HRA Agenda 12-04-1991AGENDA
MONTICELLO HOUSING AND REDEVELOPMENT AUTHORITY
Wednesday, December d, 1991 - 7:00 PM
City Hall
MEMBERS: Chairperson Al Larson, Ben Smith, Lowell Schrupp,
Everette Ellison, and Tom St. Hilaire.
STAFF: Rick Woltateller, Jeff O'Neill, and 011ie Koropchak.
GUEST: Mayor Ken Maus and Pat Pelstring, BDS, Inc.
1. CALL TO ORDER.
2. CONSIDERATION TO APPROVE THE NOVEMBER 6, 1991 HRA MINUTES.
3. CONSIDERATION TO HEAR Of THE RESEARCHED INFORMATION ON THE
GILLS PROPERTY TAR FORFEITURE.
6. CONSIDERATION TO REVIEW THE ANNUAL BILLINGS OF BDS, INC.
S. CONSIDERATION TO DISCUSS FOR POSSIBLE AUTHORIZATION OF POLICY
RECOMMENDATIONS MADE BY BDS, INC. BASED ON THE TIF FINANCIAL
ANALYSIS.
6. CONSIDERATION OF AN AROPLAX UPDATE.
7. CONSIDERATION TO INVITE PRESTIGE BUILDERS TO AN HRA MEETING.
S. OTHER BUSINESS.
9. ADJOURNMENT.
MINUTES
HOUSING AND REDEVELOPMENT AUTHORITY
Wednesday, November 6, 1991 - 7:00 PM
City Hall
MEMBERS PRESENT: Chairperson Al Larson, Ben Smith, Lowell
Schrupp, Everette Ellison, and Tom St.
Hilaire.
STAFF PRSENT: Jeff O'Neill and 011ie Koropchak.
CALL TO ORDER.
Chairperson Al Larson called the ERA meeting to order at 7:00
PM.
CONSIDERATION TO APPROVE THE AUGUST 21, 1991 HRA MINUTES.
Ben Smith made a motion to approve the August 21, 1991 HRA
minutes. Seconded by Everette Ellison and without any
corrections or additions, the minutes were approved as
written.
3. CONSIDERATION TO DISCUSS FOR POSSIBLE AUTHORIZATION OF THE
RECOMMENDATIONS MADE BY BDS,INC. ON THE TIF FINANCIAL
ANALYSIS.
Koropchak informed the HRA that the re -ran TIF Analysis
Summary, with the inclusion of the $260,000 bond issuance for
TIF District 02; decertification of TIF District O1 in year
1991; and less the 10% administrative expenses and 5% bond
reserve, projected an excess increment of a little over one
million dollars over the life of the existing eleven
districts.
Based on this analysis which includes the assumptions (less
administrative expense and bond reoerve), Mr. Peletring
recommended the HRA to consider development and implementation
of a policy to transfer 10% of the total TIF project increment
into an HRA revenue fund (Admininstrative Account) for
distribution of expenditures such as staff time and for
additional marketing dollars. This 10% figure was originally
Included within the city's bond issues but no policy exists to
transfer tha funds from TIF to the HRA. If these funds are
not expended by the HRA they would be available for debt
service.
Secondly, Mr. Peletring recommended the NRA consider
development and implementation of a policy to establish e
reserve level (6x) for future potential defaults and/or slow
payments of taxes, thereafter, the remaining excess increment
NRA MINUTES
11-6-91
would give the HRA some opportunity to fund additional public
improvement projects.
Thirdly, Mr. Pelstring recommended the HRA negotiate a loan
payback with the City for Lots 5 and 6, Oakwood Industrial
Park. Principal amount $136,000 over 10 years at 8% interest
would be an annual debt service of approximately $20,268.
Through the analysis and the implementation of these policies,
the HRA would maintain an accountability of the TIF excess
increments and it would assist the HRA in planning for future
desired projects or goals.
The HRA members felt the increase of 10% administrative
revenue would only increase the administrative costs with no
Increase in productivity. The administrative revenue would
cover staff time and consultants time for marketing Monticello
prior to a Monticello site location commitment. It was the
understanding of the members that the HRA paid for BDS, Inc.
expenses only upon the preparation of the TIF Plan/District or
when staff determined a specific marketing necessity.
The HRA is pleased with work by BDS, Inc., however, requested
monthly billing statements rather than at random. Koropchak
informed the HRA that the statements are itemized and she will
provide a copy for NRA review.
The HRA tabled any action on this agenda item and requested
Mr. Pelstring be present to provide a clearer understanding of
his recommendations.
6. CONSIDERATION TO DISCUSS FOR POSSIBLE kECO"EFDATION OF $HE
CHELSEA LAND USE AND CIRCULATION STUDY/CONCEPTUAL AREA PLAN,
Jeff O'Neill told the HRA that the land use study was the
result of concerns raised by Remmele and Tapper's on the
aesethetic value of the industrial park, the development of
the school campus, the potential limited industrial apace, and
talks with property owners and the Planning Commission. The
Chelsea storm sewer system study resulted from city staff's
recommendation for an overall plan prior to further
development of the Farm Credit property.
The professional planner's land use map proposed the Farm
Credit Proporty zoned 82, B3, and I-1 to be Light
Industrial/Business Campus and the northerly 60 acres of Kline
Property to be Multi -Residential with the southerly 80 acres
of the Kline property to be Single Residential. The HRA was
shocked that the planner recommended the northerly 80 acres of
the Kline property for multi -residential as they felt the
school and industrial property were more compatible and they
did not feel people would not want to live next to a school.
Currently, the city has approximately 200 acres of available
Industrial land and 400 residential lots for development.
HRA MINUTES
11-6-91
Based on the current pace of residential development it will
take an estimated 10 years before full development of the
residential lots occur.
Mr. O'Neill stated the Business Campus zone has the same uses
as the I-1 zone. The ordinance does allow for metal buildings
with one-half brick on all wall surfaces. Jeff further
advised the members of the reduction in the original plan for
a big commercial area in the area of Chelsea Road and County
Road 118 which now is proposed as a smaller Neighborhood
Commercial Center.
Tom St. Hilaire made a motion strongly recommending the
northerly 80 acres of the Kline Property be retained for
industrial use. Seconded by Everette Ellison and without
further discussion the motion passed unanimously. The
recommendation was made to assure that the city maintains an
adequate amount of acreage for future industrial development
with the natural continuation to the south of the industrial
park.
5. CONSIDERATION TO ESTABLISH 1992 HRA GOALS.
Tom St. Hilaire agreed to serve on the HRA for the five year
term, his name will be recommended to the City Council for
appointment by the Mayor and Council in January.
The following 1992 HRA Goals were established:
1. To research the need and feasibility for nenior quality
townhome housing. (double garage, no stairs, 1,200 to
1,400 sq ft, 880,000 to 8100,000, within city limits
preferably close to commercial).
2. To research and earmark property for future development
of such housing. (Suggestions were old Dino property,
existing Redevelopment District 02, area of Ivan
Anderson's, or Broadway between Wright and Ramsey).
To research the probability and to serve as a catalyst
for the City Council to authorize forfeiture procedures
against the Gille Property. (Invite Mayor Maus to the
HRA meeting, research the City's access of Super Bund
monies for soil testing and soil contamination cleanup,
check on Gille property tax delinquency statue, invite
City Attorney Paul Weingarden to the HRA meeting for
Information on forfeiture procedures, and request the
Mayor and City Council to proceed with forfeiture of
Dille property).
4. To encourage and assist in the development of two
Industrial projects of similiar quality to Remmele and
Tapper.
HRA MINUTES
11-6-91
CONSIDERATION OF AN UPDATE ON THE AROPLAR CORPORATION PROJECT.
Koropchak advised the HRA that the City of Brooklyn Park has
presented Mr. Jerry Schoen with a financial proposal.
Although, the exact terms of the proposal are unknown, Mr.
Schoen said the city can finance the project. The City of
Monticello has certified the TIF District for assistance in
the write down of land and approved a $30,000 OMEF loan at 6.5
percent interest over seven years for machinery and equipment.
The financial package also included an SBA loan and bank
financing.
Koropchak reported she asked the EDA to respond to Mr.
Peletring'9 suggestion to ask Aroplax, "What it would take for
a Monticello site location commitment?" It was the feeling of
the BDA that the Aroplax project was one which met the
Industrial recruitment objectives of the IDC, the ARA, and the
EDA. Therefore, it was suggested to ask, what it would take
to get the company to Monticello. Koropchak did remind the
EDA that the GMEF policy states the funds are for gap
financing and are not intented as a substitute for commercial
financing. Aroplax had the option of three bank commitments.
Mr. Pelstring met with Mr. Schoen on Tuesday, November 8th
and proposed a financial package with the insertion of the
Minnesota Economic Recovery Grant therebye reducing the debt
service by approximately $15,000. He seemed interested,
however, believes the land values in Brooklyn Park will
maintain or increase its value over a long time. Yet, he also
see the benefits to a Monticello location. He feels he has
made no site location commitment.
The HRA questioned whether he was playing with the City for
additional funds.
7. OTHER BUSINESS.,
Koropchak informed the HRA that she had requested Mr. John
Dean of Holmes & Graven to prepare a preliminary agreement
between the 11RA and a developer which basically ask the
developer for upfront dollars to cover costs prior to the
execution of a developeent contact therefore the HRA costs are
covered if for some unknown► reason the proposed project did
not develop. The HRA agreed with the concept of the document.
ERA MINUTES
11-6-91
ADJOURNMENT.
Al Larson made a motion to adjourn the HRA meeting, seconded
by Tom St. Hilaire, the meeting adjourned at 9:00 PM.
SLI
011ie Korogchak, HRA Executive Director
HRA AGENDA
12-4-91
3. Consideration to Hear of the Researched Information on the
Gille Property Tax Forfeiture.
A. Reference and Backaround.
At the November HRA meeting, one of the 1992 HRA Goals was to
research the probability and to serve as a catalyst for the
City Council to authorize forfeiture procedures against the
Gille Property. More specifically, the NRA requested Mayor
Maus attend an HRA meeting, research the current status of the
Gille property tax delinquency, research the City's access to
Super Fund monies for soil testing and soil contamination
cleanup, invite City Attorney Paul Weingarden to the HRA
meeting for information on forfeiture procedures, and request
the Mayor and City Council to proceed with property tax
forfeiture on the dills property.
1) Statue of Gille property tax delinquency -
Status as of last vear:
Gills 1.52 acres (previous gas station) $14,310.83
.25 acres (adjoining parcel) $ 1,244.59
Gille 1.03 acres (Carlson property) $ 897.65
Katzmarek 2.08 acres current
Status as of todav:
Gills 1.52 acres and .25 acres property tax delinquency has
been forfeited to the State of Minnesota (recorded at the
County).
Dille 1.03 acres has reverted to Alice Carlson with all
prcporty taxc3 currantly paid -in full.
In my conversation with Darla Groehens, Wrigiat County
Auditor /Treasurer. it is the County Auditor's office which
starts forfeiture procedures. The county orders the sale and
deed, and pays for the associated fees while the state issues
the deed. Most property taxes must be delingent for five
years and some commercial taxes for three years before
forfeiture procedures can begin. In Wright County, Darla has
started forfeiture procedures on eighty-three parcels
delinquent from years 1977 through 1982.
1. A forfeiture notice was served on the Gills
property by the Sheriff's Department on September
18, 1991.
2. The 30 to 60 day redemption period has passed.
3. The property was forfeited to the State of
Minnesota (recorded at the County).
HRA AGENDA
12-4-91
4. The State Department of Soil Conservation will walk
the property for potential wells and wetlands.
5. Two County Commissioners, the Auditor, and the
Assessor will determine the value of the property.
6. The City is notified of determined property value,
asked to comment, have first right of purchase, and
must decide whether to reinstate assessments, if
appropriate.
The procedure may take up to appropriately one year, Darla
plans to call the State's Tax Forfeiture Attorney regarding
the underground gasoline tanks on the Gills property to
determine the state's role, if any, for tank removal, soil
testing, or contaminations clean-up. Darla will inform me of
her findings.
2) Underground Tanks -
All Tank Owners Must:
Report information to MPCA such as tank age, size
and contents within 30 days after any changes in
tank ownership, use or contents, or any tanks not
vet been reported. (This regulation has been in
place for underground storage tanks since 1995).
Septic tanks, most underground petroleum storage
tanks smaller than 1,100 gallons are not covered by
this requirement. One certified underground
storage tank contractor estimated the Gille tanks
to be between 2,000 to 6,000 gallons.
Any underground flammable liquid tank that has been
out of service for one year must be removed from
the ground to comply with Article 79 of the
Minnesota Uniform Fire Code.
Notify MPCA of any tank removal 30 days in advance.
For any underground tanks taken out of service
after 1973, report to the the MPCA the date the
tanks were taken out of service and the type and
quantity of substances remaining in the tank, if
any. New federal regulations also require tank
owners to evaluate the excavation oite to determine
If there has been any leakage from the tank.
4. Minnesota has two cleanup programs for leaking
tanks: state's Petrofund and national's Luot Trust.
The two programs provide funds to the MPCA to clean
up sites where the owner or operator cannot or will
not perform the needed work. The state's
HRA AGENDA
12-4-91
Petrofund, administered by the Petrofund Board,
can also provide partial reimbursement to leaking
underground tank owners/operators who have spent
money cleaning up a release if the MPCA determines
that the cleanup was or will be adequate. Under
the Petrofund's reimbursement provision, the board
shall reimburse a responsible person who is
eligible under subdivision 2 from the fund for 90%
of the portion of the total reimbursable costs or
$1,000,000, whichever is less. Does not cover
costs related to the physical removal of a tank or
samplings.
The MPCA will also use the federal LUST Trust to
clean up underground tank sites where owners and
operators are unknown or uncooperative, and to
respond to leaking tank emergencies.
S. Landowners who purchased property without knowing
or having reason to know that buried storage tanks
existed on the site are not responsible for
cleaning up leaks from such tanks if the property
owners can show they did not significantly
contribute to the leak after they learned or should
have learned that the tank was on the property.
State law also requires anyone selling land to file
an affidavit with the county recorder that
identifies any underground tanks or leaks on the
property that have not been cleaned up,
6. Superfund Is controlled by the Attorney General's
Office.
Chapter 223 clarifies that the state, an agency of
the state, or a political subdivision that acquires
property through eminent domain, through negotiated
purchase after filing an eminent domain petition,
or by adopting a redevelopment or development plan,
to not a respond ible person under the state's
superfund law. The law also protects subsequent
purchasero and mortgage holders. Finally, it
provided protection to contract for deed vendors,
who reacquire property polluted after the contract
was executed. Effective Auguot 1, 1991.
Mr. O'Neill will report on Superfund availability
to cities.
Hiotory of the oille property, without an official on -cite
Inspection, is the property was used as a cut rate gasoline
HRA AGENDA
12-4-91
station along Highway 152 with the potential of three islands
for diesel, regular and supreme on site. Supposedly, the
tanks were pumped dry and filled with sand some twenty years
ago.
B. Recommendation.
As the HRA's goal was to research the probability and to serve
as a catalyst for the City Council to authorize forfeiture
procedures against the Gille property, no action ie necessary
as the County Auditor has executed those procedures.
C. Supoortina Data.
Copy of common questions and map.
a: Are tank installers certified by the MPCA? •
the MPCA Is not properly notified of a'tank leak
A:
reimbursement from the Pelrofund may be reduced,
Not at this time. The MICA expects to begin a
and if the cleanup plan is not approved by the MPGA,
certification program for tank installers in late 1989. •
no reimbursement from the Petrofund is possible.
After rules for the certification program are adopted,
only certified installers will be able to Install, repair or
0: Where can I dispose of soil contaminated by '
permanently remove a tank from servicein Minnesota.
petroleum_psoducts?
Q: Will the MPCA inspect tank removals and issue
A: Although most petroleum-contaminated soil
`dean bill of health' to the site?
does not qualify as a hazardous waste, disposal of
A:
petroleumcontaminawd sail In landfills„ soil at Apiles
Unfortunately, there is no such thing as a 'clean
or uncontrolled fill is not an aoceptable.disposal
bill of health' for most storage tank sites. Sometimes
method. Currently, tine moat common treatment
MPGA staff will be able to arrange to observe a tank
options are-
removal, but tank owners and operators themselves
should always examine removed tanks and
■ land spreading or land treatment — this option
surrounding soils for alga of leaks or overfills,,—
required prior approval from both the MPCA'and
federal law requires owners and operators of most
[=I officials, and
underground tanks to take samDlesiround the tank
areas to check for leaks when tanks am removed. Itis
' ■ incorporation Into asphalt, or "burning" soil in an
always a go6diaa—w arrange foq an Independent
, 'asphalt hot-mix plant. This also requires MPGA
observer (flre+rarshal, buildinglnspector, consultant,
approval•
etc.) to observe and take notes at a tank removal. An
observer will not always be able to spot subtle signs of
The MPGA continues to study these and other options,
leakage, but a trained observer can verify the cleanup
and don help tank owners and operators choose a safe
actions that were taken. If any signs of leakage are
treatment method for their soil wastes.
fourid, the tank owner or operator must notify the
MPCA. And remember— If you are planning to dose
Q: Can I have an unused underground tank In the
or remove a tank, you must notify the MPCA 30 days in
ground?.,
advance In order to meet federal rquirenxnts.
-A: For many years, the National and Minrusuld
Q,
• Does a'tank test' prove that I don't have a
Uniform Fire Codes have required proper handling of
problem?
unused tanks. These requirements arc now part of the
A, MPCA believe by
new fodcml'urdergmund tank regulations. If an
• staff that a tank teal pedomxd
underground tank has been out of service for 90 days, it
a qualified company can often detect a leak. However,
must be properly safeguarded of rived in o manner
even if a tank 'passes' the test, tanks or li nes may hAve
approved by local fire chic) or stain i re mar".
having
leaked, may be leaking slowly, or the test method may
laa(�ing imiudci the fill line, gauge
have been flawed. The MPCA staff typically will be
convinced of nonleakage only by Boll boring results and
opening and pump connection secured against
tampering. A tank which has been out of use for one
a test of ground water around the lanky
ysarjnd which hasn't been upgraded to meet new
Q:
federal standards mut generallyc�removed from the
Why should I notify the MPGA before dohs s
ground and the halBproperly filled. In certain
cleanup?
circumstances (such as tanks under roads), it may be
A:
abandoned In placeand safeguarded attending to ,
Failure to reporta leak or a spm of a subamnce
Instructions from the local firs chief or state fire
under your control is a violation of the law: Furthn, If
marshal. ,
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NRA AGENDA
12-4-91
4. Consideration to Review the Annual Billings from BDS. Inc.
Reference and Backaround.
Enclosed you will find a summarized copy of BDS, Inc. annual
billings. BSD, Inc. has been requested to submit the HRA with
monthly billing statements and have acknowledged the $450
credit due for duplicate and marketing charges. Previously,
it was agreed upon by both parties that the HRA would not be
billed for marketing fees. However, is the HRA aware of the
packaging fees which do not include TIF preparation fees but
are fees associated with preparation of other financial funds
such as the SBA loans, the Minnesota Economic Recovery Grant,
and the Central Minnesota Initative Hund are charged to the
HRA as the HRA has the contract with BDS, Inc.
BUSINESS DEVELOPMENT SERVICES BILLINGS
AROPLAX PROJECT
TIF DISTRICT NO #12
$1,925.00
ESTABLISHMENT/PWP
6-14-91
$3,850.00
PACKAGING/DL.G
3-12-91/4-25-91
3.50 HRS $ 262.50
PACKAGING/DLG
4-2-91/6-28-91
21.50 HRS $1,612.50
PACKAGING/DLG
7-1-91/7-22-91
11.00 HRS $ 825.00
MILEAGE/PWP
7.00 HRS
83 MILES $ 19.92
MILEAGE/DL(;
.50 HRS
42 MILES $ 10.08
MILEAGE/PWP
.10 HRS
42 MILES $ 10.08
MILEAGE/DLG
79 MILES } 18.96
TOTAL
$6,609.04
LESS PACKAGING
4-2-91/4-25-91
2.00 HRS ! 150.00
TOTAL
TIF ANALYSIS/PWP 5-13-91/6-26-91
$6,459.04
(HOLMES 6 GRAVEN)
TIF ANALYSIS/PWP 7-12-91/8-21-91
21.00 HRS
DEVELOPMENT AGREEMENT
9-6-91
$ 81.25
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9HIHGOBEE, INC.
TIF DISTRICT NO A13
PREPARATION/PWP(HOLDBACK)7-29-91
$1,925.00
DEVELOP AGMT(HOLDBACK) 7-29-91
! 425.00
TOTAL
$2,350.00
(BRADLEY 6 DEIKE, DEVELOPMENT AGREEMENT)
PHONE, PWP 6-27-91/6-29-91
1.10 HRS
$ 132.00
DRAFT CONTRACT, PHONE 7-3-91/7-31-91
7.00 HRS
$ 840.00
REVIEW AGMT, OLLIE 8-7-91/8-26-91
.50 HRS
$ 60.00
PHONE, OLLIE 9-10-91
.10 HRS
6 12.00
TOTAL
$1,044.00
(PAUL WEINGARDEN, CITY ATTORNEY)
SHINGOBEE, INC. 3-13-91/9-91
14.00 HRS
$1,050.00
•fffffffffflf•fffffffflfffffffff••fffffffffffffflfffffffffffffff•
TIF ANALYSIS/PWP 5-13-91/6-26-91
8.50 HRS
$ 637.50
TIF ANALYSIS/PWP 7-12-91/8-21-91
21.00 HRS
11.575.00
TOTAL $2,212.50
MARKETING 4-16-91/4-19-91 4.00 HRS $ 300.00
4-12-91/6-28-91 15.25 HRS $ 0
7-2-91 .25 HRS 0
TOTAL $ 300.00
LESS MARKETING
BUSINESS DEVELOPMENT SERVICE, INC. TOTAL
TIP DISTRICT NO 0 14, AROPLAK $6,459.04
TIP DISTRICT NO i 13, SHINGOBEE, INC. =4,350.00
TIP ANALYSIS 14,415.00
TOTAL $11,044.04
HOLMES 6 GRAVEN $ 81.45
BRADLEY 6 DIEKE $1,044.00
PAUL WEINGARDEN $1,050.00
BDS, INC. (CREDIT OWNED) $ 450.00
$ 300.00
HRA AGENDA
12-6-91
Consideration to Discuss for Possible Authorization of Policy
Recommendations made by BSD. INC. based on the TIP Financial
Analvsis.
Reference and Background.
At the November HRA meeting, the members were requested to
consider the authorization to develop certain policies as
recommended by Mr. Pelstring of BDS. Koropchak unable to makte
clear the logic and in fairness to all, both Mr. Pelstring and
the HRA members, Koropchak suggested Mr. Pelstring be present
to explain the recommendations more clearly. The three
recommendations were:
To consider development and implementation of a
policy to transfer 101 of the total TIF project
Increment into an NRA revenue fund (Admininstration
Account) for distribution of expenditures such as
staff time and for additional marketing dollars.
2. To consider development and implementation of a
policy to establish a reserve level (5%) for future
potential defaults and/or slow payments of taxes,
thereafter, the remaining excess increment would
give the HRA some opportunity to fund additional
public Improvement projects.
To consider the negotiation of a loan payback with
the City for Lots 5 and 6, Oakwood Industrial Park.
Principal amount $136,000 over 10 years at 8%
interest would be an annual debt service of
approximately $20,268.
HRA AGENDA
12-6-91
Consideration to Discuss for Possible Authorization of Policy
Recommendations made by BSD. INC. based on the TIP Financial
Analvsis.
Reference and Background.
At the November HRA meeting, the members were requested to
consider the authorization to develop certain policies as
recommended by Mr. Pelstring of BDS. Koropchak unable to makte
clear the logic and in fairness to all, both Mr. Pelstring and
the HRA members, Koropchak suggested Mr. Pelstring be present
to explain the recommendations more clearly. The three
recommendations were:
To consider development and implementation of a
policy to transfer 101 of the total TIF project
Increment into an NRA revenue fund (Admininstration
Account) for distribution of expenditures such as
staff time and for additional marketing dollars.
2. To consider development and implementation of a
policy to establish a reserve level (5%) for future
potential defaults and/or slow payments of taxes,
thereafter, the remaining excess increment would
give the HRA some opportunity to fund additional
public Improvement projects.
To consider the negotiation of a loan payback with
the City for Lots 5 and 6, Oakwood Industrial Park.
Principal amount $136,000 over 10 years at 8%
interest would be an annual debt service of
approximately $20,268.
I10V-05-'00 TUE 10:58, ID:1-11W 4-00 TEL N0:612 258-4648 4412 P02 -
Busin a mwdopnretrt tBarvW% Int:.
MEMORANDUM
TO: .OI1M Kbropabet, City of Maoticeilo
. •:.'Hot}eigg esti Redevelopment Authority
FROM: `Petrick Polstrin, President
DATB: N&Omber 3, 1991
�tB;• ; ;TIF, ANALYSIS
I ;warmed to provide a further update after our recant discussion on the Monticello
Hcoift acid Redevelopment Authority Tax Increment Ffnanoiag analysis.
I pave prepared a revised mammary report for the HRA'a TIF program with the
fob.
1) Addition of bond issue tied to TIF District No. 2, bands issued m August,
1989. I appreclate you bringing this bond ism to our attention. This bead
issue was aonminated after our original analysis report in the sp * of 1989,
and, as such, we did rmt have a record of this debt obligation for this district.
2) We aq)usted the expected Increment from TIF Distriot No. 1, es the project
will be decertified at the end of payable 1991 tax Increments.
These changes. -mom notably the addition of the bond Issue, Lmpaetm the avaiWe
exam increment for the HRA/City of Monticello. You will note that the excess
incregneat heti been algnificandy reduced, beginning in 1993 by an estimated $30,0000
• $33,000 of that bond Issue. Please ooze that this excess increment also adjusts for
dedueft allocated adn9alMtive expenses (column 7) and a s percent excess
asmolated'vrM each of the bond Issues (column 17).
Also, 6t the• HRA's review,'! have Included a secoodary summary report which
assumes a very minimal laud of inflationary value. 1 have applied a 2 percent annual
Inflationery value to the anticipated met ice; and, you oma we that the annual
excess Intxemen; Is sledtlooatly higher. A 2 percent infladaury value Is still
relatively eoaeetvative and this tan provides an indication of available excess
Incrom m fpr the HRA in limos years.
PION -05-' 00 TLE 10: 58 I D: 11112 1 200 TEL 110: 612 258-4618 13412 P03
TPP ANALYSIS
Page 2
Also, it should be noted that this analysis assumes that time will be no additional
development in any of the existing TIF districts. Addidonal development in several
of the districts does appear likely.
I also wanted to follow up on our discussion relative to administrative issues for
review by the HRA. In terns of debt service reserve, my original relation
suggeate that an additional S - 10 percent of atmual debt service be set adde each
year. Thia figure should be weighted against existing reserves and/or debt service
accounts which are currently in place. Another good measure to establish the
appropriate reserves would be to maintain an amount equal to the next year's amlual
debt service in your reserve amaatare.
For Instance, in 1992, the MRA's total debt service requirements are approximately
$194,000. I would recommend that you analyze existing debt service reserves and,
If they do not total $194,000, that the 'excess increment" be dedicated into your debt
service aow= until you reach this amount. In the HRA's case, the annual debt
service will remain relatively c onstatn until 1995 when two of the bond lam MF
bonds number 3 and 4) payoff. At that time. the debt service reserve could be
reduced, subject to the issume of additional bonds over the next three years.
I also wanted to clarify recommendations reprdlag administrative expenses. The
TIF summary automatically dedicates 10 percent of your projected increment for
City/HRA administrative expenses. In 1991, this amounts to approximately $26,900.
In 1992. this figures Increases approximately 332,600. [7bese amounts are deducted
from your 'excess increment" and would be available for debt service If they are not
expended by the 104) A better approach, and a method to guarantee that the TIF
program pays for Itself. would be to budget this item as an annual revenue figure and
annually matte a transfer to the administrative account for the HRA.
Plum review this information and contact me if you have any questions.
Unfbrdrately, I have a previous commitment on Wednesday, November 7th.
However, I would be - � P than happy to thea with the HRA to discuss these items
in greater detail, should you feel that it le necessary.
PWPAd
Apache
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i
NGV 06 '91 10:c9 HGIMES & GPFNEN P.3
` PRILIMINARY ACREEMZNT OOA;�.
THIS AQREMCM, dated this day of , 19_,
! by and between the Housing and Redevelopment Authority in and for
the City of Monticello, Minnesota ("HRA"), a Minnesota public body
corporate and politic and a
Minnesota ("Developer")i
WITNESSETH:
WHEREAS, the HRA desires to promote development of an area in
.the City (legally described in Exhibit A attached hereto) located
at ("Property"); and
WHEREAS, the Developer has submitted a preliminary proposal
for development of the Property ("Development"), a copy of which
proposal is attached hereto as Exhibit B; and
WHEREAS, the Developer has requested the HRA to explore the
use Of tax increment financing (TIP) to offset a portion of the
Development costs; and
WHEREAS, the HRA and Developer are willing and desirous to
undertake the Development if (i) a satisfactory agreement can be
reached regarding the HRA's commitment for public costs necessary
for the Development; (ii) satisfactory mortgage and equity
financing for the Development can be secured by Developer; and
(iii) the economic feasibility and soundness of the Development and
other necessary preconditions have been determined to the
satisfaction of the parties; and
WHEREAS, the HRA is willing to evaluate the Development and
work toward all socesaary agreements with Developer if Developer
agrees to reimburse the HRA for its costs if the Development is
1023M
.-3 1
:qV Ob '91 LO:--,? RAJ ES '� GPA,EI I F. J
y
abandoned or necessary agreements are not reached under the terms
of this Agreement.
NOW, THEREFORE, in consideration of the foregoing and of the
mutual covenants and obligations set forth herein, the parties
agree as follows:
I. Negotiations between the parties shall proceed in an
attempt to formulate a definitive development contract ("Contract")
based on the following:
' (a) Developer's current proposal which show the scope of the
proposed Development in its latest fora as of the date of
this Agreement, together with any changes or
modifications required by the NRA;
(b) a mutually satisfactory Contract to be negotiated and
agreed upon in accordance with negotiations contemplated
by this Agreement;
(c) such documentation regarding economic feasibility of the
Project as the RRA may wish to undertake during the term
of this Agreement; and
(d) other terms and conditions of this Agreement.
Z. It is the intention of the parties that this Agreement
(a) documents the present understanding and commitments of the
parties and (b) will lead to negotiation and execution of a
mutually satisfactory Contract for the Development prior to the
termination date of this Agreement. The Contract (together with
any other agreements entered into between the parties hereto
contemporaneously therewith) when executed, will supersede all
obligations of the parties hereunder.
3. During the term of this Agreement, Developer agrees to:
(a) Submit to tho NRA a dealgn proposal to be approved by the
HRA showing the location, size, and nature of the
proposed Development, including floor layouts,
renderings, elevations, and other graphic or written
explanations of the Development. The design proposal
shall be accompanied by a proposed schedule for the
starting and completion of all phases of Development.
The Developmont shall be dosigned to accommodate public
facilities to be constructed adjacent to, or as part, of
the Dovolopment.
(b) Submit an over-all cost estimate for the design and
construction of the Development.
asmw
0111191.2 2
r1ov Oe '91 10: c? W -4J ES w GF);�V l
P.5
(c)
Submit a time schedule for all phases of the Development.
(d)
Undertake and obtain such other preliminary economic
feasibility studies, income and axpenae projections and
such other economic information as the Developer may
desire to further confirm the economic feasibility and
soundness of the Development.
(e)
Submit to the HRA the Developer's financing plan showing
that the proposed Development is financially feasible.
(f)
Furnish satisfactory financial data to the HRA evidencing
Developer's ability to undertake the Development.
4.
During the term of this Agreement, the BRA agrees tot
(a)
Take all actions necessary to create a Project Area (if
necessary) and Plan therefor, and a Tax Increment
Financing District ("TIF District") and Tax Increment
Financing Plan ("TIP Plan") therefor, in accordance with
Kinn. Stat. Sections 469.174 through 469.179.
(b)
Proceed to seek all necessary information with regard to
the anticipated public costs associated with the
Development.
(c)
Bstimate the HRA's level and method of financial
participation in the Development and develop a financial
plan for the HRA's participation.
S.
It is expressly understood that execution and
Implementation of a Contract shall be subject tot
(a)
A determination by the HRA that its undertakings are
feasible based on (i) the projected tax increment
revenues and any other revenues designated by the HRA;
(ii) the purposes and objectives of the Plan and TIP
Plan; and (iii) the best interest of the BRA.
(b)
A determination by Developer that the Development is
feasible and in the best interests of Developer.
(c) Bzecution of the Contract by the parties.
6. Tho Doveloper hereby grants and conveys to the HRA and
Its agents, its and their successors and assigms, an easement over
and upon the Property for the purpose of ingress and ogress and for
conducting such tests or collecting such data as may be reasonably
necessary to determine the feasibility of the Development. The
easement shall terminate upon execution of a Contract or
termination of this Agreement in accordance with the torms of this
Agreement, whichovor occurs first.
m, M
M104 3
MV 06 '91 10 K tk�FEB 2 GRW+VI
F.7
7. This Agreement is effective for a teras ending days
from its date, unless extended by mutual agreement of the parties.
If for any reason a Contract is not negotiated and executed within
the term of this Agreement or any mutually approved extension
thereof, the Developer shall reimburse the HRA for all costs
reasonably expended by the HRA in regard to the Development.
8. In order to secure payment of the costs incurred by the
HRA in regard to the Development, the Developer shall deliver to
the HRA cash or a letter of credit in the amount of i
The letter of credit shall be in form satisfactory to the HRA.
The cash or letter of credit shall be delivered by the Developer to
the NRA within days of the date of this Agreement. The
letter of credit shall be valid for a miniaom of months from
the date of this Agreement. If while determining tFe feasibility
of the Project the HRA determines that its expenses will exceed the
amount of the deposit and that additional security is required, the
HRA shall notify the Developer of the aaount of such additional
security. The HRA may terminate this Agzmement in the event that
such additional security is not delivered with such period. Within
ton calendar days of receipt of said notice, the Developer shall
deliver to the HRA the required additional security. If necessary
In order to ensure that the HRA possesses sufficient financial
security at all times prior to completion of the project, the
Developer shall renew or extend the letter of credit. Upon receipt
of written demand from the HRA for reimbursement of its costs, the
Developer shall remit payment to the HRA within ton days. If the
Developer fails to make the payment within the specified period of
time, the HRA shall utilize the cash or latter of credit to
reimburse itself.
9. This Agreement may be terminated upon 30 days' written
notice by the HRA to Developer If:
(a) an essential precondition to the execution of a contract
cannot be met; or
(b) an impasse has been reached in the negotiation of any
material term or condition of this Agreement.
If the HRA toraintos the Agreement under this Section 9, Developer
shall remain liable to the HRA under Sections 7 and 8 herein for
costs reasonably incurred by the HRA through the date of
termination.
10. The HRA agrees that it will not solicit proposals for
development of the property from others daring the time that this
Agreement is in effect.
11. In the event that the Devolopor, its heirs, Successors or
assigns, fail to comply with any of the provisions of this
Agreement, the HRA may proceed to enforce this Agreement by
appropriate legal or equitable proceedings, or other similar
proceedings, and the Developer, its heLrs, successors or assigns,
a�uuo
atn•�
NOV 06 '91 14:18 HXMS & GRAVEN
P.2
agree to pay all costs of such enforcement, ineluding reasonable
attorneys fees.
11. If any portion of this Agreement is held invalid by a
court of competent jurisdiction, such decision shall not affect the
' validity of any remaining portion of the Agreement.
13. In the event any covenant contained in this Agreement
should be breached by one party and subsequently waived by another
party, such waiver shall be limited to the particular breach so
waived and shall not be deemed to waive any other concurrent,
previous or subsequent breach.
14. Notice or demand or other communication between or among
the parties shall be sufficiently given if sent by taail, postage
prepaid, return receipt requested or delivered personallys
(a) As to the HRA:
(b) -As to the Developer:
R(
15. This Agreement may be executed simultaneously in any
i number counterparts, all of which shall constitute one and the same
instrument.
IN WITNESS IMMEDY, THE HRA has caused this Agreement to be
duly executed in its name and behalf and its seal to be duly
affixed hereto and the Developer has caused this Agreement to be
duly executed as of the day and year first above written.
DEVELOPER: NRAt
i
Its Its
Its Its
aie
5
NOV 06 •91 14:19 HXPE5 8 GRAVEN
STATE OF MIr MSOU )
�. ) as
COUNTY Or )
P.3
The foregoing instrument was acknowledged before me this
day of , 19910 by and ,
the Chairperson and B:ecutive Dsrector or the Wmaing and
Redevelopment Authority in and for the City of Monticello.
Notary Public
STATE OF MIMMMMA )
- ;ae
COUNTY Or
The foregoing instrument was acknowledged before me this
day of , 1991, by and ,
the and of ,
a Corporation, on Denalf of the corporation.
Q
votary Public
! THIS IHSTRlXZW VAS DRAFTED SYi
RM S i CRAVEN, CRARTBRED
470 Pillsbury Center
Minneapolis, !as 55402
(612) 337-9300
main
ana•$ 6
MICROFILM TITLE PAGE
CITY OF MONTICELLO
Housing & Redevelopment
Authority (HRA)
Agenda Books
1992
l:ll�wflV1�' N'�fMKnfJ�y�rIMR YY A