HRA Agenda 09-06-1989AGENDA
MONTICELLO HOUSING AND REDEVELOPMENT AUTHORITY
Wednesday, September 6, 1989 - 7:OOPM
City Hall
MEMBERS: Chairperson Al Larson, Ben Smith, Lovell Schrupp,
Everette Ellison, and Tom St. Hilaire.
STAFF: Rick Wolfsteller, Jeff O'Neill, and 011ie Koropchak.
1. CALL TO ORDER.
2. APPROVAL OF THE AUGUST 2, 1989 HRA MINUTES.
3. CONSIDERATION OF A NSP PRESENTATION AND REVIEW OF FINAL PIANS.
4. CONSIDERATION OF REVIEW SITE LOCATIONS FOR DAVID FICEK
PROJECT.
S. CONSIDERATION TO HEAR A PRELIMINARY CONCEPT FOR USE OF TIF
FOR COSTS ASSOCIATED WITH THE CILLE PROPERTY.
6. CONSIDERATION OF AN UPDATE FOR THE EXPANSION OF SEVENTH
STREET.
7. CONSIDERATION OF AN UPDATE ON MANTEQ INTERNATIONAL, INC.
(BOYLE PROPERTY).
8. OTHER BUSINESS.
9. ADJOURNMENT.
IN
MINUTES
MONTICELLO HOUSING AND REDEVELOPMENT AUTHORITY
Wednesday, August 2, 1989 - 7:OOPM
City Hall
MEMBERS PRESENT: Chairperson Al Larson, Ben Smith, and Everette
Ellison.
MEMBERS ABSENT: Lovell Schrupp and Tom St. Hilaire.
STAFF PRESENT: Rick Wolfsteller, Jeff O'Neill, and 011ie Koropchak.
GUEST: Pat Pelstring, Business Development Services, Inc.
David Ficek, Scottwood Corporations
1. CALL TO ORDER.
Chairperson Al Larson called the HRA meeting to order at
7:05 PM.
2. APPROVAL OF THE JULY 5, 1989 HRA MINUTES.
Ben Smith made a motion to approve the July 5, 1989 HRA
minutes, seconded by Everette Ellison and with no further
discussion the minutes stand approved as written.
3. CONSIDERATION OF AN UPDATE OF THE MANTEO INTERNATIONAL PROJECT.
Pat Pelstring updated the HRA members on the statue of the
Manteq project indicating their request for an additional
$100,000 for working capital which can be accommodated
as long as collateral and the guarantees will cover the
increased request. The use of TIF for this project
will indirectly benefit Manteq through a write-down
of lease per square foot. The TIF Contract would be
between the developer (Boyle) and the HRA. The project
is a 30,000 sq ft office/lab/manufacturing/warehouse
facility with the potential of 50 employees.
4. CONSIDERATION TO REVIEW A REVISED LETTER OF INTENT FOR DAVID
FICEK AND TO REVIEW A NEW TIF ANALYSIS.
Mr. Pat Palstring presented the HRA members with a copy
of the TIF Analysis based on Mr. Ficak's July 21, 1989
proposal. The proposal included the construction of
14 single fluor townhouses ($69,900 base price), 8 two
story townhomes ($62,900 base price), and 8 two story
townhomes ($52,900 baso price) on Lots 4,5,6,7, and 8,
Block G and Lots 1,2,3,4, and 5. Block H, A.C. Riggs
Addition plus vacated Palm Street. The analysis based
on the assumption the developers cost of land per unit
is $1,650 would require TIP assistance of $189,079.20.
Projections based on market values (listed above) par
unit would generate an annual increment of $31,490.
Mr. Pelstring indicated the project was still feasible
as the increment is sufficient to retire a $285.000
HRA Minutes - 8/2/89
Page 2
4. CONTINUED.
bond issuance over 17 years. The feasibility of the project
is also based on the assumption the estimated acquisition
costa are real numbers. The HRA members asked what was
included in the increased developers cost per unit. Mr.
Ficek estimated a $15.00 per foot for water/sever line,
the need for a street or driveway for lot accessibility,
curb/gutter, etc. as the reasons for increased developers
costs. Concerns raised by HRA members and city staff were
the designated property zoned R3 (Block G) and R2 (Block
H) would not accommodate any structure greater than a
four plea with the R2 zoning unless an ordinance amendment
was requested and granted. Secondly, the designated 2.9
acres could accommodate only 25 units (ordinance reads
minimum of 5,000 sq ft of land per unit) not the proposed 30.
Ordinance reads minimum of 960 sq ft per unit, proposal
meets this requirement as the smallest unit is 1,200 eq ft. Another
question was. does the project fit the City's TIF policy?
Bond issues shall amortized over 8-13 years, proposed project
in for 17 years. Policy for housing projects read, TIF
compensation, to the extent of the project increment available,
shall be utilized to compensate the developer to "equalize"
the project to accepted market standards. Mr. Pelstring
indicated that in Princeton a construction agreement was
drafted stating, in affect to, the proposed housing
project market value would be equal or competitive to
other developers market value. The HRA was still concerned
about their original objective: $89,000 - $110,000 market
value townhouses.
Mr. Wolfstoller asked if the Homestead Credit reimbursed to
the cities by the state In .Tax Increment Districts would remain in
coming years? Mr. Peletring would check on this.
Combined with questions relating to ordinance. TIF policies,
and the new proposal the HRA recommended a meeting be held
between Mr. Ficok, Mr. Polstring, O'Neill, and Koropchak
to revaluate the numbers, proposals and options. Results
of the meeting to be presented at the next HRA meeting
with preliminary design and housing layouts. Mr. Ficok's
thoughts were to reduce the project size to 4 four-plox
townhouses and 2 two-plox townhouse.
5. CONSIDERATION TO HEAR A PRELIMINARY CONCEPT FOR USE OF TIF
FOR PUBLIC IMPROVEMENTS ASSOCIATED WITH THE EXPANSION OF
SEVENTH STREET.
City Staff knowing the K -Mart project is in it's preliminary
stage, yet, having the insight for possible public improvement
L costs proceeded to ask the HRA members for their input
J
L
HRA Minutes - 8/2/89
Page 3
5. CONTINUED.
for the use of TIF for public improvements associated with
the seventh street expansion. Staff members indicated
the agenda item does not appear because of a request from
K -Mart or Lincoln Properties. The HRA members were unclear
of why they should be involved as one member stated the
HRA projects are for creation of jobs, blight areae, and
low income housing. City staff reminded the HRA, they
were only requesting their input and continued to state
the proposed attached K -Mart structure would be approximately
86,000 square feet and employ 165 to 180 full and part time
positions. City staff is not interested in assisting
Lincoln Properties with the write down of land cost nor
to assist them with any site improvements or public
improvements directly related to their property. Mr.
Pat Pelstring indicated a TIF District can be created
for a public purpose to maintain the health, safety,
and welfare of. the community if city publi6 improvement.-
demands
mprovement:demands go -beyond -the proposed project yet directly related.
The long range plan for the City was to extend seventh street
west to connect with Elm Street at Country Club Road, in -other -
words run parallel to I-94. At this time, the City has
right-of-way easements on the Holthaus and Hornig properties.
Presently, the City Engineer, OSM and City Planner, Dahlgren,
Shardlow, and Uban are preparing a feasibility study at
the developer's expense for road alignment, water 6 sewer,
road grades, and drainage.
Public improvement costs can be 100% ad valorem, 100%
assessed benefited property, TIP or by a combination of
the following. Rick Wolfsteller indicated that history
would indicate that street improvement costs of 10-202
on an average aro picked up by the city.
At this point, the City looks at three options: 1)
seventh street be extended to only length of project,
2) seventh street be extended to Minnesota Street and
complete connection, or 3) seventh street be extended
to Elm Street.
City staff suggested the HRA consider TIP for public improvement
coat only above any normal coats assoicated with installation
of public improvements ponding the results of the feasibility
study.
TIP was used for public improvement costs associated with
District 6 (Raindance Properties) Sixth Street plus land
a acquisition and soil corrections. And on District 05
(Construction 5) for the extension of Lauring Lane because
of the excess cost associated with public improvement
coats.
HRA Minutes - 8/2/89
Page 6
5. CONTINUED.
One HRA member indicated that 80% of the City's taxes
are paid by NSP and the other 20% by remaining business/
residents if a portion of the project cost would be
ad valorem. Staff reminded the HRA members that if the
project is a go, taxes generated by this project are
an increase to the community tax base and an increase •-
of,newvjobbs Staff members do recognize the
concern for existing businesses with the potential of
a I -Mart.
RRA members clearly stated they were not opposed to a
K -Mart coming to town, however, did not feel the need
to subsidize the project. HRA members suggested that
after final commitments of a K -Mart project, after the
feasibility study results indicated scope of project
and cost, they may consider the use of TIF for only
any public improvement costs over 20% normal costs.
6. ODNSIDERATION TO HEAR A PRELIMINARY CONCEPT FOR USE OF TIF
FOR COSTS ASSOCIATED WITH THE GILLE PROPERTY.
Jeff O'Neill having to leave the HRA meeting early, this
agenda item wasn't thoroughly given a clear explanation of its
concept. At this point, the City la applying pressure
to the property owners. Mr. and Mrs. Gille, because an existing
non -conforming use does not allow a business to expand
(illegal). Evidents of the Gills business expanding since
1975 is shown through a comparison of aerial photos.
Suggestion by City Attorney Tom Hayes, Jeff O'Neill and
Building Official Gary Anderson, was for the HRA to
contact Mr. Gills for permission to gain access to property
to obtain soil testing around the burled tanks.
Soil testing to be paid for by the property owner because
the seller would be his responsible to disclose any
buried tanks to a potential buyer. Also, it was suggested
the HRA may or could assist in the relocation of Mr.
Cilles' business. Presently, the HRA is unaware of a
proposed redevolopmont for this property, therefore,
no increment would be generated and the project As unable to
stand on its own.
The HRA decision was to table this item because of an
unclear reason why the HRA is asked to be involved at
this timo (timing inappropriate), no increment would be
generated from the project, previously the neighborhood
objected to property rezoning, single housing development
doesn't generate a large increment, and the HRA felt
the cart was placed before the horse (suggesting HRA
involvement prior to discussion with HRA). The HRA
suggested the City continue to apply pressure to
the property owners and to place the item of the HRA agenda
again as time would determine. Koropchok tomindad
the HRA that the concept of the project did remain
HRA Minutes - 8/2/89
Page 5
6. CONTINUED.
unclear because of Mr. O'Neill's absence. City staff
has for more time send public nuisance violation notices
to the property owner.
7. CONSIDERATION TO ADOPT A RESOLUTION AUTHORIZING EXECUTION
OF A TAX INCREMENT PLEDGE AGREEEMNT BETWEEN THE HRA AND
THE CITY.
Ben Smith made a motion to adopt the resolution authorizing
execution of the tax increemnt pledge agreement between the
HRA and the City for the $260.000 G.O. Taxable TI Bond Sales.
The motion was seconded by Everette Ellison, and without
further discussion passed 3-0. The HRA adopted the resolution
because the bond sales was for the Broadway Square project
which was a HRA instated project to eliminate blight
and provided needed low income housing for the elderly.
The bonds were awarded to Miller Securities, Inc. at
8.87082 interest over 12-13 years at the July 10th
City Council meeting.
8. CONSIDERATION TO ADOPT A RESOLUTION AUTHORIZING EXECUTION
OF THREE SEPARATE AMENDED AND RESTATED TAX INCREMENT PLEDGE
AGREEMENTS BETWEEN THE HRA AND THE CITY.
Ben Smith made a motion to adopt the resolution authorizing
execution of three separate amended and restated tax increment
pledge agreements between the HRA and the City. The amendment
will reduce the HRA pledge of 1502 of the annual principal
and interest due on the bonds to the city to an amount equal
to 1052 as required by Minnesota Statutory. This for
the Raindance Properties District, the Construction Five
District, and the NAWCO District. The motion was seconded
by Everette Ellison and without further diescussion passed
3-0. The HRA adopted the resolution as this was part
of their 1989 goal to research and endorse the possibility
of excess funds for future small projects or projects of
good value without planned redevelopments, with the intent
that all newly created district project coats should equal
the availability of the project increment.
9. CONSIDERATION OF AN UPDATE ON THE NSP, BRIDGEWATER AND RUSS
MARTIE PROJECTS.
Roropchak reported that the NSP project is still expected
to be completed by December. 1989. At present, NSP has
received favorable bids for the construction of their
planned 5.400 sq ft maintenance facility in the industrial
park. However, the corporate office is preparing a
HRA Minutes - 8/2/89
Page 6
\ 9. CONTINUED.
comparative cost analysis for lease/ ownership. The bids
have been awarded to a contractor and Mr. Zimmer will
contact my office after a decision by NSP whether to
they will lease or own. Thereafter will the Development
Agreement need to be reviewed by the developer.
Mr. Russ Martie has decided to hold off with construction of
his facility until Spring of 1990.
BRIDEWATER TELEPHONE COMPANY - based on a discussion with
Mr. Rierson for Bridgewaters plan to alter or expand the structure
located on West County Road 39 and based on the fact that
the projected increemtn on a new facility on one of the city
owned lots would be substantially small, the suggestion was
made to swap lands. Koropchak wrote a letter to Mr. Rierson
of his options, informing him that in accordance to the city
ordinance, the present use of the property as a site for cold
storage is a legal but non -conforming use. If plans are to
expand or enlarge a structure for use in conjuct ion with
current operations this is not allowed under current law.
In order for an expansion to occur at this site an amendment
to the ordinance would be required. Bridgewater has an option
to amendment the ordinance or relocate to the industrial
perk. City staff will continua working with Mr. Rierson.
10. CONSIDERATION TO REVIEW AND DISCUSS THE BILLING STATEMENT
FROM BUSINESS DEVELOPMENT SERVICES, INC.
Mr. Pat Polstring apologized to the HRA members for the
billing statement error. After notation by Jeff O'Neill
of the contact between the HRA and BDS, which doesn't
include prospocting/marketIng for the City of Monticello
(example Gonereux and Manteq projects), Mr. Pelstring
suggested the reduction of billing statement to $2,626.75
(elimination of Ind. marketing/proposals hours) and the
potential to amend the existing contract to include
hours attributed to the potential loan writing and future
meetings with Mantaq or Ganoroux. The HRA was in
acceptance of Mr. Polstrings suggestion. a enrretaimn_ (over)
11. 0711ER BUSINESS.
Chairperson Al Larson suggested Koropchak contact Barb Schwientak
for input on the need for intermediate housing for the elderly.
Housing needed between the stage of capability of living alone
and the need for full nursing home care.
12. ADJOURNMENT.
The HRA meeting adjourned at 10:00 PM.
011ie Koropchak, HRA Executive Secretary
HRA Agenda - 9/6/89
Page 1
3. CONSIDERATION OF A NSP PRESENTATION AND REVIEW OF FINAL PLANS.
Since notification by NSP that the comparative cost analysis
determined that long term cost effectiveness benefit to NSP
was to own their Monticello facility, Koropchak has mailed
a copy of the Development Contract between the HRA and
the developer, NSP, as prepared by Holmes 6 Craven, to
the NSP personnel for reviewal. Mr. Jerry Kuennen had
contacted my office on NSP's construction beginning date,
Monday, August 24, 1989, however, I informed him that
its been a policy of the HRA not to convey land title
until the Development Contract is executed by both
parties. Also, advised him that no building permits
had been requested, no certificate of survey has been
received, and no final building, site, parking, landscaping,
and drainage plans have been received and approved by
the Building Official. The HRA having previously held
a public hearing for acquisition and disposition of land,
and having had the abstract title bought up to date
in May received a abstract receipt release for NSP to obtain
a legal opinion of the property. The HRA staff needs
to prepare a warranty deed for execution after the
Development Agreement is executed. City Staff should
request the seller. NSP, to update the abstract title
of the current property on West County Road 39 for
the City Attorney's opinion prior to purchase of the
NSP existing property. Also, a purchase agreement
between the City and NSP should be prepared and
executed. It was recommended that an NSP representative
give a brief presentation and review of their proposed
construction plane to the HRA.
4. CONSIDERATION OF REVIEW SITE LOCATIONS FOR DAVID FICEK
PROJECT.
David Ficok, Pat Pelstring, and myself met on August 11, 1989
to further evaluate the last suggested development on designated
Area A for 20 units. 4 four-plax townhouses and 2 two-plex
townhouses. At that meeting Koropchak apologized for her
lack of time before reviewing the last TIP analysis
noting some corrections of land availability to be 135.300
aq ft not 126.300 sq ft thereby allowing the developer
to construct 25 units based on city ordinance of 5,000
sq ft land par unit. Also, based on the construction
of 20 townhouses on the designated property with a projected
$69.900 market value per unit the annual increment would
be a little under $10,000. The big change in annual increment
is duo to the tax capacity percentage for taxes payable beginning
in 1990 is 1.002 for the lot $68,000 compared to the 2.172
used in 1989 for residential homestead property. Rental
apartment property tax capacity percentage is 4.102.
Koropchak pointed out to Mr. Ficak that Block C was zoned
R3 which does permit multi -dwellings (4-plax and above).
HRA Agenda - 9/6/89
Page 2
4. CONTINUED.
With the new information it was suggested by Mr. Pelstring
that Mr. Ficek revaluate all the suggested areas. Mr. Ficek
agreed and plans were to visit Monticello the following Tuesday.
August 15 and Koropchak to provide property valuation information,
zoning map, site maps, and a copy of the zoning ordinance for
Mr. Ficek. Mr. Ficek will present a development proposal(s)
which would be likeable to the NRA and will support a cash
flow for the developer. The housing needs survey was
mailed Friday, August 25, 1989 with the assis tance of the
Senior Citizens Center.
Mr. Pat Pelstring and David Ficek will be present at the
HRA meeting to review proposal(s) with the HRA.
5. CONSIDERATION TO HEAR A PRELIMINARY CONCEPT FOR USE OF TIF
FOR COSTS ASSOCIATED WITH THE GILLS PROPERTY.
Jeff O'Neill will make a presentation to the HRA members
at the meeting.
6. CONSIDERATION OF AN UPDATE FOR THE EXPANSION OF SEVENTH
STREET.
This is a City Council Agenda Item, Monday, August 28, 1989.
7. CONSIDERATION OF AN UPDATE ON MANTEO INTERNATIONAL, INC.
(BOYLE PROPERTY).
To be given at the NRA meeting.