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City Council Minutes 06-20-2012 SpecialMINUTES SPECIAL JOINT MEETING — MONTICELLO EDA AND MONTICELLO CITY COUNCIL Wednesday, June 20, 2012 — 4:30 p.m. Mississippi Room, Monticello Community Center Present - EDA: President Bill Demeules, Vice President Bill Tapper, Treasurer Tracy Hinz, Matt Frie, Rod Dragsten, Tom Perrault (Council rep) Present - Council: Mayor Clint Herbst, Lloyd Hilgart Absent - Council: Glen Posusta, Brian Stumpf Others: Megan Barnett Livgard, Tom Kelly, Jeff O'Neill, Charlie Pfeffer, Jim McComb, Steve Johnson, Barry Fluth, Shawn Grady, Sue Swiecichowski 1. Call to Order EDA President Bill Demeules called the meeting to order at 4:31 p.m. 2. Purpose of Meeting: Review Pfeffer land opportunities and provide ReSTOREing Downtown update Megan Barnett Livgard introduced Charlie Pfeffer and explained that he would like to talk about his company and possible opportunities in Monticello. 3. Review Pfeffer Land Opportunities (EDA Protocol) Charlie Pfeffer explained that his company is out of Maple Grove and has a 20 year presence in Monticello. Charlie Pfeffer displayed a map of Monticello and the locations where they have had a presence in Monticello. The first 2 acquisitions were called Monticello Land Company Inc. and involved a residential development and an industrial component that was acquired through an auction (Monticello Commerce Center). They have provided some land for the new freeway exchange of about 14.4 acres and created a pond in that area. Some of that industrial land is available for sale. A successor company, Ocello LLC, was formed after this and was involved in a 160 -acre residential development along School Boulevard, consisting of both single family and townhomes. Ocello was also involved in the development of Walmait in this area and has several vacant parcels that are available for sale. Another piece of property involved the development of Autumn Ridge townhomes, which is not built out yet. Ocello provided financing for the development of homes south of Autumn Ridge and was also involved in the Groveland Additions which consist of single family homes. Ocello developed the business center where Steele Collision is located. Ocello also owns other vacant land in the southwest portion of the City. Charlie Pfeffer noted that there is a total of over 1000 acres included in all of the land and developments that have involved his company and Ocello. This has generated a huge investment in Monticello in revenues and tax base. Charlie Pfeffer talked about some of Special Joint Meeting Minutes — June 20, 2012 Page 1 the collaboration between the City and Ocello, LLC on certain projects that benefited both parties, such as stormwater ponds. Charlie Pfeffer mentioned that they had the opportunity to bring the Albertville Outlet Mall to Monticello but the opportunity was missed by the community. He also discussed efforts to bring Kohl's to Monticello some years ago, but the management of Kohl's decided not to pursue that location. Charlie Pfeffer worked on the Mills Fleet Farm project and is hoping they will decide to build in Monticello soon. Charlie Pfeffer discussed the Interchange project, the contributions made by Ocello as part of that project, and the assessment agreements that resulted from that project. He noted that the Council has been generous in adjusting their assessment agreements to allow a longer payback period. Jeff O'Neill thanked Charlie Pfeffer for his condensed representation of the involvement of his company and Ocello in the City. Charlie Pfeffer complimented the EDA on its Embracing Downtown project. He questioned the role of the City when they receive inquiries from persons interested in developing in the City. Jeff O'Neill commented that the City's goal is to match each person with the best opportunity for them to locate and develop within the City. Charlie Pfeffer stated that his company has not received any inquiries in some time and was wondering if that was normal. Jeff O'Neill noted that the City has received very few inquiries itself. Charlie Pfeffer asked about TIF financing and the EDA's approach to that. Bill Demeules explained that each project is looked at individually and treated equally as far as a package that would be available based on the type of project. There would be no difference if the project was on city -owned land or on private land. The criteria is applied equally to any project that would qualify for TIT. Megan Barnett Livgard summarized the Business Subsidy Policy that addresses how the EDA would look at a project. On a case -by -case basis, they review job creation and tax base without regard to public or private land ownership. Megan Barnett Livgard stated that the City provides contact information for all land companies and developers that inquire on available land. Charlie Pfeffer stated that he would like to have his company included on any contact lists. Megan Barnett Livgard noted that they are the list she maintains. Charlie Pfeffer also commented on the highway signage that is regulated by MnDOT and was concerned about the ability to place signs within certain distance of freeway exits. He felt that the City may want to contact MnDOT regarding this. 4. ReSTOREing Downtown Update (Jim McComb) Megan Barnett Livgard introduced Jim McComb and explained that he would be updating Council and EDA members about the progress that has been made on the Embracing Downtown project. Jim McComb handed out information on financing for the anchor blocks and Block 34. Jim McComb referred participants to the anchor block drawing in the handout. McComb reviewed preliminary development numbers to acquire Special Joint Meeting Minutes —June 20, 2012 Page 2 land and constrict a parking lot. He further reviewed the increased tax value that would be realized from the improvements. Jim McComb feels that there would be strong interest from certain companies to locate in Monticello. Megan Barnett Livgard summarized that the City would need to subsidize about $1 million to develop an anchor block. Tracy Hinz asked if the subsidy information is new; Jim confirmed that is new. He knew the project would be expensive but needed to finish the study on the parking before he knew the actual costs and revenues. Jeff O'Neill asked what the cost would be to the anchor store. Jim explained that they would pay for the pad site at $5 per square foot. Jim McComb talked about the common parking area and how that would be negotiated with an anchor store to pay for costs. Clint Herbst asked if there would be annual maintenance costs charged to users. Jim McComb noted that his estimates were based on one -time construction costs of the common areas. Jeff O'Neill commented that the maintenance of common areas is often revenue - neutral; it doesn't necessarily generate income because there is a cost for the City for upkeep. Jim McComb talked about the complexities of negotiating financing to induce large anchor stores to locate in a community. They expect certain things in exchange for locating in your community. Jim McComb next discussed Block 34 and noted that there is basically one parcel needed to complete the acquisition to redevelop in that block. He summarized what has been accomplished so far in that block. His financial analysis shows this project would require a subsidy to complete the improvements. Lloyd Hilgart asked why Jim McComb did not include some scenarios on possible costs for property acquisition on his handout. Jim explained that there are still some unknowns right now. Jim McComb is assisting in negotiations and is not able to disclose information at this time. Jim McComb talked about an inquiry from a potential interest but could not pair them with a site because there is not an available downtown site for them to negotiate with the City. The City has a plan but not available land sites in the downtown. Megan Barnett Livgard explained further that interested end users expect to come into a community and have sites available. Lloyd Hilgart stated that he thinks that someone that is interested in coming into Monticello will find a place that will work for them. Lloyd Hilgart mentioned that they are having difficulties making things work for Ace Hardware, so how could the City expect to make things work for an anchor block. Clint Herbst concurred with Lloyd Hilgart and expressed his concern at knocking down buildings to make available sites. Clint Herbst would like to see them focus on getting Ace Hardware moved so that they can then look at developing that site. Jim McComb commented on being aware that the City is limited in its ability to condemn property for redevelopment. Clint Herbst noted that Council would not be interested in pursuing condemnation. Shawn Grady commented on his thoughts regarding acquisition of the property that he needs in order to move to Block 34 and the other potential costs Special Joint Meeting Minutes —June 20, 2012 Page 3 involved with relocating his business. Clint Herbst feels that this is still a good project for the City; however it is necessary to do more work to determine the anticipated costs. Lloyd Hilgart commented on his concern that this has been discussed for many months, but they have not seen a site plan to make sure that this project will work on the site. Lloyd Hilgart suggested that it would still be helpful to have numbers inserted in the formula for land acquisition on this given site and recommended using the County value or multiple values. Tracy Hinz asked Jim McComb to talk about the minimum subsidy that they could expect to come up with for Block 34 improvements. Jim McComb reviewed a few different subsidy estimates. Lloyd Hilgart asked where those fiords would come from. Megan Barnett Livgard explained that would be a package that the EDA would put together, based on the needs of the developer /property owner and City. Jim McComb will provide information to Megan Barnett Livgard on what the numbers look like to make this project work in Block 34. 5. Adjournment BILL TAPPER MOVED TO ADJOURN THE SPECIAL MEETING AT 5:56 P.M. MATT FRIE SECONDED THE MOTION. MOTION CARRIED 6 -0. Recorder: Catherine M. Shuman &%V Approved: July 9, 2012 Attest: Ci inistrator Special Joint Meeting Minutes —June 20, 2012 Page 4