HRA Minutes 02-07-1985MINUTES
MONTICELLO HGUSING AND REDEVELOPMENT AUTHORITY
Thursday, February 7, 1985 - 7:00 P.M.
Monticello City Hall
Members Present: Chairman Gary Wieber, Ken Maus, and Bud Schrupp.
Chairman Gary Wieber opened the meeting asking for approval
of the January 3, 1985, minutes. Bud Schrupp moved to approve
said minutes and was seconded by Ken Maus. Passed 3-0. Allen
noted that Jack Reeve was out of town and Vic Vokaty was sick.
James Metcalf, of Metcalf 6 Larson, presented their proposal
for a 33 -unit multiple complex. He described the property as
that lying just east of Cy Reinert's housing complex and just
west of Construction 5's projects. He then stated that in the
initial application to FmHA, they need an endorsement type letter
from the Council, the Planning Commission, and the Housing Authority.
He then showed the Authority tentative plane for the 33 -unit
complex. The construction consisted of 19 one -bedroom units,
12 two-bedroom units, and two handicapped unite. He stated
that because of City code, the building will be 21, stories instead
of 3. The property is such that ground from the high side (south
end of lot) will be moved to the low end (north end of lot).
They will be presenting their proposal to the Planning Commission
on the 12th of February. He stated that they will be asking
the Planning Commission to waive the requirements of the garages
and to allow more than 12 units. If the Planning Commission
and/or Council does not grant their request, their FmHA will
not cover the garages with the mortgage, in which case they
will consider either donating the garages to the project or
abort the project. He also suggested building the garages separately,
holding them back for five years hoping that the cost could
be recaptured in the increased rent, etc.
Metcalf explained that they started this process at about the
same time as their proposal for the elderly project but held
off for other reasons. They have an option on Lauring's property
and will pay 2-3 month on it. He indicated that this proposal
realistically stands about a 101 chance of getting funded.
He felt that FmHA programa would be drastically cut, if not
abolished, during the next four years. This project would be
more suspect than the elderly, which is in the process of getting
final approval.
Jim explained that the project is going to be located in an
area that is properly zoned and is designated for multiple unite
and -111 probably be the site for future criltiple unit--.
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HRA Minutes - 2/7/85
C_ Gary Wieber questioned the progress of Mr. Poehler's project.
Allen stated that when Poehier's request for a conditional use
and a variance was not acted upon by the Planning Commission,
it was his understanding that Joe withdrew his proposal.
Gary Wieber asked if their surveys indicated a need and what
percentage of the respondents were from Monticello. Jim Metcalf
stated that they knew previously to this proposal that there
was a need from other surveys, either their own or Barthel Homes.
He further stated that FmHA requires at least a 2 to i needs
ratio to be eligible, and they have no problem with that. He
also stated that these people have to be from the Monticello
area, either having a 295 prefix or in the Monticello School
District. In fact, he stated he would have no qualms about
constructing a 60 -unit complex instead of 30 units.
Chairman Wisher asked for direction on this. Ken Maus moved
to have Allen draft the letter on behalf of the Authority endorsing
the need and project to be funded through FmHA. It was seconded
by Bud Schrupp and passed 3-0.
The next item on the agenda concerned the consideration of approving
the concept of establishing a tax increment. Chairman Wieber's
first comment was, why the big hurry on this. Allen stated
that if it appears to be a rushed proposal, staff apologizes.
It is not intended to be pushed through fast. Quite the opposite
is true. Staff has been actively working with Construction 5,
Malone, City engineers, planners, etc., for some time. It was
not until this week that staff has actively pursued the Tax
Increment Financing (TIP) concept and prepared the information
for this meeting. Also, it may seem like we are in a hurry
with this because of the time frames involved. For example,
it could take three months or longer just to certify this Tax
Increment Finance District with the County. In that case, we
could expect certification in May of 1985. May is the beginning
of the construction period; and by postponing the Tax Increment
Finance District, we may postpone the actual construction process.
Another reason for implementing Tax Increment Financing is to
help bring down the costs of the improvements proposed. Allen
stated that if the improvements were installed and originally
the properties were valued at $1,000.00 and $6,000.00 after
the improvements, the City could only assess for the $5,000.00
difference in improvements. This means that the City would
have to absorb the remaining cost. The only way the owner of
the properties can be assessed the total costs is if they agree
to pay them. In this proposal. Construction 5 probably would
not agree to pay the $320,000.00 so that they could develop
the properties. Alien stated that the City in not intending
to give the developers and/or land owners some frco improvements,
but rather to reduce the City's obligation and assess each land owner
a reasonable amount; thus, the real benefit is to the City.
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\� Allen stated that according to Springsted, we would need $42,000.00
a year to retire the debt on the $320,000.00 bond issue. Holmes
6 Graven is researching into whothor it can be a Redevelopment
District or a Housing District. Their hunch is that it will
be a Housing District because the 18 -unit apartment is expected
to be constructed first.
Chairman Wieber asked if the developers expect to construct
projects that will generate enough tax to pay off the bonds.
Allen stated that these are all variables at this time. Staff
will be meeting with Construction 5 to discuss the values of
future development in order to secure tax information. This
information will be needed by Holmes 6 Graven to prepare the
Tax Increment Finance Plan, etc.
Allen indicated that although no public lands will be bought
or sold, the Tax Increment Finance process is the same as in
the past. We will require Construction 5 to enter into a developers
agreement which guarantees the performance of certain items;
namely, an 18 -unit apartment complex and XXX amount of sq. ft.
for office/warehouse space.
Ken Maus had some concern that the apartment building would
be below grade when the improvements were completed. Allen
stated that once the improvements such as curb and gutter, etc.,
were in place, the Zoning and Building Inspector would make
sure that the building was above grade and at the same time
Construction 5 is aware of those ordinances.
Bud Schrupp stated that this type of project was something new
to the Authority, that it concerned a lot of money, and that
because two of the members were absent, they should be given
a chance to review the information before deciding. Allen stated
that the other members should be and would be informed of the
project. He also stated that Staff was not asking for approval
of the plan, only the project concept and that the Authority
give staff authorization to proceed with the packaging of the
project information in order to see if Tax Increment Financing
will work. At that point, the Authority may need to call e
special meeting for the purpose of approving the plan and requesting
the Council to set their public hearing and establish the Tax
Increment Finance District.
Allen indicated that the members will be kept apprised of new
progress.
Ken Maus asked what type of commercial buildings Construction 5
would construct on the commercial properties. Allen stated
that the office/warehouse concept is very possible, although
It may he somewhat different from their past proposals. Thcrs
( maybe more than 1-2 buildings, but each building may be smaller
\. in eine.
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HAA Minutes - 2/7/85
Ken Maus likes the concept but is a little skeptical about Construction 5's
plans to build the office/warehouse type operation. They have
had this on the drawing board for so long and for so many years
that nobody knows if they can believe in their plane. His concern
was that the City/HAA enter into this Tax Increment Finance
District and they (Construction 5) back out. Allen stated that
the developers agreement will prevent that from happening.
Perhaps a clause such as a Performance Bond, etc., will be included.
These are the things that still need to be worked out before
the Tax Increment Finance District can take place.
Ken Maus had a suggestion to possibly use the park property
for commercial use and generate additional tax base. Allen
stated that it was a very small parcel. Ken suggested that
Construction 5 build a 12 -unit building, etc.
Allen restated the project and stressed the benefits to the
City by lowering its coats associated with the improvements
and that the intent was to provide these improvements to the
individuals involved at a reasonable assessment. He also stressed
the fact that the developers could develop this property themselves
at a cost of 5320,000.00 but would probably abandon it because
of the prohibitive costa. This, in the City's estimation, meets
the "but for" clause.
Ken Maus asked if the extremely high cost of constructing the
road, etc., could be oversized or spread the assessments to
future assessments on the street improvements from this project
to County Road 118 and Lauring Lane. Chairman Wieber felt it
was possible but had not seen it approached that way before.
This would spread the cost out to more individuals and lower
the cost. Allen stated that this could possibly irritate some
property owners to have to pay for building up a portion of
road bed. They may say that they are willing to pay for the
street, sever and water improvements, but not the cost of filling
in someone's sandpit. This is what the Tax Increment Finance
plan will eliminate. Ken Maus suggested that the oversizing
or spreading of assessments to future assessments could be used
as an alternative and/or an addition to Tax Increment Financing.
The Authority was concerned about Doran and Malone, etc., not
sharing in the costs. Allen indicated that was not the case.
The opposite is true. They will be assessed for their share
of the increased value that Tax Increment Financing does not
pick up.
Allen again stressed that staff is not trying to push this past
the HRA without careful consideration. If It seems as though
It is fast, it is because the time elements involved. He stressed
the Authority's willingness to hold a eperiel meeting, if needed,
for the purpose of approving the plan and requesting the Council
to hold a public hearing to establish a Tax Increment Finance District.
Allen suggested keeping in touch individually and inform them
of any progress.
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Cr Bud Schrupp moved to grant project concept approval to the proposal
by the City of Monticello to construct street, sever/water,
curb/gutter improvemonto to tho property known as the Construction 5
Improvement. The Authority authorises staff to investigate
the feasibility of using Tax Increment Financing, and upon the
property arrangements order the Tax Increment Finance Plan.
It was seconded by Ken Maus and passed 3-0.
Bud Schrupp stated that he will be out of town from February 28, 1985,
to March 18, 1985. Allen will keep this in mind for purposes
of holding a special meeting.
In other business, Ken Maus mentioned that the Hass's feel that
the City, in trying to purchase their property, will resell
it and make a lot of money. Their remarks have been that they're
not dumb. Perhaps in negotiating with the Hass's some sort
of guarantee could be given that we will not sell the property
for XXX amount of dollars above what the City paid for it, or
e right of first refusal, etc.
There being no further business, Bud Schrupp moved to adjourn
and was seconded by Ken Maus. Passed 3-0.
Allen 4hit
Executive Secretary of HRA
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