HRA Agenda 09-02-1987AGENDA
MONTICELLO HOUSING AND REDEVELOPMENT AUTHORITY
(� Wednesday, September 2, 1987 - 7:OOAM
City Hall
Members: Bud Schrupp, Ren Maus, Ben Smith, Al Larson, and
Everette Ellison.
1. Call to Order.
2. Approval of the August 5, 1987 HRA Minutes.
3. HRA Welcomes Everette Ellison as a New Member of the HRA.
4. Consideration to Modify the Finance Plan for Tax Increment
Redevelopment District #6.
5. Consideration to Review Other Community's Estimated Market
Values and to Review School District #882 Budget.
6. Reports: Monticello Ford, Inc.
Downtown Rehabilitation
Revolving Loan Fund
7. Other Business.
B. Adjournment.
1-4
MINUTES
MONTICELLO HOUSING AND REDEVELOPMENT AUTHORITY
Wednesday, August 5, 1987 - 7:00 AM
City Hall
Members Present: Acting Chairperson Bud Schrupp, Ken Maus, Ben
Smith, and Al Larson.
1. Call to Order.
Acting Chair Bud Schrupp called the HRA meeting to order at
7:10AM.
2. Approval of the July 1, 1987 HRA Minutes.
Ben Smith made a motion to approve the July 1, 1987 HRA minutes,
seconded by Ken Maus. Minutes stand approved.
3. Consideration to Finalize the Purchase of the Old Monticello
Ford Property.
Having negotiated a $75,000 Contract for Deed with Lawence
Flake, President of Monticello Ford, Inc. and upon review
of the contingencies by City Attorney Pringle, he added the
Buyer has the right of prepayment privileges, without penalty,
on the Contract for Deed payment schedule. Mr. Flake was
willing to agree if he received the total of six months interest
within the period the total payment of the Contract for Deed
was made. City staff pointed out the most the HRA would be
out is 12,500.00; however, the city staff said they would back
a whatever decision the HRA made. After some discussion by the
HRA members and Al Larson's concern of the HRA setting a precedent
for surrounding property owners a motion was made by Al Larson
for the HRA to accept the 175.000 Contract for Deed with prepayment
privileges, without penalty, seconded by Ken Maus. The motion
carried 4-0.
4. Consideration to Amend Tax Increment District 02 Finance Plan.
Based on the assumption that the purchase agreement will be
oxocuted by the HRA and by Monticello Ford, Inc., President
Lawrence Flake, the HRA proceeded to adopt the resolution for
Modification 02 of the finance plan for Tax Increment Rodavol-
opment District 02 and requested the City Council to set a public
hearing date for the purpose to modify the finance plan. The
motion adopting the resolution was made by Ken Maus, seconded
by Ban Smith, and carried 4-0. The estimated modified budget
for the finance plan was presented to the HRA to conform with
the Minnesota Statute, Section 273.74, Subdivision 4, Modification
of Finance Plan.
5. Consideration of the HRA to Endorse a Section 8 HouainR Assistance.
The HRA reviewed the Section 8 Housing Assistance Program which
states the tenant's share of monthly rent will be up to 301 of
monthly household income. HUD pays the balance of the rent, the
difference between the tenant's share and tha fair market rent
of the unit as determined by HUD. The program encourages low-income
housing whatever guidelines are agreed upon between qualified
tenants and landlords. The HRA stipulated they would consider
the program after an indication of a need for additional low-income
HRA Minutes - 8/5/87
housing in Monticello and would not consider the program for
the purpose of an incentive for a potential buyer of any local
property.
6. Comparison of Local Property Estimated Market Values and Assessed
Values.
It was of the opinion of the HRA that the City used poor judgement
by increaing the estimated market values all in one year to
comply with the States mandate for Wright County including the
City of Monticello to bring the valuation up to date. The HRA
felt the city should have included an explanation and pro -rated
the increase over a couple of years. The HRA's concern is the
city maybe driving businesses out of town because of the increased
property valuations and increased mill rate. Rick Wolfateller,
City Administrator, told the HRA that the City Assessor Gary
Anderson has assessed the city for the last 2-3 years and does the
field work, computation, and book work; however, the county as
the final authority. Rick will investigate if Monticello was
the only community who complied with the State's request. The
HRA requested a comparison of property valuation from other
communities. The HRA discussed the increased mill rate noticing
the greater portion of the increase due to the school district.
The NRA requested a review of the school district's 1986-87 budget
and questioned why the large increase.
7. Consideration for a HRA Member.
Ben Smith motioned to approve the appointment of Everette Ellison to the
�a NRA and recommended the.City Mayor and Council offically appoint and
approve Everette to the HRA. Al Larson seconded the option.
S. Adjournment.
By concensus of the HRA the meeting adjourned.
\`r-\. K 0, e '�) C"Q.1
Oliva M. Koropchak
Executive Secretary for the HRA
HRA Agenda - 9/2/87
A. 3. HRA WELCOMES EVERETTE ELLISON AS A NEW MEMBER.
A. REFERENCE AND BACKGROUND.
At the August 10, 1987, City Council meeting Mayor Grlmsmo
appointed Everette Ellison to the Monticello Housing and
Redevelopment Authority and the City Council approved the
appointment. On behalf of the HRA members, I welcome you
to our commission and welcome any questions you may have.
I did mail Mr. Ellison a copy of the Central Monticello
Redevelopment Plan and a copy of the HRA August agenda for
some background information.
4. CONSIDERATION TO MODIFY THE FINANCE PLAN FOR TAX INCREMENT
REDEVELOPMENT DISTRICT 86.
A. REFERENCE AND BACKGROUND.
The finance plan of Tax Increment Redevelopment District 06
(Raindsnce Properties) was adopted by the HRA, October 10,
1985 and the City Council held a public hearing and adopted
the finance plan on November 12, 1985 in pursuant of Minnesota
Statute; Section 273.71 to 273.78 inclusive, within the existing
redevelopment project created pursuant to Minnesota Statute:
Sections 462.411 et.seg., the Municipal Housing S Redevelopment
Act. The development project was the construction of a 33,000
eq ft concrete building by Raindance Properties of which 25,000
aq ft was designated for a super market and the remaining 8,000
sq ft for speculation. Substantial soil correction is required.
The developer will complete and pay for the soil correction.
The developer will be assisted with public improvements to service
the building with tax increment revenue. The building is expected
to be completed in 1986. The second addition is the construction
of a 40 foot urban designed street (Sixth Street) by the City.
The original budget was land acquisition $229,000, street
construction $75,000, and the remaining balance of the total
budget $421,150 was for administrative, capitalized interest,
and fesuance/plan preparation and documentations. The amount
of bond indebtedness $350,000 with the term of issuance at 18
years and interest rate at 9%. Estimated annual tax increment
was $41,000 with a Captured Assessed Value of $510,442.
Upon completion of the 40 foot urban designed street (Sixth Street)
by the City. the project budget cost woo underestimated by
approximately $25,000 because of the needed soil correction in
this area and no monies were budgeted for the intorocoptor sower
soil corrections surrounding the city easement. This completed
coat was $28,000. These two figures increased the budget cost
by $53,000. The soil correction payment amount was a misunderstanding
between the developer and the city. In a conversation with Mr.
Bob Doike, Holmes 6 Graven, the city can recapture the additional
expenditures because of the difference between the estimated
retirement data of the original bond indebtedness (Year 2006)
and the durations of a redevelopment district (Year 2013). This
HRA Agenda - 9/2/87
allows for an additional seven years if necessary to collect
increment. At the estimated tax increment of $41,000 times seven
years a total of $287,000 will be generated which is sufficient
to cover the additional $53,000.
In conformance with the Minnesota Statute, Section 273.74,
Subdivision 4, Modification of Plan, the HRA may modify a
finance plan if there is an increase in total estimated
tax increment expenditures. For the additional $53,000 expend-
iture the HRA should consider modification of the said finance
plan.
B. ATLERNATIVE ACTION.
1. Adopt the HRA Resolution for Modification 01 of the Finance
Plan for Tax Increment Redevelopment District 06 and request
the City Council to set a public hearing date for the purpose
of modification of the said finance plan.
2. Deny adoption of the HRA Resolution for Modification O1 of the
Finance Plan for Tax Increment Redevelopment District 06.
C. STAFF RECOMMENDATION.
Staff recommends Alternative 01, thereby allowing the city to
recover the additional expenditures of this project ($53,000).
D. SUPPORTING DATA.
Copy of the HRA Resolution and a copy of the Modified Plan to
be presented at the HRA meeting.
5. CONSIDERATION TO REVIEW OTHER COMMUNITY"S ESTIMATED MARKET
VALUES AND TO REVIEW SCHOOL DISTRICT 0882 BUDGET.
A. REFERENCE AND BACKGROUND.
Mr. Doug Gruber, County Assessor, has boon on vacation and
attending a continued education seminar which made it difficult
to contact him. He explained that the State increased the
estimated market values in 1985 for the following Wright County
cities: A 151 increase on commerical/industrial estimated
market values in Albertville, Buffalo, and Rockford, a 201
increase on commorical/industrial estimated market values
in St. Michael, and a 101 increase on commerical/industrial
estimated market values in Annandale and Delano. Monticello's
increase was in 1986 but Mr. Gruber did not have the average
increase on commerical/industrial for Monticello. I calculated
the average increase from 1986 to 1987 on the properties
listed in last month's agenda which showed an average increase
of an approximate 211 on commerical/industrial estimated market
values.
HRA RESOLUTION 87-6
A RESOLUTION ADOPTING MODIFICATION +1
OF AN EXISTING TNI INCREMERr FINANCING PLAN
FOR REDEVELOPMENT DISTRICT f6 PURSUANT TO THE
MINNESOTA STATUTE, SECTION 273.71 TO 273.78
INCLUSIVE AMID REQUESTING CITY COUNCIL TO SET
A PUBLIC HEARING DATE
WHEREAS, the Housing and Redevelopment Authority in and for the City of
Monticello (the "Authority") is carrying out the Central Monticello
Redevelopment Plan (the "Plan") and the Redevelopment Project (the "Project");
and
WHEREAS, the Authority determined in 1985 that it was necessary to
create a tax increment finance redevelopment district pursuant to the Minnesota
Tax Increment Financing Act, Minnesota Statutes, Section 273.71 to 273.78
inclusive (the "Act") within the Redevelopment Project created pursuant to
Minnesota Statutes, Section 462.411 et seq., the Municipal Housing and
Redevelopment Act; and
WHEREAS, in connection with the undertaking to modify the existing tax
increment district plan by the Authority pursuant to the Act, the approval by
the Board of Commissioners (the "governing body") of the Authority is required
by the local governing body before it will consider for approval said
modification to the plan; and
WHEREAS, there was presented to this meeting of the governing body of
the Authority for its consideration and approval, a copy of a tax increment
plan modification for said redevelopment district pursuant to Minnesota
Statute, Section 273.74, Subdivision 4, dated September 1987, 9STEE pan is
en=ded modification 41 to Tax Increment Finance Plan for Redevelopment
District 01 and
WHEREAS, the Authority has prepared Modification it and submitted
Modification it to the City Planning Commission of the City of Monticello (the
"Planning Commission") for its review and opinion;
NOW, THEREFORE, BE IT RESOLVED by the governing body of the Housing and
Redevelopment Authority in and for the City of Monticello:
1. That the proposed additional project expenditures lie as modified
within the finance plan of the Tax Increment Redevelopment District
i6.
2. That the Tax Increment Finance Plan as modified will lengthen the
original retirement date to accommodate retirement of the
additional project coot.
i
i
HRA Resolution 87-6
Page 2
3. That the Tax Increment Finance Plan as modified will increase in
total estimated tax increment expenditures or designation of
additional property to be acquired by the Authority shall be for
approval of the original plan.
The Housing and Redevelopment Authority of Monticello, Minnesota, does hereby
approve Modification 41 of an existing Tax Increment Finance Plan for
Redevelopment District f6, and does hereby transmit to the City Council said
plan for their adoption.
Adopted by the Monticello Housing and Redevelopment Authority this 2nd day of
September, 1987.
ATTEST:
HRA Director HRA Chairperson
N
HRA Agenda - 9/2/87
He further indicated that replacement cost are about the
same in all cities; however, the land cost are higher in
Monticello. The recent selling prices of commerical/industrial
property in Monticello indicates the estimated market values
are still low. He does not have a comparable list of assessed
property values for commerical/industrial in Wright County cities.
Mr. Gruber is reluctent to provide such a list because of the
variables. He said if a competent person would compile a list
of designated comparative properties from various cities he
would consider supplying the information. He also predicted
a possible increase of 10 mills to the 1988 school district
mill rate.
REVIEW OF SCHOOL DISTRICT 6882 BUDGET.
A recap of my conversation with Supt. Shelly Johnson
to why the 1987 school mill rate increased by approximately
ten mills. The following three basic reasons were given:
1. Increase in teacher's retirement plan and/or pension
fund.
Increase in social security.
2. Executed the State's levy of tiers.
In 1981-82, Legislature ok'd school districts
within the state to levy over and above the designated
levy because of the State's cutbacks to school districts.
At the time most school districts levied all four tiers.
In the previous couple of years Monticello's School
District began easing into the tier levies. As the
school district used up their reserve funds on programs
previously subsidised by State aid it became necessary
for the school district to levy the four tiers.
3. Growth of the school district.
Increase of staff
Additional materials and equipment
Middle School (1987 - capitalized interest only)
1 did not receive a copy of the 1986-87 school budget; howaver,
Supt. Johnson indicated he would gladly attend a HRA meeting
for further explanation.
HRA agenda - 9/2/87
6. REPORTS:
A. MONTICELLO FORD, INC. - Larry Flake agreed upon the
$75,000 Contract for Deed and agreed upon the buyer's right
to prepayment privileges, without penalty, on the Contract
for Deed payment schedule. Thereafter the purchase agreement
was executed by both parties, scheduled closing date on or
before September 15, 1987. John Simola, Public Works Director,
will make up bide or specs for the demoliton and removal of
the structure and removal of an underground 1,000 gallon
tank. Projected demolition to be completed by December 1,
1987. The procedure to modify the finance plan for Tax
Increment Redevelopment District 02 has been completed in
conformance with the Minnesota Statutes.
B. DOWNTOWN REHABILITATION - Following the HRA meeting this
morning I will attend the Monticello Merchants meeting to
update the streetscape project. The base maps having been
completed by OSM and transferred to Geoff Martin of Dahlgren,
Shardlow and Uban on August 25. Mr. Martin will work on the
design plans and produce several options according to the
recommended design information he received from previous
City Administrator Tom Eidem, the immediate design plane will
cover an approximate six block downtown area called Phase 1.
Concentration of Phase II and III are scheduled for the future.
Mr. Martin projects the alternative design options and coat
estimates will be ready for community view and discussion
the end of September or first week in October. I will work with
Mr. Martin to schedule a date for public notification. Once
the city has the estimated project coats we will need to
analyze how to disburse the costs. Options we have are
Ad Valorem, bond, assess, or possible funds. In my research
for funding, it seems highly unlikely we can receive funding
from the old Federal funded Comunity Development Block Grant
which is now instrumented by the State unless we have an economic
development project to tic up with. The State CDBG program
Is very competitive and a single project is highly unlikely
not to receive funding. Applications are due February 1 of
each year.
C. REVOLVING LOAN FUND - The Industrial Developmant Committee
is the backbone committee instrumental in initiating the RLP.
The RLP would be administrated by members and an executive
board of a non-profit organization. The process is complex
to develop. A brief summary of the development process includes:
I. Organization Structure
A. Non-profit organization
1. Members
2. Roles
B. Economic Development Director
1. Role
It. Revolving Loan Funding Sources
RRA agenda - 9/2/87
III. Administration and Application Process
IV. Financing Methods, Use of Proceeds, Terms and
Conditions, and Collateral.
"�,.. City
Nrc�LO, MN ea3� `z a �A
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August 21, 1987
Pham let 2) 295-2711
Metro tet 21
933-5799
Maya:
Arne nnnterno
Cuy C
Mr. Everette Ellison
Fran Fair
310 Vin Street
vvmem Pair
Monticello, MN 55362
JW* tuawee
Dear Mr. Ellison:
AdrxNeaetor:
At the City Council meeting on August 10, 1987, Mayor
Tom EON
Orimemo appointed yourself to the Monticello Housing
Famrtae arecmr:Rick Wafthilliff
and Redevelopemnt Authority which was approved by the
council members.
.Zahn SYr,oY
The next meeting of the HRA is scheduled for Wednesday.
as
September 2, 1987, 7:00 A.M., Monticello City Hall. We
Economic
K
OftEnclosed
look forward to having you on board.
is your copy of the Monticello Central Redevelopment
Plan and a copy of the August HRA agenda for some background
information. If you have any questions, please call me at
295-2711. Thank you.
Sincerely,
CA.SlL.a. Atn e C a'g'
011ie Koropchak
HRA Director and Secretary
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