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EDA Minutes 07-11-2012MINUTES ECONOMIC DEVELOPMENT AUTHORITY (EDA) Wednesday, July 11, 2012 - 6:00 p.m. Commissioners Present: President Bill Demeules, Treasurer Tracy Hinz, Matt Frie, Rod Dragsten and Council Member Tom Perrault Commissioners Absent: Vice President Bill Tapper, Councilmember Brian Stumpf Staff: Executive Director Megan Barnett - Livgard 1. Call to Order Bill Demeules called the meeting to order at 6 p.m. 2. Approve Meeting Minutes a) Regular EDA Meeting — June 20, 2012 TOM PERRAULT MOVED TO APPROVE THE JUNE 20, 2012 REGULAR EDA MINUTES AS CORRECTED. ROD DRAGSTEN SECONDED THE MOTION. MOTION CARRIED 5 -0. b) Special Joint City Council /EDA Meeting — June 20, 2012 ROD DRAGSTEN MOVED TO APPROVE THE JUNE 20, 2012 SPECIAL JOINT EDA/CITY COUNCIL MINUTES. TOM PERRAULT SECONDED THE MOTION. MOTION CARRIED 5 -0. C) Special EDA Meeting - June 28, 2012 TOM PERRAULT MOVED TO APPROVE THE JUNE 28, 2012 SPECIAL EDA MINUTES. TRACY HINZ SECONDED THE MOTION. MOTION CARRIED 4 -0. (Matt Frie abstained.) 3. Consideration of additional agenda items None 4. Consideration of recommending the City Council enter into a Continuing Affordable Senior Housing Agreement with PHS/Monticello (Presbyterian Homes) The EDA created TIF District 1 -19 in 1995 for the purpose of establishing an affordable apartment project for senior citizens. The TIF District terminated in February 2012 but the total obligation had not yet been paid off. Presbyterian Homes will no longer receive an annual $27,000 in TIF PAYGO funding assistance to cover operating costs. The developer provided documentation showing the inability for the project to cash flow without some Economic Development Authority Minutes 7/11/12 type of assistance. Staff and Ehler's determined that it is not a viable an option to extend the teen of the TIF District and that the EDA must decertify the district in 2012 according to schedule. This means the apartment complex would be put back on the general tax roll for the City, County, and school district to realize. Staff pointed out that it would likely be most viable to support a change in tax classification to fill the fimding gap and keep the units financially affordable. A 4D tax classification, established by the legislature in 2005, would lower the tax rate only on the units that are declared "affordable." Presbyterian Homes would agree to keep at least 20% of the rental units affordable (to date they are at 40% affordable) to seniors and would submit documentation to the City on a yearly basis. The City would review the agreement in 10 years to determine if it would be appropriate to continue the lower tax classification. It is estimated that the City would receive approximately 40% less in tax revenue yearly based on a 4D tax rate versus a standard residential rate Julie Spiers, Housing Director of Mississippi Shores, which is owned by the non- profit Presbyterian Homes, indicated that the apartments are classified as market rate but that some tenants have rental subsidies. She noted that there has been a significant increase in the Mississippi Shores budget due to the termination of the PAYGO funds and stated that they would have to raise rent if no other action were taken. She pointed out that seniors are often on fixed incomes and would have a difficult time adjusting to an increase in rents. There is typically a waiting list for the more affordable one bedroom units. Currently about 40% of the units are occupied by seniors that are at an income level of 60% or less of the area median gross income. Matt Frie asked how Monticello compared to other communities in terms of senior low income housing. Tracy Hinz suggested that there is less availability in general and that few seniors can afford to live in this community. There was some discussion about how the legal issues such as default, transfer, cancellation or termination were addressed in the agreement. As the EDA had originated the TIF District to support the goal of creating affordable senior housing in Monticello, staff asked that they recommend continued support of this goal to City Council. Presbyterian Homes must receive approval from local government in order to apply for the 4D tax classification with the MN Housing Finance Agency (MHFA). TRACY HINZ MOVED TO RECOMMEND THE CITY COUNCIL ENTER INTO THE CONTINUING AFFORDABLE SENIOR HOUSING AGREEMENT WITH PHS /MONTICELLO INC ESTABLISHING A 4D TAX CLASSIFICATION TO MHFA. Economic Development Authority Minutes 7/11/12 ROD DRAGSTEN SECONDED THE MOTION. MOTION CARRIED 5 -0. 5. Consideration of revising the Monticello Relocation Assistance Policy to include an appeal process for displaced residents and businesses Staff asked Relocation Expert Dan Wilson to determine how to best address the issue of relocation appeals within the Relocation Assistance policy adopted by the City Council and the EDA in March of 2012. As the process is well defined and addressed in MN State Statue, Dan Wilson proposed to add language to the existing Monticello Relocation Assistance Policy which states that the EDA will follow MN State Statute for any relocation assistance dispute. The statute states, if a business or resident being displaced disagrees with the relocation benefits negotiated with the EDA, the EDA is responsible to pay for the appeal process. The statue also states that the Judge's decision is the final decision on the dispute. Staff clarified that tenants do not sign an agreement but are reimbursed by the EDA for approved relocation costs. The appeals policy provides an option for tenants in the case of a reimbursement dispute. Bill Derneules noted the importance of letting tenants know that there are statue statutes in place to address any concerns. Matt Frie stated that the process for appeal is similar to that of arbitration. MATT FRIE MOVED TO ADOPT THE MONTICELLO RELOCATION POLICY WITH REVISED LANGUAGE STATING THE EDA WILL FOLLOW MN STATE STATUE TO RESOLVE RELOCATION ASSISTANCE DISPUTES. ROD DRAGSTEN SECONDED THE MOTION. MOTION CARRIED 5 -0. 6. Consideration of authorizing the lowest bidder to complete the MPCA required Limited Site Investigation (LSI) property located at 349 Broadway Street (Fred's Auto Body) The EDA authorized Braun Intertec to complete a Phase II Environmental Assessment of the property known as Fred's Auto Body. The report indicated the soil and ground water is contaminated. The Minnesota Pollution Control Agency (MPCA) has required that the property owner complete a Limited Site Investigation (LSI). The EDA will initiate the LSI in expectation that it will soon own the property. Staff will work with the property owner to establish a closing date for property purchase in June. It is anticipated that a portion of the $7,611 LSI fee to be expended through the EDA General Fund would be reimbursable through the Petro Fund grant. Economic Development Authority Minutes 7/11/12 Staff confirmed that, although the EDA signed the purchase agreement, they could still opt out upon learning the extent of the site contamination. Opting out was not recommended, however, as the current owner would then be fully responsible for the cost of the clean up. Costs have not yet been detennined. Matt Frie said that he was in favor of the paying the cost of the clean up because it is a legitimate use of EDA funds as it deals with eyesore or condemnable property. TRACY HINZ MOVED TO AUTHORIZE BRAUN INTERTEC TO COMPLETE AN LSI OF THE PROPERTY KNOWN AS FRED'S AUTO BODY. MATT FRIE SECONDED THE MOTION. MOTION CARRIED 5 -0. Director Report Krutzig Property - City Council voted 3 -2 to purchase Mike Krutzig's property. Council has proposed to utilize water tower funds to purchase the property. Monticello Business Center - The Wetland Delineation Report indicated there are fewer wetlands on the remaining vacant lots in the Monticello Business Center than originally anticipated. Staff noted that the Suburban Manufacturing construction project had been significantly delayed and more costly because wetlands had not been properly identified on the property. Wetland delineation had typically been handled by the purchaser upon property purchase. Most local outlets serve as a regional drainage and are then maintained by the City. Staff will start the process to get the report approved by the local Technical Evaluation Panel (TEP). 8. Adiourn TOM PERRAULT MOVED TO ADJOURN THE MEETING AT 6:42 P.M. ROD DRAGSTEN SECONDED THE MOTION. MOTION CARRIED 5 -0. Recorder: Kerry T. Burri —0 Approved: August 7, 2012 Attest: Jeflill, Executive Director