscaping in the Pointes at Cedar ordinance.
He further stated that it would be their intention to bring an "extended stay" hotel
brand to Monticello as well in the next four or five years. Tax Abatement would also
likely be requested for this development due to the extensive costs.
Steve Johnson, President, inquired what is the target return on investment both
with and without the tax abatement. Ted addressed the question; the return on
investment with the abatement is expected to be 11-12% cash on cash for investors
and without abatement is 5.2% cash on cash. Mr. Thares stated the financial page
will be included in the following agenda.
Thares addressed Chair Johnson's question regarding a pay go format or a bond;
there are no public infrastructure improvements required for this site and because
of that the City would not be selling a bond. MHG would fund through the upfront
development costs through their bank and investors. Mayor Hilgart pointed out that
the hotel study noted a hotel would require an abatement. He also said that a hotel
is one of the few abatements the County would consider.
MHG asked if the abatement would apply to the restaurant as well to help offset
their cost of opening. The MHG would own the building and lease the space to a
restaurant. President Johnson stated they could apply. Mayor Hilgart stated the City
would likely not support this. The abatement would be for the entire building. Jon
Morphew, Vice President, concurred with Mayor Hilgart.
President Johnson asked what the timeframe is for stabilization once it is built. MHG
is hoping for 12-18 months. The height of the signage is being reviewed by city staff.
Rob Thompson noted that the abatement application with county needs to be
completed and forwarded to the County as soon as possible. Jim Thares requested
the payroll information for the hotel be sent for review by City staff.
HALI SITTIG MOVED TO RECOMMEND MONTICELLO HOSPITALITY GROUP, LLC
CONTINUE FORWARD WITH A BUSINESS SUBSIDY APPLICATION FOR TAX
ABATEMENT, RICK BARGER SECONDED THE MOTION. MOTION CARRIED
UNANIMOUSLY.
6. Other Business
A. Consideration of Economic Development Manager's Report
Mr. Thares provided an overview of the Economic Development Manager's Report.
7. Adjournment
TRACY HINZ MOVED TO ADJOURN, HALI SITTIG SECONDED THE MOTION. MOTION
CARRIED UNANIMOUSLY. MEETING ADJOURNED AT 8:00 A.M.
Recorded By: Vicki Leerhoffj —
Date Approved: May 8, 2024
ATTEST:
- - /11*10 1
Thares, Executive Director