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IDC Agenda 06-21-2001AGENDA MONTICELLO INDLJSTR[AL DEVELOPMENT COMMITTEE Thursday, June 21, 2001 - 7:00 a.m. City Hall - 505 Walnut Street, Academy Room MF.,MBERS: Chair Dick Van Allen, Vice Chair Tom Lindquist, Don Smith, Kevin Doty, Bill Tapper, Tom Ollig, Don Roberts, Mike Benedetto, Mary Barger, Susie Wojchouski, Barb Schwientek, Ellen Perrault, and Dan Olson. COUNCIL: Mayor Roger Belsaas. STAFF: Rick Wolfsteller, Jeff O'Neill, John Simola, Fred Patch, and Ollie Koropchak. IDC MISSION STATEMENT: To maintain and increase the industrial tax base and to create jobs in the City of Monticello, Minnesota. Call to Order. 2. Approve the May 17, 2001 [DC minutes. 3. Subcommittee and Other Reports: A. Marketing -Smith B. Long-Term, Cooperative Land Use Decisions -Van Allen C. Membership -Update or acceptance of a Township Board Member as IDC -nember. Smith D. Mayor's Report -Belsaas E. Economic Development Report. Attached. 4. Discuss and decision whether the IDC should meet in July and/or August. 5. A. Review and discuss action taken by the City Council relative to the acquisition of the Chadwick property. See attached Council agenda and minutes. B. What is the Council's follow-up plan? Is industrial development one of the City Council's goals? C. What is the IDC's follow-up plan? 6. How does tax increment financing impact the City taxes? Koropchak. 7. Other business. a) Chamber Lunch, May 21, 1 1:50 a.m., Monticello-Big Lake Hospital, Program: "Introduction of Queen Candidates". 8. Adjournment. MINUTES MONTICELLO INDUSTRIAL DEVELOPMENT COMMITTEE Thursday, May 17, 2001 - 7:00 a.m. City Hall - 505 Walnut Street, Academy Room MEMBERS PRESENT: Kevin Doty, Don Smith, Bill Tapper, Don Roberts, Mike Benedetto, Mary Barger, Susie Wojchouski, Barb Schwientek, Ellen Perrault, and Dan Olson. MEMBERS ABSENT: Chair Dick Van Allen, Vice Chair Tom Lindquist, and Tom Ollig. COUNCIL L[AISON ABSENT: Mayor Roger Belsaas. STAFF PRESENT: Rick Wolfsteller and Ollie Koropchak. Cal I to Order. Kevin Doty, appointed as acting chair, called the IDC meeting to order at 7:00 a.m. 2. Welcome and introduction of new IDC members. New IDC members Barb Schwientek, Ellen Perrault, and Dan Olson were introduced and welcomed. Each member introduced themself and stated their professional association. 3. Approve the April 19, 2001 IDC minutes. Don Smith made a motion to approve the April 19, 2001 IDC minutes. Don Roberts seconded the motion and with no corrections or additions, the minutes were approved as written. 4. A. Marketine Subcommittee Update: 1) Review draft copy of ad for 2002 Community Guide and ratify the decision of the Marketing Subcommittee to place an ad. Don Smith, member of the Marketing Subcommittee, gave a brief history of the subcommittee stating its membership is comprised of HRA and IDC members. The subcommittee funds are derived via a request from the HRA to the City Council at budget setting time. The subcommittee elected to place a full page ad (inside back cover) in the 2002 Community Guide at a cost of $1,250. The guide is distributed by the Office of Economic Development, Chamber of Commerce, City Hall, local lenders, welcome wagon, real estate, hospital recruitment, etc. Due to previous discussions and the interest of the Chamber to promote the City of Monticello, the subcommittee is requesting the Chamber of Commerce split the cost of the ad in the amount of $625 each. Smith presented a copy of the ad which promotes industrial development within the City of Monticello. The ad is centered around the Twin City Die Castings project with quotes by the CEO of the TCDC and the project manager of the general contractor. Barb Schwientek made a motion to ratify the decision of the Marketing Subcommittee to place an ad in the 2002 Community Guide at a cost of $1,250 and requesting the Chamber of Commerce to split the cost. Seconded by Mary Barger and with no further discussion, the motion passed unanimously. 1 IDC Minutes - 5/17/01 2) Approve IDC Letter to Chamber of Commerce. Upon the request of the Chamber Director and the direction of the IDC Chair, Koropchak was asked to draft a letter to the Chamber re-affirming the IDC's agreement within the 1996 Organizational Restructu--e Agreement, stating the IDC ratified the decision of the Marketing Subcommittee to place an ad in the 2002 Community Guide, and requesting the Chamber split the cost of the community guide ad ($1,250) at $625 each. As a benefit to the new members, Tapper gave a brief history of the agreement and the transfer of the $9,640 by the 1DC to the Chamber. Although undocumented, the intended use of the dollars was for the good of the City of Monticello stated Tapper. Bill Tapper then made a -notion to approve the letter to the Chamber of Commerce as drafted. The motion was seconded by Don Robe--ts and with no further discussion, the motion passed unanimously. B. Economic Development Report. Koropchak reviewed the attached report. In addition, it was noted that the HRA and EDA have received letters of commitment for funding and the "but for" test from the lender of Integrated Recycling Technologies, Inc. Closing documents are being prepared for an anticipated closing date of June 12 or shortly thereafter. Delivery of steel is expected around June 25. Secondly, EDMA is now interested in Monticello as Rockford's mini-num lot size is two acres. Cost of city owned land $70,000 ($22,000 per acre plus $46,000 per acre in assessments). Looking for smaller lot size availability in Monticello. Thirdly, meeting with Production Stamping, Inc. Now looking at 40,000 sq ft building, may be 2001 or 2002 project. To check out availability of State and Regional funding. Four-acre parcel perhaps located with the extension of Dundas Road. Last, a lead from lender. 10,000 sq ft metal building. Welding/fabricator. 5/6 jobs. Lease up Februar}~ 2002. C. Mayor's Report. No report. mbershio Co-nmittee: A) Update or Acceptance of a Township Board Member as IDC member. Smith reported he has left a message with a township board member and has received no call back. However, Smith stated he just ran out of time and will pursue for an update in June. B) Letter to Mosford. For purpose of followup, a copy of the letter to Mr. Mosford relative to IDC decision on the request for leave of absence was attached. 6. Industrial Land: A) Short Term, Acquisition of Industrial Land -Update and discussion whether to recommend proceeding with acquisition of Chadwick/Goeman or to look at other options. A copy of the cover letter from Chadwick dated May 14 to the Mayor/Council and the April 18 land purchase offer was distributed to IDC members. In the absence of the Chair and Vice Chair, Koropchak requested direction from the IDC whether to recommend proceeding with the acquisition of the Chadwick parcels or to look at other options. Wolfsteller recapped the offer for the entire 180 acres as $3.2 million and $650,000 for gravel rights. The following is a recap of the IDC discussions: Could the City negotiate a better deal for Parcels A and B in exchange for re-zoning of Parcel C? Perhaps. However, a re-zone takes a 4/5 vote of the City Council and 2 IDC Minutes - 5/17/01 the MOAA. Commercial development would create a tax base equal to industrial but generally speaking wages of commercial development are less. How much of Parcels A and B is developable? Wolfsteller estimated 100 acres of the 143 acres. In addition to the wetlands and power lines, the acreage south of the proposed West Chelsea Road is currently zoned residential. Is the acreage lying westerly along I-94 reserved for a folded cloverleaf? What is the incentive to purchase the wetland? Ponding, offer is $ .02 per square foot. is $30,000+ per acre a reasonable price for undeveloped land along 1-94? One member stated undeveloped land sold for $20,000 per acre in Elk River (80 acres consisting of low-land) beyond Walmart and Hwy 169. Another mentioned Big Lake purchased property for $14,000 per acre. Does Chadwick need the city and is that a benefit for negotiating? Putting numbers aside: How motivated is the City to make an investment or should the Chadwick Group develop the entire parcel? If not the Chadwick property, where then? Again, the Chadwick Group needs a zoning amendment at the City and MOAA level and needs the City to obtain access to the I-94 parcel via West Chelsea Road. Doty asked the IDC to bring the discussion to a closure, noting the number of years the IDC has requested the City to obtain land for marketing. Members felt there was room to negotiate. Don Smith made a motion stating: Again, the IDC sees the need for industrial land and encourages the City to continue negotiations with Chadwick and requested the IDC Chair and Vice Chair give input and be present at the City Council meeting of Tuesday, May 29. Mary Barger seconded the motion and without further discussion, the motion passed unanimously. As a lobby organization, 1DC members can independently lobby Council members. B) Long Term. Cooperative Land Use Decisions -Update on meeting between Benedetto Van Allen, and O'Neill. Benedetto stated the group's focus is long term, 20-25 years out. What's best for the area, the big picture? The first meeting held between Van Allen, O'Neill, and himself centered around strategies. To get off center, the group will start small with discussions among Franklin Denn, Township Chair, and Dick Frie, Planning Commission Chair. Others will be added later such as Pat Sawatzke. Tapper made two suggestions for the group: To use p1f`a model such as Maple Grove looking at their 20 to 30-year planning and growth in five-year increments. Secondly, to look across the river for potential growth, town boundaries do cross rivers such as St. Cloud. Feedback relative to "Is the objective of the Industrial Luncheon being mete" The iDC recommended the Marketing Subcommittee assess the objective of the Industrial Luncheon and give it a fresh look as was done with the Industrial Banquet. Other business. a) Chamber Lunch, Vintage Grill, May 17, l 1:50 a.m. - ] :00 p.m. Program DSL by TDS Telecom. 9. Adjournment. The IDC meeting adjourned at 8:50 a.m. ~ ~ ~C~ Recorder ECONOMIC DEVELOPMENT UPDATE JUNE 13, 2001 by Ollie Koropchak Block 52 -Since the joint meeting of the HRA/Council, HRA Chair Frie and Koropchak met or spoke with all property owners of Block 52 with the exception of Kathy Froslie and including Pat Sawatzke to determine their short and long term plans. Additionally, Frie and Koropchak met twice with Pat O'Donnell, proposed owner, and Mike Cyr, proposed contractor, relative to the options for redevelopment of Block 52. Based on our conversations with property owners, the direction from Council and, given the fact, the preference of the proposed developers was either to redevelop along River Street or redevelop along Walnut Street at their existing site; the HRA on June 6, 2001 encouraged the developers to proceed with redevelopment on their existing site. The developer approached the HRA with the River Street concept knowing of the H12A's interest to redevelop the block and the project along River Street cash-flowed for the developer because of the proposed mixed use concept: retail, office, and upscale condos with underground parking which was consistent with the Comprehensive Plan. A project along Pine and Broadway would not include housing and underground parking. Given the interest of certain property owners of Block 52, upon finalizing the TIF assistance for redevelopment of the Amoco and Front Street sites, and based on the decision of the Legislators to reduce the tax classification rates; the HRA plans to meet with interested sellers to proceed with negotiations to acquire in a partnership approach for redevelopment within two/four years. The HRA authorized the preparation of the Contract for Private Redevelopment with Masters Fifth Avenue for redevelopment of the Amoco site. The proposed project is the construction of 5,700 sq ft restaurant and office facility with second-floor rental apartments (6 units) and a detached carriage house consisting of indoor parking and second-floor apartments (2 units). The H12A will reimburse the developer of the lesser: A. the cost to acquire and demolition the Amoco site, B. not-to-exceed $185,000, or C. the amount of the "available tax increment" generated from the project during the life of the district. In addition, the HRA approved up to $45,000 for parking development on adjacent parcels from surplus funds within the Downtown TIF District. Based on tax increment cash-flows including the proposed classification rate reductions, the committed debt on the Amoco site, and the proposed debt on the Front Street site; the Downtown TIF District has sufficient tax increment to proceed with negotiations for redevelopment of Block 52. City Council supported HRA's resolution of eminent domain for the property located at 218 Front Street. Industrial Development IRTI -TIF District a roved b Council. pp y Development Contract agreed upon by City, HRA, and IRTI. Full building/site plans submitted June 7. Plat approved subject to City Engineer approval of ponding. It is my understanding the initial project costs have escalated due to landscaping, irrigation, and ponding. Steve is so busy, he prefers Open House reception later, not traditional groundbreaking. The Marketing Team of Van Allen, Barger, Hoglund, Herbst, and Koropchak visited a manufacturing company in Rogers on June 6. No commitment. Looking to construct a 35,000 - 40,000 sq ft building. 45 new jobs at average wage of $15.00 per hour without benefits. Marketing Team of Barger, Hoglund, Doty, Baas, and Koropchak scheduled to visit a small machine shop in Eden Prairie June 19. Looking at a 10,000 sq ft building. 3-5 jobs at $20 per hour without benefits. ~-•+ ~' r~ - ~ 'n^ ~-¢- •'-~-~ ~ 1~~ ~ '~•s~t..,. In lieu of the two articles in the Minneapo is Tri une on Sunday and onday relative to tax increment financing, attached is a copy of the Tax Increment Property Tax Data, Taxes Payable 2000 for Wright County. You will note, the City of Monticello has 14 active TIF Districts for a captured tax capacity of 3.85% of the city's total tax capacity. Assuming the Council approved TIF District No. 1-28 and with the HRA adopting a resolution decertifying TIF District No. 1-12 (Aroplax) on June 6, the city remains at 14 active districts. In past years, the HRA has used the pay-as-you-go finance method (reimbursement). Therefore, if the classification rates are reduced, the property owner pays less property taxes, the HRA collects less tax increment, and the developer is reimbursed less tax increment ("available tax increment"). GMEF No. 007 -The first Standard Iron balloon payment was paid the end of May 2001 per Loan Agreement. Hoglund gave lead for potential industry from South Carolina -See attached letter, faxed lead sheet from CB Richard Ellis on FayMar building for lease and Barger's phone number. Had call from real estate agent "thanks" and company representative planning to visit site. 20-30 jobs. H-Window building -Red Wings Foods elected not to proceed with acquisition. Currently are working with local lender for potential to construct. Attached articles from City Business Journal. Wright County Partnership held a Business Growth 2001 Expo, a resource seminar for area commercial/industrial businesses on June 12. The seminar included financial and • technical resources. The seminar was well planned; however, only a few businesses attended. Monticello was not allowed to market our loan program which I see as an additional asset. Frauenshuh Companies -working with Rockford. One local manufacturer looking to expand in 2002. C~...a~ - )u..w• ems. t~. tYJ ,~ ~ ~k 1:1 C~ ~"' • • co t~ m ao 00 ~n O O M O N ~Y' CO ~ O rJ' 00 CO O o0 O M O r HI O ~ ~ ~ N W r r F W z H z O 1~ O M O ~ ~' (fl M r W W O O O N r cp v co r ao ~n Q1 -L') M M N ~}' CO N O OO CO (p O O O M O M O GO f~ OD M rxl fr ooooo~ A M N V ~-- V d0 r , ' ~l O to tf) I~ to !~ y~ ~ ~S' 1~ lf~ r t(~ to H a F,,, d U ov~aoM Cp ~ CO N r I(~ M WW ~ ~ 1~ ~ ~ e-- --M!!! j jj W ~ d' 0~ N 1~ e0 jj r1/ ^ ~~+ jl~ ~ 01 ~t (O O O a a ti O ' F ~ a ~ d U ~ omvaoo Cfl O O ~ N ao t1') ~"~ V r tf~ M O d' ~ (..i -. I ~ ~ O ~' M N a r N M tD O r CO N r ap CO O N r M r CO r F O ~ U t/j N N ~' r r. (p E,,,y r 0 z H w H d a U U ~ U V ~ ~ Z ~ Z U ~ o~=~aZ O ~ U O Z ~ ~ M ~n r t1') M~ .- O r o (D M I~ ~-- O O N (O O ~-- ~ O s- N N O 0 0 00 mil' tI~ M dO '~' N (O ~ O r1' r M O to O O O ~t C M CO O N op r N r r r r ~p r r M O ti ti M (O tf~ f` r OO Op M O O r O r ~ CO Op CO r CO CO r ~- O N ti O s- N O N ~ ~ O M r- O M r N M t~ CO O O lC') 1~ 00 M O O O tf) I` ~ r N ~ f~ Cr M ti V O In O r d C'rj i, V N r pp O o00 O ti O t) O O t[> Cp ~ M r r (V pp O ~ r ~ O CO M 00 N I~ CO N O O~~ ~~ o~ 0 0 N r- d0 r M ~ 1~ M ~ ~ f~ CO ~f f~ a-- r O (p CO M CO 00 1~ O N tf) f~ 'V' 00 N N d0 r N N r r r (p r r M tt~ CO ti O M dO I~ r O r CO r r In O O M r r ~ r CO O O M N r7 ti O O N M 0 0 0 0 0 0 0 0 0 0 0 CO O N~ N CO r tf~ (O O I~ O OO O CO M O I~ M OO O> ~ N ~ N O) CO O O N f~ M~ 0 0 CO r r r ~ TV O t0 N 00 r t(~ OD I~ O M O M oD !/> f` r r O r N O M Op r O O M r 1~ Ch lfl O In lf) to CO O O M O lA r I~ O l(') V ln. M O r M r (O M r s ~- N N O r r r tO r ~ `- N M 0p ~ tp N I~ 00 O M 1~ oD ~ r N ti M N I~ GD N 00 M V~ r r V' 01 O CO V' M ~- M CO ~ M I~ N O p M~~ to 00 r f~ N CO O O lA I~ M O r O N CO CAD OO t0 M~ 1~ r r (p r (y M r In M N tt~ ~}' to t0 M ~' N r ~- r 0 0 0 I~ M O lf7 M d7 CO 1~ N M OD Cp N ~ O O CO I~ O M 0p ~ M Cp ~ O N V r r 0 O O O ch O N O 0 N M ~ M O ~ ~ ~ ti ~ ~ ~ N `' ~t N ~ M r ~ ~' r M U w U U - ~QU~UJY~~~ij~0 ~ZO~O~-'VSO=~ wQ~gQQ~h-~YVZ mZLL-gJ~~ZZU~~ ~ z~ O w 0 0 0 0 0~ 0 QQODUD=~~~~caU O ti O O N M f~ ~-- O (gyp N 07 M rn N O Ch O J U ~ Q --i F- ~°~o U ~ ~ } m ~ z z Q ~ ~ O UU(~U J O I- W 1- H June 8, 2001 Mr. Charlie Gorman International Cups 577 International Drive Bennettsville, SC 29512 Dear Charlie: It was great talking with you today and hearing of your company plans to expand to Minnesota. faxed you the information on the 35,000 sq ft facility for lease in whole or part by CB Richard Ellis and also gave the name and telephone number of Brad Barger who has received city approval to construct a two 14,000 sq ft manufacturing facilities for lease. The City of Monticello offers aloes-interest-fixed loan program for manufacturing companies. The program is available for real estate or machine and equipment needs. We work with conventional lenders and take a subordinate position behind the lender. Additionally, the City of Monticello offers affordable housing options and great opportunities for families: excellent school system and health care facilities, community center and pathway systems, and excellent location along I-94. Please review the attached Monticello, We're Open for Business marketing piece and the community.profile and guide. On your next visit to Minnesota, please stop by the Monticello City Hall located within the Community Center at 505 Walnut Street. If I can be of further assistance, please call me at 763-271-3208 or a-mail okoropch(a~,uslink.net. Sincerely, CITY OF MONTICELLO ~~ ~ ~ Ollie Koropchak Economic Development Director File Monticello City Hall, 505 Walnut Street, Suite 1, Monticello, MN 55362-8831 • (763) 295-2711 • Fax: (763) 295-4404 Office of Public Works, 909 Golf Course Rd., Monticello, MN 55362 • (763) 295-3170 • Fax: (763) 271-3272 MONTICELLO FROM C B AiC'r.AnD ELL1S a ar 1 307 Chelsea Road Monticello, Minnesota SMrbume '~~~ `~~ \._ . ou^ •p >~ 9 a ~ ~ (WED) 6. 6' 01 8:24/ST. 8:23/NO. 4863681968 P 2 Y' C~ Building Features and Benefits Building Square Footpge: Total: 35,4t)n s.f. Office: 3,00 s.f. Warehouse: 32,400 s.f. Ciear Height: 18' Year Built: 199`1 Loading: One dock and one drive-in door Loo Size: Approximately 3.24 acres Access: Just off I-44 Other: ^ 5-ton bridge crane •' • ^ Outside storage Nathan Arnold 952.924.4855 ^ 3,200 s.f. of mezzaine level space narnold@cbre.com s -~-.e ~ ~ ` ~ , `~ ~ ~.r~ c. 200 I C 3 F.I C ~1A RD tl L 15. INC. the oboe mrormolion was obroined 6on~ sources bel~e.ad to ` ~ ~~ be ~el~oble, but C9 Rrchord Ellis has not verified n v hot any knowledge regarding the accuracy or compfcveness ~om Simon o! mianwl~on and me kes rno represenrollon or wvrrany concernmo some. Therefore, CB RKhord fl8s discfoims all 1;oiJ,nes ,n moon. non w~rh eny ~.wccwncm: or m<ompleteness. 52.924.4663 tsimon@cbre.com FROM C B AiCFiAAD ELLIS a ar 1 07 Chelsea Road Monticello, Minnesota (WED) 6. 6' Oi 8: 24/ST. 8:23/NO. 4863681968 P 3 ~ y~ ~~ I I I ~' I - - - ~W ^MOLl~-10W 7Y1~-~ - _ _ r~-r~-rrT-r~-r~ 1 ~ ~ 1 i I I 1Ja V I I I ; 1 I 1 I i TT°°°~I ( i i l 1 1 1 1 _-1 _a / I ~Pwl ~-,, ~ I I ~ __ I 1 I ~ I .Af rY I ~ f I M DOYM 1 ~~ I I ~ I II I I 1' I I 1 ` I ~ ~~ w.oomol i I` i I 1 I~ i ~~ ~ ~~ III ~ ~ I~ I+ 1[~l1aL ~ylltYR \, 0.VN SlV'q I "11 1 1 ~ 1 I I i I I ~ I I I , I 1 1 ~~~ ~ ~ 1 I 1 ---I-I 1--I-I-I-1 ~ - ~ ---~ J site ~lcc~a ~B Richard Ellis, Inc. 7760 France Avenue Minneapolis, MN 55• 952.924.4600 www.cbre.com crerAial Special Features ^ Great visibility and accessibility to I-94 ^ Outside storage ^ Infrared heating FROM C $ AiCHAAD ELLIS (WED) 6. 6' 01 8:25/ST. 8:23/NO. 4863681968 P 4 CB D Ibchard Elvis s1,7so,ooa INDUSTRIAL -IMPROVED FAY-MAR FACILITY PRICE 35,400 Sq.Ft. nRt=c f ftVnFR Rnna EXCIUSiV'e 307 Chelsea Road Monticello WNght For Lease ADDRESS -CITY COUNTY NIA N!A NIA RENTlMONTH RENT / SQ. FT. / MO. DOWN PAYMENT SUBMITTED BY: Nathan Arnold 3,000 sf Yes No Yes Ampie 7760 France Ave. So. OFFICE AREA DIVIDE RAIL SPRINKLERS PARKING Minneapolis, MN 55435 1 DOCK 1 GRND.208/4118 V 2500 A 3 P 18' OFFICE: Minneapolis/St. Paul LOADING DOORS ELECTRICAL POWER TRUSS HGHT. 254 1.1 PHONE: 952.924-4855 LOT SIZE AND DIMENSIONS MAP PAGE ZONING 04118/2001 013374 Nathan AmoidlTom Simon Bloomington DATE LISTING NUMBER LISTING SALESPERSON(S) OFFICE LAND AND STRUCTURES 35,400 SOFT. FREESTANDING BUILDING FOR SALE OR LEASE! ' 3,000 sq.ft. office ' 32,400 sq.ft. warehouse ' 3,000 sq.ft. mezzanine ' Built in 1995 `Tilt-up panel construction ' Infrared heating ' 1 dock door ' 1 drive-in door ' 18' clear height ' S-ton crane SITE IMPROVEMENTS AND UTILITIES ' Outside storage available Utilities: Gas/electrlc - MinnegascoCXcel energy Sewedwater -City of Monticello TERMS AND TAX DATA SALE PRICE: $1,750,000 LEASE RATES: $4.25 psf for warehouse3 $9.25 psf for office TAXES: $43,552 PID#: 155-085-0010-10 COMMENTS • Exceptional building for sale or lease with great exposure on Interstate 94 in Monticello. ~:a RICHARD EWt, INC. • LICENSED REAL EMATE eRC+ICER The iniormadon above has been obtahea from souroee bellavetl retlebb. yllNb we do nd doubt Ys acaaacy, we nave not verNbd M and make no guararNee, warranty or represenlauon about ft. n b your responsibYity to Indepsndenrry conlirm Na eecureey and oompbteneaa. My projediona, opNiona, asaumptbna or eatimatea used are br suampb ony and do not represent the current or future peAormance of the property. The value of fhb transaction to you dapartds on toff and ot'+er lectors which should he evaluated by your tae, fhancbl and lapel advbora. You end your edvisore should conduct a txreful, independent Inveetipation of the property b determine to your awbtactbn Nte supadWy of Ina ptopefty for your naede. 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U •v o U 3 °.~.c .. ~~'~ ~O GQ a c. ;~ a. ~ . _ ~, ~ M M ~ a ~ a ~ '~° k=,'~ ;~ '~ 1~, ~ ~ ~ ~: ~ w _ ~ ''^` on ~ ~ ''~ ~ .~ ~ .~ ~ w~ ~~~ ~ ~w ~ ,. ~ ~: ~ ~ , ._ , v v v f`I ~ ~ °J ~ o ;~ ~ .~ a~ ~ ~ ~' v 3 ,~ v w ~~w ~J • Survey-of Corporate Real Estate Executives Overall Ke ..Location Fac~ors 1'.' Proximity to customers/clients 2. Access to interstate highway 3. Reasonable real estate costs 4. Availability of skilled workers 3. Pro-business government officials 6. Reasonable wage rates 7. Reasonable/stable .utility rates 8. Reasonable living costs 9. Reasonable business taxes 10. Cultural/recreational facilities Table 3 May 28, 2001 Municipal Economic Development Officials Ratings of Very Important t;ommunity Advantages Community Advantage Ratings as very important 1. Quality of life_ 72 % 2. Quality workforce 59 3. Good schools 55 % 4. Work ethic 52 5. Transportation access- 51 % 6. Cost of living 48 % 7. Close to markets 48 8. Public safety 46 % 9. Cost of public housing 45 10. Government services 40 % 1 i. Recreational amenities 38 % 12. Proximity to housing 34 % 13. Environmental quality 33 14. Low labor costs 29 15. Cultural amenities 25 °~, 16. Climate - - -' ~ ° 21 17. CEO preference 20 able 4 Analytical Tools and Methods Most Frequently Used to Evaluate Community Impacts of Economic Development Projects Tools and Methods Percentage Individual experience and knowledge 50.3 Openpublic meetings 41,7 Tax impact studies 38.1 Planning commission goals 35.1 ~ Dollars of private capital invested 35.1 Project hearings board review 34.'7 New business starts 20,2 Company sales increases 16:9 Employment impact studies 15.5 Income and wage multiplier impacts 14.8 Increases in company activity 11.8 Worker training studies 10.8 Business special interest group views 10.6 Neighborhood advisory group views 9.5 Citizen special interest group views 6.9 Survey of citizens 6.7 Contribution to firm's ROI 5.0 a a fable 6 0 c d 0 w ..~ c. ~ ~ x ~ A4 3 _Q ~ ~ V7 n t` 'cf ~ [~ W M O~ N y o ~ ~ ~ ~ e}' ~' ~ et ~t ~' v7 M M N a~ ~ ,..~ A L c L U Q ~ .rn O - - a. O ~ 0 L .h 00 (~ 4A M ~ 00 00 ~D N W w h o ~t oo +n -- o o~ oo o~ w O iu a> s v ~ t., C ~ 3 eD ~ s ~ ~ O ~ ~ a~ ." "~ ~, ~ ~° °° ao i a a' _~ °~,' ~ w ~ a _ Q v y'yw~~ ~~v CD ~ a s ao+.: °~ K y w ~ ~ C U v °' c 'fl oo ~ :d a ° °' C. ~ '~ ~ .U cu A. G. ~ ~ ~~ as ~i c ~ ~ 4r ~. ~ O L~ CL..' O ~ ~ cJ U - i O City Council Agenda - 05/29/0] 7 . Consideration of proposal from Otter Creek, LLC to purchase Chadwick parcel. (JO) REFERENCE AND BACKGROUND As you know some months ago the City Council authorized a land swap whereby the city would trade 60+ acres of city owned commercial land for 120 acres of industrial land. The swap concept included the option of city purchase of an additional 40 acres of industrial land at some point in the future. Completion of the deal was delayed when the property owner requested an additional sum ($800,000) representing the estimated value of the gravel that could be mined from the site. The attempt to develop a method for accounting for this value in the deal was the main cause for the delay. While negotiations were sputtering along, the Chelsea Road project moved forward and the Denny Hecker Auto Dealership was constructed. Due to the construction of the roadway (developed in some part for the purpose of serving a potential city industrial park) and due to other market factors, the value of the property in the owners eyes has increased significantly since the original deal was formed. The last offer by the developer now places the land and gravel value at $3,842,000. It is our guess that the high value placed on the property, especially the freeway portion, reflects interest in use of the property for commercial businesses. The problem is the that the property is not identified for commercial use in the MOAA or City plans. The Otter Creek proposal also allows the city to purchase a portion of the property off the freeway at a price less than the freeway frontage land, however this area is impacted by the power line, wetland and is not contiguous to the city. It is not served by gravity sewer service which means that a significant investment in the utility system will be needed for this property to be available for industrial development. These factors, combined with price, make this option less than desirable. ALTERNATIVE ACTIONS Motion to accept proposal submitted by Otter Creek and purchase property accordingly. The IDC supports acquisition of industrial land but understands that the price of the entire Otter Creek piece may simply be too expensive. The IDC would support a continuing search for industrial land. Perhaps negotiations on purchase of the off-freeway portion of the site should continue or the city should look elsewhere for industrial land. • City Council Agenda - 05/29/0] 2. Motion to table consideration of purchase of Otter Creek partnership property. It is the view- of staff the value placed on the parcel by Otter Creek at this time reflects interest in the land for commercial uses which are not proposed by the City or MOAA. Under this alternative the City would leave the door open to purchase of the property at some point in the future if the price of the land changes to reflect the value of site for industrial uses. Otter Creek would be free to attempt to obtain a re-zoning of the property for commercial use and would also be free to apply for mining permits. Perhaps at some point in the future a high quality commercial development proposal will be presented that would be supported by the City Council and MOAA. As you know, commercial developments can be a great economic benefit to the city because TIF is not usually employed and the jobs created are decent. If Otter Creek does not obtain the desired zoning, then the price of the land might change and the city could consider a purchase in the future. STAFF RECOMMENDATION The City Administrator recommends that the City Council table further consideration of purchase of the entire site for the following reasons: The price. The cost of the land, for both freeway and non-freeway land, is simply too high. The economic return on the investment is not justifiable. Although it would be great to own the land, the city could end up holding the land for a very long time. If the land value is really as high as proposed by Otter Creek, then that means that there must be a demand for the land for a productive purpose. Anyone purchasing the land at the price proposed by Otter Creek is not likely to be purchasing it to sit on it forever. Ulimately, for the investment to be fruitful, the land will be developed perhaps with city involvement limited to providing utility and road access. Other demands for City Dollars. There are other important projects such as street reconstruction that need to be completed in the next few years. Now may not be the right time to spend so much of the city's reserves. Zoning preserves the land for industrial uses. Although it is great to own industrial land, the fact remains that the land is zoned in both the MOAA and city plans for industrial uses. Given the price proposed, it does not make sense to pay so much when the land is protected for industrial uses anyway. • City Council Agenda - 05/29/01 Other options for industrial develo ment. Although the Gold Nugget piece is not identified in the City's comprehensive plan for industrial uses, the possibility exists for future industrial uses at this site. Perhaps it is time to look at this site for industrial or a mixed use residential/industrial development. It it important to note that industrial development efforts and encouragement of industrial developers should not hinge on whether or not the city owns industrial land. Failure to purchase this site should not be construed as lack of desire to attract desireable industrial development to the city. City staff and the IDC should continue in its efforts to attract industry. SUPPORTING DATA Chadwick Proposal • t • Council Minutes - 5/29/01 7. Consideration of proposal from Otter Creek, LLC to purchase Chadwick parcel. City staff reviewed the negotiation process on this property and how initially it was proposed to do a land swap that would involve trading 60 acres of city owned commercial land for 120 acres of industrial land. The negotiation process was complicated by the issue of the gravel mining on the property. Since negotiations began the land values have increased and the latest offer by the developer has the land and gravel ~~ahied at $3,842,000. The Council discussed the cost of providing the infrastructure needed to serve the property and whether the City could afford to make this kind of expenditure when they were also looking at major Council Minutes - 5/29/01 expenditures for street reconstruction as well as other projects. In addition there was some discussion on the proposed use of the land. While it may be that the developer could realize a greater gain if the property is developed as commercial property, in the City's land use plan and in the MOAA plan the area is designated for industrial use. The Council noted that land use designation does set the property aside for industrial development and it was questioned whether it was necessary for the City to own industrial land or just to have industrial Iand available for development. Dick Van Allen from Industrial Development Committee spoke regarding the acquisition of th property for industrial use. He emphasized the need for industrial development for the City's tax base especially in light of the potential property tax exemption for Excel Energy. He asked that the Council give serious consideration to the acquisition of industrial land and to also set up a task force to resolve the differences between the City's land use plan and the MOAA land use plan as well as deal with other issues relating to industrial development. He added that this issue impacts the school district and county as well as the city. Paul Bilotta representing Otter Creek LLC, reiterated that what began as a simple proposal to exchange land was derailed by a number of little issues. A lot of effort was put forth by all parties in attempting to negotiate a land swap. City Administrator, Rick Wolfsteller, stated that the same incentives, i.e. tax increment financing, are available regardless of whether the development is through the private sector or the City. The Council concurred that development of industrial land was important to the City but felt that this particular parcel was too costly for the City to pursue. The current zoning for the property preserves the land for industrial use and in light of some major projects that the City is facing, the cost to acquire this property would take away from funds needed for these other projects. The Council also discussed other possible sites for industrial development including the Gold Nugget property, Remmle property and Pfeffer property. BRUCE THIELEN MOVE TO TABLE CONSIDERATION OF THE PURCHASE OF THE OTTER CREEK PARTNERSHIP PROPERTY. BRIAN STUMPF SECONDED THE MOTION. MOTION CARRIED UNANIMOUSLY. • -, • COMPANY X (TIF DISTRICT I-13) ESTABLISHED OCTOBER 1993, DECERTIFY OCTOBER 2004 MAXIMUM 11 YEAR DISTRICT BASED ON 10 ACRES, 52,000 SQ FT MFG/OFFICE BUILDING 1993 EMV 2000 EMV 1993 OTC 2000 NTC CTC 1993 TR 2000 TR Land LandBldg Bldg $1,250,000 $1,720,200 $1,598 $56,987 $55,~89107.~27% 129.176% TAX INCREMENT IMPACT TAXES PAYABLE 2000 IMPACT ON TAX BASE 2000 NTC CTC Wright County $61,736,076 $55,389 ISD NO. 882 $17,880,648 $55,389 City of Monticello $13,278,375 $55,389 IMPACT ON TAX RATES 1993 TR* 2000 TR % OF TOTAL Wright County 0.311790 ISD NO. 882 0.571500 City of Monticello 0.163130 Other 0.026850 TOTAL 1.073270 0.319530 0.592620 0.356920 0.022690 1.291760 29.05% 53.25% 15.20% 2.50`% l 00.00 OF CTC 0.0897% 0.3098% 0.4171 CTC Building $55,389 $5.5,389 $55,389 $55,389 TAXES $17,270 $31,655 $ 9,036 $ 1,487 $_55,389 $59,448 • CONTRACT -TIF ASSISTANCE The HRA and Company X agreed to the level of TIF assistance: Up to $275,000 NVP at 6% over 9 years for land acquisition and site improvements. Total principal and interest to Company X estimated at $385,000. Process: Annually for 9 years Company X pays property taxes of $75,000 to Wright County Treasurer. Wright County Auditor pays HRA $60,000 (TC on building only at 1.07 tax rate) HRA reimburses Company X $54,000 $54,000 over 9 years = $486,000 The HRA would decertify the district early and HRA portion is distributed to the County, City, School, and Hospital. BIG LAKE CITY PURCHASED LAND FOR $5,000 PER ACRE. TIF PAYS CITY BACK $5,000 x 10 ACRES = $50,000 NPV TIF PAYS CITY BACK FOR INFRASTRUCTURE $22,500 PER ACRE _ $225,000 NPV BUSINESS =LAND FOR $1 AND NO ASSESSMENTS. •