HRA Agenda 12-06-1989AGENDA
MONTICELLO HOUSING AND REDEVELOPMENT AUTHORITY
_ Wednesday, December 6, 1989 - 7:00 PM
City Hall
MEMBERS: Chairperson Al Larson, Ben Smith, Lowell Schrupp,
Everette Ellison, and Tom St. Hilaire.
STAFF: Rick Wolfsteller, Jeff O'Neill, and 011ie Koropchak.
GUESTS: Pat Pelstring, Business Development Services, Inc.
Ruse Martie
1. CALL TO ORDER.
2. APPROVAL OF THE NOVEMBER 1, 1989 HRA MINUTES.
3. CONSIDERATION TO REVIEW THE USE OF TIF AND BUILDING PLANS
FOR THE RUSS MARTIE PROJECT.
4. CONSIDERATION TO REVIEW THE DAVID FICER'S REDEVELOPMENT PROJECT.
S. CONSIDERATION OF AN UPDATE AND REVIEW FOR THE USE OF TIF FOR
THE REMMELE ENGINEERING PROJECT.
6. CONSIDERATION OF AN UPDATE AND DISCUSSION OF THE POSSIBLE
PURCHASE OF THE GILLS PROPERTY.
7. CONSIDERATION OF HRA MEMBERS FOR HRA APPOINTMENTS FOR THE
YEAR 1990.
8. OTHER BUSINESS.
9. ADJOURNMENT.
MINUTES
MONTICELLO HOUSING AND REDEVELOPMENT AUTHORITY
Wednesday, November 1, 1989 - 7:00 PM
City Hall
MEMBERS PRESENT: Chairperson Al Larson, Ben Smith, and Everette- Ellison
(tardy).
MEMBERS ABSENT: Tom St. Hilaire and Lovell Schrupp.
STAFF PRESENT: 011ie Koropchak
GUEST: Pat Peletring, Business Development Services, Inc.
Barb Schvientek, Hospital Executive Director
1. CALL TO ORDER.
Chairperson Al Larson called the HRA meeting to order at 7:15 PM.
2. APPROVAL OF THE OCTOBER 4, 1989 HRA MINUTES.
Ben Smith made a motion to approve the October 4, 1989 HRA minutes.
seconded by Everette Ellison and passed 3-0.
3. CONSIDERATION TO REVIEW DAVID FICEWS HOUSING REDEVELOPMENT
PLAN, ESTIMATED TIF PROJECT NUMBERS, AND SURVEY RESULTS.
Mr. Pelstring reported that Mr. Ficak was encouraged by the
results of the survey tabulation as it confirmed the HRA's
feeling of a need for a higher quality of townhome ($70,000
to $90.000) and that 32.52 were interested in townhomes.
At this point, Chairperson Al Larson updated Barb Schweintek
on the planned townhome concept. Mr. Pelstring continued
to summary the developer plan and costs and stating that
the projected increment under owner occupied units would
not be sufficient to cover the developer's cost. Mr. Pelstring aug-
gested that a portion of the units be investor/rental units.
Polstring and Koropchak will meet with Mr. Ficak to determine
possibility of rental and which unite will be rental. Mr. Pelstring
advised the HRA that he to upfront with Mr. Ficak suggesting the
HRA request full disclosure of acquisition and developer's
cost and not to give TIP numbers to Mr. Ficek, this leaving
the HRA is the driver's Beat. Additionally, that with the rental
unite Mr. Ficak becomes responsible to find investors.
Ben Smith made a motion recommending a portion of the unite
be rental, however, not in the Phase I area of Palm and
4th Street. Also, that the developer be responsible for
finding an investor(a) for rental units and that the developer
make full disclosure of acquisition and other developer's costs to the HRA.
The motion was seconded by Everette Ellison and passed 3-0.
NRA Minutes — 11!1/89
Page 2
4. CONSIDERATION OF DISCUSSION FOR ELDERLY CONVALESCENT
HOUSING NEEDS.
Chairperson Al Larson expressed the HRA's next goal which is
to provide needed housing for the person not able to
provide all services for himself/herself yet not ready for the
Nursing Home.
Barbara Schvientek gave her insight and knowledge of the
elderly and their living needs. First, the elder age population
is growing. Age 65-75 - 902 live in their own home or apartment,
age 75-85 develop more chronic illnesses, and age 85 and over -
16-212 live in nursing homes.
Approximately seven years ago a survey was completed to determine
the coat effectiveness of converting the old nugging.home into
apartments. Survey results were that the pop.i.at:on did not
support the need for market rate apartments and would need
to be subsidized.
State Legislature is very resistent to building of new Nursing Homes,
endorsing other elderly home care services, however, this
may present a shortage of nursing home beds in the future.
Even with the 200 beds added each year, projections are for
a shortage by Year 2010. Sherburne and Wright County are
known for good Nursing Homes, always a waiting list. It
was a poor decision of the Hospital Board to not have taken
the risk and built a 120 beds rather than the 91 bed capacity.
Monticello has nineteen community base services in the pilot program
which is serviced by one telephone call. Fifty to seventy-five
people used the program in the first year and is staffed by a
Public Nurse and Social Worker. The Adult Day Care Service
has grown 1002 in one year. Ms. Schwientek recommended
for the HRA to keep in mind the core of group services and
suggested the site could be most anywhere in Monticello.
The Hospital Board's decision was not to use the tax payers
money to compete with market value units and the District
does not want to be land owners. However, the Hospital
District is willing to work cooperatively with the HRA,
utilizing the Hospital services of Home Health Care and
the HRA's use of TIF and potential finding of a developer.
Children tend to relocate their parents close to them. All
unite should be handicap accessible: appliance and bath rooms
as wall as good lighting. The Heartland Express Bus is a
now service in Monticello starting December let, the availability
of diversified doctors and the adult day care program are
all options for developers to consider. Ms. Schwienta k
expressed to the HRA that forty units are generally o
break oven point and suggested expertise design models
In Elk River and Zimmerman.
Chairperson Larson thanked Barb for her insight in the elderly
care field and suggested that all persons present be alert
for a potential developer and referrals be passed on to
HRA Minutes - 11/1/89
Page 3
4. CONTINUED.
l Mr. Pat Peletring or Mr. Pelstring may have a suggestion for
the HRA.
5. CONSIDERATION OF AN UPDATE ON THE GILLS PROPERTY.
No information has been received from the PCA on legal
responaibilities for tank removal and soil testing.
The City continues to enforce the City Ordinance of
violation of a non -conforming use.
6. OTHER BUSINESS.
Chairperson Larson asked Koropchak to sent Barb Schwientek a
thank you note from the HRA.
7. ADJOURNMENT.
Everette Ellison made a motion to adjourn the HRA meeting,
seconded by Ben Smith, the HRA meeting adjourned at 8:35 PM.
011ie Koropchak
HRA Executive Secretary
4
9D5
MEMORANDUM
Business Oarobpmerit Services IaL
TO: The Monticello Housing and Redevelopment Authority
FROM: Patrick W. Pelstring
DATE: November 1, 1989
SUBJECT: FICEK HOUSING PROPOSAL
BACKGROUND
Representatives of the City and Business Development Services
have been negotiating with David Ficek on the potential of
developing a downtown housing project over the past several
months. As you are aware, the HRA offered a letter of intent to
Mr. Ficek approximately 60 days ago based upon a preliminary
analysis which had been completed. This letter, however, was not
executed as we determined that acquisition costa would be in
excess of those originally proposed, and that under the new tax
law, the projected increment would be substantially reduced.
Over the past 60 days we have had an opportunity to meet with Mr.
Ficek on several occasions and modify the proposal. Mr. Ficek
recently submitted an updated proposal to the Monticello HRA for
Its conaiderntion. This memo has been prepared to provide
comment and recommendations on the modified proposal.
MODIFIED PROPOSAL
Mr. Ficek, in cooperation with the Monticello HRA has analyzed
the results of the housing survey. Based upon these results, he
has suggested that the mnrket would support two principle types
of development; (1) Single level townhomes in the 172-79,000
price range, and (2) Two-story townhomes in the 165-67,000 price
range.
In addition. Mr. Ficek has looked at additional nreas throughout.
the City which could support the development. Hie most recent
proposnl identified four potential areas. Our review, however,
has focused on the first. two phnses of this project, lhe property
nt Palm and 4th Street, and the property at Mnple and 5th Street.
6090 SPRM06ROOM ORR11 0 SM 930 0 NUIOIHIOO A MM 554111 0 ROM 61LU"131
The Monticello Housing and Redevelopment Authority
November 1, 1989
Page 2
Mr. Ficek has proposed to reduce the number of existing homes to
be acquired on each development. This reduces overall project
costs by reducing the acquisition, and makes the project more
financially viable. Based upon our preliminary review, we still
feel that both areas could be qualified as redevelopment
districts, and thus provide the greatest opportunity for Tax
Increment Financing.
Attached as an exhibit to this proposal, I have prepared an
analysis of phases one and two of Mr. Ficek's proposal. Overall,
Mr. Ficek suggests the potential development of 22 single -level
townhomes and 44 two-story townhomes. This development, he
estimates would result in $4.3 million of new property value
within the City. Our analysis estimates the total tax capacity
of the new development at $46,015, resulting in projected taxes
of $37,720, and an estimated $34,000 of "net increment."
Assuming that the HRA has approximately $34,000 of net increment
to assist the developer with the project, this could be utilized
to generate net proceeds for the developer of an estimated $250-
265,000. This amount, however, does not cover Mr. Ficek's
estimated acquisition and improvement costs. Based upon a
preliminary review, we would estimate a developer cost of
approximately $3,500-4,000 per unit which could not be covered by
Tax Increment Financing.
The project, however, may still be feasible within this
assistance range. I have also discussed the potential of
converting some of the two-story townhomes into rental units.
Due to the current property tax structure, the net Increment
would be substantially increased by having a portion of the
project as multi -family rental units. For example, we have
estimated that if 20 of the units were converted into rental
units, then an additional $130,000 of net proceeds may be
available for the developer.
SUMMARY
We would urge your review of the modified proposal prepared by
Mr. Flcok and request. your consideration for continued
negotiations with Mr. Flock leading to a revised letter of
intent.
FICEH PROPOSAL
SUMMARY
DEVELO�MENT SUMMARY
r
J
Single Level Townhomes -- $72,900 Interior Unit
-- $78,900 End Unit
Two -Story Townhomes -- $54,900 Small Interior Unit
-- $58,900 Large Interior Unit
-- $66,900 End Unit
Phase
AcQUisition/
Single Level
Average
Two -Story
Average
No._
Location
Townhomes
Snle Price
Townhomes
Sale Price
I
Palm - 4th
16
$ 75,900
24
$ 61, 566
II
Linn/Maple -
5/6th 6
74,900
20
60, 500
III
Maple/Minn.
- 6th 7
74,900
12
58, 900
IV
Minn. - 6th
4
74,900
12
58,900
PEVELQPMFNT COSTS
Phase
AcQUisition/
Total
Now
No,
_Removal +
lmnrovnme*ntm
o Cast
VAlliP.
1
350,000
120,000
470,000
$2,692, 000
11
300,000
50,000
360,000
1,659,400
111
290,000
50,000
340,000
1,231, 100
1V
180,000
40,000
220,000
1,006,400
11
16 Single Level
Townhomes
24 Two -Story
Townhomes
SUBTOTAL
PHASE I1
6 Single Level
Townhomes
10 Two -Story
Townhomes
SUBTOTAL
TIF SUMMARY
FICEK PROPOSAL --10/15/89
Average
Price
75,900
61,500
74,900
60,600
TOTAL
Less F.sisting Taxes (Estimated)
NET INCREMENT
Tax
Capacity
14,040
14,760
28,800
6,115
12,100
17,216
46,015
Projected
Taxes
11,500
12,100
23,600
4,195
9.926
14,120
37,720
( 3,500)
$34,220
HRA Agenda - 12/6/89
Page 1
3. CONSIDERATION TO REVIEW THE USE OF TIF AND BUILDING PLANS
FOR THE RUSS MARTIE PROJECT.
A. REFERENCE AND BACKGROUND.
Mr. Russ Martie will present his proposed 7,128 square
foot metal building plans to the HRA. Increased employment
of 2 additional jobs for a total of 5.
Enclosed are copies of TIF numbers ran in early March of 1989.
As you may note the structure was reduced by a small 36 square
feet, not enough to rerun the numbers. Mr. Martie has a
contract for deed on the westerly 1.9 acres of Lot 1, Block 3,
Oakwood Industrial Park.
Project Costs: $20.000 Land acquisition
3,000 Less down payment
$17,000 Remaining balance
1,538 2nd half year taxes and assessments
and remaining balance of assessments
(does not include 89 road project)
$18,538
Mr. Martie anticipates being in the facility in March of 1990.
Questions for the HRA to answer:
1. Does the project meet the HRA guidelines?
2. Does this project qualify as a small project
to be financed internally by the TIF surplus
fund?
3. Does the HRA want to subsidise the GAP by TIP
surplus funds?
4. Does BDS, Inc. see the pay-as-you-go option as a
benefit to the developer?
At a previous NRA meeting, the HRA gave preliminary approval
to the project concept and use of TIP, if the HRA still remains
consist with their previous dectsion,Staff recommends the
HRA authorize BDS,Inc. to draft a TIF plan for TIP Economic
District 1-9.
Having not consulted with Mr. Polatring on the time frame.
the HRA may also need to authorize acquisition of land
and setting a HRA public hearing for the disposition of
public lands.
Tuesday, January 2, 1990 - Planning Commission Review
Wednesday, January 3, 1990 - HRA Public Hearing on Disposition of
Public
Lands and request City Council eat a
P.H. date
Monday, January 8, 1990 - City Council act Public Hearing Data
for
TIP Plan.
Monday, January 22, 1990 City Council hold Public Hearing for
TIF
Plan and approve TIP plan.
This schedule would propose to have the TIP Plan to the County and
School District by December 22, 1989,meoting Statutory requirements
of 30 days to make comment.
BRA Agenda - 11/6/89
Page 2
3. CONTINUED.
B. STAFF RECOMMENDATION.
Assuming the HRA approves the use of TIF, Staff recommends
the HRA authorize BDS, Inc. to draft a TIF Plan for SIF
Economic District 1-9, authorize aquisition of land, and
set a public hearing date for January 3, 1990 for the
Disposition of Public Lands.
C. SUPPORTING DATA.
PROJECTIONS RAN IN MARCH OF 1989.
LOCATION OF PROPOSED BUILDING SITE.
1
h
TAX INCREMENT FINANCE PROPOSAL
CITY OF MONTICELLO
on behalf of
MARTIE'S FARM SERVICE
ASSUMPTIONS:
1. A 7,164 square foot metal office/cold storage facility to be
constructed in fall of 1898 and completed by.January 2. 1990.
48 K 48 - 2,304 sq ft office/display
54 A 90 - 4,860 sq ft cold storage (concrete floor, 14 ft side valla).
2. Site: Westerly 1.937 acres or 84,365.36 sq ft of Lot 1, Block 3.
Oakwood Industrial Park.
3. Employment of two additional for a total of five.
4. TIF District certification, September. 1989.
2,304 eq ft R $30.00 - $69,120.00 Office
4,860 sq ft R $ 8.00 - 38,880.00 Cold Storage
84,365 aq ft R $ .35 - 29,527.87 Land
$137,527.87 EMV
A. New Capacity Value $5,232.68
B. Original Capacity Value 442.83
C. Captured Capacity Value 4,789.85
D. Capacity Rate .82091
E. Annual Tax Increment $3.932.03
F. Tax Bill $4,295.56
C. Adjusted Annual TI $3,222.01
CONCLUSION:
Tax Increment is sufficent to retire a $19,000 loan at 71 over 8 years.
Debt Service $3.181.93 (167.47).
Estimated TIF Use TIF Donation $11.000.00 (Acquisition of Land)
Plan/Devel 4,080.00
Administ 1,260.00
Cap Int (24 moa) 2 660.00
TOTAL $19.
N
LAND ACQUISITION: $20,000.00 CONTRACT FOR DEED
3,000.00 LESS DOWN PAYMENT
$17,000.00 BALANCE
181.78 2ND HALF TARES (Portion of Lot 1)
492.19 2ND HALF ASSESSMENTS
863.50 REMAINING BALANCE ASSESSMENTS
$18,537.47 TOTAL REMAINING ACQUISITION
11,000.00 LESS TIF DONATION
$ 7,537.47 GAP
ADJUSTMENT FACTOR:
A. September, 1989 Establishment Date
B. January 2, 1988 Base Year Capacity Date
C. $442.83 Base Year Capacity Value
D. January 2. 1983 Fifth Preceding Year Capacity Date
E. $221.44 Fifth Preceding Year Capacity Value
F. $221.39 Five Year Capacity Value Increase
G. .99977 Five Year Total Increase Ratio
H. .19995 Five Year Average Increase Ratio
I. 1.19995 Annual Base Year Adjustment Factor
Year Base CV Ads Factor Ad] CV NCV CR Annual TI
89/90 $442.83 1.199 $530.95 $5,232.68 .82091
90/91 636 4,597 $3,773.46
91/92 763 4,470 3,669.20
92/93 915 4.317 3,544.42
93/94 1,097 4,136 3.395.02
94/95 1,315 3,918 3,216.06
95/96 1,577 3,656 3,000.98
96/97 1,891 3,342 2,743.21
97/98 2,268 2.965 2.433.73
825,776.08
$25,776.08 divided by 8 years - $3,222.01 Annual Adjusted Tax Increment
Minnesota
CEPARTMENT OF ECONOMIC QF_VE OPMENT
Industrial Park Profile
Oakwood Industrial Park
Monticello, Minnesota
O 200 400 FEET AVAILA8LE PARCELS
In 0
�Nr
�ga
THOMAS PARR g� � ,nnn oa •�
�. mon woao '.aan
p $ •
s 3
9 wra .sal. .xia� 'aa.L,;t
:HELgA � RD.
SSW
o
V1
l
_ I }UWAS l RQ, r_
Cr { ii
t t e
• � t I< � 1`r` 8
i• �
MO YtlM tlau IUtl � ` .�� Ndtl a.atl
HRA Agenda - 12/6/89
Page 6
4. CONSIDERATION TO REVIEW THE DAVID FICEK'S REDEVELOPMENT
PROJECT.
A. REFERENCE AND BACKGROUND.
Mr. Pelstring and staff has met with Mr. Ficek and the latest
proposal consist of:
Phase I - 16 -Single level townhomes at average market
value of $75,000.
24 -Two story townhomes at average market value
of $61,500
Fourth Street and Palm. (owner occupied)
Phase II - 12 -Two story townhomes at average market value
of $55,000.
24 -Two story townhomes at average market value
of $45,000.
Linn/Maple and Fifth/Sixth Streets (investor/ rental)
To date Mr. Pelstring had Jerry Shannon of Springstad, Inc.
(bond consultant) run numbers based on the projected values
which indicates the project can support a $250,000 bond
issuance over 17 years with the possibility of excess increment
to be used on the pay-as-you-go option.
At this time, Mr. Polstring suggests the HRA not execute the
Letter of Intent until Mr. Ficek has 1) met with property
owners to gago the willingness to sell and to obtain firmer
acquisition costs, and 2) to allow time for a plan review
by the Planning Commission as the proposal consist of single
family and multi -family. This is somewhat of a differant
concept than originally planned.
No action is necessary by the HRA.
B. SUPPORTING DATA.
Will be presented by Mr. Pelstring at the meeting.
HRA AGENDA - 12/6/89
Page 7
5. CONSIDERATION OF AN UPDATE AND REVIEW FOR THE USE OF
TIF FOR THE REMMELE ENGINEERING PROJECT.
A. REFERENCE AND BACKGROUND.
The IDC, city staff, and Bob Heck have taken aggressive
steps to recruitment Remmele Engineering to locate their
proposed development in Monticello. The proposal consist
of an initial 20,000 square foot concrete building (footings
for 60,000 square feet) with an initial 50 semi -skilled to
highly skilled jobs (an additional 100 jobs with expanlon
anticipated within approximately five years).
Enclosed is the latest financial proposals presented to Remmele
Engineering by the city staff and BDS, Inc. The company has
inquired of the City's interest to acquire Remmele's 68.5
acres in the Monticello Township (west of Highway 25 and
north of Kjellberg's west trailer court). At this time,
consideration is being given of the inquiry. Remmele's
choices are Elk River, Big Lake, and Monticello.
Mr. Heitkamp informed me yesterday that their attorney's
advise was to use TIF pay-as-you—go option for land
acquisition and statutory limited developers cost in
whatever site location selected. Construction financing
would possibly be IRB's, SBA, or Small Business Development
Loan. Their time frame is preliminary site decision on
Friday. December 8 and corporate decision on Wednesday.
December 13. Planned beginning construction March or April, 1990.
Also, Genereux o: Tapper, Inc. will be making their decision
in December and are very Interested in our financial proposal
and the HRA Lot (Block 3, Lot 5, Oakwood Industrial Park).
20,000 square feet plus 5,000 square feet mezzanine,
approximate 50 employees.
No action necessary by the HRA at this time.
B. SUPPORTING DATA.
Financial proposals.
November 13, 1989
250 Fast Broadway
Monticello, MN 55362.9245
Phone: (612) 295.2711
Merro: (612) 333.5739
�r^•+
Mr. Red Heitkamp
Kennrth hlau
Remmaele Engineering
C" C-1
17701 Highway 10
Dan '"r "
Fnxn FW,
Fra
Big Lake, MN 55309
%,IeV An.Lnwn
W5r n S.nuh
Dear Mr. Heitkamm.
Rickw-4vda
The following proposal describes two potential methods for
A-- Ah.–.. -6,
City of Monticello participation in the Remmele development
G+om.mu, pn:Ly .,
1 O'Neil
finance plan via TIP. This proposal applies equally to two
potential development sites described below. If one of the
"J.hnSn
lU
two development sites are not acceptable, the finance plan
could be applied to a third alternative identified by Remmele
04..'
aW wy Ar
Gur7 Anln,.m
L
Engineering.
We .*chA+
oUle K..n.prh.J.
Please be aware that this is a y
proposal only which must be
reviewed by the Monticello City Council, the Housing and
Redevelopment Authority, and the Economic Development
Authority. It is likely that this proposal is viable, as it
has received the verbal support of the Mayor and has received
support from individual members of the Housing and
Redevelopment Authority.
OPTION lA - Lot 5, Block 3, Oakwood Industrial Park.
Current Owner: City of Monticello HRA.
cc o „•oy,:.� This option cells for the development of the Remaele plant on
.4gyp• 6.42 acres of land now owned by the City of Monticello in the
Oakwood Industrial Park. Under this alternative, the City
proposes to utilize tax increment financing to fund project
activities that equal an approximate value of $179,000. This
program proposes complete City financing of all land coats
(880,000), utility fees, building fees, existing assessments,
(810,795), eligible TIP site preparation expense (840,000),
and all capitalized interest and legal/administration expense
associated with development of the TIP plan.
This proposal calls for TIP assistance in excess of the TIP
debt that can be supported by a 20,000 square foot structure.
The proposed structure on this parcel can support a TIP debt
of 8110,000. Proposed is TIP assistance in the amount of
8179,000, which creates a TIP project deficit of 869,000
Mr. Red eeitkamp
November 13, 1989
Page 2
This defecit will be funded by future potential expansion and by
other City sources. Please note that there will be no requirement
that Remcele be committed to expansion of the original 20,000 square
foot structure. Furthermore, at such time that Remmele elects to
expand the facility, the City will again utilize TIF in financing
eligible site preparation expenses, including development of parking,
landscaping, grading, etc.
OPTION 1B - Lot 6, Block 2, Oakwood Industrial Park.
Current Owner: Oakwood Industrial Partnership.
Frac a project financing standpoint, this alternative is identical to
Option A. This option calls for development of the facility on a
corner lot rather than on an interior lot. Furthermore, this
proposal includes a smaller piece of land (5.29 versus 6.42 acres).
Under this alternative, the City proposes to utilize tax increment
financing to fund project activities that equal an approximate value
of $171,000. This program proposes complete City financing of all
land costs ($75,000), utility fees, building fees, existing
assessments ($10,500), eligible TIP sire preparation expense
($50,000), and all capitalized interest and legal/administration
expense associated with development of the TIP plan.
As in Option A, this proposal calls for TIP assistance in excess of
the TIP debt that can be supported by a 20,000 square foot
structure. The proposed structure on this parcel can support a TIP
debt of $100,000. Proposed to TIP assistance in the amount of
$171,000, which creates a TIP project deficit of $11,000. Additional
terms noted under Option A above also apply to Option B.
Option 2 - Tax Increment Financing—Pay As You Go. If the City
offers TIP on a pay as you go basis, the estimated
annual net increment of $28,815 would be available for
eight years. This presumes a minimal economic developurant
adjustment factor. This could result in an annual pay out
totaling approximately $230,000.
In addition to utilizing TIP to completely eliminate a major portion
of site preparation expenses, the City of Monticello invites Remmele
to utilize the Greater Monticello Cnterprice Fund. At this time,
$100,000 to available for assistance in financing purchase of
machinery and equipment. Current policy limits the interest rate to
two points below prime and the term to seven years.
l �J
Mr. Red Heitkaup
November 13, 1989
Page 3
Finally, if Monticello does not become your company's choice for
expansion due to a disparity in financing plans, we welcome the
opportunity to revisit the financing plan above.
Thank you for the chance to show your company why we think Monticello
is a "little mountain" of big opportunities. If you need additional
information about the Monticello opportunity, please do not hesitate
to call.
Yours truly,
CITY OF MMMCELLO
Jeff O'Neill
Assistant Administrator
OR/kd
\0
A MOML �
A,
November 13, 1989
ICon o pcwG
Budnsst Devek*want SwWcu hw-
Mr. Red Heitkamp
Remmele Engineering
17701 Highway 10
Big Lake, MN 55309
Dear Mr. Heitkampt
Enclosed please find a revised sources and uses statement
regarding the Monticello project.
If I can be of further help, please feel free to call me at
612/786-6151.
Sincerely,
BUSINESS DEVELOPMENT SERVICES INC.
Ole
Robert A. Heck
Senior Business Pinance Specialist
RAH/ld
Enclosure
cca O. Eoropchak
8990 9BINUM MM OM1M 0 SM 00 0 AVNM 1iOU% MM SSW 0 1N N 61VMMISI
l
The sources and uses under this program would be as follows:
USES
Land $ 801000
Site Preparation 50,000
Building Construction (20,000 S.F.) 660,000
Utilities 6 Building Pees 10,795
Tax Increment Financing Fees 38.205
TOTAL USES $839,000
SOURCES
Bank --First Mortgage $350,000
(Market rate, 20 years)
SBA --Second Mortgage 310,000
(9.58 fixed rate, 20 years)
City of Monticello Tax Increment 179,000 i'
Pinancing/Owner's Equity
(No payback)
TOTAL SOURCES $839,000
ESTIMATED ANNUAL DEBT SERVICE
Bank--Pirst Mortgage 8 11.51 $44,600
SBA --Second Mortgage! 9.51 34,669
City of Monticello Tax Increment
Pinancing -0-
TOTAL ESTIMATED ANNUAL DEBT SERVICE $79,489
IV -2
HRA Agenda - 12/6/89
Page 13
6. CONSIDERATION OF AN UPDATE AND DISCUSSION OF THE POSSIBLE
PURCHASE OF THE GILLS PROPERTY.
A. REFERENCE AND BACKGROUND.
Mr. Fred Gille has contacted my office inquiring of the HRA's
interest to purchase his property located on West County Road
75 (Zoned R-2). Mr. Gille expressed that one parcel is
approximately 2.6 acres and the other approximately 1.2 acres,
his asking price 1s $90,000 and $80,000 respectively. I
asked Mr. Gille of his interest to relocate his business
to a properly zoned Monticello site as it is not the City's
Economic Development Director's position to drive business
out of town but to encourage business retention as well as
to bring in industry/business. Mr. Gille responded that he
has purchased property In Clearwater and has an additional
purchase option on adjoining property to his Clearwater site.
Option expires in January.
As you may remember, Mr. Hayes, Jeff O'Neill and Gary Anderson
were advised by the HRA to continue enforcing the City
Ordinance (illegal use of a non -conforming use).
Mr. Gille indicated that the underground storage tanks
were pumped dry and partially filled with sand/gravel
some 20 years ago. However. I explained that the HRA would
need his permission to enter his property for soil testing
and the tanks would need to be removed. He verbally granted
permission to enter his property for testing, however, I
did not discuss monitary responsibility of tooting and tank
removal.
Things to consider:
1. Does the project meet the HRA guidelines?
2. Is the HRA interested?
3. Can the HRA find a developer immediately to develop
the area consistent with the currant R-2 coning?
4. How or can the NRA finance the project without a
planned development?
5. Does the HRA want to authorize an appraisal of the
property?
6. Does the HRA want to authorize soil tooting after
written permission from Mr. Gillo?
I will attempt to seek legal advise on the responsibility of
buyer/sallor for removal of tanks, soil testing and cloan-up
costs if tooting so determines.
HRA AGENDA - 12/6/89
Page 14
1 7. CONSIDERATION OF HRA MEMBERS FOR HRA APPOINTMENT FOR THE
l YEAR 1990.
L���71�a�a �i1;1 T�Sw:1�13iIilil7!
Members of all City commissions and committees are annually
appointed by the City Council at the January Council meeting,
this being more of a formality. HRA member Lowell Schrupp's
term expires in December, 1989 and has agreed to remain on
the Authority. Assuming all other HRA members will continue
to serve their term, the HRA members and the expiration dates
of their terms are as follows:
Ben Smith December 1990
Tom St. Hilaire December 1991
Everette Ellison December 1992
Al Larson December 1993
Lowell Schrupp December 1994
B. ALTERNATIVE ACTIONS:
1. Recommend to City Council for 1990 NRA membership appointment the
above named list.
2. HRA to consider new members for recommendation to the City
Council.
C. STAFF RECOMMMENDATION.
Staff recommends all existing HRA members be recommended to the
City Council for 1990 HRA membership appointmont to insure continued
consistency and the learning process for the use of TIF and
the role of the HRA.
D. SUPPORTING DATA.
None.
MICROFILM TITLE PAGE
CITY OF MONTICELLO
Housing & Redevelopment
Authority (HRA)
Agenda Books
1990
�J�4wt'hMM��'YutJdwfiY�Ma�IL� W pr