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EDA Minutes 06-24-2020MINUTES REGULAR MEETING - ECONOMIC DEVELOPMENT AUTHORITY (EDA) Wednesday, June 24th, 2020 — 7:00 a.m. Bridge Room, Monticello Community Center 505 Walnut Street, Monticello, MN 55362 The EDA meeting was held both remotely and in-person. 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 Ap-enda N/A. 5. PUBLIC HEARING - Consideration of Resolution #2020-06 Approving a Downtown Facade Improvement Grant to Jill Agosto, owner of property located at 142 West Broadway, Monticello, MN Jim Thares explained that the item was a public hearing for an application to the Downtown Fagade Improvement Program has been received by Jill Agosto. She owns a one-story, commercial/multi-tenant building located at 142 West Broadway. Thares noted that the application included two quotes: one from the Chuba Company (Elk River) and a second quote from Scott Builders (Buffalo). Quotes were prepared per the Cuningham Group (the EDA's architect) rendering. Thares noted that Agosto was asking for additional grant dollar consideration for east elevation stucco repair and/or replacement. Thares explained that the total amount of the fagade work per Chuba, which was the low quote, was $29,217.15. It was also noted that the total proposed building is renovation cost, including the east elevation, is $105,626.95. Thares offered the public to make any comments during the public hearing. Jill Agosto, the applicant, explained her request for the full $50,000 grant to complete work for the fagade and east elevation. She explained the east elevation was visible along Country Road 75/Broadway. She also added that she has recently put close to $50,000 into the building for a new roof and repairing the rear of the building due to a car accidentally running into the back (south) side of her building. She noted that she would like the building to have the same appearance throughout and would be a good example of what can happen in the downtown Economic Development Authority Minutes — June 24ti', 2020 Page 1 1 6 area. She explained that she has owned the property for some time and her husband had his own business in the building in the past. Jim Davidson asked if the lot to the east was a vacant lot. Agosto confirmed. Bill Tapper asked what the applicant was eligible for funding for the fagade. Hilgart explained that she is eligible for $50,000, but the quote did not require $50,000. The additional funds, if granted, would allow the applicant to continue renovations to the side elevation. 011ie Koropchak-White asked if the additional request fit the EDA's current policy or if it would need to be amended. Angela Schumann stated the guidelines were written that interior side renovations may be made on a case-by-case basis. The EDA was generally supportive of Agosto's application and believed it to be a catalyst for future improvements on the block. Thares confirmed the applicant would be spending $55,000 +/- of her own money to complete the project, if awarded the full $50,000 grant through the EDA. Schumann added that if the EDA approved the grant, one additional meeting with the Cuningham Group and Chuba Company would occur to go over final details on the design to ensure the work is consistent with the EDA's goals. Hearing no further comments, the public hearing was closed. LLOYD HILGART MOVED TO ADOPT RESOLUTION #2020-06 APPROVING FACADE IMPROVEMENT GRANT AGREEMENT IN THE AMOUNT OF $50,000 WITH THE AGOSTO LAW BUILDING, CONTINGENT ON THE FOLLOWING: 1. COMPLIANCE WITH ALL GRANT GUIDELINE REQUIREMENTS 2. EXECUTION OF A GRANT AGREEMENT INCLUDING FINAL PROJECT RENDERING AND CONTRACTOR CONTRACT MEETING ALL PROGRAM REQUIREMENTS TRACY HINZ SECONDED THE MOTION. MOTION CARRIED, 7-0. Schumann added that interest in the community regarding the Downtown Fagade Improvement program is still being received. She also noted that Cornerstone Cafe has indicated that they are still interested in the re -applying to the program and will make an application when it works for them. 6. Consideration of Resolution #2020-07 endorsing proposed Duffy Development 53 -unit Low Income Housing Tax Credit (LIHTC) apartment development concept and potential for TIF assistance as it seeks financing through Minnesota Housing Finance Agency (MHFA) Jim Thares introduced the item and explained the EDA recently held a pre- application/concept meeting to review a possible Tax Increment Financing (TIF) district for Duffy Development. Thares reminded the EDA of Jeff Von Feldt's presentation of a Economic Development Authority Minutes — June 24th, 2020 Page 2 16 proposed 53 -unit apartment complex that would utilize the Federal Government's Low Income Housing Tax Credit (LIHTC) program. Thares noted that the majority of funding is received from the tax credit, but that a gap of $500,000 in financing existed for the proposal. Duffy Development has asked the EDA to fill that gap. Thares provided a brief history of Duffy Development and noted that they have completed 18 projects around the Twin Cities metropolitan area. He added that they are a long-term owner of their projects and facilities. Thares also reminded the EDA of their authorization to come back to the EDA for a resolution of support of the project and the support of a potential TIF district. The resolution would be non-binding, but would increase their applications potential for the tax credit program. Thares noted that the application process is extremely competitive and final decisions on applications would be made in December, 2020. If accepted to the program, Duffy Development would then proceed with a formal TIF application and approval process. In the spring of 2021. Thares also added that the City Council and Planning Commission would hold a joint meeting to discuss and review the concept development plans on July 7. City Council would also be asked to consider a similar resolution that the EDA is considering now during their July 13, 2020 regular meeting. Jeff Von Feldt, Duffy Development, introduced himself and stated that they were requesting TIF support of the proposed development to fill their financing gap. A TIF run was included in the EDA's agenda packet showing that the gap of approximately $500,000 could be filled through TIF. Von Feldt stated that the application process was a competitive scoring process, and the resolution of support would elevate their application. Von Feldt noted that he was asking for the EDA's commitment now to further consider a future commitment. Von Feldt stated that applications were due on July 16, 2020 with the awards being announced in December, 2020. He expected that if awarded, Duffy Development would approach the EDA and City to start the application process for TIF and land use/development in March, 2021. Lloyd Hilgart asked for an explanation on the qualification guidelines for renters. Von Feldt explained the general requirement is for family incomes below 60 percent of the area median income based on the metropolitan area. Hilgart expressed concern for other recently approved market rate housing developments not being able to complete their development plans due to more competition. Von Feldt stated that there are typically differences between market rate and workforce housing such as available amenities. He noted that the average income of applicants is typically lower than the market rate housing options. Jim Davidson asked if the rent was based off of number of income earning individuals or family size. Von Feldt indicated it was determined purely by family size. Economic Development Authority Minutes — June 24th, 2020 Page 3 16 Von Feldt explained that their market study identified what is currently available in the area and it was determined that additional housing units could be supported. He also stated that in order for their proposal to be completely leased up, three to four percent of the total rental population in Monticello would be necessary. Von Feldt explained that their proposal would rent out twelve units to much lower income levels. Seven of the units would be dedicated to very low-income families and five units would be handicap accessible. Davidson asked Von Feldt to further explain the accessible units. He responded that they would construct the development using a universal building design, where all units could be converted to be accessible units. He added that all common areas would be accessible. Davidson asked for where the development would be placed along West 7th Street. Von Feldt indicated that it was proposed for the far west corner. Steve Johnson asked if there was enough increment to fill the financing gap and if the developer would be requesting any other financial incentives of the City. Thares noted that a TIF run was completed by Northland Securities and included in the packet using a taxable market value of $7.42 million and showing a net present value of $772,000 in increment that could be received over 26 years. The $500,000 gap could be achieved by Year 14. Due to uncertainty of the seemingly high taxable market value, Thares asked for Northland to complete a separate run using $5.5 million in taxable market value. Thares noted that the increment would be in excess of $500,000 after Year 16. Von Feldt added that they would also ask the City to provide non-financial contributions to the developer in the form of a waiver of a percentage of certain city fees, such as: SAC/WAC, park dedication, and building permit fees. They would also be requesting flexibility to the City's zoning standards (setback, minimum unit size, underground parking standards, etc.) through a Planned Unit Development. This helps the developer to lower the development costs and save an estimated $1300041501000. Thares pointed out the Housing Study, completed in late 2017, noted that approximately 25 percent of the City's residents have low to modest income levels. It further identified a market demand for an additional 250 multi -family units between 2017 and 2021. The report noted that to meet the needs of the 25 percent of low or modest income level households, that 58 of the expected 250 new multi -family units would need to be affordable units. Thares noted that the Briggs Companies' Rivertown Suites, which just opened up is providing 10 of the 58 needed affordable units as per the Study. The EDA inquired about an approved Development Stage PUD for a 92 -unit multi -family apartment complex near Walmart in the context of concern that the total recently approved unit tally may exceed the needed multi -family units identified in the 2017 study. A 165 -unit, three building market rate apartment development was also approved for Deephaven/Dale Buchholz Construction. It was noted that the EDA's recently commissioned updated housing study, expected to be completed in August, 2020, would help answer questions about unit Economic Development Authority Minutes — June 24t', 2020 Page 4 16 demand. Richard Palmiter, CBRE and a representative of the property owner, expressed support for the development project. Bill Tapper noted that the proposed project serves an underserved population, even with the new approved units. Tracy Hinz also encouraged the other EDA members to consider this project different from other housing projects. The EDA noted the link between commercial development and workforce housing. TRACY HINZ MOVED TO ADOPT RESOLUTION #2020-07 ENDORSING DUFFY DEVELOPMENT'S PROPOSED 53 -UNIT LIHTC APARTMENT DEVELOPMENT AND THE USE OF TIF ASSISTANCE TO FILL AN IDENTIFIED FUNDING GAP OF $500,000 +/-. BILL TAPPER SECONDED THE MOTION. MOTION CARRIED, 6-1 WITH LLOYD HILGART VOTING IN OPPOSITION DUE TO THE NEED FOR FURTHER INFORMATION REGARDING RENTAL GAP INFORMATION AND THE NEED FOR THE UPDATED HOUSING STUDY COMPLETED. 7. Consideration of Approving Small Business Emergency Grant Agreements in the amount of $5,000 to: New China Buffet of Monticello; Rustech Brewing; Elevated Wellness, LLC; Lily's Massage; Chin Fong Inn, Inc.; and Monticello Chamber of Commerce & Industry to mitigate COVID-19 economic impacts Lloyd Hilgart requested moving the item up to be considered prior to Item 6 due to attendance of the Chamber of Commerce at the meeting for Item 7. Jim Thares indicated that six grant applications were received for the EDA's Small Business Emergency Grant. He noted that applications were received prior to the meeting and that staff reviewed each of them. They were all noted as complete submittals with each business indicating distress due to the pandemic. Thares pointed out that the Monticello Chamber of Commerce & Industry, a 501 (c)(6), was one of the applications received and does not qualify as a small business per the Secretary of the State. Due to their organizational category, they are ineligible for many of the Federal and State assistance programs, including PPP. Thares noted that many of their fundraisers have been canceled or postponed and their membership rates have declined due to the pandemic. Marcy Anderson, Director of the Monticello Chamber of Commerce & Industry, further elaborated that they didn't qualify for many public assistance programs. She noted that the Chamber has been established for 72 years and is funded 50 percent through membership dues and 50 percent through events. She explained that all large events were canceled for the summer, but that they were hopeful to continue the annual golf fundraiser on Thursday, September 24. She noted that it could be devastating if the event would be canceled and that they would need to consider cutting staff to only have one staff member employed. She explained that the Chamber has shifted gears during the pandemic and has been holding additional meetings to stay tuned with other local Chamber offices and that it would be hard Economic Development Authority Minutes — June 24ti', 2020 Page 5 16 to do everything with only one staff member. BILL TAPPER MOVED TO APPROVE SMALL BUSINESS EMERGENCY GRANT AGREEMENTS BETWEEN THE EDA AND: NEW CHINA BUFFET, LLC; RUSTECH BREWING; ELEVATED WELLNESS, LLC; LILLY'S MASSAGE, LLC; CHIN FONG INN, INC.; AND MONTICELLO CHAMBER OF COMMERCE IN THE AMOUNT OF $500 TO MITIGATE COVID-19 ECONOMIC IMPACTS. JIM DAVIDSON SECONDED THE MOTION. MOTION CARRIED, 7-0. 8. Director's Report Jim Thares provided the Director's Report as included in the EDA's agenda packet. Angela Schumann and Thares noted that a workshop EDA meeting would occur on Monday, June 29th at 4:30 p.m. to discuss Block 52 along with a closed meeting to discuss property acquisition. 9. Adiourn BILL TAPPER MOVED TO ADJOURN THE MEETING AT 8:11 A.M. OLLIE KOROPCHAK-WHITE SECONDED THE MOTION. MOTION CARRIED, 7-0. Recorder: Jacob Thunander Approved: July 8th, 2020 Attest: _� \ ��/7CGA-� Thares, Economic Development Director Economic Development Authority Minutes — June 24th, 2020 Page 6 1 6