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EDA Minutes 02-13-2008pd � °O o o O Ot 8• O C) .. o y ¢, o c�D . _ �,CD C�.... . O -� CD Z COD O C�CD D ,r. O C/1 O d 00 cn �� 0 0 0 �_ CD p {�� O y p N CD CDD C0DCD CD O -hCDZ C� o �Ot �i d ►+, s r� dCDCD a 17d� o'� �CC° o° o� Z o CD cxD ' rD' `D �' c7 �'- CD o o O CL CD CDCD Cal rA cr 0 CD F CD cn CD CD 14. CL Oil CD CD fD CD CD a o d pCD CD n dog CD o cr CD CD `° -C � o w cn a. w C �CD � �� � C 0 CD m CD c b 4 CD CD CD CD CD �. ZtTj CD CD o y C CD ITI o 5r y CD w 0 `" ►-3 p d ' O a C b O ° CD yCDCD K CD Con W CD o Z 0 CDCDCD FC ° CD CD EDA Minutes — 02/13/08 about the invoices and the expenses invoices were related to the final inspections on grading and as-builts. Koropchak noted that more invoices from WSB will come forward as the business park continues to develop. Viering asked if there was an estimate for phase two of the project. Koropchak explained that there will be an accounting of infrastructure expenses as part of the project. She stated that the revenues from selling property, plus TIF, make the payment on the contract for deed and the assessment payments levied for infrastructure improvements. Viering stated that it would be helpful to have engineers provide an estimate under a particular contract. Koropchak responded that had been completed last year. She indicated that as phases one and two are complete, the EDA will be able to compare to see how expenses compare to estimates. Koropchak explained that Ehlers had prepared a projection of cash flow based on the estimated expenses for the project, which is how the $1.00 per square foot land price was arrived at. She stated that the comparison of estimate versus actual will be one of the items that will be outlined in the annual meeting. Tapper inquired what the budget for the project was and how much has been spent so far. Koropchak stated that she was unable to provide an immediate answer on that question without having the reports on projected cash flow and expense analysis. Herbst noted that stated that the HRA had dealt with the review of the projected expenses and estimates, but with the transition the EDA is trying to understand these items. Koropchak noted that she hadn't seen some of the previous billings related to the project, as they had been coded by the City Administrator and went right to the Council. With the new structure, it will be important to look at these issues at the annual meeting. Viering commented that the invoices that come through Kennedy and Graven are nicely detailed. Herbst agreed, stating that the auditors had addressed this same issue. He suggested that the City make a renewed request for consultants to improve their invoice details, perhaps considering sending them back to ask for sufficient detail. Fair noted that there were also unanticipated expenses for the project related to grading and excess dirt, which had to be addressed by the HRA. Koropchak noted that only EDA can expend TIF, and in the past the HRA. Frie asked what month the annual meeting is scheduled. Koropchak reported that the annual meeting will be held in April. Frie suggested that the total expenses might require adjusting the cost per square foot. Mayer agreed that the WSB invoices need more detail. 2 EDA Minutes — 02/13/08 COMMISSIONER TAPPER MOTIONED TO WITHHOLD PAYMENT ON THE TWO WSB INVOICES UNTIL FURTHER DETAILED ITEMIZATION FROM WSB IS PROVIDED AND INFORMATION ON EXPENSES IN COMPARISON TO PROJECTIONS IS PROVIDED. MOTION SECONDED BY COMMISSIONER VIERING. MOTION CARRIED, 6-0. COMMISSIONER FAIR MOTIONED TO APPROVE THE BALANCE OF INVOICES PRESENTED FOR PAYMENT. MOTION SECONDED BY COMMISSIONER HERBST. Tapper asked if Koropchak had reviewed and approved of the invoices from Kennedy and Graven. Koropchak indicated that she had contacted them about the extra expenses associated with the consolidation, because some of the information had to be redone. Koropchak reported that she had asked the firm to remove the additional duplicate expenses. Those amounts have been subtracted and the invoices reflect the final amount. Tapper asked if it consistent with what was anticipated. Koropchak confirmed that Kennedy and Graven had estimated between $3,000 to $4,000 in expenses for the consolidation, and now totals approximately $5,000. Tapper commented that it seems like there is an endless amount of expenditures that the EDA is unable to account for. Tapper stated that when the EDA agrees to estimates, that those estimates need to be adhered to. Koropchak stated that she had asked Steve Bubul to give proposal in terms of flat rates for TIF projects. However, each project is unique, but nonetheless, she has asked them to provide fee information. MOTIONED CARRIED, 6-0. 5. Report of the Executive Director. Koropchak added as item 8D a certificate of completion for FSI. Koropchak reviewed her report, stating that all semi-annual TIF payments were made. She also noted that she had included for the EDA's reference a letter from Campbell Knutson regarding a pending legal case on a transformation home loan. Viering inquired what the case was regarding. Koropchak responded that a subcontractor hadn't been paid, and as the HRA is a subordinate lender, was included in the information related to the pending suit. Koropchak mentioned that she had visited industrial business looking to do expansion, and had provided them with information on the revolving loan program and that City staff will also be meeting with another local business that is looking to expand. Koropchak reported that UMC has asked about the option to extend the date for their MIF balloon loan payment. That would be a EDA and City Council decision, but based on the stated criteria, it is unlikely that they would qualify for an extension. EDA Minutes — 02/13/08 Koropchak stated that the Higher Education Committee had a productive meeting with representatives from Cargill Kitchens, UMC, Xcel and MBL Community Hospital Viering referenced the State's seed program for entrepreneurial businesses the inclusion of Wright County. He suggested that as the legislation goes forward, the EDA should keep an eye on the program as Wright County could be a target for exclusion. Koropchak stated that based on conversations with DEED Commissioner Carol Pressley Olson, she believed Wright County was not included. Viering stated that the program includes provisions to help small businesses, which make up largest number of businesses in the state. Frie asked who determines who is in and who is not. Viering responded that the legislature has the ultimate decision on that item. Mayer agreed that it would be an asset, similar to the JOBZ designation. Tapper inquired whether any EDA action was needed related to the change of the name of the bank for the bond sale. Koropchak stated no action is needed. 6. Report of committees: Marketing continuing education and fiber optics Marketing Frie reported that the marketing committee did not meet. Fiber Optics Mayer reported on the progress of the fiber optics project, stating that radio frequencies for the project are currently being taken in Monticello. Frie asked about a timetable for whole system to be up and operating. Mayer responded that the information being going to the committee is that it will be early 2009. Tapper asked if an engineering firm had been selected. Mayer replied that one had been selected from three very qualified candidate firms who were interviewed. 7. Unfinished Business. a. Consideration of Request for Pre -Approval for recording service by a Community Center Employee. Koropchak explained that this item is regarding the EDA's request for taping services. In order to achieve the taping and broadcast, an employee of the Community Center payroll is needed due to scheduling conflicts with other taping employees. Due to timing of payroll and check runs, the EDA is asked to pre - approve recording services to coincide with the City's payroll. L, EDA Minutes — 02/13/08 Herbst questioned why the EDA is being charged for the position. Koropchak stated that it is to be able to accurately reflect where expenses should be coded to. Fair commented that although ultimately all expenses come out of general fund, it is a measure to keep track of where money is being spend. Koropchak agreed, stating that unlike the Planning Commission, EDA has revenues to offset the expense. COMMISSIONER VIERING MOTIONED TO PRE -APPROVE EXPENDITURES FOR SERVICES ASSOCAITED WITH RECORDING OF EDA MEETIGNS BY AN EMPLOYEE OF THE COMMUNITY CENTER AND/OR FOR CONTRACT SERVICE. MOTION SECONDED BY COMMISSIONER FAIR. MOTION CARRIED, 6- 0. Mayer asked if actual expenditures will be constant or will depend on who is doing the taping. Koropchak responded that they will be consistent as to wages and fees for the taper. Tapper commented that although this is a minot expense, it again it feels like expenses are open book. Fair responded that by controlling the length of the meeting, the EDA controls cost. 8. New Business: a. Consideration to review response to administrative shortfall associated with the Purchase and Development Contract between the EDA and WRE Enterprises, LLC and to consider alternative actions. Koropchak reported that she had sent a letter to Walker regarding the deposit shortfall. As reported, Brian Walker had called and was not pleased about cost shortfall. The Ehlers flat fee was 50% over the deposit amount. Walker had indicated that he felt that administrative costs were mishandled and did not feel that was the intent of the contract. Koropchak stated that the contract stated that the developer would be provided periodic reports at developer's request, but no more often than monthly the HRA could provide a written report of invoices. Koropchak stated that Walker was told periodically that total costs for setting up the district were between $15,000 - $17,000. Koropchak stated that she also provided information on other costs overruns. Fair stated that he thought some of the terminology is misleading. The contract is reflective of what the actual costs may be. For example, the contract states that a $10,000 deposit is required, and the obligation of the developer is to handle all administrative costs beyond that. Fair stated that the term cost overrun seems like the 5 EDA Minutes — 02/13/08 EDA lets costs go over. In fact, in some cases developer changes result in these costs. It isn't as if administrative costs went over. Frie stated that he believes the contract was very clear and very specific. Mayer commented that was a good clarification and an important distinction. Viering asked if under staff recommendation, Ehlers would be willing to give a fee reduction. Koropchak stated that she had not entered that as an alternative because she does not feel that in this case it is justified; their flat fee was adequate compared to other TIF districts. They do the same amount of work regardless of project size. Their flat fee is $8000 for economic districts. Viering indicated that from reading the documents, the responsibility of the developer seems fairly clear. He stated that his thought was that if Ehlers would give small concession, it would be passed on to the company as a gesture of good faith. Fair stated that the problem is that these are public dollar, and by forgiving a portion, it is more than a subsidy than a contract. It becomes a grey area of what is permissiable. Viering commented that it Ehlers reduces their invoiced amount, we are not talking about public dollars Frie asked for Tapper's opinion as an industrial business owner. Tapper asked Koropchak if it absolutely clear in her mind that Walker was told that typical fees were between $15,000 and $17,000. Koropchak responded that she knew that specific conversation happened more than once. Koropchak stated that the other consideration is the interpretation, of the monthly reporting as it seems to imply that they need to request reports. Tapper stated that his recommendation is to be consistent. Fair noted that the EDA has to be cognizant of setting precedent and needs to be consistent for all parties. Fair noted that providing the monthly reports also may just adds to the costs. Frie noted that this will come up again and that he would like to see us come up with some solution. Mayer noted that section 3.9 of the contract is clear in the responsibility to cover all of the costs associated with setting up the district. Tapper responded that he thinks the gentlemen entered into the obligation, but believes he was charged for things he had no control over. Fair commented that no two transactions are the same and all of the changes he may have requested added cost. Tapper suggested that the EDA be more upfront about the costs and noted that the deposit has to be paid up front, before you have the financing. Herbst indicated that in this case, Walker was also only charged for 1 acre, but in fact has a site over 5 acres. Some of the changes related to the project relate to the way they wanted to put their building on the site. He also noted that when the HRA and City purchased the land, it didn't get any breaks and had to understand what the 0 EDA Minutes — 02/13/08 possible costs were. He stated that he agrees that this contract is fair. Herbst noted that Walker's attorneys also reviewed the document and could have cautioned him on that point. Frie asked if Brian Walker was asked to come to the meeting. Koropchak stated that he indicated that he preferred to work through her. Frie stated that he would like to eliminate this problem as it isn't good policy to create these hard issues. Tapper recommended breaking the decision into two, deal with Walker and then how to address this for the future. Fair again noted being careful in setting precedent. COMMISSIONER FAIR MOTIONED TO AFFIRM THE ADMINISTRATIVE SHORTFALL IN THE AMOUNT OF $5,875.45 FOR WRE PROPERTIES, LLC, SUBMISSION OF PAYMENT IN TWO ANNUAL EQUAL INSTALLMENTS. Mayer asked if the EDA is going to incorporate this kind of structure on a case by case, or set a criteria of financial hardship. Commissioner Fair amended his motion to include that each case of administrative shortfall would be evaluated independently. Amended motion SECONDed by Mayer. Tapper stated that the EDA may be going down a slippery slope. Herbst recommended that the EDA develop a solution to make this clearer. MOTION CARRIED, 5-1, WITH COMMISSIONER TAPPER IN DISSENT. Fair asked if perhaps the EDA could have the consultants to look the contract over and provide guidance. Viering stated that banks run into similar issues on loan transactions with closing costs. Typically, banks provide in writing an itemized estimate so that there is no question. Koropchak stated that Walker wasn't necessarily questioning the amount, but questioned being given an accounting of costs. Better communication may be key. Koropchak also noted that City staff hours have not been accounted for in this case, even though that is stated in the contract. Fair suggested this item be added at another meeting for discussion and that everyone read the contract language. Tapper suggested coming up with a fixed price based off of estimates. Herbst responded that every situation is different. Fair noted that is true, especially with unplatted land. 7 EDA Minutes — 02/13/08 Viering recommended that staff come back with two to three alternatives for the workshop. Mayer stated that Ehlers should be able to bring that forward. Viering cautioned that asking Ehlers to do so would create another bill. Tapper agreed and suggested bringing forward to City leadership the idea of covering administrative costs. Herbst stated that when talking about this kind of economic development, there is a question whether to charge staff time. b. Consideration of continued use of programs and to review Polices and Guidelines for possible amendment. Transformation Home Loan Package Koropchak provided a brief overview of the program and stated that her intention in bringing forward is to determine whether the EDA would like to continue the program. Frie stated from his standpoint is the only unfortunate thing about the program is that it hasn't been used more often. It has transformed some homes. Viering stated that he was very familiar with the program and experience in using it. He commented on the stated of the local economy and foreclosure rate and suggested that the program be reviewed for ways to increase use in relationship to these issues. Fair commented that funding for the program comes from the Central Community TIF district, so there are some standards that have to be met. For example, a home needs to be substandard to fit legal criteria to use the funds. Viering stated this is an excellent program, but what he is suggesting is looking at additional programs to do more. He suggested considering a housing seminar to get those involved together to develop solutions. Frie stated that he agrees, although it would be separate from this program. Herbst concurred, stating that this program deals specifically with older homes in the downtown area. Fair commented that the objective is to prevent rental and encourage home ownership. Tapper suggested adding an agenda item and discussing Viering's comments as item 8E. Tapper asked those familiar with program if they have any ideas on how to be more proactive in seeking out property owners. Fair stated that the HRA did direct mail to every property that qualified. EDA Minutes — 02/13/08 Mayer asked Koropchak if the program is restricted to any particular geographic area. Koropchak described the geographic area bounded by I-94 on the south, the river to the North and the east and west limits. Additionally, she noted that the program is only for owner occupied homes within core City. She noted that the program is intended to bring vitality back to downtown area. Koropchak indicated that the EDA may also want to look at the market value criteria. In response to Viering's idea, the EDA would create an entirely different set of criteria, and would need to determine funding sources. Tapper stated he did not want to reduce the $150,000 in market value allotted. Frie inquired if the Buildign Official determine whether a home qualifies as sub -standard. He requested that Anderson be available to provide information on this. COMMISSIONER HERBST MOTIONED TO CONTINUE THE TRANSFORMATION HOME LOAN PROGRAM FOR YEAR 2008. MOTION SECOND BY COMMISSIONER VIERING. Tapper suggested that the EDA consider expanding the program to entire city limits. Herbst responded that the balance of the City could be addressed later with a separate program. Fair and Frie noted that Anderson could provide a better understanding at a future meeting of what qualifies a home as sub -standard and whether homes beyond the CCD would be good candidates for this type of program. Herbst commented that while he belives in improving the overall housing stock, there is a question of where public dollars stop and the market begins. Fair agreed, and noted the goal of the project was to look at the core city and stop deterioration and incentive for downtown. MOTION CARRIED, 6-0. ii. Preferred Package Criteria for Monticello Business Center Koropchak reviewed the program and opened the discussion for questions. Frie asked how the actual cost of $3.00 per square foot had been arrived at. Koropchak answered that the number had been developed through initial information from Ehlers. Mayer inquired about the wage criteria, which was set at $16.00 per hour excluding benefits. He asked $16.00 if that should be revisited and lowered. He noted that while everyone wants to see career jobs, had that been an impediment, or should it perhaps be higher. X EDA Minutes — 02/13/08 Koropchak stated that some communities have set their levels lower, but she agrees with the previous HRA that Monticello needs to market amenities and keep wages higher. She stated that she hasn't found anyone who had filled out applications where wage level has been an issue. Herbst commented that part of the reason that the City is bringing fiber is to create higher end jobs, and he would not want to see the number reduced. He stated that he is hoping one of the positive results of fiber, is creation of higher -end jobs. Koropchak stated that the criteria references an average, so there may be a range of wages and it does give a company some flexibility. Frie indicated that the average makes it easier for small companies to meet that average. Viering asked if building market value are a necessary requirement, with the restrictive covenants are in place. Koropchak replied that as the EDA is providing up -front money, the amount of TIF generated, is tied to the size and value of the building. Tapper asked if Koropchak considers the program successful Koropchak replied that she does, but would ideally like more businesses in the park. Tapper stated that he asks because it seems as though there is more economic development in other communities than here and as such, do we have the right program. Koropchak stated that in answer to that, anyone can use TIF, but perhaps the EDA wants to address its standards rather than the overall program. For example, the covenants allow no metal buildings, and no outdoor storage. At this point, Koropchak stated that she is asking the EDA to review and affirm what the HRA had put into place. Fair stated that City has to make a decision on what it wants back for return on investment. Tapper asked Koropchak if she is recommending any changes. Koropchak stated that she believes the criteria is fine, but she will bring back whether cash flow supports the $1 per square foot. Koropchak stated that she is comfortable with preferred measures. Fair asked if commissioners had any changes they would like to make. None of the commissioners requested changes. COMMISSIONER VIERING AFFIRMED THE CURRENT PREFERRED MEASURES FOR OTTER CREEK CROSSING. MOTIONED SECONDED BY COMMISSIONER MAYER. MOTION CARRIED, 6-0. 10 EDA Minutes — 02/13/08 iii. Declaration of Protective Covenants, Conditions and Protections for Otter Creek Crossing (information only.) Herbst commented that in relationship to relaxation of any standards, he believes that to be responsible to the buildings already on site, the EDA needs to stand firm on what is in place. Tapper confirmed that the covenants had been recorded against phases one and two, but not three. Koropchak confirmed, as phase three is not yet owned by the City. c. Consideration to call for an EDA workshop following the regular meeting of March 17, 2008 for purpose of reviewing Business Subsidy Criteria and Preliminary Development Agreement. COMMISSIONER FAIR MOTIONED TO CALL FOR AN EDA WORKSHOP FOLLOWING THE REGULAR MEETING OF MARCH 12TH, 2008 FOR THE PURPOSE TO REVIEW THE BUSINESS SUBSIDY CRITERIA AND PRELIMINARY DEVELOPMENT AGREEMENT. Viering asked if it is just better to just do it with the meeting. The Commissioners held a brief discussion on the proposed date and time. COMMISSIONER FAIR AMENDED HIS MOTION TO CALL FOR AN EDA WORKSHOP AT AT 4:00 PM ON MARCH 12TH, 2008 FOR THE PURPOSE TO REVIEW THE BUSINESS SUBSIDY CRITERIA AND PRELIMINARY DEVELOPMENT AGREEMENT. MOTION SECONDED BY COMMISSIONER TAPPER. MOTION CARRIED. d. Certificate of completion for FSI. Koropchak stated that she has been contacted that FSI is being sold. It was discovered that a certificate of completion was not issued for the project. To clear the title, it needs to be issued. She indicated that the district was started in 1983 and decertified, there is currently no increment being collection and no expenditures. COMMISSIONER TAPPER MOTIONED TO ISSUE A CERTIFICATE OF COMPLETION FOR FSI. MOTION SECONDED BY COMMISSIONER HERBST. MOTION CARRIED, 6- 0. 11 EDA Minutes — 02/13/08 e. Housing Programs Tapper stated that in response to earlier conversations, the market problem presents an opportunity. If the EDA can find a way to jump start and attract more citizens in relationship to housing, it may jump start other activities. Tapper stated that he did have discussions with consultants on this subject and they indicated that there are funding mechanisms for this purpose. He stated that something needs to be done to address the empty homes before they become rental properties. Viering agreed, stating that by being proactive, it speaks well of the community and positive for development. Mayer suggested following up on researching the financing available for economic stimulus. Viering stated that it will be important to encourage owner -occupation. Tapper stated that one suggestions is to provide gap financing to get people qualified for conventional lending. The Commissioners agreed that more research should be done about that it should be provided at the next meeting for discussion. 9. Adjournment COMMISSIONER FAIR MOTIONED TO ADJOURN. MOTION SECONDED BY COMMISSIONER MAYER. MOTION CARRIED, 6-0. President 12