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HRA Agenda 10-04-1988AGENDA MONTICELLO HOUSING AND REDEV&LOPMENT AUTHORITY Wednesday, October 1988 - 7:OOAM City Hall MEMBERS: Chairperson Ken Mausy Lovell Schrupp; Ben Smith; Al Larson; Everette Ellison; and 011ie Koropchak, HRA Director. CITY STAFF: Rick Wolfeteller and Jeff O'Neill GUEST: Pat Pelstring, Business Development Services, Inc. 1. CALL TO ORDER. 2. APPROVAL OF THE SEPTEMBER 7, 1988 HRA MINUTES. 3. CONSIDERATION OF TAE INCREMENT FINANCING PROPOSAL TO ASSIST THE CITY OF MONTICELLO HOUSING AND REDEVELOPMENT AUTHORITY. 4. UPDATE ON TAX INCREMENT REDEVELOPMENT DISTRICT 02 PROJECT. 5. OTHER BUSINESS. 0 6. ADJOURNMENT. MINUTES MONTICELLO HOUSING AND REDEVELOPMENT AUTHORITY SPECIAL MEETING Friday, September 16, 1988 - 1:30 PM City Hall MEMBERS PRESENT: Chairperson Ken Maus, Ben Smith, Al Larson, Everette Ellison, and 011ie Koropchak, HRA Director. STAFF PRESENT: Rick Wolfeteller MEMBERS ABSENT: Lowell Schrupp 1. CALL TO ORDER. Chairperson Maus called the NRA special meeting to order at 1:55 PM. 2. CONSIDERATION OF ALVIN JONES COUNTER-OFFER FOR PROPERTY LOCATED AT 110 NORTH LOCUST. The purchase agreement between the HRA and Joseph and Clarice O'Connor, and the purchase agreement between the HRA and Elvin and Donna Stelton have been executed as directed by the HRA motion of September 7, 1988. Mr. Alvin Jones requested that Rick Wolfeteller and Koropchak ask the HRA to consider his counter-offer of an additional $1,175. His rationale of the purchase agreement price of $57,000 less earnest monies released of $10,000 equals $47,000 times 10% interest rate divided by 4 is $1,175. The $1,175 being the quarterly intereston a $47,000 mortgage. The HRA briefly discussed the counter-offer and could find arguments for and against the rationale. The HRA felt no extra dollars were requested nor given the other two property owners of the set option agreements. Rick Wolfeteller reminded the HRA of the already high investment into this project. Everette Ellison made a motion for the HRA to remain firm on it's original purchase agraeemnt offer of $57,000 with earnest money of $10,000 released at time of execution with remaining balance due at closing date on or before March 1, 1989. Option agreement contingencies included except caller pays 1988 full taxes. The motion was seconded by Ban Smith, with no further discussion, the motion passed 4-0. The motion was made based on the rationale that the other two purchase agreements were settled without extra monies and in all fairness to those parties and to Al Jones, himself, the HRA's decision was to remain firm on their original option agreement price. 3. ADJOURNMENT. The HRA special meeting adjourned at 2:15 PM. C / n 011ie Koropchak, HRA Executive Secretary MINUTES MONTICELLO HOUSING AND REDEVELOPMENT AUTHORITY Wednesday, September 7, 1988 - 7:00 AM City Hall MEMBERS PRESENT: Chairperson Ken Maus, Lowell Schrupp, Ben Smith, Al Larson, and Everette Ellison. CITY STAFF PRESENT: Rick Yolfsteller; Jeff O'Neill; and 011ie Koropchak, HRA Director. GUEST: Brad Larson, Broadway Square Limited Partnership. 1. CALL TO ORDER. Chairperson Ken Maus called the HRA meeting to order at 7:05AM. 2. APPROVAL OF THE AUGUST 10, 1988 HRA MINUTES. Lowell Schrupp made a motion to approve the August 10, 1988 HRA minutes, seconded by Ben Smith, the motion carried unanimously. 3. CONSIDERATION TO EXECUTE THREE OPTION AGREEEMNTS, SEPTEMBER 30, 1988. Brad Larson of Broadway Square Limited Partnership, one developer i of the proposed 28 -unit elderly housing project and applicant for FmHA funding updated the HRA on the statue of funding progress. Mr. Larson reported that their project ranked in the top one- third for 1989 funding allocation. Progression steps are as follows: 1) Pre-closing conference set for next week, 2) advertise for bide, 3) bids in January, 4) spring construction, and 5) final closing in February or March, 1989. 95% assured verbal approval. The final site plan and the public hearing for a variance request is scheduled for the Planning Commission Agenda on October 4, 1988. The HRA and Mr. Larson briefly discussed the alignment of Block 51 alley as proposed on the site plan, as designed the HRA viewed the alley as non-functional because truck turn movements would need more space. Mr. Larson stated that the Topol's didn't care if the allay was closed off and Mr. Larson expressed this would not create any land locking of sorts. The HRA felt the elderly housing plan should be designed to accommodate the future with a straight through alloy. It was suggested that the City present the Topol's with a purchase agreement for the shed. The HRA having addressed the question directly to Brad Larson. if the private partnership would consider additional funds to fill the project finance gap? Mr. Larson responded that was not possible. He suggested Koropchok call Joe Folsum at the FmHA Office in St. Cloud to obtain the appraisal value. HRA Minutes - 9/7/88 The HRA discussed the option to execute the three option agreements to the three property owners prior to expiration date, September 30, 1988. It was a consensus of the HRA members to execute the option agreements with the rationale that the long term merits of the project will outweight the finance gap. Koropchak told the HRA members that the Stelton's would consider a contract for deed interest free through end of December, 1988. Also, the NRA recognizes the holding costs associated with the extended option agreements and recognizes the anxiety created to the property owners by the unknown. With the FmHA funding update and knowledge of possible final closing in February or March, the HRA discussed purchasing methods without the need to consider a loan from the city. A motion was made by Lowell Schrupp for the HRA to purchase the Jones. O'Connor, and Stelton properties for the amount agreed upon in the respective option agreements with the seller to pay the full 1988 taxes. Purchase agreements will be drawn -up by Metcalf b Larson, Attorneys at Law, with 110,000 earnest money (released) and closing date on or before March 1, 1989. Previous contingencies of the respective option agreements to be included. The motion was seconded by Everette Ellison, with no further discussion, the motion passed 5-0. 4. CONSIDERATION OF MODIFICATION 03 FOR TAX INCREMENT FINANCE PLAN DISTRICT 02. The NRA recognising the Option A expenses would be reduced because of the deletion of the city loan and interest, Al Larson made a motion to execute a NRA Resolution for Modification Plan 03 for Tax Increment Finance District 02, therebye, requesting the City Council to set a public hearing date for modifying the plan. The modification plan to recover all expenses incurred by the HRA for TI District 02. The motion was seconded by Ban Smith, with no further discussion, the motion passed 5-0. Project cost, projected tax increment, and bond indebtedness were part of the agenda supplement. A motion was made by Ben Smith requesting the City Council to sot a public hearing date for moving and relocation expanses pertaining to the acquisition of the Jones. O'Connor, and Stalton properties. The motion was seconded by Everette Ellison, with no further discussion, the motion passed 5-0. The HUD -Uniform Act states that parson (a) or business(s) who undergo displacement due to acquisition of property by a government entity are entitled to compensation of moving and relocation expenses. According to Tom Hayes, City Attorney, if a fixed agreeable moving and relocation expense is established by o willing seller and willing buyer there need only ba a public hearing because it onvolvas taxpayers monies. The fixed agreed upon moving and relocation expense (15,000) is acceptable by the HRA (buyer) and the Stelton'e. O'Connor's, and Jonas' (sellers) and is included in the purchase prices. HRA Minutes - 9/7/88 The HRA recognizes the high coat associated with this project; however, they agree that the long term benefits to the City are justifiable; 1) Eliminates blight in a distressed downtown area; 2) Eliminates the potential hazards of health, safety, and general well-being of the community; 3) Creates a use of a portion of under- used land (approximate 10 years without a retail/commercial developemnt interest); 6) Creates needed subsidized elderly housing; 5) Creates pedestrian traffic for existing businesses; and 6) Enhances the Downtown Rehabilitation Project. 5. CONSIDERATION TO CHANGE THE HRA MEETING DATE/TIME. With mixed opinions to changing the HRA meetings from morning to evening, the HRA consensus was for the HRA Director to make a judgement call for meeting time based on the length of the agenda or time element of each agenda item. Guideline established was if over one hour agenda go to evening meeting. 6. REPORTS. Reports veto accepted by the HRA as written in the agenda supplement. Koropchak was asked to contact Floyd Markling as a pooaible elderly project developer. Jeff O'Neill reported that the Monticello Attitude Survey completed indicated in the age group of 55-60 and over, 852 were satisfied with their housing and were not considering moving. Fifteen percent were open to moving. It was suggested that Koropchak contact realtors with letter of our interest in high quality elderly housing close to downtown. Al Larson gave Koropchak a lead of a builder to contact. A question by the HRA mezbers was, Can the HRA buy land and hire a developer? 7. OTHER BUSINESS. Lovell Schrupp was asked to set a meeting with property owners: John Sandberg, Scott Douglas, Dennis Taylor, and Fred and Dorothy Topol regarding the realignment and upgrading of Block 51 alley. Ken Maus volunteered to chair the meeting and Koropchak will take minutes. This to be eat up within two weeks. 8. ADJOURNMENT. Everette Ellison made a motion to adjourn the HRA meeting, seconded by Al Larson. the HRA meeting adjourned at 9:00AM. 011ie Koropchak HRA Executive Secretary C HRA Agenda — 10/4/88 3. CONSIDERATION OF TAX INCREMENT FINANCING PROPOSAL TO ASSIST THE CITY OF MONTICELLO HOUSING AND REDEVELOPMENT AUTHORITY. A. REFERENCE AND BACKGROUND. The City Staff presents to the HRA a copy of the proposal and an agreement as prepared by Business Development Services, Inc. for URA consideration. Jeff O'Neill will explain to the HRA, the City Staff's rationale and need for Business Development Services, Inc. services. Mr. Pat Pelstring, Vice President of BDS, will review the proposal and agreement with the NRA. The HRA will need to consider execution of the agreement or deny execution of the agreement. B. ALTERNATIVE ACTIONS. 1. Execute the presented agreement by and between Business Development Services, Inc. and the City of Monticello Housing and Redevelopment Authority. 2. Deny the execution of the agreement by and between Business Develpment Services, Inc. and the City of Monticello Housing and Redevelopment Authority. C. STAFF RECOMMENDATION. City Staff will recommend the execution of the agreement as per the rationale and needs presented by Jeff O'Neill at the HRA meeting. D. SUPPORTING DATA. Copy of proposal and agreement. 4. UPDATE ON TAX INCREMENT REDEVELOPMENT DISTRICT 12 PROJECT. A. REFERENCE AND BACKGROUND. To be presented at meeting. Enclosed is a copy of Modification 03 for Tax Increment District /2. Jb",, , Businm Development Somvlass-L September 19, 1988 Mr. Jeff O'Neil Assistant City Administrator City of Monticello 250 East Broadway P.O. Box 83A Monticello, MN 55362 Dear Mr. O'Neil: Mike Mulrooney and I appreciated the opportunity to meet with you last week to discuss the City of Monticello's Tax Increment Financing program. Business Development Services, Inc. (BDS) wishes to offer this proposal to assist the Housing and Redevelopment Authority and the City of Monticello in its existing and future Tax Increment Financing efforts. TAX INCREMENT FINANCING CLIENTS Business Development Services, Inc. has an extensive amount of direct experience throughout the State of Minnesota in developing Tax Increment Financing programs. We offer our experience in working with the Cities of Vadnais Heights, Woodbury, Marshall, Montevideo, Baxter, Edgerton, Forest Lake, and White Bear Township as examples of our experience and innovative approaches to Tax Increment Financing. We pride ourselves in our ability to work with tax increment projects early in the process and identify methods which ultimately benefit both the community and the developer. Our firm is considered a leader in utilising developer paybacks, 'pay as you go' and loan/equity funding approaches to Tax Increment Financing. We are willing to take an active role in all facets of the pro- cess and would prefer to also be involved in the design of a community's program rather than on just a project -by -project basis. We strongly recommend that the community select competent legal counsel in addition to utilising our firm. We prefer to use this 'team approach,' combining the design, legal and fiscal expertise in the development of a community's tax increment program. 8900 SPIYN0BROW DM • sum 230 • MOg1O1PM MM WU • PMOW 619/7966131 Mr. Jeff O'Neil September 19, 1988 Page 2 PERSONNEL The expertise available through BDS is quite diverse, ranging from marketing to finance. Business Development Services would propose to utilize one of its principals, Patrick Pelstring, as the project manager, with technical support from Deborah Grams. The backgrounds and expertise of Mr. Pelstring and Ms. Grams is detailed in the enclosed information. TIF DEVELOPMENT PROPOSAL Representatives of our firm had the opportunity to meet and review the key Tax Increment Financing issues with the City and HRA's professional staff. We have also had the opportunity to review preliminary financial summaries and TIF plan information. This information has given us a basic understanding of the key issues associated with Monticello's existing Redevelopment Plan. It is our understanding that the initial Redevelopment Plan was established in November of 1982, and ie was subsequently modified in November of 1985. Within the Redevelopment District, the City K( has established seven separate Tax Increment Financing Districts. City staff raised several questions and requested our response. After review of the information and consultation with legal counsel, we suggest the followings 1. We feel that the HRA has established a Redevelopment District which would entitle the HRA to pool all existing Tax Increment Financing Districts with respect to debt service and future improvement projects. 2. The existing Redevelopment District could be expanded to include additional property within the City. All existing and subsequent Tax Increment Financing Districts' revenue could be shared as referenced in item number one. 3. Within the City's Redevelopment District, the HRA could establish either an economic development, redevelopment, soils condition, or housing tax increment financing districts. a. We would further recommend that no existing Tax Increment Financing Districts be modified or amended as they would immediately become subject to statutory changes that were made in June of 1988. Mr. Jeff O'Neil September 19, 1988 Page 3 t. These recommendations would suggest the need to modify the existing Redevelopment Plan into a *master project" document. This form of Tax Increment Financing plan appropriately integrates all of the existing and future TIF districts under the existing Redevelopment District. This will facilitate the appropriate *sharing" of revenues. i As an initial step in our proposal, we would recommend that our firm undertake three specific responsibilities. These would be as follows: 1. BDS will conduct a workshop to review the various options with the existing Housing and Redevelopment Authority and City staff and to develop overall policies and procedures for the HRA's Tax Increment Financing program. we anticipate that this review will require a minimum of two sessions with the HRA and would result in a clearly defined program and policy. 2. BDS will modify the existing Redevelopment Plan and Tax Increment Financing plane into a master project. The appropriate public hearing and notifications will have to be �I conducted as though it were a new TIP District. This will 1� provide the ability to share revenue between districts. 3. BDS will analyze existing bond documents, debt service requirements and financial forecasts and develop an integrated NRA cash flow summary. This will provide valuable information in the HRA's planning and budgeting efforts. FEES FOR SERVICES Business Development Services would envision establishing a long- term relationship with the Monticello Housing and Redevelopment Authority to assist with their Tax Increment Financing efforts. we wouldexact, that all fees for our services would be reim- Yursse�ihrH— CEi CTiy bona saes ass—oc rated with ttmax increment projects. we would propose that the initial phase, including the steps as outlined above, would be conducted on an hourly basis at the following rateso Senior Staff 875/Hour Technical Support Staff 865/Hour Mr. Jeff O'Neil September 19, 1988 Page 4 As future Tax Increment Financing Districts are established and development agreements negotiated, BDS would provide its services on a contingent basis, according to the schedule found in the enclosed contract. These fees represent standard contractual arrangements consistent with our existing contracts. SUMMARY We appreciate the opportunity to provide this proposal to the City of Monticello's Housing and Redevelopment Authority. Enclosed for your review are additional items including a draft contract, company profile, client list and professional staff resumes. We look forward to having Monticello as a valued client. Sincerely, US NESS DEVE P T ERVICES INC. Patrick W. Pelstring Vice President PWP/ld Enclosures 0uskm s Dswebpnront Samos: Inc. 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 _ day of September, 1988, by and between the Housing and Redevelopment Authority of the City of Monticello, a Minnesota Municipality, (hereinafter referred to as "City*), 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 programs and WHEREAS, the City has initiated its economic development program through its Housing and Redevelopment Authority and utilitee Tax Increment Financing as a key component of its economic development programs and WHEREAS, BOB 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. 8A90 SPRMOR008 DW 0 SUR14i0 0 MOWN& MM SSW 0 NOW 61QI7B&6131 NOW, THEREFORE, BASED UPON THE MUTUAL PROMISES AND CONSIDERATIONS CONTAINED HEREIN, THE PARTIES HERETO AGREE AS FOLLOWS: I. SCOPE OF SERVICES A. BOB will provide ongoing consultation services to the Housing and Redevelopment Authority and the City of Monticello to assist these agencies in the appropriate design of their economic development program. B. BDS will provide preliminary financial review, and analysis and recommendations for the structuring of specific TIF development proposals. C. BOB 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. D. BDS will assist in maintaining communications between City staff members and project developers utilising the City's TIP assistance. E. BOB will assist in the collection of the required technical and financial data, publication of required notices, dissemination of plans and related materials to other public agencies and review and confirmation of data with the City's bond counsel and fiscal con- sultant. -2- F. 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. G. BDS will monitor and assist in the collection of developer repayments, letters of credit and/or securities as required. H. Other duties related to the City's economic development program and TIF program as directed by the City and/or Housing and Redevelopment Authority. II. PAYMENT FOR SERVICES A. The City agrees to payment for services as described in Section I, as followsi 1. Onqoinq Consultation Services. The City agrees to compensate BDS at a rate of per hour, plus direct expenses for professional staff time and marketing activities devoted to the establishment and ongoing operation of the City's economic development program. T. Establishment of Tax Increment Financinq Proiects. a. For completion of data preparation, processing and certification of newly established or amended Tax Increment Financing District $7.850.00 -3- b. For the completion of specific development and assessment agreements S 850.00 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. B. Payment for ongoing consultation services shall be billed on a periodic basis and due within 30 days of Ireceipt. Payment for preparation of Tax Increment IFinancing Plans and Development and Assessment Agreements shall be tied to the ultimate bond sale(s) Iassociated with the TIP projects. III. ADDITIONAL PROVISIONS A. The City and SOS reserve the right to terminate this Agreement upon 60 days written notice. 1 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 Ipartners, 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 _d. 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. ACITY OF MONTICELLO HOUSING AND REDEVELOPMENT AUTHORITY ' BY ITS ' ATTEST ITS 1 1 BUSINESS DEVELOPMENT SERVICES INC. BY BY Michael J. Mulrooney, President Patrick W. Pelstring, Vice President -5- MODIFICATION 03 TAE INCREMENT FINANCE PLAN REDEVELOPMENT DISTRICT 02 I MODIFIED TAR INCREMENT FINANCE PLAN A. STATUTORY AUTHORITY The Monticello Housing and Redevelopment Authority (the "Authority") and the City of Monticello are authorized to modify the tax increment finance plan for Redevelopment District 02 pursuant to Minnesota Statutes, Section 273.74, Subdivision 4. B. STATEMENT OF OBJECTIVES 1) Provide opportunites for development and expansion of new business ; 2) Provide opportunites for growth of the tax base; 3) Eliminate blight or deterioration within an area; 4) Create a use for currently under-utilized land; 5) Provide needed subsidized elderly housing. C. DEVELOPMENT PROGRAM FOR THE PROJECT 1) Modification 03, the Housing and Redevelopment Authority will 1 acquire the Jones Manufacturing Company property, parcel 155-010- 051011, and will raze the existing blighted structure and; 2) Modification 03, the Housing and Redevelopment Authority will acquire the Monti Truck Repair property (raw land), parcel 155-010-051040 and; 3) Modification 03, the Housing and Redevelopment Authority will acquire the Ste lton Laundromat property, parcel 155-010-051050, and will rate the existing blighted structure and; 4) Modification 03, the Housing and Redevelopment Authority will convey the three above said parcels plus parcels 155-010-051010 and 155-010-031020 (Modification 02) to the developer, Broadway Square Limited Partnership, for construction of a 28 -unit subsidized elderly housing project. D. DEVELOPMENT ACTIVITIES A purchase agreement has been executed between Alvin and Shirley Jones. Jones Manufacturing Company, (the "Sollor") and the Housing and Re- development Authority (the "Buyer") for $57,000, inclusive of moving and relocation expenses ($5,000) for the property located 110 North Locust, Monticello, Minnosota. The HRA released earnest money of $10,000 with the remaining balance of $47,000 due at closing date, on or before March 1, 1989. Earnest money was a debit to the HRA General Fund. C 155-010-051010 Lot lexc Nly 30 ft Block 51 155-010-051011 Nly 30 ft of Lots 1 b 2 d Nly 30 ft of W 24 ft of Lt 3. Also S 15 ft of Lot 15. Block 51 155-010-051020 Lt 2 exc Nly 30 ft b Lt 3 exc Nly 30 ft of W24ft&W71/2 ft of Lot 4. Block 51 155-010-051040 E 25 1/2 ft of Lot 4 & W 5 1/2 ft Lot 5, Block 51 155-010-050111 S 1/2 of Lots 11 6 12, Block 50, Original Plat 155-010-051050 Lot 5, Block 51, exc W 5 1/2 ft (50Mis-92) Original Plat 155-010-051111 Lots 11 b 12. Block 51, eac S 65 ft and exc tr sesc in Bk 266-795 Original Plat 155-010-051130 Lots 13, 14, b Nly 150 ft of Lot 15, Block 51. Original Plat F. CLASSIFICATION OF THE TAR INCREMENT FINANCING DISTRICT < The tax incrememnt financing district established within the area designated as the Central Monticello Redevelopment Areae is classified as a Redevelopment District. The property included in the district is as follows: (by PIN) a. 155-010-050010 (City of Monticello) b. 155-010-050011 (Culp) c. 155-010-050081 (Metcalf 6 Larson) d. 155-010-050101 (City of Monticello) o. 155-010-050100 (Broadway Partners) f. 155-010-051010 (Monticollo Housing and Redevelopment Authority) g. 155-010-051011 (Jonas) h. 155-010-051020 (Monticello Housing and Redevelopment Authority) J. 155-010-051040 (O'Connor) J. 155-010-050111 (Hollenback) k. 155-010-051050 (Stalton) 1. 155-010-051111 (Gustafson) m. 155-010-051130 (River Park View) G. ESTIMATE OF COSTS The estimate of public coats associated with the modified tax increment finance plan aro as follows: BUDGET Jones Acquisition Proper ty 3 52,000 Moving and Reloction Exp. 5,000 Demolition 5,000 O'Connor Acquisition Property (Raw Land) $ 50,000 Moving and Relocation Exp. 5,000 Stelton Acquisition Property $ 60,000 Moving and Relocation Exp. 5,000 Demolition 5,000 Old Ford Garage (Recover cost) Contract for Deed (pay off) $ 50,000 Interest Paid (6/88, 12/88, 6/89) 6,716 Demoli t ion 6.500 Administrative 2,000 Assessments 980 Downpayment 25,000 Modification /3 Administrative 10,954 Bond Discount 11,250 Plan Modification 2,500 Bond Issuance 12,000 Capitalized Interest (24mos) 48,100 TOTAL PROJECT COST $363,000 LESS FmRA 58,000 LESS Bond Issuance 260,000 REMAINING BALANCE $ 45,000 H. ESTIMATED AMOUNT OF BONDED INDEBTEDNESS An estimate of the maximum amount of bonded indebtedness is expected to be $260,000, estimated annual debt service of $30,193.80. The maximun term of the issue is 18 years, and the interest rate is expected to be 9.25 percent. The capitalized interest amount for approximately 24 months is catdmatod to be $48,100. The difference between the project cost ($363.000). the bond indebtedness ($260,000), and the Farmare Homo Administration Funding ($58,000) is $45.000. Bond sale Spring of 1989. I. SOURCE OF REVENUE This three sources of revenue used to finance public costs aso6ciated with the public dov elopmont projects in the redevelopment project aro $58,000 Farmers Home Administration Funding, $45,000 Monticello Housing and Redevelopment Authority 1989 Tax Levy, and the tax increment generated 48a result of the taxation of the land and building expansion in the Ij tox inc rament financing redevelopment district. Tax increment financing refers to a funding technique that utilises increases in assessed valuation and the property taxes attributed to now development to finance, or assist in the financing of public development costs. The improvements to the land acquired by the Broadway Square Limited Partnership and the previous improvements of Redevelopment District 02 are expected to generate an average annual tax lacrement of $36,084.81 payable in year 1991. The estimated annual tax increment is sufficient to retire the annual bond debt service of $30,193.80 plus Metcalf and Larson Securities annual debt service of $4,285.00. Duration of the District Life is 2010. J. ORIGINAL ASSESSED VALUE Pursuant to Minnesota Statutes 273.74, Subdivision I, and 273.76, Subdivision 1, the Original Assessed Value as modified for the Revelopment District 62 and certified by the County Auditor of Wright County on the 2nd day of January, 1988. This value is a total of $87,783.00. Individual parcel assessed values are as follows: PARCEL ASSESSED VALUE 155-010-050010 EXEMPT 155-010-050011 $ 9,860 155-010-050081 $13,574 155-010-050100 $10,536 155-010-050101 EXEMPT 155-010-050111 $ 8,960 155-010-051010 EXEMPT 155-010-051011 $12,070 155-01x051020 EXEMPT 155-010-051040 $ 6,630 155-010-051050 $10,276 155-010-051111 $ 6,271 155-010-051130 $ 9,600 Each year the Office of the County Auditor will measure the amount of increase or decrease in the total assessed value of the tax increment Redevelopment District to calculate the tax increment payable to the Monticello HRA. Each year the County Auditor shall also add to the original assessed value of the Redevelopment District an amount equal to the original assessed value for the preceding year multiplied by the average increase in the assessed valuation of all property included in the Redevelopment District during the five years prior to district certification. In any year in which there is an increase in total assessed valuation in the tax increment Redevelopment District above the annual percentage increase, a tax increment will be payable. In any year in which the total assessed valuation in the tax increment Redevelopment District is less than the original assessed value, no assessed valuation will be captured and no tax increment will be payable. The County Auditor shall certify in each year after the date the original assessed value was certified, the amount the OAV has increased or decreased as a result of any of the following: 1) Change in tax exempt status of property; 2) Alteration of the geographic boundaries of the district; 3) Change due to stipulations, adjustments, negotiated or court ordered abatements. K. ESTIMATED CAPTURED ASSESSED VALUE Pursuant to Minnesota Statutes 273.74, Subdivision 1 and 273.76, Subdivision 2, the estimated Captured Assessed Value (CAV) of the tax increment Redevlopment District will be $369,138.00. Changes in assessed values are shown in Exhibit A. The City of Monticello requests 1002 of the available increase in assessed value commencing in 1990 for taxes payable in 1991 be captured for repayment of debt and currant expenditures. L. DURATION OF THE DISTRICT The City of Monticello expecte to terminate the Monticello Tax Increment Redevelopment District 02 on January 2, 2010. The 25 year duration of the district is based on the ability of the City to collect tax increments for 25 years commencing in 1985 and ending in 2010. M. ESTIMATED IMPACT ON OTHER TARING JURISDICTIONS The impact of the lose of tax dollars represented as tax increments is estimated below for each taxing jurisdiction. This estimate to based on the existing redevelopment proposals and does not include the possible tax increments derived from any other future developments, mill changes, or inflation factors. Total Asneeoed Value Tax increment Finance District 1/2/88 Total 187,022 LATEST ASSESSED VALUE OF EACH GOVERNMENT BODY: 2 of District to Total Wright County 1407,743,709 .021 School District 0882 $140. 784,4 33 .Obi City of Monticello 1114,339,670 .076 Other 1190,334,664 .045 Considering all the districts, it can be seen from the above that the school city, and country districts will have over 992 of each respective district available for normal growth of tax base or valuation. Applying the percentage of the total mill rate in 1988 levied by each taxing jurisdiction to the projected mill rate and the estimated tax increment received reveals the annual loss of tax dollars by each taxing jurisdiction as listed in the table below assuming development would occur without public assistance. The modified finance plan indicates we anticipate a tax increment at build out as follows: Captured Assessed Estimated Tax Valuation Increment Received Tax Increment Finance District $369,138 $36,084 Based on the current mill rate, the estimated taxes received would be as follows for the taxing bodies: Mills percent Tax Increment City 15.932 16.28 $ 5,874 Wright County 22.728 23.22 $ 8,379 School District 0882 55.069 56.26 $20,301 Hospital District 4.147 4.24 $ 1,530 Total 97.876 100.00 $36,084 'r The following table represents the additional mills that would have to be levied to compensate for the lose of tax dollars in estimated tax increments for each taxing jurisdiction. The tax increments derived from the total Redevelopment District 02 improvements alluded to in the tax increment district would not be available to any of the taxing jurisdictions were it not for public intervention by the City. Although the increases in assessed value due to development will not be available for the application of the mill levy for the duration of the tax increment financing district, this new assessed value could eventually permit a mill levy decrease. If it could be assumed that the captured assessed value was available for each taxing jurisdiction, the non-recaipt of tax dollars represented as tax increments may be determined. This determination is facilitated by estimating how much the mill levy for property outside of the tax increment financing district would have to be increased to raise the same amount of tax dollars in each taxing jurisdiction that would be available if the projects occurred without the assistance of the City. Adjusted* Required Tax Assessed Value Mille Increment Wright County $407,656,687 .02 $ 8,379 School District 0882 $140,687,411 .14 $20,301 City of Monticello $114,252,648 .05 $ 5.874 Hospital District $190,247,642 .00 $ 1,530 e Tax Increment District assessed valuation subtracted N. ASSUMPTIONS It was necessary in the preparation of this plan to make certain assumptions regarding income, costa, and timing of the redevelopment district. These assumptions are listed below: 1. Income a. Original Market and Assessed Valuation of Tax Increment District 02 (provided by office of County Assessor). Market Value (1988) $1,464,600 Assessed Value (1988) $346,474 b. New Market and Assessed Valuation of Tax Increment District 02 (provided by office of the City and County Assessor). Market Value ;1,967,247.00* Assessed Value $456,160.00 Leas OAV $ 87.022.00** Total CAV $369.138.00 Leas Credits $ 456.13 $368,678.87 1988 [sill Rate .097876 Annual Tax Increment $ 36,084.81 Redevelopment District 12 Annual Debt Service Metcalf and Larson Securities $ 4,285.00 1989 Bond Issuance 130,193.80 Total Annual Debt Service $34,478.80 * Market Value docrc►ase for subsidized apartment unite from $27,500 to $24,500. *• 28,215 aQ ft considered vacant land at time of land conveyance from MRA t o developer. (after demolition) IN 14 EXHIBIT A O OAV NAV 155-010-050010 Exempt Exempt 155-010-050011 S 9,860 $ 14,420 155-010-050081 $13.574 $ 15,904 155-010-050100 $10.536 1 73,775 155-010-050101 Exempt Exempt 155-010-050111 $ 8,960 $ 9,548 155-010-051010 $ 4.455 155-010-051011 $ 3.690 155-010-051020 $10.418 155-010-051040 $ 5.115 155-010-051050 $ 4,537 $161,182 155-010-051111 $ 6.277 S 6,171 155-010-051130 9,600 $175,160 TOTALS $87,022 $456,160 O