HRA Minutes 06-07-1989
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MINUTES
MONTICELLO HOUSING AND REDEVELOPMENT AUTHORITY
Wednesday, June 7, 1989 - 7:00 PM
City Hall
MEMBERS PRESENT: Chairperson Al Larson, Ben Smith, Lowell Schrupp,
and Everette Ellison.
MEMBERS ABSENT: Tom St. Hilaire.
STAFF PRESENT: Ollie Koropchak.
GUEST: Pat Pelstring.
1. CALL TO ORDER.
The HRA meeting was called to order by Chairperson Al Larson
at 7:04 PM.
2.
APPROVAL OF THE MAY 5, 1989 HRA MINUTES.
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Ben Smith inquired of why an escrow account had been established
by the HRA for the repair of Topel's building. Chairperson
Larson responded that the HRA was declared responsible as
owners of the Stelton property at time of demolition. With
no further questions, Ben Smith made a motion to approve
the May 5, 1989 HRA minutes. Seconded by Everette Ellison,
the HRA minutes were approved as written.
3.
CONSIDERATION TO REVIEW AND ACCEPT THE TAX INCREMENT FINANCE
APPLICATION.
The HRA members briefly discussed the TIF Application stating
it was very complete and no different than a FHA or SBA
loan application. Also, noting the clause stating that the
submitted information are accurate and complete to the
best of the Undersign's knowledge and belief. The general
consensus of the HRA was to accept the new TIF application.
4.
CONSIDERATION OF HRA ALTERNATIVES FOR TIF DISTRICT NO 1-8
(NORTHERN STATES POWER COMPANY).
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The HRA was advised of the last meeting between Jerry Zimmer
and the city staff which ended with Mr. Zimmer to contact
private developers for potential build/lease and Koropchak
was to check the probability of the HRA as a developer
with an option to buy lease for the NSP maintenance building
proposed to be located in the industrial park. Mr. Pat
Pelstring informed the HRA that other HRA/communities have been
successful as developers with a lease/option to purchase.
The proposals are drafted to recover all costs, pre set
purchase price, ten year lease with option to purchase,
build to leasee specifications, can specify purchase date,
and inclusive of a triple net lease. If the HRA's decision is
to proceed as developer for the NSP project Mr. Pelstring
will draft a package proposal. The general consensus of
HRA Minutes 6/7/89
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4. CONTINUED.
the HRA was that they saw no real kick back as a developer,
the project eliminates no blight, creates few additional
jobs, and felt it was not their main game plan. The final
decision by the HRA was they would consider that project
only after all other NSP alternatives had been explored
and denied for a 1989 construction.
5. CONSIDERATION TO REVIEW DAVID FICEK'S REDEVELOPMENT HOUSING
PROJECT PLAN AND FINANCIAL PROPOSAL.
At the HRA May meeting the HRA made the following recommendations
and plans which were agreeable with Mr. Ficek. One, that the
developer (Ficek) negotiate and acquire the properties; Two,
redevelopment project #1 will concentrate on a portion of
site location Area A.; Three, the developer's guideline
density of 7 units per acre be followed; Four, BDS, Inc. will
prepare a redevelopment district and/or economic district in
accordance with statutory requirements; and Five, BDS, Inc.
will prepare two alternative financial feasibility studies
for the HRA's June meeting.
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Mr. Pelstring presented a copy of the Preliminary Analysis-
Townhouse/Housing Redevelopment Project to each HRA member
and highlighted its content. He reiterated that it makes
particular good sense to have no outside discussion of the
earmarked neigborhood. Mr. Pelstring explained his process
to arrive at the estimated annual tax increment of $23,000.
He estimated existing homes to be acquiired at 125% of their
existing market value and vacant lots to be acquired at
$15,000 each, which indicates total TIF assistance of $113,000
for Phase I of Area A. Phase I is the proposed construction
of 22 townhome units on approximately 3.15 acres. Project
cost inclusive of demolition cost plus other cost would
require a tax bond issue estimated at $205,000 retired at
16-17 years. Mr. Pelstring's conclusion was the project
clearly qualifies as a redevelopment district.
With the same analysis applied to Phase II of Area A, the
combination of both redevelopments I and II is not feasible
because of the higher market valuations on the existing Phase II
properties which results in an approximate $3,700 per year
additional increment.
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A motion was made by Everette Ellison directing Mr. Pelstring
to proceed with drafting a letter of intent and understanding
between Mr. David Ficek and the HRA for the proposed Phase I
project with an estimated write down of $7,000 per unit and
an acquisition time table of 90 days. The motion was seconded
by Ben Smith and with no further discussion passed 4-0.
HRA Minutes 6/7/89
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6. CONSIDERATION TO REVIEW LEONARD BABINSKI AND/OR DONALD
BABINSKI'S REDEVELOPMENT HOUSING PROJECT PLAN PROPOSAL.
In addition to the background and reference information
provided in your agenda supplement, Mr. Pelstring informed
the HRA how he met the two developers, Donald Babinski
and Leonard Babinski, who are brothers but are seperate
developers. Pat reiterated that Donald Babinski was
most interested in a Monticello redevelopment project.
He develops more standard apartments with high quality
or the upscale market end. He was most interested
in Block 29 for 1) luxury apartments, 2) townhome rentals,
or 3) townhome sales. Mr. Pelstring said he would
make a fo11owup contact with both developers. The HRA
advised him to keep the communications open and to
reconsider another site location than Block 29.
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Mr. Pat Pelstring advised the HRA members of the Manteq
International, Inc. Financial Package Proposal. The
project includes the construction of a 30,000 square foot
building with a lease write down from the developer/builder
to Manteq through the use of Tax Increment Financing.
Example a $5.50 per sq ft lease reduced to $4.60-4.65 per
square foot. Site location proposed on Mr. Jim Boyles
property. Manteq's package includes the State Recovery Grant
program, SBA Loan. Central Minnesota Initiative Fund, the Greater
Monticello Enterprise Fund. and Bank Financing for the $1,000.000
project cost. $750,000 equipment and machinery, $250,000
working capital. Equity requirement of $100,000. The
company's financial statements indicate a very profitable
88-89 year compared to the previous years, Mr. Pe1string
will contact the owner. Norman Strand and Accountant
Stuart Wilson in Midland, Michigan. Next step is to
prepare a letter of Intent. Potential 50 jobs.
The HRA was also informed of the financial proposal as
prepared by BDS, Inc. and presented to Tapper, Inc. for
a relocation of a manufacturing company. inclusive of
potential 50 jobs.
7. CONSIDERATION OF UPDATES: Pledge Agreement Re1inqishment Between
the City and the HRA.
City approved the relinquishment of the Pledge Agreements between
the City and the HRA thereby reducing the debt service leverage
to 105%, meeting statutory requiremment, rather than the previous
150%. However. the resolutions have not arrived from John
Green at Holmes & Graven.
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HRA Minutes - 6/7/89
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7. CONTINUED.
Deveopment Agreement Between Broadway Square Limited
Partnership and the HRA. At this time the development
agreement hasn't been signed. Tne F~ closing
was schedule for this morning in St. Cloud, however,
the date has been rescheduled for June 14.
TIF District #2 Demolition Completion. The demolition
contractor, Veit & Company did complete demolition and
bill the HRA, however, John Simola, Public Works Director,
Fred Topel, and myself viewed the site for final
inspection. Thereafter a letter was written Mr. Veit
listing approximately ten items which aren'.:t ~0mp+eted
to specifications. No payments have been made.
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TIF District #4 Guarantee. At the Board of Appeal in
May, 1988, Mr. John Plaisted, owner of the previous IXI
Complex, appeared to contest the market value placed
on this property ..as he had a purchase agreement for
$500,000, market value was $879,400. Because there
is an Assessor Agreement filed on the property for
the latter amount, Mr. Plaisted was given copies of
an agreement to release the present Assessor's Agreement
and establish a new Assessor's Agreement guaranteeing
the HRA a sufficient annual tax increment of $28,000.
Mr. Plaisted never returned the copies with signatures.
The taxes were reduced without the signed agreements,
therefore, Mr. Wolfsteller wrote a letter to Mr.
Plaisted stating unless the signed agreements were
returned for filing and establishing the new tax increment
guarantee the market value would return to the original
amount of $879,400. By the reduction of the market
value our annual tax increment was short by approximately
$500.00 this year and with no agreement stating if the
annual tax increment shall ever go below $28,000 the
owner pays the difference. Mr. Plaisted came in and
signed the necessary agreements and will pay the gap
upon billing.
8.
OTHER BUSINESS.
None.
9. ADJOURNMENT.
Lowell Schrupp made a motion to adjourn the HRA meeting and
Al Larson seconded the motion. The HRA meeting adjourned.
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Ollie Koropchak
HRA Executive Secretary