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City Council Minutes 09-14-2011 SpecialMINUTES SPECIAL JOINT MEETING - MONTICELLO CITY COUNCIL AND MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY Wednesday, September 14, 2011- 4:30 p.m. Academy Room - 505 Walnut Street, Monticello, MN EDA: President Bill Demeules, Vice President Bill Tapper, Treasurer Tracy Hinz, Bruce Hamond Absent: Matt Frie Council: Mayor Clint Herbst, Lloyd Hilgart, Tom Perrault, Glen Posusta, Brian Stumpf Absent: None City Staff: Megan Barnett Livgard, Tom Kelly, Jeff O'Neill Call to Order EDA President Bill Demeules called the meeting to order at 4:34 p.m. and took roll call of EDA and Council. 2. Purpose: Presentation and discussion on Embracing Downtown and discussion of Landmark II property Megan Barnett Livgard explained the purpose of the meeting is to listen to Jim McComb regarding the Embracing Downtown project and how the Landmark II property would fit into the plan. City Council was invited to participate in the meeting so that they can hear this information and provide input into the discussion. 3. Presentation by Jim McComb regarding land values and redevelopment strategies for downtown Monticello Jim McComb gave an overview of the area that was studied in the Embrace Downtown study. The plan is to re -orient downtown to focus on a variety of uses conducive to downtown such as retail for shopping, offices, etc. He included a handout showing each block and ideas for potential uses. Clint Herbst asked which things were taken into consideration when the concept was drawn up. Jim McComb explained that they found there is more opportunity on the west side of Highway 25 compared to the east side. The east side is pretty much restricted to smaller buildings up to 20,000 square feet. Jim McComb noted that all of this is subject to change dependent on the development that comes to downtown. The main purpose of the plan is to increase the tax base and increase the revenues derived by downtown businesses. The study took into consideration what types of businesses would garner certain levels of market rents. Glen Posusta asked how the City would address other uses that might want to locate in the downtown that are not included in the plan. Megan Barnett Livgard explained that might require changes in zoning code. Bill Tapper explained that the CCD district already allows a wide variety of zoning so most uses would probably be accommodated. Jim Joint EDA /City Council Special Meeting Minutes — September 14, 2011 Page 1 McComb talked about a preliminary scheme he prepared listing sources and uses of funds showing values and other site information in the plan area. Jim McComb talked about the Walgreen's relocation and how that is related to redevelopment and business relocations in various phases for specific blocks. Phase I includes Walgreen's, Block 1, B, and 34 (A). Phase II would include the Anchor Block which includes blocks 31, 32, 35, and 36. Future phases would include other blocks in the plan area. Glen Posusta asked about other cities of the size of Monticello where there has been development such as a department store within a downtown area, noting those type of businesses seem to be located along a freeway. Jim McComb explained that the advantage that Monticello has is the traffic on Highway 25. He used Mora and Cambridge as examples where there are major routes that run through those cities and there has been development of department -type stores. Traffic studies show that the traffic counts in Monticello are higher than those towns and should be able to draw businesses to locate there. Jim McComb also noted that there will be need for parking adjacent to those businesses and the current layout of downtown is conducive to being converted to meet redevelopment plans. Jim McComb said that he had talked to Kohl's and found the reason they had not located here previously is they felt it would detract from sales in Rogers and St Cloud. They would be open to discussion, although the City would have to offer inducements to draw them here. Jim McComb also talked to Herberger's but feels they would probably need higher inducements than Kohl's. Penney's might be another possibility. Jim McComb explained that Kohl's is already familiar with Monticello because they had researched it previously; it would be a good place to start because the City would not have to prepare as much for discussions with them. Jim McComb explained the overall plan for progression of redevelopment would be to sell pad sites and the surrounding five feet to businesses. The City would own the common areas and would sell parking licenses to the businesses. Jim McComb talked briefly about common parking situations in downtown areas; usually businesses don't have a lot of access for parking and therefore would be looking for a source of parking. The parking revenues could help fund future development inducements. Jim McComb reviewed the Preliminary Scheme he developed for Phase I showing Sources and Uses of Funds. The Scheme compares building sizes (sq ft), land values, sales of pad sites, parking licenses, and tax increment. He pointed out an example of relocating the dental building and redevelopment of part of Block 34 (A), which would result in a positive balance after that is done. Jim McComb also discussed the redevelopment of the remainder of Block 34 (B), which would require location of residents in the apartment building on the block, resulting in a significant cost to the City. In redevelopment of Block B, the anticipated result would be a positive balance. Jim McComb said they would suggest trying to get a small grocery type of business in Block 33, such as an Aldi's or health food store. Joint EDA /City Council Special Meeting Minutes — September 14, 2011 Page 2 Bruce Hamond asked what percentage of the total downtown do these blocks represent. Jim McComb said that he thinks it would be about 40% of the area. He anticipates the building area would represent about a $45 million private sector investment, using a calculation of $80 to $100 per square foot with eventual increase of values. Clint Herbst asked about the possibility of buying out some downtown businesses as part of the downtown redevelopment. He feels that the resulting tax increases may force some of the smaller businesses to consider other options, such as closing their business rather than relocating. Jim McComb stated that consideration should be given to willing sellers, if looking at buyouts. Megan Barnett Livgard said that the Embrace Downtown plan is not all about bringing in new businesses, but allowing existing businesses to expand and grow. Jim McComb explained that when you draw traffic into a downtown area, any businesses in the surrounding area benefits from that traffic. He feels that it is important to look at Highway 25 as an asset to bring traffic into the downtown. Jim McComb talked about the confirmation he has received from Walgreens and other business contacts, confirming that Monticello is good real estate with its location on Highway 25 and easy access off I- 94. He said that you just need a couple of key businesses to locate in downtown and that will create the impetus for growth. Bill Tapper asked Jim McComb to talk about the timeline for getting things going. Jim McComb said that it would be viable to work with relocating the hardware store in the next year. As some of these businesses are relocated, it gives you building sites to bring in other businesses. Glen Posusta asked if the site costs on the proposed Scheme includes relocation costs. Jim McComb noted that he had included estimates in those figures for both acquiring and relocating. Clint Herbst asked if Block 34 would be targeted first so that the hardware store could be moved there in order to open up the Anchor block, stating that it seems a good place to start as there is a willing party. Glen Posusta noted that the City is looking at rectifying some traffic issues at that corner so focusing on Block 34 would fit into that plan. Tracy Hinz asked if anyone has talked to tenants that are currently in Block 34. Megan Barnett Livgard explained that the City has someone working on that. With the potential street construction, there are considerations that require professional attention. Jim McComb explained that the City would definitely benefit from trying to relocate existing tenants and get them to relocate within the downtown area. There are a number of options on how redevelopment could take place, such as multi - tenant buildings. He feels that Block B (former garden center) would be a good site for a multi- tenant building for retail and/or office. Jeff O'Neill asked how the new state law allowing more flexibility in using TIF funds could benefit the City. Megan Barnett Livgard explained that the new law could be used to facilitate the redevelopment for the hardware store. Jim McComb noted that there are many variables in real estate costs. He noted that it takes study to find the best pricing so that you don't pay more than needed. Megan Barnett Livgard asked Jim McComb to talk about opportunities that may arise outside of the plan phases. He said there may be opportunities to purchase properties that Joint EDA /City Council Special Meeting Minutes — September 14, 2011 Page 3 are not in the immediate plan. Jim McComb feels that the offered price is very reasonable. Megan Barnett Livgard asked the EDA and Council to be willing to listen and discuss opportunities that come up. The important part of acquiring land is to consider offers from those willing to sell. Bill Tapper mentioned that he had talked to an associate of his who knows Jim McComb quite well; this person stated that Jim McComb is a good person to deal with and he wants to look at some information on the project. Jim McComb passed around the marketing plan that came out of the Embrace Downtown study. Clint Herbst suggested that it would be helpful to look at the TIF surplus and other funds that are available for acquisition of land and other projected costs. Clint Herbst also noted that he feels Council would focus on negotiating with willing sellers. Jeff O'Neill mentioned the street design and thought it would be good to receive some comments. Clint Herbst asked about Walnut Street and whether part of that would be truncated. Jim McComb stated that the plan calls for Walnut Street, between Broadway and 0', to change from a public street to a lane around the anchor block. The lane would still function to move traffic. Lloyd Hilgart asked about the examples that were given of other cities gaining department stores in a downtown setting, which Jim McComb explained. He also asked about Ace Hardware and how soon they are willing to relocate Lloyd Hilgart asked Lynne Dahl Fleming about her thoughts on the effects of redevelopment in downtown; are there fears about increasing market rates? Lynne explained that the information that has been presented to downtown businesses has been very helpful and seems to have alleviated fears of the City forcing unwilling businesses to sell. She also stated there is excitement about the interest of Ace Hardware in relocating their business within the downtown area. 4. Adjourn EDA PRESIDENT BILL DEMEULES ADJOURNED THE MEETING AT 5:53 P.M. Recorder: Catherine M. Shuman C#td,' Approved: September 26, 2011 Attest: CityAWistrator Joint EDA /City Council Special Meeting Minutes — September 14, 2011 Page 4