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HRA Minutes 01-03-2001MINUTES MONTICELLO HOUSING AND REDEVELOPMENT AUTHORITY Wednesday, January 3, 2001 - 7:00 p.m. 505 Walnut Street - Bridge Room Members Present: Chair Darrin Lahr, Vice Chair Dan Frie, Brad Barger, Steve Andrews, Bob Murray and Council Liaison Brian Stumpf. Officers: Treasurer Rick Wolfsteller, Executive Director 011ie Koropchak, and Recorder Lori Kraemer. GUESTS: Brad Johnson, Lotus Realty Services Barry Fluth, BBF Properties Mark Ruff, Ehlers & Associates, Inc. Call to Order. Darrin Lahr called the meeting to order at 7 PM. 2. Consideration to approve the HRA minutes of December 6 2000 A MOTION WAS MADE BY BRAD BARGER AND SECONDED BY BOB MURRAY TO APPROVE THE MINUTES OF THE DECEMBER 6, 2000 HRA MEETING. Motion carried unanimously. Consent A enda. A. Consideration to approve the Certificate of Completion and to adopt resolution decertifying TIF District No. 1-18 (River Mills.) A MOTION WAS MADE BY STEVE ANDREWS AND SECONDED BY BRAD BARGER TO APPROVE THE CONSENT AGENDA. Motion carried 3 to 1 with Bob Murray abstaining. Brian Stumpf, Council Liaison, had to leave at the beginning of the meeting on an emergency response call. 4. Consideration of adding or removing consent agenda items None Consideration of items added or removed from the consent agenda for discussion. None 6. Consideration to hear updated and additional information relative to project concept for redevelopment of the Amoco site. 011ie Koropchak advised that Brad Johnson had contacted her on 12/27/00 and requested to be on the January HRA agenda to report an update on the progress for redevelopment. Koropchak also reminded the members that the preliminary agreement termination date is 2/7/01. HRA Minutes - 01/03/01 Brad Johnson provided some additional information for the members to review which included two scenarios, one being a retail/mixed use proposal at an 11 % return on cost which Mr. Johnson stated seems to work best. He provided a layout showing extensive parking and a site that a restaurant was interested in. He also showed a plan which increased housing to 21 units with increased parking, noting he stayed away from 3 stories of housing and went with longer units/flats which are less expensive to build. On the Amoco site an 8,000 sq. ft. office building with a brick face and possible flat roof was proposed. Johnson states acquisition is close and he has sent out a letter to the property owners advising them of their proposal and has met with all but one owner and his proposed time frame is sometime yet this year. Johnson also talked about the housing proposal stating possibly a flat on the first floor (1 story rental), a townhouse project with 2 stories, all market rate rentals. If a restaurant is built it would be 3,500 sq ft. Johnson stated that the question now is who should purchase the properties, the developer or the HRA. Mark Ruff, Ehlers and Associates, asked if Mr. Johnson was asking the. HRA to purchase and he stated it would depend on cash flow. Johnson also stated that the Amoco site could get started as early as May. Another decision that needs to be discussed is the housing acquisition. Darrin Lahr asked Johnson is this project could be done in three phases versus two and he stated it could but it is not preferred. The next step is for the developers to meet with staff. 7. Consideration of update and action relative to TIF District 1-22 North Anchor. 7a). Consideration to review TIF cashflow projections by Mark Ruff Ehlers & Associates. Koropchak reported that this is an informational item and follow-up from the November HRA meeting. She noted that Rick Wolfsteller, City Administrator, and she had met with Mark Ruff on 12/19/00. Mark Ruff, Ehlers & Associates, advised the HRA regarding proposed changes in the legislature regarding school districts which if approved would mean that the district would no longer be funded by property taxes. This in turn cuts tax increment revenue in half but the chances of this happening are remote, although it shows the risks and he emphasized pay-as-you-go. Ruff provided information regarding Block 54 and all costs relating to redevelopment, advising three possible options, as well as his recommendation. Ruff suggested the HRA get City Council approval and decide whether to approach them now or later on GO tax increment. The feelings were that they would go to the City for a loan, but not to go to the Council at this time. 7b) Consideration to authorize entering into a Lease Agreement_ between the Carlsons and HRA. Koropchak advised the HRA that the Carlson's accepted the HRA's counter-offer of $275,000 as a package deal and signed the requested purchase agreement. A Lease 2 HRA Minutes - 01/03/01 Agreement was drafted by Kennedy & Graven for rental lease at $1 annually, tenant responsible for utilities and property taxes, and possession date August 1, 2002. The leased property will not be a tax exempt parcel. A MOTION WAS MADE BY STEVE ANDREWS AND SECONDED BY DAN FRIE TO ENTER INTO A LEASE AGREEMENT BETWEEN THE CARLSON'S AND HRA FOR THE PROPERTY LOCATED AT 225 FRONT STREET WITH TERMS AND CONDITIONS AS DRAFTED. There was further discussion regarding the agreement stating property taxes to be paid by the Carlson's and it was determined that this was in the lease agreement. Motion carried unanimously. 7c) Consideration to review counter-offer from Mike O'Connor for a reply and to extend the null and void date of the purchase agreement Koropchak advised that O'Connor responded to the HRA's offer, making a counter offer of $175,000 as a package deal to the HRA's offer of $92,200. The HRA is asked to either consider this offer and to extend the null and void date with the Purchase Agreement or direct Koropchak to move forward with condemnation. After discussion, the members decided on a counter-offer package deal to offer O'Connor and directed Koropchak to advise Mr. Helvey to proceed upon execution of the Carlson purchase agreement. Mr. Helvey to advise the seller "this is one of the highest percentage offer ever offered by the HRA". A MOTION WAS MADE BY BRAD BARGER AND SECONDED BY DAN FRIE TO MAKE A COUNTER-OFFER IN THE AMOUNT OF $130,352 AS A PACKAGE DEAL TO MIKE O'CONNOR, POSSESSION DATE NO LATER THAN 4/15/2001, AND EXTEND THE NULL AND VOID DATE TO TWO WEEKS FROM DATE OF COUNTER-OFFER PRESENTED; AND ADOPTED A RESOLUTION DIRECTION STAFF TO PREPARE MATERIALS TO AUTHORIZE ACQUISITION OF PROPERTY BY EMINENT DOMAIN. Motion carried unanimously. 7d) Consideration to review counter-offer from Sandy Bostic for a reply and to extend the null and void date of the purchase aereement. Koropchak advised that Bostic responded to the HRA's offer of $78,000 with a counter- offer of $148,000 as a package deal. Also noted was the penalty payment that would need to be added to the counter-offer as Bostic would be penalized on her home improvement loan if she sold now. The HRA is asked to either consider this offer and to extend the null and void date with the Purchase Agreement or direct Koropchak to move forward with condemnation. Koropchak also advised the HRA that once a purchase price " is agreed upon, the HRA needs to authorize an environmental test on the property for the underground fuel tank. HRA Minutes - 01/03/01 After discussion, the members decided on a counter-offer package deal to offer Bostic and directed Koropchak to advise Mr. Helvey to proceed upon execution of the Bostic purchase agreement. Mr. Helvey to advise the seller "this is one of the highest percentage offer ever offered by the HRA". A MOTION WAS MADE BY BOB MURRAY AND SECONDED BY STEVE ANDREWS TO MAKE A COUNTER-OFFER IN THE AMOUNT OF $109,400, PLUS THE PREPAID PENALTY, NOT TO EXCEED $5,000, AS A PACKAGE DEAL TO BOSTIC, POSSESSION DATE NO LATER THAN 4/15/01 AND TO EXTEND THE NULL AND VOID DATE TO TWO WEEKS FROM DATE COUNTER-OFFER PRESENTED. Motion carried unanimously. 7e) Consideration to authorize an appraisal of the raw land only for the Carlson property. Koropchak stated that in conversation with Attorney Bubul relative to the acquisition of the Carlson property with tax increment monies for future use as green space or park land, this is the plan. The HRA will finance the purchase of the land and building with tax increment: the property lies within the district, is blighted and was identified within the plan for redevelopment. The HRA will demolish or remove the house in late August 2002 after which the HRA will sell the raw land to the City because greater than 50% of the parcel lies within the 100 -year flood plain and the City restricts issuance of building permits within the flood plain. The City previously had budgeted $35,000 for North Anchor acquisition. The HRA must sell the parcel for fair market value, therefore, it was suggested to authorize an appraisal of the land only. The 1995 appraisal had the land at $65,000 and the building at $98,000. The 1997 appraisal had the land at $75,000 and the building at $90,000. For taxes payable 2000, the estimated market value of the land is $54,000 and the building $95,100. It is the opinion of Attorney Bubul that an appraisal of the raw land without the house will be less than the appraisals with the house because of the restrictions. The difference between the appraised raw land and the $35,000 would be financed by non-restrictive or HRA General Funds. Koropchak advised that a supplement to the 1997 appraisal or an update for raw land only is about $200. The Carlson's were unhappy with Mr. Nagorski and perhaps the HRA may wish to have another appraiser complete the appraisal. A MOTION WAS MADE BY DARRIN LAHR AND SECONDED BY STEVE ANDREWS TO AUTHORIZE APPRAISER ROD DRAGSTEN TO COMPLETE A SUPPLEMENT OR AN UPDATE FOR RAW LAND ONLY FOR THE PROPERTY LOCATED AT 225 FRONT STREET, SUBJECT TO EXECUTION OF THE PURCHASE AND LEASE AGREEMENT WITH THE CARLSON'S. Motion carried unanimously. rd HRA Minutes - 01/03/01 7f) Informational update relative to public improvements associated alongy Front Street and redevelopment along a protected scenic area. Koropchak advised that the three parcels along the south side of Front Street will require a sub -division or re -platting into 10 lots of 33 ft width if the Hans Hagen concept is accepted. Each parcel will require installation of a water/sanitary sewer stub therefore this will add development costs to the project. Because of the high water table along Front Street, this installation will require de -watering which further increases the cost of the installation. The Public Works Directors has noted in the fixture (1-5 years), this the oldest water and sewer line within the city, will need replacing. It appears the policy for replacement of infrastructure will not be through assessment. Koropchak asked the members if perhaps it would make more sense to replace the line at the same time as installing the new stubs. In talking with the Parks Director, it is up to the city to manage a wild and scenic area such as the Mississippi River. Only if the shore line is modified (elevation changed) is a permit required. Some problems did occur when the city attempted to clear the brush along the river across from the Battle Rapids development. It is my assumption that the dead or downed trees from the 1997 storm would be removed, otherwise the Carlson property would basically be seeded or sodded. Maintenance and repair of the Carlson property is a future budget item for the Parks Department. Darrin Lahr felt the sooner the City looked into this the more beneficial. No action was required. 7g) Consideration to authorize entering into a Preliminary Development Agreement with Hans Haien Homes. The HRA is asked to consider authorizing entering into a Preliminary Development Agreement with Hans Hagen Homes. Hans has been updated periodically on the HRA's progress to acquire the parcels and continued to be very interested in redevelopment of the area. The Parks, Council, and Planning Commission members have all seen the concept plans submitted by Hans Hagen and all were excited and liked the concept, two people suggested perhaps the HRA should offer the proposed redevelopment site to other developers. This is an HRA decision, the Minnesota Statute does not require the HRA to go out for request for proposals. However, the HRA by Law must hold a public hearing upon the sale of property. Although the HRA does not have the properties tied -up and at what price, to authorize entering into the Agreement with Hans Hagen Homes would allow our financial consultant and HRA staff to begin working out details. The Preliminary Development Agreement is our standard agreement which includes the $5,000 deposit. If we get executed Purchase Agreements prior to the February meeting, we could begin working with Hans. Koropchak asked the members if they felt the timing was right and if they preferred to submit an offer to Hans Hagen or see other developers/concepts. 5 HRA Minutes - 01/03/01 The HRA members directed Koropchak to hold off any action until the regular HRA meeting in February but to move forward and start conversations with Hans Hagen. 8. Continued - Consideration to hear progress relative to research of purpose/objective and funding for a scattered housing_ program and a motion of action/direction. Dan Frie briefly updated the HRA stating that Shari had received the application for the grant and provided Dan a description of the program, as well as general information that is important to the City. Frie stated that the City could apply for up to $500,000. There will be a seminar/workshop in Little Falls on January 10, 2001 and Shari advised that she would like a City staff person and HRA member to attend this workshop regarding the grant application. Also provided in the information from Shari were examples of grant applications. Frie will supply Koropchak with copies for the HRA members to review and stated that after the seminar this item would need to go to the City Council. 9. Consideration to authorize payment of the monthly HRA bills. A MOTION WAS MADE BY STEVE ANDREWS AND SECONDED BY BOB MURRAY TO AUTHORIZE PAYMENT OF THE MONTHLY HRA BILLS. Motion carried unanimously. 10. Consideration of Executive Director's Report. • Koropchak provided her report updating the HRA on a letter sent to Ed Kauffmann per the direction of the HRA Chair at the December HRA meeting - no response at this time; • Bondhus Letter mailed relative to tax increment deficiencies and notice of payment due; • Semi-annual tax increment payments - in the process of issuing voucher for the finance department to issue checks for the February 1, 2001 tax increment payments due for TIF Districts financed by the pay-as-you-go method; • Twin City Die Castings - In addition to contacting Doug Harmon, a resolution was drafted extending the construction completion date to April 1, 2001 per the motion passed by the HRA in December. The resolution also stated that the HRA and Developer recognized that amending the construction completion date to April 1, 2001, may alter the TIF Cash Flow. Because the City was a party to that Contract, the Council adopted the resolution on December 11, 2000. The resolution was forwarded to TCDC for execution, it has not been returned at this time; Red Wing Foods, Inc. - They continue working with Tom Feaski on building design and have approached one local lender about financing. Lender reviewing project and financials; 300,000 sq ft headquarter/manufacturing building - Via voice mail from Chicago, the search consultant stated the company has elected to remain in the St. Cloud area; 0 11 HRA Minutes - 01/03/01 Slow on industrial lead this month, and Koropchak provided a copy of the letter to the Dept of Revenue for review. Committee Reports: Marketing Brad provided the update stating thoughts on a billboard or message board with businesses supporting it in turn for advertising. Also more marketing brochures will be mailed out monthly - 100 versus 25. Brochures have been updated and they will look again in another year to see if more updates should be made. Community Center Annual Report - Bob provided an update stating February and March were the strongest months; purchased 2 new machines for fitness area; tabled an item on the bike park stating there have been a number of requests to put one in. There are a number of promotions coming up such as promoting a coffee bar targeting K -mart and Cub to have them meet at the MCC, it was asked if this would be in competition with the other shops in town and Bob stated the MCC would not be serving food but rather trying to get more people in. Kitty Baltos, Community Center Director had provided hand outs regarding the expenses and revenues for the HRA's review. MCP - Steve Andrews gave a brief update noting there are still funds available but no people for volunteering, and their feelings that by cutting down on expenses such as office space lease and paid staff, they could save some money. He did note that the MCP is still up and running and they are meeting monthly at the MCC. The annual meeting is next month. 12. Other Business. None 13. Adjournment. A MOTION WAS MADE BY BOB MURRAY AND SECONDED BY STEVE ANDREWS TO ADJOr THE MEETING AT 9:20 PM. Motion carried unanimously. I Chair cord r