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HRA Minutes 06-02-2004MINUTES MONTICELLO HOUSING AND REDEVELOPMENT AUTHORITY Wednesday, June 2nd, 2004 - 6:00 p.m. 505 Walnut Street - Bridge Room Commissioners: Chair Bill Fair, Vice Chair Darrin Lahr, Steve Andrews, Brad Barger, and Dan Frie Absent: Council Liaison Roger Carlson Staff. Rick Wolfsteller, 011ie Koropchak, and Angela Schumann l . Call to Order. Chair Fair called the meeting to order at 6:00 p.m. and declared a quorum, noting the full compliment of members and the absence of Council Liaison Roger Carlson. 2. Consideration to approve the May 5th, 2004 HRA minutes. A MOTION WAS MADE BY BARGER TO APPROVE THE MINUTES OF THE MAY 5TH, 2004 HRA MEETING, NOTING A CHANGE TO THE MINUTES TO SHOW THAT AT THE MAY 5TH MEETING, THE HRA HAD APPROVED THE MINUTES FROM THE REGULAR MEETING HELD APRIL 7th MOTION SECONDED BY ANDREWS. MOTION CARRIED UNANIMOUSLY. 3. Consideration of adding or removinfz items from the agenda. None. 4. Consent Agenda. None. 5. Continued - Consideration to review a revision to the Contract for Private Redevelopment between Masters Fifth Avenue and the HRA for Landmark Square Phase II. The item was tabled due to the expected arrival of Masters Fifth Avenue representatives Brad Johnson and Barry Fluth. As the developers had not arrived after the completion of the balance of the agenda, the HRA commenced discussion of the item. 0 9 HRA Minutes 05/05/04 Koropchak stated that she would not ask the HRA to take any action, only ask them to review the contract as presented. The City's attorney has changed the contract language to clarify when the letters of credit would be released back to the developers. The clarification is that when the certification of completion is issued, the letters of credit will be released. Fair asked if the developers have signed the contract. Koropchak indicated that they have not. She also provided the HRA with a summary of requirements the developers need to meet before funds can be disbursed. Koropchak noted that there are 15 items the developers have yet to complete before dispersal. The HRA will need to know whether these items can be completed for bond purposes by June 11 th. The developers will also need to provide revised plans addressing planning and engineering comments presented during the Planning Commission meeting by the 1 Oth. 6. Consideration to discuss for interest the establishment of a scattered housing program. Fair indicated that this item had been put on the agenda at his request. Fair stated that his • intent was to discuss a program more along the lines of a redevelopment program than a scattered housing program. Fair would like the HRA to discuss the possibility of instituting a program to reinvigorate areas of homes with the lowest values in the community. As a background for the discussion, Fair referred to a previous HRA tour of a similar project in Richfield. Fair proposed offering a low interest loan program to rehabilitate homes, in addition to the opportunity for the HRA to purchase devalued properties for demolition and rebuilding. Fair stated that in looking at the possibility of the HRA having excess funds, he considered such a project an opportunity to utilize those funds to reinvest in the community. Koropchak referred to areas and homes identified for possible redevelopment when the Community Development Department had done an inventory for a scattered housing project. The identified properties would be candidates for the project. Koropchak discussed funding of the project as outlined in the staff report. With budget cuts, redevelopment grants are non-existence or few; however, low to moderate income housing programs are still available. Richfield's program continues through the use of pooling dollars from the Best Buy TIF District. Using a similar model, the Monticello HRA could use pooling dollars on an annual basis from TIF District No. 1-22 for this purpose. Koropchak stated that the allowable pooling dollars for a redevelopment district 2 HRA Minutes 05/05/04 is 25% of the tax increment; ten percent for administrative costs and fifteen percent for the other. However, Koropchak noted that it is not advised to designate the funds but rather to review on an annual basis as the 15% serves as a reserve for bond payment in case of a tax increment shortfall. The bond projections assume full expenditure of the Front Street project and do not reflect the sale of the property to Hans Hagen Homes. Attorney Bubul is researching if these dollars ($297,352) are outside the pooling dollars and available as seed money for a scattered housing program. The second source of funds would be the revenues from a new TIF District either Redevelopment or Housing District. A third source of funds needs further research. Koropchak indicated that Ehlers has stated that the funds would have to be used for the purpose of redevelopment. Fair inquired whether the funds could be used for low -interest loans. Koropchak is unsure if funds could be used for both purchase/demolition and rehabilitation. Koropchak will clarify with Ellers. Andrews asked Frie if any of the potential properties are around $55,000. Frie indicated that there were not. Due to the potential expense involved in the purchase of such properties for redevelopment, Fair stated that he is more interested in the loan program. A loan program would also be voluntary. Andrews noted that such a program would require that a distinction be made between small and sub -standard homes. • Koropchak reported to the HRA that a potential developer had come forward on the 4`n Street property. A proposal for an HRA/City project for that property had previously come before the HRA. Koropchak stated that such developments are in indication of progress in terms of Council's desire to allow developers to do their work within the marketplace. Fair stated his position that revenue generated from projects should be reinvested in other community projects. The HRA members inquired how much funding would be available for such a program. Koropchak stated that could be addressed after discussing the next item regarding the issuance of the temporary bond. Koropchak also indicated that the HRA should know by the 11 th what the amount of the bond would be, which would determine funding availability. It was noted again that funds from the Hans Hagen project and the investment returns might be potential funding sources. Barger indicated his interest in researching the loan program. Barger also asked Koropchak about the City's current fagade loan program. Koropchak stated that thus far, there did not seem to be many properties taking advantage of the program. Fair stated that under the proposed revitalization loan program, there would need to be set certain criteria. For example, one criteria might be bringing the market value up by a 3 . HRA Minutes 05/05/04 specific amount. Wolfsteller indicated that the idea was similar to how the HRA has originated, which was with a grant/loan program that encouraged rehabilitation and depended on how long residents stayed in a home. Lahr inquired whether seed money would be land sale proceeds (one-time) and interest on investments, also one-time. Wolfsteller indicated that once bond proceeds are gone, interest decreases. Fair stated that he sees the program operating on more of a revolving fund basis. Koropchak commented that redevelopment district could also be set up for the program, which would require the HRA to establish a new TIF district. The areas would have to be residential or commercial and considered substandard. Wolfsteller provided a scenario for pre -payment of the bonds. Fair clarified that if another use isn't found for an eligible project, the bond has to be paid off and ultimately the district would be decertified sooner. Creating a redevelopment program is an opportunity to use the TIF generated downtown to re -invest. Andrews inquired how the program would be managed. Koropchak stated that building department would need to enter into the management of the program. Koropchak stated • that there would also be a need to market the program. Fair noted that he is not suggesting the program include rental properties. Lahr stated that the HRA would have to determine what the ultimate goal of the program. For example, would the goal be to clean up blighted areas or would it be to truly redevelop. A discussion commenced on possible partnership opportunities that may exist for such a program with other non-profit entities. Fair inquired how CMHP works as far as entering into a partnership to start a program. Scott Douglas addressed the HRA, commenting that the HRA may want to consider Kjellberg's park as an area for future revitalization. Fair stated that is an interesting concept. However, its current status as a commercial property makes it difficult. Frie stated that Kj ellberg's may present itself at some point as a large TIF project possibility. The HRA member agreed to defer a discussion on the program after discussion relative to the next agenda item. • 4 0 HRA Minutes 05/05/04 7. Consideration of an update relative to refinancing of the TIF District No. 1-22 Bonds and to authorize calling for a special HRA meeting. Koropchak stated that HRA will need to look at bottom line dollar amount in considering a refinance of the district. Council will needs to know the amount of the bond by the 141n Wolfsteller reviewed current bond amounts. Wolfsteller stated that the current bond for District 1-22 is for over $2 million, for which the balloon payment is due July 1, 2004. In reviewing the financial records, $1,762,257 of the bond has been utilized in the downtown district. Wolfsteller indicated that the bottom line amount to pre -pay bonds is approximately $91600, plus $40,000 for the first half tax settlement. Hence, if the HRA would make the balloon payment rather than refinance, the new bond would be issued at 1.3 million. Wolfsteller stated that the result is that the bond would be paid off sooner, but all that means is that the district is de -certified sooner and other entities share in tax sooner. Lahr asked if repayment comes through captured income. Wolfsteller noted that the reality is that there is an opportunity to borrow $450,000 and pay it back with tax receipts funds from City, County and School district, as opposed to starting a new district with new borrowed funds with City incurring all costs. Ehlers feels that TIF coverage of debt obligation is satisfactory, with a cushion also included. Barger inquired if the Paul Wurm property would qualify for a project such as that proposed by Fair. Koropchak indicated that it most likely would. Barger stated he thinks they should reserve the funds and refinance the bond. Andrews agreed. Wolfsteller noted that if income is lower than expected, unspent funds can be used to make payments if necessary. Lahr asked if a large share of revenues from the district are coming from one property. Lahr sought clarification on what properties make up the $186,000 in existing TIF revenues. Lahr stated that he would like to know if there is enough diversity to cover expenses. 4K indicated that projections presented are also based on up front TIF and revenues from Landmark Square II. Koropchak explained that a public meeting notice needs to be determined. Koropchak stated that the meeting could be held immediately before the Council meeting on the 14th, after which the Council would consider authorization of bond issuance. The HRA would • 5 HRA Minutes 05/05/04 pledge to pay back the bond pending authorization to refinance. MOTION BY BARGER TO CALL FOR A SPECIAL MEETING OF THE HRA AT 6:00 PM ON JUNE 14TH FOR THE PURPOSE OF AUTHORIZING ENTERING INTO A PLEDGE AGREEMENT BETWEEN THE CITY AND THE HRA RELATIVE TO THE TIF DISTIRCT NO. 1-22 BONDS. MOTION SECONDED BY ANDREWS. MOTION CARRIED. Fair requested that staff clarify any items of concern raised within the meeting, as well as those staff might identify. Koropchak indicated that the HRA could also discuss redevelopment with the refinanced funds during the meeting on the 14tn. 8. Consideration to authorize payment of HRA bills. None. • 9. Consideration of Executive Director's Report. Koropchak reviewed her report. Koropchak specifically referred to the spreadsheet provided for the recently completed wage survey. Koropchak noted in particular that a total payroll statement would also be helpful as an indicator, as wage levels beyond $22 per hour are not itemized out. Koropchak also noted that the City had signed a purchase agreement of the Chadwick parcel. She indicated that earnest money has been paid by the City, with a potential closing in July. The net land available for development is 85 acres. Frie inquired about the status of the Moon Motors plat as a result of the sale. Wolfsteller indicated that a development agreement needs to move forward and that Chadwick is requesting a re -zone to commercial for that strip of land. Additionally, Chadwick will need to sign a waiver of public hearing on assessment. The re -zone is potentially slated for Planning Commission in July. 10. Committee Reports. Previously discussed via the Executive Director's Report. is 6 HRA Minutes 05/05/04 0 11. Other Business The HRA members discussed the status of the Streeter proposal and the interchange in relationship to the Planning Commission decisions made June 1st. 12. Adi ournment. A MOTION WAS MADE BY ANDREWS TO ADJOURN THE MEETING AT 7:30 P.M. MOTION SECONDED BY LAHR. MOTION CARRIED UNANIMOUSLY. HRA Chair Recor r� is 7