HRA Minutes 02-04-1998
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MINUTES
MONTICELLO HOUSING AND REDEVELOPMENT AUTHORITY
Wednesday, February 4,1998.7:00 p.m.
City Hall
MEMBERS PRESENT:
Chair Brad Barger, Vice Chair Steve Andrews, Darrin Lahr, Bob
Murray, and Dan Frie.
COUNCIL LIAISON PRESENT: Brian Stumpf
ST AFF PRESENT:
Rick Wolfsteller, Jeff O'Neill, and Ollie Koropchak.
GUESTS:
Barry Fluth, BBF, Inc.
Brad Johnson, Lotus Realty Services
Dan Greensweig, HRA Attorney
David Bell, Freedom Development
1. Call to Order.
Chair Barger called the HRA meeting to order at 7:00 p.m.
2.
Consideration to approve the January 7 and January 28. 1998 lIRA minutes.
Bob Murray made a motion to approve the January 28, 1998 HRA minutes. Dan Frie
seconded the motion and with no corrections or additions, the minutes were approved as
written.
The January 7, 1998 HRA minutes were tabled.
3. Consideration of addin~ agenda items.
Koropchak requested two items be added to the agenda under No. 9 Other Business.
Consideration to approve the Certificate of Completion for Fay-Mar expansion and
consideration of interest to hire a lobbyist to amend the Green Acres clause.
4. Consideration to approve the Private Redevelopment Contract between the lIRA and
REF. Inc.
The Private Redevelopment Contract was revised as followed:
1. Redeveloper must obtain agreements with each tenant agreeing to agreed-upon
payments of which the tenant is entitled.
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lIRA MINUTES
FEBRUARY 4, 1998
2. Relocation consultant must review payments to identifY the amounts constitute true
relocation costs not acquisition ofleasehold interest. Only relocation costs subject to tax
increment reimbursement.
3. Because some relocation costs paid to tenants will not be reimbursed, site improvement
costs will be eligible items. The redeveloper will receive up to $500,000 for relocation,
demolition, administrative, and site improvement costs.
4. The redeveloper will indemnifY the lIRA for any claim relating to relocation benefits. If
the redeveloper is required to make such payment within two years of date of contract, the
HRA will issue an additional tax increment note in the amount of 50% of the payment, a
maximum of $50,000.
5. The HRA will received the first 10% ofthe tax increment plus $45,000 and the
redeveloper will receive the remaining tax increment through February, 2020.
Attorney Dan Greensweig highlighted the indemnification clause and tenant waivers which
were revisions resulting from the motion approved by lIRA on January 7, 1998,
addressing the liability concerns associated with relocation costs versus buyouts.
Additionally, the developer requested a letter of intent from the HRA stating it would
have used its powers of eminent domain to acquire the Skillet Restaurant at 206 West 7
Street had the property owner not entered into an agreement to sell the property. F or the
purpose of the IRS, this allows the owner of the Skillet Restaurant, three years to reinvest
in a new restaurant.
With a minor correction to the name of a title of an article within the contract, Bob
Murray made a motion to approve the Contract for Private Redevelopment by and among
the BRA and BBF, Inc. with the said above revisions. Dan Frie seconded the motion and
with no further discussion, the motion passed unanimously.
Dan Frie made a motion stating had the property owner not entered into an agreement to
sell the property known as the Skillet Restaurant, 206 West 7 Street, the HRA would have
used its power of eminent domain to acquire the property. Bob Murray seconded the
motion and with no further discussion, the motion passed unanimously.
5.
Consideration to approve level of TIP assistance for tax credit application by Freedom
Development Consultants.
David Bell, Freedom Development Consultants, stated his increased purchase offer from
$151,675 to $300,000 was competitive in nature. Submitting a feasibility report to lIRA
members, Mr. Bell affirmed the development ofa mix of36 affordable-rental units (2 and
3 bedroom) utilizing tax credits and 42 market-rate townhouse units that would be for sale
to private owners. The proposed development for Outlot A, Country Club Manor. The
feasibility report used a classification rate of2.9% rather than the 1.0% typically used for
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HRA MINUTES
FEBRUARY 4, 1998
affordable housing projects, this results in generating a greater amount of taxes and tax
increment. Affordable rents would range between $495 and $565 for families oflow to
moderate income levels.
Mr. Bell continued by requesting TIF assistance in the amount of$331,561 NPVor
$597,700 at 9% over 13.9 years (20.3% of the project costs) maximizing the 10 points
awarded for local participation. Flood-stricken areas will receive 35 points; however, Mr.
Bell informed commissioners he plans to develop Outlot A, even without the award of tax
credits.
Koropchak submitted a comparison of the December proposal and the February request
from Mr. Bell noting the purchase offer to the City increased from $151,675 to $300,000.
In the December proposal, storm sewer charge, 7 Street sidewalk installation, and city
park land acquisition were improvements identified for TIF assistance. Utilizing the city
engineer, WSB, the improvement costs were estimated to be approximately $87,500.
Ehler's TIF cashflow using a 1.0% classification rate estimates a net tax increment of
$111,743 NPVor $228,800 over 14 years at 9%. Compare this with Mr. Bell's request of
today for $331,561 NPV of TIF assistance. The improvements now identified for TIF
assistance are site utilities, curb, landscaping, and additional fill and berm plus land
acquisition. Ehler's TIP cashflow using a 2.9% classification rate estimates a net tax
increment of $324,055 NPV or $667,720 over 14 years at 9%. Typically, the HRA pay-
as-you-go notes have a 7.5% interest rate rather than the requested 9% rate. Mark Ruff
felt the requested 9% was high and inconsistent with HRA standards.
Brad Barger made a motion to approve TIF assistance in the amount of$331,561 NPV
for the tax credit application of Freedom Development Consultants. Proposed
development of 36 low and moderate-income level rental units (2 and 3 bedroom) on a
portion of Outlot A, Country Club Manor. The motion was seconded by Steve Andrews.
No interest rate or length of term was determined by the lIRA. With no further
discussion, the motion passed unanimously. The City Council will consider adoption of a
resolution supporting tax credit application for the 36-unit townhouse development at
their regular meeting of February 9, 1998.
Upon Mr. Bell's request, Steve Andrews made a motion authorizing the Executive
Director to draft a letter ofHRA support for development of the low and moderate
income-level rental unit project. Bob Murray seconded the motion and with no
discussion, the motion passed unanimously.
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HRA NIINUTES
FEBRUARY 4, 1998
b. Consideration to hear direction taken by the small group Ci1Y/HRA meeting and
consideration of HRA action if necessary.
Jeff O'Neill reported on the small group meeting of 3:30 p.m., noting the group has met
twice with discussion centering on the task force recommendation to include water in the
facility. The group focus has been on project costs and location; however, no project or
program cost cuts have been proposed. It was suggested that staff prepare financing
options to study including lease revenue and GO Bonds and lease revenue and GO with
Liquor Funds and other sources for the next small group meeting of February 9, 5:00 p.m.
Perhaps the HRA could review the small group recommendation prior to the joint
IDC/HRA meeting of February 11. Earlier, a target date of February 9 or 23 was
determined as the date to finalize the design and financing of the community center in
order to keep the project on schedule.
7. Consideration I4 authogpayment of HRA monthly bill
Bob Murray made a motion authorizing payment of the HRA bills with the exception of
the armory invoice. Seconded by Steve Andrews and with no discussion, the motion
passed unanimously.
8. Consideration of the Executive Director's report
Commissioners accepted the report without questions or comments.
9. Other Business.
a) Consideration to approve the Certificate of Completion for the Fay -Mar expansion -
With issuance of the certificate of occupancy by the Building Department for the
expansion of Fay -Mar, Brad Barger made a motion to approve the Certificate of
Completion for the Second Amended and Restated Contract for Private Redevelopment
between the HRA and Ron Musich, Dan Frie seconded the motion and with no
discussion, the motion passed unanimously. The expansion consisted of 20,000 sq ft
manufacturing space and the creation of 20 new jobs at $8.50 ph within two years from
issuance of the Certificate of Completion.
b) Consideration of interest to hire a lobbyist to amend the Green Acres clause -
Koropchak informed HRA members that Attorney Bubul contacted her relating to a City
of Cottage Grove bill before legislators to amend the Green Acres clause to include
warehousing and distribution. Knowing Monticello's issue with Green Acres (at least
85% of a facility must be for manufacturing) as it relates to the proposed Midwest Graphic
expansion, Bubul asked if Monticello would like to co-sponsor the bill. Estimated cost for
lobbyist $3,000, timing is critical. Perhaps the land owner of the Monticello Commerce
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HRA MINUTES
FEBRUARY 4, 1998
Center would assume the payment or a portion of the payment. HRA members appeared
interested; however, they authorized the Executive Director to check with Charlie Pfeffer.
10. Adjournment.
Brad Barger made a motion to adjourn the lIRA meeting. Steve Andrews seconded the
motion and with no further business, the meeting adjourned at 8:50 p.m.
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Executive Director
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