HRA Agenda 11-02-1998
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SPECIAL MEETING
MONTICELLO HOUSING AND REDEVELOPMENT AUTHORITY
Monday, November 2, 1998 - 5:00 p.m.
City Hall
MEMBERS:
Chair Steve Andrews, Vicc Chair Bob Murray, Brad Barger,
Darrin Lahr, and Dan Frie.
STAFF:
Treasurer Rick Wolfsteller, Executive Director Ollie Koropchak,
and Recording Secretary Nancy Whalen.
COUNCIL LIAISON:
Brian Stumpf.
Enclosed is a copy of the November 2, 1998, City Council agenda for consideration to act on the
construction bids for the community center. As you recall, construction bids were received on
Thursday, October 29, 1998.
A special meeting notice of the BRA was posted in order for more than two HRA commissioners
to attend the City Council meeting of November 2. Mark Ruff~ Ehlers & Associates, suggested
the HRA commissioners be in attendance and stated the HRA must decide whether or not to
proceed with the bond sale if the audit has not been completed. If a HRA commissioner
determines the need for the commissioners to convene, it is the recommendation of Attorney
Bubul that the commission request the Council call for a recess. Independent discussion or
action relating to the same topic by two public bodies should not be held simultaneously. I
assume the Mayor will recognize each HRA commissioner for questions or comments during the
Council meeting.
Also enclosed are copies of Counci I and HRA minutes relating to increased costs of the
community center project per your request.
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MINUTES
SPECIAL MEETING. MONTICELLO CITY COUNCIL
Monday, March 2,1998.7 p.m.
Members Present: Bill Fair, Clint Herbst, Brian Stumpf, Roger Carlson, Bruce
Thielen
Members Absent: None
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Consideration of requestinl! HRA l,1articination in construction financimr of
the community and training center.
Assistant Administrator Jeff O'Neill reported that the small group charged
with establishing a common concept for design and financing of the
community and training center agreed on many points but did not come to an
agreement on the financing program. Following were the areas agreed upon
by the small group:
1. The basic design and mix of uses as recommended by the task force.
2.
The leisure pool and light fitness areas are important ingredients to a
successful community center.
3. Downtown redevelopment and the comprehensive plan are well
supported by the proposed location.
4. Other funding sources such as liquor store revenue and available TIF
dollars should be used to defray the tax impact. The concept of
establishing a sales tax should be shelved.
5.
Reductions in the amount of $500,000 could be accomplished without
negatively affecting the design.
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6. The latest finance plan alternatives included estimated operation
expenses not covered by operation revenue.
Two options were proposed by the small group for Council discussion. The
first option proposed building the core facility using lease revenue bonds and
allowing residents to vote on construction of a water park using general
obligation bonds. The second option was to build the core facility and the
water park using lease revenue bonds. In lieu of sales tax, both options
proposed the use of tax increment financing and liquor store revenue.
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Special Council Minutes - 3/2/98
Assistant Administrator O'Neill reported that the City Administrator
recommended that because the water park would be vital to development of
an active community center and would add a small percent to the cost of the
project when considering operation cost/expense, from a business and
community development standpoint, the best option would be to build the
entire project under the lease revenue option. However, it was pointed out
that Council may wish to conduct a vote on a portion of the project for
legimate public policy reasons.
Rusty Fifield of Ehlers & Associates reviewed the proposed financing options,
which included building the core facility and voting now on the water park,
with a total project cost of $9,379,239; building the core facility and delaying
the vote on the water park, with a total project cost of $6,985,868; and
building the core facility including the water park, with a total project cost of
$9,379,239. Mr. Fifield also noted that the information presented in the
Monticello Times was incorrect in that the table included the projected tax
impact of the wastewater treatment plant and the operations costs of the
community center rather than just the impact of the community center.
The Council then accepted comments and questions from the public.
Public comments included concerns regarding operation cost, increased tax
burden for citizens, individual financial responsibility of the Council
members for the City's financial condition, duplication of facilities and
competition with the Life Fitness Center, and the impact of the community
center on fire station operations. Comments favoring the community center
were also made, with many requesting that the water park be included since
it would generate revenue to help offset the cost.
AFTER DISCUSSION, A MOTION WAS MADE BY CLINT HERBST AND
SECONDED BY BRIAN STUMPF TO PUT THE ENTIRE COMMUNITY CENTER
PROJECT TO A REFERENDUM UNDER GENERAL OBLIGATION BONDS.
Voting in favor': Clint Herbst, Brian Stumpf. Opposed: Bill Fair, Roger
Carlson, Bruce rrhielen. Motion failed.
A MOTION WAS MADE BY ROGER CARLSON AND SECONDED BY BRUCE
THIELEN TO REQUEST HRA FUNDING USING LEASE REVENUE BONDS TO
BUILD THE CORE FACILITY AND THE WATER PARK, AND INCLUDE THE USE
OF LIQUOR STORE REVENUE AND TAX INCREMENT FINANCING AS
DESCRIBED IN THE FINANCE WORKSHEET UNDER ALTERNATIVE #2.
COUNCILMEMBER BRUCE THIELEN MOVED TO AMEND THE MOTION TO
LIMIT THE AMOUNT OF LIQUOR STORE REVENUE USED FOR COMMUNITY
CENTER FINANCING TO $200,000 AND ADJUST THE LEASE REVENUE BOND
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Special Council Minutes - 3/2/98
ACCORDINGLY. AMENDMENT WAS SECONDED BY ROGER CARLSON . Voting
in favor of the amendment: Bill Fair, Roger Carlson, Bruce Thielen.
Opposed: Clint Herbst, Brian Stumpf. Motion for amendment carried.
Voting in favor of amended motion: Bill Fair, Roger Carlson, Bruce Thielen.
Opposed: Clint Herbst, Brian Stumpf. Motion carried.
3. Consideration of a resolution re(!'ardin~ Superior Landfill Project.
4.
Mayor Fair requested that Council consider approving a letter to the Wright
County Board of Commissioners opposing the massive expansion of the
Superior Landfill.
A MOTION WAS MADE BY BRUCE THIELEN AND SECONDED BY CLINT
HERBST TO SUPPORT THE LETTER AS DRAFTED AND DIRECT STAFF TO
SEND THE LETTER TO THE WRIGHT COUNTY BOARD OF COMMISSIONERS.
Mr. Wayne Yonak, former owner of the landfill, noted his concern regarding
the City's letter opposing the expansion. It was his view that many questions
remained unanswered and that additional meetings between the County and
the landfill owners should be held to address those questions and concerns.
Motion carried unanimously.
Consideration of a resolution adoDting annexation a~reement with Monticello
Townshin.
City Attorney Dennis Dalen reviewed the proposed Citytrownship joint
resolution regarding annexation and noted that any motion made by Council
should be subject to review of exhibits by the City Attorney and City Planner
since they were not available at this time.
A MOTION WAS MADE BY CLINT HERBST AND SECONDED BY BRUCE
THIELEN TO APPROVE THE ANNEXATION AGREEMENT CONTINGENT UPON
EXHIBITS BEING REVIEWED BY THE CITY ATTORNEY AND CITY PLANNER.
Motion carried unanimously. SEE RESOLUTION 98-7.
A MOTION WAS MADE BY BRIAN STUMPF AND SECONDED BY ROGER CARLSON TO
ADJOURN THE MEETING.
Karen'-Ooty
Office Manager
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MAR 03 '98 03:16PM EHLERS & ASSOCIATES P.2/3
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PRELIMINARY. For Discussion Only
. City of Monticello Q~J .J..
Community Center Finanoing ~~
Full Project Full Project
Lease Leas8
Revenue Revenue
Bonds Bonds
$500,000
No Add. cuts Add. Cuts
1 Proj~ct Costs 9,379,239 9,379,239
2 Plus: Delay in Aquatic: Center 0 0
3 Less: Cuts 0 (500.000)
4 Aquatic to G.O. Bonds NA NA
5 National Guard (1,500,000) (1,500,000)
Q Sale ot City Hall + Senior Center (500.000) (500,000)
7 Other City Funds (400,000) (400,000)
8 I.iquor Store Reserves (224,000) (224.000)
9 Investment of Bond Proceeds ( 120.000) (120,000)
10 Net Projec:t Cost 6.636,239 6.135.239
11 Finance Costs 2.35% 165,258 152,805
12 Capitalized Interest 7 231.772 214,307
13 Rounding 2.731 2,649
14 Total Bond Issue 5.65% 7.035.000 6,505,000
. 15 Annual Costs
16 Total Debt Service 20 596,032 551.128
17 Net Liquor Store Revenues (200.000) (200,000)
18 Tax Increment (11.250) (11,250)
1& Operating Deficit 85,596 85,596
20 Total to L.evy 470,378 425,474
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Ehlers & Associates. Inc.
03103/98
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MRR 03 '98 03 17P
: M EHLERS & RSSOCIATES
. City of Monticello
Projected Tax Impact
Net Levy ~ LRB + ciperatioM"""~'
Net Levy - G.O. Bonds
Combined
Estimated Tax Rate. Market Value
I Estimat,::d Tax ~T.!!.9~pacitY._
fEMV
--.-. ----S30,000
60,000
90,000
120,000
150,000
200,000
250,000
300,000
.350.,~90
$50,000
100,000
300,000
500,000
750,000
1,000,000
1.250,000
1,500,000
1,750,090
_.__._.~ooo.ooo
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Residential
Homestead
PRELlMINAI=!Y - For Discussion Only
Net Tax capac~~
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Full Project I Foil Project
. Leaae I
Revenue l Lease Revenue
Bonds I Bonds
I $500,000 Add.
No Add. Cuts I Cuts
$470]78l $425,m-.
o : 0
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470,378 l 425,414
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0.0000% I 0.0000%
3.26~ l 2.9519%
'. .Est 'AJ~dftiooat..Ailnw..Fr.~:~,,;~'
~H, ,_...._. '__\f"", ~"'\'" .............._011
. --1....._._
$9.79 I $8.86
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19.58 I 17.71
33.53 : 30.33
51.64 I 46.71
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69.76 I 63.10
99.94 I 90.40
130.13 I 117.71
160.32 l 145.01
, 90.50 I 172.32
.. ::. . ,,". ..~:. r. .c.... ",;:" '~'. ';..;.
$44.06 I $39.85
88.11 : 79.70
327.97 t 296.67
589.05 I 532.82
915.39 I 828.01
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',241.74 I ',123.20
1,568.08 l ',418.39
1,894.42 I 1,713.58
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2,220.77 I 2,008.76
2,S47:.!.'!-,~~.303.95
The figures above are gross property tax amounts. They do not reflect the effects 0' the
state Property Tax Refund ("CIrcuit Breaker") program or potential federal income tax
deductions. Some owners of homesteaa propel'lY (both residential and agricultural) will
qualify for a state refund. based on their Income and total property tax bill. These factOrt
will decrease the net impact of the project for many property owners.
The tax capacity values in this analysis are based on statutory formulas lor taxes payablE
, 998. Legislative action to change these formolas will alter the results.
The analysis uses a total City Net Tax Capacity of:
This amount reflects values for taxe$ payable in 1998.
Ehlers & Assoc;lates. Inc.
$14,413,597
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BRA :MINUTES
MARCH 4,1998
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Consideration of request by City Council relating to the design and financing of the
NG/Community Center and consideration of action if necessary,
HRA memberswere asked to consider concept approval for funding the NG/Community
Center and to adopt of resolution of official intent to reimburse expenditures for the
armory project. BRA members received a copy of the project costs and projected tax
impact for the full project using lease revenue bonds with and without $500,000 cuts.
Based on the small group's efforts to cut the project costs by $500,000 and to reduce the
total amount to levy through annual contributions from the Liquor Funds and TIF funds,
the City Council approved funding the full project ($9.4 million NG/community
center/aquatic center) through lease revenue bonds with the $500,000 cuts, an annual
contribution of $200,000 from the Liquor Fund, and an annual contribution from TIP.
The tax impact was narrowed to a point where Council passed the motion on a 3-2 vote.
The $500,000 reductions was project cost cuts, not contingency cuts. AKA informed
HRA members if given a budget, they stick within the budget. The greatest variables are
the bidding market and interest rates. The project materials within the bid were not
Cadillac and not low budget but middle of the road. For instance, not concrete floors,
some carpet but not cory tile. O'Neill's concern was the potential increase in land values.
The budget included land purchase as is; however, dollars were in the budget for site
rehab. Lahr suggested for the long term benefit, the use oflow maintenance materials.
BRA small group representatives Barger and Andrews recommended 20/30% of the BRA
tax: increment from redevelopment of the mall be used to reduce the levy amount as a
gesture of good faith (commit funds) as well as to issue debt (issue bonds). Attorney
Greensweig informed BRA members if they commit TIF revenues to a social/recreational
facility, the BRA will need to be a party to the Operational Procedure Agreement.
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Steve Andrews made a motion to use lease revenue bonds for the full project (National
Guard/core facility/aquatic center) consistent with the City Council approval and
committed 25% ($11,250) of the BRA's annual tax increment from redevelopment of the ,
mall toward the community center project. Bob Murray seconded the motion and with no
further discussion, the motion passed 3-1. Yeas: Andrews, Murray, and Barger. Nays:
Lahr. Absent: Frie. Lahr voted against the motion stating the cost of the project was to
high to not allow the taxpayer a vote. Barger expressed a change in vote because of the
reduced project costs and annual contributions from other local funds.
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BRA members were asked to adopt a resolution of official intent to reimburse
expenditures for the armory project. With the adoption of the resolution, expenditures
from and after said date will qualify for reimbursement from the proceeds of the lease
revenue bond. Damn Lahr made a motion to adopt the resolution of official intent to
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lIRA NlINUTES
MARCH 4,1998
reimburse expenditures for the armory project at a project maximum principal amount of
$9.4 million. Bob Murray seconded the motion and with no further discussion, the motion
passed unanimously.
5.
Consideration of preliminary concept approval for proposed redevelopment project No.n
within TIF District No. 1-22 and agreeing to the use ofTIF.
HRA members received a copy ofTIF cashflows for a proposed 4,000 sq ft print and
6,000 sq ft print professional building. Because of the expense to develop, Greg Hayes,
Shingobee, Inc., was looking to the HRA for a response of support to the idea and site of
the proposed redevelopment project. The project consist of acquisition of the parcel,
demolition of the unused, substandard gas station, and removal of three gasoline tanks and
one oil tank for construction of a two'-story professional building. Mr. Hayes informed
BRA members that he is negotiating with two potential tenants and others as well as the
property owner. The proposed two-story structure would encourage centralized parking,
consist of zero lot-lines, and complement the design standards of the CCD. The city policy
for parking is pay a fee or develop parking. Hayes is confident in working out issues with
the city, tenants, and neighbors. HRA members were in agreement and liked the idea and
site of the proposed redevelopment project for Lots 13, 14, & 15, Block 36, City of
Monticello.
Working as an agent, John Sandberg, informed BRA members he was working on two
potential different redevelopment project options for the same area including the gas
station parceL He is not the owner and his involvement consist of securing the parcels.
The redevelopment projects are larger in scale than Mr. Hayes' project and involve four
property owners. One project is the development of a mortuary and the other is a senior
housing project. Mr. Sandberg states he has been working on this for three months and
brings this before the BRA as informational and to inform them that yes, there are others
interested in redevelopment of the area. O'Neill indicated the downtown Broadway is
intended for small retail, service, eating, or two-story facilities anq. he felt the Planning
Commission would not see a senior housing project as a fit. Mr. Sandberg suggested a
swap between City, BRA, and Grimsmo relating to the said site and the proposed
community center and existing city hall sites. HRA members suggested Mr. Sandberg
keep his Options open and to work with O'Neill to see how his concepts fit with the
Comprehettsive Plan. Developers were informed that the next HRA meeting is Aprill,
1998, 7:00 p.m.
6.
Consideration to authorize payment ofHRA monthly bills.
Brad Barger made a motion authorizing payment of the BRA monthly bills as submitted
and stated. Bob Murray seconded the motion and with no further discussion, the motion
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Council Minutes - 5/26/98
A MOTION WAS MADE BY BRIAN STUMPF AND SECONDED BY CLINT HERBST TO
ADOPT A RESOLUTION ACCEPTING THE FEASIBILITY REPORT AND ORDERING A
PUBLIC HEARING FOR JUNE 8, 1998, ON THE PROPOSED IMPROVEMENTS OF
MARVIN ROAD AND THE CHELSEA ROAD EXTENSION. Motion carried unanimously.
SEE RESOLUTION 98-23.
Consideration of approval of final concept design and authorize preparation of plans and
specifications for the Monticello Community Center proiect: Consideration of accepting
trunk sanitary sewer relocation feasibility report and authorize preparation of plans and
specifications for the community center site: Consideration of initiation of eminent
domain procedures for acquisition of community center site: and Consideration of fire
hall driveway improvements.
FINAL CONCEPT DESIGN - COMMUNITY CENTER
Mark Wentzell of Ankeny Kell Architects reviewed the final concept design of the
community ccnter and noted that changes occurring from the user group meetings
resulted in a slight incrcase in the size of the facility, the largest increase being made in
meeting space; however, in an effort to stay within budget, resulting additional costs were
off-set by removal of certain quality items. The current cost of the project was estimated
at $9,605,026, and the average annual debt service was cstimated at $582,844, a $31,716
difference from the $551,128 amount previously approved by Council. Rusty Fifield of
Ehlers & Associates stated that he felt the $31,000 amount could be further reduced.
Mr. Wentzell added that there were three areas ofthe budget from which reductions could
be made: the contingency amount; furniture, fixtures, and equipmcnt; and the alternate
list such as using concrete rather than tile around the pool.
Councilmember Clint Herbst voiced his opposition to development of a community
center without a vote and stated that hc agreed with the health club owner that portions of
it would be a duplication of school and health club facilities. Public Works Director John
Simola suggested that Council consider removing items [rom the project that would
compete with local businesses and instead move the motor vehicle office into the
community center.
SANITARY SEWER RELOCATION
City Engineer Bret Weiss reported that relocation of the existing 18-inch sanitary sewer
interceptor located along 5 Y2 Street from Locust Street to Walnut Street is necessary to
allow construction of the community ccnter. He reviewed four alternatives ranging in
cost from $53,518 to $269,963. It was noted that Alternative C would involve removal of
two spurs; however, approval had not yet been received from the railroad.
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Council Minutes - 5/26/98
EMINENT DOMAIN PROCESS FOR COMMUNITY CENTER SITE
Assistant Administrator Jeff O'Neill reported that Dan Wilson has been negotiating with
Arve Grimsmo, owner of the parcel planned for construction of the community center.
Although negotiations have been going well, it was recommended that the City Council
initiate its powers of eminent domain to acquire the land so that, in the event negotiations
are not fruitful, the land can be legally acquired.
FIRE HALL DRIVEWAY ACCESS IMPROVEMENTS
City Engineer Bret Weiss reviewed the proposed access improvements for the fire hall
and noted that the fire department has requested additional electronic warning equipment
to address the increased pedestrian and vehicle traffic associated with the proposed
community center. In addition, they also requested that the parking lot be moved to the
west in order to crcate parking on both sides of the drive aisle, allowing enough space for
trucks to drive through.
AFTER DISCUSSION, A MOTION WAS MADE BY BRUCE THIELEN AND SECONDED
BY ROGER CARLSON TO T ABLE APPROVAL OF THE FIRE HALL DRIVEWAY ACCESS
IMPROVEMENTS TO ALLOW THE CITY ENGINEER TIME TO ADDRESS THE FIRE
DEPARTMENT'S REQUESTS. Motion carried unanimously.
A MOTION WAS MADE BY BRUCE THIELEN AND SECONDED BY ROGER CARLSON
TO APPROVE THE COMMUNITY CENTER CONCEPT DESIGN AS RECOMMENDED
AND AUTHORIZE PREPARATION OF THE PLANS AND SPECIFICATIONS, KEEPING IN
MIND THE AL TERNA TES IN ORDER TO KEEP THE COST MANAGEABLE; AUTHORIZE
INITIA TJON OF THE EMINENT DOMAIN PROCEDURE FOR ACQUISITION OF THE
COMMUNITY CENTER SITE; AND ACCEPT THE FEASIBILITY STUDY AND
AUTHORIZE PREPARATION OF PLANS AND SPECIFICATIONS FOR SANITARY
SEWER LINE RELOCATION USING OPTIONS C & D COMBINED AS THE FIRST
CHOICE AND OPTION A AS THE SECOND CHOICE. Voting in favor: Bill Fair, Bruce
Thielen, Roger Carlson. Opposed: Clint Hcrbst, Brian Stumpf. Motion carried.
SEE RESOLUTION 98-22.
13.
Consideration of plan for stagin~ West Bridge Park/Walnut Street improvements.
Assistant Administrator leffO'Neill reported that the Parks Commission prepared a
concept plan for improvements to East/West Bridge Park, which included the
reconnection of Walnut Street to River Street and replacement and relocation of a lift
station. In addition, the plan calls for building a terraced wall on each side of
Highway 25 to set the framework for future development of the park itself. The Parks
Commission elected to dcIete thc observation deck from the first phase. The estimated
cost of the entire project, including improvements to Walnut Street and the lift station, is
$734,900; total cost of the proposed first phase is $281,000 after removal of the
observation deck from the project.
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HRA Minutes - 8/5/98
4. Consideration to hear preliminary concept update for redevelopment of the North Anchor.
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Ms. Koropchak introduced Brad Johnson. Mr. Johnson gave the HRA an update on the
process for redevelopment of the North Anchor. He stated that he felt a housing
development, a hotel and a good size family restaurant would make good use of the area.
This concept includes an exchange of land to preserve the parks and vacating Front Street
would add additional parking. Mr. Johnson stated that Blackwoods Restaurant has
expressed an interest in opening a new restaurant in a community this size. Blackwoods
currently has restaurants in Duluth and 3 other northern cities. Representatives from
Blackwoods will be visiting Monticello in the near future.
Mr. Johnson stated that he recently visited the Parks Commission and they were receptive
to the concept. It is estimated that this project would increase the park by 50%. He felt
that it would be good strategy for the HRA to continue acquiring land as it comes up for
sale.
HRA Commission asked questions of Mr. Johnson regarding the impact of acquisitions
on the foreseeable value of surrounding land. Also, whether or not the developers will
need a liquor license and traffic issues.
Consideration to approve a resolution adopting the modification for Central Monticello
Redevelopment Proiect No. I: and establishing TIF District No. 1-24 therein and
adopting the related TIF plan therefor. (St. Benedict's)'s).
Ms. Koropchak introduced this item and asked Mr. James Hiatt, S1. Benedicts, to review
the design of the proposed independent facility for seniors. Mr. Hiatt covered in great
detail the proposed design and layout of the units. He stated that they are close to
finalizing their drawings. The project would not be done in phases. Completion should
be June or July, 1999. Mr. Hiatt stated that they have what is needed from the City and
will continue with the platting process.
A MOTION WAS MADE BY BRAD BARGER AND SECONDED BY BOB
MURRA Y TO APPROVE A RESOLUTION ADOPTING THE MODIFICATION FOR
CENTRAL MONTICELLO REDEVELOPMENT PROJECT NO.1; AND
ESTABLISHING TIF DISTRlCTNO. 1-24 THEREIN AND ADOPTING THE
RELATED nF PLAN THEREFOR. Motion carried unanimously.
Consideration of an update on the Community Center Proiect: Cost estimates and
funding.
Ms. Koropchak: introduced Mr. Rusty Fifield, Ehlers & Associates, reviewed a memo
regarding the finance plan for the Community Center with a proposed schedule of events
in the bond issuing process. He went over the original cost estimate verus the current
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HRA Minutes - 8/5/98
estimate, cash flow projections and debt structure. Mr. Mark Wentzell, AKA, Inc., went
over the design of the building. He covered the exterior materials to be used and the
layout of the inside of the Community Center. Mr. Wentzell stated that bid opening is
scheduled for October 22, 1998, with groundbreaking on November 1, 1998. Completion
is scheduled for NovemberlDecember 1999.
7.
Consideration to review the operating agreement for the community center between the
City and National Guard.
Attorney Dan Greensweig reviewed the proposed operating agreement with the City and
National Guard. He stated that the BRA is not a party in the agreement but felt that the
HRA should be updated since they will issue the bonds. The State will own the armory
and lease it to the City of$1.00 a year. The City will do routine maintenance of repairs
and a 90/1 0 split for real estate taxes. Also, the City will have total control over the lease
of facility except when the guards are scheduled to use the facility.
8.
Consideration to accept a counter-offer for the property located at 225 Front Street (Rich
and Marian Carlson).
Ms. Koropchak reviewed the above item. An Option Agreement and Purchase
Agreement was offered to the Carlsons in November 1997, the purchase offer price was
$130,000 as is. The appraisal value was $165,000. The Carlsons counter-offered in
amount of $179,500 as is, closing on or before 18 months, the City would reimburse $300
survey fee, BRA would be responsible for all closing fees, and the Carl sons would be
allowed to remove certain residential items. Also, they would be permitted to use the
HRA. garage at no cost, and be allowed to remove fallen trees. The "as is" appears to be
in conflict with request for removal of items and trees.
After discussion was held between commissioners on how this property would impact the
North Anchor and funding, the commissioners felt that a special meeting should be held
with Treasurer Rick Wolfsteller, Rusty Fifield, Mark Ruff, and Ollie Koropchak to
review TIF and HRA General Fund finances. The HRA staffwill gather information
enabling the commissioI'l.ers to' set priorities. '
A MOTION WAS MADE BY DARREN LAHR AND SECONDED BY BOB
MURRAY TO TABLE ANY ACTION RELATING TO THE JULY 24, 1998,
COUNTER-OFFER FROM THE CARLSONS. Motion carried unanimously.
A SECOND MOTION WAS MADE BY BOB MURRAY AND SECONDED BY
STEVE ANDREWS AUTHORIZING HRA STAFF AND THE HRA FINANCIAL
CONSULTANTS TO PREPARE CURRENT CASH FLOW STATEMENTS AND
CASH FLOW PROJECTIONS, AND TO CALL A SPECIAL MEETING OF THE HRA
TO REVIEW THE PREPARED FINANCIAL INFORMATION THEREBY
ASSISTING THE HRA IN BUDGET PLANNING FOR 1999 AND TO SERVE AS A
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EHLERS
& ASSOCIATES INC
Memo
To:
From:
SUbject:
Date:
City of Monticello
Rusty Fifield
Finance Plan for Community Center
August 5, 1998
The purpose of this memo is to provide the HRA and the City Council with updated information
on the finance plan for the Community Center and with a proposed schedule of events in the bond
issumg process.
Project Finance Plan
The plan (see Attachment 1) is based on the latest information from AKA, City Staff and other
consultants on the estimated cost of the Project. From a finance perspective, we continue to refine
the assumptions and move towards the final terms of the bond issue. Our objective is to create a
plan that meets the City's needs and offers an attractive investment.
It is important to understand the basic concept of the finance plan. The plan consists of two
equally important elements: the bonds and the lease. State Law gives housing and redevelopment
authorities the ability to issue revenue bonds to finance HRA projects. It has been determined that
community centers and other public projects are valid undertakings of a HRA. By themselves, the
bonds are not marketable. The HRA does not have an adequate flow of revenues to secure the
bonds. The lease provides the security for the bonds.
The City enters into a lease purchase agreement with the HRA and the HRA pledges these
revenues to retire the debt. The lease payments match debt service on the bonds. While the lease
is a long-term agreement, State Law requires that it be subject to an annual appropriations pledge.
Each year, the City must take action to appropriate monies to pay the lease. This provision creates
the legal ability not to appropriate funds. Part of developing the bond issue becomes 4etermining
the factors that offset investor concern over the potential of non-appropriation.
The general use of the facility (city hall and national guard training center) and the up-front
funding creates a strong impression for future financial support. We are currently exploring the
viability of various options for enhancing the investor appeal.
. Bond insurance provides the bondholder with assurance that the debt will be paid. Insurers
may require certain terms and conditions.
.
A trustee may be required. The trustee acts on behalf of the bondholders in the case of
non-appropriation or default. Use of a trustee creates both initial and on-going costs.
3060 Centre Pointe Drive .:. Roseville. Minnesota 55113-1105
(651) 697-8506 .:. FAX (651) 697-8555
rusty@ehlers-inc.com
..
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City of Monticello
Page 2
August 5, 1998
. A debt service reserve fund provides short-term protection to the bondholders if funds are
not appropriated. The size of the bond issue would be increased to create the reserve.
Interest on the investment of the reserve can be used to pay debt service. Monies in the
reserve will be used to make the final lease payment.
All of these factors are being evaluated. Final decisions on a recommended finance plan will be
made in the next six weeks.
Cash Flow Projections
The Project Finance Plan shows the overall funding and the amount of debt required to undertake
the project. Cash flow projections demonstrate that the Plan actually works. The projections in
Attachment 2 match the receipt and disbursement of funds for the project during the construction
period. Based on the assumptions used in the analysis, the project completes construction and the
first year of debt payment with a positive cash balance.
An important factor in the flow of funds is the sale of City Hall and Senior Center properties.
Current projections show the receipt of funds in January 2000, following the completion of the
Community Center. This lag could cause temporary deficits in late 1999 as shown in Attachment
2. .
Bond Issue
To this point, discussions on the bond issue have concentrated on the amount of debt and the
average annual debt service payment. As we approach the actual implementation of the Finance
Plan, attention must be given to the structure of the debt. The current debt structure (Attachment
3) is based on the following assumptions:
. The bo,nds will be repaid over 20 years in "equal" annual payments of principal and interest.
. Full debt amortization begins with fiscal year 1999.
. The City will use $200,OOO/year of net revenues from the Liquor Fund to pay debt service.
. The HRA will contribute $11,250/year in tax increment revenues to pay debt service.
. The remaining funds needed to support the debt will come from property taxes.
The review and consideration of these assumptions is a critical next step in the planning process.
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City of Monticello
Page 3
August 5, 1998
Timing
The formal bond sale process begins in late September. The bond sale is tentatively scheduled for
November 9. Funds would be received by the City in early December. The key dates in the
proposed sale process are as follows:
September 28
City Council requests that the HRA call for the
sale of bonds. Set final terms and structure of
bond issue.
October 7
HRA calls for the sale of bonds.
October 26
October 27
City Council consideration of construction bids.
Make adjustments, as needed, to finance plan and
bond issue.
November 9
HRA awards sale of bonds (special meeting) and
approves lease agreement with City.
City Council approves lease agreement with HRA
and ratifies sale of bonds.
November 9
December 7 (est.)
Bond issue closing and receipt of funds.
N:\MINNSOT A \MONTICEL\ARMORy\UPDATE8SWPD
..
City of Monticello
Community Center
Project Finance Plan
1
2
3
4
5
6
7
8
9
Construction
Site Acquisition
Site Preparation
FF&E
Rerouting Utilities
Fees & Insurance
ArchitecturaVEngineering
Contingency
Subtotal
10
Reductions
11
Total Project Budget
12 Difference from Current
PRELIMINARY. eiSCUssion Only
ATTACHMENT 1
13
14
15
16
11
National Guard
Sale of City Hall + Senior Center
Other City Funds
Liquor Store Reserves (1998 $)
Investment of Bond Proceeds
Up-Front Funds
18
Net Costs To Finance
19
20
21
22
23
24
25
Finance Plan Finance Costs
Costs of Issuance
Discount
Debt Service Reserve
Capitalized Interest
Rounding
Total Bond Issue
26
Average Annual Debt Service
27 Difference from Current
Ehlers & Associates, Inc.
2.35%
1.50%
5.65%
: ^'o .... ~~, ~ ,~~ ~2&; r~~~~ <. :",~:;, -;,;: ;~_.;( l..'~' ~:~, ..../.:;; ~,V-.l).. (, ':,..,J,t.i{~'-"Ji~~'
?; ,p~l.A r~"',: '.; "Councll"AeU9n: ;j;QunclfAPllPn'!:
Orig pal '. March 1998 May 1998 .
I
7,037,128
520,000
120,000
351,856
186,000
73,500
562,970
527,785
9,379,239
7,037,128
520,000
120,000
351,856
186,000
73,500
562,970
527,785
9,379,239
7,707,888
525,195
99,000
413,000
186,000
73,500
562,970
462,473
10,030,026
1
0 (500,000) (425,000)
9,379,239 8,879,239 9,605,026
(189,931) (689,931) 35,856
(1,500,000) (1,500,000) (1,500,000)
(500,000) (500,000) (500,000)
(400,000) (400,000) (400,000)
(224,000) (224,000) (224,000)
(120,000) (120,000) (190,000)
6,635,239 6,135,239 6,791,026
165,258 152,805
55,000
104,254
0
231,772 214,307 0
2,731 2,649 4,720
7,035,000 6,505,000 6,955,000
596,032 551,128 582,844
16,443 (28,461) 3,255
20
.
7,781,000
500,000
99,000
325,000
172,700
73,500
562,970
255,000
9,769,170
(200,000)
9,569,170
(1,500,000)
(500,000)
(400,000)
(224,000)
(150,000)
6,795,170
57,000
104,348
o
o
3,482
6,960,000
579,589
08105/98
.
PREliMINARY eiSCUssion Only
City of Monticello
ATTACHMENT 2
Community Center
Cash Flow Projections
5.00%
REVENUE
National City Investment Bond Other Construction
Date Guard Funds ~ Proceeds Revenue Costs
Jan-98 0 0
Feb-98 0 0
Mar-98 0 0
Apr-98 0 0
May-98 0 0
Jun-98 0 0 0
Jul-98 0 0 0
Aug-98 0 0 0
Sep-98 1,500,000 400,000 a 0 0 0
Oct-98 5,833 0 0
Nov-98 3,099 0 156,720
Oec-98 1,434 6,798,652 352,620
Jan-99 224,000 b 28,298 0 528,930
Feb-99 27,145 0 744,420
Mar-99 24,157 0 901,140
Apr-99 19,148 0 1,057,860
May-99 14,820 0 979,500
Jun-99 10,801 0 764,010
Jul-99 7,663 0 286,581 d 697,404
Aug-99 5,983 0 587,700
Sep-99 2,551 0 383,964
Oct-99 962 0 329,112
Nov-99 0 0 195,900
Oec-99 0 0 286,581 d 156,720
Jan-oo 500,000 c 0 0 0
Feb-QO 1,403 0 0
TOTAL 1,500,000 1,124,000 153,298 6,798,652 573,162 7,836,000
Notes
a. .Other City Funds' In project finance plan.
b. Contrlbution from 1998 Uquor Store funds
c. Sale of City Hall and Senior Center
d. City funds for debt service = property tax levy for taxes payable 1999 + Uquor store + TIF
e. Land acquisitlon and related costs
f. Site preparation
g. Utilities and feesJInsurance
h, Archil ecVenglnaerin 9
I FFE
Ehlers & Associates, Inc.
EXPENSE
Debt Site
Service Costs
241,807
331,355
573,162
500,000 a
99,000 f
246,200 9
845,200
BALANCE
.
Other
EXDenses
562,970 h
325,000 I
887,970
Annual
o
o
o
o
o
o
o
o
1,400,000
(656,137)
(399,821)
6,447,466
(276,632)
(717,275)
(1,201,983)
(1,038,712)
(964,680)
(753,209)
(403,161)
(823,524)
(381,413)
(328,150)
(195,900)
129,861
500,000
(329,952)
Cumulative
o
o
o
o
o
o
o
o
1,400,000
743,863
344,043
6,791,509
6,514,876
5,797,602
4,595,618
3,556,907
2,592,227
1,839,018
1,435,858
612,334
230,921
336,732
Dl',8OJ
08/05/98
.. . PREUM1NAR.r Discussion Only' .
City of Monticello ATTACHMENT 3
Community Center
Debt Structure
Bond Issue 6,960,000
Dated 01-Dec-98
1 st Interest 01-Aug-99
AADS 579,589
Date PrinclDal Rate Interest P&I L1auor TIF levy
01-Feb-99 0 0 0
1 01-Feb-00 150,000 4.30% 423,162 573,162 200,000 11,250 361,912
2 01-Feb-01 220,000 4.40% 356,260 576,260 200,000 11 ,250 365,010
3 01-Feb-02 230,000 4.50% 346,580 576,580 200,000 11 ,250 365,330
4 01-Feb-03 245,000 4.60% 336,230 581,230 200,000 11 ,250 369,980
5 01-Feb-04 255,000 4.70% 324,960 579,960 200,000 11,250 368,710
6 01-Feb-05 270,000 4.80% 312,975 582,975 200,000 11,250 371,725
7 01-Feb-06 285,000 4.90% 300,015 585,015 200,000 11 ,250 373,765
8 01-Feb-07 295,000 5.00% 286,050 581,050 200,000 11 ,250 369,800
9 01-Feb-08 315,000 5.10% 271,300 586,300 200,000 11,250 375,050
10 01-Feb-09 330,000 5.20% 255,235 585,235 200,000 11,250 373,985
11 01-Feb-10 345,000 5.25% 238,075 583,075 200,000 11,250 371,825
12 01-Feb-11 365,000 5.30% 219,963 584,963 200,000 11,250 373,713
13 01-Feb-12 380,000 5.35% 200,618 580,618 200,000 11 ,250 369,368
14 01-Feb-13 400,000 5.40% 180,288 580,288 200,000 11 ,250 369,038
15 01-Feb-14 420,000 5.45% 158,688 578,688 200,000 11 ,250 367,438
16 01-Feb-15 445,000 5.50% 135,798 580,798 200,000 11 ,250 369,548
17 01-Feb-16 465,000 5.50% 111,323 576,323 200,000 11 ,250 365,073
18 01-Feb-17 490,000 5.55% 85,748 575,748 200,000 . 11 ,250 364,498
19 01-Feb-18 515,000 5.55% 58,553 573,553 200,000 11 ,250 362,303
20 01-Feb-19 540,000 5.55% 29,970 569,970 200,000 11 ,250 358,720
6,960,000 4,631,787 11 ,591 ,787
.Ehlers & Associates, Inc.
08/05/98
.
.
.
.
Memo
To:
Monticello City Council
Monticello HRA
Rusty Fifield/Mark Ruff
Public Project Revenue Bonds - Community Center
October 12, 1998
From:
Subject:
Date:
EHLERS
& ASSOCIATES INC
We request your consideration of the following change from the finance plan for the Community
Center bond issue as described in oUr Bond Sale Report. Revised estimates for costs of issuance
require an increase of $10,000 in the size of the issue to $6,960,000. Please note that this amount
equals the issue size anticipated in our previous analysis.
This change modifies the proposed sources and uses of funds as follows:
SOURCES OF
FUNDS
Par Amount of Bonds
Up-Front Revenue
USES OF
FUNDS
Project Costs
Costs of Issuance
Discount
Capitalized Interest
Debt Service Reserve
Other
Total Sources
$6,960,000
2,774,000
Total Sources
$9,734,000
$9,569,170
60,430
104,400
o
o
o
$9,734,000
A revised preliminary debt service schedule for the bond issue is attached. We have also revised
Council and HRA resolutions to reflect this change. An amended Bond Sale Report will be
prepared to reflect the necessary changes.
N:\MINNSOT A IMONTICEL\98_BONDS\HRA..REY.WPD
3060 Centre Pointe Drive .:.. Roseville, Minnesota 55113-1105
(651) 697-8506 .:. FAX (651) 697-8555
rusty@ehlers-inc.com