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HRA Minutes 05-07-1997MINUTES MONTICELLO HOUSING AND REDEVELOPMENT AUTHORITY Wednesday, May 7, 1997 - 7:00 p.m. City Hall MEMBERS PRESENT: Chairperson Brad Barger, Vice Chairperson Steve Andrews, Darrin Lahr, Bob Murray, and Dan Frie. STAFF PRESENT: Rick Wolfsteller and 011ie Koropchak. GUESTS: HRA Attorney Steve Bubul. Steve Krenz, Midwest Graphics, Inc. Jeff Congoll, Allied Companies John Komarek, Cedrus Creek Craftsmen, Inc. Brad Johnson, Lotus Realty Services. Call to order. Chairperson Barger called the regular meeting of the HRA to order at 7:00 p.m. 2. Consideration to approve the April 2 1997 HRA Minutes Darrin Lahr made a motion to approve the April 2, 1997 HRA minutes. Seconded by Steve Andrews and with no corrections or additions, the minutes were approved as written. 3. Consideration of adding items to the agenda Koropchak introduced Steve Krenz, CEO of Midwest Graphics, Inc., and Jeff Congoll, Allied Companies. Mr. Krenz informed HRA members that over the 28 -year life of Midwest Graphics, the company has become one of three largest print centers in the local trade association. Midwest Graphics is also into communications. Monticello Investment Company, the holding company of the existing facility located at 9530 Fallon Avenue employs 20 full-time plus temporary help. The starting wages are low-paying and progress higher. Additionally, the company leases space at 206 Pine Street for its telemarketing division. The company has an option on this building. Mr. Krenz continued stating that Midwest Graphics serves Fortune 500 companies through marketing of data, the way of today. The company does not compete with FSI. The communications service requires a higher skill. 3M, National Car Rental, Northwest Airlines, Dayton's, and Toro are some known customers. HRA MINUTES MAY 7, 1997 The estimated 1997 local economic impact of wages is about $700,000. UPS is their largest shipper as well as other local shippers, the company provides employees with an opportunity to grow and offers good benefits. The proposed project is 36,000 sq ft manufacturing space and 8,000 sq ft office space which could accommodate 72 telemarketers and has 100 parking spaces. Allied Companies would be the developer with a build -to -suit to lease option. It is anticipated that the proposed project would create 22 jobs within the first year. The company plans to lease out the current Fallon Avenue facility. The projected value of the new building is approximately 1.4 million, an attractive facility. The legislative requirement of "Green Acres" places an incumbrance on the Monticello Commerce Center property. The "Green Acres" five-year window expires in year 2000. In order to create a TIF District, any proposed facility must consist of 85% manufacturing or production space of tangible personal property, including processing resulting in the change in condition of the property. Printing is considered a manufacturing business and if the developer/owner are willing to substantiate their product results in change and 85% of the building is for manufacturing, TIF can be utilized. HRA members agreed the project has merit and one member stated the overall wage/benefit package is about $12.00 per hour. Koropchak provided a time schedule for preparation of a TIF District which would spare the developer the increased costs of sanitary sewer hook-up fee. Steve Andrews made a motion authorizing Ehlers and Associates to begin preparation for establishment of TIF District No. 1-23 subject to the developer/owner providing evidence of findings for the "Green Acres" and "but for" tests, execution of the Pre TIF Agreement, and submittal of a $5,000 cashier cash. Brad Barger seconded the motion. Attorney Bubul to work with the developer relating to "Green Acres" finding. With no further discussion, the motion passed unanimously. HRA members determined the proposed project met the local TIF Policies. 4. Consideration of request by Developer Komarek for an update relating to the development of TIF District No. 1-20 and the HRA review of the contract relating thereto Koropchak submitted a written account of the progress of the project in the agenda supplement. John Komarek, the developer, presented the HRA members with a letter drafted by Attorney Brad Larson. The letter requested a one-year extension of all performance dates within the contract and stated the delay was caused in part by the time necessary to clear the title of the former Carlson property and the torrens title of the former Gille property. Additionally, the letter addressed the confusion of the property description as described within the contract and the approach taken by the city engineer to resolve the ponding issue. Komarek noted that the Gille property had some 41 title liens which contributed to the slow process of the yet uncleared title. Komarek indicated the 2 HRA MINUTES MAY 7, 1997 need perhaps for a left -turn lane to enter Prairie West from County Road 75 and also indicated sales were a little slower than anticipated. Attorney Bubul noted that Komarek, the developer, had been advised of the torrens title relating to the Gille property. HRA members agreed and noted the role of the HRA is not to place judgement on design standards set by the City Engineer or City Staff. Lahr noted the Letter of Default was prepared at the direction of the HRA. With the developer agreeing to pay all costs associated with amending the contract, Steve Andrews made a motion to amend the Private Redevelopment Contract of January 13, 1997, between Cedrus Creek Craftsman, Inc., the HRA, and the City, extending the date of construction commencement and completion and the date of recording and filing of the final plat for Prairie West Second Addition by one year. Bob Murray seconded the motion and with no further discussion, the motion passed unanimously. The commissioners felt the non- performance by the developer was beyond the control of the developer, Cedrus Creek Craftsman, Inc. Prior to leave the meeting, Attorney Bubul informed members that voting by proxy was not allowed because of the open meeting law. Secondly, in response to the HRA's question: What is our risk if the HRA simplifies its Private Redevelopment Contracts? This question arose as the HRA has been requested to amend a number of contracts. A general form or simplified contract could be done; however, continued Bubul at times the HRA may wish they had more leverage as in the case of TIF Districts 1-1 and 1-4. 5. Consideration to hear an update on potential redevelopment projects by Brad Johnson Brad Johnson, Lotus Realty Services, informed members of the downtown redevelopment projects in Chaska and Chanhassen. Johnson continued: Pushing something that isn't happening makes redevelopment difficult. This along with title, engineering, and acquisition problems and the perception by legislators that the use of TIF takes away revenues from the school districts doesn't make things easier. Convenient retail and entertainment appear to be strengths, hotels are a risky business. Johnson feels the Monticello Mall is not going to survive as is and sees the need to raze and start over. His first attempt was to work with the local grocer and currently has a second grocer under study. A drug store perhaps fits into the concept. Johnson informed members any consideration of a plan for a hotel in Monticello is about three months out. In Chaska, the developer obtained the purchase option which eliminated the relocation costs. Johnson anticipates a hotel in Monticello much the same as Chaska: a destination hotel, full-service, excellent sales staff, meeting place with deli/bakery. The corporate level market in Monticello is weaker than in Chaska. To HRA MINUTES MAY 7, 1997 support the day -time business of entertainment and restaurants, housing and office employment need to be worked into the area plan. Johnson concluded: Redevelopment is what the community wants, it must make sense (economical sense) and add value to a site. 6. Consideration to discuss HRA by-laws for potential amending Tabled until June meeting. 7. Consideration to review the returned surveys from Blocks 54 and 64 for discussion and further direction. HRA members were pleased with the 100% response rate of the surveys mailed to property owners in the 54 and 64 Blocks. The surveys to gage their level of interest for entering into a purchase option. Members also agreed that perhaps any further direction was premature until adoption of the Revitalization Plan, recognizing the potential for a developer to secure the options, and the potential increased purchase price for a public entity to acquire. Darrin Lahr made a motion authorizing a general note of thanks be drafted and mailed to the property owners of Block 54 and 64. Brad Barger seconded the motion and with no further discussion, the motion passed unanimously. Consideration to review the content of the Contract between the HRA and Hoisin lgton Koegler Group Inc relating to the Downtown/Riverfront Revitalization Study/Plan HRA members accepted the written agenda supplement update. 9. Consideration to set special meeting with Ken Barthel Veit Companies Mr. Barthel informed the Executive Director that a special meeting with the HRA appears premature. 10. Consideration to appoint an HRA representative to a task force for defining the need and uses and sources of a training and community center, Steve Andrews volunteered to be the HRA representative. Brad Barger made a motion appointing Steve Andrews as the HRA representative on the training and community center task force. Darrin Lahr seconded the motion and with no further discussion, the motion passed unanimously. 11 HRA MINUTES MAY 7, 1997 11. Other Business. Steve Andrews made a motion to approve the monthly HRA bills. Brad Barger seconded the motion and with no further discussion, the motion passed unanimously. 12. Adjournment. The HRA meeting adjourned at 10:45 p.m. 011ie Koropchak, Executive Director