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HRA Minutes 02-07-1990 . MINUTES MONTICELLO HOUSING AND REDEVELOPMENT AUTHORITY Wednesday, February 7, 1990 - 7:00 PM City Hall MEMBERS PRESENT: Chairperson Al Larson, Ben Smith, Everette Ellison, Tom St. Hilaire, and Lowell Schrupp (late 8:15PM). CITY STAFF PRESENT: Jeff O'Neill and Ollie Koropchak. GUEST: Russ Martie, Martie Farm Service, Inc. Pat Pelstring, Business Development Services, Inc. 1. CALL TO ORDER. The HRA meeting was called to order at 7:10 PM by Chairperson Al Larson. 2. APPROVAL OF THE JANUARY 3, 1990 HRA MINUTES. A motion to approve the January 3, 1990 HRA Minutes was made by Ben Smith and seconded by Everette Ellison. With no further discussion the minutes were approved as written (4-0). . 3. PUBLIC HEARING AND CONSIDERATION TO ADOPT THE RESOLUTION RELATING TO THE MODIFICATION, BY THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF MONTICELLO, OF THE REDEVELOPMENT PLAN RELATING TO REDEVELOPMENT PROJECT NO.1, THE MODIFICATION OF THE TAX INCREMENT FINANCING PLANS RELATINGTO TAX INCREMENT FINANCING DISTRICT NOS. 1-1 THROUGH 1-8 AND THE APPROVAL AND ADOPTION OF THE TAX INCREMENT FINANCING PLAN RELATING TO TAX INCREMENT FINANCING DISTRICT NO. 1-9, ALL LOCATED WITHIN REDEVELOPMENT PROJECT NO.1. (TAPPER, INC.). Chairperson Larson opened the public hearing for the disposition of land relating to the TIF Plan of TIF District No. 1-9. With no public oral or written comment and no oral or written comment from the county, the school district, or the hospital district, the public hearing was closed. . The TIF Plan budget consist of up-front assistance to Tapper, Inc. for land acquisition of $77,500 with remaining budget for soft costs, captalized interest, etc. The life of the district is 10 years, 8 years of collectible tax increment. Total financial package for Tapper, Inc. is TIF, $77,500; Small Business Development Loan, $820,000; Greater Monticello Enterprise Fund, approximately $100,000; and equity approximately $28,800. Final approval by the state on the SBDL is expected in February or early March. The HRA verified that the use of TIF or the $77,500 is like an interest free loan, in actuality it's a grant . HRA Minutes 2/7/90 Page 2 3. CONTINUED. to the company. The project meets the "but for" test as the project would not occur without the assistance of TIF. The HRA reviewed the project against the HRA policies and found the project met HRA policy considerations: The project is consistent with the City's comprehensive plan, the project demonstrates long-term economic and housing benefits to the community, the project shall create employment. and the project sahlI be deemed to promote additional desired spin-off development. The TIF land acquisition is for 7.6 acres of land in the Oakwood Industrial Park, Lot 4, Block 2, currently owned by Oakwood Industrial Partnership. Land sale negotiations were between the Tappers and the Partnership. The HRA transfers the land sale for $1.00 by the use of quit claim deeds which includes the covenants attached to the project, the quit claim deed being part of the development agreement. . Tom St. Hilaire made a motion adopting the resolution relating to the modification, by the Housing and Redevelopment Authority in and for the City of Monticello, of the Redevelopment Plan relating to Redevelopment Project No.1, the modification of the Tax Increment Financing Plans relating to Tax Increment Fiancing Districts Nos. 1-1 through l-8 and the approval and adoption of the Tax Increment Financing Plan relating to Tax Increment Financing District No. l-9 (Tapper, Inc.). The motion was seconded by Ben Smith, and with no further discussion passed 4-0. The motion passed because the project was consist with HRA policy considerations 1. 2. 3 and 8; the Planning Commission approved the finance plan, as the project was consistent with the City's Comprehensive Plan, and the company and owners demonstrate high quality, are a growing, well-managed company. and interested in the community. The City Council is to call a public hearing for February 26, 1990 for the adoption of the said TIF Plan relating to TIF District No. 1-9. 4. CONSIDERATION OF ADDITIONAL INFORMATION ON TAX INCREMENT FINANCE PLAN RELATING TO TAX INCREMENT FINANCE DISTRICT NO. 1-9. (MARTIE FARM SERVICE). . '-' On January 22, 1990, the City Council held a public hearing for the TIF Plan relating to TIF District No. 1-9 (Martie Farm Service) which was opened and closed without public comment. The City Council denied use of TIF for the Martie project based on setting a precedence for direct use of TIF assistance to competitive retail businesses. The Council was unclear of the nature of the company's business HRA Minutes 2/7/90 Page 3 4. CONTINUED. and was unable to obtain sufficient clarifcation from city staff or BDS, Inc. with the absent of the developer. Upon the advise of Mr. Pat Pelstring, it was recommended that Mr. Martie receive support from the HRA prior to Council reconsideration of the matter. Mr. Martie apologized for not being at the Council meeting as this was not encouraged by city staff because of the past historical TIF adoption process by the Council. The HRA members questioned their role and function in relationship to,the City Council as recent HRA recommendations for use of TIF have been reversed by the Council without regard to the facts. In brief summary, Mr. Pat Pelstring defined the HRA role as the working body for the useofTIF and the City Council role as the issuance for the bonds, as per statutory. Also, Koropchak mentioned the HRA has TIF policies which have not been adopted by the City Council nor does the Council have it's own TIF policies. Ben Smith made a motion stating the HRA wholeheartedly supports the Martie Farm Project and the TIF Plan as drafted by Business Development Services, Inc. The HRA approved the use of TIF because the project is consistent with HRA policy considerations 1, 2, 3, and 8; the project increases and retains local employment; the project increases the local tax base; the project encourages local business retention and expansion; and the addition of the agricultural warehouse and the level of TIF assistance provided for this project were negotiating tools used by the HRA as suggested by BDS, Inc., to encourage consistency of the HRA policy and was not to encourage a larger development. The motion further requested that the City Council reconsider the adoption of the resolution for the TIF Plan relating to TIF District No. 1-9 because of the lack of information relating to the nature of the Martie Farm Service business. Also, Council is encouraged to visit their current business located on South Highway 25. The motion was seconded by Everette Ellison and with no further discussion passed 4-0. Additionally, the HRA requested a letter be written and mailed to the City Council members suggesting the Council consider a joint meeting with the HRA to define the Council's role and the HRA's role in relationship to the Tax Increment Financing process; secondly, that the Council consider tabling an agenda item which may be unclear or inconsistent with HRA policy to allow further discussion or clarification of the project outside the realms of the public; and thirdly. that the City Council consider adoption of the HRA Tax Increment Financing policies or create and adopt joint Tax Increment Finance policies. Mr. Pelstring expressed his willingness to be present at this meeting, preferably prior to a Council meeting. Lowell Schrupp now in attendance and Everette Ellison no longer in attendance. . HRA Minutes - 2/7/90 Page 4 5. CONSIDERATION TO ADOPT THE CERTIFICATE OF COMPLETION AND RELEASE OF FOREITURE FOR THE DEVELOPMENT AGREEMENT BETWEEN THE HOUSING AND REDEVELOPMENT AUTHROITY AND NORTHERN STATES POWER COMPANY. Ben Smith made a motion adopting the certificate of completion and release of forfeiture for the Development Agreement between the Housing and Redevelopment Authority and Northern States Power Company. Tom St. Hilaire seconded the motion and with no further discussion the motion passed 4-0. The motion was adopted because the NSP district service center constructed in Oakwood Industrial Park was completed and the occupancy permit issued by the City Building Official in accordance with the project development agreement. 6. CONSIDERATION TO SET A SPECIAL HRA MEETING FOR THE PUBLIC HEARING AND ADOPTION OF THE TAX INCREMENT FINANCE PLAN RELATING TO TAX INCREMENT DISTRICT NO. 1-10. (REMMELE ENGINEERING, INC.) . The HRA members considered setting a special meeting of February 21 for the public hearing and adoption of the TIF Plan relating to TIF District No. 1-10, however, due to scheduled vacations a quorm would not be present. The City has offered Remmele Engineering two options of financing: 1) Up-front assistance, $185,000 for land aquisition, site development, on-site utilities and parking and landscaping costs. 2) Pay-as-you-go assistance, $320,000. The public hearing held by the HRA is for the disposition of lands and not for the adoption of the TIF Plan, therefore, the HRA can hold the public hearing at their next regular meeting in March which still maintains the calendar schedule as presented to Remme1e. HRA member Tom St. Hilaire then made a motion adopting a resolution in support of or an inducement of the Tax Increment Finance Plan relating to Tax Increment Finance District No. 1-10. Motion was contingent upon no public comment or opposition at the public hearing. The motion was seconded by Ben Smith and the HRA members were in agreement that staff do whatever it takes to have Remme1e Engineering locate in Monticello. The motion passed 4-0. . . HRA Minutes - 2/7/90 Page 5 7. CONSIDERATION OF AN UPDATE ON THE DAVID FICEK AND K-MART PROJECTS. Koropchak reported that she had been in attendance at the meeting held between developer, David Ficek, and the owners of the proposed development areas. The majority of the property owners were not in favor of the project because the project would create greater density. Mr. Ficek was encouraged by a couple of property owners suggesting to consider the westerly portion of the proposed development only. therefore. eliminating the majority of the opposition from the Phase A development. These owners stepped forward after the meeting. Mr. Ficek was unaware of the cost to relocate the gas tank in the Phase B area which makes the project undoable or not cost effective. Mr. Ficek was going to rethink and rerun project numbers on the Phase A area at the suggested smaller development and contact my office on Monday. Koropchak has not received a call and has been unable to reach him. . Jeff O'Neill updated the HRA on the City proposed TIF budget for the Lincoln Companies, K-Mart project. The total up-front TIF expense is approximately $56l,000 inclusive of soft costs, etc. The Lincoln Companies costs is approximately $202,000 of which a portion is assessed or deferred assessments. The City anticipates recovery of approximately $404.000 from land sales of property acquired for project and from deferred assessments. The HRA commented on the increased TIF budget from the original meeting with the Lincoln Companies and yet the City has received no written commitment or guarantee of intent to develop from the developers. Tom St. Hilaire made a motion restating the HRA position, the HRA recommends no use of Tax Increment Financing for the Lincoln Companies proposed development. The motion was seconded by Lowell Schrupp and passed 4-0. 8. CONSIDERATION TO REVIEW AND ADOPT 1990 HRA GOALS. Staff has not had time to draft HRA goals for the HRA members to review and adopt. Mr. Wolfsteller will provide a written year end report of the TIF Districts in March. 9. OTHER BUSINESS. None. . 10. ADJOURNMENT. The HRA meeting adjourned at 9:40 PM. ~ "<C!\.bE;~ Ollie Koropchak, HRA Executive Secretary