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HRA Minutes 04-04-1984MINUTES MONTICELLO HOUSING AND REDEVELOPMENT AUTHORITY Wednesday, April 4, 1984 - 7:00 P.M. Members Present: Don Cochran, Gary Wieber, Vic Vokaty, and Bud Schrupp. Members Absent: Jack Peeve. Staff Present: Tom Eidem, Allen Pelvit. Chairman Cochran opened the meeting asking for a motion to approve the March 7, 1984, regular meeting minutes and the March 17, 1984, special meeting minutes. Motion was made by Gary Wiebor and seconded by Bud Schrupp. Chairman Cochran explained this item as being a piece of property (Lots 13, 14, and 15, Block 51) held by the HRA and that members of the Authority should have received information giving a few options available to the Authority in regard to this property. lie then turned the floor over to Tom Eidem for further explanation. Tom Eidem explained that what he did was to combine several sets C. of suggestions and/or lists and used the Mr. Potato Head concept where you pick and choose. tie also stated that it was not intended to be all inclusive. For example, under cost he listed the break- even point. The Authority could sell bel;;7f they wanted to. This is merely illustrative. Tom then went on to discuss the following items: 1) Refunds; 2) Proposals for development. He stated the Authority could simply list the property on the open market, or they could request proposals from potential developers; 3) Hearings - Tom explained that he checked with the League of Minnesota Cities and Holmes and Graven. The part of the statute pertaining to bidding or selling of City property specifically excludes land. You do, however, under 462, have to publish a notice that you intend to sell. FmHA wants the HRA to keep the land and enter its own housing project. Tam indicated this was not practical because of the Authority's infancy. We are more dedicated toward economic development and/or redevelopment and are not physically equipped to handle this sort of project. 4) FmHA has stated that they will judge applications on a first come, first serve basis with no way of rating morit because that is delegated to the local community. They do not want two or mutually exclusive options on the same piece of property. 5) The other alternative would be to turn it over to a land speculator. But then the Authority loses its control. However, the City does have zoning control. You could turn it back to the development corporation. You lose approximately $25,000. Another alternative is that maybe rttHA dc:cicpc.,nt is not suitable for this property at all. The cost was figured using a May 9, 1984, date. - 1 - HRA Minutes - 4/4/84 CGary Wieber raised a question on FmHA's concern over whether this project would be approved. He wanted to know if it was because of the Big Lake vacancies. Tom then added that in addition to the Big Lake problem, the project might not be approved because of this projects use of an elevator. Chairman Cochran reported that he had called FmHA and spoken with a Mr. McDowell. The summation is that Mr. Poehler's application was no longer current and that it needed to be updated, etc. So at this time there was no application in and would award a project to the first to apply, control a site, and prove a need. FmHA wants an update on the survey showing a two for one need in the community. The elevator, in their opinion, is not needed, and they want an independent market study completed that shows a continuing need, as well as present need. The last reason was that Poehler did not have site control. Ion went on to say that FmHA wanted the local HRA to develop this project and if it did would automatically get top preference. Ion asked why and their response was that it takes away the profit issue and serves the community better. Don stated that the Big Lake project still has nine vacancies, that FmHA has opened the rental to other than elderly, and that it may pick up after a nearby Tom Thumb store opens. Don asked the Authority if they wanted to continue with the project and if so, should it be designed for elderly housing? Secondly, if we do want to do it, then we have to decide on the options available to us. Thirdly, if we decide not to proceed with this type of project, do we put the land on the open market? Or do we return it to the Development Corporation? Chairman Cochran felt the Authority had too much money tied up in the project to do this. Tom suggested accepting responses and proposals via advertisements. This would allow you to be in control. Chairman Cochran asked if we felt $60,000 could be received for this property. Tom said that the three lots would have to be sold for $20,000 and had no idea if they were worth that. Allen added that residential lots cost approximately $10-12,000. This is prime commercial property, so it may be worth $20,000 per lot. Don then added that it's worth as much as a developer is willing to pay. A discussion took place between Authority members regarding owning and operating a housing dove lopment.When confronted with other types of developments besides housing, there would not be enough parking. Gary Wicber stated that the Development Corporation originally bought the property with the intent that it would be used as parking. Then - 2 - HRA Minutes - 4/4/84 Mr. Poehler entered the picture and the Development Corporation, being financially strapped, sold it to the City, who had an individual interested. Tom said the Development Corporation offered the property to the City and only after the sale was consummated did Poehler come forward and make his interests known. Gary Wieter stated that Jack Maxwell and himself tried to use tax increment financing, buy the Flake properties, demolish the existing structure, and then entice a developer to put up a building. This increment hopefully would have been enough to put in parking, too. Unfortunately, the project would have required such a large development that it didn't seem feasible and their project fell apart. Chairman Cochran restated two alternative actions that he felt important to this development: 1) offer option(s) to the developer(s) for elderly housing, thus covering our interest expense for a six month period: 2) after six months not do any development and hold the property, absorbing the interest expense in hopes that something develops with the Flake property. Don stated his preference was in Alternative M1. Bud Schrupp stated that he was not prepared to make any decisions based on the information before him at the present. He further stated that the Authority should make it known that we are open to any proposals. He also stated that we may have to sell the property for less and take a loss. Tom Eidem stated that if the Authority doesn't give an option at all, they are making it known to Larson, Poehler, FmHA, etc., that this is still a good elderly housing site and that if their groups want to go through the effort of the surveys, etc., you are willing to consider their proposals. A deadline could be May 15 or whatever. Then you give one option. This could be accomplished through an advertisement. You may also get other proposals as well and the Authority may utilize tax increment financing. Bud Schrupp stated that we have been committed to this project for quite some time. We have expenses in demolition and excavation,and he feels the Authority should stay with it just a little longer. Tom stated the Authority's kitty is not real large and to be paying out $2,400 would only keep depleting your funds. Another option, and perhaps even riskier, is to purchase the Flake Building, which is in the Tax Increment District already. Market the bond to buy without a developer. The real risk is that the bonds eventually come due. You can capitalize interest for up to 18 months, thus absorbing the debt of this property right into this building. Then you would demolish the building, giving you bare land available and work an aggrctsire marketing program. This is also .-cry risky because now instead of being $35,000 in debt, you would be down by $150,000 or more. - 3 - Chairman Cochran addressed the Tax Increment District Plan for IRI that was delivered by Allen Pelvit. He suggested going through and Sitting the highlights. Tom Eidem explained the property description and the layout of the first building. This building will be difficult to assess with parts attributable to different parcels. Thus, it (the Tax Increment Financing Plan A1) needs to be modified to reflect the Tax Increment Finance Plan q4. He then noted that the description of activities explains the size and description of the four buildings and their intended purposes. We can take the excess increment from this district and apply it against the $154,000 (the land bank debt). The rest of the Plan - 4 - HRA Minutes 4/4/84 CBud Schrupp stated that there has been a lot of citizen comments on getting something going with the Flake property. Tom added that a bond issue within this tax increment district, the Haas house, could even be added. This could eliminate blight without a developer but be advised you would have to pay the bonds off. Gary Wieber questioned some problems with giving an option to a developer and then having some adverse opinions when we held the public hearing on the sale and disposition of public lands. Tom stated that the intent of the public hearing is not to sell the land but rather present the project to the public and accept comments on the project itself. Chairman Cochran stated that he wanted the Authority to take some action on this tonight in order to give developers an answer as to what we're doing. Vic Vokaty commented that the Authority has not formally done any advertising on this property and asked if we shouldn't hold onto property and seek out proposals. Gary Wiober made a motion to not offer any option at this time, that the Authority continue to hold the land and place it on the June agenda and oppress it at that time. If somebody comes in C with a proposal, the Authority could look at it at its next 4-0. regular meeting. It was seconded by Vic Vokaty. Passed Allen Pelvit stated that the Fulfillment Systems, Inc. (FSI) update was intended to be informational and needed no action at this time. Chairman Cochran asked if anything was happening with the project, and Tom Eidem stated that a public hearing will be held Monday night at the Council meeting. He further stated that the County and the School Board have signed off for tax increment financing. The developers agreement is ready for completion and staff is currently working on IRB problem. Because of no action being taken in Washington, FSI is stalling, waiting for word on the future of IRS's. We still have the upper hand on them. Because of circumstances, we believe FSI will act and not lose their tax increment financing and U.D.A.;. funding. This could mean losing $400,000. Chairman Cochran addressed the Tax Increment District Plan for IRI that was delivered by Allen Pelvit. He suggested going through and Sitting the highlights. Tom Eidem explained the property description and the layout of the first building. This building will be difficult to assess with parts attributable to different parcels. Thus, it (the Tax Increment Financing Plan A1) needs to be modified to reflect the Tax Increment Finance Plan q4. He then noted that the description of activities explains the size and description of the four buildings and their intended purposes. We can take the excess increment from this district and apply it against the $154,000 (the land bank debt). The rest of the Plan - 4 - HBA Minutes - 4/4/04 is "boilerplate" material. The last page is the assessor's estimate of the buildings values using the County's formula. Allen, in his agenda supplement, pretty well explained the remaining steps needed to be taken for completion of the project. IXI would like to buy the land as soon as possible. That is okay. We can put the district in place after the sale. However, before we sell the land, we have to complete the development agreement. This is very similar to the previous agreements. IXI will start construction prior to establishing the district. This is also okay by Minnesota Statutes as long as it is completed within 90 days. Chairman Cochran asked if the HRA was getting anything for the efforts from this project. Tom Eidem explained that they wouldn't because it was all built into the preliminary agreement that was put together for District M1. In that agreement it included all future districts. Tom explained that with this new district all expenses and costs, including the HRA expenses, are included in the Plan. Bud Schrupp commented on future districts on this project. He wanted to know if the excess increment could be used toward the next district or construction phase. Tom explained that the excess or surplus would go to repay the Authority's debt to the City. C Bud Schrupp moved to adopt the resolution for Tax Increment Finance District 44. Seconded by Gary Wieber. Passed 4-0. There being no other business, Chairman Cochran moved to adjourn. Motion was made by Bud Schrupp and seconded by Vic Vokaty. Passed 4-0. Allen L. Pelvic Director of Economic Development - 5 -