HRA Minutes 07-11-1990
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MINUTES
MONTICELLO HOUSING AND REDEVELOPMENT AUTHORITY
Wednesday, July II, 1990 - 7:00 P.M.
City Hall
MEMBERS PRESENT: Chairperson Al Larson, Ben Smith, and
Tom St. Hilaire. Everette Ellison was
tardy.
MEMBER ABSENT: Lowell Schrupp.
STAFF PRESENT: Rick Wolfsteller and Ollie Koropchak.
1. CALL TO ORDER.
Chairperson Al Larson called the HRA meeting to order
at 7:03 PM.
2. APPROVAL OF THE MAY 2, 1990 HRA MINUTES.
Ben Smith made a motion to approve the May 2, 1990 HRA
minutes, seconded by Tom St. Hilaire, the minutes stand
approved as written.
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3. CONSIDERATION TO APPROVE A RESOLUTION TO MODIFY THE TAX
INCREMENT FINANCE PLAN RELATING TO TAX INCREMENT FINANCE
DISTRICT NO. 1-9 (WILLIAM AND BARBARA TAPPER).
Koropchak reiterated parts of the agenda supplement
informing the HRA members to why the need to modify
the TIF plan for the Tapper's project. The basic
reason being that a $12,000 discrepancy gap existed
in the total funding project because SBA officers
would not accept the recommendation given by Bob Heck
to the EDA at the time of GMEF approval. The SBA
would not accept the 7 year balloon payment on the
$12,000. Therefore, staff recommends that $12,000
equity (TIF) be injected into the funds as the
estimated market value in the Assessment Agreement
of the Development Agreement is sufficient to generate
the tax increment necessary to retire the increased
bond indebtedness. Thereafter, the Greater Monticello
Enterprise Fund will be reduced from $100,000 to
$88,000 which is a benefit as the EDA maintains a
greater revolving loan balance and reduces the city's
loan amount which is a third position loan. The
developer, Wright County State Bank, SBA, and Tom
Hayes agreed with staff's recommendation. Attorney
Bob Deike confirmed that this modification would
not apply to new legislative ruling on TIF.
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The modified budget will_increase from $125,000 to
$140,000, however, direct assistance to the Tapper's
will increase from $77,500 to $89,500. Additionally,
the negotiated Development Agreement includes language
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HRA Minutes
7/11/90
Page 2
3. CONTINUED.
stating: if for some unknown reason the modified TIE Plan was
denied, the $12,000 gap funds would be transferred from
another district. This allows for the closing date to occur
prior to adoption of the modification by the City
Council.
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Tom St. Hilaire made a motion 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 Plan relating to Tax Increment Financing
Districts Nos. 1-1 through 1-11 and the modification
of the Tax Increment Financing Plan relating to the
Tax Increment Financing District No. 1-9, all located
within Redevelopment Project No.1. The motion further
included the support of the negotiated Development
Agreement stating that if for some unknown reason
this modification was denied, gap funds would be
transferred from another TIF district. The motion
was seconded by Ben Smith and without further
discussion passed 3-0.
CONSIDERATION TO REVIEW LEGISLATION RULING ON TIF AND
ITS IMPACT TO THE CITY OF MONTICELLO.
4.
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The HRA members had received a summary of the 1990
Legislative changes to TIF with their agenda.
Koropchak concluded that TIF is still a useable financing
tool, however, it has been restricted by Legislation.
Most communities are subject to a reduction in the amount
of tax increment available for a project because of
the LGA/HACA payments. The city of Monticello does not
receive state aid therefore the city does not need to
deduct any LGA/HACA payments at this time. However,
if a district were created today and the city would
receive state aid at a future date then the amount
of available useable tax increment would be reduced
for the remaining life of the TrF district.
Legal counsels state TIF can be used, however, stress the important
of written documentation because of potential penalties
of TIF abuse. Also~it may generally be desirable for the
authority to remain outside the chain of title because of
potential environmental clean-up cost concerns. This
can be done as assessment agreements can now be entered into
whether or not the authority takes title to the property
involved and a development agreement is necessary under
law.
Everette Ellison now present at the HRA meeting.
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HRA Minutes
7/11/90
Page 3
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5. CONSIDERATION OF A PROJECT UPDATE:
a) TAPPER'S INC. - Closing scheduled for Friday, July 13, 1990
Wright County State Bank
b) REMMELE ENGINEERING - Development Agreement - Estimated Market
Value is $805,000, Tax Increment Finance
Gurantee is $32,000, Letter of Credit
for $185,000, Letter of evidence of
financing construction, Evidence of
of good title, and evidence of insurance
upon construction time.
Closing scheduled for Monday, July l6,
1990, Dorsey & Whitney, Minneapolis.
c) MARTIE'S FARM SERVICE - reiterated HRA position that the
recommended screening along Oakwood Drive
is to be determined by the Planning
Commission, Planning Administrator, or
Building Inspector. Also, the use of
TIF ~eans the pr9ject will.be consistent
with the City Ordinance as determined
by the expertise of the Planning
Commission and/or it's staff. This is
covered in the Development Agreement.
d) THE LINCOLN COMPANIES - the company has filed Chapter 11
Bankrupty. The Lincoln Companies being
current owners of the Mall and Monticello
K-M Partnership the developers of the
K-Mart proj ect.
6. CONSIDERATION TO REVIEW THE CONTRACT BETWEEN THE HRA AND BDS, INC.
The HRA viewed Pat Pelstring and Bob Heck's presentation to
the HRA, EDA, and Remmele Engineering as very professional,
however, concerns center around the efficiency of returning
telephone calls, ability to carry out a project within a
reasonable time frame, and the cost effectiveness of some
services (Development Agreements). The HRA members recommended
this agenda item be tabled until the August meeting, the staff
prepare questions for BDS evaluation, and invite Pat Pelstring
to be present at the meeting.
7. OTHER BUSINESS.
Chairperson Al Larson asked that the Fred Gille Property be
placed on the August HRA agenda for discussion and
information.
8. ADJOURNMENT.
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Tom St. Hilaire made a motion to adjourn the HRA meeting,
seconded by Everette Ellison, the HRA meeting adjourned
at 8:00 PM.
Q) Q Q.~ '<-..GI. ().~ &"-c....9--
Ollie Koropchak, HRA Executive Secretary