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HRA Agenda 05-28-1996MINUTES SPECIAL JOINT MEETING MONTICELLO CITY COUNCIL. AND EIEtA Monday, May 13, 1996 -11:80 p.m. Council Members Present: Brad Fyle, Shirley Anderson, Clint Herbst, Brian Stumpf, Tom Perrault Council Members Absent: None HRA Members Present: Al Larson, Roger Carlson, Bradley Barger HRA Members Absent: Tom St. Hilaire A special joint meeting was held with the City Council and Monticello Housing and Redevelopment Authority for the purpose of considering approval for the overall concept plans for the redevelopment project known as Prairie West. The project area is divided into four additions: 1st Addition, which is the original Prairie West subdivision; 2nd Addition, which is the proposed TIF district; 3rd Addition, which is a parcel currently owned by the City; and 4th Addition, 1400 West Broadway. Economic Development Director 011ie Koropchak reported that on May 1, 19%, the HRA approved entering into a preliminary agreement with the developer, Cedrus Creek Craftsman, Inc. (John Komarek), which authorizes Publicorp, Inc., to begin preparation for establishment of the TIF district and Kennedy & Graven to begin preparation of the private redevelopment contract. Koropchak noted that the overall goals of this redevelopment project are to remove blight, increase property values, and create public green space. Mark Ruff of Publicorp, Inc., explained that the project would include 29 housing units. The 1st Addition would be funded with private dollars, and the 2nd Addition would be the proposed TIF District No. 1-20, which would require HRA assistance in the amount of $130,000 plus the City property in order for the developer to receive a total sales return of 6.6%. Typical development returns are 9.5%. Without HRA assistance and the City property, the return would be only 2.1'X; therefore, the proposed TIF district satisfies the "but for" test. Ruff went on to explain that the 3rd Addition is the parcel currently owned by the City, on which approximately $36,000 was spent to clean up the property. He noted that a city can avoid a HACA loss if it commits to a local contribution of at least 5% of the expected tax increment. It was proposed that the City gift $20,000 of the value of the property to the developer and receive a payment of $16,000, thereby avoiding the HACA penalty, receiving some compensation, and receiving tax revenues from the 19 units of housing outside of the TIF district. Page 1 Special Council Minutes - 5/13/96 Joint Meeting with HRA The 4th Addition property located at 1400 West Broadway would be purchased by the HRA with the intent of deeding the property to the City to use as green space. The amount of the purchase price, including estimated relocation costs and attorney, relocation consultant, and appraisal fees is $145,000. Council discussed the amount the City has invested in the parcel being proposed for the 3rd Addition and noted their concern with making a local contribution of $20,000 in addition to the TIF district and purchases that would be made by the HRA. Staff also discussed with Council the $11,000 in taxes is owed to the County for this parcel and the agreement with the County that the City would market the property for sale. City Administrator Wolfsteller advised that any agreement regarding the use of this parcel for the proposed Prairie West development should be presented to the County Board. Councilmember Perrault suggested that the 4th Addition proposed for green space should be developed if possible rather than adding to the park inventory. The developer noted that there is very little high ground in this area and that most of it is undevelopable. AFTER DISCUSSION, A MOTION WAS MADE BY SHIRLEY ANDERSON TO APPROVE THE OVERALL CONCEPT PLAN FOR THE REDEVELOPMENT PROJECT KNOWN AS PRAIRIE WEST, ESTABLISH TIF DISTRICT NO. 1-20 AS A REDEVELOPMENT DISTRICT, COMMIT A LOCAL CONTRIBUTION OF $20,000 FOR THE CITY -OWNED PARCEL, AND ACCEPT THE PROPERTY LOCATED AT 1400 WEST BROADWAY FOR USE AS GREEN SPACE. Motion died for lack of a second. A MOTION WAS THEN MADE BY BRUIN STUMPF AND SECONDED BY SHIRLEY ANDERSON TO APPROVE THE OVERALL CONCEPT PLAN FOR THE REDEVELOPMENT PROJECT KNOWN AS PRAIRIE WEST, ESTABLISH TIF DISTRICT NO. 1-20 AS A REDEVELOPMENT DISTRICT, AND ACCEPT THE PROPERTY LOCATED AT 1400 WEST BROADWAY FOR USE AS GREEN SPACE. THE CITY MUST RECOVER ITS OUT-OF-POCKET COST FOR THE CITY -OWNED PARCEL PROPOSED FOR THE 3RD ADDITION OF THE PROJECT, AND THE PROPOSAL MUST BE PRESENTED TO THE COUNTY BOARD. MOTION ALSO INCLUDES ADOPTING A RESOLUTION CAIdNG FOR A PUBLIC HEARING ON ESTABLISHMENT OF TIF DISTRICT NO. 1.20 FOR JUNE 24, 1998. COUNCILMEMBER PERRAULT THEN AMENDED THE MOTION TO ADD THAT THE AREAS THAT ARE DEVELOPABLE ON THE 4TH ADDITION PARCEL ARE TO BE DEVELOPED RATHER THAN USED FOR ADDITIONAL PARK AREA. Voting in favor of the motion: Brian Stumpf, Shirley Anderson, Clint Herbst, Tom Perrault. Opposed: Brad Fyle. Fyle noted that if the City is reimbursed the cost for the City -owned parcel, the City will suffer HACA loss due to the proposed TIF district. Motion carried. SEE RESOLUTION 96.20. Page 2 Special Council Minutes - 6/13/96 Joint Meeting with HRA Mark Ruff noted that the HRA would not recommend that the City lose HACA aid and would meet with the attorney to ensure no loss of HACA to the City. There being no further business, the special joint meeting of the Council and HRA was adjourned. Karen Doty Office Manager Pago 3 MINUTES MONTICELLO HOUSING AND REDEVELOPMENT AUTHORITY v Monday. May 6, 1996 - 4:00 p.m. City Hall MEMBERS PRESENT: Chairperson At Larson, Vice Chairperson Brad Barger, and Roger Carlson. MEMBERS ABSENT: Tom St. Hilaire. STAFF PRESENT: 011ie Koropchak. GUEST: Bang Fluth. Chairperson Larson called the HRA special meeting to order at 4:30 p.m. oil 40-1w, r1•• • r. • •: • Y ,•.• Previously HRA members had been informed that Mr. Fluth did not accept their offer of April 3: First right of refusal for a period not -to -exceed three years. $1(10 per year. Mr. Fluth felt the offer was an insult and he understood the intended -offer was at appraisal value (negotiable), $2,5(K)eamest money, not -to -exceed nine months from date of option agreement, and first right of refusal. At the May I HRA meeting. Administrator Wolfsteller informed HRA members that a local business -owner had made inquiries relating to city parking requirements for development of I I I West Broadway. With the results of the TIF Surplus Proforma and a recommendation from the HRA financial consultant to consider land banking properties within the potential redevelopment project arcs, the NRA approved an offer of $37.(N)D (HRA appraisal value). $2.5(1(1 eamest money. not -to -exceed nine months for acquisition of the I I I West Broadway property. Koropchak to contact Fluth for acceptance of offer prior to preparation of the purchase option. Upon Koropchak contact with Mr. Fluth for acceptance of the HRA's May I offer. Fluth acknowledged the interest of a potential (private) buyer with no need for government approvals at a greater purchase price. The seller would consider an NRA purchase agreement inclusive of an in lieu of condemnation clause, the buyer accepts the property "as is", and without prolonged public hearings or council approval. Therefore, a special HRA meeting notice was posted for May 6. 1996. 4:(1O p.m. for consideration to execute a prepared purchase agreement at a purchase Page 1 s HRA MINUTES MAY 6, 1996 price of $50.000,S1,O00earnest money, and closing date on or before May 31, 1996 inclusive of an attached addendum. Koropchak reported St. Hilaire was unable to attend the special meeting and informed commissioners of St. Hilaire's non-support for acquisition of the 111 West Broadway pawl. Additionally, Koropchak reported Mark Ruff, Publicorp, advises the HRA against involvement in any purchase bidding -wars and a rule -of --thumb for purchase price consideration: Not -to -exceed 120`b of the appraisal. Koropchak reported Attorney Bubul expressed two concerns: One, the in lieu of condemnation request, although, perhaps workable. To accommodate this request Bubul recommended the HRA adopt a resolution finding that the HRA was prepared to acquire 111 West Broadway property through eminent domain inorder to eliminate a blighted condition and to carry out a redevelopment project. The in lieu of condemnation gives the seller a three-year Window for re -investment of capital gains. Bubul's second concern was acquisition without a Phase 1, Environmental Study. Also, because the 111 West Broadway property was not identified in the modificiation of the Central Monticello Redevelopment Plan for Project No. I, the purchase dollars must be disbursed from the HRA General Fund, not TIF Surplus Funds. Commissioner Barger felt the HRA ownership of the parcel was a necessary. temporary thing until such time the Revitalization Study was completed and the redevelopment of the downtown occurred. Additionally, he felt the HRA would receive some heat because an acquisition by the HRA may be viewed as discouraging an interested private business -owner from investing in the downtown. Lastly. Barger felt a Phase 1. Environmental Study should be completed as this is a common practice. Fluth inquired to "why"the addendum did not reference the "as is" clause as requested. Koropchak responded that Attorney Bubul preferred not to include the "as is" clause as normally it is understood the buyer assumes such liability. Anomey Bubul has conversed with Brad Larson. Attorney for Fluth. Commissioner Carlson felt HRA ownership of the property ensured management of the downtown area which is currently under study by Hoisington. Commissioner Larson felt the acquisition was a timing issue which required the HRA taking a risk. Fluth expressed he had a verbal purchase commitment, a clean deal with no government acquisition requirements, at a price greater than the HRA appraisal of 537,0(10. Page 2 HRA MINUTES MAY 6. 1996 Roger Carlson made a motion to adopt the resolution authorizing the HRA to acquire the Ill West Broadway property, including by exercise of the powers of eminent domain, real property that is necessary to eliminate blight or to carry out the project. In lieu of acquisition, authorizing the execution of the Standard Purchase Agreement between the HRA and Barry D. Fluth and Barbara A. Fluth. Al Larson seconded the motion and with no farther discussion, the motion passed unanimously for the reasons stated above. Fluth requested his attorney review the purchase agreement prior to execution by Barbara Fluth. None. :..• 4.r The special HRA meeting adjourned at 4:50 p.m. 7"'��+ �'1 X10 ���r�✓y 011ie Koropchak. Executive Director Page 3 HRA AGENDA MAY 29, 1996 In order to save time, enclosed you will find a copy of the agenda supplement prepared for the City Council meeting of May 2g, 1996. If modifications have been made to the Contrw prior to the Council adoption of the resolution, the HRA will be updated at your meeting. Council did not receive the uses and sources sheet. IN C Page I Council Agenda - 6/28/96 Consideration to ado Private Redevalop= Craftsman- Inc (O.K.) The City Council is requested to consider approving the Private Redevelopment Contract among the HRA, the City, and Cedrus Creek Craftsman, Inc. The Contract is a document which describes the amount, the method of delivery, and the timing of the TIF payment to the Redeveloper (Cedrus Creek). The Contract also describes the obligations of the Redeveloper, the Authority, and the City. The HRA will consider approval of the Contract at a special meeting of May 29, 1996. This will be the HRA's first review of the revised proposal for assistance in the amount of $40,000 for coats associated with the City -owned parcel. From the perspective of the Redeveloper's accountant and anticipated lender, the project is not doable without the proposed additional assistance. The Redeveloper and the lending institution received a draft copy of the Private Redevelopment Contract. PRIVATE REDEVELOPMENT CONTRACT The draft copy of the entire Contract as prepared by Attorney Steve Bubul, Kennedy & Graven, is available at city hall for your review. The following is a summary of the Contract. Within Phase 1, the 2nd Addition or TIF District, the Redeveloper agrees to construct six 4-plex townhouse unite valued at a minimum market value of $130,000 and four twinhome townhouse units valued at a minimum market value of $160,000. Four of the twinhome units are to be completed no later than December 31, 1997; Four of the 4-plex unite are to be completed no later than December 31, 1998; and two of the twinhome unite are to be completed no later than December 31, 1999. The Authority agrees to reimburso the Redeveloper up to $130,000 of the purchase price paid by the Redeveloper for two of the three parcels in Phase 1. The first $66,000 TIF assistance as follows: $32,600 paid at time the Rodeveloper acquires the two parcels and $10,000 paid upon each date the Authority issues a Certificate of Completion for a townhouse but not -to - exceed the sum of $32,600. The second $86,000 TIF assistance as follows: $86,000 together with a noncompound interest rate of 8.60% per annum Council Agenda - 6/28/96 (semi-annual payments) commencing August 1, 1999, and ending February 1, 200_ in the amounts shown in Exhibit F. Interest shall commence to accrue on the Closing Date. The Authority shall retain the first 60% of the Available Tax Increment as reimbursement for the first $66,000 TIF assistance and the $16,000 cost to acquire the City parcel. The semi -payment due the Redeveloper shall be solely from 40% of the Available Tax Increment. If on the payment date, the Available Tax Increment is insufficient for the Authority to recover its full reimbursement, the Redeveloper agrees to pay the deficiencies. Before commencement of construction of the minimum improvements in Phase 1, the Redeveloper shall plat the Redevelopment Property to coincide with the boundaries of the TIF District and in accordance with all City requirements. The Redeveloper and City agree to enter into a Developer's Agreement substantially similiar to that executed for the 1st Addition. All parties agree and understand that the Authority intends to acquire the 1400 West Broadway parcel (4th Addition) immediately adjacent to the City parcel (3rd Addition) and transfer the parcel to the City for use as public green space or park. If the acquisition and transfer occurs, the City agrees that such transfer will satisfy park dedication requirements under the City subdivision ordinance in connection with Phase 1 and Phase 2. Nothing herein shall be construed to require the Authority to acquire the 4th Addition parcel or the City to accept such parcel. Within Phase 2, the let Addition and 3rd Addition, the Redeveloper agrees to construct ten twinhome units and two 4 -plea units in the lot Addition, and four twinhome units and three triplex unite in the 3rd Addition. The Authority agrees to purchase the 3rd Addition parcel (City -owned) subject to satisfaction of certain terms and conditions, convey the parcel to the Redeveloper for $1.00, and provide, pursuant to the Contract, financial assistance to the Redeveloper for purchase of the parcels within the 2nd Addition. The City agrees to convey the tide to the Authority and the Authority agrees to acquire the title via a deed subject to certain terms and Ix conditions. The purchase price to be paid to the City by the Authority is r $40,000: $26,000 payable at closing and $16,000 pursuant to the terms of the non-interest note, Exhibit H. The Authority agrees to convey the title to the Redeveloper via a deed subject to certain terns and conditions. Date of closing, no later than '1996. Council Agenda - 5/28/96 If TIF District No. 1-20 is not created by June 24, 1996, this agreement becomes null and void. The Authority agrees that the $25,000 payment to the City for the City parcel at closing shall be from non-restrictive Authority funds (HRA General Fund) with the intent to constitute the "qualifying local contribution" necessary to exempt TIF District No. 1-20 from local HACA Penalties. The Authority, Redeveloper, and County Assessor shall agree to the Assessment Agreement. The Redeveloper shall provide evidence of one or more commitments for financing and evidence of insurance. The rights of the Authority with respect to receipt and application of any proceeds of insurance shall be subject and subordinate to the rights of any lender. The City Council approved a resolution calling for a public hearing date of June 24, 1996, for establishment of TIF District No. 1-20. Council also approved the overall concept plan for the redevelopment project known as Prairie West and accepted the parcel known as 1400 West Broadway. The Council declined the HRA's proposal relating to the City -owned property. The Council requested recovery of its out-of-pocket cleanup costs and requested the proposal be presented to the Board of Wright County. Lastly, the Council requested the developable area of the 1400 West Broadway parcel be developed and the non -developable area be used as green apace. Upon the Boardmembers of Wright County having received a letter from Administrator Wolfsteller relating to the proposal for conveyence of the City - owned parcel, County Commissioner Pat Sawatzke, Administrator Wolfsteller, and Koropchak met. According to an agreement between the City and the County, the County is entitled to $12,049.21 for outstanding taxes and other costs. Therefore, the value of the City -owned parcel is $45,000. The City has been reimbursed in the amount of $5,000 from the Petro Fund. Of the proposed $40,000 purchase price to be paid by the Authority, it was understood between Satwatzke, Wolfsteller, and Koropchak that the City will reimburse the County $12,049.21 from the $25,000 payment to the City from the Authority. Following approval of the Private Redevelopment Contract by all three parties, Administrator Wolfsteller will address the County Commissioners with a Letter of Explanation and Intent. Additionally, utilization of the HRA non-restrictive funds constitutes the "qualifying local contribution" to exempt the City from the HACA Penalty for TIF District No. 1-20. The property line between the City parcel and the 1400 West Broadway parcel is misleading, as the easterly row of pine trees and a part of the driveway of the 1400 West Broadway parcel actually lies within the City - owned parcel. This was determined through a survey of the City -owned parcel. Therefore, the City -owned parcel is larger than it appears, and the Council Agenda - 5/28/96 developable area of the 1400 West Broadway parcel is reduced. Secondly, it is economically unfeasible for the Redeveloper to incur additional engineering and other costs for the purpose to perhaps construct one additional unit to the triple: unit located nearest the 1400 West Broadway parcel. B. Ai.TERNATIVE ACTIONR; 1. A motion to adopt the resolution approving the Contract for Private Redevelopment among the HRA, the City, and Cedrus Creels Craftsman, Inc. 2. A motion to deny adoption of the resolution. 3. A motion to adopt the resolution with certain modifications to the Contract. 4. A motion to table any action. C. $TA_FF REGOMII�LF.NDATICiN: With the Council's May 13 approval of the overall concept plan for the Prairie West project and with staff addressing and resolving the concerns raised by Councilmembers, the Administrator, Assistant Administrator, and the HRA Executive Director recommend Alternative •1. The overall concept plan for the Prairie West project provides a uniform development of high-quality housing, complies with the Monticello Comprehensive Plan, increases the tax base, removes substandard or blighted structures, and provides land for use as public green space. D. RI JPPORTINO DATA: Copy of the resolution for adoption; Map identifying the 1st, 2nd, 3rd, and 4th Additions. HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF MONTICELLO RESOLUTION NO._ RESOLUTION APPROVING CONTRACT FOR PRIVATE REDEVELOPMENT AMONG THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF MONTICELLO, THE CITY OF MONTICELLO AND CEDRUS CREEK CRAFTSMAN, INC. WHEREAS, the Housing and Redevelopment Authority in and for the City of Monticello ("Authority") is administering its Redevelopment Project No. 1 ("Project"); and WHEREAS, within the Project the Authority has proposed to create Tax Increment Financing District No. 1-20 (the "TIF District") In order to facilitate the development of a housing development by Cedrus Creek Craftsman, Inc. (the "Redeveloper"), known as the "Prairie West Project;" and WHEREAS, the Authority has reviewed a Contract for Private Redevelopment among the Authority, the City of Monticello and the Redeveloper (the "Contract") specifying the respective obligations of the parties regarding the TIF District and the Prairie West Project; and WHEREAS, the Board of Commissioners of the Authority has determined that It is in the best interests of the Authority to enter Into the Contract; NOW, THEREFORE, BE IT RESOLVED by the Board of Commissioners of the Housing and Redevelopment Authority in and for the City of Monticello as follows: 1. The Contract Is hereby approved in substantially the form presented to the Authority on this date, subject to modifications that do not materially alter the nature of the transaction, which are approved by the Chair and Executive Director; provided that execution of the documents by such officials shall be conclusive evidence of such approval. 2. The proper Authority officials are authorized and directed to execute the Contract on behalf of the Authority and to carry out on behalf of the Authority the Authority's obligations thereunder. 3. The proper Authority officials are authorized to execute any deeds any related certificates or documents necessary to carry out the real estate transaction contemplated under the Contract, all subject to the terms and conditions of the Contract. Approved by the Board of Commissioners of the Housing and Redevelopment Authority in and for the City of Monticello this day of , 1998. Chair ATTEST: Executive Director S"10$0l8 101190.1• USES AND SOURCES SHEET �. PROPOSED CITY PROPERTY (GILLE) SOURCES $32,950.79CI7Y $ 5,000 PETRO FUND 12,049.21 COUNTY 25,000 UP -FRONT 15.000 OWR-n%*E $45,000.00CLEANUP/OUTSTANDING TAXES $45,000 OF THE $25,000 UP -FRONT PAYMENT TO THE CITY, THE CITY WILL REIMBURSE THE COUNTY FOR $12,049.21. HRA S25,00000NTRIBUTION FROM NON-RESTRICTIVE FUNDS (HRA GENERAL FUND) TO THE PROJECT (REDEVELOPER) SATISFIES THE 5% LOCAL CONTRIBUTION THEREBYE THE CITY IS EXEMPT FROM THE HACA LOSS OF TIF DISTRICT NO. 1-20. PROPOSED TIF DISTRICT NO. 1-20 $ 65,000 UP -FRONT ASSISTANCE S 65-ODO PAY-AS-YOU-GO ASSISTANCE $130,000 TOTAL HRA AGENDA yt MAY 29, 1996 r, r -71I I IT7 :u,r,n.r. r•. Following the HRA special meeting of May 6, Preferred Title was contacted to prepare the title work necessary on behalf of the HRA. The week of May 13, Attorney Brad Larson telephoned to say the abstract had been updated and would drop it off at the office of Preferred Title. In a telephone conversation with Preferred Title on May 23, Preferred Title had not received the abstract from Attorney Larson. Larson's office said they would deliver the abstract, May 23. HRA Attorney Bubul would like to review the completed title work prior to closing. It is the intent of the HRA to hold the closing on Friday, May 31,1996. Barry Fluth is anticipating the same date, he will be out-of-town the prior Tuesday and Wednesday. S. Consideration of discussion relating to Pilling the vacated HRA commissioner's seat_ As of today, May 23, the HRA Executive Director has received no calls or resumes to fill the HRA seat vacated by Mr. Ellison. If you have ideas, please encourage. Candidates must be a resident of the City of Monticello. Page I May 24, 1995 1005 East River St. Monticello, MN 55362 Jeff O'Neil 250 East Broadway Monticello, MN 55362 Dear Jeff: I would like to be considered for the open position on the HRA. I feel that the HRA will continue to play a strong role in shaping the Monticello community through key acquisitions and aggressive partnerships with the Council, MCP, city Staff and the residents of Monticello at large. This is a great time in Monticello's history. The continuation of careful planning will allow for further growth while still preserving the essence of our town. I would like to be a part of this process by serving on the HRA. I look forward to continuing my involvement with my community either through the HRA position or in my present capacity as a Parks Commission member. Thanks for your consideration. If you have any questions of me please feel free to call at 295-6512. meq$ Sinc � Steve Andrews