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EDA Agenda 09-13-2017 AGENDA REGULAR MEETING - ECONOMIC DEVELOPMENT AUTHORITY (EDA) th Wednesday, September 13, 2017 6:00 p.m. Mississippi Room, Monticello Community Center Commissioners: President Bill Demeules, Vice President Bill Tapper, Treasurer Steve Johnson, Tracy Hinz, Jon Morphew and Councilmembers Jim Davidson and Lloyd Hilgart Staff: Executive Director JAngela Schumann, Wayne Oberg and Jacob Thunander 1. Call to Order 2. Roll Call 3. Consideration of additional agenda items 4. Consent Agenda a. Consideration of approving Regular Meeting Minutes August 9th, 2017 th b. Consideration of Workshop Meeting Minutes August 9, 2017 c. Consideration of approving payment of bills Regular Agenda 4.5. Consideration of adopting agreement between the Economic Development Authority, City of Monticello, Swan River School, Swan River Building Company, and Sherburne State Bank 5. Consideration of First Amendment to Purchase Agreement for 220 West Broadway 6. Consideration of Building Inspection Proposal from LHB, Inc. 7. Consideration of Adopting 2018 Marketing Plan 8. 9. Adjourn MINUTES REGULARMEETING-ECONOMICDEVELOPMENTAUTHORITY(EDA) Wednesday,August9th,2017–6:00p.m. MississippiRoom,MonticelloCommunityCenter CommissionersPresent:BillDemeules,BillTapper,SteveJohnson,TracyHinz,Jon Morphew,JimDavidson,andLloydHilgart StaffPresent:JimThares,AngelaSchumann,andJacobThunander 1.CalltoOrder BillDemeulescalledtheregularmeetingoftheEDAtoorderat6:00p.m. 2.RollCall 3.Considerationofadditionalagendaitems None. 4.ConsentAgenda BILLTAPPERMOVEDTOAPPROVETHECONSENTAGENDA.TRACYHINZ SECONDEDTHEMOTION.MOTIONCARRIED,7-0. th a.ConsiderationofapprovingRegularMeetingMinutes–July12,2017 th -Recommendation:ApprovedtheRegularMeetingMinutes–July12,2017. th b.ConsiderationofapprovingJoint/SpecialMeetingMinutes–July12,2017 th Recommendation:ApprovedtheJoint/SpecialMeetingMinutes–July12,2017. c.Considerationofapprovingpaymentofbills Recommendation:ApprovedthepaymentofbillsthroughJuly,2017. d.Considerationofapproving2018contributiontoInitiativeFoundation Recommendation:Approved$2,390allocationtotheInitiativeFoundation. e.ConsiderationofapprovingpaymenttoCuninghamGroup Recommendation:Approvedpaymentfor$2,500. RegularAgenda 5.ConsiderationofApprovalofSmallAreaStudyPlan AngelaSchumannstatedthatajointworkshopwasrecentlyheldwiththeCityCouncil. Inresponsefromthemeeting,changesweremadetothedraftSmallAreaStudyplan. SchumannstatedifrecommendedforapprovalbytheEDA,theplanwouldmovetothe PlanningCommissionwithaPublicHearingtobeheldandthenfinaldecisioncouldbe madebytheCityCouncil. 1 AndrewDresdner,CuninghamGroup,providedabriefhistoryontheevolutionofthe SmallAreaStudyandthepurposeoftheplan.Dresdneralsoreviewedthegoals identifiedintheplanandprovidedspecificinformationonhowtheplandifferedfromthe EmbracingDowntownPlan(2010). Dresdneralsoprovidedtheprimaryrecommendationsthatweredevelopedfromtheplan including:connectingthegridandconnectingtotheriver,maintainingthe storefront/MainStreetDistrictonBroadway,maintainingPineStreetasaregional avenue,includingmorehousinginthecore,andrenovating/rehabbingnewriverfront parks. Dresdnerexplainedsomeofthechangesthatweremadefromthepreviousdraft includinganupdatedparkingsection,modificationstotheguidelinestoincrease flexibility,andgreaterattentiontoincrementalismandthepartnersrequiredtoimplement theplan. Dresdnerexplainedinfurtherdetailtheincrementalismandimplementation.Heprovided alayoutofalloftheproposedSmallAreaStudyinvestmentswithanillustrationshowing focusareastheCitycouldstartwith.Dresdnerstatedmanypartieswouldneedtobe involvedtohaveasuccessfulplan.Healsoaddedthattheplandidnotcompelexisting businessestodoanythingandthattheycouldmaintaintheirbusiness.Dresdnerstatedif theyareasuccessfulbusiness,theyareimportantinthedowntownandthattheplan couldbeusedifmarketconditionsorpropertyownershipchanged. Dresdnerexplainedaparkingconceptforthecoreblocksofdowntown(Blocks35,36, 51,and52)thatsharesparkingatmidblockandon-street. Dresdnerdescribedthattheplanrecommendsmaximizingtheexistingparking, improvingtheenvironmentandaccessingparkingandstorefronts,investinginmobility optionsandwayfinding,andmakingsmallchangeswithmonitoring.Dresdneralso showedagraphfromtheEmbracingDowntownPlan(2010)thatdemonstratedthetotal parkingstallsandthenumberavailablethroughoutthedayonBlocks35,36,51,and52. Allofthoseareashadampleparkingspacesavailableatthetimessurveyed.Dresdner pointedoutthattheEmbracingDowntownplanstatedthattheutilizationofpublic parkingthatsupportsusesalongBroadwayinBlocks34-36and51-53isastrong indicationthatlackofavailableparkingisnotasignificantcomponentcontributingto lackofvitality. Specificparkingimprovementswereupdatedtotheplanonthecoredowntownblocks. Discussionabouttheabilitytoconstructaramp,ifneeded,pursued. Dresdnerclosedhispresentationwithexplainingtheimportanceofthedowntownandthe goalsoftheplan. 2 TracyHinzthankedtheconsultantforincorporatingthefeedback,especiallyregarding parking,intotherevisedplan. BillTapperquestionedtheproposedparkingforBlock52.Dresdnerofferedassurance thatthe250footlengthalongBlock52wouldprovide25parkingspacesperrow(10feet perparkingspace). Tapperalsomentionedthatpage30wasmissingtext.Dresdnerstatedthathewould updatethat.Dresdneralsostatedthatonpage30,Block51wouldbeupdatedto: “provideshorttermon-streetparkingonLocustStreet”andBlock36wouldinclude rd “provideshorttermon-streetparkingon3Street”. Tapperalsosuggestedchangingwordssuchas“required”to“suggested”tokeeptheplan flexible.Dresdneraskedthatiftherewereanyareasoftheplanthatshouldsay “required”tonotethem. Tapperalsomentionedconcernswiththequarterblockstrategyespeciallyasitrelatesto undergroundparkingforresidential.Dresdnerexplainedthepotentialofdeveloping undergroundparkingonaquarterblock.Hefurtherstateditwouldlikelyoccurona largerscale.Dresdnerdidnotintendfortheplantodiscouragehalfblockunderground parkingdevelopment. Tapperexplainedhisappreciationfortheconsultantsworkontheproject. BILLTAPPERMOVEDTOACCEPTTHEWORKPRODUCTOFTHE DOWNTOWNSMALLAREASTUDYANDRECOMMENDADOPTIONOFTHE PLANTOTHECITYCOUNCILWITHMODIFICATIONSPERTHECOMMENTS TH MADEDURINGTHEAUGUST9EDAMEETING.TRACYHINZSECONDED THEMOTION.MOTIONCARRIED,6-0-1WITHSTEVEJOHNSONABSTAINING. 6.ConsiderationofAdopting2018PropertyTaxLevyandApproving2018Budget JimTharesexplainedthatinJulyarecommendationwasmadebytheEDAtobring forwardthemaximumamountfortheEDAlevyof$323,000whichisanincrease $43,000fromthe2017proposal.Theproposalwouldinclude$195,000foroperating activitiesand$144,000forredevelopmentactivitieswhichisanincreaseof$52,400from 2017. Anincreaseinmarketingactivitieswasalsoproposedfrom$5,000(2017)to$22,000 (2018).TharesexpressedthathewouldlikeasubcommitteeofEDAmemberstodirect staffonmarketingactivities. Miscellaneousprofessionalserviceswasproposedfor$20,000,whichwasdecreasefrom 2017becauseofthecompletionoftheSmallAreaStudy.Tharesalsomentionedthe proposedcontinuationoftheEconomicDevelopmentAssistancecontractwithWSBis 3 budgetedforaslightincrease. LloydHilgartaskedhowmuchofthebudgetwouldcarryover.Tharesstatedthatabest guessisthatabout$100,000wouldlikelycarryoverfrom2017into2018.Hecangather thatinformationtoprovidetotheEDA. STEVEJOHNSONMOVEDTOADOPTRESOLUTIONEDA–2017-003 APPROVINGTHE2018EDABUDGETANDHRAPROPERTYTAXLEVY.BILL TAPPERSECONDEDTHEMOTION.MOTIONCARRIED,7-0. 6.5.Considerationtoapprovefundingfor2017IndustryoftheYear/MN Manufacturer’sWeekactivities BILLTAPPERMOVEDTOAPPROVEFUNDINGFORTHE2017INDUSTRYOF THEYEAREVENT.TRACYHINZSECONDEDTHEMOTION.MOTION CARRIED,7-0. 7.Director’sReport JimTharesprovidedtheDirector’sReport. HepointedoutthatstaffwouldbemeetingwiththeChamberofCommerceand MinnesotaWorkforceCentertoreplicateamodelthatwaspresentedattheSkillsGap Summit. TharesstatedamarketingplanwouldbepresentedtotheEDAattheSeptemberor Octobermeeting.BillDemuelesandBillTappervolunteeredtositonthecommitteeto furtherdiscuss. Tharesalsomentionedtheimportanceofsubmittingastatementduringtimesofconflict ofinterest.DemeulesaddedthatconflictsofinterestonlyaffectstheCommissionerand nottheEDAortheCityofMonticello. TharesalsostatedhehasasitevisitinNorthBranchatabio-agriculturecompanyinthe followingweek.HeinvitedEDAmemberstoalsoattend. TharesexplainedthatShred-n-GowouldliketheCityofMonticellotoreconsidertheone dollarlotpurchasepriceandstatedaclosedmeetingcouldbeheldtofurtherdiscuss.The EDAagreedtoaclosedmeeting. 8.ClosedSession–Considerationofrecessingtoclosedsessiontodeveloporconsider offersorcounter-offersforthepurchaseorsaleofrealorpersonalproperty pursuanttoMinnesotaStatute13D.05,Subdivision3(c)(3).PID#155010052110, 155010052120,155010052102,155194000020,155010050011,155010067100,and 155040002101 Theclosedmeetingwasheld. 4 9.Adjourn BILLTAPPERMOVEDTOADJOURNTHEMEETINGAT7:12P.M.TRACYHINZ SECONDEDTHEMOTION.MOTIONCARRIED,7-0. Recorder:JacobThunander____ th Approved:September13,2017 Attest:____________________________________________ JimThares,EconomicDevelopmentDirector 5 MINUTES WORKSHOPMEETING-ECONOMICDEVELOPMENTAUTHORITY(EDA) Wednesday,August9th,2017–4:30p.m. AcademyRoom,MonticelloCommunityCenter CommissionersPresent:BillDemeules,BillTapper,SteveJohnson,TracyHinz,Jon Morphew,JimDavidson,andLloydHilgart StaffPresent:JimThares,AngelaSchumann,andJacobThunander 1.CalltoOrder BillDemeulescalledtheregularmeetingoftheEDAtoorderat4:30p.m. 2.RollCall 3.Considerationofadditionalagendaitems None. 4.DiscussionRegardingRealEstateLandOptions JimTharesexplainedthattheworkshopmeetingwaseducational.Hestatedthathemet withMarthaIngramtheEDA’sattorneyregardinglandoptions.Heprovideddefinitions ofrealestatelandoptionspertheEDA’sattorney. TheEDAtalkedaboutrelocationcostsandtheuseofTIFDistricts.Tharesstatedthatall oftheprojectsthathe’sbeeninvolvedwithregardingredevelopmentefforts,whenthey involveapublicsubsidy,therelocationexpensesasdefinedundertheUniform RelocationAct(URA)dokickin.TheEDAdiscussedhowitwouldliketouseits moneywhenpurchasingproperty(forrelocationcostsornot). Furtherdiscussionensuedregardingoptionagreementsandifrelocationexpenseswould needtobepaidinsuchscenarios. 5.Adjourn LLOYDHILGARTMOVEDTOADJOURNTHEMEETINGAT5:00P.M.STEVE JOHNSONSECONDEDTHEMOTION.MOTIONCARRIED,7-0. Recorder:JacobThunander____ th Approved:September13,2017 Attest:____________________________________________ JimThares,EconomicDevelopmentDirector 1 EDAAgenda:9/13/17 4c.Considerationofapprovingpaymentofbills(JT) A.REFERENCEANDBACKGROUND: AccountsPayablesummarystatementslistingbillssubmittedduringthepreviousmonth areincludedforreview. B.ALTERNATIVEACTIONS: 1.MotiontoapprovepaymentofbillsthroughAugust2017. 2.MotiontoapprovepaymentofbillsthroughAugust2017withchangesasdirected bytheEDA. C.STAFFRECOMMENDATION: StaffrecommendsapprovalofAlternative#1. D.SUPPORTINGDATA: A.AccountsPayableSummaryStatements SteveJohnson-Treasurer Theprecedinglistofbillspayablewasreviewedandapprovedforpayment.Date:9/13/17Approvedby_____________________________________ SteveJohnson-Treasurer Theprecedinglistofbillspayablewasreviewedandapprovedforpayment.Date:9/13/17Approvedby________________________________________ SteveJohnson-Treasurer Theprecedinglistofbillspayablewasreviewedandapprovedbypayment.Date:9/13/17Approvedby_____________________________________ SteveJohnson-Treasurer Theprecedinglistofbillspayablewasreviewedandapprovedforpayment.Date:9/13/17Approvedby______________________________________ 1 / 1 6 0 4 7 0 0 1 ------manifestline--------- . 0029072.0001 * 2 / 1 6 1 2 8 0 0 1 ------manifestline--------- . 0031264.0001 2 / 2 6 1 2 8 0 0 . * EDAAgenda09/13/2017 4.5.ConsiderationofadoptingagreementbetweentheEconomicDevelopment Authority,CityofMonticello,SwanRiverSchool,SwanRiverBuildingCompany, andSherburneStateBank(JO,JT) A.REFERENCEANDBACKGROUND: SwanRiverSchoolandtheSwanRiverBuildingCompanyareintheprocessofsecuring additionalfinancingfromSherburneStateBank.Duringtheprocess,SherburneState BanklearnedthatagreementsexistedbetweentheCityandSwanRiverthatinterfered withSherburne’sabilitytoobtainafirstlienpositionagainsttheproperty.Underthe preexistingagreementtheCityhastheoptiontopurchasethepropertyatappraisedvalue ifSwanRiverdefaultedundertheoriginalcontractfordeed,subsequentmortgageor uponclosureoftheschool.Thisprovisionwasinstalledtoenablereversionofthe propertytotheCityintheeventtheprojectwasnotsuccessful. Inlightofthesituation,ithasbeenproposedtocreateanewagreementthatterminates theexistingagreementandreplacesitwithasimilaragreementthatextendstherightof firstrefusaltotheCityviaanagreementwithSherburneStateBankaswellaswithSwan River.IfSwanRiverSchool/SwanRiverBuildingCompanydefaultsontheloan, SherburneStateBankwouldacquiretheproperty,however,theCitywouldhavethefirst optiontopurchasethepropertyfromthebank.Intheoriginalagreement,itwasonlythe originalschoolbuildingthatwasincluded.Underthenewagreement,theCityhasright offirstrefusalontheoriginalbuildingplustheschoolannexbuildingacrossthestreet. Pleasenotethatstaffhasmadecertainthatallotherimportantelementsoftheagreement establishedin2005betweentheCityandSwanRiverrelatingtosharedusesand activities(detailedinparagraphs14,15,and19oftheoriginal2005document)survive andareincorporatedintothenewdocumentationaccordingly.TheEconomic DevelopmentAuthorityisinvolvedintheAgreementduetothefinancingthatwas issuedfortheMonticelloCommunityCenter(MCC)propertyviaHRAbondsand theleaseholdagreementswiththeCityofMonticellofortheMCCpropertyfacilities andtheparkinglotwhichtheSchoolisentitledtouseviaagreementwiththeCity. A2.BudgetImpact:AnyCityAttorneyfeesoccurredinthisprocesswillbepaidby SwanRiverSchooland/orSwanRiverBuildingCompany. B.ALTERNATIVEACTIONS: 1.MotiontoadoptagreementbetweentheEconomicDevelopmentAuthority,City ofMonticello,SwanRiverSchool,SwanRiverBuildingCompanyandSherburne StateBankpertainingtopreviousagreementTermination(withexception),and establishingrevisedFirstOptionandrightofFirstRefusalterms. 2.Motiontodenyadoptionofasaidagreement. 3.Motiontotable. EDAAgenda09/13/2017 C.STAFFRECOMMENDATION: TheCityAttorneyhashadsignificantinputonthedraftingoftheagreement.Inhis opiniontheCity’sandEDA’sinterestsidentifiedinpreviousagreementsareprotectedby thenewagreement. D.SUPPORTINGDATA: A.AgreementbetweenCity,theEDA,SwanRiverSchool,SwanRiverBuilding CompanyandSherburneStateBank TERMINATION, FIRST OPTION AND RIGHT OF FIRST REFUSAL AGREEMENT THIS TERMINATION, FIRST OPTION AND RIGHT OF FIRST REFUSAL AGREEMENT, dated the _____ day of _________________, 2017, by and between SRCS BUILDING COMPANY, a Minnesota non-profit SWAN RIVER MONTESSORI CHARTERSCHOOL, a Minnesota non- , CITY OF and the CITY OF MONTIC WHEREAS, SRCS has applied for and been approved for financing from SHERBURNE to benefit SRCS and SCHOOL; and WHEREAS, an Agreement dated April 7, 2005 and recorded with the Wright County Recorder on April 7, 2005, as document number 953876, Agreement between the CITY and SRCS and SCHOOL, securing repayment of the sums for the Contract for Deed with CITY for which CITY has been paid in full, and specifying other terms and conditions that survive satisfaction of the Contract for Deed; WHEREAS, an Amended and Restated Lease-Purchase Agreement, dated February 1, 2008 and recorded with the Wright County Recorder on March 7, 2008, as document number 1081500 -the City. WHEREAS, an Amended and Restated Ground Lease, dated February 1, 2008 and recorded with the Wright County Recorder on March 7, 2008, as document number 1081501 and WHEREAS, the 2005 Agreement , 2008 Lease-Purchase and 2008 Ground Lease contain 1 provisions interfering with the property. NOW THEREFORE, for and in consideration of one dollar and other good and mutual consideration, the parties hereto agree as follows: 1. With the exception of paragraphs 14, 15 and 19 of the 2005 Agreement, the 2005 Agreement shall be and is hereby terminated by the parties. 2. The 2008 Lease-Purchase shall be and is hereby terminated by the parties. 3. The 2008 Ground Lease shall be and is hereby terminated by the parties. 4. That the CITY shall be granted an option to purchase all of the real property owned by SRCS or SHERBURNE, the legal description of which is attached hereto as Exhibit A, in the event of the SCHOOL discontinuing use and operation of the property or in the event of a foreclosure of the property by SHERBURNE. 2 5. That upon occurrence of either of the discontinued use of the property as a school by SRCS or foreclosure by or conveyance of the property by a deed-in-lieu to SHERBURNE shall promptly notify the City in writing. Following receipt of that notice, the CITY may, upon giving sixty (60) days written notice to SRCS or SHERBURNE, purchase the property at fair market value agreed to by both parties. If the parties cannot agree to the fair market value of the property, SRCS or SHERBURNE and the CITY shall each appoint an appraiser who shall in turn value. 6. Upon receipt by SRCS or SHERBURNE (to the extent SHERBURNE takes title to the property) of any bona fide written offer of purchase by a third party, SRCS or SHERBURNE, as the case may be, shall, by written notice, notify CITY of said offer by sending said notice first class U.S. mail, postage paid, to CITY OF MONTICELLO, 505 Walnut Street, Suite 1, Monticello, MN 55362. CITY shall then have 60 days from the date of said mailing in which to purchase said real property at a price and terms at least as favorable as those in the original bona fide written offer of purchase. CITY shall execute their right of first refusal by presenting to SRCS or SHERBURNE, within 60 days of the mailing of the notice of offer of purchase, a written agreement to purchase said property specifying the same or more favorable price and term as called for in the original bona fide written offer of purchase, together with earnest money in an amount at least equal to that called for under the original bona fide written offer of purchase. 3 7. Lease, as detailed in paragraph 15, shall continue in full force and effect, or as modified by the CITY and SCHOOL by written agreement. That except for paragraphs 14, 15 and 19, all of the terms, conditions and restrictions contained in the 2005 Agreement are set aside and shall be considered null and void. 8. If CITY does not timely respond to the notice of the option to purchase or the right of first refusal, these rights shall lapse and be of no force and effect. CITY, their successors or assigns, shall, if requested by SRCS or SHERBURNE subsequent to the lapse of this Agreement, shall execute a Quit-Claim Deed to SRCS or SHERBURNE, as the case may be, for the said real property. 9. CITY shall not assign this Agreement without the written consent of SRCS and SHERBURNE. DATED:___________________________DATED:____________________________________ SRCS BUILDING COMPANY SWAN RIVER MONTESSORI CHARTER SCHOOL _________________________________ _________________________________________ By:______________________________ By:_______________________________________ Its ______________________________ Its _______________________________________ DATED:__________________________DATED:_____________________________________ SHERBURNE STATE BANK CITY OF MONTICELLO _________________________________ _________________________________________ By:______________________________ By:_______________________________________ Its:_______________________________ Its:_______________________________________ 4 DATED: _____________________________ CITY OF MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY _________________________________________ By:_______________________________________ Its:_______________________________________ STATE OF MINNESOTA ) ) ss. COUNTY OF WRIGHT ) The foregoing instrument was acknowledged before me this ____ day of _______, 2017, by ____________________________, the ___________________ of SRCS BUILDING COMPANY, a Minnesota non-profit corporation, __________________________________________ Notary Public STATE OF MINNESOTA ) ) ss. COUNTY OF WRIGHT ) The foregoing instrument was acknowledged before me this ____ day of _______, 2017, by ____________________________, the ___________________ of CITY OF MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY, a public body corporate and politic and policital subdivision of the State of Minnesota. __________________________________________ Notary Public 5 STATE OF MINNESOTA ) ) ss. COUNTY OF WRIGHT ) The foregoing instrument was acknowledged before me this ____ day of _______, 2017, by ____________________________, the ___________________ of SWAN RIVER MONTESSORI CHATER SCHOOL, a Minnesota non-profit corporation, __________________________________________ Notary Public STATE OF MINNESOTA ) ) ss. COUNTY OF WRIGHT ) The foregoing instrument was acknowledged before me this ____ day of _______, 2017, by ____________________________, the ___________________ of SHERBURNE STATE BANK, a Minnesota banking corporation, __________________________________________ Notary Public STATE OF MINNESOTA ) ) ss. COUNTY OF WRIGHT ) The foregoing instrument was acknowledged before me this ____ day of _______, 2017, by ____________________________, the ___________________ of CITY OF MONTICELLO, a Minnesota Municipal corporation. __________________________________________ Notary Public DRAFTED BY: th 201 West 7 Street Monticello, Minnesota 55362 (763) 295-2107 6 \[Exhibit A\] 7 EDA:09/13/17 5.ConsiderationtoadoptResolution2017-04approvingtheFirstAmendmenttothe PurchaseAgreementforAcquisitionofavacantparcellocatedat220West BroadwayStreet,PID155-010-036090(JT) A.REFERENCEANDBACKGROUND: Inreviewingtitleforthevacantparcellocatedat220WestBroadwayStreet,staff discoveredaperpetualeasementagreementcoveringtheparkinguseandmaintenanceof theparkingareaonthesouthsideofthislot.StafffollowedupwithRedRooster Properties,Inc.,thecurrentowner,astotheannualcostofthemaintenancesotheEDA couldreviewthisaspartofthepurchaseoffer.RedRoosterindicatedthattheannualcost isabout$750to$800peryear.Themajorpatchrepairscompletedin2017mayincrease thefeeforthisyear.Itisstaff’sunderstandingthattheeasementagreementdoesnot precludepublicuseoftheparkingarea,givenCityownership. Asadditionalbackground,afterreviewingadraftoftheSmallAreaStudy,Tom Holthaus,principalofRedRoosterProperties,Inc.,askedstaffiftheEDAwouldbe interestedinpurchasingthislot.TheSmallAreaPlanshowsthislotasapotentialpocket parkwhichservesasawaytoconnectBroadwayStreettotheparkingareasinthemiddle oftheblock(Block36). th AttheregularJuly12,2017EDAmeeting,amotionwasapprovedtoauthorizeentering intoapurchaseagreementtoacquiretheparcelatapriceof$34,400whichisthe2017 taxablemarketvalue.Theparcelisnarrowandlinearconsistingof.10acres+/-(4,524 sq.ft.)withplantedgrassnearBroadwayStreetandaparkingsurfaceintherearwith approximately9spaces+/-.RedRooster,whichalsoownstheadjacentpropertywitha buildingonit,212WestBroadway,hasdeterminedthatthevacantparceldoesnotfitit’s needs. TheattachedFirstAmendmentcontainstwochanges.ItadjuststheclosingdatetoOctober 27,2017anditalsospecifiesthattheannualparkinglotmaintenancefeebepaidbythe sellerpriortooratthetimeofclosing.Resolution2017-04isattachedforyourreviewand consideration. A1.STAFFIMPACT:ThereisminimalstaffimpactinconsideringtheFirstAmendment tothePurchaseAgreementrelatedtotheproposedacquisitionofthevacantparcellocated at220WestBroadwayStreet.Stafftimeconsistsofreviewingpertinentdocumentsand coordinatingwiththetheEDAattorneyinthedraftingoftheAmendmentandResolution aswellaspreparingthestaffreport. A2.BUDGETIMPACT:ThereisasmallbudgetaryimpactfromconsideringtheFirst AmendmenttothePurchaseAgreementrelatedtotheacquisitionofthevacantparcel locatedat220WestBroadwayStreet.TheestimatedcostfortheEDAattorneytodraftthe requireddocumentsis$500+/-.The2017EDAbudgetcontainsalineitemforlegalfees forthistypeofcharge.IftheEDAultimatelyacquiresthevacantparcel,therewillbe futureannualbudgetaryimpactsassociatedwiththeeasementmaintenanceagreementin theamountof$750to$800.Although,thisisasmallamountrelativetotheentirebudget, itwillneedtobeaccountedforinEDAbudgetsgoingforward. 1 EDA:09/13/17 B.ALTERNATIVEACTIONS: 1.MotiontoapproveResolution2017-04authorizingtheFirstAmendmenttothe PurchaseAgreementforthevacantlandlocatedat220WestBroadwayStreet. 2.MotiontodenyapprovalofResolution2017-04authorizingtheFirstAmendment tothePurchaseAgreementforthevacantlandparcellocatedat220West BroadwayStreet. 3.MotiontotableconsiderationofResolution2017-04relatedtotheFirst AmendmenttothePurchaseAgreementanddirectstaffaccordingly. C.STAFFRECOMMENDATION: TheEDAshouldconsiderthesameinformationinitsdecisionasitdidatthetimeof approvingthePurchaseAgreement.TheSmallAreaPlanenvisionsamorewalkable, aestheticallypleasingdowntownarea.Thecreationofapocketparkinthisparcel,as illustratedinthePlan,wouldbeasmallstepinthatdirection.Theowneroftheparcelis motivatedtosellthelot.ThepriceisfairandbasedontheCountytaxablemarketvalue. CitystaffwillsupportthedesireddirectionoftheEDAinthismatter. D.SUPPORTINGDATA: a.Resolution2017-04 b.FirstAmendmenttoPurchaseAgreement c.EasementAgreement d.AnnualMaintenanceFeeInformation e.AerialPhotoofProperty 2 EDARESOLUTIONNO.________ RESOLUTIONAPPROVINGFIRSTAMENDMENTTO PURCHASEAGREEMENTBETWEENTHECITYOF MONTICELLOECONOMICDEVELOPMENTAUTHORITY ANDREDROOSTER,INC. BEITRESOLVEDBYtheBoardofCommissioners("Board")oftheCityofMonticello EconomicDevelopmentAuthority(the"Authority")asfollows: Section1.Recitals. 1.01.TheAuthorityandRedRooster,Inc.(the“Seller”)executedacertainPurchase Agreement,datedasofJuly12,2017(the“Agreement”),inconnectionwiththeconveyancebythe SellerofcertainpropertydescribedintheAgreement(the“Property”)totheAuthority. 1.02.Duetodelaysinclarifyingcertaintitle-relatedquestionsconcerningtheProperty, thepartieshaveagreedtoamendtheAgreementtoextendthedateforclosingonthetransferofthe PropertyfromtheSellertotheAuthority and toclarifycertaincostsassociatedwithclosingon theconveyanceoftheProperty. Section2.FirstAmendmentApproved. 2.01.TheFirstAmendmenttoPurchaseAgreement(the“Amendment”)aspresentedto theBoardisherebyinallrespectsapproved,subjecttomodificationsthatdonotalterthe substanceofthetransactionandthatareapprovedbythePresidentandExecutiveDirector, providedthatexecutionoftheAmendmentbysuchofficialsshallbeconclusiveevidenceof approval.ThePresidentandExecutiveDirectorareherebyauthorizedtoexecute,onbehalfof theAuthority,theAmendment. AdoptedbytheCityofMonticelloEconomicDevelopmentAuthorityonSeptember13,2017. President Attest: Secretary 505995v1MNIMN325-34 FIRSTAMENDMENTTOPURCHASEAGREEMENT ThisagreementismadeasofSeptember__,2017,byandbetweenREDROOSTER PROPERTIES,INC.,aMinnesotacorporation(the“Seller”)andtheCITYOFMONTICELLO ECONOMICDEVELOPMENTAUTHORITY,apublicbodycorporateandpoliticandpolitical subdivisionoftheStateofMinnesota(the“Buyer”). WHEREAS,theBuyerandtheSellerenteredintothatcertainPurchaseAgreementdatedas ofJuly12,2017(the“Contract”)providingfortheconveyancebytheSellertotheBuyerofthe propertylegallydescribedasattachedheretoasExhibitA(the“Property”);and WHEREAS,duetoadelayinresolvingcertaintitleissuesrelatedtotheProperty,theparties havedeterminedtoextendthedateofclosingontheconveyanceofthePropertyandtoclarify certaincostsassociatedwithclosingontheconveyanceoftheProperty. NOW,THEREFORE,inconsiderationofthepremisesandthemutualobligationsofthe partieshereto,eachofthemdoesherebycovenantandagreewiththeotherasfollows: 1.AmendmenttoParagraph7oftheContract.Paragraph7oftheContractisamended asfollows: CLOSINGDATE.TheclosingofthesaleofthePropertyshalltakeplacebyOctober27, 2017(the“ClosingDate”),unlessotherwisemutuallyagreedbytheparties.Theclosing shalltakeplaceatMonticelloCityHall,505WalnutStreet,Monticello,MNorsuchother locationasmutuallyagreeduponbytheparties. 2.AmendmenttoParagraph12oftheContract.Paragraph12oftheContractis amendedasfollows: CLOSINGCOSTSANDRELATEDITEMS.TheSellershallberesponsibleforthe followingclosingcostsandrelateditems:(1)allrecordingfeesandchargesrelatingtothe filingofanyinstrumentrequiredtomaketitlemarketable;(2)statedeedtax,conservation feeorotherfederal,stateorlocaldocumentaryorrevenuestampsortransfertaxwith respecttothedeedtobedeliveredbytheSeller;(3)one-halfoftheclosingfeeschargedby thetitlecompanyengagedinconnectionwiththisPurchaseAgreement;(4)Sellers’own legalandaccountingfeesassociatedwiththistransaction;and(5)allamountsdueand payablebySellerin2017pursuanttotheDeedofDeclarationofEasementsand 505982v2MNIMN325-34 MaintenanceAgreement,recordedintheofficeoftheWrightCountyRecorderasDoc.No. 845602.TheBuyershallberesponsibleforthefollowingclosingcostsandrelateditems: (1)thecostofanysurveyofthePropertyrequiredbytheBuyer;(2)recordingfeeforthe WarrantyDeed;(3)anyfeesincurredforthetitlecommitment;(4)thecostofallpremiums requiredforissuanceofthetitleinsurancepolicy;(5)thefeesforanysoiltests, environmentalassessments,inspectionreports,appraisals,orothertestsorreportsordered bytheBuyer;(6)one-halfoftheclosingfeeschargedbythetitlecompanyengagedin connectionwiththisPurchaseAgreement(7)Buyer’sownlegalandaccountingfees associatedwiththistransaction. 3.Miscellaneous.ExceptasamendedbythisAmendment,theContractshallremainin fullforceandeffect. (Remainderofthispageintentionallyleftblank.) 505982v2MNIMN325-34 INWITNESSWHEREOF,thepartieshaveexecutedthisAmendmenttoPurchase Agreementasofthedatefirstwrittenabove. SELLER REDROOSTERPROPERTIES,INC. By:_______________________________ Its:_______________________________ BUYER CITYOFMONTICELLO ECONOMICDEVELOPMENTAUTHORITY By:___________________________________ Its:President By:__________________________________ Its:ExecutiveDirector 505982v2MNIMN325-34 EXHIBITA PROPERTY ThatpartofLot9,Block36,TownofMonticello,accordingtotherecordedplatthereof,Wright County,Minnesota,lyingNorthwesterlyofalinedrawnparallelwithanddistant5.70feet Northwesterlyfrom,measuredatrightanglesto,thecommonlotlinebetweenLot8and9,said Block36. A-1 505982v2MNIMN325-34 %1/11 GZ!3128 %:-781/11%3-611/11%4-:11/11%2-:31/11%2-461/11 %:-781/11%:-781/11 %:-781/11 Qbhf!2!pg!2 Efd 1/11 916/94319/44436/11271/11223/61 916/94916/94 916/94 Opw 1/11 916/94319/44436/11271/11223/61 916/94916/94 916/94 Cvmmtfzf!QspqfsujftQP!Cpy!29:Npoujdfmmp-!NO!66473+++Sfuvso!Tfswjdf!Sfrvftufe+++)874*!3:6.7677 Pdu 1/11 916/94319/44436/11271/11223/61 916/94916/94 916/94 Tfq 1/11 916/94319/44436/11271/11223/61 916/94916/94 916/94 Bvh 1/11 916/94319/44436/11271/11223/61 916/94916/94 916/94 Kvm 1/11 916/94319/44436/11271/11223/61 916/94916/94 916/94 Kvo 1/11 916/94319/44436/11271/11223/61 916/94916/94 916/94 Bt!pg!220303127 Nbz 1/11 916/94319/44436/11271/11223/61 916/94916/94 916/94 Bqs 1/11 916/94319/44436/11271/11223/61 916/94916/94 916/94 Nbs 1/11 916/94319/44436/11271/11223/61 916/94916/94 916/94 Gfc 1/11 916/94319/44436/11271/11223/61 3128!Cvehfu!}!Cspbexbz!Qbsljoh!Fbtfnfou!}!GZ3128 916/94916/94 916/94 Kbo 1/11 916/94319/44436/11271/11223/61 916/94916/94 916/94 Fmfdusjdjuz!DBNHspvoet!Nbjoufobodf!)Mbxo0Topx*!DBNNbobhfnfou!Gfft!DBNQbsljoh!Mpu!Nbjoufobodf!DBN Tvcupubm!gps!Dpnnpo!Bsfb!Nbjoufobodf!)DBN* Upubm!gps!JodpnfUpubm!gps!Fyqfotft Dpnnpo!Bsfb!NbjoufobodfDpnnpo!Bsfb!Nbjoufobodf!)DBN* Bddpvou JodpnfFyqfotftOfu!Pqfsbujoh!Jodpnf Hfofsbufe!220303127!:;57!BN EDA:09/13/17 6.ConsiderationtoauthorizeenteringintoaTIFQualificationInspectionServices ContractwithLHB,Inc.intheamountof$3,200toqualifytheFred’sproperty locatedat349WestBroadwayStreetforafutureTIFRedevelopmentDistrict(JT) A.REFERENCEANDBACKGROUND: ThisitemistoasktheEDAtoconsiderapprovingabuildinginspectioncontractwith LHB,Inc.architectsandengineerstocompleteaninspectionofFred’sGasStation buildingonEDAownedpropertylocatedat349WestBroadwayStreet.Theattached proposaloutlinesthescopeofworkandthefeesinvolvedintheinspection.Thebenefit ofcompletingtheinspectionisthatitwilldocumentthesubstandardandblighted conditionsofthebuildingand,inthefuture,allowtheEDAtoestablishthisparcelasa singleormulti-parcelTIFDistrictforredevelopmentpurposes. A1.STAFFIMPACT:ThereisalimitedstaffimpactinconsideringenteringintoaTIF QualificationInspectionServicesContractwithLHB,Inc.toqualifytheFred’sproperty forafutureTIFRedevelopmentDistrict.Todate,stafftimeinvolvesreviewingpossible stepstoensurethattheEDAcanretainflexibleoptionsinmovingforwardwithpotential futureredevelopmentoftheFred’ssite.Asmallamountofadditionaltimeinvolved reviewingserviceofferingsofLHB,Inc.andaskingthemtosubmitaproposalaswellas draftingthestaffreport. A2.BUDGETIMPACT:PertheLHB,Inc.proposal,therewillbeabudgetaryimpact of$3,200iftheEDAapprovesenteringintotheproposedTIFQualificationInspection ServicesContract.The2017EDAbudgetincludesalineitemformiscellaneous professionalserviceswhichwouldbethesourceoffundingforthisproposedservice. B.ALTERNATIVEACTIONS: 1.MotiontoauthorizeenteringintoaTIFQualificationInspectionServicesContract withLHB,Inc.tocompleteareviewofFred’sGasStationbuildinglocatedat349 WestBroadwayStreet. 2.MotiontodenyauthorizationtoenterintoaTIFQualificationInspectionServices ContractwithLHB,Inc.tocompleteareviewofFred’sGasStationbuilding locatedat349WestBroadwayStreet. 3.MotiontotableconsiderationofenteringintoaTIFQualificationInspection ServicesContractwithLHB,Inc.tocompleteareviewofFred’sGasStation buildinglocatedat349WestBroadwayStreet. C.STAFFRECOMMENDATION: Staffrecommendsalternative1.BycompletingtheTIFqualifyinginspectionprocess, theEDApreservesit’soptionsforthefutureredevelopmentofthissite.IftheEDA prospectivelychoosestousearedevelopmentTIFdistricttoredevelopthesite, documentationoftheblightedandsubstandardconditionsofthestructuresontheparcel isrequired.ThisactionwillgivetheEDAthemostflexibilityforthisparcelinthenear future. 1 EDA:09/13/17 D.SUPPORTINGDATA: a.LHB,Inc.TIFQualificationInspectionServicesProposal e.AerialPhotoofProperty 2 September 7, 2017 Jim Thares Economic Development Manager City of Monticello EDA 505 Walnut Street Monticello, MN 55362 FREDS GAS STATION TIF ANALYSIS Dear Jim: Thank you for the opportunity to submit a proposal for the Freds Gas Station TIF analysis in Monticello, Minnesota. LHB is a full-service architecture, planning and engineering firm with 250 employees in our Minneapolis, Duluth, Cambridge, and Superior, Wisconsin offices. Our Government studio has extensive experience working with local governments on their planning, design, architectural and engineering needs. Having been personally involved on various city councils and planning commissions, I understand how cities function and the importance of maintaining the support of your appointed and elected officials and community throughout the process. PREVIOUS EXPERIENCE LHB has significant experience with a variety of inspection and facility assessment projects, including the analysis of over 200 TIF Districts. Examples include: City of Columbia Heights TIF inspection services City of St. Paul TIF inspection services City of St. Anthony Village, NW Quadrant TIF inspection services City of St. Louis Park TIF District inspection services - City of Osseo TIF inspection services Minnesota State Colleges and Universities system facility assessments State of Minnesota Facility Assessments Property Condition Assessments for the St. Paul Department of Planning and Economic Development (Franklin/Emerald Neighborhood) Condition surveys for every DNR facility in the State of Minnesota, 2014 Page: 2 Freds TIF Analysis September 7, 2017 TEAM CREDENTIALS Michael has 29 years of experience as project principal, project manager, project designer and project architect on planning, urban design, educational, commercial and governmental projects. He has become an expert on Tax Increment Finance District analysis assisting over 100 cities with strategic planning for TIF Districts. He is an Architectural Principal at LHB and currently leads the Minneapolis office. Michael completed a two-year Bush Fellowship, studying at MIT and Harvard in 1999, earning Masters degrees in City Planning and Real Estate Development from MIT. He has served on more than 50 committees, boards and community task forces, including a term as a City Council President and as Chair of a Metropolitan Planning Organization. Most recently, he served as Chair of the Edina, Minnesota planning commission and is currently a member of the Edina city council. Michael has also managed and designed several award-winning architectural projects, and was one of four architects in the Country to receive the AIA Young Architects Citation in 1997. Philip is a project manager with 13 years of experience in historic preservation, building investigations, material research, and construction methods. He previously worked as a historic preservationist and also served as the preservation specialist at the St. Paul Heritage Preservation Commission. Currently, Phil sits on the Board of Directors for the Preservation Alliance of Minnesota. His current responsibilities include project management of historic preservation projects, performing building condition surveys and analysis, TIF analysis, writing preservation specifications, historic design reviews, writing Historic Preservation Tax Credit applications, preservation planning, and grant writing. Jonathan Pettigrew has worked in architecture and construction for the last twenty years in Minnesota, California and Washington. His experience includes a variety of commercial and residential project types and scales, from single-family homes to a 300,000 square foot multi-building office complex. He has significant experience in code reviews and building systems inspections and brings a strong interest in sustainability and an eye for detail to his work. He enjoys working with clients, consultants and contractors to bring projects together successfully. For 35 years, Phil Fisher worked in the field of Building Operations in Minnesota including White Bear Lake Area Schools. At the University of Minnesota, he earned his Bachelor of Science in Industrial Technology. He is a Certified Playground Safety Inspector, Certified Plant Engineer, and is trained in Minnesota Enterprise Real Properties (MERP) Facility Condition Assessment (FCA). His FCA training was recently applied to the Minnesota Department of Natural Resources Facilities Condition Assessment project involving over 2,000 buildings. Page: 3 Freds TIF Analysis September 7, 2017 SCOPE OF SERVICES LHB will provide the following services based upon the terms and conditions described below. 1. Survey the TIF District to determine if it meets applicable coverage test. A. To meet the coverage test, parcels consisting of 70 percent of the area of the district B. improvements. 2. Conduct a visual review of building(s) interior and exterior: A. B. Document property conditions relative to Minnesota Statutes Section 469.174 Subdivision 10. 3. Estimate building(s) replacement cost: A. Replacement cost is the cost of constructing a new structure of the same square footage and type on the site. B. A base cost will be calculated by establishing the building class, type and construction quality. C. Identify amenities, which increase the value of the building over the standard construction quality level. D. Review building permits for each parcel. E. The base cost and cost of amenities will be totaled to determine the replacement cost for the property. 4. Evaluate building(s) existing condition: A. elements or a combination of deficiencies in essential utilities and facilities, light and ventilation, fire protection including adequate egress, layout and condition of interior partitions, or similar factors, which defects or deficiencies are of sufficient total significance to justify 5. Determine Building(s) Code Deficiencies: A. Determine technical conditions, which are not in compliance with current building code applicable to new buildings. B. Provide opinion of probable cost to correct identified deficiencies. C. Compare cost of deficiency corrections to replacement value of building. 6. Prepare and deliver report: A. Prepare a written narrative analysis of the District describing why the property within the District does or do established in Minnesota Statutes Section 469.174, subdivision 10. B. Deliver final reports via email PDF. ASSUMPTIONS 1. LHB will inspect one building and will inspect both the interior and exterior of the building(s) and evaluate the coverage of the parcel(s). 2. The Client will provide the following: Page: 4 Freds TIF Analysis September 7, 2017 A scalable parcel map and/or aerial photo of the area to be inspected, including GIS information with specific parcel data, including parcel area measured in square feet. A list of all parcels affected including name of owner, current known business or resident name and address. Available information regarding the condition of the structures, including past building permit information, and known code violations. STANDARD OF CARE LHB shall perform services consistent with the professional skill and care ordinarily provided by other professionals practicing in the same or similar locality under the same or similar circumstances. Any report prepared by LHB represents a professional opinion based upon information available and arrived at in accordance with generally accepted professional standards. Other than as contained in the report, LHB makes no express or implied warranty. Short of complete deconstruction to examine every element at every location, no assessment can reveal all conditions which may exist. Additional testing, assessment, or demolition, may uncover conditions which would make i Any report prepared for the purpose described in this Agreement is for the exclusive use by those to whom the report is addressed. LHB will not and cannot be held liable for the unauthorized reliance upon this report by any third party. COMPENSATION We propose to work on an hourly basis with the following key staff: Project Principal, Michael Fischer (TIF analysis) $265/hour Project Manager $150/hour Project Architect/Inspector $130/hour Project Administrator $80/hour We will work on an hourly basis not to exceed Three Thousand Two Hundred dollars ($3,200) including reimbursable expenses for a Letter of Finding. Payments are due and payable upon receipt of our invoice. Unpaid balances 60-days after invoice date shall bear interest at the rate of 8% annually. sole disc Instruments of Service. Page: 5 Freds TIF Analysis September 7, 2017 ADDITIONAL SERVICES If there is a material change in the circumstances or conditions that affect the scope of work, schedule, allocation of risks or other material terms, LHB shall notify the Client. The Client and LHB shall promptly and in good faith enter into negotiation to address the changed conditions including equitable adjustment to compensation. The fees and costs for any additional services will SCHEDULE The final report will require 30-45 days to complete from the time we are authorized to start. We are able to make preliminary conclusions prior to our full report being completed if necessary to allow other consultants and the client to begin their work. CONSEQUENTIAL DAMAGES LHB and Client waive consequential damages for claims, disputes or other matters in question arising out of or relating to this Agreement. LIMIT OF LIABILITY damages to the sum of Ten Thousand Dollars ($10,000) or the amount of fee paid to LHB, whichever is greater. This limitation shall apply regardless of the cause of action or legal theory pled or asserted. The documents prepared by LHB are solely for use with respect to this project. All documents prepared by LHB pursuant to this Agreement are the instruments of services to the Project and LHB shall retain all common law, statutory and other reserved rights, including copyright. LHB grants to Client a nonexclusive limited license solely for the purposes of evaluating and executing the Project. The Client shall not assign, delegate, sublicense, or otherwise transfer any license granted herein to another party. To the extent the documents are transferred or are modified, supplemented or otherwise altered by the Client, subsequent design professional, or any other party, the Client agrees to indemnify, defend and hold LHB harmless for any claims, demands, damages or causes of action arising out of such transfer or modification, supplementation or alteration. OTHER CONDITIONS The laws of the State of Minnesota shall govern this Agreement. Any provision of this agreement later held to violate a law or regulation shall be deemed void. All remaining provisions shall continue in force. The Client recognizes that materials prepared by others may be subject to copyright protection and warrants to LHB that any documents provided by the Client do not infringe upon the copyright held by another. Page: 6 Freds TIF Analysis September 7, 2017 Unless the parties mutually agree otherwise, the parties shall endeavor to settle disputes by mediation. A demand for mediation shall be filed, in writing, within a reasonable period of time after a claim, dispute or other matter in question has arisen. LHB and the Client, acting through the Client's legal representative, will, to the fullest reasonable extent, cooperate and coordinate efforts in preparing necessary responses to any third party challenges to the inspections. The Client agrees to pay LHB its regular hourly rates for time spent as a result of a third party legal challenge If the terms and conditions of this Agreement are acceptable, please sign and return a copy to LHB. CLIENT NAME LHB, INC. By: By: (Signature) (Signature) Its: Its: Principal (Title) (Title) Name: Name: Michael A. Fischer, AIA (Printed Name) (Printed Name) C:\\Users\\MAFisch\\Documents\\LHB\\TIF\\TIF Agreements\\2017 Agreements\\Monticello Fred's Gas Station LOF 9-7-17.docx EDA:09/13/17 7.Considerationofthe2017-2018EDAMarketingPlan(JT) A.REFERENCEANDBACKGROUND: ThisagendaitemistoasktheEDAtoconsiderapprovingtheproposed2017-2018 marketingplan.TheattachedplanwascraftedbytheEDAMarketingSubcommittee appointedattheAugust9th,2017meeting. TheplanconsistsofavarietyofmediaandmethodsforeachoftheEDA’spriorityareas andidentifiesaprospectivebudgetamountwitheachitem.Marketingtheassetsand opportunitiesthattheCitycanofferexistingandprospectivebusinessesisanimportant goaloftheEDA.Actualizingthemarketinggoalisaccomplishedviathebudgetand staffandconsultantefforts.Avarietyofeffectivemarketingactivitieswillalsosupport otherEDAgoalsandobjectivesaswell. A1.STAFFIMPACT:StaffimpactsinconsideringtheMarketingPlanareminimal. Theprimarystaffcommitmenttothispointconsistedofmeetingwiththesubcommittee memberstocraftasetofoptionsandthenpreparingthestaffreportwhichpresentsthe marketingplantotheEDA.ItshouldbenotedthatthescopeofservicesthatWSB providesunderitsEconomicDevelopmentAssistanceContractdoesincludesome marketingactivitiessuchasattendingtradeshowsandparticipatingintheMinnesota MarketingPartnershipandadjustingcollateralmarketingmaterialsannually. A2.BUDGETIMPACT:TheexpectedbudgetaryimpactfromtheproposedMarketing Planisapproximately$20,000to$23,000.TheamountofthePlanisanincreasefrom 2017($5,000).Fundingisprovidedinthe2018proposedEDAbudgetinadedicatedline itemformarketing/advertising.Thefundingrequiredtocoverthisproposedexpenditure isincludedintheredevelopmentactivitieslineitemofthe2017EDAbudget.Staff proposestobringforreviewbeforetheEDAanyitemsthatcostmorethan$1,000.This thresholdisconsistentwiththeCityCouncilpolicyforexpendituresfromtheGeneral Fundaswell. B.ALTERNATIVEACTIONS: 1.Motiontoapprovethe2018EDAMarketingPlan. 2.Motiontodenyapprovalofthe2018EDAMarketingPlan. 3.Motiontotableconsiderationofapprovalofthe2018EDAMarketingPlanfor furtherreviewanddiscussion C.STAFFRECOMMENDATION: Staffrecommendsalternative1.Byapprovingamarketingplan,itwillguidestaffin movingforwardwithvariousactivitiestogetthemessageoutregardingMonticello’s assetsandthedevelopmentopportunitiesthatexistinthecommunity. D.SUPPORTINGDATA: a.Proposed2018MarketingPlan 1 2018EDAMARKETINGPLAN&BUDGET TOTALBUDGET $22,000 INDUSTRIAL MarketMatching(separatebudgetlineitem) Tradeshowattendance(seelistfromWSB) GreaterMSPRepresentation Stateincentiveprogramdevelopmentandfacilitation Listpurchase:Siteselectors,manufacturers,brokers,etc Annualcollateralpieceupdate(wrapandsites),basefiles DirectMail Brokers,siteselectors,manufacturers TimesPartnershipPiece 2018DigitalUpdate Website DirectURLbuildingbusinessinmonticellotoCitysite BuildCitypages Workwithpartnersforlinkstosite BusinessRetention&Expansion IndustryoftheYear Visits DOWNTOWN(COMMERCIAL&RESIDENTIAL) MarketingCollateral Cuninghamdorprepofgeneralandsitepieces,basefiles MediaContent ArticlesandpressreleaseinMSPjournalsandmagazines HOUSING ProgramMarketingMaterials Developprogramsthenpromotionalpieces Website Developerprograms,posttowebsite Developer/BuilderBreakfast Focusonstep-upbuilder/developers GENERAL Events Invitationstolargercommunityevents,hosting Brokerevents PromotionalMaterials Uniqueandrecognizableitemswithquick-readpiece IDEAS:Compass,flashdrive,post-its,etc.shovefor"shovel-ready" Other Casebycaseevaluation TotaldoesnotincludeMarketMatchingasitisseparatebudgetitem &BUDGET2018EDAMARKETINGPLAN Amount $9,000 $4,000 $250 $100 staff staff $1,000 staff $2,000 staff $1,000 staff $1,000 $7,000 $2,000 $3,500 TOTAL$21,850 ludeMarketMatchingasitisseparatebudgetitemTotaldoesnotinc EDAAgenda:9/11/17 8.EconomicDevelopmentReport(JT) A.IndustryoftheYear TheIndustryoftheYearactivitiesaretakingshape.Thebreakfasteventdateissetfor Wednesday,October4,2017at7:00a.m.Severalcompanynominationshavebeen submitted.TheindustrytourswillbescheduledduringtheweekofSeptember18th rd through23. B.CEDSDraftDocument ThefourCountyregionalCEDSdocumentcanbefoundinDRAFTformonthelink shownbelow. https://www.cmjts.org/about/reports-publications/ EDAmembersareencouragedtoreviewandaddyourownsuggestionsorcommentsas somoved.CommentsareduebacktoeitherJenniferRussell,CentralMNJobsand Training,jrussell@cmjts.org,ormebySeptember29,2017.ThenextstepsintheCEDS processafterthefinaldocumentisadoptedistoidentifypotentialprojectsincommunities thatcanbesubmittedtoUS-EDAforfundingconsideration. C.HousingStudy VariousdiscrepancieswereidentifiedintheHousingStudyandtheyhavebeen corrected/revisedbytheconsultant(WSB).PleaserefertonewcopiesoftheStudy(see attached).NoadditionalactionisneededbytheEDA. D.SmallAreaStudyUpdate ThePlanningCommissionapprovedtheSmallAreaStudy5-0attheregularPCmeeting onSeptember5,2017.ThenextstepisCityCouncilconsiderationonSeptember25, 2017.Followingthatwillbeplanimplementationdiscussionstepsbypolicymakers. E.Fred’s(349WestBroadwayStreet) StafflearnedthatSteveBauer,Hasting,MN,theprospectivebuildingremover,isinthe processofschedulingfinaldestinationinspectionpermitswhichareissuedbythe TownshipwherethePioneerVillageislocated.Thisprocessisexpectedtotakeseveral weeks. F.BrokerEventUpdate th TheWrightCountyBrokerEventisscheduledforTuesdaySeptember19from8:30a.m. until12:30p.m.TheCity/EDAwillhaveatablesetupformarketingmaterialsand informationabouttheavailablelandsitesintheCityofMonticello. G.Prospects–Seeattached AspreadsheetwiththeactiveprospectswillbeprovidedtotheEDAforreviewand discussionattheregularmeeting. H.IndustrialLandSurveyandResults Thesurveyresultsarebeingreviewedandinitialanalysisisbeginning.Areportwillbe compiledandpresentedtotheEDAatafuturemeeting. 1 Acknowledgements We would like to thank everyone who participated in the development of the Monticello Housing Study, including the Monticello City staff, Wright County and the various realtors in the community. Completed in coordination with: WSB & Associates, Inc. 1 | Page PURPOSE AND SCOPE OF RESEARCH Housing is an important component of all communities. Housing quality, availability, affordability and diversity enhances the WSB & Associates, Inc. was engaged by the City of Monticello to conduct a Housing Study to assess the housing market conditions and provide recommendations for housing needs within the City of Monticello. The market analysis focused on the housing needs within the City of Monticello including market rate, subsidized, and move- up housing for various age categories including owner-occupied and renter occupied housing options. Monticello (Study) should be used as a reference to guide planning efforts, financial initiatives and strategies, and provide direction to the City regarding the approach it should take; the types of housing opportunities the City should promote, and the roles in providing those opportunities. This Study is intended to be flexible to meet unforeseen housing needs and future land use decisions. It should be noted that the findings presented in this report should not be used to determine the market feasibility of any single development or project; rather, it is designed to be a broad analysis of the entire Monticello housing market and is intended to guide planning efforts, especially as they relate to future land use designations. The Study contains data from both primary and secondary research. Primary research includes interviews with local officials, and the real estate community. Secondary research data includes data from the US Census, American Community Survey, Department of Employment and Economic Development (DEED), Wright County, 1 Business Analyst, and other local planning agencies. Secondary research is always used as a basis for analysis and is carefully reviewed along with other factors that may impact projections. All the information on pending developments was gathered by WSB & Associates, Inc. and is accurate to the best of our knowledge. INVENTORY AND ANALYSIS DEMOGRAPHIC CHARACTERISTICS This section looks at the demographic characteristics that underlie the need for various types of housing in Monticello. The U.S. Census and Business Analyst served as the primary sources for the demographic overview. While population projections are an effective planning tool when used correctly, their accuracy is dependent on several factors including assumptions for birth rates, death rates, migration, and economic conditions. Assumptions are based on past trends and the best information available at the time, but assumptions do not always remain true, and unexpected changes can occur. Therefore, Monticello should use the population projections presented in this Market Study as a general guide and not as an absolute certainty. Moreover, the City should periodically review and update the population projections based upon new conditions. WSB & Associates, Inc. determined the Study Area to be used as comparison points. The area was based on geographic and man-made boundaries, community orientation, our knowledge of the area, and the dictates of the proposal. Considering these factors, we determined a Study Area to include the cities of Monticello, Big Lake, Buffalo, Elk River, Becker, and Rogers. In addition, Wright County and the State 1 Business Analyst is a data processing service that uses ESRI technology, U.S. Census data, and American Community Survey data. 2 | Page of Minnesota are also included as part of the analysis in the report. Though outside the scope of this report, it is important to note that surr Figure 1: City of Monticello, MN HISTORIC POPULATION CHANGE The total population of Monticello has grown substantially since the 1980s. Between 1980 and 2010, the City has grown by 597% adding 10,929 new residents, accounting for 18% of the study areas total growth. During the last U.S. Census period (2000-2010), Monticello saw a 38% growth with the addition of 4,891 new residents. Please refer to Table 1-A for further details. 3 | Page Table 1-A: POPULATION CHANGE 1980-2010 Change US Census 1980-1990 1990-2000 2000-2010 Place 1980 1990 2000 2010 No. % No. % No. % Monticello 1,830 4,941 7,868 12,759 3,111 170.0% 2,927 59.2% 4,891 62.2% Big Lake 2,210 3,113 6,063 10,060 903 40.9% 2,950 94.8% 3,997 65.9% Buffalo 4,560 6,856 10,097 15,453 2,296 50.4% 3,241 47.3% 5,356 53.0% Elk River 6,785 11,143 16,447 22,974 4,358 64.2% 5,304 47.6% 6,527 39.7% Becker 601 902 2,673 4,538 301 50.1% 1,771 196.3% 1,865 69.8% Rogers 652 698 3,588 11,197 46 7.1% 2,890 414.0% 7,609 212.1 % Study Area 16,638 27,653 46,736 76,981 11,015 66.2% 19,083 69.0% 30,245 64.7% Total Wright County 58,681 68,710 89,986 124,700 10,029 17.10% 21,276 30.90% 34,714 38.50 % Minnesota 3,806,104,075,907 4,375,094,919,47269,804 7.10% 299,197.30% 544,3812.40 3 9 9 2 0 % Source: U.S. Census Bureau age distribution has remained relatively consistent from 2000 to 2010 with the largest age group being 25 to 34 in both census periods. The percentage of people 19 and younger decreased from 33.7% to 32.8% while the percentage of those 65 and older increased from 8.9% to 9.8%. Keeping with national trends, the median age increased in Monticello from 2000 to 2010 from 29.8 to 31.6. Please refer to Table 2-A for further details. Table 2-A: MONTICELLO HISTORIC AGE DEMOGRAPHICS 2000-2010 2000 2010 Number % Number % Total Population 7,868 100.0 12759 100.0 Under 5 years 799 10.2 1292 10.1 5 to 9 years 725 9.2 1101 8.6 10 to 14 years 610 7.8 969 7.6 15 to 19 years 511 6.5 823 6.5 20 to 24 years 547 7 731 5.7 25 to 34 years 1,571 20 2255 17.7 35 to 44 years 1,215 15.4 1991 15.6 45 to 54 years 719 9.1 1505 11.8 55 to 59 years 271 3.4 490 7.0 60 to 64 years 202 2.6 395 3.1 65 to 74 years 316 4 584 5.0 75 to 84 years 260 3.3 394 3.0 85 years and over 122 1.6 229 1.8 Median age (years) 29.8 (X) 31.4 ( X ) Source: U.S. Census Bureau 4 | Page POPULATION ESTIMATES AND PROJECTIONS Population projections are an effective planning tool when used correctly. They are based upon assumptions for birth rates, death rates, migration, and economic conditions. In 2010, the U.S. Census reported Monticelloopulation as 12,759. Monticelloestimated population was 13,568 in 2016, and is projected to increase to 14,383 in 2021. Again, it is impossible to know with certainty what Monticello future population will be, but it is reasonable to believe that any future population increases resulting from new housing development or redevelopment in Monticello will be offset (to some extent) by population trends resulting from an aging population and diminishing household size. However, based on available data, Monticellolikely see a continued increase through year 2021. It is anticipated that Monticello and 2021. Monticello expected rate of population change is roughly equal to the County and double the State. Refer to Table 1-B: Projected Population Change: 2010-2021 for additional information. TABLE 1-B: PROJECTED POPULATION CHANGE: 2010-2021 Change U.S. Census Bureau 2010-2016 2016-2021 Place 2010 2016 2021 No. % No. % Monticello 12,759 13,568 14,383 809 6.3% 815 6.0% Big Lake 10,060 10,629 11,080 569 5.7% 451 4.2% Buffalo 15,453 16,093 16,699 640 4.1% 606 3.8% Elk River 22,974 23,984 24,891 1,010 4.4% 907 3.8% Becker 4,538 4,858 5,253 320 7.1% 395 8.1% Rogers 11,197 12,675 13,844 1,478 13.2% 1,169 9.2% Study Area Total 76,981 81,807 86,150 4,826 6.3% 4,343 5.3% Wright County 124,700 132,801 140,895 8,101 6.5% 8,094 6.1% Minnesota 4,919,479 5,541,669 5,720,647 622,190 12.6% 178,978 3.2% Source: U.S. Census Bureau, ESRI forecasts The City of Monticello has developed its own projections based on building permits and certificates of utilized as base reference point. It indicated the City had 13,311 residents at the end of 2014. During the 2015-2016 time-frame, the City issued permits for 307 additional housing units. Using household size of 2.72, this yields an estimated population of 14,146 at the end of 2016. In recognition of the trend of increasing household size and the moderate pace of new residential development and household formation in the City, the projections for the 2017-2021 period indicate an increase of 893 people (2.74 persons per 326 new units or 65 +/- units per year). The annual population increase of 179 is sixteen (16) people higher than -accounted for the sizeable number of new units in the community during 2015-2016. Basically, ESRI does not factor in the steady recovery in building permit issuance in this period and applies its projections to a lower beginning population figure than a more realistic number. Refer to Tables 1-C and 2-C for more information. 5 | Page TABLE 1-C: MONTICELLO HOUSING PERMITS & POPULATION FORECAST CALCULATIONS Year: Single-Family Single-Family Multifamily Total Detached Attached 2010 2 0 0 2 2011 2 0 0 2 2012 22 0 0 22 2013 49 3 0 52 2014 70 3 0 73 2015 38 6 136 180 2016 61 0 66 127 Average Total 244 12 202 458 65.2 per year POPULATION FORECAST CALCULATIONS Time-Frame New Housing Average HH Size New Residents 2014 Pop End of 2016 Pop Units (Permits x HH Size) 2015 - 2016 307 2.72 835 13,311 14,146 Time-Frame New Housing Average HH Size New Residents 2016 Pop End of 2021 Pop Units (Permits x HH Size) 2017 - 2021 326 (65.2 x 5) 2.74 893 14,146 15,039 Source: City of Monticello, Minnesota State Demographer TABLE 2-C: POPULATION PROJECTION DIFFERENCE 2016 2021 Annual Growth City of Monticello 14,146 15,039 179 ESRI 13,568 14,383 163 Difference 578 656 16 Source: ESRI forecasts, The City of Monticello HOUSEHOLD CHARACTERISTICS AND FORECASTS In 2010, the US Census reported 4,693 households in Monticello and 3,164 families. A household refers to a housing unit occupied by at least one person. A household can involve a family living in a housing unit or it can involve unrelated people sharing an apartment or housing unit. A family refers to a household consisting of a householder and one or more other people related to the householder by birth, marriage, or adoption. In the future, it is likely that the percentage of married couples without children living with them will increase. The percentage of single parent households will also increase. Family households with no spouse present accounted for approximately 30% of the family households in Monticello in 2010. The average household size in Monticello in 2000 was 2.64 persons compared to 2.68 in 2010 according to the U.S. Census Bureau. These figures were projected to increase, according to ESRI, to 2.72 in 2016 and 2.74 by 2021. According to the American Community Survey 5-Year Estimates, Monticello has seen a decrease in family households, a decrease in households with children under the age of 18, and an increase in non-family households (see Table 1-D: Household Occupancy Characteristics for further details). These trends held true from 2009-2014 aside from an outlying year (2014 highlighted in gray on Table 1-D) when there was an increase in family households, an increase in families with children, and a decrease in nonfamily households. This may have been caused by an increased availability of single- family housing units. These trends have implications for the demand of future housing types in Monticello. Since the average household size is projected to decrease and the trend of family households has been decreasing, a shift in demand will likely occur less for 3-4 bedroom, single-family homes and more for smaller housing units, and multi-family units. 6 | Page TABLE 1-D: HOUSEHOLD OCCUPANCY CHARACTERISTICS 2009-2014 Family Family with Children Nonfamily 1-person 2-person 3-person 4-or-more-person 2009 72.2% 47.0% 27.8% 22.0% 29.8% 18.8% 29.4% 2010 69.6% 46.4% 30.4% 25.1% 25.8% 18.6% 30.6% 2011 68.5% 45.3% 31.5% 25.8% 26.9% 16.9% 30.9% 2012 66.8% 43.8% 33.2% 26.5% 25.3% 19.1% 29.1% 2013 66.2% 42.3% 33.8% 27.0% 27.0% 16.4% 29.6% 2014 68.8% 43.8% 31.2% 24.9% 29.0% 13.7% 32.4% Source: American Community Survey 5-year Estimates Between 2010 and 2016, the number of new households (4,693 and 4,936 respectively) has grown proportionally to the increase in population (12,759 and 13,568 respectively) suggesting stability in household size (see Table 1-E: Historic and Projected Households: 2010-2021). The number of households in Monticello is projected to increase by 5.3% by 2021 accounting for 18.2% of the study area TABLE 1-E: HISTORIC AND PROJECTED HOUSEHOLDS: 2010-2021 Change US Census 2010-2016 2016-2021 Place 2010 2016 2021 No. % No. % Monticello 4,693 5,136* 5,399 443* 8.6% 263 4.9% Big Lake 3,377 3,566 3,720 189 5.6% 154 4.3% Buffalo 5,700 5,872 6,058 172 3.0% 186 3.2% Elk River 8,080 8,452 8,780 372 4.6% 328 3.9% Becker 1,526 1,635 1,772 109 7.1% 137 8.4% Rogers 3,748 4,232 4,610 484 12.9% 378 8.9% Study Area Total 27,124 28,893 30,339 1,769 6.1% 1,446 4.8% Wright County 44,473 46,817 49,383 2,344 5.3% 2,566 5.5% Minnesota 2,087,227 2,176,475 2,258,733 89,248 4.3% 82,258 3.8% *The 200 occupied units of the new IRET Apartment Complex were accounted for here. Note: There is potential for household growth Sources: U.S. Census Bureau, ESRI forecasts, WSB & Associates 7 | Page AGE COMPOSITION& IMPACT ON HOUSING In addition to knowing how many people currently live and will likely live in Monticello, an understanding of can help the City plan for and provide necessary and desired services for its residents. The following provides an overview of the existing age composition of Monticello 2021 (see Table 1-F: Age Composition 2010-2021). Composition will remain relatively consistent outside of a slight decrease in the 25-34 age category (by 2.1%) and slight increase in the 55-64 age category (by 2.5%) which reflects aging baby boomers and a smaller succeeding generation. Extrapolating further past year 2021, Monticello can expect a surge of 7,438 residents entering the over- sixty-five (65) age group as is indicated by the red box in Table 1-F. The age cohort closest to age sixty- five (65) typically is comfortable downsizing their living situation. This is a substantial number of households who will be causing the demand in housing types to change in Monticello for future years as current projections do not have a corresponding offset in future age groups. TABLE 1-F: AGE COMPOSITION 2010-2021 2010 2016 2021 Age Number % Number % Number % Age 0 - 4 1,292 10.1% 1,206 8.90% 1,293 9.00% Age 5 - 9 1,101 8.6% 1,150 8.50% 1,226 8.50% Age 10 - 14 969 7.6% 1,033 7.60% 1,163 8.10% Age 15 - 19 823 6.5% 924 6.80% 949 6.60% Age 20 - 24 731 5.7% 901 6.60% 903 6.30% Age 25 - 34 2,255 17.7% 1,968 14.50% 2,246 15.60% Age 35 - 44 1,991 15.6% 2,065 15.20% 2,157 15.00% Age 45 - 54 1,505 11.8% 1,771 13.10% 1,682 11.70% Age 55 - 64 885 6.9% 1,240 9.10% 1,353 9.40% Age 65 - 74 584 4.6% 751 5.50% 836 5.80% Age 75 - 84 394 3.1% 372 2.70% 404 2.80% Age 85+ 229 1.8% 185 1.40% 171 1.20% Median Age 31.6 -- 33.1 -- 32.3 -- Source: U.S. Census Bureau, ESRI forecasts HOUSING SUPPLY Number and Types of Housing Units The US Census indicates that there were 4,693 households in Monticello in 2010: 1,749 more units than identified in 2000 (2,944). Data describing the household type, as shown below in Table 1-E, was only available as an estimate. The most recent data is from the 2014 American Community Survey. Roughly, 54.5% of the housing units in 2014 were single-family detached houses: this is considerably lower than Wright County (76.4%) and lower than the State of Minnesota (67.2%). In 2014, roughly 18.2% of the housing units in Monticello were single-family attached units (townhouses): this is almost double the figure for Wright County (9.8%) and much higher than the State (7.5%). In 2014, the City also had a considerably higher percentage of multi-family housing than Wright County but was consistent with the State of Minnesota. Refer to Table 1-G: Housing Supply by Type - 2014, for more information. 8 | Page TABLE 1-G: HOUSING SUPPLY BY TYPE -2014 Housing Type Monticello Monticello Wright County Wright County State State Units % Units % Units % Single-Family 2,663 54.5% 37,715 76.4% 1,589,773 67.2% Detached Single-Family 889 18.2% 4,863 9.8% 176,173 7.5% Attached 2-4 Unit Multi- 123 2.5% 799 1.6% 104,411 4.4% Family 5+ Unit Multi- 787 16.1% 3,609 7.3% 410,648 17.4% Family Mobile Home 422 8.6% 2,335 4.7% 82,441 3.5% Other - 0.0% 50 0.1% 703 0.0% Total Units 4,884 100% 49,371 100% 2,364,149 100% Source: 2010-2014 American Community Survey 5-Year Estimates Comparison and Forecast of Owner-Occupied and Renter-Occupied Units It is important to have a balance of owner-occupied and renter-occupied units. In general, many communities strive to have roughly 65-70% of their housing units owner-occupied and 30-35% renter occupied. In 2010, approximately 68% of the housing units in Monticello were owner-occupied; this is slightly lower than Wright County (75%), and about the same as the State of Minnesota (68%). During 2016, the City of Monticelloowner: renter) has changed slightly, with 69% of the housing units being owner occupied and 25% being renter occupied. In 2021, the housing occupancy ratio is forecasted to remain consistent with past trends. Refer to Table 1-H: Housing Tenure by Type 2010, for additional information. Please be aware that there is roughly a 6% gap between owner occupied housing units and renter occupied housing units; this gap will be addressed in the following section. TABLE 1-H: HOUSING TENURE - 2010 - 2021 Owner Occupied Housing Units % Renter Occupied Housing Units % Location: 2010 2016 2021 2010 2016 2021 Monticello 68.2% 68.7% 68.1% 26.2% 25.3% 24.9% Wright County 75.8% 74.7% 74.7% 14.9% 15.8% 15.9% State of MN 64.9% 64.0% 63.9% 24.0% 24.8% 24.9% Source: U.S. Census Bureau, ESRI forecasts Vacancies Today, the City of Monticello faces an overall housing vacancy rate of 6.0%, which is 3.4% lower than the vacancy rate for Wright County, and 5.2% lower than that of the State. Monticellohas increased by 0.4% since 2010 and is projected to increase by 1% in 2021 which will still be significantly lower than the County and State. Both the County and State are projected to remain consistent through year 2021. The increase of vacant housing units in Monticello can partly be explained by the fact that the number of housing units in the City increased by nearly 6% from 2010-2016, and the housing market experienced a significant decline. Please see Table 1-I for further details. 9 | Page TABLE 1-I: VACANT HOUSING FORCAST & COMPARISION 2010-2021 Year City Vacant Units City Percent Vacant County Percent Vacant State Percent Vacant 2010 280 5.6% 9.2% 11.1% 2016 315 6.0% 9.4% 11.2% 2021 391 7.0% 9.4% 11.2% Source: U.S. Census Bureau, ESRI forecasts The rental housing average vacancy rate is low in Monticello but is projected to increase indicating a demand for addition rental units at all levels of affordability. Table 2-I indicates specific vacancy rates for eight of the rental properties in the City. TABLE 2-I: RENTAL APARTMENTS VACANCIES AND RATES Vacancy Rates Ridgemont Apartments 0.0% $566 - $610 River Park View Apartments 0.0% 30% of income Ridgway Apartments 2.3% $460 - $725 Hillside Terrace 0.0% 30% of income Cedar Crest Apartments 0.0% 30% of income Broadway Square 0.0% 30% of income 7th Street Townhomes 6.7% $825 Monticello Crossings* 1.0% $925 - $2,210 Monticello Village 3.3% $1,018 $1,610 Average Vacancy Rate 1.5% * 202-unit IRET Apartment Complex built in 2016 Source: WSB & Associates Phone Interviews Value of Housing The median value of owner-occupied housing units in Monticello in 2016 was $179,095 and is projected to increase by $30,314 in 2021. Most housing in Monticello is valued in the range of $150,000 to $199,999, which is consistent with the County and State. In comparison to low and moderate valued housing, there is a relatively limited choice of higher valued housing units in Monticello. Only 16.5% of owner-occupied housing units have a value of $250,000 or greater compared to 38.8% in the County and 36.7% in the State. The median value of owner-occupied housing in Wright County was $216,395 and $205,288 in the State of Minnesota. Monticello needs to focus on later-stage housing opportunities to meet the demand for higher valued housing units. Refer to Table 1-J: Owner-Occupied Housing by Value -2016 for additional information. Table 2-J illustrates the affect that the Great Recession had on housing values in Monticello. Note that median sale price fell below median appraised value in mid-2007, then recovered and surpassed appraised value in 2011to regain a more traditional relationship. Data from Table 2-J came from the Wright County Assessor. 10 | Page TABLE 1-J: OWNER-OCCUPIED HOUSING BY VALUE -2016 Value City Units City % Wright County % State % Less than $50,000 411 11.4% 6.5% 6.5% $50,000 to $99,999 240 6.7% 4.8% 9.4% $100,000 to $149,999 407 11.3% 11.8% 14.7% $150,000 to $199,999 1282 35.5% 21.4% 17.9% $200,000 to $249,999 672 18.6% 16.7% 14.7% $250,000 to $299,999 269 7.5% 11.5% 10.3% $300,000 to $399,999 217 6.0% 13.2% 12.2% $400,000 to $499,99 65 1.8% 6.4% 6.1% $500,000 to $749,999 18 0.5% 4.5% 4.9% $750,000 to $999,999 22 0.6% 1.8% 1.9% $1,000,000 or More 5 0.1% 1.4% 1.3% Median Value $179,095 $216,395 $205,288 Source: ESRI Forecasts CHART 2-J: MONTICELLO HOUSING VALUES THOUGH THE GREAT RECESSION $210,000 $200,000 $190,000 $180,000 $170,000 $160,000 $150,000 $140,000 $130,000 200520062007200820092010201120122013201420152016 Median SaleMedian Appraised Owner Monthly Costs as Percentage of Household Income Housing decisions should not be based solely on the value of housing, but also the cost of housing expenses in relation to household income. In general, housing costs (taxes, insurance, principal, interest, etc.) should not exceed 30% of total household income. In 2014, only 19% of homeowners in Monticello had monthly costs that were more than 30% of their household income, compared to 27% in Wright County and 29% in the State of Minnesota (see Table 1-K: Owner Monthly Costs as Percent of Household Income -2014). These figures suggest that housing was more affordable in Monticello than in Wright County and the State of Minnesota in 2014 possibly due to age and livability of housing units. This is an important strength for the City as it continues to grow and evolve into a regional center linking the Twin Cities Metro with the St. Cloud MSA. Monticello should consider a goal to maintain appropriate amounts of affordable housing to mitigate the negative impacts of a housing price correction like that seen during the Great Recession (2007-2010). This will allow for the community to see steady and modestly increasing home values and reduce the 11 | Page likelihood of rapidly increasing home prices causing homeowners to be required to spend a larger portion of their income on housing. While the provision of affordable housing is one side of the coin, the City should also incorporate a plan to encourage the development and attraction of livable wage employment opportunities in the City. TABLE 1-K: OWNER MONTHLY COSTS AS PERCENT OF HOUSEHOLD INCOME - 2014 Percent of Household Income City Units* City % County % State % Less than 20% 1,286 47.0% 39.0% 41.3% 20.0 to 24.9% 611 22.3% 18.9% 17.8% 25.0 to 29.9% 611 11.4% 14.8% 12.3% 30.0 to 34.9% 169 6.2% 7.6% 7.9% 35.0% or More 361 13.2% 19.6% 20.8% Total 2,738 100% 100% 100% Source: 2010-2014 American Community Survey *Housing Units with a Mortgage Contract Rent In 2014, rental housing units accounted for roughly 25% of the occupied housing units in Monticello. In 2014, roughly 88% of units had a monthly rent of $500 or more, which is higher than Wright County (87%), and the State of Minnesota (79%). See Table 1-L: Renter-Occupied Housing Units by Gross Rent 2010, for additional information. TABLE 1-L: RENTER-OCCUPIED HOUSING UNITS BY GROSS RENT - 2014 City County State Monthly Rent Units % Units % Units % Less than $200 23 2.0% 141 2.0% 24,764 4.2% $200 to $299 57 4.9% 233 3.3% 31,166 5.3% $300 to $499 66 5.6% 582 8.2% 68,601 11.6% $500 to $749 367 31.2% 2136 30.1% 159,802 27.1% $750 to $999 322 27.4% 2012 28.3% 139,386 23.6% $1000 to $1,499 306 26.0% 1514 21.3% 105,182 17.8% $1,500 or more 34 2.9% 188 2.6% 34,297 5.8% No Rent Paid 0 0.0% 300 4.2% 27,938 4.7% Median Rent Paid $773 $778 $747 Total Specified Units 1,175 100% 7,106 100% 590,136 100% Source: 2010-2014 American Community Survey Renter Monthly Costs as Percentage of Household Income In 2014, 46.5% of renters paid over 30% of their household income in rent (see Table 1-M: Gross Rent as Percent of Household Income 2014). This number is slightly lower than Wright County (47.7%) but higher than the State of Minnesota (46.1%). This suggests that there is not an abundance of affordable rental units in Monticello and efforts should be made to decrease rental costs. 12 | Page TABLE 1-M: GROSS RENT AS A PERCENT OF HOUSEHOLD INCOME -2014 Percent of Household Income Units Percent Wright County State Less than 10% 0 0.0% 3.2% 3.5% 10 to 14.9% 73 6.2% 8.1% 8.2% 15 to 19.9% 205 17.4% 13.6% 12.3% 20 to 24.9% 262 22.3% 13.1% 12.5% 25 to 29.9% 72 6.1% 9.1% 11.4% 30 to 34.9% 194 16.5% 9.7% 8.8% 35 to 39.9% 86 7.3% 8.1% 6.1% 40 to 49.9% 102 8.7% 9.8% 8.1% 50.0% or More 164 14.0% 20.1% 23.1% Not Computed 17 1.4% 5.2% 6.0% Total Specified Units 1,175 100% 100% 100% Source: 2010-2014 American Community Survey Age and Maintenance of Housing Stock In 2014, roughly 39% (1,910 units) of the Citystructed before 1990 (greater than 27 years old). Just 5.4% of the housing units in Monticello were built before 1939. Monticello has a relatively new housing stock in comparison to Wright County and the State of Minnesota, with 60.8% of housing units being built since 1990 compared with 50.4% for the County and 29.0% for the State. TABLE 1-N: YEAR STUCTURE BUILT Year Structure Built Monticello Units Percent Wright County State 2010 or later 0 0.0% 0.7% 0.8% 2000 to 2009 1,697 34.7 32.2% 14.6% 1990 to 1999 1,277 26.1% 18.5% 13.6% 1980 to 1989 748 15.3% 12.2% 13.0% 1970 to 1979 654 13.4% 16.0% 15.6% 1960 to 1969 63 1.3% 4.9% 9.8% 1950 to 1959 96 2.0% 4.1% 10.4% 1940 to 1949 86 1.8% 2.3% 4.8% 1939 or Earlier 263 5.4% 9.2% 17.3% Total Specified Units 4,884 100.0% 100.0% 100.0% Source: 2010-2014 American Community Survey 13 | Page LIFE-CYCLE HOUSING AND PROFILE OF HOUSEHOLDS The housing needs of a community relate to the demographic profile of the household. Typically, households move through several life-cycle stages; including entry-level households, first time homeowners, move-up buyers, empty nesters/young seniors, and senior citizens. The following describes each of these household types and the effect that they have on housing demands in Monticello. Entry-Level Households People in the 18 to 24-year-old age group typically leave their childhood home and establish their own household. They often rent a house or an apartment because they generally do not have the income and savings needed to buy a home. In addition, many people in this age group move frequently, so they are hesitant to buy a house. They are also more likely to share housing with other unrelated people of similar age. The entry-level household population in Monticello will fluctuate annually. Many Monticello residents that graduate from high school move to other communities to attend a university or to pursue other job opportunities. In the long term, unless current conditions and trends change, Monticello is projected to see a 0.5% decrease in the 15 to 24-year-old age group by year 2021 (Table 1-F). Job opportunities aimed at retaining this age cohort need to be strongly considered. Nevertheless, there will always be a strong need to provide affordable housing for people of all ages. First-Time Homeowners First time homeowners are - increasingly, first time homeowners are single. They are prone to moving within several years of buying their first home for several reasons; including, increased salaries allow them to move to more expensive housing, children may require larger housing, and job opportunities may require that they move to another 2 community. Monticello is projected to see a 0.3% increase in the 20-44 age group by year 2021 (Table 1- F), which could translate into an increased demand for lower-end housing units. Move-Up Buyers Move-up buyers are typically in their 30s and 40s. They move up from the smaller, less expensive house that they had previously purchased. From an economic growth perspective, this is an important age group of people. Typically, move-up buyers have children in school and an established career. They are less likely to move to another community and start over. Also, professionals who are moving to a community to advance their career are generally looking to move to a more expensive house than what they had in 3 their previous community. Monticello is projected to see a 0.5% decrease in the 25-54 age group by the year 2021 (Table 1-F). This is 0.3% lower than the study area average of a 0.8% decrease. This may be an indicator that there is a shortage of available units for move-up buyers. Monticello must continue to 2 People in their 40s were included due to U.S. Census age groups. 3 People in their 20s and 50s were included due to U.S. Census age groups. 14 | Page ensure that it has adequate choices for those who are looking for move-up housing that will satisfy their needs until they are in their 50s and beyond. Empty Nesters and Young Seniors Empty nesters and young seniors are generally in their 50s, 60s, and early 70s. Often, their children have moved out of their house and left them with a larger house than needed. Empty nesters and young seniors often want to live in a smaller home, like a townhouse or patio home, that has less maintenance. The baby boom generation in Monticello is projected to increase by 0.6% by year 2021 (Table 1-F). A notable increase in apartment rentals in Monticello by members of this population segment is likely to occur. A large portion of these individuals will likely desire higher-end apartment complexes with quality amenities so they can maintain their current lifestyles. Senior Citizens This age group is generally in their late 70s and older and are often looking for low maintenance or assisted living housing. As the population ages, Monticello must continually ensure that it has adequate housing to meet the needs of seniors. The City is projected to see a 0.1% decrease in the 75 and older age group by year 2021 (Table 1-F). Monticello should continue to strive to be a senior-friendly community that values the contributions of seniors, promotes positive intergenerational interactions, considers the needs of seniors in community planning, supports the efforts of seniors to live independently, and acknowledges the role that family, friends, and neighbors play in the life of seniors. Special Needs Housing for those with special needs includes housing for those with mental and/or physical disabilities or health issues and those who need temporary or transitional housing. The number of people with special housing needs is expected to increase as the population of Monticello continues to age and grow. Senior Housing Market Monticello City staff members have identified a need for senior housing market analysis. Based upon population growth forecasts, household forecasts, and the current age of householders, we can extrapolate what the senior housing market will require. Table 1-O: Senior Housing Projections 2010-2021 illustrates how the change in the sixty-five and older population will affect the number of occupied housing units. By year 2021, Monticello will need 940 units suitable for senior residents to meet demand, which is an increase of 136 units from 2010. We consider senior housing to be any housing unit (affordable, renter, duplex, patio house, etc.) that meets the needs of residents sixty-five (65) and older. 15 | Page TABLE 1-O: SENIOR HOUSING PROJECTIONS2010-2021 Year 2010 2016 2021 Total Population 12,759 13,568 14,383 Total Occupied Units 4,693 4,936 5,199 65+ Population 1,207 1,308 1,411 65+ Population Percent 9.5% 9.6% 9.8% Units Occupied by 65+ Population 804 871 940 Percentage of Units Occupied by 65+ Population 17.1% 17.7% 18.1% Source: U.S. Census, ESRI Forecasts, WSB & Associates AFFORDABLE HOUSING Affordable housing is important to a strong economy and a healthy community. Increasingly, housing is not affordable for many working families and the lack of affordable housing for people of all ages and incomes causes families stress, dampens productivity and stifles job growth. Various organizations define many ways. The Department of Housing and Urban Development (HUD) generally defines housing as affordabl Section 8 guidelines define low and moderate incomes on a sliding scale, depending on the number of persons in the family. For example, a four-person Most housing affordability programs and data place emphasis on creating owner-occupied units at eighty (80) percent of the median family income (moderate income) and rental units at fifty (50) percent of the median family income (low income). Since low income persons are typically renters, the definition of d to the number of persons in each unit. T eighty (80) percent of median income). Affordable rental units are based on fifty (50) percent of the median income and reflected on a per capita and per family basis. It is change as the cost of living increases and interest rates change. Therefore, the City should periodically review income/housing statistics and update the definition as warranted. Factors such as interest rates will impact housing affordability in both a positive and negative manner. Income by Age of Householder Looking at income data is also important when predicting future housing demands in the City of Monticello. In 2010, the median household income in Monticello was $68,135 ($67,963 in the County) and the largest employment industries were educational, health and social services, manufacturing, and retail trade. By 2016, the median household income increased significantly to approximately $76,954 ($73,798 in the County) and the top employment industries were the same. household income is projected to increase to $85,218 by 2021 ($83,257 in the County) according to ESRI Business Analyst. 16 | Page Income distributions as reported by the U.S. Census Bureau can be compared to affordability standards to determine how many households and families in the City of Monticello may require affordable housing. Table 1-P: Monticello Affordable Housing Units Requirements 2016 & 2021 depicts the number of households (renter and owner) that may require affordable housing (based on family income). The gray shaded area indicates family incomes of 80% or less of the median household income ($61,449 in 2016 and $68,174 in 2021). The red box indicates family incomes of 50% or less of the median household income ($38,406 in 2016 and $42,609 in 2021). By 2021, 2,214 owner households may require affordable housing, and 1,629 renter households may require affordable housing. TABLE 1-P: MONTICELLO AFFORDABLE HOUSING REQUIREMENTS 2016 & 2021 2016 2021 Annual Household Number of Households % of Total Number of Households % of Total Income Less than $15,000 378 7.7% 411 7.9% $15,000 to $24,999 286 5.8% 271 5.2% $25,000 to $34,999 332 6.7% 316 6.1% $35,000 to $49,999 543 11.0% 631 12.1% $50,000 to $74,999 834 16.9% 512 9.8% $75,000 to $99,999 887 18.0% 937 18.0% $100,000 to $149,999 1,262 25.6% 1,564 30.1% $150,000 to $199,999 341 6.9% 472 9.1% $200,000 and over 74 1.5% 85 1.6% Total Households 4,937 100% 5,199 100% Source: U.S. Census Bureau, ESRI forecasts The following table illustrated the maximum affordable housing costs for renters and owners based on median income. A direct relationship exists between monthly affordable housing costs and median income. Steps should be taken in Monticello to keep housing costs affordable as housing values increase such as maintaining current affordable housing stock and assuring opportunities for the construction of new affordable housing units. TABLE 1-Q: MAXIMUM AFFORDABLE HOUSING COSTS (RENTER & OWNER) - 2016 & 2021 Renter Owner Year 2016 2021 2016 2021 Median Income $76,811 $85,218 $76,811 $85,218 Affordable Income: $38,406 $42,609 $61,448.80 $68,174.40 50% Renter, 80% Owner 30% of Affordable $11,522 $12,783 $18,434.64 $20,452.32 Income Monthly Housing Cost $960 $1,065 $1,536.22 $1,704.36 Source: U.S. Census Bureau, ESRI forecasts 17 | Page OWNER-OCCUPIED HOUSING MARKET ANALYSIS This section analyses the City of Monticello are single-family home resale trends, home foreclosures, actively marketing subdivisions, pending subdivisions, interviews with local real estate professionals and others involved in the local housing market to gain their feedback on existing market conditions and trends. The Wright C Office provided data on resale trends. The following are key findings regarding the owner-occupied housing market. Home Resale Trends The average resale price of single-family homes in Monticello in 2016 was $202,073 and there were 342 sales. This was an increase in price from 2015 ($169,025 and 266 sales). While some of the price changes from year to year can be attributed to the age and quality of the homes sold during a year, an interview with a realty expert indicated the average resale price likely bottomed out in 2011 and slow price appreciation is expected to continue to bring prices back to a more market-neutral level. Median sale price is often a more reliable measure of price trends. In Monticello, the median sale price of single- family homes increased from $171,500 in 2015 to $185,269 in 2016, which reflects an increase of 8% for that period. TABLE 1-R: RE-SALE TRENDS OF EXISTING SINGLE FAMILY HOMES Year Number of Sales Median Sale Price Average Sale Price 2015 266 $171,500 $ 169,025 2016 342 185,269 $ 202,073 Source: Wright County Assessor's Office; WSB & Associates, Inc. Table 1-S shows the number of home sales in 2016 by the decade the homes were built. In 2016, 181 of the 342 (52.9%) single-family homes sold were built during year 2000 or later. Similarly, Table 1-N showed that approximately 34.7% of Monticello-occupied single-family homes were built after 2000. Only 11.7% of the sales in 2016 were homes built prior to 1980. This highlights the relatively large supply of newer homes available to potential new residents moving to the community. Table 1-S also highlights how the median sale price decreases as the homes get older. Most homes sold in Monticello in 2016 for under $170,000 were built before 1980. Homes priced above $180,000 were generally built since 2000. TABLE 1-S: HOME SALES BY DECADE BUILT 2016 Decade Number of Sales Percentage Median Sale Price 1970 and Older 27 7.9% $151,509 1971-1980 13 3.8% $166,000 1981-1990 23 6.7% $157,500 1991-2000 98 28.7% $181,467 2001-2010 132 38.6% $193,951 2010-2016 49 14.3% $221,050 Total: 342 100.0% - Source: Wright County Assessor's Office 18 | Page Foreclosures Beginning in the middle of the last decade, home foreclosures began to have a significant impact on housing markets across the nation. Initially, most foreclosures occurred among buyers with lower credit ratings who had sub-prime mortgages. Gradually, foreclosure activity increased as jobs plummeted and home prices sank precipitously. Foreclosures have gradually decreased over the past few years as housing markets have stabilized. Table 1-T presents foreclosure data for Wright County and Minnesota. The data are considered Minnesota Homeownership Center and published on their website. There were 7,212 foreclosures in Minnesota in 2015. This was down from 8,313 in 2014 and significantly lower than 11,834 in 2013. Wright County had 205 foreclosures in 2015, down from 240 in 2014 and 372 in 2013. Wright County has maintained a higher foreclosure rate than Minnesota. The foreclosure rate, as shown in Table 1-T, is defined as the number of foreclosed mortgages as a percent of total residential parcels. In 20150.49% compared to 0.40% in Minnesota. Foreclosures have hindered as they have other areas of the State. Out of 87 counties in the State, only 6 had a higher foreclosure count than Wright County. Those counties were Saint Louis, Washington, Dakota, Anoka, Ramsey, and Hennepin. TABLE 1-T: HOME FORECLOSURES WRIGHT COUNTY, 2013 to 2015 Wright County Minnesota Year Number of Foreclosures Foreclosure Rate Number of Foreclosures Foreclosure Rate 2013 372 0.89% 11,834 0.64% 2014 240 0.57% 8,313 0.46% 2015 205 0.49% 7,212 0.40% Sources: Minnesota Homeownership Center, HousingLink Single-Family Listings Based on a review of various Realtor websites, there were 77 single-family homes actively listed for sale in Monticello in November 2016. The homes were unevenly distributed by price range; weighted heavier toward higher priced homes. Only two (2) homes were priced below $120,000 and 68 priced $150,000 or higher listed for sale. Four (4) homes were listed for sale between $100,000 and $150,000. The average list price of homes on the market was $271,759 in November 2016. While homes typically sell for less than the list prices, the current prices suggest that Monticello should continue to see appreciation in home prices since the low point in 2011. Existing Lot Supply There are currently a limited number of lots available to accommodate new single-family homes in Monticello. The City is experiencing a shortage in buildable lots as bank owned lots have been purchased and developed. As of the end of 2016, there are a total of 74 single-family lots and sites that can accommodate up to 101 multi-family units. Permit numbers have steadily recovered from the 2010 and 2011 low point (two single family permits issued each year) to the issuance of 61 single-family permits in 2016. Prior to the recession, the City issued more than 300 permits annually. During that time (2002- 2007) housing lots were selling in the $70,000-$90,000 range. The sale price of lots fell by more than 80% after the recession. Bank foreclosures of developers resulted in existing lots becoming bank owned 19 | Page and ultimately being developed quickly. Many of the approved single family pre-plats were not completed due to the diminished demand for new homes. Refer to Table 1-U for full details. TABLE 1-U: AVAILABLE PLATTED & UTILITY SERVICED LOTS Development Single Family Lots Multi Family Lots Featherstone 15 0 Hunters Crossing 0 0 Hillside Farm 22 0 Spirit Hills 0 5 Sunset Ponds 21 0 Carlisle Village 7 17 Autumn Ridge 0 79 Eastview 1 0 Club West 7 0 Pine View 1 0 Total 74 101 Source: City of Monticello In mid-2016, the average price of a lot was about $20,000. As the housing market has improved and lot prices have increased due to the limited supply, it has allowed for an increase in prices for new single family lots. The new housing price situation is further aggravated by the limited number of remaining small home builders which have either closed or changed professions due to the recession and is now resulting in higher construction costs. According to a Monticello realty expert, another critical factor impacting the demand for single family homes is the degree to which first-time home buyers are riddled with college debt and unable to afford the price of a new home. The interest rate for new home loans has increased slightly from an all-time low of 3.4% during the depths of the recession to approximately 4.25% in late 2016. -sale price currently sits in the five to seven percent range and is expected to go up. There are no major complaints or concerns among current homeowners looking to move up into more expensive homes. However, Monticello currently lacks availability of lots that are attractive for higher end housing. The community should focus on the development or attraction of a high-end housing development. The two-major upper-bracket areas (Carlisle Village and Briar Oakes Boulevard) have limited availability of undeveloped lots and are surrounded by agricultural uses. City-annexed land west of Monticello provides development opportunities but is unattractive to developers looking to build higher-market homes due to the lack of natural amenities and features generally associated with high end housing areas. Single-family Housing Permits The City of Monticello issued sixty-one (61) building permits in 2016. This number is up 38.6% from 2015 when forty-four (44) permits were issued (6 attached and 38 detached). To meet demand, the City will need to continue this trend. Please refer to Table 1-C for additional information. 20 | Page RENTAL HOUSING MARKET ANALYSIS Affordable Rental Housing This section of the report analyses the affordable rental housing market in Monticello. The analysis includes data collected from Affordable Housing Online. All the properties in this section are general occupancy. As shown in the demographic and housing stock overview sections, there are approximately 1,175 renter households in Monticello which is down 127 households from 2010. The overwhelming majority of renters live in larger multifamily properties. There are approximately 2,923 renters (24% of total population) living in Monticello. As of 2014, 25% of total Monticello households were renter-occupied, compared to 15.6% for Wright County, and 28% for the State of Minnesota. Properties that include units assisted by federal programs were surveyed as part of this analysis. In total, eight (8) properties with 322 units were surveyed. Twenty-six (26) percent of the rental units are federally subsidized. financed through the following programs: TABLE 1-V: FEDERALLY ASSISTED AFFORDABLE RENTAL HOUSING STOCK Program Properties Units Section 8 2 74 LIHTC 3 102 RD 515 6 189 Total 9 307 Note: The total does not necessarily equal the sum of each program as some properties may participate in multiple funding programs Source: Affordable Housing Online The average number of units per property for affordable rentals in Monticello is 34. The largest federally assisted affordable rental community in Monticello is Ridgemont Apartments at 48 units and the smallest is Hillside Terrace II at 12 units. Two apartment properties provide housing for seniors totaling 59 units. All 307 units include some form of rental assistance (like Section 8) to make rent more affordable for very low income families. In Monticello, a family of four must earn $42,900 or less to qualify for Section 8 housing. See Table 1-W: Federally Assisted Units by Property for details. TABLE I-W: FEDERALLY ASSISTED UNITS BY PROPERTY Name Sec 8 LIHTC RD 515 Senior Broadway Square - - - 28 Cedar Crest Apartments 38 - - - Hillside Terrace -- Monticello 36 - - - Hillside Terrace II - - 12 - Ridgeway Apartments - - 44 - River Park View Apartments - 31 31 31 Ridgemont Apartments - - 48 - Source: Affordable Housing Online Note: Not all unit counts are available from HUD 21 | Page Photographs of Monticello Apartment Buildings Image 1: Ridgemont Apartments Image 2: River Park View Apartments Image 3: Hillside Terrace Image 4: Cedar Crest Apartments Image 5: Broadway Square Image 6: Ridgeway Apartments 22 | Page Image 7: Monticello Crossings Image 8: 7th Street Townhomes Housing Development Opportunities There are currently three future housing development sites that have been identified in Monticello. Site A is an 11.93-acre area located at 506 Territorial Road and is the site of the historic registered Rand House which was the home of the Minnegasco founders. This site is zoned low density residential (R-1) and performance-based overlay and may be used for the development of a senior housing apartment complex with sixty to eighty units (60-80) in addition to forty (40) patio homes. The Rand House would be used as a community center and guest home for the development. Rezoning this area using the planned unit development (PUD) process may be the best option to allow for this higher density could be used to justify the PUD. Also, we believe the proposed housing development is consistent with the purpose of the performance based enhancement district. th Site B is a 6.4-acre area located north of the lake on the corner of Elm Street and 7 Street West. It is zoned for medium density residential (R-3) and may be used for multifamily, senior, or market-rate development. It is within proximity exposure to the wetland pond offers an attractive natural amenity. rd Finally, Site C is located at the corner of Locust Street and 3 Street West and has already been approved for the construction of a twenty-three (23) unit three story residential development. m 2010-2021 Monticello will need to construct 136 new senior housing units to meet the forecasted demand. Sites A and B have both been identified as ideal locations for senior housing development. Depending on the number of units permitted on each of these sites, and on how many senior housing units have been constructed from 2010-2016, Monticello may need to identify more sites suitable for senior housing. 23 | Page Image 9: Site A Image 10: Site B Image 11: Site C 24 | Page DEMAND ANALYSIS AND CONCLUSIONS This section of the report utilizes data collected in the previous sections to calculate demand for owned and rental housing in Monticello through 2021. Housing Demand Analysis Demand for additional housing in Monticello will primarily come from household growth. Replacement of older homes will contribute to the need for additional residential development, as will pent-up demand. Table 1-X outlines our calculations for owner and rental housing demand in Monticello from 2017 to 2021. TABLE 1-X: POTENTIAL HOUSING DEMAND OVER NEXT 5 YEARS 2017 to 2021 A. Household growth* 500 B. Replacement Demand 10 C. Total housing growth (A+B) 510 Range to occur over next 5 years: D. Percent rental demand 30% to 35% E. Rental housing demand (C x D) 153 to 179 F. Pent-up rental demand 64 64 G. Total rental housing demand (E+F) 217 to 243 H. Percent owner demand 65% to 70% I. Total owner housing demand (C x H) 332 to 357 * Includes projected growth for Monticello (263 households) and one-fifth the growth in the remainder of the market area (237) Sources: US Census Bureau, ESRI forecasts, WSB & Associates, Inc. Table 1-E shows that Monticello is projected to add 263 households between 2016 and 2021 and the remainder of the market area is projected to add 1,183 households. We estimate that Monticello can capture one-fifth of the demand in the remainder of the market area, or 237 households, by providing greater housing choices to retain and attract some potential residents who otherwise would live in the surrounding areas. Thus, an additional 500 housing units would need to be developed from 2017 to 2021 to satisfy projected household growth in Monticello. Replacement demand is generated from the loss of housing or the need to replace housing units that are revealed that there are about 340 housing units built prior to 1950. values are decreasing at a faster rate relative to other types of housing. Most of these homes are in good 4 condition, and we estimate that 0.5% percent per year should be removed annually from the housing supply because of obsolescence, which equates to two units every year or ten units over the next five years. A healthy rental market is expected to have a vacancy rate of about 5% to allow for sufficient consumer choice and unit turnover. With pent-up demand (a shortage of units), persons who would normally form 4 Good condition meaning that these homes do not need renovated or demolished. 25 | Page their own rental households, instead decide to move in with other persons in a housing unit, live with their parents, or live in housing outside of the area and commute to jobs. In 2016, Monticello had an estimated 1,300 rental households, of which 20 units (1.5% from Table 2-I) were vacant. This percentage is well below the stabilized vacancy rate. In order to bring the overall vacancy rate to a balanced 5%, about 64 additional rental units would need to be added to the city. Based on demographic and market trends, we project 30% to 35% of the housing demand from household growth and replacement-need in Monticello between 2017 and 2021 will be for rental housing. There is a total of demand for approximately 217 to 243 rental households (about 44 to 49 annually). This demand is for all types of rental housing from subsidized and market rate general occupancy housing to senior housing. An estimate of 65% to 70% of housing demand in Monticello between 2017 and 2021 is projected to be for owner-occupied housing. This equates to demand for 332 to 357 households from 2017 to 2021 (66 to 71 homes annually.). This would equate to the projected demand for single-family homes and townhomes. These demand projections are based During this time, we experienced the market correction of 2009-2013 which greatly impacted the calculations causing the projections to be historically low. It can be anticipated that if the housing market continues its recovery, the demand for both rental-occupied and owner-occupied households will be greater than the projections. It can be further extrapolated that in response to the increased regulations on mortgages, and the high rates of student debt, the demand for rental housing will dramatically increase. Other Housing Recommendations Projected demand for new housing products in Monticello through the remainder of the decade from current and future residents is outlined on the preceding pages. In addition, there are other programs that Monticello can implement to assist in meeting local housing needs and improving the quality of the existing stock. The key programs/initiatives that Monticello should pursue are outlined below. Monticello needs to closely monitor rental vacancy rates and availability as new rental properties are added to the community. The addition of the 202-unit Monticello Crossing apartment complex has set a precedent with 200 of its units being occupied during a very short timeframe. This indicates a clear pent-up demand that should continue to increase at the housing market recovers from the correction. Monticello should also work towards converting vacant housing units into renter-occupied to reach 30-35% of total housing units. In its current state, the rental housing inventory sits at 25% of total housing units. As seen in Table 1-I, the City is projected to have seventy-six (76) additional vacancies. Monticello needs to maintain its low housing costs and low percentage (19%) of residents paying more than 30% of their monthly household income on housing to reduce the negative impacts from another housing correction like 2006-08. This percentage is much lower than county and state averages (27% and 29% respectively). Monticello should make efforts to increase affordable rental housing inventory so they are available for younger generations of citizens as well as baby-boomers and empty-nesters. The latter two cohorts of residents are downsizing their living spaces and need affordable places to 26 | Page live. Combining affordable housing options with job opportunities could lead to an increase in 19-24-year-old residents. Monticello should also ensure an adequate amount of higher-end rental units for higher-income individuals looking to retire and downsize their living quarters. While these individuals are looking for smaller spaces, they are not willing to surrender the amenities to which they have grown accustom. With the expected increase in the percentage of residents over the age of sixty-five (65), Monticello needs to increase their stock of senior housing units. Refer to Table 1-O for projected figures. Monticello should consider the development of housing in the downtown area to accommodate young seniors and millennial residents. Both cohorts share the same preference for areas that are rich with amenities and walkable, and housing properties that have lower maintenance requirements. Providing residents with downtown housing options is critical if the city wishes to achieve population age diversity and a complete life-cycle housing environment. 27 | Page