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HRA Minutes 04-01-1998 . . . MINUTES MONTICELLO HOUSING AND REDEVELOPMENT AUTHORITY Wednesday, April!, 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 STAFF PRESENT: Rick Wolfsteller and Ollie Koropchak. GUESTS: Mike Cyr and Pat Benoit, Front Porch Associates. Paul Ederers, Allied Companies Steve Krenz, Midwest Graphics Rita Ulrich, MCP 1. Call to order. Chair Barger called the annual meeting of the BRA to order at 7:00 p.m. 2. Consideration to approve the February 4_ February 1 L and March 4_ 1998 lIRA minutes. Steve Andrews made a motion to approve the February 4, 1998 HRA minutes. Seconded by Dan Frie and with no corrections or additions, the minutes were approved as written. Damn Lahr made a motion to approve the February 11, 1998 HRA minutes. Seconded by Bob Murray and with no corrections or additions, the minutes were approved as written. Steve Andrews made a motion to approve the March 4, 1998 HRA minutes. Seconded by Darrin Lahr and with no corrections or additions, the minutes were approved as written. 3. Consideration of adding a~enda items. Koropchak added to items to the agenda: a) Subordination Agreement and b) Diversifoam Products. 4. Consideration to authorize establishment of a TIF District for a manufacturing project. Steve Krenz of Midwest Graphics, the proposed tenant of the 60,000 sq ft manufacturing facility, informed HRA of the pending new contracts and need for expansion. Immediate 1 . HRA MINUTES APRIL 1, 1998 lease of the total 60,000 sq ft by Midwest Graphics depends upon finalization of the new business contracts. The building may be leased in two phases of 30,000 sq ft each with total occupancy by Midwest Graphics in two years. The total sixty-thousand sq ft will be constructed initially. Krenz anticipates retaining his existing building to the south which currently employs 40-50 individuals (full-time). Krenz likes Monticello because of the local work force and the availability of affordable new housing for two-income families. In response to the request for the level of TIF assistance needed to make the project work? Ederers responded the numbers have not been defined; however, the assistance will pass through to the tenant. Again, Allied Companies will construct and lease the building to Midwest Graphics. The "but for" finding will be provided by the tenant. The project will create 37 new jobs with average wages between $8.00 to $12.00 over two years. . HRA members determined the proposed AlliedlMidwest Graphics project complies with items 1, 2, 3, 7, 8, and 9 of the Local TIP Policies. Having received the executed Pre-TIP Agreement and the $5,000 check, Steve Andrews made a motion to authorize establishment ofTIF District No. 1-23, an Economic District, for Allied Properties. Brad Barger seconded the motion. The HRA elected to contribute 50% of the 10% Local Match and requested the City Council at their April 13 meeting consider contributing the remaining 50%. Ifthe local match is made, the City is then exempt from the HACA Penalty of approximately 30% of the tax increment. With no further discussion, the motion passed unanimously. 2 5. Consideration to authorize establishment of a TIF District, a Housin" District. Mike Cyr of Front Porch informed commissioners as to the project background and its development stating initially they planned to construct 7 units of twinhomes on four vacant lots. The project grew to 13 units through the encouragement of city staff thereby creating a nice neighborhood for the city. The proposed project would have an internal private driveway system for accessibility to the rear garages. It was suggested Front Porch acquire the BN right of way and construct a collector pathway along the railroad, the city vacate 5 Street, and the HRA assist with acquisition of the house at the requested assistance amount of $60,000. The purchase agreement offer between Front Porch and the seller included waiving the relocation benefits. The proposed project area has no city utility lines along 5 Street causing an increase in the project costs. The asking price per unit is $129,000 and targeted for empty nesters. Cyr said he would submit a proforma tomorrow. . A TIP housing district is suggested as the project doesn't meet the findings for a redevelopment district. In a housing district the facilities are intended to be occupied by persons or families oflow and moderate income. The income levels for Wright County are . . . HRA MINUTES APRIL 1, 1998 in the Mpls/St. Paul MSA and for owner-occupied units at least 95% of the units must initially be purchased by persons ofless than or equal to $60,800 (annual gross income) for two persons or 115% if 3 or more persons. Comments ofHRA members: The project ties in nicely with Bauer's project along 4 Street. Does the HRA have dollars available to purchase the parcel? With the completion of Cub and the community center, the proposed project and area should see an increase in value making the project feasible with or without TIF assistance. Would like to see redevelopment of blighted areas. An assistance level of $60,000 results in 6 more tax payers and a total of 1.7 million dollars for the 13 units. The developer stated the 13 units is not doable without TIP assistance. Frie agreed with the concept and felt the project met the local policy for housing by encouraging infill in the area surrounding the CCD. Barger had a problem providing TIP assistance for housing projects with qualifYing income levels of $60,800 for two when the median family income level for Monticello is approximately $35,000 annually. Who would be the next residential developer for TIP assistance? Wally Croudon whose son owns the home proposed for acquisition informed commissioners of the removal to waive the relocation costs from the purchase agreement until such time the entitled relocation benefit costs were established. He continued stating six months ago they had looked into redevelopment of a near area and found the demolition and acquisition costs to exceed the asset of the project. Bob Murray made a motion to table any action until a project proforma was submitted and to call a special meeting. Dan Frie seconded the motion and with no further discussion, the motion failed. Yeas: Murray and Frie. Nays: Andrews, Lahr, and Barger. Darrin Lahr made a motion to deny authorization to establish TIF District No 1-24, a housing district, for Front Porch, Inc. Reason for denial: Lack ofHRA General Funds, unknown relocation costs, owner-occupied housing income levels outside local housing objectives, and a seven-unit project is doable without TIF assistance. Steve Andrews seconded the motion and with no further discussion, the motion passed. Yeas: Lahr, Andrews, and Barger. Nays: Murray. Abstention: Frie. All HRA commissioners were supportive of Front Porch and liked the project. 6. Consideration of information item only: Retail Market Evaluation Rita Ulrich, MCP Manager, informed commissioners as part of the revitalization plan the time has come for development of the retail shopping district. In addition to office space, what can Monticello support? A presentation was made by McComb Group, Inc. to the 3 . . . HRAMINUTES APRIL 1, 1998 MCP-ER based on a market evaluation completed for Newton, Iowa. The cost to prepare the study was estimated between $30,000-$40,000 and takes 3-4 months to complete. The MCP looks at this as a summer project and plans to solicit funding. A local government agencies may be requested to apply for a grant through the Central Minnesota Initiative Fund. Barger asked if the Hoisington Study did not include a market study? Rita responded they had hoped but it did not include: What kind of products? What do people shop for in St. Cloud? How will Cub change the market? Andrews felt the study could help the HRA and serve as a linkage for redevelopment. Barger felt the estimated $30,000 was high particularly when the HRA funded a $80,000 study. He suggested contacting a university. Lahr questioned "With the limited amount of rental space available in downtown or available land, where could we put retail?" Rita informed the commissioners she would be back in a month and this was meant as informational and to plant a seed. 7. Consideration to elect 1998 HRA officers and appoint committee representatives. HRA commissioners discussed their available time to volunteer and agreed to rotate the lIRA officers among commissioners suggesting the vice-chair move up to chair. Brad Barger made a motion nominating Steve Andrews as Chair and Bob Murray as Vice Chair for 1998. Darrin Lahr seconded the motion and with no other nominations from the floor, the motion passed unanimously. Darrin Lahr made a motion to elect Steve Andrews as Chair and Bob Murray as Vice Chair for 1998. Brad Barger seconded the motion and with no further discussion, the motion passed unanimously. Brad Barger made a motion to appoint Rick Wolfsteller as treasurer and Ollie Koropchak as secretary of the HRA for 1998. Bob Murray seconded the motion and with no further discussion, the motion passed unanimously. Bob Murray made a motion to appoint the following commissioners: Steve Andrews to MCP, Steve Andrews to Community Center Task Force, Brad Barger and Damn Lahr to Marketing Committee, and Bob Murray to Community Center Small Group. Steve Andrews seconded the motion and with no further discussion, the motion passed unanimously. 8. Consideration to review and accept the year-end financial report for the BRA General Fund and TIP Fund. HRA Treasurer Wolfsteller explained that TIP-Debt Service Fund is an accountability of 4 . . . HR.A MINUTES APRIL 1, ] 998 9. the bonds issued and the annual debt service, the revenues are transfers from the HRA Fund and the bond payment is made in February of each year. After the February 1, 1998, the December 31, 1997 cashflow balance of $297,000 will be reduced to about zero. The HR.A Fund Summary is an accountability of all TIP districts showing tax increment revenues and expenditures including both internal loans and transfer to the TIF-Debt Service Fund. The December 31, 1997 cashflow balance of $280,000 does not include the 1998 budget items totaling $200,000 plus the 1997 Industrial Reserve Fund of $75,000. In summary, the BRA is not cash flush. Bob Murray made a motion to accept the 1997 year-end financial report for the HRA General Fund and TIP Fund. Seconded by Brad Barger and with no further discussion, the motion passed unanimously. The commissioners elected not to forward the year-end reports to the City Council. Consideration to review and clarifY the values as to certified real estate or assessed values. Bob Murray submitted a copy of the certified real estate value and the assessor's estimated market value as of March 31, 1998 for TlF District No. 1-18. The reimbursement payment is scheduled to commence in August 1998. He noted the inconsistency and pointed out the $96,500 EMV ofthe one twinhome unit. Murray requested modification of the agreement to use the certified real estate value as the determining criteria rather than the assessed value. Brad Barger made a motion requesting city staff to contact the County Assessor for an explanation of the inconsistency of the assessed value. Steve Andrews seconded the motion and with no further discussion, the motion passed. Yeas: Barger, Andrews, Lahr, and Frie. Nays: None. Abstention: Murray. 10. Consideration to co-sponsor a iolf outin~ with the Chamber of Commerce. HRA members agreed and showed interest to co-sponsor the golf outing with the Chamber and to invite industrial site locators or developers to Monticello for a morning city tour and lunch prior to the 1 :00 p.m. golf outing. The lIRA plans to purchase x amount of tickets for a gratis invitation to developers, locators, and etc. Lahr views this as promoting goodwill and Frie thought it was a great idea. Steve Andrews made a motion appointing Commissioner Dan Frie as the BRA liaison to assist with coordination ofthe golf outing. Seconded by Brad Barger and with no further discussion, the motion passed unanimously. 11. Consideration for review and discussion of TIP Policies from the Ci~ of Savage. Darrin Lahr made a motion to table review and discussion of TIF Policies from the City of 5 . . . HRA l\1INUTES APRIL 1, 1998 Savage. Steve Andrews seconded the motion and with no discussion, the motion passed unanimously. 12. Consideration to authorize payment ofHRA monthly bills. Steve Andrews made a motion to authorize payment of the lIRA monthly bills. Seconded by Dan Frie and with no discussion, the motion passed unanimously. 13. Consideration of Executive Director's RtWort. The commissioners accepted the written report. 14. Consideration of committee reports: a) MCP - Steve Andrews infonned commissioners that the ER group is working on the probability of a marketing study and expressed the need for volunteers for tree planting, Saturday, April 25. b) Marketing Committee - Darrin Lahr informed commissioners that Don Smith, Dick Van Allen, Brad Barger, Lahr, and Koropchak met once. The group reviewed the plans of the BRA and IDC for duplication. Smith will summary for comments by the group. c) Community Center Small Group - User groups are being interviewed and fine tuning of financial numbers is forthcoming. 15. Other Business: a) Subordination Agreement for BBF Properties Inc. - Koropchak reiterated Attorney Bubul concerns with the Subordination Agreement which states the HRA warrants the building and site plans have been approved, the lIRA has no right to terminate the contract, and the HRA can not modifY the contract without the consent of the lender. Brad Barger made a motion granting Attorney Bubul power of attorney to finalize the agreement representing the interest of the lIRA. Darrin Lahr seconded the motion and with no further discussion, the motion passed unanimously. b) Diversiform Products ~ lIRA commissioners were asked of their interest to use TIP assistance for the manufacturer of foam products. Assuming the construction of a 100,000 sq it tip-up panel manufacturing facility, it is estimated the total NPV tax increment over 9 years is $600,000. The company request free land. Dan Frie made a motion suggesting a consistent use of tax increment, 50% of the increment. Assistance subject to exterior material, wage levels, more information, and a tour of the facility by BRA members. Brad Barger seconded the motion and with no further discussion, the motion passed unanimously. 6 . . . HRA MINUTES APRIL 1, 1998 16. Adjournment. The BRA meeting adjourned at 11:00 p.m. HRA~~ ~Qlli-.u ~(J\~~ Executive Director 7