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EDA Minutes 10-11-2017MINUTES REGULAR MEETING - ECONOMIC DEVELOPMENT AUTHORITY (EDA) Wednesday, October 11t11, 2017 — 6:00 p.m. Mississippi Room, Monticello Community Center Commissioners Present: Bill Demeules, Bill Tapper, Steve Johnson, Tracy Hinz, Jim Davidson, and Lloyd Hilgart Commissioners Absent: Jon Morphew Staff Present: Jim Thares and Angela Schumann 1. Call to Order Bill Demeules called the regular meeting of the EDA to order at 6:00 P.M. 2. Roll Call 3. Consideration of additional agenda items None. 4. Consent Agenda a. Consideration of approving Regular Meeting Minutes — September 13, 2017 LLOYD HILGART MOVED TO APPROVE THE REGULAR MEETING MINUTES FROM SEPTEMBER 13TH, 2017. TRACY HINZ SECONDED THE MOTION. MOTION CARRIED, 4-0-1 WITH BILL TAPPER ABSTAINING. b. Consideration of Workshop Meeting Minutes — September 13, 2017 LLOYD HILGART MOVED TO APPROVE THE WORKSHOP MEETING MINUTES FROM SEPTEMBER 13TH, 2017. TRACY HINZ SECONDED THE MOTION. MOTION CARRIED, 4-0-1 WITH BILL TAPPER ABSTAINING. c. Consideration of approving payment of bills LLOYD HILGART MOVED TO APPROVE THE PAYMENT OF BILLS THROUGH SEPTEMBER, 2017. TRACY HINZ SECONDED THE MOTION. MOTION CARRIED, 5-0. Regular Agenda Consideration of 5" Amendment to Contract for Private Redevelopment with Master's Fifth Avenue for property in TIF District 1-35 Jim Thares stated that a request was made by Barry Fluth to consider extending the performance timeline identified in the 4t1' Amendment to Contract for Private Redevelopment. Thares stated that the Fourth Amendment to the contract stated that construction needed to commence by December 31St, 2017, with project completion to be the end of 2018. Thares stated that Fluth has been working with interested developers on a potential project. Fluth has asked to extend the time frame to start construction by December 31St, 2018 with final completion by the end of 2019. If the extension is approved, the EDA's Attorney will draft an amendment document which the EDA would need to approve at its next meeting. Bill Demueles asked if the proposed development would be similar to the past. Thares confirmed, stating it would be a 23 -unit market rate apartment with detached garages. Lloyd Hilgart asked if the contract remained the same (no change to the performance dates), would the TIF assistance would be forfeited. Angela Schumann stated that staff would need to consult with the EDA's Attorney. Hilgart also asked if the TIF assistance has been declining as it was in the past years or if the same amount is still available. Schumann explained that that the developer removed the buildings on the property and must provide evidence of the activities and costs as a part of the completion of the contract for TIF eligibility. The documents related to the district specify the amount of eligible TIF, but the land value hasn't risen to a point that any increment is being generated. Hilgart inquired if the developer had(s) a three-year time period for removal of the buildings. Schumann stated that this district is somewhat unique. Tammy Omdal, Northland Securities, said that the redevelopment TIF District had buildings that were determined to be substandard and then removed. No increment has been generated at this point. The district is set up for twenty-six years but the collection calendar has not started. The three year rule is applicable if findings are made for the establishment of districts and is not applicable in this case. The five year rule is applicable to either commit or spend the tax increment dollars within that timeframe. Under the terms of the development agreement, as long as it is valid, and the developer is not in default, all of the increment collected can be used to assist with the project per the agreed upon amount. If the EDA decides not to grant an additional extension of the performance dates, the developer may end up in default. The district would not go away, but in the future, the EDA would only be able to use 25 percent of the tax increment to assist any project. Decertification of the district is another option for the EDA at this time. Tracy Hinz asked where the EDA was at with the five-year period. Omdal stated that the five-year timeline is long past. She further added that the contract is still valid and the performance dates could be amended, but, if the dates are not extended the agreement would go away. Jim Davidson confirmed that this project was the only one that could be fully funded using the increment dollars. Omdal confirmed that is correct with the current agreement. Hilgart asked if there was a financial benefit for the City to not extend the contract. Omdal stated that there were findings made and assistance agreed to for this project. If the EDA determined that the proposed project was no longer consistent with the EDA or the City's objectives, than it may be a reason to not extend it. Whether or not the project could continue would be up to the developer as public financial assistance would not be 2 available if the contract was not amended. Hilgart asked how many years the buildings have been removed. Omdal stated that this would be the Fifth Amendment to the agreement. Schumann stated that the district was established in late 2005. STEVE JOHNSON MOVED TO DIRECT PREPARATION OF AN AMENDMENT TO THE CONTRACT FOR PRIVATE DEVELOPMENT BETWEEN MASTERS 5TH AVENUE AND THE CITY OF MONTICELLO EDA AS IT RELATES TAX INCREMENT FINANCING DISTRICT 1- 35. TRACY HINZ SECONDED THE MOTION. MOTION CARRIED, 6-0. 6. Consideration of entering into contract with displacement relocation consultant for services for dislocated properties in downtown Jim Thares stated that the displacement assistance as required under the Uniform Relocation and Assistance Act (URAA) was determined to be useful and necessary as the EDA possibly becomes involved with downtown redevelopment projects. Thares noted the challenges that relocation activities can bring in an effort to comply with the Act. Two proposals were received; from Wilson Development and also from SB & Associates. Wilson Development quoted the work at $53,500 while WSB & Associates' quote was $30,768. The difference was mainly in the amount of hours expected to spend providing technical assistance to the displaced. They actually charge similar hourly rates. Staff recommended working with Wilson Development. Thares noted that the City has worked with Mr. Wilson on previous projects and that any hours not utilized would not be charged to the EDA. Bill Demueles asked how many years WSB has been providing these services. Jim Davidson commented that their main contact has 17 years' experience. Tracy Hinz asked if the project was a retainer to pay upfront for projects. Thares noted that is specifically for one potential project where a significant amount of displacement may occur. Steve Johnson asked what Wilson Development would be offering for the larger contract compared to WSB. Thares explained that Wilson Development has a lot of experience working in Monticello and within the State. Angela Schumann also added that WSB is estimating their cost at a reduced number of hours compared to Wilson Development. She also said that in the proposal from WSB the hours state "Not to Exceed", and that it was important to understand that if the hours were to exceed, the costs would be increased. Jim Gromberg, WSB explained that any hours outside of the contract would be consumed by WSB. Johnson asked if Wilson Development would overall save the City of Monticello more money. Schumann stated that the EDA needed to look at references and past experiences. Hinz asked if the EDA should be concerned that the majority of projects that WSB has worked on involve road right-of-ways. Demueles explained that there wasn't much differentiation as the URAA prescribes the activities and tasks that need to be undertaken. Lloyd Hilgart asked on what other Monticello projects Wilson Development has worked on .... other than Block 34. Schumann stated that her personal experience has only been with Block 34, in particular the Montgomery Farms acquisitions, but that the relationship dates farther back. Tracy Hinz and Bill Tapper both appreciated the prior work that Wilson Development has completed within and for the City of Monticello. Johnson asked if there were any differences in outcomes from the two proposals. Thares stated that both matched up the services requested under a proposed scope of work. BILL TAPPER MOVED TO AUTHORIZE ENTERING INTO A DISPLACEMENT RELOCATION ASSISTANCE SERVICES CONTRACT WITH WILSON DEVELOPMENT IN THE AMOUNT OF $53,500. EXPENSES OVER THIS AMOUNT ARE TO BE AUTHORIZED BY SEPARATE APPROVAL OF THE EDA. TRACY HINZ SECONDED THE MOTION. MOTION FAILED DUE TO A LACK OF MAJORITY VOTE, 2-4 WITH STEVE JOHNSON, JIM DAVIDSON, LLOYD HILGART, AND BILL DEMEULES VOTING IN OPPOSITION. Johnson asked if there was a starting point for this project. Schumann stated the starting point would be defined by the project itself. She also added that in consulting with the EDA's attorney there is a certain amount of latitude in selecting a contractor for professional services. She also said that the question could be posed to Wilson Development to enter into a "Not to Exceed" contract. Johnson stated if no project happened at all, neither contract would be employed. Schumann confirmed. STEVE JOHNSON MOVED AUTHORIZE ENTERING INTO A DISPLACEMENT RELOCATION ASSISTANCE SERVICES CONTRACT WITH WSB & ASSOCIATES IN THE AMOUNT OF $30,768. EXPENSES OVER THIS AMOUNT ARE TO BE AUTHORIZED BY SEPARATE APPROVAL OF THE EDA. LLOYD HILGART SECONDED THE MOTION. MOTION CARRIED, 5-1 WITH TRACY HINZ VOTING IN OPPOSITION. 7. Consideration of WSB Economic Development Assistance Contract for 2018 Jim Thares stated that the WSB Economic Development Assistance Contract from 2017 is coming to a close at the end of the year. Staff proposed to renew the contract for another 12 months. The four principal tasks areas include: market engagement, marketing plan implementation, financial packaging and site review/presentation technical assistance, and communication. Per the WSB proposal, the arnount is $50 higher per month than last year at $750 per month. The same work would be completed with a small 4 enhancement with Task 3 (financial packaging and site review/presentation technical assistance). Thares introduced Jim Gromberg. Bill Demeules recalled from last year when the EDA entered into the contact, the costs of individually being members of different associations would exceed the costs of the contract with WSB to be involved. Gromberg confirmed, explaining that the services help to get Monticello's name out there. Lloyd Hilgart asked if Jim Thares also attended some of the meetings and events with WSB. Gromberg confirmed. Steve Johnson asked for examples of specific items that have benefited the City of Monticello and the EDA through the contract. Gromberg referred to a site location planning. He also added that they are working on identification of companies that can fill niches that the City for or to match up with the workforce. Johnson asked if these examples have brought any type of development to Monticello. Gromberg stated that a couple projects have come from the State and he has helped to put together proposals for specific sites. He also added that WSB has been involved with Thares at various meetings to discuss State programs as a potential assistance package for several prospects. Johnson asked if WSB has worked with Thares on prospect projects included in the Director's Report. Gromberg confirmed stating they have worked with him on Project Novus, Project #6580, Project Kodiak, and Project AJax. Bill Tapper asked Thares for his recommendation. Thares confirmed it would be helpful to continue working with WSB. BILL TAPPER MOVED TO APPROVE THE PROPOSED 2018 WSB ECONOMIC DEVELOPMENT ASSISTANCE SERVICES PROPOSAL IN THE AMOUNT OF $9,000. JIM DAVIDSON SECONDED THE MOTION. MOTION CARRIED, 6-0. 8. Consideration of TIF Financial Management Plan Policy and Guidance Statements Jim Thares stated that various TIF Districts are generating extra TIF dollars for allocation to various redevelopment or affordable housing projects. Nearly $1.7 million is estimated to be available by 2025 for redevelopment projects as well as another $1.4 million for affordable housing developments. Thares stated that the staff report includes a policy statement that reflects the comments of the EDA workshop that was held in September. Thares introduced Tammy Omdal, Northland Securities. Omdal stated that the policies were meant to be general and not restrictive. In the future, the policies could be changed to reflect the EDA's direction. Omdal stated that there may be projects that come along that are not listed in the policy statements. This would allow staff to bring these projects forward to the EDA. Bill Tapper stated that he did not understand the reason for doing this and felt limitations would be in place for what the EDA could do or bring forth. Omdal provided an example that if the EDA felt that staff shouldn't be looking at available TIF dollars for land acquisition, this would be a time to give that direction to staff so that they are not putting time or effort into considering that. At the workshop, the EDA did not indicate an interest in returning any net available dollars not committed to current obligations back to the County for distribution to the County, School, and City. Omdal stated that these policy statements are guidelines so staff has a sense of the EDA's intent is for using these funds. Tapper asked why there were three statements in the redevelopment policy as they seemed redundant. Thares answered saying at the workshop they were trying to be more specific with identifying Block 34 and Block 52. Tapper also asked why Master's Fifth Avenue was singled out. Angela Schumann explained that sometimes it is important to be specific to provide staff with direction that's needed and to provide continuity with the planning efforts. She explained that it was not meant to limit the opportunities, but rather to highlight specific areas. Tapper explained that "policy" seemed more directive rather than suggestive. Johnson stated that it was redundant to have comment three and five from the staff report. Tracy Hinz stated she did not recall calling out Master's Fifth Avenue at the workshop. Johnson asked if this could be changed at any time. Thares confirmed. Schumann added that it is important to have direction to be able to focus time and effort. The policy statements provide that guidance. Hinz echoed concerns with specifying a specific project. Demueles stated that these policy statements drive the EDA's vision and support. Hinz did not recall conversations about financing the underground parking for Master's Fifth Avenue. Demueles added that the policy statements does not strictly prohibit or force the EDA to do anything. TRACY HINZ MOVED TO ADOPT THE 2016 TIF MANAGEMENT PLAN AVAILABLE FUNDS POLICY STATEMENT. JIM DAVIDSON SECONDED THE MOTION. MOTION CARRIED, 5-1 WITH BILL TAPPER IN OPPOSITION. Steve Johnson suggested removing Item 3 in the Affordable Housing section. Lloyd Hilgart commented that he would not be in favor of returning dollars to the County for redistribution. He asked if the money that was available as of 2016 was spent, if it would be deducted from the 2025 value. Omdal stated that it affects the 2025 amount because it projects the accrual of the interest income. She also added that those balances as of fiscal year 2016, is cash available at the end of 2016. There is also the ability to capitalize or use the future projected increment to issue a bond obligation to fund a 6 project today, but the EDA would assume the risk that the future tax increment will be at the levels estimated to cover any debt obligation. Lloyd Hilgart prefers to call out specific projects. 9. Consideration of Appointing Member to Downtown Zoning Committee Bill Demueles noted that the request was for the EDA select a member to the Downtown Zoning Committee. Angela Schumann stated the City Council authorized a work group for a revision of the zoning ordinance to support the Downtown Small Area Study that was adopted by the City Council. It was expected that the group of seven to eight members would begin meeting in early November and wrapping up the beginning of the year. Schumann stated that a member from the City Council, Planning Commission, and EDA would be represented on the committee. An invitation to interested downtown community members would also be sent by staff. Schumann noted that the meetings would be public and that any zoning ordinance amendments would occur with a Public Hearing. BILL TAPPER MOVED TO RECOMMEND THE APPOINTMENT OF EDA MEMBER STEVE JOHNSON TO SERVE. TRACY HINZ SECONDED THE MOTION. MOTION CARRIED, 5-0. 10. Director's Report Jim Thares stated that Industry of the Year was held on Wednesday, October 4t", 2017 to present the award to UMC. The keynote speaker was regional economist, Joseph D. Mahon, from the Minneapolis Federal Reserve Bank. Thares also stated that he was continuing to work with the person interested in relocating the Fred's Auto building to Hastings, MN. Tracy Hinz asked if the building transfer was closed. Thares explained that a Development Agreement would be presented to the EDA with the specifics of the proposed relocate project. It will include an escrow fund to ensure the individual actually completes the work that is agreed to in the Performance Agreement. He did reiterate that the interested party is not going to pay for the building, but would pay to clean up the site. Thares added that the Wright County broker event was held on September 19'x'. He continues to follow up with individual contacts from that event. Thares also followed up regarding the sign at Otter Creek Business Park. The City's Public Works Department would be picking it up and would try to rebuild it. Jim Davidson asked if the sign was effective marketing approach. Bill Demueles commented that having a sign out there may be beneficial to people visiting Monticello. Angela Schumann added that the EDA should make sure that the sign has the most current available information and that it is visible from a distance. She also added that long term the EDA could think about an entrance monument to Otter Creek Business Park. Thares provided an update on the active prospects in Monticello. Thares noted that 7 Project Kodiak had a site tour yesterday and received a call that Monticello was not accepted. Hinz asked if staff received any feedback. Thares responded with location concerns. Project AJax would also be removed from the list because of the desire to have outdoor storage which exceeds the amount allowed by ordinance. Steve Johnson asked about Project Basil. Thares explained that they are working with another community, but they may be interested in Monticello again. Thares added that Shred -n -Go has moved on due to the cost of land in Otter Creek Business Park. 11. Adjourn BILL TAPPER MOVED TO ADJOURN THE MEETING AT 7:12 P.M. STEVE JOHNSON SECONDED THE MOTION. MOTION CARRIED, 5-0. Recorder: Jacob Thunander Approved: November 8', 2017 Attest: 7 - ii Thares, Economic Development Director