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HRA Minutes 08-02-2006 . MINUTES MONTICELLO HOUSING AND REDEVELOPMENT AUTHORITY Wednesday, August 2,2006 - 6:00 p.m. Bridge Room - Community Center Commissioners: Chair Brad Barger, Dan Frie, Darrin Lahr, and Bill Fair Commissioners Absent: Steve Andrews Council Liaison: Wayne Mayer Staff: Ollie Koropchak, and Angela Schumann. 1. Call to Order. Chairman Barger called the meeting to order, noting absence of Commissioner Andrews and Rick Wolfsteller. 2. Consideration to approve the June 7. 2006 HRA minutes. . MOTION BY COMMISSIONER FAIR TO APPROVE THE MINUTES OF JUNE 7th, 2006. MOTION SECONDED BY COMMISSIONER FRIE. MOTION CARRIED, 4-0. 3. Consideration of adding or removing items from the agenda. Koropchak noted that Michael VanHeel was present to discuss item 6A. 4. Consent Agenda. A. Consideration to ratifY the Amendment to the Contract for Private Development between the HRA and Master's Fifth Avenue, Inc. Koropchak noted the changes made the Master's Fifth Avenue contract regarding the project's commencement, completion and reimbursement date. B. Consideration to approve the Amendment to the Contract for Private Development between the HRA and SL Real Estate Holdings LLC. . Koropchak reported that Karlsburger would like to close on either the lOth or II th of August and start grading on the 14th. The recommendation is to amend the closing date from June 30'\ 2006 to August 15th, 2006. MOTION BY COMMISSIONER FAIR TO RATIFY THE AMENDMENT TO THE CONTRACT FOR PRIVATE DEVELOPMENT BETWEEN THE HRA AND MASTER'S FIFTH AVENUE, INC. AND TO APPROVE THE AMENDMENT TO THE CONTRACT FOR PRIVATE REDEVELOPMENT . . . HRA Minutes - 08/02/06 BETWEEN THE HRA AND SL REAL ESTATE HOLDINGS, LLC. MOTION SECONDED BY COMMISSIONER FRIE. MOTION CARRIED, 4-0. 5. Consideration to approve entering into a Preliminary Development Agreement with Walker Instore, Inc. Koropchak stated that in discussing the results of the last HRA meeting, Walker Instore didn't understand why the HRA didn't proceed. Their representatives indicated that they felt like the proposal had changed. Koropchak stated that she had informed Walker that it was important to be here to discuss the project. Koropchak stated that as the original proposal expired and their project parameters had changed in terms of employment, the HRA may want to present a new offer. Walker wants to buy 1 Y2 acre at $1 per square foot under their new parameters. Barger asked if Walker is willing to work within the criteria. Koropchak stated that the original offer was 1 acre at the criteria rate, with the other Y2 acre at market rate. Walker is stating that they are creating more jobs, so they may fit criteria for the other acreage, once they re-apply. 6. Consideration to discuss follow-up items from HRA Workshop. A. Block 53 - Korpochak noted that Michael Van Neel was present to discuss the project that had been proposed for the block. The property owners had emailed that they are not moving forward with the proposal at this time. Barger indicated that the HRA had previously worked on Block 51 for some time. Barger stated that perhaps by working together with the property owner, they could accomplish something downtown. Barger stated that he felt it important to have Van Heel discuss opportunities with the HRA. Michael Van Heel addressed the HRA, noting that he had attended a seminar on mixed-use project. Van Heel stated that mixed-use seems to work in the inner- ring cities and suburbs. The question for his site is whether it works outside of that environment. Based on the discussion that he had with the consultants they were working with, no one could give them a clear answer. Van Heel stated that as such, the risk outweighed the possible outcome. Van Heel noted that Block 51 and 53 are great entrance points, but there was concern about the housing and retail mix. When they had talked with retailers for the mixed use project, all the interest was on the south Highway 25 corridor or at the interchange location. Retailers want a prototype store in Monticello and indicated that they wouldn't be willing to do the downtown concept here. In terms of the office portion that had been proposed above the retail, the Workforce Center had been the primary focus for that area. Van Heel stated that they wanted to grow, but the 2nd floor space wasn't going to work for them. 2 . HRA Minutes - 08/02/06 Additionally, VanHeel stated that as they didn't have first-hand expertise in the townhome and condo market, with the market slowing down, the concept presented yet another risk. For the proposed project, they weren't convinced the timing today was right. Koropchak asked if Van Heel had further discussions with Muller. Van Heel stated that they had not and weren't sure they had a lot of interest in the project. Barger noted that without parking, the value of that property goes down. Fair clarified that Van Heel owned the parking for the theater area, and that Van Heel didn't own anything east of the theater. VanHeel confirmed. Barger asked if they needed the whole block to do a project. Van Heel stated that to make a project work comprehensively and get the parking, they really need the whole block. Barger asked if they had looked at other areas or blocks. VanHeel stated that he had not. He noted that if they were to have an anchor, that would help. Koropchak asked if they were willing to partner with residential developers. Van Heel stated that if and when they moved forward, they would absolutely partner with a residential real estate partner to capture market. . Fair stated that he thought Elk River's HRA was involved in the Jackson Place project and that from a governmental point of view, the HRA can't go into a project to generate revenue. He stated that the HRA may need to be willing to spend some money up front to get a payoff. Barger asked if VanHeel sees potential in downtown with the growth south of the interstate. Van Heel stated that the momentum is at that location, from a retail perspective. Lahr stated that in looking at risk and gap, the HRA's philosophy has been that it wants developers to pick the projects. The HRA is supportive of the development community. Where a gap exists, the HRA can perhaps reduce some ofthat risk. Lahr stated that the HRA is interested in helping, but doesn't have the expertise to take the project from the start. Van Heel stated that until the Highway 25 and interchange commercial areas mature, it may not make sense for retailers to compete downtown. Fair asked if it makes sense to get government involvement at the beginning in perhaps acquiring the land. Lahr stated that he thinks the amenities will sell the downtown - community environment. The commissioners indicated that they had been working on Block 51 and recognize that the City needs to make an investment. . Van Heel asked if there are specific strategies for acquiring properties. Fair stated that ifthe HRA approaches the owners, the price seems goes up. Lahr noted that one issue in acquiring property is that there are too many parties involved. Fair posed the question if it makes sense to acquire the property, demo the buildings and have vacant land. 3 . HRA Minutes - 08/02/06 Barger asked Van Heel if the HRA owned the rest of the block, would they be more willing to undertake a project. Van Heel stated that they would be more willing to put money into marketing studies and look at residential opportunities. Koropchak asked about the Van Heel's property along east 7th. Van Heel stated that they are marketing the property. Fair asked Van Heel about the closing of River Street at 25. Van Heel stated that the key factors driving retail are access and parking. The Commissioners thanked Van Heel for his input. B. Other properties - Dan Frie. Frie reported that there are 5 additional properties downtown that are for sale. Frie noted that he had spoken with various property owners downtown, who had given him various responses to selling. . Fair stated that HRA needs to make a decision on how to proceed. Frie stated that the asking price for the Muller Theatre property is $750,000; although there is a difference between market value and their price. Fair suggested making an offer. Mayer asked if the HRA would be opening up a "City will buy" mentality. Lahr stated that with southward population flow, the picture has changed. The idea is to now completely change downtown. Mayer asked about how to calculate fair market value. Fair stated that the property owners probably think it is prices at market. Mayer recommended that Frie develop a price. 4 Fair recommended setting parameters so that approach to each property owner is consistent. The Commissioners discussed possible purchasing parameters. MOTION BY COMMISSIONER FAIR TO AUTHORIZE COMMISSIONER FRIE TO ACT AS THE HRA'S PURCHASING REPRESENTATIVE ON THREE PROSPECTIVE DOWNTOWN PARCELS, SUBJECT TO THE PARAMETERS AS FOLLOWS. . I. The HRA is interested in value of the land, not the building. 2. Start with 3 properties on Block 53 that are currently for sale 3. Offer will be based on market value ofland, plus incentive of 15% 4. The HRA is looking at long-terms holding ofland 5. The offer will include a provision that the current tenants/owners can stay for minimum 00 years rent free (not including utilities) 6. The offer will expire and be re-evaluated at 2 months MOTION SECONDED BY COMMISSIONER LARR. MOTION CARRIED, 4- O. . . . HRA Minutes - 08/02/06 7. Consideration to authorize payment of HRA bills. MOTION BY COMMISSIONER LAHR TO AUTHORIZE PAYMENT OF THE HRA BILLS. MOTION SECONDED BY COMMISSIONER FRIE. MOTION CARRIED, 4-0. 8. Consideration ofHRA Executive Report. Koropchak referred to the report, stating that unless there were questions, the HRA could move on to the next item. 9. Committee Reports: Marketing - Koropchak reported that the group would be meeting the following day. Fiber Optics - Mayer reported that the preliminary survey information has come back on the four possible models. Currently, the consultants are reviewing the numbers for revenues in terms of bond payoff. If the desired model works, it will be service to the whole community with no home left behind. 10. Next regular HRA meeting - Wednesday, September 6,2006. II. Adjournment. MOTION BY COMMISSIONER BARGER TO ADJOURN. MOTION SECONDED BY COMMISSIONER FAIR. MOTION CARRIED, 4-0. .~ o/ta C{;/i _ Chairinan ~ Recorder 5