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HRA Agenda 10-04-1989AGENDA MONTICELLO HOUSING AND REDEVELOPMENT AUTHORITY Wednesday, October 4, 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 GUEST: Pat Pelstring and David Ficek. 1. CALL TO ORDER. 2. APPROVAL OF THE SEPTEMBER 6 AND SEPTEMBER 14, 1989 HRA MINUTES. 3. CONSIDERATION TO HEAR AN UPDATE OF THE GILLS PROPERTY. 4. CONSIDERATION TO REVIEW THE AGREEMENT BETWEEN THE HRA AND BDS, INC. S. CONSIDERATION TO REVIEW DAVID FICEW S HOUSING REDEVELnPMENT PROJECT AND SURVEY RESULTS. 6. CONSIDERATION TO HEAR TIP CONCEPTS AND PRELIMINARY APPROVAL FOR THE USE OF TIP: Manteq International, Inc. Tapper, Inc. Remmele Engineering Cardinal IG 7. CONSIDERATION TO REVIEW CITY COUNCIL TIF DISTRICT FOR SEVENTH STREET ALIGNMENT AND EXPANSION. 8. OTHER BUSINESS. 9. ADJOURNMENT. MINUTES MONTICELLO HOUSING AND REDEVELOPMENT AUTHORITY Wednesday, September 6, 1969 - 7:OOPM City Hall MEMBERS PRESENT: Chairperson Al Larson, Ben Smith, Tom St. Hilaire, Everette Ellison, and Lovell Schrupp (late). STAFF: Jeff O'Neill, Rick Wolfsteller, and 011ie Koropchak. GUEST: Jerry Zimmer and Pat Pelstring. 1. CALL TO ORDER. Chairperson Al Larson called the HRA meeting to order at 7:05PM. 2. APPROVAL OF THE AUGUST 2, 1989 HRA MINUTES. Chairperson Al Larson made one addition to the August 2, 1989 HRA minutes, Item 10. Consideration to Review and Discuss the Billing Statement from Business Development Services, Inc. addition to include that the HRA would like to be advised up front as to when BDS. Inc. billing clock begins to run on individual projects other than TIF projects. Ben Smith made a motion to approve the amended August 2, 1989 HRA minutes, seconded by Everette Ellison. Passed 4-0. 3. CONSIDERATION OF A HSP PRESENTATION AND REVIEW OF FINAL PLANS. Mr. Jerry Zimmer of the NSP St Cloud Region Office informed the HRA of the 5,124 square foot maintenance building to be constructed in the Oakwood Industrial Park, construction to begin within days. The building will include a small office and have six garage stalls, with employment of eleven. The maintenance building serves . the areas of Monticello, Big Lake, Becker, Rogers, St. Michael, Hanover, and rural Dayton. Storage will consist of poles, wire, street lights and some transformers, and be screened with a cyclone fence. Chairperson Larson thanked Mr. Zimmer for his time and presentation. 4. CONSIDERATION TO HEAR A PRELIMINARY CONCEPT FOR USE OF TIF FOR COSTS ASSOCIATED WITH THE GILLS PROPERTY. Jeff O'Neill informed the HRA members that the city has taken a pro active approach on the Gillo property stating that Gille's Auto hes an illegal auto license, constitutes blight and public nuisance, and is in violation of the City Zoning rdinance (expansion of an existing non- conforminges nce 1976). The City has two options: 1) Enforce City Ordinance or 2) for the City or NRA to work with the property owner on a relocation site and to research lend and soil correction costs. The HRA could seek land permission entry from the owner for soil testing and substract the testing costa from the land acquisition costs, HRA Minutes 9/6/89 Page 2 4. CONTINUED. The HRA recalled when Mr. Metcalf appeared before the NRA about a possible multi housing project in that area and the reslstence from the neigbhorhood. It was projected that the increment generated from single housing wouldn't cover the anticipated project costs. The HRA felt it was the sellers responsibility to disclose of any underground tanks to a buyer. The HRA requested City Staff to confirm seller/buyer responsibility of disclosure, check on state funds available for clean-up, and investigate the time frame for development of a PCA plan for abandon tank removal. The HRA members recommended that Jeff O'Neill, Gary Anderson and the City Attorney continue applying pressure on Gille's Auto for the violation of the City Ordinance (expansion of a non -conforming use since 1976). The HRA concluded that this was not the time for HRA involvement however wants to be kept informed. The HRA hasn't turned down the project. S. CONSIDERATION OF AN UPDATE ON MANTEO INTERNATIONAL, INC. (BOYLE PROPERTY). Pat Pelstring informed the HRA that he has spoke with Stewart Wilson regarding the uncompleted business plan and the updated financial statements. Plans were to meet the October Omni financial meeting. Norman Strand indicated that Manteq plans do include expansion to Monticello. Koropchak indicated a letter was mailed to Mr. Boyle of the TIF requirements and the HRA position for a County recorded copy of the subdivision and the need for a drainage plan. Other builders have been contacted for alternative sites. 6. CONSIDERATION TO REVIEW SITE LOCATIONS FOR DAVID F10EK PROJECT. Pat Polstring responded to David Ficaks Master Plan which included four districts and recommended the HRA commit to only Area A. Mr. Ficek researched the market price with a conclusion of $60,000-$80,000. He is researching the possibility of continued vacant property further to the cast for project feasibility. Mr. Pelstring would need to verify the area as a qualified Redevelopment District. Koropchak informed the HRA that some 500 surveys were mailed out and a first look of a good return. Mr. Ficak will tabulate the survey and present the HRA with a copy of the results. Mr. Ficek needs to develop a site plan and acquisition/ redevelopment costs for NRA review. 7. CONSIDERATION OF AN UPDATE FOR THE EXPANSION OF SEVENTH STREET. Jeff O'Neill informed the HRA members that The Lincoln Companies has a signed letter of intent from K -Mart but no signed lease. City Council has two alternative for the seventh street aligment. One, original plan of a curved road aligment and second, a straight road alignment with a estimated $200,000 acquisition cost for an additional approximate 50,000 eq ft of retail/ HRA Minutes 9/6/89 Page 3 7. CONTINUED. commercial development. The Lincoln Companies can live with either alignment, however, K -Mart has not approved parking spaces constituted by either road alighment. Lincoln does agree that the larger retail /commercial lots to the west would encourage larger developments. Staff pointed the straight road alignment would also serve as a buffer between the retail/commercial zoning to the south and the PZM zoning to the north. The original road alignment was approved by previous owner, Rosewood Corporation, and not The Lincoln Companies. Mr. O'Neill presented the HRA with the curved project costs: Road to Minnesota Street, $161,000; land value of Lincoln Property, $43,000 plus excess land, $8,000 for a total of $212,000. Straight project costs: Road to Minnesota Street. $151,000; Pratt, 12,000 sq ft $61,000 (.51), Holthaus, 28,000 sq ft $56,320 ($2.00). Demolition $3,000, subtotal $271.320 plus Kraemer 1.9 acres $197,000 ($1.41), Demolition $7,000, subtotal $204,000 for a total of $475.320. Mr. O'Neill suggested the HRA consider the use of TIF for the acquisition of the Pratt, Holthaus, and Kraemer properties plus demolition costs for a total of $307,320 less the lend sales of Kraemer ($70,000) and Holthaus ($17,000) for net cost of $237,320. Road construction would be assessed the benefitting property owners. Mr. Polstring suggested the land owners negotiate with their renters for a signed renters compensation agreement for hardship or relocation cost. The HRA felt the benefitting developer could purchase the Holthaus and Pratt property (plus demolition) and put the road in and still recover the approximate $235,000 ($233,250) through the K -Kart and future larger commercial developments. The NRA was not convinced that the proposed $307,320 cost for the acquisition of land could be justified or recovered by the HRA in exchange for an approxiate addition of 50,000 aq ft of land. Staff was unable to put a dollar value on the anticipated future larger developments. Staff indicated the project was the straight road alignment, a public purpose (public improvements) which would encourage larger development of Monticello retail/commercial area which the approximate annual $100,000 increment would retire the debt service in 3-31 years. The Lincoln Companies project would create some 165-180 part time and full time jobs and consist of 86,000 sq ft. HRA Minutes 9/6/89 Page 4 7. CONTINUED. Additional commence by the HRA: City Council can establish a TIP District, how would the HRA look, Lincoln Companies have not indicated a no go on the project without the use of TIP, acquisition for street improvements and assessment should be handled under the normal city process, K -Mart lease decreases and Lincoln Companies values and revenues increase, if had choice would rather see a Target, do the right thing up front, HRA is drivers seat, relatively small cost to the City for curved road alignment. Mr. Pelstring reminded the HRA that the key issue tonight was to make a finance decision on the use of TIP as Lincoln Companies anticipate a September 27 beginning grading date. Staff informed the HRA that its suggested recommnedation was not for direct assistance to the developer,hovever, did agree it was an indirect assistance which encourages the future retail/commercial development in Monticello. Hopefully opening the City of Monticello as a Regional Retail/Commerical Area. The HRA considered the TIP policies which determines the project valuation. Out of the eight considerations: 4 were yea, 2 were no, and 2 were maybe. The HRA recommended the benefitting property developer (The Lincoln Companies) acquire the Holthaus and Pratt properties and put in the Seventh Street straight road alignment to Minnesota Street. Also, the HRA recommended the use of TIP for the acquisition of the Kraemer property (;197,000) with an anticipated land resale of $70,000 to $100,000. The City then to assess the benefitting property owner (Hornig) for street improvements along Seventh Street with an approximate coat to the tax payers (TIP) of $100,000. B. OTHER BUSINESS. Mr. Pelstring presented the HRA with a revised Agreement between the HRA and BDS, Inc. The HRA tabled the itom to the next meeting. 9. ADJOURMENT. Everette Ellison made a motion to adjourn the HRA meeting, seconded by Tom St. Hilaire. The meeting adjourned at 10:30PM. 011ie Koropchak HRA Executive Secretary LINCOLN COMPANIES, INC. (K -MART) r 92,000 aq ft facility (86,000 eq ft K -Mart) 12 acres acquired (TIF using 9 acres) 92,000 aq ft per $20.00 - $1,840,000 392,040 aq ft per $ 2.00 - $ 784,080 TOTAL EMV $2,624,080 $100,000 $2,524,080 X .0330 x .0515 $ 3,300 $ 129,990 New Capacity Value $133,290 Taxes $109,419 Original Capacity Value 2,636 Captured Capacity Value $13(..654 Tax Capacity Rate 82091 lax Increment annually J107.255 Eight year tax increment $858,040. (5"/ \0.%N SOURCES MIO USE STATEMENT - ALTERNATIVE TWO K -MART FACILITY GENERATES f IN ANNUAL TAXES 1?4 V4 M V-0 'SO 4A f VV I I PROUECT ITOTAL ITIF ILAND (ASSESSMENTS I TOTAL COMPONENTS ICOST I ISALE ILINCOLN RIDGE RIDGE KRAMI I I I 7S$I MONT VIEW ER 1 I I I I I I I SO K -MART STRUCTURE I�..�. I I I I $0 7TH - LOCUST TO MN 1$151,000 I I I I $O 7TH - Md TO ELM 1 (167000)1 1 1 1 $0 MINNESOTA AVE 1 I I I $0 — LAND ACOUSITION/PER FT 1$314.J2U I I 1I 1 �.. .. a7 1� � $0 PRATT $0.57 $61,000 1 1 $61,000 1Z f0 I $61,000 HOLTHOUS $2.00 $56,320 I 1 $39.320 617,000 I ,i,,�oo �1 �•a 1 $56.320 KRAMER $1.41 $197,000 1 1$127,000 1$70.000 1 I $197,000 SPRINGBOARD $0 $0 DEMOLITION EXPENSE 1 $10,000 I 1 I $O PRATT $3,000 I 1 $3,000 1 1 I $3.000 KRAMER $7,000 1 I $7,000 I I $7,000 RELOCATION COSTS 1 1 I I r $0 STORM SEWER I �� I I I $0 SEWER I I I I ` I $0 _ WATER — 1$475.320 5237,320 x`$87,000 * $0 $0 $0 $0 "*$324,3200 Pratt house now vacant, no relocation cost expocted Kramer house contains two rental units, one rented to son. i• Lincoln Company expressed Interest in remaining Holthous prop at $1.00 sii ft Remaining Kramer property estimated sale value at $1.00 souaro foot. 1 K -MART DEVELOPMENT MEETING - 9/6/85 DISCUSS CRITICAL PROJECT COMPONENTS - TIME LINES TIMETABLE 1989 1990 SEPT IOCT NOV DEC JAN FEB MARCH APRIL MAY JUNE JULY AUWS' I I I I I I I I I I I I Council Meeting Dates1�119i31/3.171Nas'IR/a a. I��I" Publication Deadlines ICV 9q 1' 1� Y. /!.)� 1�'�:�I• s, 1;9" 1_1_____1_1_-_ HRA meeting dotes Ilt_—ISL_I_S-3_I7_IZ_II_I_I_I�_ CRITICAL EVENTS 1 I I I I I I I I I 1 I I I I I I I i I I I I BUILDING CONSTRUCTION I Submit Bldn Permit App1_1_I�I�I___I�I�I I_I_1—I Receive euildng Permt Initiate Site Prep Intitiate Bldng Const Receive Occup. permit PUBLIC IMPROVEMENTS Establish Rd Order Feas Study Publish Hearing Order Plans/Specs Approve Plans/specs Develop Finance Plan Conduct Public Authorize Bid Award Bids Order Project Complete Project Assessment Adopt Aaaesament Roll BONDING REQUIREMENT I I I I I I I I I I I I Pub'ish Hearing Establish Financo Authorize bid Award bid TIF REQUIREMENTS 1 1 1 I 1 1 1 I I I I I Establish Finance Planl_____I_�_I_____I_____I�I_—_I_____I Acquire properties 11 September 6, 1989 HRA Meeting Chairperson Al Larson, Ben Smith, Tom St. Hilaire, Lovell Schrupp, and Everette Ellison. The HRA recommended the benefitting property owners (The Lincoln Companies) acquire the Holthaus and Pratt properties and put in the Seventh Street straight road alignment to Minnesota Street. Also, the NRA recommended the use of TIF for the acquisition of the Kraemer property (;197,000) with an anticipated land resale of $70,000 to $100,000. The City then to assess the benefitting property owner (Hornig) for street improvements along Seventh Street with an approximate coat to the tax payers (TIF) ofA100,000. Lincoln TIF Seventh Street Straight alignment $151,000 $151,000 Pratt 12,000 sq ft 61,000 Demolition 3,000 Holthaus 28,000 sq ft 56,000 Kraemer 1.9 acres $197,000 Demolition 7,000 Relocation Total $271,000 $204,000 Less assess Hornig 37,750 1nn_nnn lees Resale $233,250 $104,000 The HRA considered the TIF policies which determines the project's valuation. 4 - yes 2 - no 2 - maybe 1i RDS i euinen Denwpment &Nw m Inc. AGREEMENT BY AND BMWEEN BUSINESS DEVELOPMENT SERVICES INC. and the CITY OF MONTICELLO HOUSING AND REDEVELOPMENT AUTHORITY This Agreement made and entered into on the _ day of April, 1989, by and between the Housing and Redevelopment Authority of the City of Monticello, a Minnesota Municipality, (hereinafter referred to as •HRA•), and Business Development Services, Inc., a Minnesota corporation (hereinafter referred to as •BDS•). WHEREAS, the City of Monticello believes that communities are dynamic In the sense that they are constantly changingt and WHEREAS, the City of Monticello believes that the economy of its community is shaped by its active economic development programs and WHEREAS, the City has initiated its economic development program through its Housing and Redevelopment Authority and utilises Tax Increment Financing as a key component of its economic development program( and WHEREAS, DOS seeks to assist the continued growth of the City of Monticello to provide economic development services and technical, professional assistance for its Housing and Redevelopment Authority and its Tax Increment Financing program. MW SPF M BM M OW • R= 00 0 AWN Aon A MM UM 0 MM 6108&6151 NOW, THEREFORE, BASED UPON THE MUTUAL PROMISES AND CONSIDERATIONS CONTAINED HEREIN, THE PARTIES HERETO AGREE AS FOLLOWS: I. SCOPE OF SERVICES A. BDS will provide ongoing consultation services as requested, to the Housing and Redevelopment Authority and the City of Monticello to assist these agencies in the appropriate design of the economic development program. B. BDS will provide marketing assistance on behalf of the City to identified prospects on a case-by-case basis. Those services would not be reimbursed. At City's option BDS will be reimbursed on an hourly or fixed fee basis. C. BDS will provide preliminary financial review, analysis and recommendations for the structuring of specific TIP development proposals. D. BDS will assist City staff and/or its designate in negotiating specific provisions of the development and assessment agreements associated with the City's TIP projects. E. BDS will assist in maintaining communications between City staff members and project developers utilising the City's TIP assistance. ol r P_ BDS will assist in the collection of the required technical and financial data, draft modified TIP plans and coordinate the dissemination of the plans and related materials to other public agencies and will review and confirm data with the City's bond counsel and fiscal consultant. G. BDS will assist in the preparation of materials for public hearings and the presentation of the appropriate information with the City and the Rousing and Redevelopment Authority. R. BDS will monitor and assist in the collection of developer repayments, lettere of credit and/or securities as required. I. Other duties related to the City's economic development program and TIP programs as directed by the City and/or Rousing and Redevelopment Authority. II. PAYMENT FOR SERVICES A. The City agrees to payment for services as described in Section I, as followsi 1. 14arkotina Assistance. BDS will provide marketing assistance to the City of Monticello's prospects at no charge through the preparation of proposal information. Once a prospect has reached the stage where a letter of intent is to be mailed or a prospect has requested a meeting, the City at its discretion agrees to hire BDS at its standard fee of $75 per hour, or on a negotiated fee schedule. 2. Establishment of Tax Increment Pinancinq Projects. At the City's determination, BDS will be utilised to assist in the design and preparation of TIP documents for the community's major projects. Fees for these services are as follows: a. For completion of data preparation, processing and certification of newly established or amended Tax Increment Financing District - $3.850.00. b. For the completion of related development and assessment agreements - 0850.00. c. The City and BDS recognize that the development of tax increment financing projects will be conducted on a contingency basis. City payment for services shall include all variable staff time and expenses associated with each project. 3. Consultation for TIP projects. The City will, at its discretion, seek to complete the data and structuring for the community's smaller TIP projects. on this basis, BDS will be retained on an hourlv fee of $75.00 to support the -4- process and to complete the appropriate documentation. B. BDS also agrees to provide an overall accounting of hours expended and fees that have been generated through this contract. It shall be BDS' and the HRA's intent to provide an overall hourly average rate, con- sistent with BDS staff fee schedule. I -5- III. ADDITIONAL PROVISIONS A. The City and BDS reserve the right to terminate this Agreement upon 60 days written notice. B. Each party to this Agreement binds himself and his partners, successors, executors, administrators, and assigns to the other party of this Agreement and to the partners, successors, executors, administrators, and assigns of such other party, in respect to all covenants of this agreement. Except as above, neither party shall assign, sublet, or transfer his interest in this agreement without the written consent of the other. Nothing herein shall be construed as creating any personal liability on the part of any officer or agent of any public body which may be party hereto, nor shall it be construed as giving any rights or benefits hereunder to anyone other than the parties to this Agreement. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. CITY OF MONTICELLO HOUSING AND REDEVELOPMENT AUTHORITY BUSINESS DEVELOPMENT SERVICES INC. BY BY ITS Michael J. Mulrooney, President ATTEST BY ITS Petrick M. Pelstring, Vice President