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HRA Agenda 08-01-1990AGENDA MONTICELLO HOUSING AND REDEVELOPMENT AUTHORITY Wednesday, August 1, 1990 - 7:00 P.X. City Hall MEMBERS: Chairperson Al Larson, Ben Smith, Lovell Schrupp, Everette Ellison, and Tom St. Hilaire. STAFF: Rick Wolfsteller, Jeff O'Neill, and 011ie &oropchak. GUEST: Pat Pelatring, Business Development Services, Inc. 1. CALL TO ORDER. 2. APPROVAL OF THE JULY 11, 1990 HRA MINUTES. 3. CONSIDERATION TO REVIEW THE CONTRACT BETWEEN THE HRA AND BDS, INC. 4. CONSIDERATION TO HEAR PRELIMINARY CONCEPT FOR POTENTIAL USE OF TIF (ECONOMIC DISTRICT) FOR ERIC BONDHUS PROJECT. S. CONSIDERATION OF RESEARCHED INFORMATION TO WHETHER THE GILLS PROPERTY AREA CAN QUALIFY FOR THE ESTABLISHMENT OF A TIF DISTRICT. li-- 6. OTHER BUSINESS. 7. ADJOURNMENT. I MINUTES MONTICELLO HOUSING AND REDEVELOPMENT AUTHORITY r Wednesday, July 11, 1990 - 7:00 P.M. City Hall MEMBERS PRESENT: Chairperson Al Larson, Ben Smith, and Tom St. Hilaire. Everette Ellison was tardy. MEMBER ABSENT: Lowell Schrupp. STAFF PRESENT: Rick Wolfsteller and 011ie Koropchak. 1. CALL TO ORDER. Chairperson Al Larson called the HRA meeting to order at 7:03 PM. 2. APPROVAL OF THE MAY 2, 1990 HRA MINUTES. Ben Smith made a motion to approve the May 2. 1990 HRA minutes, seconded by Tom St. Hilaire, the minutes stand approved as written. 3. CONSIDERATION TO APPROVE A RESOLUTION TO MODIFY THE TAX INCREMENT FINANCE PLAN RELATING TO TAX INCREMENT FINANCE DISTRICT NO. 1-9 (WILLIAM AND BARBARA TAPPER). Koropchak reiterated parte of the agenda supplement informing the HRA members to why the need to modify the TIF plan for the Tapper's project. The basic reason being that a $12,000 discrepancy gap existed in the total funding project because SBA officers would not accept the recommendation given by Bob Hock to the EDA at the time of GMEF approval. The SBA would not accept the 7 year balloon payment on the $12,000. Therefore, staff recommenda that $12,000 equity (TIF) be injected into the funds as the estimated market value in the Assessment Agreement of the Development Agreement is sufficient to generate the tax increment necessary to retire the increased bond indebtedness. Thereafter, the Greater Monticello Enterprise Fund will be reduced from $100,000 to $88,000 which is a benefit as the EDA maintains a greater revolving loan balance and reduces the city's loan amount which is a third position loan. The developer, Wright County State Bank, SBA, and Tom Hayes agreed with staff's recommendation. Attorney Bob Daike confirmed that this modification would not apply to now legislative ruling on TIP. r The modified budges will increase from {125,000 to $140,000, however, direct assistance to the Tapper's will increase from $77,500 to $89,500. Additionally, the negotiated Development Agreement includes language v HRA Minutes 7/11/90 Page 2 3. CONTINUED. stating:. if for some unknown reason the modified TIF Plan was denied, the $12,000 gap funds would be transferred from another district. This allows for the closing date to occur prior to adoption of the modification by the City Council. Tom St. Hilaire made a motion to adopt the resolution relating to the modification, by the Housing and Redevelopment Authority in and for the City of Monticello, of the Redevelopment Plan relating to Redevelopment Project No. 1, the modification of the Tax Increment Financing Plan relating to Tax Increment Financing Districts Noe. 1-1 through 1-11 and the modification of the Tax Increment Financing Plan relating to the Tax Increment Financing District No. 1-9, all located within Redevelopment Project No. 1. The motion further included the support of the negotiated Development Agreement stating that if for some unknown reason this modification was denied, gap funds would be transferred from another TIF district. The motion was seconded by Ben Smith and without further t discussion passed 3-0. 4. CONSIDERATION TO REVIEW LEGISLATION RULING ON TIF AND ITS IMPACT TO THE CITY OF MONTICELLO. The HRA members had received a summary of the 1990 Legislative changes to TIF with their agenda. Roropchak concluded that TIP is still a useable financing tool, however, it has been restricted by Legislation. Most communities are subject to a reduction in the amount of tax increment available for a project because of the LGA/HACA payments. The city of Monticello does not receive state aid therefore the city does not need to deduct any LGA/HACA payments at this time. However, if a district were croated today and the city would receivo state aid at a future data then the amount of available useable tax increment would be reduced for the remaining life of the TIF district. Legal counsels state TIP can be used, however, stress the important of written documentation because of potential penalties of TIP abuse. Also,it may generally be desirable for tho authority to remain outside the chain of title because of potential environmental clean-up cost concorns. This can be done as assessment agreements can now be entered into whether or not the authority takes title to the property Involved and a development agreement is necessary under law. Everette Ellison now present at the HRA meeting. HRA Minutes 7/11/90 Page 3 5. CONSIDERATION OF A PROJECT UPDATE: a) TAPPER'S INC. - Closing scheduled for Friday, July 13, 1990 Wright County State Bank b) REMMELE ENGINEERING - Development Agreement - Estimated Market Value is $805,000, Tax Increment Finance Gurantee is $32,000, Letter of Credit for $185,000, Letter of evidence of financing construction, Evidence of of good title, and evidence of insurance upon construction time. Closing scheduled for Monday, July 16, 1990, Dorsey b Whitney, Minneapolis. c) MARTIE'S FARM SERVICE - reiterated HRA position that the recommended screening along Oakwood Drive is to be determined by the Planning Commission, Planning Administrator, or Building Inspector. Also, the use of TIF means the project will be consistent with the City Ordinance as determined by the expertise of the Planning Commission and/or it's staff. This is covered in the Development Agreement. d) THE LINCOLN COMPANIES - the company has filed Chapter 11 Bankrupty. The Lincoln Companies being current owners of the Mall and Monticello K -M Partnership the developers of the K -Mart project. 6. CONSIDERATION TO REVIEW THE CONTRACT BETWEEN THE HRA AND BDS, INC. The HRA viewed Pat Pelstring and Bob Heck's presentation to the HRA. EDA, and Remmele Engineering as very professional, however, concerns center around the efficiency of returning telephone calls, ability to carry out a project within a reasonable time frame, and the cost effectiveness of some services (Development Agreements). The HRA members recommended this agenda item be tabled until the August meeting, the staff prepare questions for BDS evaluation, and invite Pat Polstring to be present at the meeting. 7. OTHER BUSINESS. Chairperson Al Larson asked that the Fred Gills Property be placed on the August HRA agenda for discussion and Information. 8. ADJOURNMENT. Tom St. Hilaire made a motion to adjourn the HRA meeting, seconded by Everette Ellison, the HRA meeting adjourned at 8:00 PM. n n 011ie Koropchak.-HRA Executive Secretary utas: Q t Services lac. AGREEMENT BY AND BETWEEN BUSINESS DEVELOPMENT SERVICES INC. and the CITY OF MONTICELLO HOUSING AND REDEVELOPMENT AUTHORITY This Agreement made and entered into on the 4th day of October, 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 changing; and WHEREAS, the City of Monticello believes that the economy of its community is shaped by Its active economic development program; 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 programl and WHEREAS, BDS 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. SM SPAIN &%= WX • villin = • M99IMO A MM INUS 0 PMfM 61VI06-6151 NOW, THEREFORE, BASED UPON THE MUTUAL PROMISES AND \141 CONSIDERATIONS CONTAINED HEREIN, THE PARTIES HERETO AGREE AS FOLLOWS: 1. 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 TIF development proposals. D. 805 will assist City staff and/or Its designate in negotiating specific provisions of the development and assessment agreements associated with the City's TIF projects. E. BDS will assist in maintaining communications between City staff members and project developers utilising the City's TIP assistance. -2. F. BDS will assist in the collection of the required technical and financial data, draft modified TIF 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 Housing and Redevelopment Authority. H. BDS will monitor and assist in the collection of developer repayments, letters of credit and/or t securities as required. 1. Other duties related to the City's economic development program and TIF programs as directed by the City and/or Housing and Redevelopment Authority. 11. PAYMENT FOR SERVICES A. The City agrees to payment for services at described in Section 1, as follows: 1. Marketing 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 -3- 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 $73 per hour, or on a negotiated fee schedule. 2. Establishment of Tax Increment Financing Projects. At the City's determination, BDS will be utilized to assist in the design and preparation of TIF 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 - $7,870.00. b. For the completion of related development and assessment agreements - $870.00. 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 TIF projects. The City will, at Its discretion, seek to complete the data and structuring for the community's 17 smaller TIF projects. On this basis, BDS will be retained on an hourly fee of $73.00 to support the -0. process and to complete the appropriate u 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. 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 V' 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. .3. 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 BY ITS ATTCL W d'TiWT& ITS BUSSS DEVELOPMENT ERVICES INC. BY'll trY W. Patrick W. Pelstring, President Mary A. Czech, Vice President -6.