HRA Minutes 11-01-2006MINUTES
MONTICELLO HOUSING AND REDEVELOPMENT AUTHORITY
Wednesday, November 1, 2006 - 6:00 p.m.
Bridge Room -Community Center
Commissioners: Vice Chair Steve Andrews, Dan Frie, Darrin Lahr, and Bill Fair.
Commissioners Absent:
Council Liaison Present:
Council Members Present:
Staff Present:
Guests:
1. Call to Order.
Chair Brad Barger
Wayne Mayer
Mayor Clint Herbst, Council Members Brian Stumpf, and Tom Perrault.
Executive Director Ollie Koropchak, Treasurer Rick Wolfsteller, and
Recorder Angela Schumann.
Mike Maher, Karlsburger Foods, Inc.; Shibani Bisson, WSB, Inc.
Mark Ruff, Ehlers & Associates
Vice Chairman Andrews called the meeting to order and declared a quorum, noting the absence
• of Chairman Barger.
2. Consideration to approve the October 4, 2006 HRA minutes.
MOTION BY COMMISSIONER FAIR.
MOTION SECONDED BY COMMISSIONER FRIE TO APPROVE THE MINUTES OF
OCTOBER 4, 2006. MOTION CARRIED, 3-0.
3. Consideration of adding or removing items from the a eg, nda•
Koropchak removed the Walker In-store item from the Executive Director's report for discussion
as item 9.5.
Koropchak added as item 10.5 the consideration to approve a recent transformation home loan.
application
4. Consent A enda.
A. Tabled -Consideration to ratify the execution of the second Certificate of Completion
related to the Purchase and Development Contract between the HRA and Vector Tool &
Manufacturing, Inc.
MOTION BY COMMISSIONER FAIR TO RATIFY THE EXECUTION OF THE
SECOND CERTIFICATE OF COMPLETION RELATED TO THE PURCHASE AND
DEVELOPMENT CONTRACT BETWEEN THE HRA AND VECTOR TOOL &
MANUFACTURING, INC.
MOTION SECONDED BY COMMISSIONER FRIE. MOTION CARRIED, 3-0.
Tabled - Consideration of a request from Karlsburger Foods Inc. for compensation of over-run
costs associated with earthwork on Lot 1 Block 1 Otter Creek Crossing 2°d Addition. (Purchase
and Redevelopment Contract between HRA and SL Real Estate Holdings, LLC)
Koropchak provided a summary of the discussion regarding grading compensation to-date. The
reimbursement of general grading is stated within the contract between Karlsburger and the HRA
is at $.12 per square foot up to $11,002.50. At issue is the cost associated with the unsuitable soil
discovered in a vein on the building site. It is now stockpiled on the City's property. Koropchak
stated that all parties seem to agree that the soils were present when the City bought the property.
The question is who is responsible for removing the unsuitable soil and the stockpile of that
material now on the City's property. Additionally, there was also discussion about the removal of
the hill on the Karlsburger property.
Bison addressed the 6,000 yards of unsuitable soil removed. She indicated that Schluender had
worked with RL Larson to push 3,000 yards of the unsuitable soil, which is a topsoil black dirt
onto Karlsburger's site for finish grading. The balance of the 3,000 yards would be spread over
the City's site. RL Larson will charge $1.20 per cubic yard for spreading. Bison had given them
permission to spread the dirt. Karlsburger had also utilized the material cut from the berm to fill
the vein.
Fair rephrased that the HRA has already accepted some of the cost for the excess grading in
spreading the dirt mentioned by Bisson. However, the cost for the removal of dirt in the vein is a
separate issue.
Andrews asked if there was any understanding of an obligation that was not delivered, or
warranties that have not been met. Koropchak stated that based on the contract, there was no
warranty on the soils. Andrews asked if there was a contract issue, or if consideration of
reimbursement was a goodwill gesture. Koropchak confirmed that the consideration of possible
reimbursement would be outside of the contact. At the last meeting, the HRA members present
also had the desire to get more information on the issues.
Fair stated that he was of the opinion that contractually, the land was sold as is, and that there was
a provision to allow for payment of general grading. Fair stated that he doesn't think the HRA
can justify this additional expenditure.
Maher stated that if the boring samples had been taken in another location, they wouldn't have
purchased the lot. In that case, the HRA would have needed to handle the removal on its own.
Maher stated that what they are working toward a compromise with the HRA on the removal.
Andrews questioned whether the issue is the expenditure amount, or who is responsible.
Andrews asked Frie what would happen in a private selling transaction. Frie stated that you
would go back to the contract, however, this is a unique issue. There is a good will issue here.
They had indicated that they felt they were misled.
Andrews asked if there was incomplete or incorrect information given. Maher stated there was
not. Frie pointed out that had they done a soil boring, they wouldn't have purchased the site.
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Mayer asked if there was something wrong with the soil, or it was simply not conducive to
building. Panek stated it is unsuitable for a building; it was not hazardous. Mayer noted that the
HRA isn't selling pad ready sites. Fair stated that companies do soil borings, but in this case, the
soil vein wasn't caught.
Lahr stated that for him, it comes down to the contract. There will always be unknowns. That's
what the representation was at the time. He indicated that he doesn't believe that the City has a
financial responsibility in this case. Andrews asked if Fair concurs. Fair stated that he thinks we
have a responsibility to the City's investment.
MOTION BY COMMISSIONER FAIIZ TO REAFFIlZM THE TERMS AND CONDITIONS OF
THE EXECUTED PURCHSE AND REDEVELOPMENT CONTRACT BETWEEN THE HRA
AND SL REAL ESTATE HOLDINGS, LLC, DATED APRIL 12, 2006.
Panek stated that more than general grading occurred on that site; the work was actually
excavating and mining. Fair stated that the HRA's contract covered general grading.
Bison stated that she had done a comparison with Dahlheimers. The $0.12 was calculated based
on $45,000 over 8 acres. It did include some correction, not just general grading.
MOTION SECONDED BY COMMISSIONER LAHR. MOTION CARRIED, 3-1, WITH
COMMISSIONER FRIE IN DISSENT.
6. Presentation by Mark Ruff: "What is Tax Abatement and is it a viable economic development
tool for the City of Monticello?"
Mark Ruff, Ehlers and Associates, provided a brief presentation on tax abatement. The
Commissioners and guests each received a copy of the Powerpoint presentation notes. Ruff
reviewed the limitations and opportunities for tax abatement, as well as background on how
communities use it as a economic development tool.
Andrews clarified that different major jurisdictions can participate at different levels. Ruff
confirmed. Lahr asked how abatement could affect the next year's taxes. Ruff stated that it can
be given back to property owner or be used to fund service that the City builds/provides. Herbst
asked how often the school district chooses to abate. Ruff stated that Counties and school
abatements are rare.
Frie asked about using both TIF and abatement. Ruff stated that you cannot give property owners
or developers abatement in a TIF district. Stumpf confirmed that if user defaults on the terms of
their contract, there is no need to continue to pay. Ruff confirmed, stating that the HRA can set
any goals it wishes as part of the contract.
Stumpf asked if there is any area in particular for which the HRA is looking to use tax abatement.
Koropchak stated that she had wanted the information to be presented for the Council and HRA
to learn more about, as a possible tool for economic development. Koropchak cited the
Monticello Dental Clinic relocation as a potential opportunity. The City retains a business with
higher wage levels.
Mayer inquired if asked if using the dental clinic as an example, if the clinic owner took another
building in town, or built, the City could have given him back a portion of his taxes. Ruff
confirmed. Herbbt asked if Ruff supports the use of tax abatement.
Ruff stated that if the City can honestly and easily communicate why it is being used. Fair asked
if the City should have pre-determined districts. Ruff stated that he would recommend that the
City have pre-set districts or qualifications/policies. Stumpf asked if tax abatement is better
suited for smaller communities. Ruff stated that generally they are in greater need for economic
development.
Koropchak recommended having policies in place, rather than making them up as you go along.
Stumpf asked if it had been used in Monticello before. Koropchak stated that it had not. Fair
asked if there is a common set of items that communities look at. Ruff stated that he could
prepare documentation in that regard.
7. Consideration to hear a negotiation progress report from Steve Conroy.
Koropchak referred to the email sent by Conroy which indicated that Springborg's counter offer
was $193,200. Froslie's price went to $500,000. Lahr noted that the HRA had agreed that it
would purchase both or none. The Commissioners discussed strategies for counter offering. Lahr
suggested offers equitable based on square footage. Frie also suggested meeting other terms for
the seller. Lahr recommended $17.50 per square foot, both parcels, willing to work with them on
terms. The Commissioners agreed on the rate recommended by Lahr.
Consideration to authorize payment of HRA bills.
Koropchak provided the HRA with an additional invoice from the Conroy Law Office, as related
to the downtown property acquisition. Frie noted that he had agreed to $150.00 per hour. The
invoice showed an hourly rate of $190. Koropchak will call.
MOTION BY COMMISSIONER LAHR TO AUTHORIZE PAYMENT OF HRA BILLS,
SUBJECT TO ADJUSTMENT OF CONROY INVOICE.
MOTION SECONDED BY COMMISSIONER FAIR. MOTION CARRIED, 4-0.
Consideration of HRA Executive Report.
The Commissioners had no questions regarding the information in the report.
9.5. Walker In-Store Report
Walker In-Store had inquired on whether the HRA would be willing to meet the same offer on
another site within the business park, noting the impact of AVR. Koropchak had stated that given
the lot and the long-term investment, Walker was not interested in the site the HRA had offered.
Lahr stated that as Walker doesn't meet the criteria for 1.5 acres at $1.00, he felt the answer
should be no. However, they could purchase any other lot at market rate.
MOTION BY COMMISSIONER LAHR TO REAFFIlZM THE TERMS OF THE ORIGINAL
OFFER TO WALKER IN-STORE FOR OTTER CREEK BUSINESS PARK.
MOTION SECONDED BY COMMISSIONER FRIE. MOTION CARRIED, 4-0.
10. Committee Reports: Marketing -Meeting set for Friday.
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Fiber Optics -November 8`~' fiber forum.
10.5 Transformation Home Loan
Koropchak provided the Commissioners with new application for the transformation home loan
program. She noted that an inspection hadn't been completed for the substandard test. Fair and
Andrews stated that if it is in the district, there shouldn't be a problem. Koropchak stated that she
questioned some of the items listed, as they seemed to be maintenance-oriented. Koropchak
reported that the 2005 market value was $160,500. Fair clarified that it will be owner-occupied.
Koropchak confirmed.
MOTION BY COMMISSIONER ANDREWS TO APPROVE THE TRANSFORMATION
HOME LOAN FOR 501 WEST BROADWAY, IF THE PROPERTY MEETS CRITERIA.
MOTION SECONDED BY COMMISSIONER LAHR. MOTION CARRIED, 4-0.
Koropchak asked the Commissioners their opinion of a situation in which the property value is
over limit at $213,050 due to location on the river, however, the home value is less the program's
maximum required market value. She indicated that she had received a call regarding this
situation. Lahr stated that the point should be to help the more disadvantaged. Andrews pointed
out that if the HRA evaluated the two separately for this program, it becomes another criteria to
measure..
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11. Next regular HRA meeting -Wednesday, December 6, 2006.
12. Adjournment.
MOTION BY COMMISSIONER LAHR TO ADJOURN.
MOTION SECONDED BY COMMISSIONER FAIR. MOTION CARRIED, 4-0.
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