Loading...
HRA Minutes 08-07-1996 . . . MINUTES MONTICELLO HOUSING AND REDEVELOPMENT AUTHORITY Wednesday, August 7, 1996 - 7:00 p.m. City Hall MEMBERS PRESENT: Chairperson Al Larson, Vice Chairperson Brad Barger, Tom S1. Hilaire, and Steve Andrews. MEMBER ABSENT: Roger Carlson. STAFF PRESENT: Rick Wolfsteller, Jeff O'Neill, and Ollie Koropchak. GUEST: Mark Ruff, Publicorp, Inc. Jay Morrell, M&P Transports, Inc. Chuck McCamy, M&P Transports, Inc. Brad Johnson, Lotus Realty Services Barry Fluth, Redeveloper 1. CALL TO ORDER. Chairperson Larson called the HRA meeting to order at 7:03 p.m. 2. CONSIDERATION TO APPROVE THE JULY 3, 1996 HRA MINUTES. Brad Barger made a motion to approve the July 3, 1996 HRA minutes. Seconded by Tom S1. Hilaire and with no corrections or additions, the minutes were approved as written. 3. CONSIDERATION TO HEAR A PRESENTATION BY THE PROPERTY OWNER RELA rING TO THE SHORTFALL OF THE TIF GUARANTEE. Jay Morrell stated he was not the sole liable party for the $12,517.93 tax increment shortfall. He informed HRA members that the John Plaisted/Jay Morrell Partnership dissolved and was replaced by an ownership of individuals (Plaisted/Morrell), tenants in- common. Later, he became the sole owner. Secondly, at the May 1989 Board of Review, the partnership requested the market value ofthe two parcels be reduced to $500,000, the true value or purchase price. Next, the minimum TIF Guarantee of$28,000 was for District Nos. 1 and 4 with expiration dates in 1991 and 1994, respectively. Lastly, the 1989 payment of $4,479.27 was an over-payment. Morrell offered a shortfall settlement of$I,498. 15 from Morrell with a release ofthe property and $450.64 collectable from John Plaisted. HRA members noted the two Agreements were recorded at the County and upon a title search necessary for bank financing the agreements would be discovered. Mark Ruff 1 . HRA MINUTES AUGUST 7, 1996 stated Assessment A!,JIeements don't go away, they run with the property. Wolfsteller informed members the original Assessment Agreement had a minimum value of$879,000 and the new agreement replaced the original Assessment Agreement with a reduced minimum value of $700,000 and an annual TI Guarantee of $28,000 which was necessary to meet the TIF obligation for retirement of the debt service. The $4,479.15 was not an over-payment, the County made an error in calculation ofthe 1989 TI which was included in the 1993 total. Brad Barger suggested pro-rating the $12,517.93 shortfall over five years. Mr. Morrell declined. Chairperson Larson thanked Morrell for his presentation and said the lIRA would discuss his offer of$1,498.15 with release of the property. . lIRA members agreed in principle that the property owner owed the shortfall. Members also recognized the owner had not received annual notices of the shortfall, the county miscalculated the increment, and the two parcels constituted two different TIF District expiration dates. HRA members acknowledged their disappointment of no response from Mr. Morrell from previous written notifications. Koropchak noted Attorney Bubul's three alternatives: File Claim with Plaisted, Small Claim Court, or split the difference. Attorney Hubul felt the best alternative was to split the difference as the lIRA did not have a strong case. Tom St. Hilaire made a motion to split the $12,517.93 TI shortfall between the HRA and Mr. Morrell. Upon payment in the amount of$6,258.96, the HRA agreed to release the two recorded Agreements between the HRA and John Plaisted. Recorded Document Nos. 461125 and 461126. The second one-half payment of$6,258.96 to be billed to John Plaisted. AI Larson seconded the motion and with no further discussion, the motion passed 4-0. A letter relating to the HRA's motion to be drafted and mailed to Morrell. 4. CONSIDERATION TO HEAR A PRESENT A TION OF A CONCEPTUAL PLAN FOR A POSSffiLE REDEVELOPMENT PROJECT. Brad Johnson, Lotus Realty Services, introduced himself as representing Barry Fluth, owner of the Monticello Mall. Mr. Johnson informed HRA commissioners he has done redevelopment projects in the communities of Chaska, Chanhassen, and Duluth and previously has met with Jeff O'Neill and Ollie Koropchak. His redevelopment projects are mixed-used projects consisting ofrestaurants, hotels, and housing. He sees himself as the doer, finding a solution for a community with a vision. . Mr. Johnson presentation to the HRA was a conceptual plan for possible redevelopment ofthe Monticello Mall. Stating, of the 70,000 sq ft facility approximately 35,000 sq ft is leased. Annual taxes generated are currently about $50,000 with the potential of $145,000 annually. The mall is underutilized, outdated, and competes with the clothing markets of S1. Cloud and Maple Grove. He presented three options: Big box user such as Best Buy or Pet-Mart, big box user with small annex retailers, or a grocery store. A 2 . HRA MINUTES AUGUST 7,1996 typical Cub store is about 55,000 sq ft. Some interest has been expressed by Super Value and Rainbow; however, in order for a second grocer to successfully compete the standard guide for the trade area population is approximately 25,000. Mr. Johnson's concept plan is the redevelopment of the existing mall and requests TIP assistance for demolition and relocation costs. The concept plan proposes the demolition ofthe existing mall and the construction of a new 52,000 sq ft grocery facility as the anchor with 20,000 sq ft of annex retail space. A grocery store has a higher value than a clothing store. Box users and hardware stores are generally visited once or twice a month, furniture stores are visited maybe once every three years, and grocery stores are visited one to three times a week. Grocery stores move retail centers. Big boxes require a 20 ft ceiling. Monticello's existing grocery store is the hub of the community states Johnson. The question arises, is there a need for two '! . Mr. Johnson sees the redevelopment of the mall as an opportunity for Monticello and a complement to the downtown /riverfront plan under study. The grocery store could become an anchor to the downtown with Walnut Street as the main entrance. TIP revenues could provide an opportunity to assist with redevelopment ofthe downtown/riverfront plan. With Monticello's existing grocer looking to expand in the near future and no available land to expand at the existing site, an opportunity exists to keep the hub of the community within the area boundary of the plan under study. Based on preliminary numbers, Mr. Johnson estimated annual taxes in the amount $150,000. A request of $300,000 to $400,000 pay-as-you-go TIP assistance for demolition and relocation costs was mentioned. With a 25-year Redevelopment District, a $60,000/$40,000 annual tax increment split was suggested. Time frame outlined was construction commencing March 1997 and occupancy October 1997. Mark Ruff, Publicorp, informed lIRA members that after running preliminary estimates it appears sufficient tax increment is generated to assist with redevelopment. Next, two tests must be confrrmed. First, does the project meet the legal test of substandard for creation ofa Redevelopment District'! If for example, it costs $4,000,000 to construct a new structure, the cost to fix up the existing structure must be more than 15% or $600,000. Fix up includes bringing up to code: Electrical, safety, handicap, sprinklers, etc. The findings are generally done by the local building official or contracted by the developer. Secondly, the HRA or community must determine that the project meets the public policy test for redevelopment. Satisfactory findings of both test would satisfY any future investigation by a State Auditor. . HRA members presented different viewpoints. St. Hilaire felt supporting competition or assisting retail should not be at the expense ofthe taxpayer. Another thought, if 3 . . . HRA MINUTES AUGUST 7, 1996 redevelopment can not occur solely with private dollars, would public dollars be best used to encourage outside competition or to encourage expansion and relocation of an existing business. Chairperson Larson felt the HRA should keep its options open. Others agreed the concept provided an opportunity to encourage or assist with implementation of a downtown/riverfront revitalization plan. The key question is: Does the concept meet the vision of the community or what the community wants? If so, Mark Ruff suggested the HRA request the developer to contract an architect to establish findings for satisfYing the substandard test. Hilaire asked "What is the remaining balance ofthe original $360,000 TIF District No. 1 -6 debt'?" HRA members agreed to keep their options open and requested Brad Johnson contract with a party to determine whether the proposed concept plan for redevelopment meets the substandard test. 5. CONSIDERA nON TO PREP ARE A ONE-YEAR PLAN AND FIVE-YEAR PLAN OF HRA GOALS AND ACTIVITIES. IDC Member Jay Morrell informed HRA members of the IDC's objective to lobby the local government entities to consider preserving funds to purchase lands for a future industrial park. With the understanding many local government agencies own industrial parks for control or management and due to the high-cost of development, the fmancial feasibility for private development of industrial parks has greatly been reduced. Consistent with the Monticello Comprehensive Plan, a future industrial park would lie in an area south of 1-94 at Orchard Road. Identified within the Comprehensive Plan for industrial use and within the OAA Study as agricultural, O'Neill felt no risk existed today with the county and the township since four residential proposals for the designated area did not receive support. O'Neill added another use ofthe HRA dollars may be for freeway interchange and utility development rather than land purchase. Mark Ruff responded to the question: How do HRA's fmance the purchase of industrial land? Various ways, one combination is 60% TIF Surplus and 40% levy. HRA members noted a high priority for the need to increase the city's revenues and job base. Looking at the capital improvements plan, surplus dollars are eligible to fund all items listed except City Hall. Members expressed the importance of supporting the Downtown/Riverfront Revitalization Plan. No goals or activities were defined. 6. CONSIDERATION TO APPROVE A SUBORDINATION AGREEMENT BETWEEN THE lIRA AND THE FIRST NATIONAL BANK OF MONTICELLO. As similar to other request that the Private Redevelopment Contract be subordinated to the lien on the mortgage, Al Larson made a motion to approve the Subordination 4 . . . HRA MINUTES AUGUST 7,1996 Agreement between the HRA and the First National Bank of Monticello. Seconded by Brad Barger and with no further discussion, the motion passed 4-0. 7. CONSIDERATION FOR PERMISSION TO ENTER THE HRA LOT LOCA TED AT III WEST BROADWAY. Tom St. Hilaire made a motion granting permission to the MCP-Promotions Committee to enter the 111 West Broadway parcel on August 10 for displaying garage sale items at the one-day community sale subject to the MCP's obtaining a one-day liability insurance policy. Steve Andrews seconded the motion and with no further discussion, the motion passed 3-0-1. Yeas: Hilaire, Andrews, and Barger. Nays: None. Abstention: Larson. HRA members declined the suggestion made by the Public Works Director to fence the Broadway sidewalk boundary with a split cedar rail to discourage driving through the lot. HRA members felt a fence would not discourage anyone. 8. OTHER BUSINESS: a) b) HRA members OK'd payment of monthly bills. 1996 Monticello Property Tax from the Minnesota Chamber of Commerce - Larson asked: What is the number of housing parcels in Monticello? Wolfsteller felt the County property tax levy of$15,886,49l was an error and the number represented the whole county not just for the City of Monticello. Without an invoice from Hoisington Koegler, the HRA elected not to take action for payment of services conducted by Maxfield Research or Hoisington. Without a formal or written request from the Steve Johnson to extend the HRA stairway easement, the HRA elected not to take any action. c) d) 9. ADJOURNMENT. The HRA meeting adjourned at 10:30 p.m. (J~ \<O\~~ Ollie Koropchak, Executive Director 5