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EDA Minutes 04-11-2012 (Closed/Joint/Special Meeting) MINUTES SPECIAL CLOSED JOINT CITY COUNCIL AND EDA MEETING Wednesday, April 11, 2012 - 5:00 p.m. Mississippi Room - 505 Walnut Street, Monticello, MN EDA Commissioners: President Bill Demeules, Vice President Bill Tapper, Treasurer Tracy Hinz, Matt Frie, Council members Tom Perrault and Brian Stumpf City Council: Mayor Clint Herbst, Glen Posusta, Lloyd Hilgart Others: Executive Director Megan Barnett-Livgard, Finance Director Tom Kelly, City Administrator Jeff O’Neill, Todd Hagen (Ehlers), Attorney Dan Wilson, City Engineer Bruce Westby, Bret Weiss (WSB) 1. Call to Order The Special Closed Joint meeting was called to order by EDA President Bill Demeules at 5:01 p.m. 2. Purpose of Meeting Megan introduced participants in the meeting and noted the various items that are to be covered tonight: Montgomery Farms purchase agreement, Fred Culp property, Block 34 strategy, and Anchor Block opportunity. 3. Montgomery Farms Purchase Agreement Megan Barnett Livgard explained that the City/EDA has obtained a signed purchase agreement from Clay Montgomery of Montgomery Farms for his property at the corner of East Broadway and Hwy 25. Megan Barnett Livgard summarized the history leading up to the purchase agreement offer. She then went through a presentation clarifying the terms of the offer. Clint Herbst asked about a tenant’s request for a payment of $25,000 to get out of his lease. Clay Montgomery is asking the city to share this cost. Dan Wilson explained the conditions of the purchase agreement and how this relates to the tenant leases. Glen Posusta asked what would happen if any of the tenants want to stay in the building. Dan Wilson explained that the City would negotiate that with those tenants. However, he noted that most of the tenants are planning to leave and are not interested in a new lease. Matt Frie asked who holds the other long-term lease and Dan Wilson noted that is the tattoo parlor. Clint Herbst asked how that would affect the City and Dan Wilson noted that would be between Montgomery and the tenant. Clint Herbst asked if the City would still need to get an appraisal on the property for MnDOT. Dan Wilson explained that process is not certain at this time. They are recommending that the EDA actually be a partner in the sale with Montgomery and then the City would become involved with MnDOT as part of the intersection improvements. Bret Weiss noted that federal funds cannot be used for right-of-way and other purchases so this property would probably not be eligible for any federal funds. Megan Barnett Livgard explained that she is asking the Joint Council and EDA members to take action by motion to recommend acceptance of the Purchase Agreements with Clay Montgomery, and direct staff and Dan Wilson to begin working through individual tenant relocation packages. Bill Demeules mentioned that there is a TIF district expiring at the end of the year and was wondering if any of those funds could be used toward this purchase. Megan Barnett Livgard explained how the funds from TIF 1-22 and TIF 1-5 might be best used toward this purchase. Lloyd Hilgart asked if there were additional costs beyond the purchase agreement cost of $847,000. Megan Barnett Livgard explained that there would be some tenant relocation costs that would be the responsibility of the City. Dan Wilson talked about the potential expectations of additional costs, which could possibly exceed $200,000. Glen Posusta asked what the additional $47,000 covers that is requested by Clay Montgomery. Megan Barnett Livgard noted those cover some of Montgomery’s additional costs with interest losses and loss of rental income. Clint Herbst talked about the opportunity for the City or EDA to lease out the building and recover some of the expenses that might have to be paid now. The City can also negotiate those leases to exempt the City from paying any further relocation costs. BILL TAPPER MOVED TO RECOMMEND CITY COUNCIL APPROVAL OF THE PURCHASE AGREEMENT WITH MONTGOMERY FARMS, LLC AND DIRECTS STAFF AND DAN WILSON TO WORK ON TENANT RELOCATION PACKAGES. MATT FRIE SECONDED THE MOTION. MOTION CARRIED 6-0. 4. Fred Culp Property Megan Barnett Livgard summarized the new offer from Fred Culp to purchase his property for $84,000. Brian Stumpf noted that the shop is up for auction on Thursday, April 12. Brian Stumpf noted that he talked to Fred Culp about the tanks and they are still in the ground, but filled and tapped. Brian Stumpf suggested that if the EDA were interested in purchasing this property, there should be superfunds or other sources to help pay for cleaning up the blight. Matt Frie commented that it would be kind of difficult to leave this property as is and then have to deal with it years down the road. Brian Stumpf spoke in favor of considering this offer for purchase and getting the property cleaned up. Tom Perrault pointed out that the disadvantage with establishing a TIF district for clean- up is that you have restrictions on redeveloping the property. Todd Hagen noted that there is a 3-year requirement to redevelop after demolishing the building and cleaning it up. Megan Barnett Livgard asked what thoughts were on letting the auction take place to see if it doesn’t sell and possibly making an offer after that. Clint Herbst stated that he is not opposed to the EDA making an offer on this property. Dan Wilson explained that the offer can specify that the owner-occupant does not have to receive relocation costs. BRIAN STUMPF MOVED TO HAVE THE EDA OFFER $84,000 TO FRED CULP FOR THE PROPERTY AT 348 WEST BROADWAY WITH NO RELOCATION EXPENSES TO BE PAID AND SELLER RESPONSIBLE FOR PROPERTY TAXES. TRACY HINZ SECONDED THE MOTION. MOTION CARRIED 5-1 WITH TOM PERRAULT OPPOSED. 4. Block 34 Redevelopment Strategy - ACE Expansion / Wolfe property Megan Barnett Livgard discussed some points regarding the Ace Hardware expansion plans to the southeast corner at Broadway and Hwy 25. In order to make this happen, the Wolfe store needs to be obtained. Megan Barnett Livgard reviewed several points supporting the purchase of the Wolfe store: 1) taxes are now $6285 - in the future they could generate taxes in excess of $45,000; and 2) Does EDA/CC support having Ace Hardware move to Block 34? Do they want to authorize Dan Wilson to start negotiations? Or would they rather have Sean Grady, owner-operator Ace Hardware, make an offer to Wolfe to start things rolling? Glen Posusta asked what kind of an offer might need to be made. Dan Wilson explained that he has done some investigating and found that they were asking $425,000 when CVS Pharmacy was looking at purchasing. Clint Herbst thought it was better to have Sean Grady make the first offer and asked about the impact on the City for responsibility to pay any relocation costs. Dan Wilson noted that, if Sean Grady makes the offer and is able to secure the purchase, he becomes the owner-operator and the City would not have to pay relocation. Megan Barnett Livgard asked who would be able to sit down with Sean Grady to talk about this; Jeff O’Neill will do that. Jeff O’Neill also mentioned some points regarding eminent domain and noted that the Wolfe property is not needed for the Hwy 25 intersection reconstruction. Megan Barnett Livgard asked if everyone was still in support of moving Ace Hardware to Block 34, which was confirmed. Lloyd Hilgart noted that the City is not in a position that they need to move forward at this time. If this would be too expensive, they could hold off. Glen Posusta commented that he would prefer to have Sean Grady work directly with Wolfe on making the offer; however he wanted to make sure that he does not get into discussion about the city’s plans rather than focusing on Ace Hardware plans. It was noted that Jim McComb has held discussions with Sean Grady and explained what his role should be in the negotiations. 5. Anchor Block Opportunity - Julie Reh property Megan Barnett Livgard brought up the former NAPA property and owner Julie Reh’s interest in selling this property for future development. Megan Barnett Livgard would like to get direction from the EDA and CC in pursuing this property. She is meeting with Julie Reh on Thursday, April 12 to discuss the status of the property and potential options for the City. Dan Wilson noted that the City wants to be cautious about relocation costs because of the number of tenants that are in the building or potential tenants that she may have in the future. This could impact the City with large acquisition and relocation costs. Megan Barnett Livgard will meet with Julie Reh as a fact-finding discussion. 6. Adjournment Megan Barnett Livgard noted that she intends to continue with joint EDA/CC meetings about every other month and is looking into providing a “confidential” green sheet to keep all commissioners updated on these items. BRIAN STUMPF MOVED TO ADJOURN THE SPECIAL CLOSED MEETING AT 6 P.M. BILL TAPPER SECONDED THE MOTION. MOTION CARRIED 9-0. Recorded by Catherine M. Shuman, Deputy Clerk