HRA Agenda 06-12-1991AGENDA
MONTICELLO HOUSING AND REDEVELOPMENT AUTHORITY
Wednesday, June 17, 1991 - 7:00 PDR
City Hall
MEMBERS: Chairperson Al Larson, Ben Smith, Lowell Schrupp,
Everette Ellison, and Tom St. Hilaire.
STAFF: Rick Wolfeteller, Jeff O'Neill, and 011ie Roropchak.
GUESTS: Brad Larson, Metcalf & Larson
Pat Pelstring or Deb Gustafson, BDS, Inc.
Gas Veit, Shingobes, Inc.
1. Call to Order.
2. Consideration to Approve the May 1, 1991 HRA Minutes.
3. Consideration to Hear Potential Redevelopment Area Option
Inclusive of the west Praire Partnership and Gills Property.
4. Consideration to Adopt a Resolution for Modification of the
Redevelopment Plan relating to Redevelopment Project No. 1,
the modification of TIP Plane relating to TIF Districts Nos.
1-1 through 1-12, and the approval and adoption of the TIF
Plan relating to TIF District No. 1-13, all located within
Redevelopment Project No. 1.
5. Consideration to Set a Policy to Recapture the HACA Penalty
Payment for Shingobee, Inc. District with Recommendation to
the City Council.
6. Consideration to Review an Updated Report on the TIF Reserve
Funds as prepared by RDS, Inc.
7. Consideration of an Updated Report on Arop lax and MaLd of
Scandinavia.
B. Other Business.
9. Adjournment.
MINUTES
MONTICELIO HOUSING AND REDEVELOPMENT AUTHORITY
Wednesday, May 1, 1991 - 7:00 PM
City Hall
MEMBERS PRESENT: Chairperson Al Larson, Ben Smith, Lowell
Schrupp, Everette Ellison, and Tom St.
Hilaire.
STAFF PRESENT: Rick Wolfsteller, Jeff O'Neill, and 011ie
Xoropchak.
GUEST: Jerry and Steve Schoen, Aroplax Corporation.
Pat Pelstring, BDS
Gas Veit and Tom Golewski, Shingobee, Inc.
1. CALL TO ORDER.
Chairperson Al Larson called the HRA meeting to order at 7:04
PM.
CONSIDERATION TO APPROVE THE APRIL 3, 1991 HRA MINUTES.
Lowell 3chrupp made a motion to approve the April 3, 1991 HRA
minutes, seconded by Ben Smith, and without comments or
corrections the minutes were approved as written.
3. CONSIDERATION TO ADOPT A RESOLUTION TO ESTABLISH THE TAX
INCREMENT FINANCE DISTRICT AND PLAN FOR AROPLAX CORPORATION
AND TO REQUEST CITY COUNCIL TO SET A PUBLIC HEARING DATE.
Mr. Jerry Schoen and his eon, Steve, were present at the HRA
meeting and gave the members a brief history of their company.
Mr. Schoen stated that they had looked at other Minnesota
communities and a Wisconsin community for their planned
relocation before making a committment to locate in
Monitcello. The company's present location in Minneapolis is
of 39,000 sq ft which is leased to two other busineses in
addition to apace occupied by Aroplax. The company needs to
relocate into a one story facility with a 24 foot ceiling
clearance inorder to maximize the use of their production
equipment and to increase productivity. The company is a
heavy user of electricity with the need for 1,600-2,000 amps
as they use an electric heat process instead of gas. The
company initially expecte approximately 20 of their current
employees to transfer with the need for approximately six new
employees. The company employe both high and medium skilled
personnel and provides good benefits. Some employees have
been with the company for 25-30 years. Mr. Schoen stated the
coat to move the equipment will be in excess of $190,000. The
company's financial package will include SBA funding, TIF, and
the GMEF.
HRA Minutes
5-1-91
Mr. Pat Pelstring of BDS, noted the District proposed budget
included $90,000 for land acquisition and a maximum liberation
of $75,000 for public improvements. Mr. Pelstring informed
the members that by approving the resolution they were
authorizing the establishment of the TIF Plan and District No.
-12 for Aroplax Corporation and requesting City Council to
set a public hearing date for the adoption of the TIF Plan and
District Establishment. Thereby the taxing jurisdictions of
the county, the school district, and the hospital district
have thirty days to make written or oral comment.
Tom St. Hilaire made a motion to adopt the resolution
authorizing the establisment of the TIF District and Plan for
Aroplax Corporation and requesting City Council to set a
public hearing date of June 10. The motion was seconded by
Lowell Schrupp and without further discussion the motion
passed unanimously. The motion passed as it met the public
purpose of the HRA guidelines and the State Statutory
requirements.
4. CONSIDERATION TO SET A POLICY TO RECAPTURE THE HACA PENALTY
PAYMENT FOR AROPLA% TIF DISTRICT WITH RECOMMENDATION TO THE
CITY COUNCIL.
Mr. Pelstring explained to the HRA members the HACA or TIF
Penalty. First, as the City of Monticello was designated to
receive RACA (state aid) in the amount of $246,000= the city
was able to reduce their tax levy but also became subject to
the HACA Penalty . Secondly, the HACA Penalty is applied to
newly created TIF districts only, therefore, as a City
receives HACA and a new TIF district is created, the school
district does not receive a portion of TIP increment during
the life of the TIF district. Thereby the state requires a
city to replenish the state's budget which was reduced because
the state has supplemented the school's loss. Thirdly, now
the HRA must determine a method to replenish or not to
replenish the city's general fund which replenished the
state's budget. The HACA or TIF Penalty amount is calculated
by the state through various school district data.
For TIF District No. 1-12 (Aroplax) the annual RACA Penalty is
approximately $5,000 of the projected $21,000 annual TIF
increment. Mr. Pelstring stated that Monticello's loss is
about 24-261 whereas moot other communities' lose is about 30-
35%.
Page2
HRA Minutes
5-1-91
The HRA may determine that the community will simply bite the
bullet and swallow the HACA Penalty, or the the HRA may
determine to construct the TIF budget to cover the penalty
through the use of a legal TIF expenditures (public
improvements), or the HRA may determine that the developer
absorb the penalty, or the HRA may set the budget based on the
"net" increment. It was the general consensus of the HRA that
they continue to keep their noses clean on TIF projects and
agreed with the maximum liberation of $75,000 for public
improvements within the proposed TIF District No. 1-12 budget.
The public improvements must occur within the Redevelopment
Project area and must be spend within three years of the TIF
approval by City Council.
CONSIDERATION TO REVIEW AND ACCEPT THE LETTER OF INTENT
BETWEEN THE HRA AND THE DEVELOPER, SHINGOBEE, INC.
Upon receiving the Letter of Intent from Paul Weingarden this
day, it was the consensus of all parties involved not to act
on the acceptance of the letter of intent. The NRA was
informed of the previous three main concerns with the TIF
project: One, that the TIF assistance includes the leasehold
costs; secondly, that the TIF assistance is for the life of
the district only, and finally, that all returned request for
proposals were completed as requested. With the inclusion of
the leasehold cost the TIF will be used as a lease assistance
of approximately i.75 per square foot which makes this a
competitive project and the entire TIP assistance is passed
through to the leasee. The project must demonstrate the
public purpose: Not to assist the developer but to reduce
the lease rental.
6. CONSIDERATION TO ADOPT A RESOLUTION TO ESTABLISH THE TAX
INCREMENT FINANCE DISTRICT AND PLAN FOR SHINGOBEE, INC. AND TO
REQUEST CITY COUNCIL TO SET A PUBLIC HEARING DATE.
Gas Veit and Tom Goleweki of Shingobee, Inc. presented the HRA
members with building and site plans for the proposed 25,000,
20,000, or 15,000 sq ft manufacturing/office facility on Lot
8, Block 2, Oakwood Industrial Park. They noted the
utilization of the lot due to the swale and expressed their
interest in the Monticello project.
Duo to the latest of the Letter of Intent and latest of the
actual leasehold cost numbers for TIF calculation the adoption
of tho resolution was tabled until the June meeting.
page3
HRA Minutes
5-1-91
The TIF/SPEC project was questioned on its necessity,.
Roropchak responded that on the city's industrial leads
approximately 40% require leaseable space of various size.
The project was initiated with the knowledge of no guarantees
but as a creative marketing tool with no or a minimum cost to
the city. The project will not construct the facility bu t
with reduce the development time by approximately 508 through
having the TIF public hearing and building/site plans
completed. Also, this allows the city to assist in marketing
a new facility at a below market lease rate.
Upon the suggestion of Hr. Pelstring, Everette Ellison made a
motion authorizing the execution of the letter of intent
subject to conditions and terms and the initiation of the TI F
process. The motion was seconded by Ben Smith and withou t
further discussion passed unanimously.
CONSIDERATION TO SET A POLICY TO RECAPTURE THE HACA PENALTY
PAYMENT FOR SHINGOBEE . INC. DISTRICT WITH RECOMMENDATION VO
THE CITY COUNCIL.
Tabled til the June meeting.
S. OTHER BUSINESS.
Roropchak informed the HRA members of a prospect, Maid of
Scandinavia, who are looking for six to seven acres of free
land without the use of TIF. The company's isn't interested
in TIF because they do not want to take the taxes away from
the school, hospital, or county.
The company plans to construct a 50,000 sgaure foot facility
comprised of a 15,000 sq ft office of brick exterior and
35,000 sq ft warehouse of decorative metal. Currently 90
jobs, unskilled labor at $5.50 and data processing at $7.00-
$10.00 of which they anticipate 15-20% to relocate. This is
a clean mail order catalog business with a current location at
Highway 7 and 100 which is up for sale.
Roropchak noted that the HRA owns a lot in the Industrial Park
along Dundas Road known as Lot 5, Block 3, which is 6.4 acres.
This lot was purchased by the HRA (through a loan from the
City) in 1983 from the Oakwood Partnership with the intent to
resale the property for the IHI proposed development. The
original amount of this loan was $77,400 at 6% and as W
December, 1990 the principal has been reduced by $9,400 to
$68,000 and $44,457 of interest has been paid. Currently the
property is tax exempt for an annual loss of $1,217.
Page4
HRA Minutes
5-1-91
Additionally, Roropchak had projected annual taxes of
$54,907.63 from the proposed Scandinavia development of which
the city would receive $9,559.21. The question to the HRA
was, based on the presented information, is the HRA interested
in marketing the lot and is the HRA interested at looking at
other creative financial incentives to recruit this company.
Mr. Pelstring suggested a performance development agreement
which ties number of jobs created at a designated time to the
cost of the land. The general agreement was to market the
property and Mr. Pelstring will summary alternative financial
incentives. Staff inquired of the amount of truck traffic
created by the project.
9. ADJOURNMENT.
The HRA meeting adjourned at 905 PM.
c.ul.' \14-�(IdI'—Q19--l-I
011ie Roropchak, HRA Executive Director
Pages
nll�
MAID OF SCANDINAVIA
PROJECTED TAXES
ASSUMPTIONS: 50,000 Total Square Foot Building
15,000 sq ft brick office
35,000 sq ft decorative metal warehouse
6.4 acres or 279,480.96 eq ft of land
Lot 5, Block 3, Oakwood Industrial Park
Currently 90 jobs, unskilled labor @ $5.50 and data processing
@ $7.00-$10.00. Expect approximately 15-20% current employees
will relocate.
Clean business, mail order catalog, current location at Hwy
100 and Hwy 7 up for sale, cone truction plans August/ September
1991 or January/ February 1992, has general contractor with
estimated time for construction of four months.
PROJECTED TAXES:
Building: 15,000 sq
ft @ $40.00
per sq ft
= $ 600,000
35,000 sq
ft @ $17.00
per eq ft
= ¢ 595,000
3tal Building Estimated Market
Value (EW)
_ $1,195,000
Land: 2.4 acres
or 104,544 sq ft @ $.40 per sq ft
= $ 41,817
4 acres or 174,130 sq
1t @ $.25 per sq ft
a 1 43,560
Total Land ENV
= $ 85,377
TOTAL BUILDING AND LAND ENV
- $1,280,377
New Capacity Value
(NCV) _
$61,628.66
191 Tax Rate
=
.67780
ANNUAL PROJECTED TAXES
$54,097.63
Tax Portion
Tax Rate
Total Percentaqe
County
$17,267.73
28.019%
31.9195%
City
$ 9,559.22
15.511%
17.6703%
School District
$25,675.11
41.661%
47.46071
Hospital District
$ 1,595.56
2.589%
2.9494%
TOTALS
$54,097.62
TT -7W
99.99991
3t 5, Block 3, Oakwood Industrial Park
Owner: Monticello HRA purchased the lot in 1983 for IXI
Price: $75,000 @ 88 interest rate over 8 years
P and I: Principal, $75,000 Interest, $29,412 - $104,412
PID#: 155-018-003050
'91 EMV: $28,000
'91 Taxes: Tax Exempt (<$1,217> over 8 years, <$9,736>)
Special
Assessments: 69-03 Improvement Original Amount $753.68
15 years @ 8.15%
Due 191 P $50.25 I $57.33 $107.58
Remaining Balance $653.18
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PROJECTED GAIN OVER EIGHT YEARS
Wage Income: 45 jobs @ $5.50 ph X 16,640 hours $4,118,400.00
45 jobs @ $7.00 ph X 16,640 hours $5,241,600.00
I
�ax Income: Total $54,097.62 X 8 years $ 432,473.76
City Portion $9,559.22 X 8 years $ 76,473.76
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ANNUAL COMPARISON
Expenses Land Principal 6 Interest
5
13,051.50
Special Assessments
$
107.58
TOTAL ANNUAL EXPENSE (Projected)
5
13,159.08
Incomes Wages ($5.50 X 15.511%)
$
79,850.62
Wages ($7.00 X 15.5111)
$
101,626.07
Taxes (City Portion)
$
9,559.22
TOTAL ANNUAL INCOME (Projected)
$
191,037.91
I
PROJECTED TAX INCREMENT
New Capacity Value (NCV) $61,628.66
Original Capacity Value (OCV) $ 1,386.00
Captured Capacity Value (CCV) $60,242.66
191 Tax Rate .87780
ANNUAL PROJECTED TAX INCREMENT $52,881.00
ANNUAL PROJECTED ADJUSTED TAX INCREMENT $52,504.75
Estimated TI Penalty $17,450.73
ANNUAL PROJECTED "NET" TAX INCREMENT $35,054.02
$180,000 Bond Issuance @ 9.5% over 8 years (184.05)
Annual Debt Service $33,129.00
PROPOSED BUDGET: Land $ 75,000
Land Interest
and Assessments $ 25,000
Site Improvements $ 24,800
Administration $ 18,000
Bond Discount $ 3,000
Capitalized Interest (24 mos) $ 34,200
TOTAL PROPOSED BUDGET $180,000
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HRA Agenda
6-12-91
CONSIDERATION TO HEAR POTENTIAL REDEVELOPKENT AREA OPTION
INCLUSIVE OF THE WEST PRAIRIE PARTNERSHIP AND GILLE PROPERTY.
REFERENCE AND BACKGROUND.
Based on the City Council's recommendation, the HRA is to
review the land swap option presented by the West Praire
Partnership. The Council is aware of the HRA's interest to
redevelop the Gills Property area therefore would like your
input as this may be the first parcel of the puzzle for
acquisition in the potential redevelopment area. Mr. Brad
Larson will be at the HRA to present their proposal to swap
the previously known 2.5 acre Baptist parcel for the 16 acre
Outlot A parcel. Enclosed is the City Council's June 10th
agenda supplement on the delinquent assessments of Outlot A as
written by Rick Wolfsteller. The Council's general feeling
was they themselves were not interested in a land swap.
Previously, the HRA has made a motion for Mr. Paul Weingarden,
City Attorney, to work with the County Auditor on the Gills
Property delinquent taxes. The delinquent taxes on the Gills
Properties through 1990 is $16,343.07. The HRA has viewed the
Gills Property as a liability, not an asset because of the
potential soil contamination and ultimately see the property
reverting to the city.
The enclosed map outlines areas in discussion.
Council Agenda - 6/10/91
:2. Consideration of an offer to exchange land in lieu of
delinquent assessments--Outlot A of Country Club Manor.
(R.W.)
REFERENCE AND BACKGROUND:
At the April 22 Council meeting, a request was made by West
Prairie Partners for the City to accept $200,000 as payment in
full for the special assessments that had accrued against
Outlot A of Country Club Manor. The partnership has recently
acquired an interest in this property and was proposing to
develop the parcel into residential building sites.
Approximately $550,000 is delinquent against the parcel in
question, which apparently exceeds the market value of the
land.
The sketch plan proposed for Outlot A consisted of
approximately 22 lots fronting along Country Club Road, which
is anticipated to be a collector street connecting to 7th
Street near Kmart in the future. The City staff had concerns
over the concept plan in that the property would require a
number of additional sewer and water services which would
result in the street being torn up and the fact that a
collector type street may not be appropriate to have
individual driveways accessing along this route. As you may
recall, the City staff prepared their own concept plan
utilizing cul-de-sac arrangements to minimize potential
traffic problems and still create residential building sites.
The property owners did not feel this type of proposal would
be either economical or attractive for development, and their
proposal would also allow the three billboard sites to remain.
In addition, because part of the property has been mined, the
staff was exploring the possibility of utilizing a portion of
Outlot A for a future storm water ponding area that may also
benefit surrounding properties in the future.
The Council action in April was to table any action on the
special assessment offer to allow time for the planner to
review the proposed concepts for single family development and
also to encourage the Wright County Auditor's Office to
continue with the tax forfeiture proceedings against the
parcel. It has come to our attention that the county is
commencing action to foreclose on the property, as the
property owners were notified on May 17, 1991, that the
property is under forfeiture proceedings, which will expire in
July. If the property taxes and special assessments are not
paid by the middle of July, the property owners will lose all
rights to the property.
Council Agenda - 6/10/91
West Prai sie Partners have proposed another option regarding
Outlot A. Basically, the partnership owns 2-1/2 acres along
County Road 75 between the Gills Auto sales lot and the
Pinewood playground area. They are proposing to trade the 2-
1/2 acres they own to the City in exchange for approximately
10 acres of the Outlot A property with the City retaining
approximately 6 acres of Outlot A for future storm ponding
needs. In turn, they are requesting that all assessments be
waived, they be allowed to keep the existing signs located on
the property, that they be immune from any sewer and water
hookup charges and immune from future storm sewer assessments.
As part of the exchange, they would have no plans to change
the zoning, which is currently R-3 ( multiple family) and
future development would limit access to the future collector
road.
As explained by the partnership, the reasons for proposing a
land trade is that they feel the City of Monticello will
ultimately be the responsible party for acquiring and possibly
cleaning up any contamination that may exist on the Gills Auto
site. Should this occur, the partnership felt the City would
be in a good position to own their adjacent 2-1/2 acre parcel
to combine with the Gills Auto site to create a townhouse
and/or multiple family development site to clean up the area
in the future. First of all, the staff is not convinced that
the City of Monticello should be or will be the responsible
entity to clean up the Gills Auto site, and also we question
whether the proposed land exchange adequately compensates the
City for the special assessment debt against Outlot A. The
partnership's 2-1/2 acres has currently been approved for a
residential plat consisting of six lots, and it doesn't seem
that the aix-lot development would equal the value of 10 acres
along I-9 4 in Country Club Manor.
The partnership has indicated they previously made an offer of
$200,000 as payment for all assessments upon which no firm
action was taken by the Council. Being somewhat under
pressure due to the county's tax forfeiture procedures, they
wanted to propose another option for the Council to consider.
At this point, they are requesting some type of action by the
Council, either rejection, further negotiations, or at least
a counter-offer by the City. While I believe the staff and
also the Council realize Outlot A may not have a market value
of $550,000, it is difficult to establish its true value
today. With the current zoning being R-3 (multiple family),
I checked on some R-3 property that has been for sale and also
found out what recent R-3 property has sold for. Ono
apartment site along Lauring Lane near Burger King recently
sold for $39,000 per acre, and an adjacent parcel is listed
for $43,000 per acre. While I do not believe the market
currently exists for multiple dwelling sites, you can see that
27
Council Agenda - 6/10/91
if the entire 16 -acre Outlot A parcel was suitable for
multiple housing development and there were developers
interested in the property, the market value could exceed
$600,000. In all likelihood, it will take a number of years
before multiple dwellings are again in demand in Monticello,
and it's the staff's opinion that Outlot A can only go up in
value once the collector street is finished connecting Country
Club Road to the Kmart area.
A counter-offer proposal could possibly be that the City would
retain four acres of the 16 -acre site for future ponding
needs; and if we discounted the estimated value to $25,000 per
acre for the remaining 12 acres, this would equal $300,000.
It seems possible that the Outlot A property would be more
suited in the future for multiple housing in that garages
required for apartment buildings could be placed near the
freeway, which would automatically create an S -Loot berm. If
we tried to establish a current value for the property
assuming a light commercial use, it would be anybody's guess
as to the value; but again, we believe the construction of the
collector road will only enhance its value in the future.
If we took the same approach we did with Farm Credit in
reducing the assessments by eliminating some penalties and
interest, this could be another counter-offer to the
partnership. In the Farm Credit settlement, the City did
collect about 40% of the penalties and interest that pertained
to the delinquent assessments. We reduced the total
outstanding balance by only 15%, which if applied to the
Outlot A delinquent assessments would only reduce the balance
to about $450,000. I'm sure this type of proposal would not
be acceptable to the partnership at this time.
With the county having started the tax forfeiture process, the
City will ultimately and up owning this property. Although it
may take another year or so to acquire title, the other option
is to do nothing and hope to recapture as much of our
assessment debt as possible in the future ourselves by selling
the property. In the meantime, the public works could use the
Outlot A property for disposal of fill material and could
start to construct a berm. with the City owning the property,
we could develop an appropriate storm pond area and hopefully
market the balance of the property when multiple housing
demand again increases or for light commercial use.
ALTERNATIVE ACTIONSI
Since an additional proposal has been submitted by the
partnership, the Council could accept a proposal to trade
land as outlined.
28
Council Agenda - 6/10/91
2. The Council could make a counter-offer on a cash
settlement based on the estimated market value as I
outlined above. For example, reduce the assessments to
$300,000 with approximately four acres being deeded to
the City for future ponding area.
3. Council could reconsider their original offer of a
$200,000 settlement.
4. Council could indicate that since the tax forfeiture
process has been commenced, no settlement will be
considered.
C. STAFF RECOMMENDATION:
Initially, the staff does not feel their proposal for a land
swap would provide the City with adequate compensation for the
delinquent assessments. While the partnership did propose to
give the City six acres of Outlot A for future ponding needs,
some of this property would have to remain in a drainage area,
as a portion was already dedicated for that purpose as part of
the Country Club plat. A land swap will not recapture any
funds for the City at the present time to pay off the debt and
only puts us in the land business. It seems that if we are
going to own land, we might as well wait for the tax
forfeiture procedures to run its course, and we will own
Outlot A. Again, it is extremely hard to establish a good
market value for the property todayr but if the current zoning
is to remain R-3, there will be value to the property in the
future. Based on current asking prices for multiple family
property and based on recent sales, it is logical to assume
the property with sewer and water and streets will be worth at
least 129,000 per acre. This is based on recent sales of
139,000 to $40,000 an acre for multiple sites.
Basically, the partnership is asking for some type of a
decision, either a willingness to continue negotiations of
some kind or an out-and-out refection.
D. SUPPORTING DATA:
Copy of Notice of Expiration of Redemption.
29
OFFICE OF COUIM AUDITOR
County of Wright curoa Myr NOTICE OF EMPATMN OF REDEMPTION
To A6 persons alterssted ti the tailds herarnfM CmuEth
You am Mnbr notiflad Nat Ou paroah of lend twos aft dreevelred, snabd M Qts Cpaity, of Wrieht
State of Minnesota. were brd in b the Sona on the I l th dayd May t6 6l
at Vie tree wdw-em sate d ImW for dwincuant nraa b Itn yrer 19 -ML out to Lear desatotlons and na parcei
wrer dfiC uori marWers of "Ch WrcW aiw namta Of the tLxD"M SM No earn and in adMon Vices yanks who
have Ned 1t1W addrMarere puernm to Section 276.041, and Via amount necemery, to redssrn es of Vire date haired
an4 at VV sYtlbn at the County Audhor, the uarant 0ed aaarbMa of army sash person; an, se bNowe:
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000010 P.O. a.. 426 Country Club
PrineetW 141 55771-0426 Manor
Jamres G. Mattel!
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P.O. boa 446
Ilonticallo MM 55762
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I911LURE TO REDEEM SIJC14 LANDS PRIOR TO THE 01P1NATION OF REDEMPTION WILL RESULT IN
THE LASS OF THE LAND AND FORFEITURE OF MD LAID TO TIE STATE OF INMESOTA.
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Coty. Minnesota. hereby ON OW ties 1118 tue Copy of 0. aertro natal aM of 90 pored nOUn roie passed
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HRA Agenda
6-12-91
4. CONSIDERATION TO ADOPT A RESOLUTION FOR MODIFICATION OF THE
REDEVELOPMENT PLAN RELATING TO REDEVELOPMENT PROJECT NO. 1.
THE MODIFICATION OF TIF PLANS RELATING TO TIF DISTRICTS NO. 1-
1 THROUGH 1-12t AND THE APPROVAL AND ADOPTION OF THE TIF PLAN
RELATING TO TIP DISTRICT NO. 1-13, ALL LOCATED WITHIN
REDEVELOPMENT PROJECT NO. 1.
A. REFERENCE AND BACKGROUND.
At the May meeting, HRA members heard of the project plans as
presented by Gas Veit and Tom Golewski, Shingobee, Inc., on
the TIF/SPEC Proposal and gave approval for BDS, Inc to
initiate the TIF process for this project. Upon execution by
Shingobee of the enclosed letter of intent as drafted by
Attorney Paul Neingarden, the HRA should consider formal
adoption of the enclosed resolution adopting the TIF plan and
requesting the City Council to set a public hearing date.
Proposed TIP Schedules
June 12, 1991 HRA approval and request City to
call for public hearing.
June 14, 1991 Distribution of TIF Plans to taxing
jurdiedictions.
July 6, 1991 City Council sets public hearing.
July 9, 1991 Planning Commission reviews plans
for consistency with Comprehensive
Plan.
July 22, 1991 Council holds public hearing and
tables adoption of the TIF Plan.
Mr. Peletring will be providing information at the meeting for
agenda items 4 and 6.
612-925-5879 0LSU4AVET P. A.
692 P02 Jul 10 '91 15:.48
OLSON. USSET, AGAN & WEINGARDEN
Me. Gas B. Veit
President
Shingobse Builders, Zno.
279 Borth Medina Street
P.O. Box 6
Loretto, MN SS337
Re: Letter, of Intent
Dear Me. Veit:
Our.AlO D/IIEf
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PROD, J. AOAN
6Nu1L66 J. ALLEN
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KIM •OK TIN
TRUDV 6VND
DONNI■ TRONNf6
DEE aOo.N
As you know, the undersigned represents the City of
Monticello and the Monticello HRA. Pursuant to the selection of
your company by the industrial development committee of the
Monticello HRA in response to its requoet for proposals to
prepare TIP/SPEC building pre -plane for tho City of Monticello,
this letter will evidence our mutual intention that the HRA and
Shingoboe Builders, inc. will enter into a development agreement
substantially on the tome outlined in this letter.
If the following terms and conditions reflect your
basic understanding of the proposed transaction, please sign the
form of approval below on both copies of this latter and return
one copy to me.
Upon your indication of the approval of tho basic terms
and conditions of tho agreement, it is the intention that the
parties move with all dispatch to secure the necessary approvals
and to proparo a formal agreement which will be bindinq on both
parties.
The proposed agreement would reflect the basic terms
and conditions:
1. The City will dooignato a portion of the City of
Monticello as a TIP district. This aroa will be
concis tont with that portion of the City which the
City believes ideally suitod for industrial
devolopaont.
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DEL A. OLOCNER
o�.r_ No
7975(2)
June 10, 1991
Me. Gas B. Veit
President
Shingobse Builders, Zno.
279 Borth Medina Street
P.O. Box 6
Loretto, MN SS337
Re: Letter, of Intent
Dear Me. Veit:
Our.AlO D/IIEf
T.1.f/wow. la I al baa -cool
RDCu/O.D Or/IC.
T.u/w 161 a)4"7 010
Lfou uafrAwru
PROD, J. AOAN
6Nu1L66 J. ALLEN
0110" OAKK6
AT
vIV A lOR6LAND
KIM •OK TIN
TRUDV 6VND
DONNI■ TRONNf6
DEE aOo.N
As you know, the undersigned represents the City of
Monticello and the Monticello HRA. Pursuant to the selection of
your company by the industrial development committee of the
Monticello HRA in response to its requoet for proposals to
prepare TIP/SPEC building pre -plane for tho City of Monticello,
this letter will evidence our mutual intention that the HRA and
Shingoboe Builders, inc. will enter into a development agreement
substantially on the tome outlined in this letter.
If the following terms and conditions reflect your
basic understanding of the proposed transaction, please sign the
form of approval below on both copies of this latter and return
one copy to me.
Upon your indication of the approval of tho basic terms
and conditions of tho agreement, it is the intention that the
parties move with all dispatch to secure the necessary approvals
and to proparo a formal agreement which will be bindinq on both
parties.
The proposed agreement would reflect the basic terms
and conditions:
1. The City will dooignato a portion of the City of
Monticello as a TIP district. This aroa will be
concis tont with that portion of the City which the
City believes ideally suitod for industrial
devolopaont.
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61 2-922-,-T_,37? Cl. W4- _S' --T P.A. _rd FO- 301 11D 'PI 15:•14
Mo. Cas B. Veit -2- June 10, 1991
The selected developer shall obtain a land
purchase option or commitment letter from the land
owner of the designated industrial site location.
Said option or commitment shall coincide with the
duration of this agreement.
2. The City will guarantee that there shall be no
building permits issued to any entity other than
Shinqobee Builders, Inc. or its aesigns in the
designated TIF district for a period of one year,
with options to extend for an additional one year
period, by mutual agreement of both parties.
3. Shingobse Builders will prepare plans and specs
for a 15,000, 20,000 and 25,000 square foot
industrial use building which specifications shell
include parking, landscaping, drainage and
elevation, to conform with City ordinance and
zoning requirements. All planning shall be
reviewed by the City staff and City engineers and
approved by the City Building Inspector prior to
TIF plan approval.
d. Shingobee shall not be obligated to construct any
industrial building within the TIF district until
such time as it has secured an acceptable lease
from a proposed tenant. Both Shingobea and HRA
will attempt to locate possible tenants for an
industrial use building to be developed by
Shingobse provided, however, that both the City
and Shingobee have the right and discretion to
accept or refuse a proposed tenant, it being the
intent of this paragraph that both parties must
agree to accept a proposed tenant prior to
execution of a binding leaso agreement.
S. Once an acceptable tenant is found either by
Shingobee or HRA, developer shall construct an
industrial use building acceptable for the
purposes of tenant substantial in accordance with
the plans and specifications previously supplied
by Shingobeo to City. The construction of the
proposed building by Shingoboo will be contingent
upont
old- _�-'x',r �i �i��ir,=ci r. ti. _._ i � :u, �•! :�i ��.,.
Ne. Gae B. Veit -3- June 10, 1991
(a) determination of the tax increment capture by
HRA, which amount shall be the net increment
after any local government aids are lost;
(b) execution by tenant of a tan year icaae at e
below market rate, together with a TIP
supplement so as to produce the following
lease rates for the first five years:
i for a 25,000 square foot building -
$4.25 per square foot;
ii for a 20,000 square foot building -
$4.50 per square foot; and
iii for a 15,000 square foot building -
$4.75 per square foot.
For purposes of illustration, if the proposed
building is a 25,000 square foot building and the
not tax increment amounts to a $.75 per square
foot economic aid, then the amount per square foot
charged by the developer shall be $3.51 per square
foot, which, together with the TIF assistance
supplied to the tenant, will result in a net
square rate of $4.25.
After the first five years of the lease, lease
rates would increase 0.25 per square foot for the
last five years.
S. The TIP increment shall be received on a pay as
you go basis. so long as the tenant remains
within the facility and is paying rent to
developer, the City shall reimburse the developer
on a monthly basis. In the event the landlord or
tenant terminate the lease or otherwise
vacate/abandon the promises, the TIF increment
payable to the developer shall be suspended during
any such period until such time as the tenant
commences paying rent or a new tenant is found to
occupy the promisee and pay rent in at least an
amount equal to the prior tenants lease
obligation.
1
IIIAI I -F -`EI F. A. 692 FV5 11.41 10 '?l lS:5
Ms. Gas B. Veit -4- June 10, 1991
7. The plans and specs provided to the tenant shall
include a 825,000.00 allowance for leasehold
improvement for a 25,000 square foot building;
$20,000.00 allowance for leasehold improvements
for a 20,000 square foot building; and 815,000.00
allowance for leasehold improvements for a 19,000
square foot building. If the tenant requires more
than a 75,000 square foot building or less than a
18,000 square foot building, the leasehold
improvement allowance shall be adjusted upward or
downward dependent upon the size of the building
desired. it is anticipated that the leasehold
allowances shell be adjusted upward or downward
consistent with the rates provided for in this
paragraph. If the tenant requires upgrades in
addition to the permitted allowances, the lease
rent shall be adjusted upward or the tenant shall
be required to pay the sums in advance.
B. The developer and the HRA shall pro -negotiate a
development contract which shall include an
assessment agreement and any addendums necessary
to carry forward the understandings and agreements
of this project. The development contract shall
also be executed by the lessee acknowledging the
City's assistance in verifying the project's
representations. The developer shall submit
financial statements and data, as requested by the
HRA.
9. The partioe acknowledge and understand that this
is not a joint venture agroement, partnership or
other similar undertaking. Developer shall
provide its own employees, workman's compensation
end unomploymont insurance and shall hold the RRA
and City of Monticollo harmless from any claims
against HRA, City or Monticello or developer
arising from developers negligence or intentional
wrongful conduct. Developer acknowledges that it
is an indopondent contractor and not an employee
of HRA or City.
012-925-58';"9 OL10tIiUSSET F.H.
Me. Gas B. Veit
092 F05 Jul 10 '91 15:�
-5- June 10, 1991
10. The obligations of the parties under this letter
of intent shall be contingent upon the successful
negotiation, execution and delivery of a
definitive development agreement, proposed lease
agreement, assessment agreement and necessary
addendum. The agreement will contain such further
representations, warranties and conditions and
terms as are customary in such agreements.
11. The obligations of the parties under this letter
of intent shall be further contingent upon
delivery by developer to City of a development
commitment fee of $5,000.00 for the purpose of
reimbursing City for actual costs incurred in
preparing the TIF District Plan and the Cityle
legal and administrative costs in preparing the
proposed Development Agreement. Upon execution of
the development agreement and finalization of the
TIF District Plan, any remaining unspent amounts
shall be immediately refunded to Developer.
If the following terms and conditions reflect your
basic understanding of the proposed transaction, please sign the
form of approval below on both copies of this letter and return
one copy to me.
tr
Pa 1 A. Winger
PAMtlld
cot 011ie Koropchak
Acknowledge, approved and agreed to this day of
, 1991
Dao 8. Veit
President of 8hingobee
Builders, Inc.
Councilmember introduced the following
resolution, the reading of which was dispensed with by unanimous consent,
and moved its adoption:
HOUSING AND REDEVELOPMENT AUTHORITY
IN AND FOR THE CITY OF MONTICELLO
WRIGHT COUNTY
STATE OF MINNESOTA
Resolution No.
A RESOLUTION RELATING TO THE MODIFICATION, BY
THE HOUSING AND REDEVELOPMENT AUTHORITY IN
AND FOR THE CITY OF MONTICELLO, OF THE
REDEVELOPMENT PLAN RELATING TO
REDEVELOPMENT PROJECT NO. 1, THE MODIFICATION
OF THE TAX INCREMENT FINANCING PLANS
RELATING TO TAX INCREMENT FINANCING DISTRICTS
NOS. 1-1 THROUGH 1-12 AND THE APPROVAL AND
ADOPTION OF THE TAX INCREMENT FINANCING
PLAN FOR TAX INCREMENT FINANCING DISTRICT NO.
1-13, ALL LOCATED WITHIN REDEVELOPMENT PROJECT
NO. 1.
BE IT RESOLVED by the Commissioners (the "Commissioners") of
the Housing and Redevelopment Authority (the "Authority") in and for the
City of Monticello, Minnesota (the "City"), as follows:
Section 1. Recitals.
1.01. It has been proposed that the Authority modify, by increased
project costs, Redevelopment Project No. 1, pursuant to and in accordance
with Minnesota Statutes, Sections 469.001 to 469.047, inclusive, as amended.
-1-
It has been further proposed that the Authority modify, by increased project
costs, the Tax Increment Financing Plans relating to Tax Increment Financing
Districts Nos. 1-1 through 1-12 and establish Tax Increment Financing
District No. 1-13 and approve and adopt the Tax Increment Financing Plans
relating thereto, all located within Redevelopment Project No. 1, pursuant to
and in accordance with Minnesota Statutes, Sections 469.174 to 469.179,
inclusive, as arnended.
1.02. The Authority has investigated the facts and has caused to
be prepared a proposed Modified Redevelopment Plan (the "Modified
Redevelopment Plan") for Redevelopment Project No. 1, defining more
precisely the increased project costs to be made to Redevelopment Project
No. 1, the proposed Modified Tax Increment Financing Plans for Tax
Increment Financing Districts Nos. 1-1 through 1-12 and Tax Increment
Financing Plan (the "Tax Increment Financing Plan") for Tax Increment
Financing District No. 1-13 (collectively referred to as the "Plans").
1.03. The Authority and the City have performed all actions
required by law to be performed prior to the modification of Redevelopment
Project No. 1, the modification of Tax Increment Financing Districts Nos. 1-
I through 1-12 and the establishment of Tax Increment Financing District
No. 1-13 and the adoption of the Plans relating thereto.
1.04. The Authority hereby determines that it is necessary and in
the best interest of the City at this time to modify Redevelopment Project No.
1, to modify Tax Increment Financing Districts Nos. 1-1 through 1-12 and
to establish Tax Increment Financing District No. 1-13 and approve the Plans
relating thereto, and to request that the City Council (the "Council") hold a
public hearing relating to the above -stated matters.
-2-
Section 2. Approval of the Modified Redevelopment Plan for
Redevelopment Proiect No. 1.
2.01. Subject to the finding, determination, and approval of the
Modified Redevelopment Plan for Redevelopment Project No. 1 by the City
Council of the City, the Modified Redevelopment Plan for Redevelopment
Project No. I is hereby approved by the Commissioners of the Authority.
The increased project costs shall be described in the Modified Redevelopment
Plan for Redevelopment Project No. 1, approved in Section 4 hereof.
Section 3. Approval of the Tax Increment Financing Plans for
Tax Increment Financing Districts Nos. 1-1 through 1-13.
3.01. Subject to the finding, determination, and approval of the
Modified Tax Increment Financing Plans for Tax Increment Financing
Districts Nos. 1-1 through 1-12 and Tax Increment Financing Plan for Tax
Increment Financing District No. 1-13 by the Council of the City, the Tax
Increment Financing Plans for Tax Increment Financing Districts Nos. 1-1
j through 1-13 are hereby approved by the Commissioners of the Authority.
Section 4. Approval of the Respective Plans.
4.01. The Plans presented to the Authority on this date, are
hereby approved and adopted by the Authority and shall be forwarded to the
Council with the request that the Council hold a public hearing relating to the
adoption of the Plans for Redevelopment Project No. 1 and Tax Increment
Financing Districts Nus. 1-1 through 1-13.
Section 5. Disposition of Public Lands.
5.01. The Authority held a public hearing, as of this date,
regarding the disposition of public lands. The Authority hereby verifies that
said public hearing was held and duly authorizes the City Attorney and City
staff to proceed with the implementation of the necessary documentation
relating to said disposition of public lands.
1 -3-
Section 6. Filina of Plans.
6.01. 'Me Authority shall cause the Plans, all as approved and
adopted, to be filed with the Office of Minnesota Department of Trade and
Economic Development.
NNWMITIPIWL':7>�
Chairman
Attest:
011ie Koropchak, Executive Director
Cuff.1-07
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