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City Council Minutes 05-18-1996 SpecialMTNUTES SPECTAL JOTNT MEETING MONTICELLO CTTY COUNCTL AND HR.A Monday, May 13, 199g - 8:30 p.m. Council Members Present: Brad Fyle, Shirley Anderson, Clint Herbst, Brian Stumpf, Tom Perrault Council Members Absent: None HRA Members Present: Al Larson, Roger Carlson, Bradley Barger HRA Members Absent: Tam St. Hilaire A special joint meeting was held with the City Council and Monticello Housing and Redevelopment Authority far the purpose of considering approval far the overall concept plans for the redevelopment project known as Prairie West. The project area is divided into four additions: 1st Addition, which is the original Prairie West subdivision; 2nd Addition, which is the proposed TIF district; 3rd Addition, which is a parcel currently owned by the City; and 4th Addition, 1400 West Broadway. Economic Development Director Ollie Korapchak reported that on May 1, 1996, the HRA approved entering into a preliminary agreement with the developer, Cedrus Creek Craftsman, Inc. (John Komarek), which authorizes Publicorp, Inc., to begin preparation for establishment of the TIF district and Kennedy & Graven to begin preparation of the private redevelopment contract. Koropchak noted that the overall goals of this redevelopment project are to remove blight, increase property values, and create public green space. Mark Ruff of Publicorp, Inc., explained that the project would include 29 housing units. The 1st Addition would be funded with private dollars, and the 2nd Addition would be the proposed TIF District No. 1-20, which would require HRA assistance in the amount of $130,000 plus the City property in order for the developer to receive a total sales return of 6.5%. Typical development returns are 9.5%. Without HRA assistance and the City property, the return would be only 2.1%; therefore, the proposed TIF district satisfies the "but for" test. Ruff went on to explain that the 3rd Addition is the parcel currently owned by the City, on which approximately $35,000 was spent to clean up the property. He noted that a city can avoid a HACA lass if it commits to a local contribution of at least 5°Io of the expected tax increment. It was proposed that the City gift $20,000 of the value of the property to the developer and receive a payment of $15,000, thereby avoiding the HACA penalty, receiving some compensation, and receiving tax revenues from the 19 units of housing outside of the TIF district. Page 1 Special Council Minutes - 5/13/96 Joint Meeting with HRA The 4th Addition property located at 1400 West Broadway would be purchased by the HRA with the intent of deeding the property to the City to use as green space. The amount of the purchase price, including estimated relocation costs and attorney, relocation consultant, and appraisal fees is $145,000. Council discussed the amount the City has invested in the parcel being proposed for the 3rd Addition and noted their concern with making a local contribution of $20,000 in addition to the TIF district and purchases that would be made by the HRA. Staff also discussed with Council the $11,000 in taxes is owed to the County for this parcel and the agreement with the County that the City would market the property for sale. City Administrator Wolfsteller advised that any agreement regarding the use of this parcel for the proposed Prairie West development should be presented to the County Board. Councilmember Perrault suggested that the 4th Addition proposed for green space should be developed if possible rather than adding to the park inventory. The developer noted that there is very little high ground in this area and that most of it is undevelopable. Al Larson noted that the proposed development is supported by the HRA because of the benefits to the tax base and the local area created by combining the area parcels into a single development project. In addition, a blighted property will be eliminated and replaced with a park on the pathway. AFTER DISCUSSION, A MOTION WAS MADE BY SHIRLEY ANDERSON TO APPROVE THE OVERALL CONCEPT PLAN FOR THE REDEVELOPMENT PROJECT KNOWN AS PRAIRIE WEST, ESTABLISH TIF DISTRICT NO. 1-20 AS A REDEVELOPMENT DISTRICT, COMMIT A LOCAL CONTRIBUTION OF $20,000 FOR THE CITY-OWNED PARCEL, AND ACCEPT THE PROPERTY LOCATED AT 1400 WEST BROADWAY FOR USE AS GREEN SPACE. Motion died for lack of a second. A MOTION WAS THEN MADE BY BRIAN STUMPF AND SECONDED BY SHTRLEY ANDERSON TO APPROVE THE OVERALL CONCEPT PLAN FOR THE REDEVELOPMENT PROJECT KNOWN AS PRAIRIE WEST, ESTABLISH TTF DISTRICT NO. 1-20 AS A REDEVELOPMENT DISTRICT, AND ACCEPT THE PROPERTY LOCATED AT 1400 WEST BROADWAY FOR USE AS GREEN SPACE. THE CITY MUST RECOVER ITS OUT-OF-POCKET COST FOR THE CITY-OWNED PARCEL PROPOSED FOR THE 3RD ADDITION OF THE PROJECT, AND THE PROPOSAL MUST BE PRESENTED TO THE COUNTY BOARD. MOTION ALSO INCLUDES ADOPTING A RESOLUTION CALLING FOR A PUBLIC HEARING ON ESTABLISHMENT OF TTF DISTRICT NO. 1-20 FOR JUNE 24, 1996. Page 2 Special Council Minutes - 5/13/96 Joint Meeting with HRA COUNCILMEMBER PERRAULT THEN AMENDED THE MOTION TO ADD THAT THE AREAS THAT ARE DEVELOPABLE ON THE 4TH ADDTTTON PARCEL ARE TO BE DEVELOPED RATHER THAN USED FOR ADDITIONAL PARK AREA. Voting in favor of the motion: Brian Stumpf, Shirley Anderson, Clint Herbst, Tom Perrault. Opposed: Brad Fyle. Fyle noted that if the City is reimbursed the cost for the City-owned parcel, the City will suffer HACA loss due to the proposed TIF district. Motion carried. SEE RESOLUTION 96-20. Mark Ruff noted that the HRA wauld not recommend that the City lose HACA aid and would meet with the attorney to ensure no loss of HACA to the City. There being no further business, the special joint meeting of the Council and HRA was adjourned. r ~~~- Kare Doty Office Manager Page 3