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HRA Agenda 04-03-1987AGENDA MONTICELLO HOUSING AND REDEVELOPMENT AUTHORITY Monday, April 20, 1987 - 9:00 AM Monticello Council Chamber Members: Acting Chair Bud Schrupp, Ken Maus, Ben Smith, Marlys Erickson, and Al Larson. 1. Call To Order. 2. Approval of the April 3, 1987 HRA Minutes. 3. Public Hearing on the Disposition of Public Land for Construction Five Tax Increment District 05. 4. Consideration of the HRA to Execute a Quit Claim Deed for Construction Five Tax Increment District 05. 5. Consideration of a Resolution Authorizing the Execution of a Tax Increment Pledge Agreement for Construction Five. 6. Other Business. 7. Adjournment. AGENDA MONTICELLO HOUSING AND REDEVELOPMENT AUTHORITY Friday, April 3, 1987 - 9:OOAM Monticello Council Chamber Members: Acting Chairperson Bud Schrupp, Ken Maus, Ben Smith, Marlys Erickson, and Al Larson. 1. Call To Order. 2. Approval Of The February 4, 1987 HRA Minutes. 3. Public Hearing On The Disposition Of Public Lands For Construction Five Tax Increment District /5. 4. Consideration Of The HRA To Execute A Quit Claim Deed For Construction Five Tax Increment District 05. 5. Consideration Of Concept Approval And The Use Of Tax Increment Financing for HAWCO Minnesota, Inc. 6. Other Business. 7. Adjournment. MINUTES MONTICELLO HOUSING AND REDEVELOPMENT AUTHORITY Wednesday, February 4, 1987 - 7:OOAM City Hall Members Present: Acting Chairperson Bud Schrupp, Ben Smith, Marlys Erickson, and Ken Maus. 1. Call To Order. Acting Chairperson Bud Schrupp called the BRA meeting to order at 7:05AM. 2. Approval of the January 7, 19871 HRA Minutes. Ben Smith motioned to approve the January 7, 1987 HRA minutes, seconded by Marlys Erickson. The motion carried unanimously. 3. Consideration for the Monticello HRA to Adopt Construction Five's Development Agreement. Construction Five proposes to build one 24 -unit apartment building and one 30 -unit apartment building on Lots 1,2,3, 4,and 5, Block 1, Construction Five Addition. Tax Increment District /5 was created to subsidise the cost of public improvement along Fallon Drive, Lauring Lane, and Washington Street. City staff recommends a minimal assessment for �a water and sever against the owners of the Malone property and Rand property is justifiable. The HRA inquired about the City's contact with the said property owners. Koropchak replied that as of the last City Council meeting, January 26, 1987, there had been no negotiations. Koropchak explained the Development Agreement in theory and reiterated the benefits of the project. With the Developer's Agreement between Construction Five and the HRA for Tax Increment District /5, prepared by Holmes 6 Graven, available at the meeting, the HRA continued to support the project. Ben Smith motioned for the HRA to adopt Construction Five's Development Agreement. Seconded by Marlys Erickson, the motion passed unanimously. 4, Consideration to Solect/Approve an HRA Member for Recom- mendation to the Citv Council. Koropchak reported to the HRA members that she had con- tacted Linda Smith for a passible HRA membership nominee, however,she declined at this time. Al Larson and Dr. C. McCarty accepted nomination for HRA membership. The HRA members had no problems with either nominee, therefore, based their recommendation of Al Larson because of his years of participation in the community (business owner) and now a resident of Monticello. Ken Maus motioned to recommend Al Larson, owner of Coast to Coast, for HRA membership. This recommendation to be made to the City Mayor for appointment and ratification by the City Council. The said term expires December, 1988. Ban Smith seconded the motion and the motion passed 4-0. 5. Other Business. ` NAWCO Minnesota, Inc. - Ken Maus inquired about the Norwegian's timetable. Koropchak reported the R -window company is looking at a fall construction completion with machinery and equipment installation completed and a plant operation start-up of January, 1988. Metcalf/Larson Project - The NRA recommended that I advice Metcalf/Larson to proceed with negotiations for the purchase of properties (O'Connor, Flake, Jones, Stelton and/or Topel's shed). Also, stating BRA's interest to part- icipate in the project with the use of Tax Increment Finance, if TIF is still a usable tool by Law. Low -Level Radioactive Waste (LLRW) Disposal Facility - The RRA recognized the project as a controversial issue, but agreed the City should proceed with interest for consideration as a possible site location. BSA Financial Toole - Koropchak reported on alternative financial tools used by other communities, based on concerns for Monticello's future. Ken Maus suggested the City complete the necessary legal work to subdivide the recently acquired lot or lots in the Oakwood Industrial Park. Thereby, meeting the need and allowing time for appropriation of costa into the City's budget. (Cost for public improvements). The NRA can foresee the m possibility to use the deferral of property taxes as an incentive for economic development with the major criteria based on number of jobs created by a firm. The statis of the IKI building was briefly discussed. Ken Maus recommended inquiry into the statis or plans for the Ken Stoke's property (auto repair), west of the Post Office. The next regular NRA meeting will be held Wednesday, March 11, 1987. 6. Adjournment. Ben Smith motioned to adjourn the NRA meeting, seconded by Ken Maus. The meeting adjourned. Olive M. Koropchak NRA Executive Secretary and Director HRA Agenda - 4/3/81 3. PUBLIC HEARING ON THE DISPOSITION OF PUBLIC LAND FOR CONSTRUCTION FIVE TAR INCREMENT DISTRICT /5. A. REFERENCE AND BACKGROUND. Construction Five started preliminary construction on the proposed 24 -unit apartment building and 30 -unit apartment building on April 1, 1987. Legal property description: Lots 1-5, Block 1, Construction Five Addition, City of Monticello. The HRA adopted the Tax Increment District /5 Development Agreement with Construction Five on February 4, 1987. At the March 23, 1987, City Council meeting, the council accepted the low bid from S 6 L Excavating for the construction of public improvements in Construction Five Subdivision. Due to the low bid, the budget for the Tax Increment Financing project was reduced from $530,000.00 to $365,000.00. The City Council adopted a resolution setting the sale of Tax Increment Finance Bonds for Improvements in the Construction Five Addition. Jerry Shannon, Springsted, Inc., recommended the sale of a $365,000.00 G.O. Tax Increment Bonds. The final bond bids for the award of sale is scheduled for the April 27, 1987 City Council meeting. Public improvements for the said project include water and sewer, streets, curb and gutter along Lauring Lane, Fallon Drive, and Washington Street. Upon the advice of Mr. Bob Deike, Development Agreement Attorney for Holmes 6 Graven, the HRA should execute a t Quit Claim Dead for the acquisition and reconvoyance of Lot 1-5, Block 1, Construction Five Addition, City of Monticello to Construction Five. This a security measure for the HRA. The Quit Claim Deed's provision states that Construction Five cannot sell the said above property during the construction period and that construction of the two proposed said apartment buildings will be completed in 1987. Second, the Minnesota Statutory states that before a market value can legally be assigned to said land and improvmants by the County Assessor, a Quit Claim Deed need be executed between the "Grantor" and the "Grantee". The consideration of One Dollar ($1.00) hereby will acknowledge the acquistion and reconvoyance of said property from the HRA to Construction Five. The County Assessor assigned a 1.5 million dollar market value to the said land and improvmonts. According to Minnesota Statutory a public hearing must be held on the disposition of public land. This being the purpose for the said public hearing. Bain& a public hearing, there really are no alternative actions. The hearing should be oponod, testimony accepted, and the hearing closed. Other decisions will follow. C NOTICE OF PUBLIC HEARING DISPOSITION OF PUBLIC LANDS Notice is hereby given that a public hearing will be held at 9 o'clock A.M. on Friday, April 3, 1987, the Monticello City Council Chambers, 250 East Broadway, Monticello, Minnesota, 55362, for the purpose of accepting comment on 'the proposed acquisition and subsequent reconveyance by the Housing and Redevelopment Authority to Construction Five, a Minnesota Corporation, of the following property: Lots 1-5, Block 1, Construction Five Addition, City of Monticello. The proposed sale is part of the HRA Redevelopment Plan and is already included in Tax Increment District No. 5. Anyone wishing to submit written comments should submit said comments to the office of the City Administrator no later than 9:00 A.M., Friday, April 3, 1987. Olive M. Koropchak Executive Secretary V Monticello Housing and Redevelopment Authority HRA Agenda - 4/3/87 % 4. CONSIDERATION OF THE HRA TO EXECUTE A 4UIT CLAIM DEED FOR CONSTRUCTION FIVE TAX INCREMENT DISTRICT 05. A. REFERENCE AND BACKGROUND. With the assumption that the public hearing (agenda item 03) was opened, not contested, and closed; the HRA can proceed with the consideration to execute the Quit Claim Deed. Necessary reference and background information was provided with the public hearing supplement. Based on the recommend- ations from Holmes 6 Graven, the City Staff recommends the following. B. ALTERNATIVE ACTIONS. 1. The HRA adopt the execution of a Quit Claim Deed between the HRA and Construction Five. 2. The HRA not adopt the execution of a Quit Claim Deed between the HRA and Construction Five. C. STAFF RECOMMENDATION. City Staff recommends the HRA adopt the execution of a Quit Claim Deed between the HRA and Construction Five; inorder, to abide by the Minnesota Statutory and to secure the HRA on the provisions provided in the Quit Claim Deed. D. SUPPORTING DATA. Copy of the Quit Claim Deed. and for created SCHEDULE B QUIT CLAIM DEED VS INDENTURE, between The Housing and Redevelopment Authority In the City of Monticello, Minnesota, a public body corporate and politic pursuant to the Laws of Minnesota (the "Grantor'), and , a Minnesota (the "Grantee'). WITNESSETH, that Grantor, in consideration of the sum of Dollars (S_) the receipt whereof is hereby acknowledged, does hereby grant, bargain. quitclaim and convey to the Grantee, its successors and assigns forever, all the tract or parcel of land lying and being in the County of Wright and State of Minnesota described as follows, to -wit (such tract or parcel of land is hereinafter referred to as the "Property'): LEGAL DESCRIPTION To have and to hold the same, together with all the hereditaments and appurtenances thereunto belonging In anywise appertaining, to the said Grantee, Its successors and assigns, forever, Provided: SECTION 1. It is understood and agreed that this Deed is subject to the covenants, conditions. restrictions and provisions of an agreement entered Into between the Grantor and Grantee on the day of , _, identified as "Contract for Private Redevelopment" (hereafter referred to as the "Agreement") and that the Grantee shall not convey this Property, or any part thereof, without the consent of the Grantor until a certificate of completion releasing the Grantee from certain obligations of sold Agreement as to this Property or such part thereof then to be conveyed, has been placed of record. This provision, however, shall In no way prevent the Grantee from mortgaging this Property in order to obtain funds for the purchase of Property hereby conveyed and for erecting Improvements thereon In conformity with the Agreement, any applicable redevelopment plan and applicable provisions of the Zoning Ordinance of the City of Monticello, Minnesota. It is specifically agreed that the Grantee shall promptly begin and diligently r ute to completion the redevelopment of the Property through the uction of the Improvements thereon, as provided in the Agreement. Promptly after completion of the Improvements In accordance with the provisions of the Agreement, the Grantor will furnish the Grantee with an appropriate instrument so certifying. Such certification by the Grantor shall be (and it shall be so provided in the certification Itself) a conclusive determination of satisfaction and termination of the agreements and covenants of the Agreement and of this Deed with respect to the obligation of the Grantee, and its successors and assigns, to construct the improvements and the dates for the beginning and completion thereof. Such certification and such determination shall not constitute evidence of compliance with or satisfaction of any obligation of the Grantee to any holder of a mortgage, or any Insurer of a mortgage, securing money loaned to finance the purchase of the Property hereby conveyed or the improvements, or any part thereof. All certifications provided for herein shall be in such form as will enable them to be recorded with the County Recorder, or Registrar of Titles, Wright County, Minnesota. if the Grantor shall refuse or fall to provide any such certification in accordance with the provisions of the Agreement and this Deed, the Grantor shall, within thirty (30) days after written request by the Grantee, provide the Grantee with a written statement indicating in adequate detail in what respects the Grantee has failed to complete the improvements in accordance with the provisions of the Agreement or is otherwise in default, and what measures or acts It will be necessary, in the opinion of the Grantor, for the Grantee to take or perform In order to obtain such certification. SECTION 1. In the event the Grantee herein shall, prior to the recording of the certificate of completion, hereinabove referred to: (a) Pell to begin construction of the improvements provided for In this Deed and the Agreement in conformity with the Agreement and such failure Is not due to unavoidable delays (as defined in the Agreement) and such failure Is not cured within thirty (30) days after written notice to do sot or (b) Default in or violate Its obligations with respect to the construction of the Improvements provided for In this Deed and the Agreement, or shall abandon or substantially suspend construction work, and such default, violation or failure is not due to unavoidable delays (as defined In the Agreement), and any default or violation, abandonment or suspension shall not be cured, ended or remedied within thirty (30) days after written demand by the Grantor so to dol or (e) Pail to pay real estate taxes or assessments on the Property or any part thereof when due, or &hall place thereon any encumbrance or lien unauthorized by the Agreement with the Grantor, or &hall suffer any levy or attachment to be made, or any materlalmen's or mechanic's liens, or any other unauthorized encumbrances or liens to attach, and such taxes or assessments shall not have been paid or the encumbrance or lien removed or discharged, or provisions satisfactory to the Grantor made for such payments, removal or discharge, within thirty (30) days after written demand by the Grantor so to do provided, that If the Redeveloper shall first notify the Authority of its intention to do so, it may In good faith contest any mechanics' or other lien filed or established and in such event the Authority shall permit such mechanics' or other lien to remain undischarged and unsatisfied during the period of such contest and any appeal, but only if the Redeveloper provides the Authority with a bank letter of credit In the amount of the lien, in a form satisfactory to the Authority pursuant to which the bank will pay to the Authority the amount of any lien in the event that the lien is finally determined to be valid and during the course of such contest the Redeveloper shall keep the Authority informed respecting the status of such defense; or (d) Cause in violation of the Agreement or of this Deed, any transfer of the Property or any part thereof, or any change in the ownership or distribution of the Grantee, or with respect to the identity of the parties In control of the Grantee or the degree thereof, and such violation shall not be cured within sixty (60) days after written demand by the Grantor to the Grantee; or (e) Fail to comply with any of its covenants under the Agreement and falls to cure any such noncompliance within thirty (30) days after written demand to do sol or (f) Default under the terms of a mortgage loan authorized by Article VII of the Agreement and the holder of the mortgage exercises any remedy provided by the mortgage documents or exercises any remedy provided by law or equity in the event of a default in any of the terms or conditions of the mortgage; then the Grantor shall have the right to re-enter and take possession of the Property and to terminate and revest In the Grantor the estate conveyed by this Deed to the Grantee, Its assigns or successors In Interest, but only If the events stated In Section 2(aHf) have not been cured within the time periods provided above, or If the events cannot be cured within such time periods, the Redeveloper does not provide assurances to the Authority, reasonably satisfactory to the Authority, that the events will be cured and will be cured as soon as reasonably possible. SECTION 3. The Grantee agrees for Itself and Its successors and assigns to or of the Property or any part thereof, hereinbefore described, that the Grantee and such successors and assigns shall: (a) Devote the Property to, and only to and in accordance with the uses specified In any applicable redevelopment plan as amended and extendedl (b) Not discriminate on the basis of race, color, creed, national origin, or sex In the sale, lease, rental, or in the use or occupancy of the Property or any Improvements erected or to be erected thereon, or any part thereof, (c) Not cause the Property to be removed from the public tax rolls or to become exempt from assessment for general real estate taxes by reason of any conveyance, lease, abatement, or other action so long as tax increment generated by the Property is pledged to the payment of the principal of and Interest due on outstanding bonds or other obligations; and (d) Not apply for or seek through administrative or judicial proceedings a reduction in real property taxes but only if such reduction would reduce taxes to an amount below the amount needed to pay the principal and Interest due on the bonds or obligations for which tax increment generated by the Property is pledged. It is intended and agreed that the above and foregoing agreements and covenants shall be covenants running with the land, and that they shall, In any event, and without regard to technical classification or designation, legal or otherwise, and except only as otherwise specifically provided In this Deed, be binding, to the fullest extent permitted by law and equity for the benefit and In favor of, and enforceable by, the Grantor, Its successors and assigns, and any successor in interest to the Property, or any part thereof against the Grantee, Its successors and assigns, and every successor in interest to the Property, or any part thereof or any interest therein, and any party in possession or occupancy of the Property or any part thereof. In amplification, and not in restriction of, the provisions of the preceding section, it is Intended and agreed that the Grantor and Its successors and assigns shall be deemed beneficiaries of the agreements and covenants provided herein, both for and In their own right, and also for the purposes of protecting the interest of the community and the other parties, public or private. In whose favor or for whose benefit these agreements and covenants have been provided. Such agreements and covenants shall run In favor of the Grantor without regard to whether the Grantor has at any time been, remains, or Is an owner of any land or Interest therein to, or In favor of, which such agreements and covenants relate. The Grantor shall have the right, in the event of any breach of any such agreement or covenant to exercise all the rights and remedies, and to maintain any actions or suite at law or In equity or other proper proceedings to enforce the curing of such breach of agreement or covenant, to which it or any other beneficiaries of such agreement or covenant may bre entitled. SECTION 4. This Decd is also given subject tot (a) Covenants, conditions and restrictions contained In the Monticello Redevelopment Project Plan, as amended as of the date of the Agreement. (b) Provision of the ordinances, building and zoning laws of the City of Monticello, state and federal laws and regulations In so far as they affect this real estate. (c) Taxes payable subsequent to the date of this conveyance. IN WITNESS WHEREOF, the Grantor has caused this Deed to be duly e --uteri In its behalf by its and and has caused Its corporate seal to be hereunto affixed this day of , 188_. THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF MONTICELLO BY By STATE OF MINNESOTA ) as. COUNTY OF ) Its Its On this day of , 188_, before me, a notary public within and for County, personally appeared and to me personally known who by me duly sworn, did say that they are the and of the Hcusing and Redevelopment Authority in and for the City of ("Authority') named in the foregoing Instrument; that the seal affixed to said instrument is the seal of said Authority; that said Instrument was signed and sealed on behalf of said Authority pursuant to a resolution of Its Board of Commissioners; and said and acknowledged said instrument to be the free act and deed of said Authority. Notary Public This instrument was drafted byu Holmes & Graven, Chartered 470 Pillsbury Center Minneapolis, Minnesota 88402. HRA Agenda - 4/3/87 CONSIDERATION OF CONCEPT APPROVAL AND THE USE OF TAX INCREMENT FINANCING FOR NAWCO MINNESOTA, INC. A. REFERENCE AND BACKGROUND. In February of 1986, I met the Board of Directors for Det Scandinaviske Vinduscompaniet A/S; Odd Jdrgensen. Erik Fjerdingstad, and Roald Starheim. The DSV is the Norwegian holding company for the incorporated North American Window Company, of which NAWCO Minnesota, Inc. is a subsidiary. The Board of Directos traveled to Minnesota and Monticello on several occasions this past year. Their product being windows and doors designed with the H -window concept has been tested positively with the Twin City Testing Company, St. Paul, MN and with C. J. Olson Marketing/Research Firm, Minneapolis, MN. The company specializes in an aluminun clad, high energy efficient window which features the H -window, concept of an 180° turn for easy cleaning from within. In Norway, the window is produced in 45 different colors. Their initial market area will be Minnesota for new construction and renovations. Their legal counsel firm is Faegre and Benson, Minneapolis, MN. The twelve shareholders visited Monticello in October of 1986, and made their final decision to locate in Monticello and to proceed with plans for a U. S. expansion in December. City Staff has worked with Erik Fjerdingstad and Roald Starheim to secure raw materials, business formation information, and financing. The Minnesota Trade Office and Minn DEED have also been a part of the project. At this time, NAWCO Minnesota. Inc. has offically received a positive response from the Norwegian Industrial Fund to complete the finance package. The City of Monticello has always incanted to use Tax Increment Financing for the purpose of writing down the land cost. Also, the City will apply for a Minnesota Small City Economic Grant through Minn DEED for $250,000.00. Of the total estimated project cost (3.2 million dollars) the shareholders will finance one-half the project (1.6 million dollars plus an additional $800,000.00 for market backup). The proposed project includes a 25,000 sq. ft, manufacturing facility with an attached 3,400 sq. ft. office . showcase, conference facility for a total of 28,400 sq. ft. The proposed site is Lots 11 and 12, Block 2. Oakwood Industrial Park, City of Monticello. Plans call for the construction of the facility on Lot 12 with Lot 11 for future expansion. Plans call for the facility to be operational the beginning of 1988, with an initial employment of 20. Erik , his wife, and their three children will move to Monticello this July. The Fjerdingstod's are building a home in the Meadow Oaks Addition. Prolminiary estimates for the building is $602.000.00 and for the land. $105,000.00 for a total of $707,000.00. Estimated tax increment, $24,800.00. Erik and Roald will meet with Viet Construction and Winkelman Building Corporation on Monday, April 6, 1987. On Tuesday, April 7. 1987, they will moot with Dave Paterson, Minn DEED Finance Consultant, Mayor Graimso, City Administrator Tom Eidom, Banker Dale Lungwitc, HRA Agenda - 4/3/87 and myself. B. ALTERNATIVE ACTIONS. 1. Approve proposed concept authorizing setting an HRA public hearing to approve TIF Plan and requesting the City Council to set a public hearing on the TIF Plan. 2. Do not approve the proposed concept and investigate the tax increment finance further. C. STAFF RECOMMENDATION. Staff recommends giving concept approval and giving staff the ability to proceed with the prospect to insure meeting a time schedule. The City has on record their Fineance Plan and Business Plan which includes projections, financial atatements, and marketing strategies, however, upon arrival this Sunday, the total project cost may have changed. The City Staff recognizes the competiton of large window producing companies in Minnesota but feel the specialized features of the H -window concept and the commitment of the parent Norwegian companies to invest their monies in the United States emphasizes the confidence they have in their product. D. SUPPORTING DATA. Proposed site location. MONTICELLO I�1 i ns;a: ti• _ 1■:f � GiY R�'w t