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HRA Minutes 03-07-1984MI NUTES MONTICELLO HOUSING AND REDEVELOPMENT AUTHORITY Wednesday, March 7, 1984 - 7:00 P.M. Members Present: Don Cochran, Vic Vokaty, Jack Reeve, and Gary Wieber. Members Absent: Bud Schrupp. Staff Present: Tam Eidem and Allen Pelvit. Chairman Don Cochran called the meeting to order. He then asked for a motion to approve the February 15, 1984, minutes. Gary Wieber made a motion to approve the February 15, 1984, minutes, seconded by Jack Reeve. Passed 4-0. Don asked that the minutes reflect any split votes in the future, and Allen agreed to indicate SO. Don also asked for a clarification on the last paragraph of page 5 of the February 15, 1984, minutes. He was concerned that it was not the Authority's consensus to tell potential developers that there was an option on the property. Allen apologized for any misunderstanding. The interpretation of this could have caused a problem. Fortunately, it did not. In the future, all meetings will be taped for reference and tapes kept on file. Vic Vokaty made a motion to approve the minutes of the special meeting held February 28, 1984. It was seconded by Gary Wieber and passed 4-0. 3. Fulfillment Svstems Proqress. Tom Eidem explained that the PSI project was beginning to take shape. He further stated that the City has officially received a congratulatory letter from HUD in Washington, D.C., on the project's preliminary approval. Allen Pelvit has been named Project Manager. He will receive help from other staff members as needed. Eidem will be contacting Holmes 6 Graven regarding tax increment financing. Upon their approval, a special meeting will be held to have the Authority execute a resolution for approval of the tax increment financing district for FSI. The project is progressing a little slower than originally anticipated. Summer construction is planned with fall transition to the new facility. A request for UDAG funds has been initiated by Allen Pelvit and contracts will be entered into in the near future. 4. Consideration of Brad Larson's Client's Proposal for Development of Lots 13, 14, and 15, Block 51, also known as "The Poehler Proiect." Chairman Cochran introduced Brad Larson to Joe Poehler. Larson summed up Poehler's Project and how he (Poehler) has not furthered - 1 - A HRA Minutes - 3/7/84 his project. He also mentioned the Big Lake Project was a bad mistake. Larson then proceeded to ask for an option on the three lots in question or some alternative should Pochler's Project not succeed. Larson then explained to the Authority that Gary Anderson, the City's Building Inspector, said up to 31 units of elderly housing or 20 units for multiple family could be built. With the multiple family alternative, there would have to be two setback variances. Cary Wieber asked Larson if the project wouldn't qualify for FmHA funding, would he consider conventional financing. He indicated that he would. It was noted by Tom Eidem that the property was not rezoned. It is currently zoned B-3 and would need to be re- zoned if multiple family units were planned. Jack Reeve asked if Larson had been before the Planning Commission. He had not. Wieber then asked if Larson had any architectural plans for his proposal, and Larson indicated that he didn't because the developers didn't want any expenses without having an option on the land. Larson explained that his development group is tentatively committed to an elderly project and an outright purchase of the property. He stated that if FmHA fails to fund an elderly housing project regardless of who has control of the land, his development group should be granted an option to proceed conventionally with an elderly/multiple family project. Jack Reeve reviewed Larson's proposal. He summed it up by saying that if FMHA does not fund Poehler's Project, Larson would have an option to return to the Authority and proceed with an alternative project using conventional means. The floor was then turned over to Mr. Poehler. Mr. Poehler reviewed his problems with FmHA and the Big Lake elderly housing unit. He told the Authority of how he has worked with FmHA in trying to save this project. He also stated how people personally came to Monticello to look at and review cost analyses for the project and compared proposals to the original HRA proposal (two stories with elevator). Poehler stated that the problem is Big Lake's nonrental of all its units. They have opened rental up to all low to moderate income people in hopes of filling all vacancies. The problem is beyond the developer's control, Poehler indicated. Poehler said he asked Toa Eidem to attend the meeting with FmHA Officials to see if there was any possibility to get this project funded. At this point, it - 2 - HRA Minutes - 3/7/84 Cwas learned that another developer was interested in the property. Poehler explained an alternative family housing project that could be eligible with little modification from the original proposal. He also stated that he appreciated the Authority's time and consideration given in the project thus far. He assured the Authority that as many elderly units would be rented as possible. Vic Vokaty questioned the Big Lake off -location. He compared it to a project in any other location and asked if another project such as Hasty, for example, were not filled, would that stop a project in Monticello. Poehler affirmed that and added that it was his understanding that all projects in a 35 mile radius must be filled in order for his project to be funded. He then asked Tom Eidem, who also attended the same meeting, for an explanation. Tam Eidem stated that it was not an exact 35 mile radius but rather fmHA'S philosophy of being close enough. Chairman Cochran asked for clarification on the term "family housing". Poehler commented on being 18 years or older, etc. And then Chairman Cochran stated that it sounded very much like ordinary family housing projects. Poehler assured the Authority that the project would emphasize elderly housing. He also stated that unit size could help control this. He went on to say that by keeping apartments small, families would steer away,allowing Celderly people (1-2 per unit) to inhabit the housing unit. Cochran asked if it would be attractive for elderly people to possibly live next to a family setting. Poehler again assured the Authority that this counter proposal would emphasize elderly. He stressed the need for this project and asked for a continuance of his proposal and time to get the Big Lake problem resolved. Chairman Cochran asked for a time frame and Poehler suggested six months, one way or another. At this point, Chairman Cochran stated that the Authority's main cuncern lies with the interest ($2,400 for six months and $4,800 annually). Tom Eiden explained that Poehler's original option was granted for $200 and the money to be refunded if the application was not approved. At this time, the money has not been refunded. Chairman Cochran asked if Poehler would accept an option if he paid the interest in six month increments. Poehler said he would, but it wasn't his decision, it was FmHA's. Larson inquired about the initial purchase price, and Tom Eidem stated it was $32,500 and now is $54,000 with a $17,000 to $18,000 write down. The 5% versus 20% assessment valuation was explained. - 3 - HRA Minutes - 3/7/84 Chairman Cochran asked if Poehler would need tax increment financing, and he said no because FmHA was not concerned with tax increment financing. Larson stated that he spoke to a Mr. McDowell (FmHA) that previous Friday, and he told Larson that FmHA does not favor tax increment finance proposals. Larson, therefore, contends that Poehler does not have a valid application. Tom Eidem related various parts of a letter from Mr. McDowell regarding tax increment financing. Eidem stated that FmHA does not prohibit tax increment financing but rather discourages it. Jack Reeve stated that the Authority has a vast amount of information to digest and until there is a ruling on the Big Lake Project, the Authority cannot act. Because of an apparent deadlock between the two interested parties, Jack suggested adjournment. Tom Eidem support Larson's statement that FMHA did not like tax increment financing. He read excerpts from several letters regarding FmHA's stand on tax increment financing. Eidem went on to say that FmHA had given Poehler's project their commitment if his papers were in order. This commitment gives Poehler's project first choice. Larson stated that his group wasn't looking for an exclusive option on the property. That wouldn't be fair. He said that if it happened to him, he would scream foul. He just wants an option to the property if Poehler's project fails. Chairman Cochran asked Poehler if he had considered conventional monies, and Poehler said that he had not. Gary Wieber asked if the Authority gave him an option, what would he gain by it. Poehler responded by saying, nothing unless the Big Lake problem is resolved. At that point, some areas would need updating. Wieber stated that from the Authority's standpoint we would not know what to do if we gave you an option and the Big Lake problem wasn't resolved. For example, what do we do if another developer comes in with a terrific proposal and you hold the option and can't proceed? No response from Poehler. Jack Reeve stated that last year Poehler came before the Authority to request tax increment financing. Reeve then stated that he understood tax increment financing to be a but for type incentive. But for this benefit, my project would not become a reality. Now you come before the Authority and say you do not need tax increment financing. How do you explain this? Poehler stated that he couldn't honestly remember. Tom Eidem added that because of some problems - 4 - HRA Minutes - 3/7/84 with the partnership a year ago, the project needed tax increment financing. Reeve asked if tax increment financing could be considered no longer a part of the elderly housing project, and Eidem affirmed the answer and suggested Poehler's project be amended to reflect this. Gary Wieber suggested both interested developers submit written option agreements and return to the Authority. Jack Reeve stated that it was the Authority's purpose to control the standards of this project and make a decision. Larson suggested that the HRA give two contingent options to both parties, both contingent to FmHA's decision. Chairman Cochran felt that an option would tie up the property and thus cost the Authority added expense in additional interest. He further stated that the only way he would consider an option would be if the holder of the option would pay the interest expense. Larson suggested a "72 -hour clause". For example, if someone approached the NRA with a good proposal, they would have three days to give Poehler or Larson notice to the purchase of the land, etc. Poehler reiterated that the delays in the project such as this are not considered out of line. Chairman Cochran said he didn't C have trouble with the delays, but could not see tying up the land unless there is considerable money given to cover the Authority's loss due to the interest expense. Poehler agreed that it is the Authority's decision. And if it is favorable to his plans, fine; if not, then he would pass it to Mr. Larson. Larson suggested that a public hearing for the sale or disposition of public lands be held for the sale of this type of land in the future. Chairman Cochran suggested a five-minute break. Chairman Cochran called the meeting back to order. Jack Reeve told Larson that the City had an option (June 1, 1983, minutes) and then gave the option on the property to Poehler, but didn't know if a public hearing was held. Chairman Cochran asked for additional comments. He then stated that there were two equally good proposals, neither of which intended to utilize tax increment financing. He summed up each proposal briefly and asked the Authority for direction. - 5 - C NRA Minutes - 3/7/84 Gary Wieber made a motion for the HRA to accept written proposals containing such items as purpose of the proposal, dollar amounts for the option, and contingencies, etc. No second --motion died. Jack Reeve suggested drawing up contingent options, as Larson had suggested, but only for elderly housing. If any variations, then the option dies. In all fairness to the HRA, the Authority should give precedence to Poehler. It was further suggested to have Tom Eidem and Allen Pelvit dictate to the developers the options available. Chairman Cochran summed up Jack's proposal adding a fee consideration. Jack Reeve asked if a public hearing would be needed, and Tom Eidem stated that it would when the land is ready to be sold but not to create an option. Chairman Cochran suggested abandoning the elderly housing concept and list the property on the market to obtain the best price. He further stated that he is leary about waiting for approval of an FmHA project. He again asked for direction. Jack Reeve moved to table the consideration of granting an option for tonight and discuss it at the next meeting. There being no second, the motion died. Gary Wieber moved to put the property on the open market and have developers compete for it. There being no second, the motion died. Tom Eidem referred back to Jack Reeve's motion and suggested that the Authority direct the staff to prepare directives for at least two options and return to the Authority. This could be presented at a special meeting to be hold prior to the regular April meeting. Chairman Cochran took the liberty as Chairman in relaying the Authority's consensus to have the staff prepare directives regarding Poehler/Larson options. Chairman Cochran moved to adjourn the meeting and was seconded by all. Passed 4-0. DAL.'P vit Director of Ecunomic Development - 6 -