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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.