HRA Minutes 12-03-1997
--
.
.
MINUTES
MONTICELLO HOUSING AND REDEVELOPMENT AUTHORITY
Wednesday, December 3,1997 -7:00 p.m.
City Hall
MEMBERS PRESENT:
Vice Chair Steve Andrews, Damn Lahr, Bob Murray, and Dan
Frie.
MEMBERS ABSENT:
Chair Brad Barger.
COUNCIL LIAISON PRESENT: Roger Carlson.
STAFF PRESENT: Rick Wolfsteller and Ollie Koropchak.
GUESTS:
Mayor Bill Fair
Brad Johnson, Lotus Realty Services
Barry Fluth, Monticello Mall
Mark Ruff, Ehlers & Associates
Steve Johnson, Monticello FordlMercury
Ken Maus, AI Larson, Dan Goman, and David Bell.
1.
Call to Order.
Vice Chair Andrews called the HRA meeting to order at 7:00 p.m.
2. Consideration to approve the November S, 1997 lIRA minutes.
Dan Frie asked if the motion by Lahr on page 3., agenda item 4., was recorded correctly
or was the motion to go out for RFPs to include or target affordable housing
development. Other members felt the minutes as written, correctly recorded the motion.
Lahr requested a correction to the minutes on page 3, agenda item 5., third line from the
bottom. Correction to read "The proposed tenant would like the entire TIP monies." Dan
Frie made a motion to approve the November 5, 1997 HRA minutes with the above stated
correction. Bob Murray seconded the motion and with no further corrections or
additions, the amended minutes were approved.
3. Consideration of adding items to the a~enda.
No items were added to the agenda.
-
.
.
.
HRA MINUTES
DECEMBER 3, 1997
4. Consideration to hear a second proposal for development of affordable housing utilizing
tax credits.
Koropchak reported Chuck Risenberg of Community Capital, a development organization,
was unable to secure options on parcels which were suggested by city staff as the best use
for development of affordable housing. Currently, the developer is exploring other site
options. Mr. Risenberg requested their presentation be tabled to the January HRA
meeting. Bob Murray made a motion to table the presentation by Community Capital for
development of affordable housing utilizing tax credits until the January 7 meeting of the
HRA. Darrin Lahr seconded the motion and with no further discussion, the motion passed
unanimously.
5.
Consideration of a presentation for redevelopment of the Monticello Mall and request for
TIF assistance.
Brad Johnson representing Monticello Mall owners Barry and Barbara Fluth, informed
lIRA members that the owners. plan to demolish the existing Monticello Mall structure
and construct a new facility to lease to Cub Foods, Inc. HRA members received a written
request for $600,000 ofTIF assistance for costs associated with demolition, relocation of
tenants, and site improvements. Redevelopment of the mall is consistent with the
downtown/riverfront revitalization plan, will encourage other spin-off development
opportunities, and will increase the market value of the City of Monticello continued
Johnson. If the proposed tenant, Cub Foods, does not locate in Monticello they will
locate in another community. Cub's plan is to circle the twin cities, one such proposal
includes development in Buffalo. The proposed Monticello grocery store is 65,000 sq ft
and will create 150 jobs. Fifty ofthe 150 jobs will be full-time with wages ranging
between $8.00 to $12.00 per hour plus benefits. The proposed tenant supports a
community through community sponsorships. Currently, negotiations between Fluth and
Cub Foods and between Fluth and the current mall tenants is underway. The proposed
tenant wishes to occupy the facility in fall of 1998; therefore, construction is anticipated to
begin in March 1998. The proposed grocery store will be a corporate store.
The proposed project includes 5,000 sq ft of other retail space in addition to the 65,000 sq
ft. of grocery space. The proposed grocery store will be a full Cub operation and includes
a bank, pharmacy, etc. Mr. Johnson reported Cub controls the cost or rent expense and
felt the $600,000 TIP assistance or one-half the TIP was a reasonable request from the
owner. He expects the preliminary lease agreement with Cub to be completed December
19. It is anticipated that two existing tenants will occupy the 5,000 sq ft and the other
tenants will relocate in the downtown area resulting in no loss of businesses.
2
.
.
.
lIRA MINUTES
DECEMBER 3, 1997
BRA members asked if the requested $600,000 was a level playing-field and how the
amount of the request was determined. Mark Rutfresponded that Koropchak checked
with the Wright County Assessor who suggested a $42.86 per sq ft value by using the
comparative approach. The existing Maus structure is valued at $42.09 per sq ft and the
existing mall is valued a $11.48 per sq ft. Mr. Johnson assumed the income approach as
used in Elk River and other metro areas using $60.00 per sq ft resulting in approximately
50% of the tax increment or $600,000 of assistance over time. Mark suggested an
Assessment Agreement as one-way to make this work assuming the County Assessor
would sign-off at $60.00 per sq ft. Brad Johnson informed lIRA members the purpose of
redevelopment is to increase property values and felt if the original value was low perhaps
the HRA would not maximize the full tax increment potential. The life duration of the
district is another option for the HRA to consider. Mark suggested the details of the TIP
assistance be determined after the HRA considers the request for TIP assistance and
authorizes the lIRA consultants to further explore the TIF options.
Koropchak provided members with a copy of the level of TIF assistance approved for
similar projects: Lincoln Properties (K-Mart as tenant), Raindance Properties (Maus
Foods as tenant), and Demeules Family Limited Partnership (Standard Iron as tenant).
Rutfprovided members with TIP Cash Flows using both a $42.86 and $60 per sq ft
market value.
BRA members analyzed and evaluated the proposed mall redevelopment project against
the HRA-TIF Policies. The proposed project met consideration nos. 1,2,3,5, 7 (50/50
split), and 8 (Walnut & West 7 Street) of the policies. Nos. 4 and 6 were not applicable.
HRA members questioned Mr. Johnson relating to Cub Foods involvement in a
community and requested more information. No.9 being an important issue to the HRA,
Mr. Johnson suggested a Super Value representative be present at the next lIRA meeting;
however, he noted the TIF assistance request is from the developer/owner of the mall,
Barry Fluth, and not from the proposed tenant, Cub Foods.
Koropchak requested the developer/owner provide the lIRA with written evidence
satisfying the "but for" test, an updated profonna, a line-item request ofthe $600,000, and
a list of the tenants with relocation destinations.
Lahr expressed interest in redevelopment of the south anchor; however, he was not
interested in the HRA buying the anchor. He asked if the developer could show the cost
to develop on raw land compared to the cost for redevelopment of the mall. Johnson
indicated because the proposed project has only one or two small tenants, the profit
margin to the owner is less.
3
.
.
.
BRA MINUfES
DECEMBER 3, 1997
HRA members recognized the proposed tenant, Cub Foods, Inc., has other options.
Monticello options: The mall site or sites south of the interstate with the potential of othef
strip mall tenants. Or other communities: Buffalo, Albertville, or Rogers. Members
agreed the proposed redevelopment project and site was consistent with the TIP
Redevelopment District Plan, City Comprehensive Plan, and MCP Revitalization Plan and
provides opportunity for other spin-off business. Johnson indicated the proposed tenant
is interested in Monticello because of the growth and transportation system. Cub looks at
the trade area not the community size. Vice Chair Andrews asked if anyone in the
audience had questions or would like to make comments. Being none, the commissioners
proceeded.
Because the proposed mall fedevelopment project and site is consistent with the above
named Plans, the TIF Policies, increases the tax base, and eliminates substandard/blighted
property; Bob Murray made a motion authorizing Ehlers & Associates and Kennedy &
Graven to further explore the request for TIF assistance and called for a special meeting of
the lIRA on December 10, 1997, 7:00 p.rn. The motion was subject to receiving a cashier
check in the amount of$5,OOO from the developer and a list of the existing mall tenants
with proposed relocation destinations. Dan Frie seconded the motion and with no further
discussion, the motion passed unanimously.
6.
Considefation to appfove the Certificate of Completion for Lake Tool.
With the completion of the 9,000 sq ft manufacturing/office facility (minimum
improvements), Darrin Lahr made a motion to approve the Certificate of Completion for
Lake Tool, Inc. (TJ. Martin, Inc./TIF District No. 1-23). Bob Murray seconded the
motion and with no :further discussion, the motion passed IJnanimously.
7. Consideration to review the appraisal fOf Outlot A. Country Club Manor. to detennine
disposition price.
Rod Dragsted, a local appraiser, appraised the 20-acre parcel at $204,000 or $10,200 per
acre. Dan Frie thought the comparatives were good; however, he noted the discrepancy
between the 20-acre parcel of the appraisal and the 16-acre parcel reference in the RFP for
development of moderate-high density residential housing. Bob Murray made a motion to
return the appraisal to the appraiser for review and correction. The corrected appraisal
available for HRA consideration at the special meeting of December 10 and to withhold
payment of invoice no. 3103. Steve Andrews seconded the motion and with no further
discussion, the motion passed unanimously.
4
.
.
.
HRA MINUTES
DECEMBER 3, 1997
8. Consideration to accept the Purchase Option between the HRA and Carlsons. 225 Front
Street.
With no response from the sellers, Richard and Marian Carlson; Steve Andrews made a
motion to table any action until the January 7, 1998 HRA meeting. It was noted the use
of the garage at 220 Front Street should coincide with the life duration of the 225 Front
Street purchase option. The use of the garage means in its "as is" condition. Darrin Lahr
seconded the motion and with no further discussion, the motion passed unanimously.
9. Consideration to accept the Purchase Agreement between the BRA and Hawkins. 225
West River Street.
With no response from the seller, Irwin Hawkins; Steve Andrews made a motion to table
any action until the January 7, 1998 HRA meeting. Darrin Lahr seconded the motion and
with no :further discussion, the motion passed unanimously.
10.
Consideration of a presentation on the potential redevelopment of the southwest corridor
and the realignment of West Oakwood Drive
Steve Johnson representing the Monticello FordlMercury dealership informed HRA
members that the car industry today is very focused and with the growth ofthe local
dealership comes the need to expand on or near the present site. He continued with a brief
history of the dealership stating in 1977, Larry Flake relocated the dealership from its
West Broadway location. Two years ago, Peterson planned to remodel and expand the
facility from 15,000 to 35,000 sq ft as the dealership tripled its sales of new cars out-
selling three metropolitan dealers. However, the current site is a little less than 5 acres
and a 10-acre site is ideal for expansion. The dealership has learned it will lose its direct
access via West Oakwood Drive and Highway 25 with the new 1-94 easterly exist and
enter ramps. The dealership's new access is proposed via the alignment of proposed West
Chelsea Road and Highway 25 and then right on Sandberg Road. Lastly, the dealership
was hit with two million dollars of damage to vehicles and property with the July 1997
storm.
The dealership needs the property to the south for expansion and accessibility. The
dealership is attempting to negotiate a land sale with the owners of the Hart Clinic
building; however, the Clinic appears not interested in a quick turn-around time continued
Johnson. An appraisal of the property has been obtained. The State is negotiating with
the dealership via an appraisal of the value of the closed access. Johnson requested the
HRA serve as a facilitator to assist in retaining the dealership at its present location
perhaps to facilitate the procurement of the land or utilizing its power of condemnation.
5
.
.
.
HRA MINUTES
DECEMBER 3, 1997
The dealership can grow or die continued Johnson. To grow the company options are to
expand at the present site or relocate and expand elsewhere in Monticello or outside
Monticello.
HRA members noted the financial standings of the dealership: Increased sales, insurance
settlement for storm damage, and State settlement for closed access. Mark Ruff informed
Johnson that in order for an HRA to condemn property there needs to be a public purpose
or to create a Redevelopment District the property must qualify as blighted. Neither
option fit nor qualified. HRA members suggested perhaps if another site in Monticello
was found, an exchange of properties could occur. Mayor Fair suggested the EDA's
revolving loan fund as another option.
11. Consideration to review for discussion the first draft of an action plan endorsing the
Council Vision and Policies.
Commissioners Darrin Lahr and Bob Murray informed the other commissioners that they
and Koropchak met a couple oftimes to draft the enclosed action plan which supports the
vision and policies of the Council. The plan as presented is not in detailed form, this was
the intent of the sub-group. In addition to the $75,000 matching fund for future industrial
land, the sub-group requested of the City Budget another $30,000 for marketing and
$35,000 to assist with land acquisition associated with the downtown revitalization plan.
Final budget approval by the City Council is anticipated early December. Darrin Lahr
made a motion to accept the Economic Development Action Plan as written and the
amount ofthe budget request. Steve Andrews seconded the motion and with no further
discussion, the motion passed unanimously. Commissioners noted the plan includes
partnering with the EDA and IDe.
Subject to approval of the City Council for marketing funds in the amount of $30,000,
Steve Andrews made a motion authorizing Koropchak select a marketing team for
development of a marketing program for the City. Seconded by Darrin Lahr and with no
further discussion, the motion passed l1fllmimously. Andrews expressed an interest in
becoming a team member.
In the absence of Chair Barger whom IDC Chair Ken Maus contacted relating to establishing a date for a joint meeting between the IDe and BRA, members agreed to
table any action until the special meeting of December 10, 1997 or the regular meeting of
January 7, 1998.
6
.
.
.
BRA MINUTES
DECEMBER 3, 1997
12. Consideration to authorize payment of the BRA monthly bills.
Koropchak noted the Community Center Financing bill is an expenditure of the City. Bob
Murray made a motion to approve the HRA monthly bills. Seconded by Steve Andrews
and with no discussion, the motion passed unanimously.
13. Consideration of Executive Director's report.
The commissioners accepted the Director's report and requested Andrews give a report
on the tour of community centers at the next HRA meeting.
14. Other Business.
a) Special meeting of December 10, 1997, 7:00 p.m. was called.
b) 401 Front Street - Although the property has river frontage and the price was lowed,
the commissioners agreed the timing was not right for purchase of the parcel because two
parcels with structures lie between the 401 Front Street parcel and targeted Blocks 54 and
64 and with the lack of excessive HRA funds and no foreseeable project for the parcel.
HRA members agreed they were not interested at this time.
15.
Adiournment.
The HRA meeting adjourned at 9:50 p.m.
CJ~ \(~~SJ~
Ollie Koropchak:, Execunve Director
7