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HRA Minutes 03-03-2004 . . . MINUTES MONTICELLO HOUSING AND REDEVELOPMENT AUTHORITY Wednesday, March 3rd, 2004 - 6:00 p.m. 505 Walnut Street - Bridge Room Commissioners: Chair Stevc Andrews, Vice Chair Bill Fair, Brad Barger, Dan Fric, and Council Liaison Rogcr Carlson Darrin Lahr Rick Wolfsteller, Angela Schumann Absent: Staff: 1. Call to Order. Chair Andrews called the meeting to order at 6:00 p.m. and declared a quorum, noting the absence ofHRA member Darrin Lahr and Economic Development Director Ollie Koropchak. 2. Consideration to approve the February 4th, 2004 HRA minutes. A MOTION WAS MADE BY TO FAIR APPROVE THE MINUTES OF TIlE FEBRUARY 4'1'1-1,2004 liRA MEETING. BARGER SECONDED THE MOTION. MOTION CARRIED UNANIMOUSLY. 3. Consideration of adding or removing items from the agcnda. None 4. Consent Agenda. None 5. Continued - Consideration to approve changcs to the Contract for Private Rcdevelopment betwccn Masters Fifth Avenue and the lIRA for Landmark Square Phase II. Brad Johnson provided a report on the project, indicating that thc developcrs would seek to close on duplex property with ERA funds. Johnson understands that the City's attorney has recommended a letter of credit be obtained in order to release funds fCJr purchase. Johnson indicated that the property owner of the lot for duplexes has agreed to sell. The developers arc requesting that the first letter of credit expire whcn duplex is completed. Therefore, they are requcsting that the contract language regarding the expiration date change to begin November 1 st (or sooner depending on tenant) and completing by April I S\ 2007. The project will pay TIF no matter when land is purchased. Johnson indicated that $157,000 letter of credit would be returned after completion of duplex. Johnson relayed to the commission that the final per lot cost is still an issue. The developers are still seeking a final lot cost that is closer to $30,000. Johnson stated that BRA Minutes 03/03/04 . currently, the per lot cost is closer to $39,000. Johnson indicated that one way to reduce lot cost would be to lower the interest rate on the loan from 6.5% to 1 point over what note is. He stated that the HRA could accomplish this in a formal action. Andrews stated his concern that making this concession in this project may be setting the stage for a similar request in future projects. Johnson re-stated his desire for the HRA to at least consider the option, as other resulting decisions on this matter will need to be made. J again remarked that the HRA has no risk on this project in comprison to the Hans Hagen project. Wolfsteller noted that when the City refinanced bonds in the summer, the rate would be variable at 1 % over. Fair inquired about the acceptability of the developer's proposal. W olfsteller stated that in a pay-as-you-go project, the I-IRA would be paying the developer the interest and would still cover costs. In regards to the developer's request to have sewer ~illd water access charges waived, Wolfsteller also suggested that the HRA and developers consider other alternatives. Wolfsteller indicated that he would rather see additional tax revenues help pay back those dollars, rather than waiving SAC and WAC. . Johnson suggested a combination of a lower interest rate and an exploration of other options would help the project move forward. He stated that Barry Fluth had talked with some Council members who would like to see project move forward. Wolfsteller asked what waiving the two fees would save the developer. Johnson estimated the savings at about $70,000. Fair indicated that the project meets criteria of comprehensive plan's vision for the CCD. He stated that it would increase the tax base without substantial profit margin to developer. Fair relayed that he thinks it is possible to close the gap and move forward. Fair stated that he believes that setting policy and SAC and WAC fees is Council's responsibility. Fair reported that he has no problem with lowering the interest rate. Barger agreed, stating that they will still be covered by ,ill interest point. Wolsteller re- stated that SAC and WAC can be paid back to the City by additional TIF. Frie stated that a lot of work has already gone into the project and noted that the developers mentioned that the property owners are becoming tentative. Frie would like to help make project go forward before more change occurs. Andrews expressed his concern about margin on interest, as he doesn't want this to be policy. Andrews indicated that the HRA has a responsibility to help reduce tax burden on the rest of the community in the best way. Frie and Fair stated that though they agree with that, if a project could happen at market standards, there would be no need for HRA. . - 2 - . . . HRA Minutes 03/03/04 Wolfsteller requested that latest financial statement on project should be prepared and presentcd to the HRA. A MOTION WAS MADE BY FAIR TO APPROVE THE eHANGES AS OUTLINED IN DRAFT POUR OF THE CONTRACT FOR PRIVATE REDEVELOPMENT BETWEEN MASTERS FIFTH A VENUE AND THE HRA FOR LANDMARK SQUARE PHASE II, WITH AMENDMENTS REGARDING CONSTRUeTION AND THE ADDITION OF A SUNSET DATE TO THE LOC. MOTION SECONDED BY FRIE. MOTION CARRIED UNANIMOUSLY. A MOTION WAS MADE BY PAIR TO DIRECT STAFF TO WORK WITH DEVELOPER TO CLOSE THE PER LOT COST GAP DISCUSSED. MOTION SECONDED BY BARGER. MOTION CARRIED UNANIMOUSLY. 6. Continued - Consideration to hear an update on redevelopment ofI3lock 52. Bob Cunningham addressed the HRA on behalf of l' old Development. eunningham provided the HRA with a brief outline of the project to-date, including Council action to address site concerns and their work with Steve Johnson and other adjacent property owners. 'fold is not seeking action to condemn; they much prefer to work on a willing buyer and sellcr basis. Cunningham indicated that he thinks Told will have a product to bring to the HRA relatively soon. They have hired real estate eonsultant Fred Kattcr to work with property owners and have made several property offers. Cunningham reported that the process seems to be somewhat backwards irom how they usually work, as they prefer to have site control before eoming to the eity. He would like to come back in April to provide an updated rcport on the site situation. In the meantime, Told and Katter will be working with all property owners to move to the purchase agreement stage. Cunningham stated that he had read the preliminary development eontract and would discuss it further with Koropchak. lIe stated that he is available to answcr any of the lIRA's questions. Fair inquired about Bubul's memorandum on the properties. He noted that Bubul recommends that the HRA does not enter into purchase agreement at this time. He noted that the City would not want to give up that property until they are certain of redevelopment project because they would be giving up some site control. eunningham stated that he is anxious to get project moving forward as they are cognizant ofTIF ~ 3 - . . . HRA Minutes 03/03/04 funding deadlines. lIe indicated a desire to work through contingencies so that the project can move forward. He stated that the HRA property is a critical piece of the puzzle. At this point, Cunningham would like to see the City entering into a preliminary purchase agreement. Fair noted that transfer of title would need to occur by the June 30th date. Wolfsteller stated that heis unsure of how to proceed without entering into a formal contract, unless the City entered into the contract with the purchase agreement as an addendum, with the contingency that development must proceed. Andrews stated that Bubul' s notation indicates that the purchase agreement becomes the development agreement/contract. Andrews inquired about an appraisal on the HRA property. Wolfsteller stated that no new appraisal had been done. Barger reported an appraisal was completed when the land was purchased in 1996. Cunningham requested that a discussion on the terms and conditions take place. Fair recommended contacting Bubul for questions related to his notes and questions on the terms and conditions. Cunningham suggested tabling the preliminary development agreement. He suggested a conference call with Bubul, Wolfsteller and Koropchak to work out the remaining issues on the purchase agreement and preliminary development contract. A MOTION WAS MADE BY FAIR TO TABLE ANY ACTION ON THE BLOCK 52 REDEVELOPMENT PROPOSAL AT THIS TIME. MOTION SECONDED BY BARGER. MOTION CARRIED UNANIMOUSLY. 7. Consideration to authorize payment of HRA bills. A MOTION WAS MADE BY FAIR TO AUTHORIZE PAYMENT Of THE HRA BILLS. ANDREWS SECONDED THE MOTION. MOTION CARRIED UNANIMOUSLY. 8. Consideration of Executive Director's Report. THE HRA ACKNOWLEDGED RECEIPT OF REPORT. Barger inquired ifthere were any properties in Monticello with rail access on north side of freeway. Wolfsteller stated that he is not aware of any properties available directly adjacent to the railway. - 4 - . . . 9. HRA Minutes 03/03/04 Committee Reports. Small Industrial Frie reported that the Small Industrial group is working on non-hinding letter of intent with Chadwick. Council has authorized moving forward with purchase agreement. Frie stated his heliefthat a City industrial park would producc favorable results for the City. Members of the Small Industrial group also meet with Shawn Weinand and Charlie Pfeffer, who expressed concerns about the City industrial park. Their primary concern is the assessment on potential Cty. 18/1-94 interchange. At this time, therc has been no further response from Chadwick. Wolfsteller stated that City attorney has drafted a purchase agreement. Wolfsteller stated that there may be some resistance on closing date, although he doesn't believe the closing date to be unreasonable. Chadwick would keep parcels along interstate and will market them. Fric stated there will most likely be additional changes hefore the process is complete. The City will also have to try to negotiate on a parcel to move Chelsea. Barger stated that he had spoken with someone regarding building a motorcycle business. Jle relayed information on the Remmele building and parcels along 25. Marketing Barger reported that the Marketing group had met with Perry Sloneker, manager of local Comfort Inn hotel. Sloneker is looking to form a Visitors Association, as a committee within the Chamber of Commerce. The Visitors Association would focus on huilding cooperative marketing promoting Monticello's visitor resources. Fair asked what role the City would have. Barger stated that the group would be seeking partnership funding. If funding were provided, the City would also have a role in the direction of marketing efforts. BRA members expressed interest in seeing the Visitors Association proposal. 10. Other Business. None. 11. Adiournment. A MOTION WAS MADE BY FAIR TO ADJOURN THE MEETING AT 7: 15 P.M. i]::MOTION. MOTIONCA;::~ liRA Chair ' RecodIer u~: - 5 -