HRA Agenda 01-06-1993MINUTES
MONTICELLO HOUSING AND REDEVELOPMENT AUTHORITY
Wednesday, December 2, 1992 - 7:00 p.m.
City Hall
MEMBERS PRESENT: Chairperson Al Larson, Vice Chairperson Ben
Smith, Lowell Schrupp, Everette Ellison, and
Tom St. Hilaire.
STAFF PRESENT: 011ie Koropchak.
STAFF ABSENT: Rick Wolfsteller and Jeff O'Neill.
GUEST: Pat Pelstring, BDS, Inc.
1. CALL TO ORDER.
Chairperson Larson called the HRA meeting to order at 7:03
p.m.
2. CONSIDERATION TO APPROVE THE NOVEMBER 6. 1992 HRA MINUTES.
Lowell Schrupp made a motion to approve the November 6, 1992
HRA minutes, seconded by Ben Smith, and with no corrections or
additions the minutes were approved as written.
3. CONSIDERATION TO REVIEW CUSTOM CANOPY'S CONCEPT PLANS FOR
POTENTIAL TIF ASSISTANCE.
Koropchak reiterated the Custom Canopy project and plans as
outlined in the agenda. Of the projected $8,661.60 annual
Increment, Mr. Pelstring estimates an annual tax increment
penalty of $1,970 and an annual net increment of $6,690 over
eight years beginning in 1995 through 2002. This sufficient
to cover a bond Issuance of $45,000 and a net proceed of
$30,000.
The HRA found the Custom Canopy project to be in -compliance
with the TIF Policy for establishment of an Economic District.
Because of the smaller project size and the company's
development hassles with the City of Albertville, Mr.
Pelstring suggested the HRA offer a pay-as-you-go annual
assistance of $5,000 to Custom Canopy. This comparative to
the Rues Martie TIF assistance.
Tom St. Hilaire made a motion authorizing Pat Pelstring to
establish TIF District No. 1-15 for Custom Canopy subject to
project plan compliance with the City's zoning and ordinance,
company acceptance of the annual $5,000 pay-as-you-go TIF
assistance, and upon execution and delivery of the TIF Letter
of Intent. The motion was seconded by Ben Smith and without
further discuosion the motion passed unanimously.
HRA MINUTES
DECEMBER 2, 1992
CONSIDERATION TO REVIEW BDS. INC. BILLINGS AND CONTRACT.
Upon the HRA request, Mr. Pelstring explained the following
rational for the BDS billings in question. First, the City
was charged approximately $1,677.75 for preparation of the
CMIF (Aroplax) application, although, not approved by the
Board because our agreement for packaging is based on a
straight-line billing. Secondly, Mr. Pelstring apologized for
the error in billing for the two-hour Aroplax Reception which
is considered marketing, therefore, not billable.
Thirdly, the $2,500 Twin City Metro fee is inpart the 1.5E
SBA-OMRI Board fee and not a duplication of BDS charges.
Next, the Business Plan ($1,045) is a part of the Economic
Recovery Grant application and should not be considered
separately. Although, the HRA felt a Business Plan Is the
responsibility of the company, Mr. Pelstring reminded the HRA
of the approved grant payback. The HRA also questioned the
seriousness of the Aroplax consideration for a Brooklyn Park
site location.
Mr. Pelstring explained the BDS marketing concept as
specialization with a team basis, therefore, as the Aroplax
project involved numerous funding sources, various BDS
individuals were involved. Lastly, the HRA was informed that
once the funding application Is approved, BDS is no longer
involved.
The HRA reminded Mr. Pelstring that the questions were asked
for clarification and not to be taken as production dis-
satisfaction. The HRA agreement with BDS hired Mr. Pelstring
for TIF and f Snancial packaging.
COVSXDPRATJON Z0 REVLEW TIF "SURPLUS FUNDS" AND DISCUSS
POTENTIAL USE OF FUNDS,
Kcropchak explained the economic development revenue summary
provided with the agenda, stating the TIF "Surplus" was taken
from Mr. Pelstring Is accountability of a year ago; the GMEF is
based on approved loan paybacks with the assumption of
collected balloon payments; anticipated UDAG payback; and
first $100,000 principal and interest payback of the $170,000
State Economic Recovery Grant. Also, a detailed summary of
the GMEF loans with annual payback and loan terms was
submitted to the HRA. All loan paybacks are current.
HRA MINUTES
DECEMBER 2, 1992
Although, the TIF "Surplus" can legally be used for public
improvements, business relocations, or soil restoration which
benefit or support the objectives of the HRA, the HRA denied
use of the surplus dollars for those purposes. The HRA felt
the current estimated surplus of 8127,975 (a conservative
estimate by Mr. Pelstring) was not excessive. The HRA felt
the best use for the surplus was to reduce bond debt.
However, since the HRA does not exercise their right to levy,
the final consensus for the use of the TIP "Surplus" was to
provide additional assistance to quality companies such as
Remmele Engineering or to provide assistance for a senior
housing project.
CONSIDERATION TO AUTHORIZE THE TRANSFER OF 10% OF THE 1992 TIF
PROJECT INCOME INTO A HRA DEVELOPMENT FUND TO OFFSET
DEVELOPMENT EXPENSES.
First, the HRA reviewed their action of a year ago regarding
the denial to authorize a 10% administrative expenditure
policy. Secondly, the HRA heard an explanation for the year-
end request by staff for HRA authorization to transfer 10% of
the 1992 total TIF project income or 834,000 from TIF accounts
into a development fund (HRA account) inorder to cover or
recover all development costs associated with the Aroplax and
SMM projects.
Without an accountability of the associated development costs,
the HRA viewed the 10% transfer to be a potential abuse of the
TIF purpose, whereas, the HRA would prefer the project income
be returned to the taxing jurisdictions. Mr. Peletring
explained that the 10% transfer authorization did not mean the
HRA relinquished their TIF control. In response to the [IRA's
question, Mr. Pelstring said the Monticello HRA was less
willing and creative to use TIF dollars than other communities
which is not necessarily bad.
Tom St. Hilaire made a motion requesting an accountability of
all development coots associated with the Aroplax and SMM
projects by invoice prior to execution of a HRA resolution of
authorization to transfer. The motion was seconded by Al
Larson and without further discussion the motion passed
unanimously. The accountability meant to be cimiliar to the
pay-as-you-go process.
HRA MINUTES
DECEMBER 2, 1992
CONSIDERATION TO REVIEW THE LETTER OF INTjNT BETWEEN THE HRA
AND SH INGOBEE. INC. FOR POTENTIAL EXTENSION (CONSTRUCTION AND
TIF PREPLAN) .
Based on the IDC's recommendation for the HRA to renew the
Letter of Intent with Shingobee, Inc. on the Construction/TIF
Preplan, Lowell Schrupp made a motion for the HRA to extend
the Letter of Intent for one year with the willingness of
Shingobee and the Oakwood Partnership. The motion was
seconded by Everette Ellison and without further discussion
the motion passed unanimously.
B. CONSIDERATION TO ADOPT 11 RESOLUTION APPROVING A TAX INCREMENT
AGREEMENT BETWEEN THE CITY OF MONTICELLO AND THE HRA RELATING
TO TIF DISTRICT NO. 1-12.
The HRA is asked to adopt a resolution pledging TIF District
No. 1-12 increments from the Aroplax project to the city for
retirement of the $220,000 bond debt. The City Council
authorized issuance of the G.O. Taxable Tax Increment Bond on
November 23. Unlike previous years, the city will not sell
the bond to the public but will purchase the bond as an
investment with a 6.5 interest rate.
Lowell Schrupp made a motion to adopt the HRA resolution
approving a Tax Increment Agreement between the City of
Monticello and the Housing and Redevelopment Authority
relating to TIF District No. 1-12. The motion was seconded by
Everette Ellison and without further discussion the motion
passed unanimously.
CONSJDEk6TIOf TO ADOIPT 6 RESOLUTION APPROYT)iG A TAV INGgRttEt7T
QSiREEMEYT @ETWEEN THE CITY OF MONTICELLO AND THE HRA RELATING
TO TIP DISTRICT NO. 1-14.
The HRA is asked to adopt a resolution pledging TIP District
No. 1-14 increments from the Suburban Machine and
Manufacturing project to the city for retirement of the
$75,000 bond debt. The City Council will be requested to
authorize the issuance of the G.O. Taxable Tax Increment Bond
on December 14. Again, the city's intent is to purchase the
bond as an investment at an anticipated 6.5% interest rate.
Lowell Schrupp made a motion to adopt the HRA resolution
approving a Tax Increment Agreement between the City of
Monticello and the Housing and Redevelopment Authority
HRA MINUTES
DECEMBER 2, 1992
relating to TIF District No. 1-14. The motion was seconded by
Everette Ellison and without further discussion the motion
passed unanimously.
10. CONSIDERATION TO REVIEW AND EXECUTE THE INDEMNITY AGREEMENT
AND THE TAX -FORFEITED LANDS CONVEYANCE FORM FOR OUTLOT A.
COUNTRY CLUB MANOR.
The ARA reviewed the prepared Indemnity Agreement releasing
the HRA of any obligations or revenues for raw lands described
as Outlot A, Country Club Manor. The agreement is a followup
of the City Council's action to acquire said property and
request for use of the HRA's name only.
Lowell Schrupp made a motion authorizing the execution of the
Indemnity Agreement between the City of Monticello and the HRA
for raw lands described as Outlot A, Country Club Manor. The
motion was seconded by Tom St. Hilaire and without further
discussion the motion passed unanimously. Said agreement to
be fowarded for execution by the City Mayor and Administrator.
11. CONSIDERATION OF AN UPDATE AND REMINDER OF THE PLANNED ELK
RIVER SENIOR HOUSING TOUR ON DECEMBER 9, 1992.
HRA members were informed that the Guardian Angel Senior
Housing Campus is owned and operated by an Elk River non-
profit church organization. Volunteerism, campus concept, and
efficient utilization of services are keys to its success.
Members were reminded to meet at the City Hall at 6:30 p.m.
next Wednesday for departure to tour the Elk River facilities.
Mayor Maus and Hospital Administrator Schwientek will
accompany the NRA. Because of Mr. St. Hilaire's work schedule
he may meet us in Elk River.
12. QnIER BUSINESS.
a) Potential consolidation of the HRA and the EDA - Based on
Mayor Maus' interest, timeliness with annual commission
appointments, concern for a lack of commission meeting quorum,
and for the potential to increase the efficiency of legal
communications and fees associated with financial-aesioted
development projects; Chairperson Larson asked for input from
the HRA and Mr. Pelstring as to the interest or viability of
consolidating the HRA and the EDA.
Mr. Polstring summarized that come years ago the right to
establish a PIRA was created as an alternative to Port
Authority. Due to come inefficiencies and to assure a closer
. a
HRA MINUTES
DECEMBER 2, 1992
tie between a commission and city council the right to
establish EDA was created and has become the more popular
choice. The key role of most HRA today is housing development
for the low to moderate income, this being done by County
HRA's which administer Section- a programs, PmHA loans, etc.
A HRA has the power to levy independent of a city where an EDA
does not have the power to levy independently. An EDA
generally utilizes more creative powers. It was the HRA's
opinion that the Monticello HRA exercised more powers than the
Monticello EDA.
The HRA discussed the importance of more need for diversity
and asked of the the HRA's liabi lity. The HRA saw the need to
research the subject further and the need to continue talks
with the Mayor.
b) Annual HRA appointment - Mr. Everette Ellison agreed to
another HRA five-year term with an expiration term -date of
December 1997. The HRA recommends Mr. Ellison's name to the
Mayor and City Council for annual commission appointment. Mr.
Schrupp will be out-of-town Janizary. February, and March; and
Mr. Ellison will be out-of-town Pebruary and possibly March.
c) Prospect - Koropchak informed the HRA of the industrial
prospect, WSlaon Tool International. The company exists in
White Sear Lake, employs 350 people, and are looking to expand
in Minnesota or Wisconsin. Potential of 20,000 to 40,000 sq
ft building, 40 employees within three years, average wage is
$12.00. The company manufacturers punch and tie replacement
parts. Referred to by Remmele Engineering and Maureen
Steinwall. The HRA was supportive of the project.
13. ADJOURNMENT.
The HRA meeting adjourned at 9:00 p.m.
011ie Koropchak, HRA Executive Director
f1E
213.4dSTY
r.PA --U,4:•
TIF Al2 - AROPI.AX OOOJECT
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?s SUSINEss OEVEtOPgINT Sit 0011091 310+5
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01:79? 3!335
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3; >;OLmfs 4 4#.Avct4
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7 12.sool
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oolso? 33911
1.393.75
F 906
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G:3.?:
PPr.)F
16 busluess oilvel.09*10 Set
102092 316111
63) is
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j MG.P*lt SiGRAVEN
102 It? 14190
13G.15de
PFCF
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AAfrow
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1
FAM. PQOPCSSIONA� $40V*C(l
0.464.20
*To
*Tom ............
-as 14 0
L101ks. ?4Q-lCt FIjt,if.A'ION
eft
4-b-4161.
.0 KONTICILLO TlomiS
of, 102 33114
123.76
I.EGAI.
3.1665116.3510
L.(JAu NfTt%:t Pljt-.jCAT'&ON
t1l . 13
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102�?2 114100
$0.00
tilcoltolvall $411PIU0 AjLc,.j:Bf~.
be. "
i
.4,je.* olmilk 14.0c.4st
$0.00
OTOTAL . . . . . . ... . ...
OTO -A
1
-94 t1lft3
101.326.74
me.4r,
OTOTAL ....... , . . 1. . . . . .. . . . ..
1992 HRA BUDGET
REVENUES:
LEVY
$ 13,075
TIE DISTRICTS 1-11
$325,175
INTEREST EARNINGS
$ 13,200
TOTAL REVENUES
$351,450
EXPENDITURES:
SALARY & BENEFITS
$ 7,700
SERVICE CHARGES
$ 5,375 '
TIF LOANS/PAYG
S 43,345
TRANSFER TO D/S
$225,675
TOTAL EXPENDITURES
$282,095
NET
$ 69,355
TIF SURPLUS
DISTRICTS 1-11 REVENUES $325,175
TIF LOANS/PAYG $ 43,345
TRANSFER TO D/S $225,675
TIF SURPLUS $ 56,125
X10% PROJECT INCOME $ 32,517
T, Igo• S 1
t4 rib--*
SUBURBAN MACHINE & MANUFACTURING
PROJECTED TAX INCREMENT = $100,488 X 10% ADMINISTRATION = $10,048.80.
TIF ADMINISTRATION COSTS:
TIF PLAN (BDS)
$
3,850.00
TIF LEGAL (HOLMES & GRAVEN)
$
2,142.00
SUBTOTAL
$
5,992.00
POTENTIAI, TO TRANSFER TO DEVELOPMENT
FUND
PACKAGING COSTS:
CMIF (BDS)
$
3,206.25
PROJECT COSTS:
LEGAL (WEINGARDEN)
EDA
$
2,349.25
TIF
$
412.50
SIGN ORDIANCE & PLAT
S
712.50
SUBTOTAL
$
3,474.25
MISCELLANEOUS:
FILING, PUBLIC NOTICES
$
183,76
ENGINEERING COSTS:
OSM
$
1,316.25
TOTAL SUBTOTAL
$
8,180.51 ....
TOTAL
$14,172.51
BUDGET:
ADMINISTRATIVE $ 7,500.00
TOTAL BUDGET 089,000.00
BOND ISSUANCE: $75,000.00
I
AROPLAX CORPORATION
�-PROJECTED TAX INCREMENT = $157,904 X 10% ADMINISTRATION = $15,790.40
TIF ADMINISTRATION COSTS:
TIF PLAN (BDS)
$
4,700.00
TIF CERTIFICATION
$
50.00
TIF LEGAL (HOLMES & GRAVEN)
$
5.081.87
SUBTOTAL
$
9,831.87
POTENTIAL TO TRANSFER TO DEVELOPMENT
FUND
PACKAGING COSTS:
CMIF, SBA, STATE (BDS)
$
12,289.53
PROJECT COSTS:
LEGAL (WEINGARDEN)
TIF
$
243.75
STATE
S
1.580.45
SUBTOTAL
$
1,824.20
ENGINEERING COSTS:
OSM
$
837.57
TOTAL SUBTOTAL
$
14,951.30
TOTAL $ 24,783.17
BUDGET:
ADMINISTRATION $ 15,000.00
PROFESSIONAL FEES $ 10,000.00
TOTAL BUDGET $235,000.00
BOND ISSUANCE: $120,000.00
c
V a. N'-.- h:'t t ew$
Subd. 12. Et000mkdevelopment dbotrict. -Economic development district" mems
a type of tax increment financing district which consists of any project, or portions of
a project, not meeting the requirements found in the definition of redevelopment dis-
trict,
s-trip, renewal and renovation district, soils condition district, mined undergr ural
W= development district, or housing district, but which the authority finds to be in
the public interest because:
(1) it will discourage commerce, industry, or manufacturing from moving their
operations to another state or municipality, or
(2) it will result in increased employment in the state; or
(3) it will result in preumtioo artd enhancement of the tax base of the state
Subd. 13. Mined snderpr I egsruadevelopment dbtrki'Mined underground
space development district" mans a typeof tax increment financing district consisting
of a project, or portions of a project, for the development or redevelopment of mined
underground space pursuant to sections 469.135 to 469.141.
Subd. 14. Administrative exposes. *Administrative expenses" means all expendi-
tures of an authority ashes than ammmu paid for the purchase of land or emoants paid
to contractors or other providing materials and semom including architectural and
cogineefing urvices. directly connected with the physical development of the real prop -
city in the district, relocation benefits paid to or services provided for persons residing
Of businesses located in the district, or amounts used to pay interest an, fund a reserve
for, or sell at a discount bonds issued pursuant to section 469.178.'Admitristraufve
expenses' includes amounts paid for servim provided by bond counsel, fisesl cons. to
teats, and planning or economic development consultants.
Subd. 15. Pascal. 'Parcel" means a tractor Pitt ofland established prior to them.
tification of the district as a single unit for purposes of assessment.
Subd. 16. Designated haardoas a asbnroro site. "Designated harardous substaw
site" means any parcel or parch with respect to which the authority has certified to
the county auditor that the authority hen entered into a redevelopment or other algae,
meat providing for the removal actions or remedial actions specified in a devdapmcm
response action plan or the authority will use other available money, including withom
limitation tax increments, to finance the removal or remedial actions. A pard
described in the plan or plan amendment may be designated for inclusion in the hazard.
ous substance subdistrict prior to approval of the development anion response plan as
the basis of the reasonable expectation of the municipality. Such parcel may nes be"
tified as part of the subdistrict until the development anion response plan has baa
approved.
L
40.176 ECONOMIC DEVELOPMENT
period; or (2) the period necessary to recover the costs of removal actions or remedi'l
actions specified in a development response action plan.
Subd. 2. ta. lints. (a) In any year in which the tax increment exceeds
the amount necessary to pay the costs authorized by the tax increment financing plan.
including the amount necessary to cancel any tax levy as provided in section 475.61, =
subdivision 3, the authority shall use the excessamount to do any of the following: (1)
prepay any outstanding bonds. (2) discharge the pledge of tax increment therefor, (3)
pay into an escrow account dedicated to the payment of such bond, or (4) return the
excess amount to the county auditor who shall distribute the excess amount to the
municipality, county, and school district in which the tax increment financing district
is located in direct proportion to their respective local tax rates. The county auditor
must report to the commissioner of education the amount of any excess tax increment
distributed to a school district within 30 days of the distribution.
(b) The amounts distributed to a city or county must be deducted from the levy -
limits of the governmental unit for the following year. In calculating the levy limit base
for tater years, the amount deducted must be treated as a local government aid pa).
mens. }+
Subd. 3. IJmltallon on administrative expenses. (a) For districts for which ceni6ca-
tion was requested before August 1, 1979, or after June 30, 1982, no tax increment shall i
be used to pay any administrative expenses for a project which exceed ten percent of
the total tax increment expenditure authorized by the tax increment financing plan or
the tool tax increment expenditure for the project, whichever is les
(b) For districts for which certification was requested after July 31. 1979• and 4
before July 1, 1982, no tax increment shall be used to pay administrative expenses,a R
defined in Minnesota Statutes 1980, section 273.73, for a project which exceeds Eve `-
percent of the total tax increment expenditures authorized by the tax increment finatnc,
ing plan or the total tax increment expenditures for the project, whichever is It% '
Subd. 4. LhWtntl= on tae of to Increment: general rude. Ali revenues derived from i
tax incrcmrnt shall be used in accordance with the tax increment financing plan. The
revenues shall be used solely for the following purposes: (1) to pay the principal of see
interest on bonds issued to finance a project; (2) by a rural development Anasrtrr ,
authority for the purposes stated in section 469.142, by a port authority or municip" I
exercising the powersof a pon authority to finance cr otherwise pay the cost of redtsd
opment pursuant to sections 469.048 to 469.068• by an economic development What*
ity to finance or otherwise pay the cost of redevelopment pursuant to sections 469.010
to 469.108, by a housing and redevelopment authority or economic develops" :y
authority to finance or otherwise pay public redevelopment costs pursuant to tectieaa %n
469.001 to 469.047, by a municipality or economic development authority to 60990
or otherwise pay the capital and administration costs of a development district psess• ,t '
ant to sections 469.124 to 469.134, by a municipality or redevelopment Wort M
finance or otherwise pay premiums for insurance or other security guaranttesse Ohl
payment when due of principal of and interest on the bonds pursuant to chapter bIC.
sections 469.152 to 469.165, or both, or to accumulate and maintain o reserve the*6th
the payment when due of the principal of end interest on the bonds pursuantto 'r
162C, section 469.152 to 469.165, or both, which revenue in thr resin'
10
exceed, subsequent to the fifth anniversary of the date of issue of the first btme
secured by the reserve, an amount equal to 20 percent oft aggregate principe
of the outstanding and nondefessed bonds secured by the reserve.
Subd. 4a. Mined andergroand apace districts. Revenue derived from tax st�
from a mined underground space development district may be used only to Psy"
costs of excavating and supporting the space, of providing public access to tw
underground space including roadways, and of installing utilities includsW 6R
Iter systems in the space.
Subd. 4b. Solis condition districts. Revenue derived from till incremt�
soils condition district under section 469.174, subdivision 19, may be used
acquire parcels on which the improvements described in clause (2) will Oscar,
l
1993 HRA GOALS
1. To serve as a faci lator and to investigate the need for senior
housing, n.
A. Market rate and subsidized assisted -living.
B. Market rate quality independent —living.
2. To encourage and assist in the development of two industrial
projects of quality.
3. To research the pros and cons for consideration to consolidate
the Housing and Redevelopment Authority and the Economic
Development Authority.
4. To serve as a governmental unit which utilizes Tax Increment
Financing while accountable to the local taxpayers.
5. Others.
TAX INCREMENT FINANCE ESTIMATES
ALL -TEMP DISTRIBUTION COMPANY
John C. Holman, President
5400 NE Main Street
Minneapolis, MN 55421
(612) 571-0215
BACKGROUND:
This family-owned storage distribution company was started in 1985
and today operates out of a 425,000 sq ft facility on 25 acres with
50 employees in Fridley. The company plana to expand and construct
an approximate 50,000 sq ft metal facility on a minimum of 2.5
acres. Potential 100,000 sq ft. The company would initially
employ 20 full time (forklift operators, customer service,
clerical), starting wages at $8.00 ranging to $10.00 per hour. The
company desires rail, estimated 24-40 trucks in and out per day,
shifts run from 5:30 a.m. to 6:30 p.m. with 5 -day extended option.
Some customers are Sunny Fresh Foods, Haagen Daze Ice Cream,
Tombstone Pizza, Green Giant, etc. Sunny Fresh Foods uses holding
freezers and has the need for blast freezing. Referred by Jerry
Rose of Sunny Fresh Foods.
PROJECT:
Building: Metal insulated -panels, construction costs $55 per eq ft
($2,750,000). Assessed value per Doug Gruber, County Assessor.
5,000 sq ft office ® $30.00 per eq ft
45,000 sq ft metal warehouse storage ® $17.00
45.000 eq ft refrigerated storage ® $3.00
Land: Five acres.
87,120 eq ft or 2 acres 0 8.40 per sq ft
130,680 sq ft or 3 acres ® $.25
TOTAL ESTIMATED MARKET VALUE
$1001000 $1,015,000
iOgOQ .0470
9 3,000 $ 47,705
NEW CAPACITY VALUE $50,705
'93 EST. TAX RATE 1.07212
ESTIMATED TAXES $54,361.84
ORIGINAL CAPACITY VALUE
CAPTURED CAPACITY VALUE c
ESTIMATED TAX INCREMENT
ADJUSTED TAX INCREMENT
TIF PENALTY
$ 150,000
$ 765,000
s 135.090
$1,050,000
8 34,848
o 0 33,670
$ 67,518
o $1,117,518
TEL NO:786-9034 0003 P01
Bush m Develop ur t Servkes, Itx-
MEMORANDUM
TO: 011ie Kosopchalc, City of Monticello
Housipg,ad Redevelopment Authority
FROM: Pat Pelstring, President, Business Development Services, Inc.
DAM January 3, 1993
SUBJEC I: ALL -TEMP DISTREBUTION COMPANY
I have had an opportunity to review the Information provided by Ms. Koropchak concerning the
potcnW for Tau Increment Financing to assist in the recruitment of All -Temp Distribution
Company.
1 have prepared the attached analysis which identifies the potential LGA loss and calculates the
projected vet• increment available per project cost. This analysis assumes that we establish an
Fmnomic Development District over a ten year time period, without a significant oconornic
deyEloptrsmt adjustment factor.
On an sap -host basis, after adjustment for LGA lou, the project generates approximately
S351360 per year of rat tax increment. This would support a proposed bond issue of
apprW!naWy $200,000, After issuance costs and capitalized interest, the HRA would retain
appmitimuely $150,000 for project investment.
As I undastand, the company's anticipated net land acquisition cost Is $67,500. I would
propose that the HRA offer to fully reimburse the land acquisition cost, and provide an
aftdoitffi $32,500 for site development and on-site utilities. This would leave approximately
350,OOD to offset the extension of public utilities, which may be required to serve the site.
We would mcommend that the HRA improve this offer, if newsary, to complete the project.
This'cosnpany has in excellent reputation in the Twin Cities. Although the proposed new jobs
am reladvely modest compared to the sire of the facility, thete are higher -paying, quality
poaldcns. A Company of this type also has the added value of serving to appoint additional food
ptooewing development projects within the immediate area.
Your consideration of this Information is appreciated. Please contact me if you would like us
-to meet with you and the company and/or prepare a more detailed proposal.
PWWMM
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G
HOUSING AND REDEVELOPMENT AUTHORITY
City of Monticello
TAX INCREMENT FINANCING POLICY
Program Purpose: The Monticello Housing and Redevelopment
Authority will utilize Tax Increment Financing to support the
community's long-term economic and housing goals.
Policy Considerations: The HRA will analyze and evaluate Tax
Increment Financing proposals based upon the following policy
considerations. Each project shall be measured against these
considerations and the project's value shall be determined, based
upon meeting these considerations.
(11 The project shall be consistent with the City's
Comprehensive Plan.
:2) The project shall demonstrate long-term economic and/or
housing benefits to the community.
(3) The project shall create and/or retain employment for
Monticello residents.
The project shall increase moderate priced housing
options for area residents. .
tN The project shall facilitate the redevelopment or
elimination of "substandard" or •blighted• areas as
determined by the HRA.
(61 The project shall facilitate the •clean-up" of
environmentally unsound property.
(7) The project shall provide additional public funding
for public improvements including utilities and/or
park development which would not otherwise be available.
(6) The project shall be deemed to promote additional
desired •spin-off" devolopment.
POLICY GUIDELINES
(1) Tax Increment financing will be considered for use in
economic development, redevelopment and specialized
housing projects. The standard level of assistance for
projects shall be as follows:
k
FOR YOUR INFORMATION
This endorsement is attached to and forms a part of Covenant
No. CMC 12541 of the League of Minnesota Cities
Insurance Trust.
This endorsement is effective 3-7-92
In consideration of the premium charged it is understood and
agreed that Section II - who is covered is amended to
include
Mousing Redevelopment Authority
for all coverages where M is X'd above
All other terms and conditions remain unchanged.
LMCIT
ME051 (1/90)
Pago i of 1
Authorized Representative
Comprehensive Municipal Liability Coverage
d
Coverage
A General Liability
Q
Coverage
B Medical Payments
Coverage
C Personal Injury Liability
®
Coverage
D Errors or Omissions Liability
®
Coverage
E Automobile Liability
In consideration of the premium charged it is understood and
agreed that Section II - who is covered is amended to
include
Mousing Redevelopment Authority
for all coverages where M is X'd above
All other terms and conditions remain unchanged.
LMCIT
ME051 (1/90)
Pago i of 1
Authorized Representative
"Maturity Date" means the date that the Tax Increment District is no longer
in place and generating Tax Increment which is remitted to the Authority.
"Minimum Improvements" means anapproximately 11,000 square foot office and
manufacturing facility.
"Mortgage" means any mortgage made by the Redeveloper which is secured,
in whole or in part, with the Redevelopment Property and which is a permitted
encumbrance pursuant to the provisions of Article VIII of this Agreement.
"Net Proceeds" means any proceeds paid by an insurer to the Redeveloper or
the Authority under a policy or policies of insurance required to be provided and
maintained by the Redeveloper pursuant to Article V of this Agreement and
remaining after deducting all expenses (including fees and disbursements of
counsel) incurred in the collection of such proceeds.
"Project" means the Monticello Redevelopment Project.
"Project Area" means the real property located within the boundaries of the
Project.
"Redeveloper" means Bradley D. Barger and Mazy A. Barger, husband and
Wife.
"Redevelopment Property" means the real property described iti Schedule A
of this Agreement.
"Redevelopment Plan" means the Monticello Redevelopment Project Plan, as
emended as of the date of this Agreement.
"Site Improvement Costs" mean the costs incurred by the Redeveloper and
reimbursed bt the Authority for gradhtg,Ccurbs>water and sewer hook-up, and
�landaoaping) Site Improvements")
"State mean the State of Minnesota.
"Tax Increment" means that portion of the real property taxes paid with
respect to the Tex Increment District and which is remitted to the Authority as tax
increment pursuant to the Tax Increment Act.
"Tax Increment Act" means the Tax Increment Financing Act, Minnesota
Statutes, Sections 469.174-469.179, els emended.
"Tex Increment District" moans the Authority's Economic Development Tax
Incroment District No. 1-19 located In the Project Area.
"Tax Official" mean any City or county assessor; County auditor; City,
County or S tete board of equalization , the commissioner of revenue of the State, or
any State or federal district court, the tax court of the State, or the State Supreme
Court.
"Unavoidable Delays" means delays which are tho direct result of strikes,
other labor troubles, fire or other casualty to the Minimum Improvements, delays
caused by unavailability of building materials, litigation commenced by third parties
which, by injunction or other similar judicial action, directly results in delays, or
acts of any federal, state or local governmental unit (other than the Authority or the
City) which directly result in delays.
J103"11
Im110.17
ARTICLE III
Tax Increment Assistance
Section 3.1. Statement of Intent. The Redeveloper has represented to the
Authority that it has acquired or entered into purchase agreements for all of the
separate tracts of land which comprise the Redevelopment Property. The
Redeveloper has fully informed the Authority of its acquisition costs together with
the costa necessary to prepare the Redevelopment Property for redevelopment. The
Authority has further considered the other public costs of redevelopment and the
reuse value of the Property. Based upon all such information and consideration, the
Authority determines that a land writedown of $69,575 ("Land Writedown") is the
necessary level of asaiatance necessary to permit redevelopment to occur on the
Redevelopment Property. Subject to the provisions of this Agreement, the Authority
agrees to pay the Redeveloper the Land Writedown to assist the Redeveloper In the
acquisition and preparation of the Redevelopment Property. It is the further
intention of the parties that title to the Redevelopment Property shall not pass to the
Authority by operation of this Agreement, and that this Agreement shall not be
construed so as to vest or create in the Authority and right, title or interest in the
Redevelopment Property.
The Land Writedown shall be paid to the Redeveloper when all of the following
conditions have occurred, but only if at such time the Redeveloper is not in default
of any of its obligations under this Agreement:
(a) The Redeveloper and the Authority having reviewed and approved title
to the Redevelopment property;
(b) The Redeveloper having submitted and the Authority having approved
the evidence of financing required to be provided pursuant to Section 7.1;
(c) The Redeveloper having submitted and the Authority having approved
Construction Plans for the Minimum Improvements pursuant to Section 4.2;
(d) The Redeveloper having executed and delivered to the Authority the
Assessment Agreement; and
(e) The Redevelopment Property has been replated.
Section 3.2. Time of Pavment. (a) Subject to the conditions contained in
Section 3. 1, and the Redeveloper Faving provided the Authority with a note ("Note")
agreeing to repay the Authority $19,575 of the Land Writedown at 89 interest over
a term which shall not be longer than eight years from the date on this Agreement,
or the Maturity Date, whichever shall first occur, the Redeveloper shall be paid
$19,575.
(b) Subject to the conditions contained in 3. 1, the Redeveloper shall be paid
$20,375 when the Site Improvements aro fully complete as determined by the
Authority; and the Rodevelopor has furnished the Authortty.with evidenoe that the
Site Improvement Cost is at least that amount.
(c) Subject to the conditions contained in Section 3. 1, the Rodeveloper shall
be paid $29,625 when the building to be constructed on the Rodovelopmont Property
is at least 300 complete, as determined by the Authority.
M
1 T, ®►
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