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EDA Minutes 01-16-2008 (Special Meeting)MINUTES — SPECIAL MEETING CITY OF MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY Wednesday, January 16th, 2008 6:00 PM 1. Call to order. President Demeules called the meeting to order at 6:00 PM. 2. Administer Oath of Office. President Demeules directed Economic Development Director Koropchak to administer the oath of office to the Commissioner Mayer. Commissioner Mayer recited the oath of office. The Secretary is to file a copy of the oaths of office in the permanent records of the EDA. 3. Roll Call. Cj On roll call, the following Commissioners were present: President Bill Demeules Vice President Dan Frie Treasurer Bill Tapper Commissioner Wayne Mayer Commissioner Bob Viering Commissioner Bill Fair Commissioner Clint Herbst Also present were Executive Director 011ie Koropchak and Secretary Angela Schumann and Assistant Treasurer Tom Kelly. Koropchak introduced EDA Attorney Steve Bubul and Todd Hagen, a representative from the EDA's financial consultant Ehlers and Associates. of 7 of Monticello ED. Commissioner Fair moved to approve the Transcript of Proceeding: Organizational meeting of the reconstituted City of Monticello EDA, December 18th, 2007. Motion seconded by Commissioner Viering. Motion carried, 6-0, with Commissioner Mayer abstaining. 5. Approval of the EDA bills and communications. Koropchak explained that the report on the item details a structure for payment of EDA bills as suggested by the City's Finance Department. The procedure requires that the EDA Minutes — 01/16/08 Executive Director code the invoices, which will then come before the EDA for approval. After that step, the bills will go on to City Council for approval. Thereafter the Finance Department will disperse checks for the invoices. Koropchak noted that the bills presented for payment had been separated into two categories. The first sets of invoices related to the HRA's authorized demolition of the Cedar Garden Center. Koropchak stated that her recommendation is for approval of those invoices. Commissioner Fair inquired whether City staff had capped the services at the Cedar Street Garden Center. Koropchak stated that City staff had verified services present and went out for bid on the project, which included capping of services. The invoices represent lowest bid for the project COMMISSIONER TAPPER MOTIONED TO APPROVE THE EDA BILLS AS PRESENTED. MOTION SECONDED BY COMMISSIONER FAIR. MOTION CARRIED, 7-0. Koropchak stated that the second set of bills was related to the consolidation of the HRA and EDA, which had been directed by the City Council. Koropchak indicated that her recommendation is to approve the bills and request that the City Council transfer funds for payment, as these expenditures were not authorized by either the HRA or EDA. Fair clarified that there are two bills for which this authorization would apply. Koropchak confirmed that there are two invoices, which represent attorney fees from attorney Kennedy and Graven for consolidation efforts. Mayer requested further clarification on the amounts of the invoices. Koropchak stated that the invoices are in the amount of $264.00 and $4,121.58. COMMISSIONER FAIR MOTIONED TO APPROVE BILLS AND REQUEST THE CITY COUNCIL TRANSFER FUNDS FOR PAYMENT AS RELATED TO THE INVOICES FOR EDA AND HRA CONSOLIDATION. MOTION SECONDED BY COMMISSIONER TAPPER. MOTION CARRIED, 7-0. Koropchak noted that she had received an invoice from the Monticello Times for the publication of the EDA public hearing notice dealing with the consolidation. Mayer recommended that the invoice be added to authorization made in the previous motion. COMMISSIONER MAYER MOTIONED TO APPROVE THE BILLS AND REQUEST THAT THE CITY COUNCIL TRANSFER FUNDS FOR PAYMENT. MOTION SECONDED BY COMMISSIONER TAPPER. MOTION CARRIED, 7-0. 2 EDA Minutes — 01/16/08 Commissioner Tapper asked who originally authorized expenditures. Koropchak explained that the consolidation had been originated by the City Council. Tapper inquired as to why the invoices come before the EDA for approval, as the invoices were most likely generated prior to the new organization. Mayer stated that these are all interim bills required as the organization was in transition. 6. Report of the Executive Director. Koropchak presented her report for review and questions. Koropchak commented that the Industrial Development Committee is working with the City Attorney and Administrator to complete a resolution and agreement of understanding, which would recognize the IDC as an organization receiving City support. That resolution will be presented for the IDC's review at their February meeting. Viering asked for clarification on the roles of the IDC versus EDA. Koropchak stated that the draft agreement states that the IDC will advise and assist the Council and EDA. Koropchak stated that the EDA has the financial tools for economic development and redevelopment. The IDC is more focused on industrial development and the creation of living wage jobs in Monticello. Fair asked what the IDC's resolution process is intended to accomplish. Mayer responded that as the City allocates staff and resources, a resolution formalizes their path of input to the City. Viering asked if there is overlap in responsibilities between the two organizations. Mayer stated that the IDC will come to the EDA with their input and advisement. Koropchak stated that their role to support industrial growth and development will continue. In further reviewing her report, Koropchak stated that the pervious EDA had approved a loan for an expansion project to the Washburn Computer Group building. The loan was approved subject to bank and plan approvals. Koropchak stated that the preparation of the loan documents was not authorized. Koropchak stated that the loan approval will become null and void on Feb 8th. She reported that the owner of Washburn Computer Group led her to believe that the loan would not be requested for extension. Koropchak also noted that the Planning Commission recommended approval of the extension of Conditional Use Permit for the Landmark Square II project. That project had received approval for TIF. Koropchak provided information on the fee structure for Ehlers & Associates' services. Koropchak also presented overview on the 2007 EDA cashflow projections, which were estimated to include a cash balance of $435,213.06. She indicated that the EDA will be EDA Minutes — 01/16/08 provided with detailed reports of EDA loan and grant programs at the annual meeting in April. 7. Report of committees: Marketing continuing education and fiber optics Marketing Commissioner Frie noted that the Marketing Committee had met to discuss the use of marketing budget, which had previously been approved. Discussion concluded with one commitment to place an ad in the Wright County Partnership journal. The committee also discussed better use of the website and other opportunities. Frie stated that the Commission discussed the use of realtors and MLS services. Frie commented that while there isn't necessarily a comparable industrial listing service for industrial real estate, there is one for commercial real estate. The Marketing committee discussed the merits of listing with those types of sites. Frie stated that it would need more research. Fair asked if anyone has a good idea of what commercial agents are using to site locations. Viering confirmed that in his experience, the first research is done online. Koropchak noted that she had included information on the city of Cambridge's economic development marketing materials. Those materials reference an agent commission. The Marketing Committee wanted feedback on whether that should be offered, and if so, at what percentage. Herbst stated if that if a commission is offered, they must set criteria for what is proposed to be located in the City. Demeules stated that the commission would be set primarily for industrial park, which already has criteria in place. Herbst asked what happens for those who don't meet criteria. Fair clarified that those who don't meet the criteria are able to purchase property at the market price. In any case, the buyer must still meet all zoning and covenant standards. Frie suggested bringing in a commercial agent to provide more information on these topics. Fair asked that it be put on the agenda for a future meeting. Koropchak stated that it will be important to go over the set criteria so that everyone understands what is in place and to confirm that this EDA wants to keep that set of criteria in place. Mayer stated that the Marketing Committee should also emphasize the direct -to -site fiber capacity. 11 EDA Minutes — 01/16/08 Fiber Optics Commissioner Mayer reported that the Fiber Optics Task Force is in the process of reviewing engineering proposals. Eight proposals were received from well respected firms. The group is evaluating the proposals on a points basis and will select the top two to three candidates for interview in Monticello. 8. Unfinished Business. NONE. 9. New Business: a. Consideration to adopt a Resolution awarding the Sale of Public Project Revenue Refunding Bonds, Series 2008 (City of Monticello, Minnesota Lease Obligation.) Ehlers & Associates representative Todd Hagen stated that the City Council supported the EDA in the action to proceed with the proposed refinancing of the bond issue for Community Center building. The original bond was issued in 2000. Hagen stated that bids for the refinance were taken until 11:00 AM that dat. The bids were based on an official statement about the financial status of the City. That statement was provided to the EDA for review. Hagen reported that they had worked with Moody's previously to have the bonds rated. The EDA has a rating of A3, and the City has an A2 rating. A rating report, explaining Moody's logic was also provided for the EDA's reference. Hagen discussed the bid results and tabulations. He stated that they had received four bids from six underwriters. He reported that the Banc of America had provided the best bid. He stated that the Banc of America holds bonds as privately placed. In summary, they do not offer the bonds to the public, which is what allowed them to provide the best rate and bid. Hagen noted that because the bonds are not publicly offered, Banc of America does not require a trustee and savings funds. As such, Ehlers will work with Kennedy and Graven to rework the documents to these circumstances. As a result, the cost of issuance goes up slightly. Hagen stated that in short, the Banc of America bid offers a much more streamlined process. They don't require payment of an agent fee and they didn't take any fee upfront. 5 EDA Minutes — 01/16/08 Hagen indicated that Ehlers had initially forecasted that the refinancing would represent a future savings value of $179,375. Based on the Banc of America bid, that savings is now$287,760, within the same period of time. The bond is now set at a rate of 3.2% versus 6.2%. If the bid is accepted by the EDA, the closing would be on February 20th. The resolution before the EDA authorizes the acceptance of the proposal. Once the bond sale documents are revised to meet the Banc of America terms, they will come back to the EDA for approval. COMMISSIONER HERBST MOTIONED TO AUHTORIZE ACCEPTANCE OF THE PROPOSAL FOR THE SALE OF PUBLIC PROJECT REVENUE REFUNDING BONDS, SERIES 2008A (City of Monticello, Minnesota Lease Obligation)/ MOTION SECONDED BY COMMISSIONER VIERING. In discussion, Mayer asked if the previous motion should include the bank to which the sale is awarded. Hagen confirmed. MOTION BY COMMISSIONER FAIR TO AMEND TO MOTION TO AWARD SALE OF PUBLIC PROJECT REVENUE REFUNDING BONDS, SERIES 2008A (City of Monticello, Minnesota Lease Obligation) TO BANC OF AMERICA. MOTION AS AMENDED SECONDED BY COMMISSIONER MAYER. MOTION CARRIED, 7-0. Koropchak noted that the resolution will move forward to the Council on January 28th Koropchak requested that the Commissioners set a date for approval of the revised bond sale documents. A date and time of January 30th, 4:45 PM. COMMISSIONER HERBST MOTIONED TO SET AN EDA SPECIAL MEETING OF JANUARY 30th AT 4:45 PM FOR THE PURPOSE OF APPROVAL OF BOND SALE DOCUMENTS FOR PUBLIC PROJECT REVENUE REFUNDING BONDS, SERIES 2008A (City of Monticello, Minnesota Lease Obligation). MOTION SECONDED BY COMMISSIONER TAPPER. MOTION CARRIED, 7-0. 0 EDA Minutes — 01/16/08 b. Certificate of Completion for WRE Properties, LLC Koropchak reported that the.HRA entered into a development contract with WRE Properties, Walker In -Store for the purchase and development of land within Otter Creek Business Park. As part of that contract, the developer is required to put down deposit for the administration costs of preparing the TIF district and related materials. When the Certificate of Completion is issued, expenses are reconciled against the deposit. The initial deposit is based on estimated costs to set up the district, at $10,000. However, for this project, the Finance Department reports expenses at a total of $16, 010.15. Walker In -Store will be asked to pay the difference. Koropchak also explained that the Certificate of Completion is recorded at the County. Viering asked how this amount compares to other projects. Koropchak stated that for the newer TIF districts, the administrative costs for setting up the districts have averaged been about $5000 more than the $10,000 deposit. She noted that raising the deposit amount in the contract will be something that the EDA will want to consider. Fair noted that with some history of preparing parcels for development, the EDA can be more prepared to make a determination of what they want the fee to be. Tapper stated that as a business owner, the overage is very frustrating and unexpected. He suggested that the EDA would be doing people a disservice to keep the deposit amount so low, if it is not representative of actual costs. Viering stated that he would agree. Koropchak noted that a review of development contract language was listed for the next meeting. Mayer asked that Koropchak also provide some history on these items for the EDA's reference. COMMISSIONER FAIR MOTIONED TO APPROVE THE CERTIFICATE OF COMPLETION FOR WRE PROPERTIES, LLC NOTIFYING THE DEVELOPER OF THE $6,010.15 ADMINISTRATIVE COST SHORTFALL. MOTION SECONDED BY COMMISSIONER TAPPER. MOTION CARRIED, 7-0. c. Consideration to Review Bids for Demolition of Structures at Cedar Street Garden Center, City Project No. 2007-20C, and Consideration to Award Contract for Demolition Work. Koropchak explained that the EDA is asked to consider authorizing award for the demolition for the Cedar Street Garden Center to the lowest bidder, in the amount of $12,700. 7 EDA Minutes — 01/16/08 The bids were also received and review by the City Council. The Council had tabled action to allow time to check references on the low bidder and their experience with asbestos abatement and tank removal. Koropchak reported that City Engineer Westby had reported that he believed the contractor to be acceptable. The low bidder had also received a favorable financial recommendation. Westby had communicated that the bid amount does not include costs for payment for performance bond. However, with cost for performance bond, this still represents the lowest bid. Koropchak stated that Westby is recommending that the EDA option for the joint project rather than separate, since they were bid together. However, the EDA will only pay for Cedar Street portion of the demolition. Herbst stated that according to the information provided, if the contractor pulls tank, the seller is liable for it. Koropchak stated that she had spoken with the previous property owner on this issue and will follow up with a written letter. She stated that at this time, the City doesn't know the outcome of tank removal. Fair noted that in purchase agreement, there is a clause that says there was no underground tank. However, after purchase, it was discovered that there was. Koropchak stated that when the HRA took possession, it passed a resolution to cover removal costs up to $500. Herbst asked if the $500 is tied to removal and abatement. Koropchak stated that it is tied to removal. Mayer inquired about the identification of tank contents. Frie stated that he believed it was fuel oil. Fair stated that the contractor won't know until they get into the job. Viering asked if there was a staff estimate before bids. Koropchak responded that there was not. Viering asked when the project would start and how long it would take to complete. Koropchak stated that the City needs to act on bids by February 10th, and the project is expected to be completed within a few months. Tapper inquired if it is normal to have such a large difference in bids. Herbst stated that was a concern of the Council, and a reason for tabling to check references. COMMISSIONER FAIR MOTIONED TO AWARD THE JOINT PROJECT TO FITZGERALD EXCAVATING OF GOODHUE, MINNESTOA, BASED UPON THE LOW PROPOSAL OF $25,500, CONTINGENT UPON APPROVAL BY THE CITY COUNCIL ON JANUARY 28TH, 2008 AN ITEMIZATION OF TANK REMOVAL. MOTION SECONDED BY COMMISSIONER HERBST. MOTION CARRIED, 7-0. EDA Minutes — 01/16/08 10. Adjournment COMMISSIONER TAPPER MOTIONED TO ADJOURN. MOTION SECONDED BY COMMISSIONER VIERING. MOTION CARRIED, 7-0. President } 1--Sec-re,";