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HRA Minutes 09-08-1999 , , . MINUTES MONTICELLO HOUSING AND REDEVELOPMENT AUTHORITY Wednesday, September 8, 1999 - 7:00 p.m. City Hall Members Present: Dan Frie, Brad Barger and Darrin Lahr Absent: Chair Bob Murray, Steve Andrews and Brian Stumpf S tafl Present: Executive Director Ollie Koropchak, Rick Wolfsteller and Lori Kraemer 1. Call to Order. Acting Chair Darrin Lahr called the HRA meeting to order at 7: 15 p.m. 2. Consideration to approve the August 11, 1999 HRA minutes. A MOTION WAS MADE BY DAN FRIE AND SECONDED BY BRAD BARGER TO APPROVE THE MINUTES, AS WRITTEN, OF THE HRA MEETING ON AUGUST I 1, 1999. 3. Consideration of adding agenda items. None 4. Consent Agenda: A. Consideration to approve amending the Amended Bylaws of the {-lousing and Redevelopment Authority in and for the City of Monticello, Minnesota. It was requested at the previous meeting to consider amending the bylaws of the HRA, Article VI Meetings, Section 1., Annual Meeting. and Section 2., Regular Meeting. for consideration to amend the annual and regular meeting dates from the second Wednesday of April and second Wednesday of each month to the first Wednesday of April and first Wednesday of each month, respectively. It was noted that consideration to revert back to the first Wednesday of each month is to accommodate the schedules of the majority of the commissioners. As the commissioners in attendance at the August HRA meeting were not adverse to the change, this items appears on the consent agenda and upon approval, the next BRA meeting will be held October 6, 1999. , , . A MOTION WAS MADE BY BRAD BARGER AND SECONDED BY DAN fRIE TO APPROVE AMENDING THE AMENDED I3YLA WS OF THE HRA, ARTICLE VI MEETINGS, SECT'ION I., ANNUAL MEETING. AND SECTION 2., REGULAR MEETING. TO READ: THE FIRST WEDNESDA Y OF APRIL AND THE FIRST WEDNESDA Y OF EACH MONTH, RESPECTIVEL Y. 5. Consideration of items removed from the consent agenda for discussion. None 6. Public Hearing and consideration to adopt the Business Subsidy Criteria for the Housing and Redevelopment Authority in and f()[ the City of Monticello, Minnesota. Darrin Lahr opened the public hearing. No audience was present. Public hearing was closed. Ollie Koropchak provided a rcvision of the draft copy ofthc Business Subsidy Criteria that was reviewed by the commissioners at the August meeting. The revised copy includes the changes made by the commissioners and/or consultants. A MOTION WAS MADE BY DAN FRIE AND SECONDED BY DARRIN LAHR TO ADOPT THE BUSINESS SUBSIDY CRITERIA FOR THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF MONTICELLO, MINNESOTA. 7. Consideration to hear Council input relating to acquisition of the property located at 1 Locust Street and authorization to solicit an appraisal. Tim Holm, property owner of 1 Locust Street was present. Ollie Koropchak provided information regarding the property at 1 Locust Street and the current owner's interest in putting this property on the market. Koropchak was contacted by the owners previously to see if the HRA was interested in purchasing this property. It was also stated that there was a possible party interested in renting this property until it is sold. At the Council meeting of August 23, information relating to the owner's interest to sell the property was submitted to the members. As an agenda item, the Council received the comments and questions from the North Anchor public information meeting and tabled for six months any action to solicit a request for proposal for a mixed housing and commercial development in the designated "purple" area. They appeared to agree and recognized the area encompasses substandard parcels, safety concerns and an unattractive Image. With the initial goal of the Council not to increase the levy for Budget Year 2000, no 2 . , . consideration was given to the North Anchor's request for a $200,000 annual appropriation. The Council presently is looking at a budget proposal which includes the capital improvement program items and not capital outlay requests. Legal description of the property is the Northerly 99 feet of Lots 6 and 7, Block 55. EMV for taxes payable 1999 - $61,400 land and building. Assessments of $332. EMV for taxes payable 1995 - $57,200 land and building ($39,200 bldg., $18,000 land). Certificate of Real Estate Value - April 27, 1992 - $40,500. 1 1;; story house, fireplace, 1,306 sq. ft. - Garage 360 sq. ft. - Site 13,068 sq. ft. Ollie explained to the property owner that it has been the past practice of the liRA to authorize an appraisal, prior to negotiating a purchase price. If the HRA is interested in proceeding, the recommendation is authorize an appraisal and suggest an appraiser. Several of the council members suggested the HRA go ahead with securing an appraisal. Ifthe council was willing to help fund this, the HRA members are interested in pursuing. The members asked if there had been an appraisal of the property and the owner stated there had not been one. The members asked what is the chance that there will be others available in this block. Rick Wolfsteller stated that the question of the council was that if this was approved they would look into funding this, but without an amount of money in mind they cannot make a decision. Ollie asked the owner ifhe had any questions and if they did not sell this property to the HRA, was there another interested party which he stated there was. Ollie stated that state law directs that HRA cannot share the information from the appraisal until negotiations. The members asked ifthe house would stay on the property or would it be torn down. This is an option as well as the house could be sold and moved otTthe property. In the event of an appraisal, Ollie would ask that an I IRA member and possibly the Building Otlicial to go through the house. Ollie asked for some names of appraisers to contact. This will be on the HRA agenda in October. A MOTION WAS MADE BY DARRIN LAHR AND SECONDED BY DAN FRIE TO AUTHORIZE AN APPRAISAL FOR THE PROPERTY LOCATED AT 1 LOCUST STREET'. Motion carried. 8. Consideration of a request by Harold Jesh ofHRA's interest to hear a second presentation for TIP assistance for a market rate housing proiect. Ollie Koropchak stated that Mr. Jesh had asked her to get direction from the HRA members of their interest to hear a second presentation. Mr. Jesh appeared before the HRA on June 9, 1999, and asked the HRA of their interest to provide TIP assistance for an upper-scale 18 to 24 unit market rate rental complex. He requested 15 years of the 90% available tax increment with a 20/50 criteria. Mr. Jesh stated the project would not 3 , , . proceed without TIP assistance but submitted no data to back his statement. Additionally, he had not completed a comparison between his projected rents and the existing market-rate rents. The HRA made a motion to table any action as project is premature to gage interest to provide TIF assistance, and requested direction from the City Council relative to the use of TIF assistance for market rate housing. The Council addressed the request of the liRA for direction and directed the HRA conduct a Housing Study to better understand the housing needs of the City of Monticello for TIF use and City planning. Copies of three Housing Studies from Brooklyn Center are on hand with the $20,000 request for funding the housing study still pending in the City Budget 2000 process. Also, the Executive Director was to check with Big Lake and Buffalo for sample housing studies. Mr. Jesh has called several times and still appcars interested in a housing project in Monticello. He stated he has run numbers indicating a cashflow deficit satisfying the "but for" test. Although informed of the direction to conduct a housing study and the open-door policy to appear before the BRA, Mr. Jesh requestcd to seek the HRA's interest to hear a second presentation at the October meeting. The members agreed that market rate housing is not truly market rate if a developer receives TIF assistance. They still felt this is premature until a housing study is done. A MOTION WAS MADE BY BRAD BARGER AND SECONDED BY DARRIN LAHR OF NO TNTEREST TO HEAR PRESENTATIONS REQUESTING TIF ASSISTANCE FOR HOUSING PROJECTS UNTIL COMPLETION OF THE HOUSING STUDY. Motion carried. 9. Consideration of an update relating to amending the Private Redevelopment Contract between lA. C. Development, LLC and the HRA and consideration of action if necessarv. Ollie Koropchak provided the report noting a copy of the first amendment to the Contract for Private Redevelopment between J.A.c. Development LLC and the HRA was submitted to lA.C. on August 12, along with the Assessment Agreement. Signatures from the HRA, City, and County Assessor have been secured. Upon lA.C. receiving a copy of the amendment, they had two concerns: Tax liability for received up-front monies and liability relative to a default of the wage and job goals. It appears lA.C. is willing to assign the First Amendment to the Contract from lA.C. to Midwest Graphics and Response Systems, Inc. and to assign the right to Midwest Graphics to receive the $181,000 if lA.C. has no liability upon a default by Midwest Graphics. Midwest Graphics would be responsible for paying back this money if they do not fulfill their contract. Ollie stated she did not know how strong, financially, Midwest is right now. Members would like Midwest Graphics to provide a financial statement to be 4 . , . assured that thc company is financially capable. Income and balance sheets for the last threc ycars might bc sufficicnt to show financial strength. lA.C., as owner of the property and by the statutes, is responsi blc for the property taxes. A new assignment will include an Indemnification Clause stating Midwest Graphics will reimburse lA.C. for any costs associated by a property tax default. Evidence of site improvement costs paid by lA.C. has been satisfied. Yet to be received is a copy of the executed Assignment from Allied Companies to lA.C. and from Steve Krenz evidence adequately satisfactory to the HRA vcrifying Midwest Graphics ability to finance the approximate $400,000 relocation move. A MOTION WAS MADE BY DARRIN LAHR AND SECONDED BY BRAD BARGER TO APPROVE RELEASING lA.C. DEVELOPMENT LLC FROM THE RESPONSIBILITY OF THE JOB AND WAGE COVENANTS SUBJECT TO RECEIVING INCOME AND BALANCE SI.IEETS OR A LETTER FROM FINANCIAL LENDER AND EXPLANATION OF LOWER WAGES INDICATING EVIDENCE '1'0 FINANCE THE MOVE. Motion carried. 10. Consideration to authorize pavment of monthly BRA bills. A MOTION WAS MADE BY DAN FRIE AND SECONDED BY BRAD BARGER TO AUTHORIZE PAYMENT OF THE MONTHL Y HRA BILLS. Motion carried. 11. Consideration of Executive Director's Report. Ollie Koropchak provided the report a) Twin City Die Casting - Twin City Die Casting has committed to Monticello. However, the company may proceed with building a 20,000 sq. ft. building initially with a phased progression to the max of 80,000 sq. ft. Therefore, the funding application has not proceeded until a final decision is made. It is Jay's desire to start with 40,000 sq. ft. The company has a purchase agreement with Charlie Pfeffer which is being reviewed by Twin Cities' attorney. Jay Eller and general contractor Jack Girard met with Jeff O'Neill, Fred Patch, and Bret Weiss last week. b) The EDA made a motion to support the HRA's request for $75,000 for industrial land acquisition and the North Anchor's request for an annual $200,000 appropriation for acquisition of substandard properties for the City Budget Year 2000. The EDA approved a $100,000 GMEF real estate loan for Aroplax Corporation. 5 . , . c) At the suggcstion of DA T, the EDA was asked to considcr requesting $20,000 for acquisition and improvements to the 7-foot Grassl walkway for City Budget Year 2000. Howcver, in licu of the Council direction not to incrcase the levy, the EOA requested the Executive Director to check if the $20,000 is an eligible expenditure ofthc DMRF. Ollie stated she believed this is a power of the HRA and an eligible expenditure of TIF within TIF Redevelopment District No. 1-22. Shc asked the members if the lIRA was interested in putting this in their 2000 year budget, and they respondcd "not at this time". d) The North Anchor public information mecting comments were submitted to the Council. The Council sclected to table for six months any action to solicit a request for proposal for a mixed housing/commercial devclopment. In time, they plan to address or answer the questions or comments from the public information meeting. Ollie provided the members with a copy of the summary from the information meeting. e) Ollie stated she has an appointment with Oiba Sobhani, Sonic Courier, on Thursday, September 9. She will be joined by Shingobee representatives and wanted one member of the HRA to accompany. This company is looking at building a 200,000 to 230,000 sq. ft. building and Ollie advised them that the 20- acre freeway property they were looking at is not on-the-market. f) A meeting for the City Budget Year 2000 was held on Tuesday, September 7 at 5:30 p.m. No appropriations made on anything. g) Last week Ollie checked with the County regarding the payable 1999 tax increment for Lake "fool and Custom Canopy and was advised that neither had paid their 1999 property taxes. Ollie was advised by the attorney to contact the companies to seek their intent to pay. The HRA can file a claim as well. Ollie also stated she is checking the current status of the bank loan as the EDA's Lake Tool loan is subordinate to the bank loan. Custom Canopy's loan balloon payment was due and paid in 1998. h) Ollie provided a copy of the notice sent to 3 Walnut Street relative to the delinquent water/sewer bill. She also stated she had not yet received full payment for the August rent. $100 was applied on August 3; amount yet due is $450 rent, $50 late penalty fee, September rent of $550 all due and payable before September 15, 1999. As of the date of this meeting, Ollie had received $200. Amount owing is $850 plus the water bill. 6 , , . 12. Consideration of Committee renorts: These members were not present to provide the reports. 13. Other Business. None 14. Adjournment. A MOTION WAS MADE BY DARRIN LAHR AND SECONDED BY BRAD BARGER TO ADJOURN THE MEETING. MOVED AND SECONDED A MOTION TO ADJOURN THE MEETING. Motion carried. /~~ 'Rt;COl' ing Secretary, Lori Kraemer 7