EDA Minutes 02-26-2020MINUTES
REGULAR MEETING - ECONOMIC DEVELOPMENT AUTHORITY (EDA)
Wednesday, February 26th, 2020 — 7:00 a.m.
Academy Room, Monticello Community Center
Commissioners Present: Steve Johnson, Bill Tapper, Jon Morphew, Tracy Hinz, 011ie
Koropchak-White, Lloyd Hilgart, and Jim Davidson
Staff Present: Jim Thares and Angela Schumann
1. Call to Order
Steve Johnson called the Regular Meeting of the EDA to order at 7:00 a.m.
2. Roll Call
3. Consideration of additional agenda items
None.
4. Consent Agenda
N/A.
5. PUBLIC HEARING — LAND SALE (Continued) UMC Expansion Project —
Proposed sale of EDA property described as Lot 2, Block 1, Monticello Commerce
Center, Sixth Addition, Wright County, MN (7.39 -acres) [PID #1551430010201 to
UMC Real Estate, LLC for the sole purpose of pursuing a 52,000 square foot
expansion project
Jim Thares introduced the item and explained that the Public Hearing for the land sale
was continued from the EDA meeting on February 12. Steve Johnson opened the public
hearing for the public first.
Tim Dolan, Decklan Group, expressed appreciation from UMC for the EDA's support of
their project. He noted that UMC officials were unable to be present at this meeting due
to scheduling conflicts.
BILL TAPPER MOVED TO CLOSE THE PUBLIC HEARING. JIM DAVIDSON
SECONDED THE MOTION. MOTION CARRIED, 7-0.
6. PUBLIC HEARING — BUSINESS SUBSIDY (Continued) UMC Expansion Project -
Proposed Tax Increment Financing (TIF) Land Value Write Down in the amount of
$731,000 for development property to UMC Real Estate, LLC for the sole purpose
of pursuing a 52,000 square foot expansion project.
Steve Johnson noted that the public hearing was continued from the February 12, 2020
EDA meeting.
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Jim Thares reminded the EDA that per state statutes the public hearing is a requirement
for the business subsidy write down of $731,000. Johnson invited the public to speak.
OLLIE KOROPCHAK-WHITE MOVED TO CLOSE THE PUBLIC HEARING. BILL
TAPPER SECONDED THE MOTION. MOTION CARRIED, 7-0.
7. Consideration of Resolution #2020-01 Approving the Establishment of Tax
Increment Financing District No. 1-41 and the TIF Plan for the District
Jim Thares introduced the item and explained the land component of the proposed
development requires the establishment of a new TIF District allowing the EDA to
purchase the 7.39 acres site adjacent to the UMC Facility for $1,031,000 and convey it to
UMC for $300,000. Thares added that TIF District 1-41 is proposed as a 9 -year economic
development district and will allow the EDA to capture tax increments sufficient to
reimburse it for its land write down amount of $731,000 plus interest at the rate of 3.0
percent. The estimated taxable value of UMC's development is expected to be about
$5,20000 +/-.
Thares asked Tammy Omdal, Northland Securities, to add clarification and more details
regarding the TIF District. She noted that the TIF District would be established to
capture taxes generated with the new development to repay the EDA for the conveyance
of the land. Omdal indicated it was expected and anticipated that the EDA would be paid
in full based on estimates, but it was not guaranteed. She further noted that increment
would fluctuate based on value of property over the nine-year term. Local property tax
rates also would be a factor on the increment.
Omdal also noted that no TIF would be repaid to the developer. It would instead be
repaid to the EDA with principle and interest. Johnson explained that the interest on the
$731,000 would be estimated at $177,000 plus the $731,000. Omdal confirmed.
Tim Dolan stated that as part of the Purchase and Development Contract, there is a
provision that UMC will agree to a minimum assessment level of $5,200,000 and will not
be able to appeal that figure during the 9 -year term of the TIF District. With that as part
of the Contract, the EDA will be in very good shape to capture the full $731,000 plus the
interest in the 9 -year period.
BILL TAPPER MOVED TO ADOPT RESOLUTION #2020-01 ESTABLISHING TIF
DISTRICT #1-41 AND APPROVING THE TIF PLAN FOR THE DISTRICT
(SUPPORTING UMC'S 52,000 SQUARE FOOT EXPANSION PROPOSAL). TRACY
HINZ SECONDED THE MOTION. MOTION CARRIED, 7-0.
8. Consideration of Resolution #2020-02 Approving the Purchase and Development
Contract between UMC Real Estate, LLC and City of Monticello Economic
Development Authority (EDA), the Land Sale by the EDA to UMC described
therein, and a Business Subsidy Agreement contained within the Purchase and
Development Contract.
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Jim Thares opened the item for discussion. He summarized the contract terms per the
EDA agenda report. Thares highlighted that new jobs required wages per the business
subsidy agreement to be in the range of $15-17 an hour or more. UMC though has
provided additional information showing that the average of all jobs would be $23.81per
hour.
Tim Dolan, Decklan Group, believed that the UMC legal counsel wanted to use the floor
level wage requirements which are outlined in the State Statute for business subsidies.
Thares indicated that in the TIF application packet, which is attached as an exhibit to the
staff report, there is an outdated bank commitment. He noted that the State required that
UMC update the letter. Dolan noted that he would send it to Jim Thares for review. The
bank increased their commitment level due to the increase in building size and cost.
Dolan confirmed that business equity was coming from the company's assets. It was
noted that the sources and uses had been updated in the staff report as well.
TRACY HINZ MOVED TO ADOPT RESOLUTION #2020-02 APPROVING A
PURCHASE AND DEVELOPMENT CONTRACT BETWEEN UMC REAL ESTATE,
LLC AND THE EDA, THE LAND SALE BY THE EDA TO UMC DESCRIBED
THEREIN, AND A BUSINESS SUBSIDY AGREEMENT CONTAINED WITHIN
THE PURCHASE AND DEVELOPMENT CONTRACT. BILL TAPPER SECONDED
THE MOTION. MOTION CARRIED, 7-0.
9. Consideration of Resolution #2020-03 Approving an Interfund Loan, authorizing
expenditures of legally available EDA funds for costs related to TIF District No. 1-
41 to be reimbursed through tax increments from TIF District No. 1-41
Tammy Omdal, Northland Securities noted that this item is required. The EDA has to
authorize an interfund loan that would be paid back from future increments from the
newly established TIF District for the UMC expansion project.
BILL TAPPER MOVED TO ADOPT RESOLUTION #2020-03 APPROVING AN
INTERFUND LOAN FOR THE PURPOSE OF REIMBURSING THE EDA FOR ITS
UPFRONT EXPENDITURES RELATED TO TIF DISTRICT #141. OLLIE
KOROPCHAK-WHITE SECONDED THE MOTION. MOTION CARRIED, 7-0.
10. Consideration of Resolution #2020-04 Approving an Interfund Loan, authorizing
expenditures of up to the total balance of tax increments available from TIF District
No. 1-6 to pay a portion of property acquisition costs in connection with TIF District
No. 1-41
Tammy Omdal, Northland Securities, explained that the request would give the EDA
more flexibility to pay a portion of the property acquisition of UMC from existing TIF
District 1-6. The option to decertify the newly established TIF District 1-41 at an earlier
date from the nine-year window could also occur at the EDA discretion if the increments
reach the principal amount of $731,000 sooner than the allowed 9 -year time frame.
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BILL TAPPER MOVED TO ADOPT RESOLUTION #2020-04 APPROVING AN
INTERFUND LOAN FOR THE PURPOSE OF AUTHORIZING THE USE OF
INCREMENT FROM PRE -1990 TIF DISTRICT #1-6 AS A SOURCE OF FUNDS FOR
UPFRONT LAND ACQUISITION EXPENSES RELATED TO UMC, INC.'S
EXPANSION PROJECT AND FURTHER AUTHORIZING FUTURE
REIMBURSEMENT OF TIF DISTRICT #1-6 FROM TAX INCREMENTS
GENERATED IN CONNECTION WITH NEW DEVELOPMENT IN TIF DISTRICT
#1-41. JON MORPHEW SECONDED THE MOTION. MOTION CARRIED, 7-0.
11. Consideration of Approving Industrial Land Absorption and Demand Study, Jim
Gromberg, WSB & Associates, Inc.
Jim Thares explained that the item was brought forward at the previous EDA meeting,
but staff recommended tabling the study due to changes that staff would like included in
the report. Thares also indicated that there were no additional EDA comments on the
draft plan after the February 12, 2020 meeting. Thares introduced Eric Maass to review
the report with the EDA.
Maass indicated that a completed study was not available as they wanted to make sure
the EDA comments were included in the report. Maas indicated that with the current
interest level, Otter Creek Business Park would be at capacity in three to four years.
Maas also indicated that it was important to discuss industrial growth in the City as Xcel
plans to decommission its facility in the future. Maas presented on three sites in
Monticello that could be the location of new industrial business park.
Discussion about the advantages and disadvantages of each of the three sites occurred
with the EDA and WSB. Ultimately, WSB selected Site 1 as the preferred location of a
new industrial business park.
Steve Johnson asked if the study could be revised to include a general understanding of
the cost of fiber in those areas. Maass confirmed.
LLOYD HILGART MOVED TO APPROVE THE INDUSTRIAL LAND
ABSORPTION AND DEMAND STUDY. JIM DAVIDSON SECONDED THE
MOTION. MOTION CARRIED, 7-0.
12. Consideration of Authorizing Hospitality Study Proposal and Entering into a
Professional Services Contract with Hospitality Consulting Group, Excelsior, MN
in the amount of $5,550
Jim Thares indicated at the February IEDC meeting, the commission made a motion to
recommending the EDA consider completing a new hospitality study. The IEDC noted
that the study was completed in 2015 and that a new study should reflect prospective
room demand due to the proposed Google Data Center development in Becker. Staff
asked Hospitality Consulting Group, the consultant who completed the 2015 Study, to
provide a quote for a study update. The quote was received and is in the amount of
$5,550.
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Tracy Hinz asked how the previous study was utilized. Thares indicated that during his
time with the City, the report has been sent to several prospects, although it has not
spurred any development proposals.
Lloyd Hilgart indicated that hotel developers likely will create their own hotel studies
when they are looking at developing in cities. Tim Dolan observed that in his
experience, the existence of a hotel and hospitality study that has been completed by a
municipality can be a valuable source of information regarding development plans and
initiatives supported or led by the City.
JIM DAVIDSON MOVED TO APPROVE THE HOSPITALITY CONSULTING
GROUP QUOTE PROPOSAL FOR AN UPDATED HOTEL AND HOSPITALITY
STUDY IN THE AMOUNT OF $5,550. BILL TAPPER SECONDED THE MOTION.
MOTION CARRIED, 7-0.
13. Adjourn
TRACY HINZ MOVED TO ADJOURN THE EDA MEETING AT 8:05 A.M. BILL
TAPER SECONDED THE MOTION. MOTION CARRIED, 7-0.
Recorder: Jacob Thunander
Approved: March 11 th, 2020
Attest:
, Economic Development Director
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