HRA Agenda 02-06-1995AGENDA
MONTICELLO HOUSING AND REDEVELOPMENT AUTHORITY
Monday, February 6, 1995 - 7:00 p.m.
City Hall
MEMBERS: Chairperson Al Larson, Vice Chairperson Ben Smith,
Everette Ellison, Tom St. Hilaire, and Brad Barger.
STAFF: Rick Wolfsteller, Jeff O'Neill, and 011ie Koropchak.
GUEST: Rick ur Bob Murray, Residential Development, Inc.
1. CALL TO ORDER.
2. CONSIDERATION TO APPROVE THE JANUARY 11 AND JANUARY 26, 1995
HRA MINUTES.
3. PUBLIC HEARING AND AUTHORIZATION OF THE ACQUISITION AND
DISPOSITION OF LANDS RELATING TO TIF DISTRICT NO. 1-19.
6. CONSIDERATION TO APPROVE CHANGES TO THE PRIVATE REDEVELOPMENT
CONTRACT BETWEEN THE HRA AND RESIDENTIAL DEVELOPMENT, INC.
5. CONSIDERATION TO REVIEW FOR APPROVAL THE PRELIMINARY CONCEPT
FOR THE USE OF TIF (RON JOHNSON AND GENE GOAD)
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6. OTHER BUSINESS.
a) Authorization of monthly bills.
b) Next scheduled HRA meeting, Wednesday, March 1, 1995.
C) Report on TIF Seminar of February 2 and 3, 1995.
7. ADJOURNMENT.
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MINUTES
MONTICELLO HOUSING AND REDEVELOPMENT AUTHORITY
SPECIAL MEETING, Thursday, January 26, 1995 - 7:00 p.m.
City Hall
MEMBERS PRESENT: Vice Chairperson Ben Smith, Everette Ellison,
and Tom St. Hilaire.
MEMBERS ABSENT: Chairperson Al Larson and Brad Barger.
STAFF PRESENT: Jeff O'Neill and 011ie Koropchak.
STAFF ABSENT: Rick Wolfsteller.
GUEST: Dar, Lindl, Presbyterian Homes.
1. CALL TO ORDER.
Vice Chairperson Smith called the special HRA meeting to order
at 7:00 p.m.
2. CONSIDERATION TO APPROVE MODIFICIATION OF THE BUDGET OF THE
TIF PLAN RELATING TO TIF DISTRICT NO. 1-19.
Mr. Dan Lindl introduced himself, informed HRA members he was
employed by Presbyterian Homes, and explained his affiliation
with the Monticello Senior Housing Alliance, Inc. Mr. Lindl
was asked to help with structuring the project because of his
previous affiliation with B.R.W. Elness Architects and he is
riot in it for the money. It was hiu initial under:.:tanding
that the Huspital District was going to donate the
approximately 3 acre -b of kind, which is currently being
appraised by the Alliance or Hospital. He felt the site was
a good location as it relates to hospital servires; howuver,
a negative location as it relates to the close proximity to
the treatment plant.
Mr. Lindl reported the project is highly leveraged and no more
than 2% of the bond proceeds can be used for soft costs.
Unite should rent for no more than 90 cents per square foot
and the end product should have a minimum property tax of leas
than $10.00 per unit. Groundbreaking was anticipated for
March in hopeu of securing a low Intereut rate for the Lends.
The project must meet the roquirements of 50% of the uults are
occupied by residents with incomes of BOiti or luoo of the area
median Income. 20% of the unite are uceupiad by residezats
whose incomes do riot oxcoed 50% of the area wedlan income ur
40/60, and the maxlmuw runt for these units must be 30% of the
aroa median Income levul to quality for tax credit& and a
"Qualified Houaing District".
Page 1
HRA MINUTES
JANUARY 26, 1995
Koropchak reiterated the reference and background information
provided in the agenda relating to the 4enior housing project
and the TIF budget. The proposed budget of $406.000 is
recommended for approval by Attorney Bubul in order for the
project to cashflow.
Jeff O'Neill reflected concerns raised by the city staff
regarding the proposed project: First, riot a good location as
It relates to the close proximity to the Waste Water Treatment
Plant; secondly, no HRA, City Council or staff member was on
the initial search committee for site selection; thirdly, the
Hospital Board purchased the two properties and now the
perception is the HRA/City is to bail them out: fourth, the
HRA./City was sucked into the project; and fifth, the City has
a big interest in the established land appraisal because of
the City's potential interest to purchase property within the
Immediate area.
With the use of TIF for land acquisition, Tom St. Hilaire sees
the taxpayers money being shifted to or within the Hospital
District. Additionally, the Hospital District will benefit
through revenues generated from the services provided for the
operation acid management of the senior housing. Previously,
St. Hiliare gave support to the project if it were privately
developed, owned and managed.
HRA members supported the senior housing project concept and
Its need within the community. However, they agreed that the
HRA was not involved in a site search, not informed of the
project details, mislead as to the equity provided by the
Hospital (land donation to a dollar donation), atid now the HRA
becomes the entity to halting or slowing down the project.
The HRA asked, "What will it take to keep the project alive?"
Mr. Lindl reported the project won't work with rental rates at
$1.15 per square foot. To enhance a better cash flow the
sources of funding might be revenue bunds lasued by the city,
guaranteed luau by the HRA for a 112% point reduction, and
laud donated by the husplt.Al.
Everette Ellison made a motion to reaffirm the TIF budget of
$210,830 (NPV .i 8%) as approvud on January 11, 1995, with the
addition of $10,000 for firetruck path/hydrants; recommended
the Hospital donate the land; recommended the Alliance
research other entities for a low or intereot-free loan, and
gave support of a loan which would increase the cashflow
Page 2
HRA MINUTES
JANUARY 26, 1995
of the project. Tom St. Hilaire seconded the motion and with
no further discussion, the motion passed 3-0. Yeas: Everette
Ellison. Tom St. Hilaire, and Ben Smith. Nays: None.
3. CONSIDERATION TO REVIEW FOR APPROVAL AN EQUAL
DISBURSEMENT/PAYBACK AGREEMENT BETWEEN THE HRA. HOSPITAL, AND
ALLIANCE.
horopchak informed HRA members that the Loan Agreement of
January 11, 1995, between the HRA and the Alliance did not
include an equal disbursement or payback provision. The HRA
is now asked to consider approval of an equal
disbursement/payback agreement.
Because the Loan Agreement of January 11, 1995 was subject to
an equal disbursement and payback clause or provision and with
the financial funding for senior housing project uncertain,
Tom St. Hilaire made a motion to deny approval of an Equal
Disbursement and Payback Agreement. Everette Ellison seconded
the motion and wish no further discussion, the motion passed
3-0. Yeas: Tom St. Hilaire, Everette Ellison, and Ben Smith.
Nays: None.
Upon donation of the land by the Hospital and approval of
project financing, the HRA will conolder approval of the equal
disbursement and payback agreement.
OTHER BUSINESS.
Everette Ellison reported he would be uut-of-tows, frum
February 10 through March 20.
5. ADJOURNMENT.
The HRA meeting adjourned at 8:35 p.m.
z'S�-L �<a
011ie Horopcak, HRA Executive ve Director
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Page 3
MINUTES
MONTICELLO HOUSING AND REDEVELOPMENT AUTHORITY
Wednesday, January 11, 1995 - 7:00 p.m.
City Hall
MEMBERS PRESENT: Chairperson Al Larson, Vice Chairperson Ben
Smith, Everette Ellison, Tom St. Hilaire, and
Brad Barger.
STAFF PRESENT: Jeff O'Neill and 011ie Koropchak.
STAFF ABSENT: Rick Wulfsteller.
GUEST: Brad Larson, Metcalf & Larson.
Rick Murray, Residential Development, Inc.
1. CALL TO ORDER.
Chairperson Larson called the HRA meeting to order at 7:00
p.m.
2. CONSIDERATION TO APPROVE THE DECEMBER "„ 1994 AND DECEMBER 15,
1994 HRA MINUTES.
I
Everette Ellison made a motion to approve the December 7, 1994
HRA minutes. Seconded by Brad Barger and with no corrections
or additions, the minuted were approved as written.
Brad Barger made a motion to approve the December 15, 1994 HRA
minutes. Seconded by Everette Ellison and with no corrections
or additions, the minutes were unanimously approved as
written.
3. CONSIDERATION TO ACKNOWLEDGE AND RECORD THE DISCLOSURE AND
ABSTENTION STATEMENTS FROM THE TWO AFFECTED HRA
COMMISSSIONERS.
At the December 15, 1994 HRA mcuting, HRA Commissioners Al
Larson and Brad Barger were notified of the potential conflict
of interest due to serving on both the HRA and the Monticello
Senior Housing Alliance, Inc., as governed Ly Mirinosuta
Statutes, Suction 469.009. Subd. 1.
Per the advice of HRA Attorney Steve Bubul, affected
Commissioners Larson and Barger had two options to avoid the
potential conflict of interest. One, a Disclosure and
Absention Statement. This a declaration of potential conflict
of interest to be executed and submitted to tho HRA Office
a Pago 1
HRA MINUTES
JANUARY 11, 1995
within one week after the commissioner became aware of the
potential cor.flict. Or secondly, resign from one of the two
boards.
Both, Commissioner Larson and Barger executed and submitted a
Declaration of Potential Conflict of Interest Statement to the
HRA Office on December 22, 1994 which satisfied the one week
time limit. The statement disqualifies the two commissioners
from voting or holding any discussions with other HRA members
or staff during HRA meetings or otherwise as it relates to the
proposed senior housing project.
Non -affected HRA Commissioners Ellison, Smith, and St. Hilaire
acknowledged receipt of the Declaration of Potential Conflict
of Interest Statements from affected Commissioners Larson and
Barger and requested the acknowledgement be recorded in the
January 11, 199E HRA minutes.
4. CONSIDERATION TO READOPT THE PRELIMINARY CONCEPT APPROVAL FOR
USE OF TIF FOR THE SENIOR HOUSING PROJECT AND THE APPROVAL FOR
AUTHORIZATION FOR RE -IMBURSEMENT OF FEES ASSOCIATED WITH THE
SENIOR HOUSING MARKET ANALYSIS.
With Vice Chairperson Smith presiding over the HRA meeting,
HRA Commissioners Ellison, Smith, and St. Hilaire considered
the action taken by the HRA on November 9, 1994 relating to
the approval of the preliminary concept for use of TIF on the
senior housing project and re -imbursement of fees.
Commissioner Tom St. Hilaire made a motion to readopt the
preliminary concept approval for use of TIF to asblst with the
financing the senior housing project and the approval to
authorize re -imbursement of the S5, 600 fire associated with the
Senior Hous;ng Market Analyoio. Everette Ellison seconded the
motion a„d with no further discusoion, the, motion passed 3-0-
2. Yeau : Ton St. Hilaire, Everette Ellison, and Bet. Smith.
Nays: None. Absention: Al Larson and Brad Barger.
S. CONSIDERA71 ON TO READOPT THE RESOLUTION AUTHORIZING PRG TO
PREPARE THE TIF PLAN RELATI140 TO THE ESTABLISHEMNT OF TIF
DISTRICT 110. 1-19, A HOUSING DISTRICT.
Vice Chairperson Smith directed HRA Commissioners Ellison, St.
Hilaire, and himself to cunalder the action taken by the HRA
on Docember 7, 1994 relating to the resolution auth,rizing PRO
to prepare the TIF Plan for the Houuing District.
Page 2
HRA MINUTES
JANUARY 11, 1995
Commissioner Tom St. Hilaire made a motion to readopt the
resolution authorizing PRG to prepare the TIF Plan relating to
the establishment of TIF District No. 1-19, a Housing
District. Everette Ellison seconded the motion. In addition
to authorizing PRG to prepare the TIF District to assist with
financing the senior housing project, the resolution states
the HRA agreed to waive the receipt of the TIF Preliminary
Agreement and $5,000 Cashier Check, and agreed to allocate the
estimated $7,500 PRG and Legal fees and previous $5,600 Health
Planning 6 Management Reoources,Inc. fee as Administrative
Custs. With no further discussion, the motion passed 3-0-2.
Yeas: Tom St. Hilaire, Everette Ellison, and Ben Smith.
Nays: None. Absentlon: Al Larson and Brad Barger.
6. CONSIDERATION TO ADOPT A RESOLUTION MODIFYING THE PLAN
RELATING TO THE REDEVELOMENT PROJECT NO. 1L MODIFYING THE
PLANS RELATING TO TIF DISTRICT NOS. 1-1 THROUGH 1-18, AND
APPROVING AND ADOPTING THE PLAN RELATING TO TIF DISTRICT NO.
1-19.
Koropchak informed HRA Commissioners Ellison, Smith, and St.
Hilaire that the proposed 48 -unit senior housing project has
an estimated minimum market value of $1,850,000, an annual tax
increment of $42,265, and captured tax capacity of $37,454.
Thu HACA Lose to the City Is estimated at a Net Present Value
(NPV) of $78,700 at 5.5%. This loss lo waived if the project
qualifies as a "Qualified Housing District".
At the time the agenda was distributed, the TIF Plan included
two budget options of $246,000 and $390,000. Both options
Included capitalized interest and discount amounts for bonding
and the lesser amount of $246,000 deleted the land
acquioition. Those budget amounts were NPV rg; 8%.
Upon the recommendation of HRA Attorney Bubul, a third budget
option of $370,830 was submitted at the HRA meeting. The
third option lrtcludod the deletion of the capitalized interest
and d13count Muco tho TSF osslstanco is the pay-as-you-go
financing method, public improvement costo for utility
roalignment of $12,000 and a bike/pudestrian path bridge of
$10,000 woro added upon city staff recommondation, the
administrative cost woo maximized of 10% of the projocted
Increment, and the contingoney amount increasod to utilize
ovailablo TIF dollars therubye enhancing the cash flow of thu
project.
Koropchak further noted that a budget within a TIF Plan 19 a
guideline of idontified and qualifying TIP exponditureo of
Pago 3
HRA MINUTES
JANUARY 11, 1995
which the total expenditures do not exceed the projected tax
increment from the district. The proposed budget allows room
for flexibility. As in the case of the Soils Correction
District, a Housing District must expend 100% of the
Increment, less 10% admininstrative costs, within that
district. The TIP enforcement tool for disbursement of TIP
expenditures lies within the Private Redevelopment Contract
between the HRA and a developer, not, with the approved TIP
budget. In other words, the pay-as-you-go assistance for the
site/public Improvements will be paid to the Alliance as
outlined in the Contract.
After some discussion, Tom St. Hilaire made a motion to adopt
the resolution modifying the plan relating to the
Redevelopment Project No. 1, modifying the plans relating to
TIP District No. 1-1 through 1-18, and approving and adopting
the plan relating to the TIP Dstirct No. 1-19. The motion
included a budget total of $210,830 NPV at 8.0%; this a
reduction of $169,000 from the third option of $379,830. The
land acquisition of $120,000 was deleted, and the contingency
and administration costs were reduced to $20,000 each.
Everette Ellison seconded the motion and the motion passed on
a 3-0-2 vote. Yeas: Tom St. H111aire, Everette Ellison, and
Ben Smith. Nays: None. Absentlon: Al Larson and Brad
Barger.
The land acquisition was deleted because:
1. The HRA members understood tliu Hospital District was
donating the land as equity Into the project.
2. The HRA members heard the concern raised by city
staff relating to the potontial releaso of odors from the
Waste witer Treatment Ploiit. Staff did riot support the
use of TIP for land write-down at this site locatlo;,.
3. Thu HRA members wore informed that the Alliance
requested the architect to incorporatu special filters
Into the design of the building to ducrease the potential
intake of outside air and that the Alliance viowed the
number of reported odors from the Treatment Plant as
Insignificant.
4. On December 7, the HRA members approved a resolution
authorizing PRO to prepare a TIP Plan relating to TIP
District No. 1-19 and viewed the potential odors from the
Treatment Plant as insignificant as it rolatoo to the uuu
of TIP and the proposed site of the senior housing
project.
5. On December 15, a meeting was hold between RSrocht,
Lindl, Bubul, wolfoteller, and Koropchak to dlocuss the
ounior housing project coots and the structuring as it
Pago 4
HRA MINUTES
JANUARY 11, 1905
related to TIF and the issuance of bonds. Although, the
elimination of the land acquisition from the TIF Plan
would keep the project cleaner, the decision to include
the land acquisition in the TIF budget was left undecided
until the list of itemized project costa were available
from Dan Lindl. Therefore, this meeting is the first
opportunity the HRA had to review a proposed budget fur
approval.
The administrative and contingency costs were reduced to
$20,000 each because:
1. Previously, the HRA approved the estimated legal and
PRG fees of $7,500 for creation of District No. 1-19 and
the re -imbursement of $5,600 for the Housing Market Study
Analysis as Administrative Coots. Members felt a maximum
of $20,000 was sufficient and allowed for a $6,900 over-
run.
2. The HRA felt a contingency of $20,000 was a
sufficient amount for over -runs.
3. The HRA felt once the budget was approved, dollars
would be expended to the maximum of the budget amounts.
4. The HRA recognized the option to modify the budget at
a later date if an Increase to the budget was necessary.
7. CONSIDERATION TO REVIEW THE FIRST DRAFT OF THE PRIVATE
REDEVELOPMENT CONTRACT BETWEEN THE HRA AND THE MONTICELLO
SENIOR HOUSING ALLIANCE. INC.
As the senior houuing project has not been fully defined nor
the project financing approved, it was premature to prepary a
first draft of the Private Development Contract. TK.,G Item
will appear on the nuxt HRA agenda.
CONSIDERATION TO APPROVE A NOTE IN THk AMOUNT' OF y40 z00 FROM
THE HRA TO THE MONTICELLO SENIOR MOUSING ALLIANCE, INC.
Attorney Bubul has prepared a Luan Agreement and Promissory
Nato for HRA consideration. The interim loan is between the
Monticello Senior Housing Alliancu, Inc. (the "Borrower") and
the HRA (tho "Londor") and is necessary to finance the
estimated $81,000 Alliance expenditures which are expanded
prior to receipt of thu bund funds. Thu prupared agreement Ss
for an Interim loan of $40,500 at 8.5% intureat rate over 120
days. Disbursement at a minimum amount of $5,000 and upon
uvldoncu GatiGfactury to the Lender of preliminary costs in
connection with the project that are duo or have been paid by
Page 5
HRA MINUTES
JANUARY il, 1995
the Borrower. The Hospital Board has approved a loan to the
Alliance in the amount of $40,500 at 8.5% interest rate over
120 days.
Koropchak noted the HRA loan would be unsecured and the
dollars must be transferred from the HRA Ceneral Fund, not the
SIF Surplus Fund, because 100% of the project expenditures
must be from within the Housing District. Additionally, no
loan dollars are to be disbursed until January 24, 1995, or
until the City Council readopts the resolution to reimburse
certain expenditures from the proceeds of the bonds.
Tom St. Hilaire asked if the loan agreement or promissory note
included an equal disbursement and payback provision for the
Hospital and HRA loans. Unable to answer St. Hilaire
question, Koropchak responded she would clarify the question
with Attorney Bubul.
Tom St. Hilaire made a motion to approve the loan agreement
and promissory note in the amount of $40,500 at 8.5% Interest
rate over 120 days subject to an inclusion of a clause or
provision within the jreament for equal disbursement and
payback of the Hospital and HRA loans. Everette Ellison
seconded the motion and with no further discussion, the motion
passed on a 3-0-2 vote. yeas: Tom St. Hilaire, Evurette
Ellison, and Ben Smith. Nays: None. Absentlon: Al Larson
and Brad Barger.
9. CONSIDERATION TO REVIEW A REQUEST FROM BRAD LARSON.
Brad Larson gave a historical background on the 12 foot paved
driveway lying within Lots 9 and 10, Block 50. Since the City
purchased and demolished a home on the northerly portion of
Lotu 9 and 10, they obtained the deed. Through a decd to the
City from Larry Flake, the City obtained an casumeut within Lot
10. The alignment of the paved driveway today vxist becauco
.ne City ruqueatud a now location for- the curbcut along Locust
Street; however, the previous City Adminiotrator had no time
to relocate or shift the easements. Later, Metcalf & Larson
obtalnod a 5 ft strip along the easterly boundary of Lot 8,
wherein lies the options to block the driveway. There Is no
pruscriptive casement.
Brad Larson reported as the community hao grown, the activity
at the post office has increased csucing a number of occldent3
In the area. Secondly, upon Metcalf & Lar�aun blocking the
drlvuway for onow romoval, did Metcalf & Larson hoar negative
communtu from the public. Postal Maotur Jack Hutchluoon dues
Pago 6
ON
HRA MINUTES
JANUARY 11, 1995
not view this as a tenant problem but as an owners problem.
In order to foster a positive public image and prevent
additional negative public comments, Brad proposed that since
the City owned the northerly portion of Lots 1, 2, and 3
Block 50 and since these properties lie within a TIF
Redevelopment District; the HRA/City might consider providing
an alternative access to Linn Street for the post office which
would enhance the traffic flow. The post office originally
had a 10 -year lease and now operates under a 5 -year option
lease.
The HRA outlined three options: One, Metcalf & Larson block
the access to Locust Street with a chain. O'Neill reported
Administrator Wolfsteller indicated the public has a right -to -
cross. SF,condly, The HRA!City provide an alternative access
for the post office to Linn Street via the property owned by
the city. Thirdly, Metcalf & Larson address a letter to the
owner of the post office property giving 30 -day notice to
close the driveway because of the increased potential for
liability acid noting Metcalf & Larson will not be hold liable.
The HRA recommended Brad Larson address a letter to the owner
of the post office property giving 30 -day notice to close the
drlvoway because of the Increased potential for liability and
noting Metcalf & Larson will not be held liable. The HRA felt
the conflict was between the two proporty owners. A letter to
the owner of the post office property may cause the owner to
contact the city for purchase the northerly portions of Lots
1, 2, and 3 In order to provide an access to Linn Street for
the tenant.
10. CONSIDERATION TO APj'ROV£ CHANCES TO THE PR_IVATE REDEVELOPMENT
CONTRACT BETWEEN THE HRA AND RESIDENTIAL DEVELOPMENT, INC.
Rick Murray stated the River M111s prujuct began in Auguut of
1304 and slncu then a number of things occurrud causing a
change in the project concept. Mortgage rates Increaued,
future potential to relocate the County Road 75 and I-14
Interchangu wan highlightud, realignment of the storm sower
was suggested by City Engineer, arid commencement of
construction delayed. Therefore, the project completion date
has boon oxtunded, tho total catimated market value decreased,
and the construction phasing ruducud from four to two.
Noropch ak noted that a meeting with HRA Attornoy Bubul was
scheduled for tie next day at 10:00 a.m, to discuss the final
dotai]o of thu Prlvato Redovulopment Co11LtdCt. She suggeutod
the ltcmu of must interest (market valuu and timing) be
Page 7
HRA MINUTES
JANUARY 11, 1995
presented thereafter to the HRA. Basically, the total
estimated market value has decreased by approximately $3
million from the adopted TIF Plan and the termination date of
the district would be extended by two years from the original
anticipated termination date of 1999.
11. CONSIDERATION TO APPROVE ISSUANCE OF THE CERTIFICATE OF
COMPLETION FOR ROY AND TODD SCHULZ DBA POLYCAST SPECIALTIES.
INC.
As the City Building Official issued a full Occupancy Permit
to Roy and Todd Schulz for completion of their 16,640 sq ft
office/manufacturing facility on December 5, 1994; the HRA
declared the construction of the minimum improvements complete
as per the Private Redevelopment Contract between the HRA and
the Schulz Properties. Everette Ellison made a motion to
approve issuance of the Certificate of Completion for the
Schulz Properties. Ben Smith seconded the motion and with no
further discussion, the motion passed 5-0.
Full occupancy permits have not been Issued by the Building
Official for the H -Window or Custom Canopy minimum
Improvements so no HRA action is neceesary.
12. OTHER BUSINESS.
a) Ben Smith was appointed as the HRA representative to the
IDC Brainstorm workshop on January 19, 1995.
b) The HRA authorized payment of the December PRC and Holmes
& Craven billings. Members inquired to the progress of
rusearching for other financial consultants for HRA
consideration. Noropchak stated she has only contacted
Pull lcorp.
C) The next HRA meeting was rescheduled from February 1 to
Monday, February 6, 1995, 7:00 p.m. to meet the schedules
of Ellison, Smith, and St. Hilaire.
13. ADJOURNMENT.
The HRA meeting adjuurned at 8:45 p.m.
011io Koropchak, HRA Evocutivo DSructor
'�_ Page 8
JANUARY 26, 3995 HRA MINUTES TO BE SUBMITTED AT THE MEETING.
\.L.
HRA AGENDA
FEBRUARY 6, 1995
3. Public Huaritio and authorization of the acauisition and
disuosition of lands relating to TIF District No. 1-19.
A. Reference and Backaround:
This item is for consideration by Commissioners Smith,
Ellison, and Tom St. Hilaire.
Although the approved TIF budget does not included land
acquisition and since the public hearing notice for
acquisition and disposition of lands had been published,
Attorney Bubul recommended the public hearing be opened wal
continued until the March 1 or a special meeting of the HRA.
The senior housing project is on hold until Barbara
Schwlentek, Hospital Administrator, returns from vacation on
February 9. Dan Lindl and Steve Bubul suggest a meeting with
key people to define the project and the intent of the
Hospital District. Some of the Hoopital Board members
are in agreement to slow -down the project and to lay the
project financing out on the table. Therefore any other
HRA/TIF action regarding this project will be held In the
future: Approval of loan agreement and the Private
Redevelopment Contract. At this time, the C.ity Council is
still scheduled to hold its public hearing and adopt of the
resolution relating to TIF Plan for District No. 1-19 on
February 27, 1995.
Enclosed lu a copy of the HRA public hearing notice and a copy
of the January 26, 1995 HRA appruved budget for TIF District
No. 1-19.
It is requested that Vice Chairperson Smith opus the public
huaring and call for a contination until March I or upon a
special HRA meeting.
Page 1
Nolae of Pttlb Nwh
HOUBOfO AND REDEVELOPMENT AUTHORITY
of AND FOR
TNR CRY OF MONMELLO, YRNNE9OTA
NOTICE 19 HEREBY OMENOto H ertd RedeveloprMM Au0lortry Re
�4wlry�
Of the City of "WoeMo, Canty of YMW" Blete of Mktnetota, MI Mo
e puWe Mwkq m Monday, Feb S. 19M. at eppro.heetely 7:00 p.m., et the Clry
Hap, Momkedo, Mkwwmta, retodrq to " proposed OcaWsltlon wW Napotltim of
pgwly as euVwdred M ar Tu twemem Flr n Plan for Tea Ineremem Firwo
ONbtclIfa. 1.19,
tm property proposed lar ocpileteon and eubeeou" dtepostdon wtlhtn Tu
Moment a Ototkt No. 1.19 to as boo" 1215 11en Ediemd, Monecefe,
MN
-0114 Koropthek. HALA EnoutNe Okatw
(Jen. 20, 1ON
TIF DISTRICT NO. 1-19 BUDGET
APPROVED BY HRA JANUARY 26, 1995
LAND ACQUISITION
DEMOLITION/REMOVAL
$ 7,500.00
SITE IMPROVEMENTS
STORM SEWER
15,440.00
SANITARY SEVIER
18,950.00
WATER
3,400.00
PUBLIC IMPROVEMENTS
UTILITY REALIGNMENT
12,000.00
FIRETRUCK PATH/HYDRANTS
10,000.00
BIKE/PBD PATHWAY BRIDGE
10,000.00
SITE PREPARATION
39,208.00
OTHER PREPARATION FOOTINGS
15,675.00
PARKING/PAVING/LANDSrAPING
48,657.00
SUBTOTAL
$170,830.00
CONTINGENCY
20,000.00
ADMINISTRATION
20,000.00
TOTAL
$220,830.00
C'
14,
HRA AGENDA
FEBRUARY 6, 1995
Cunsideration to approve changes to the Private Redevelopment
Contract between the HRA and Residential Development. Inc.
RDI .
Reference and Backuruund:
The TIF Plan relatiny to TIF District No. 1-18 was approved by
the City Council on November 28, 1994, based on the marketed
minimum market value of $19,312,400 and the construction of 83
single -homes, 48 twin -homes, and two commercial properties.
The last year to collect increment was anticipated in 2001.
However, a Soils Correction District has a maximum life
duration of 12 years, in other words, the duration of tlils
district could extend to November 2006.
The HRA adopted a resolution approving the Private
Redevelopment Contract between the HRA and RDI on December 7,
1994. The estimated market value was $17,057,400 and the
construction of 64 single-homeu, 48 twin-homeu, and two
commercial prupertles. The market value decreased bec,uue the
developer was unable to develop a portion of the single -homes
because of a now site design and usability to gala access
through the Norrell property. The last year to collect
Increment remained in 2001.
Due to the changes within thu project as Outlined by Rick
Murray at the January 11 HRA meeting (sue minutes), the
estimated minimum market value within the negotiated Private
Redevelopment Cuntract iu $16,275,000, a ruductiun of
$3,037,400 from the approved TIF Plan or a reduction of
auuthor $782,400 frum thu Contract approved un Dueembur 7 by
the HRA. The construction of single -homes iu 67, twin hnm,,a
remain at 48, and the two commurcial prupurtleo were d eletud.
The lout year to collect increment lu now in 2003, a twu-ycor
extension.
The project generates eufflcient tax increment to cuver thu
HRA'u debt oervice of $102,000. Resember. the HRA .,ppruved
thu uuc of TIF for thls project for the vole purpoue to auuiut
with the restoration of an unuafe gravel pit.
The pay -au -you -go paymento are paid upon a pur urntage of thu
available tax increment and upon meeting a minimum market
value and number of unitu cuuutructud criteria within the
phoned duvolopment. Tho tutal $102,000 TIF auuiutancu may bu
paid to thu dovolopur prior to final complutiun of thu
duvolopment. Howuver, the HRA's purpooe to rooture the
Page 1
HRA AGENDA
FEBRUARY 6, 1995
gravel pit would be accomplished as HRA payments also require
evidence of soils correction work completed or certification
of payment.
B. Alternative Actions:
1. A motion to approve the changes to the December 7 Private
Redevelopment Contract between the HRA and RDI.
2. A motion to deny the changes to the December 7 Contract.
3. A motion to table any action.
C. Staff Recommendation:
Staff recommends Alternative Action No. 1, as the HRA's
purpose for the use of TIF will be accomplished and the
development generates sufficent tax increment to cover the HRA
debt. Huwever, it does not please me when a developer markets
a project on a greater market value with a shorter completion
date and then Insist the City Council approve the TIF Plan
prior to the Private Redevelopment Contract be:uy executed and
prior to completion of the orderly annexation by the Muncipal
Board. The orderly annexation has been rutifiud by thu
Muncipal Board.
D. Supporting Data:
Copy of excerpts of the Private Redevelopment Contract noting
changes.
Page 2
ARTICLE III
Soil Corrections
Section 3.1. Status of Redevelovment Property. As of the date of this
Agreement, the Redeveloper has entered a purchase agreement (the "Purchase
Agreement") to acquire the Redevelopment Property from a third party. Before the
Authority has any obligations hereunder, the Redeveloper shall close on acquisition
of the Redevelopment Property in accordance with the terms of the Purchase
Agreement. The Authority has no obligation to purchase the Redevelopment
Property or any portion thereof.
Section 3.2. Soil Corrections. The parties agree and understand that
development of the Redevelopment Property is hindered by the presence of a former
gravel pit with steep slopes and other soil deficiencies, all as further described in
A Geotechnical Evaluation Report for Residential Development, Inc., dated August
3, 1994 prepared by Braun Intertec Corporation and on file in City Hall. In order
to make development of the Minimum Improvements economically feasible, the
Authority will reimburse the Redeveloper for the cost of the Soil Corrections
described in Schedule B hereto, in the maximum amount of $102,000 and subject to
the terms of Section 3.3 hereof. In the event that the Soil Correction costs exceed
$102,000 such excess costa shall be the responsibility of the Redeveloper. The
Authority shall have no obligation to the Redeveloper or to any third party with
respect to any defects in the construction of improvements financed or reimbursed
by the Authority as Soil Corrections. The Soil Corrections shall be commenced and
completed by the dates required for Phase 1 of the Minimum Improvements as
specified in Section 4.3 hereof, and shall be carried out in accordance with the
Construction Plans approved under Section 4.2 hereof. Soil Corrections shall be
deemed commenced upon commencement of grading and filling within the gravel pit
area of the Redevelopment Property, and shall be deemed complete upon the
reasonable determination of the City Engineer.
Section 3.3. Financing of Soil Corrections. The Authority will reimburse the
Redeveloper for the coat of Soil Corrections paid by the Redeveloper pursuant to
Section 3.2 hereof in the total amount of $102,000, in accordance with the following
terms and conditions:
(a) The Soil Correction coats will be paid by the Authority to the
Rodeveloper without Interest thereon in semi-annual Installments payable on each
February 1 and August 1 ("Payment Dates") commencing August 1, 1998 and
concluding no later than February 1, 2004, which payments will be made from
Available Tax Increment as defined in this Section and from no other source. and vM
be subject to all the terms and conditions of this Section.
(b) The term "Available Tax Increment" means 90 percent of the Tax
Increments paid to the Authority with respect to the TIF District during the six
months preceding any Payment Date; provided that Available Tax Increment shall not
include any Tax Increments attributable to any portion of the Redevelopment
Property that Is developed for commercial use. For the purposes of this Section. the
term "commercial use" moans any use other then residential use.
(a) On Payment Dates August 1, 1998 and February 1, 1999, the Authority
shall pay to the Redevolopor 78 percent of the Available Tax Increment applicable to
sn7l"O
also -46 8
each Payment Date, provided that the aggregate sum of payments during such period
shall not exceed $78,500.
(d) If at least 90 percent of the number of Phase i single family and
twinhome units required under Section -4.1 (b) hereof have been constructed as of
January 2, 1999, and if the assessor's eatimated market value for Phase 1 meets the
requirement of Sect on 4.1(c) hereof on July 1, 1999 (collectively, the "Phase I
Requirements"), then on Payment Dates August 1, 1999 through February 1, 2002,
the Authority shall pay to the Redeveloper 80 percent of the Available Tax Increment
applicable to each Payment Date; provided that the aggregate sum of all payments
under paragraphs (c) and (d) of this Section shall not exceed $81,900.
(e) If the Phase 1 Requirements are not timely met, than on Payment Dates
August 1. 1999 through February 1, 2002, the Authority shall pay to the
Redeveloper 50 percent of the Available Tax Increment applicable to each Payment
Date; provided that the aggregate sum of all payments under paragraphs (c) and (e)
of this Section shall not exceed $51,000. If the aggregate payments under paragraph
(d) exceeded $51,000, no further payments shall be made under this Section unless
and until payments are made under paragraph (f) of this Section.
(f) If at least 90 percent of the number of Cumulative Phase 16 2 single
family and twinhome units required under Section 4.1(b) hereof have been
constructed as of January 2. 2002, and if the Cumulative Phase 18 2 assessor's
estimated market value meets the requirement of Section 4.1(c) hereof on July 1.
2002 (collectively, the "Cumulative Phase 1 i 2 Requirements"), then on August 1.
2002 the Authority shall pay to the Redeveloper all Available Tax Increment
previously withheld by the Authority under paragraphs (c), (d) and (e) of this
Section, without interest thereon, and on Payment Dates August 1, 2002 through
February 1, 2004, the Authority shall pay the Redeveloper 100 percent of the
Available Tax Increment applicable to each Payment Date; provided that in no event
shall the payments under this paragraph, aggregated with all prior payments under
this Section, exceed $102,000.
(g) If the Cumulative Phase 1 & 2 Requirements are not timely met, then
such event shall be an Event of Default hereunder, and the Authority may exercise
any remedles available to it under Section 9.2(a) or (b), including without limitation
suspension of payments on Payment Dates August 1, 2002 and thereafter or
termination of this Agreement.
(h) The Authority shall have no obligation to pay any portion of the Site
Improvement costs that remain unpaid after A February 2, 2001. The Authority may
prepay the Site Improvement costs at any time.
(1) The Authority shall not be obllgatod to make any payment under this
Section if: (1) A there Is an Evont of Default on the Redeveloper's part under this
Agreement A that has not been cured as of the Payment Date (except to the extent
payment is otherwise provided for under paragraphs (c) through (f) of this Section
in the event of defaults described thereto) ; or (it) the Redeveloper has failed to
comply with the payment procedures described in paragraph (j) herein. If an Event
of Default to cured in accordance with this Agreement, the Available Tax Increment
withheld shall be doferred and paid, without interest thereon, on the next Payment
Date eftec the Event of Default is cured.
snnsw
OXIOC-66
0) At least 30 days before the first Payment Date (August 1, 1898), the
j
Redeveloper must submit to the Authority a payment request certificate signed by
its duly authorised representative stating that the Redeveloper has yaid the Soil
Correction costs in at least the amount of =102,000 and that no Event of Default has
occurred and is continuing under this Agreement. The first payment request
certificate must be accompanied by a certificate of a project engineer or other project
supervisor showing in adequate detail that the Site Improvement costs specified in
Section 3.2 have been incurred and paid by the Redeveloper.
C
(k) The parties agree and understand that the Authority and City may, at
their sole discretion, terminate the TIF District on the Maturity Date or any prior
date on which the Authority has received or Is entitl-d to receive Available Tax
Increment in amount sufficient pay the Soil Correction costs In full in accordance
with the terms of this Section.
Section 3.4. Payment of Authoritv Expenses. Pursuant to that certain
Preliminary Agmement between the Authority and the Redeveloper dated as of
October 8, 1984 (the "Preliminary Agreement"). the Redeveloper has deposited the
sum of $5,000 with the Authority. As specified in the Preliminary Agreement. the
Authority will return the Redeveloper's deposit upon commencement of the Soil
Corrections. if the Soil Corrections are not commenced by the date for oommencement
of Phase 1 specified in Section 4.3 hereof, all right, title and interest in the deposit
shall be deemed transferred to the Authority. In all other respects, this Agreement
supersedes and replaces the Preliminary Agreement.
sA►swo
sno-as
ARTICLE In
Construction of Mluic um Improvements
Section 4.1. Construction of Minimum Improvements.
(a) The Redeveloper agrees that it will A cause constrnctim of the Minimum
Improvements on the Redevelopment Property in'accordance with the approved
Construction Plans and at all times prior to the Maturity Date (while Redeveloper
owns the Minimum Improvements) will operate and maintain, preserve and keep the
Minimum Improvements or muse the Minimum Improvements to be maintained,
preserved and kept with the appurtenances and every part and parcel thereof, in
good repair and condition.
(b) The Minimum Improvements shall consist of the following improvements:
Phase 1: A 41 single family detached homes
A 24 twinhome buildings (A 48 units)
Phase 2: A 28 single family detached homes
A 24 twinhome buildings (A 48 units)
A Cumuleilve _
Phases 1 8, 2: 87 single family detached homes
-- - _ ._ . 48 tvAnhmte buSdiags (88 units)
(c) A The Minims Improvements for each Phase shall have an assessor's
t estimated market value (including land and improvements) as follows:
A Phase 1: As of January 2, 1888, single family homes emu
_ have an aggregate estimated market value of
$4,000,000, and each single family home shall have
an estimated market value of at least $8D,OOO.,
As of January 2, 1888, twinhomes shali have an
aggregate estimated market value of $4, 000, 000, and
each twinhome building (2 units) shall have as
estimated market value of at least 1801000.
Phase 2t - - As of January 2, 2002, single femW homes dM
^—
--have an aggregate estimated morket veins of
$3,818.000, and each singte bully home shall have
an estimated market value of at least :85,000.'
As of JaMAW 2, 2002, twinhomes shall baw as
aggregate estimated market value of $4,880.000, and
each twinhome building (2 units) shall have an
estimated market value of at least $180.000.
Cumulative
Phases 1 i 2:_ As of January 2, 2002, single family cad twin hmee
combined shall have an aggrespate estimated market
value of $18,278,000, and each single family home
onnvw
Milo-"
and twinhome building shall have the minimum
market value specified above.
Compliance with the above assessor's estimated market value requirementa
shall be determined on July 1 in the year in which the market value is requited to be
In place. Therefore, compliance with the Phase 1 estimated market value requirement
will be determined on July 1, 1899, and comPIf— with the Phase 2 estimated market
value requirement will be determined on July 1, 2002.
The parties agree and understand that the covenant under this Section 4.1(c)
shall not constitute an "assessment agreement" within the meaning of Section
468.177, Subd. 6 of the Tax Increment Act, and that such covenant is not intended
to bind owners of individual lots or housing units upon acquisition from the
Redeveloper. Any failure by Redeveloper to perform its obligation under this
paragraph constitutes and Event of Default hereunder for which the Authority
retains all remedies specified in Article IX hereof.
(d) The parties agree and understand that as of the date of this Agreement
the Redeveloper is undertaking a subdivision plat of the Redevelopment Property,
and that in connection with such plat the Redeveloper will enter into a subdivision
development agreement with the City (the "Subdivision Agreement"). The parties
hereto anticipate that the Subdivision Agreement will include A obligations by the
Redeveloper regarding landscaping, restrictive covenants and related matters. Any
obligations of Redeveloper under this Agreement are in addition to Its obligations
under the Subdivision Agreement. Further, any default by the Redeveloper under
the Subdivision Agreement shall constitute an Event of Default under this
Agreement.
Section 4.2. Construction Plans.
(a) Before commencement of the Soil Corrections, the Redeveloper must
submit Constructions Plans for such corrections to the City Engineer, who shall
review such plans on behalf of the Authority. Minimum Improvements as defined
In Section 1.1 shall be developed as individual housing units, and as such, prior to
the commencement of construction of any housing unit as required herein, the
Redeveloper or its agent shall submit Construction Plans for each building to the
City Building Official, who shall review such plans on behalf of the Authority. The
City Building Official shall approve the Construction Plana in wri or cause to be
Issued building permits for each building if: (1) the construction plans conform to
all applicable federal, state, and local laws, ordlaaaaes, rules and regulations; (ti)
the Construction Plans conform to the terms and conditions of thl3 Agreement; (ill)
the Conatruction Plans are adequate to provide for construction of the minimum
market value par unit of the Minimum Improvements; and (1v) no Event of Default has
occurred. No approval by the City Building Official shall relieve the Redeveloper
of tho obligation to comply with the terms of this Agreement or of the Redevelopment
Plan, applicable federal, state and local laws, ordinances, rules and regulations, or
to construct the Minimum Improvements In accordance therewith. No approval by the
City Building Official or City Engineer shall constitute a waiver of an Event of
Default. If approval of the Construction Plans is requested by the Redoveloper in
writing at the tlmo of submission, such Construction Plans shall be deemed approved
unless rejactod In writing by the City Building Official or the City Engineer with
respect to the Soil Corrections, in whole or in part. Such rejections shall set forth
in detail the roe ons therefore, and shall be made within 30 days after the date of
their receipt by the City Building Official. If the City Building Official or City
sWIno
MOD-"
Engineer rejects any Construction Plans in whole or in part, the Redeveloper shall
submit new or corrected Construction Plans within 30 days after written notification
to the Redeveloper of the rejection. The provisions of this Section relating to
approval, rejection and resubmission of corrected Construction Plans shall continue
to apply until the Construction Plans have been approved by the City Building
Official and City Engineer with respect to the Soil Corrections. The City Building
Official's and City Engineer's approval shall not be unreasonably withheld. Said
approval shall constitute a conclusive determination that the Construction Plans (and
the Soil Corrections and the Phase of the Minimum Improvements constructed in
accordance with said plans) comply to the Authority's satisfaction with the
provisions of this Agreement relating thereto.
(b) If the Redeveloper desi--s to make any material change in the
Construction Plans after their approval by the City Building Official and City
Engineer, the Redeveloper shall submit the proposed change to the City Building
Official (or City Engineer in the case of Soil Corrections) for approval. If the
Construction Plana, as modified by the proposed change, conform to the
requirements of this Section 4.2 of this Agreement with respect to such previously
approved Construction Plans, the City Building Official or City Engineer, as the
case may be, shall approve the proposed change and notify the Redeveloper in
writing of its approval. Such change in the Construction Plans shall, in any event,
be deemed approved by the Authority unless rejected, in whole or in part, by
written notice by the City Building Official or City Engineer, as the case may be, to
the Redeveloper, setting forth in detail the reasons therefor. Such rejection shall
be made within ten (10) days after receipt of the notice of such change. The City
Building Official's or City Engineer's approval of any such change In the
Construction Plans will not be unreasonably withheld.
Section 4.9. Commencement and Completion of Construction. Subject to
Unavoidable Delays, the Redeveloper shall commence and complete construction of
the Minlmum Improvements in accordance with the following schedule:
Phase 1: Commence by June 1, 1995 and complete by January 2, A IM
Phase 2: Commence by A June 1, A 1998 and complete by January 2,A
2002
All work with respect to the Minimum Improvements and related Soli Corrections
to be constructed or provided by the Redeveloper on the Redevelopment Property
shall be in conformity with the Construction Plans as submitted by the Redeveloper
and approved by the City Building Official and City Engineer.
The Redeveloper agrees for itself, Its successors and assigns, and every
successor in Interest to the Redevelopment Property, or any part thereof, that the
Redeveloper, and such successors and assigns, shall promptly begin and diligently
prosecute to completion the redevelopment of the Redevelopment Property through
the construction of the Mlnlmum Improvements thereon, and that such construction
shall in any event be commenced and completed within the period specified In this
Section 4.3 of this Agreement. Until construction of Phase 4 the Minimum
Improvements has been completed, the Redevoloper shall make reports, in ouch
detail and at such times as may reasonably be requested by the Authority, as to the
actual progress of the Redeveloper with respect to such construction.
aa7eM
MM-"
Section 4.4. Certificate of Completion.
(a) Promptly after substantial completion of any Phase of the Minimum
Improvements in accordance with those provisions of the Agreement relating solely
to the obligations of the Redeveloper to construct such Phase (including the dates
for beginning and completion thereof), the Authority will furnish the Redeveloper
with the Certificate shown as Schedule c hereto. Such certification by the Authority
shall be a conclusive determination of satisfaction and termination of the agreements
and covenants in the Agreement with respect to the obligations of the Redeveloper,
and its successors and assigns, to construct the relevant Phase 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
Redeveloper to any Holder of a Mortgage, or any insurer of a Mortgage, securing
money loaned to finance the Minimum Improvements, or any part thereof.
(b) If the Authority shall refuse or fail to provide any certification in
accordance with the provisions of this Section 4.4 of this Agreement, the Authority
shall, within thirty (30) days after written request by the Redeveloper, provide the
Redeveloper with a written statement, indicating to adequate detail In what respects
the Redeveloper has failed to complete the relevant Phase of the lsintmum
Improvements in accordance with the provisions of the Agreement, or is otherwise
in default, and what measures or acts it will be necessary, to the opinion of the
Authority, for the Redeveloper to take or perform in order to obtain such
certification.
(c) The construction of any Phase shall be deemed to be substantially
completed when the responsible Inspecting authority has issued a certificate of
occupancy for all the housing units A constituting such Phase.
w»wo
maw" 12
February 3. 1995
Olive Koropchak
Economic Develop.. t Director
City of Monticello
P.O. Box 1147
Monticello, MN 55362-9245
RE: Residential Development, Inc.
Dear 011ie:
Enclosed is one revised page of the Residential Development, Inc. contract. with a change in
Section 3.3 (f) suggested by Jim Casserly. New language is underlined. 71he change simply
clarifies that if the Redeveloper amu all the Phase l and Phase 2 requirements before 2002, the
pescez tages of increnunt previously withheld will be paid earlier. I think this makes sense, as
it provides an incentive for the build out to occur sootier.
You should insert this page in the January 31. 1995 draft I sent earlier this week. I have also
enclosed a clean. execution copy of the Contract with all changes incorporated.
Let me know if you have any questions.
Very truly yours.
Rge,L
Stephen J. Bubul
cc: Jim Casserly
mut3,6
� 01170.66
HOLMES & GRAVEN
Sr6MEv J. Buatn.
ae pmea.r cow. + m..r. nam
Ano—y a la.
T*p.s (617) 3,7.0300
thea Dial (612) 3374228
haled (SW J374310
February 3. 1995
Olive Koropchak
Economic Develop.. t Director
City of Monticello
P.O. Box 1147
Monticello, MN 55362-9245
RE: Residential Development, Inc.
Dear 011ie:
Enclosed is one revised page of the Residential Development, Inc. contract. with a change in
Section 3.3 (f) suggested by Jim Casserly. New language is underlined. 71he change simply
clarifies that if the Redeveloper amu all the Phase l and Phase 2 requirements before 2002, the
pescez tages of increnunt previously withheld will be paid earlier. I think this makes sense, as
it provides an incentive for the build out to occur sootier.
You should insert this page in the January 31. 1995 draft I sent earlier this week. I have also
enclosed a clean. execution copy of the Contract with all changes incorporated.
Let me know if you have any questions.
Very truly yours.
Rge,L
Stephen J. Bubul
cc: Jim Casserly
mut3,6
� 01170.66
V
HRA AGENDA
FEBRUARY 6, 1995
5. Consideration to review for approval the preliminary concept
for the use of TIF (Ron Johnson and Gene Goad).
A. Reference and Background:
Last fall, the Prospect Team of John McVay, Kevin Doty, Ron
Hoglund, and Koropchak vislted Quality welding in Rogers, MN.
The company does i.eeclsion welding and fabricating for
prototype arid production. Tire leased facility in Rogers was
for sale and upon the facility selling the company would move
arid relocate. The company must move by September 1, 1995.
The Prospect Team viewed the company with interest, felt the
company was worthy of financial assistance; however,
recommended not giving the store away. Ron Johnson resides on
Locke Lake and Gene Goad resides in Dayton.
No credit analysis of the company's financial statements have
been made and I await more detail on the job creatlun arid
average wages. Marquette Bank made a plant site visit on
January 31. The company is also Interested in SBA financiny.
The approximate 15,000 ay ft metal building (steel frame) on
2.8 acres of Light Industrial zoned land is estimated to
gunera to an annual tax base of $16,000. The proposed site is
to the north of the vacant industrial building within the
Montlt;ello Commurce Center, First Additlun. The suggested
amount of TIF assistance is $40,000 with the HRA'o preference
of a pay-as-you-gu financing method if feasible to the
company. Job creatlon Information will be available at the
HRA meeting.
B. Alternative Actions:
1. A motion to approve the preliminary concept for uue of
TIF for the Ron Johnson and Genu Goad project.
2. A motion to deny the pruliminary concept for use of TIF.
3. A motion to table any action.
C. Staff Rucommendallon:
Subjection to a puultive job creatlun and wages criterla and
uince the HRA is not authurizing PRG to prepare a TIF
Diotrlct, otaff recommends Allernativu Action No. 1.
iPayu 1
En -
HRA AGENDA
FEBRUARY 6, 1995
Supportinq Data:
Copy of the estimated taxes and Projected HACA and available
increment.
Page 2
ESTMATED TAXES
QUALITY WELDING
GENE GOAD AND RON JOHNSON
February 1, 1995
ASSUMPTIONS:
15,000 SQ FT METAL (STEEL FRAME) OFFICE/MANUFACTURING FACILITY
WITH EXTERIOR BRICK TRIM.
2.8 ACRES OF LIGHT INDUSTRIAL ZONED LAND.
JOBS: 7
ESTIMATED TAXES:
BUILDING 16,000 SQ FT 4 $20.00 PER SQ FT = $300,000
LAND 2 ACRES OR 87,120 SQ FT i? $.40 PER SQ FT = $ 34,848
.8 ACRES OR 35,880 SQ FT u S.25 PER SQ FT = $ 8,970
ESTIMATED MARKET VALUE
$100,000 $243,818
.0330 .0460
$ 3,000 $ 11,215
�b CAPTURED TAX CAPACITY $14,215
1995 TAX RATE 1.13028
ESTIMATED ANNUAL TAXES $16,066
POTENTIAL ASSISTANCE
$343,818
Based on assumptions and eatimates,and without completion of a
financial credit analysis of the companies or without information
on the number of jobs to be created or ,average wages, these numbers
are suggestions only. The ouggested amount of Tax Increment
Finance (TIF) asuistauce in the pay-as-you-go financial method is
a Net Present Value (NPV) of $40,000 at 8% intureGt rate over 9
years or the upfront financial method is $40,000. Thte HRA preferu
the pay--as-you-go financial method if thlu is feaGlblu for a
company. Qualified expenditureu for uee of TIF are land
acyuiuition and site Smyrovvmunts. Preliminary concept approval
for uue of TIF on thle project la scheduled to appear on the
Fabruary 6 Housing and Rodevelopmunt Authority (HRA) .Aqunda.
011ie Koropchak, NRA Executive Director
TAX NCREINENT FNANCNG
ESTIMATE OF LOCAL
GOVERNMENT AIDS PENALTY
CITY:
MONTICELLO
SALES RATIO:
0972
SCHOOL DIST:
0882
EST TAX RATE
3926%
TYPE OF DIST:E ON DEVXX1ALJTY WELDING
TAX CAP RATE:
112.875%
CAPTURED
QUALWYtMG
SCHOOL
ADJUSTED
TAX
TAXES
TW TAX
PMASE4 N
TAX
SALES
OWLIFYINO
PENALTY
04CRFJAENT
PAYABLE
CAPACITY
PERCENTAGE
CAPACITY
�
RATA
TAIL CAPACITY
TAX RATE
PENALTY
®1991 ¢ten
100.0016 nn�na�=
0.00
0.972
Baa 0.00 6�na�3928%
0.00
1982
100.00%
0.00
0272
0.00
9828%
0.00
1993
100.00%
0.00
0.972
0.00
9928%
0.00
1994
0.00
0.00%
0.00
0.972
0.00
3928%
0.00
1985
0.00
20.00%
0.00
0.972
COO
9920%
0.00
1996
0.00
40.00%
0.00
0.972
0.00
3928%
0.00
1897
14,203.76
60.00%
6=26
0272
BJ67.75
9929%
3.44397
1998
14,203.76
60.00%
11363.01
0272
11,60034
3928%
4',59186
1909
14203.76
100.00%
14200.76
0.972
14.612.62
9928%
5,73986
2000
14,203.76
100.00%
14203.76
0.972
14Al2.92
3026%
5,73986
2001
14,203.76
100.00%
14203.76
0.972
14,612.92
3928%
5,73986
2002
14,200.76
100.00%
14203.76
0272
14,612.92
3928%
5,73986
2003
14,200.76
100.00%
14203.76
0.972
14,612.92
3920%
5,73986
2004
14,203.76
100.00%
14203.76
0.972
14,51292
3926%
5.73986
2005
14,203.76
100.00%
14203.76
0.972
14,612.92
9926%
5,738.96
2005
000
100.00%
Om
0.972
0.00
3928%
Om
2007
0.00
100.00%
0.00
0272
0.00
3928%
Om
2008
000
100m%
Om
0.972
0.00
3928%
Om
2009
Om
100.0016
0.00
0.972
0.00
3929%
Om
2010
0.00
100m%
0.00
0.972
0.00
9928%
Om
2011
0m
100.0016
0.00
0.072
0.00
3928%
Om
2012
Om
100.00%
Om
0.972
0.00
9929%
0m
2013
Obo
100.00%
0.00
0.972
0.00
9928%
Om
11M GIC2EEMr AFTER 1.0.59 OF
LOCAL GCVEFJ1ENT ADB
TAX ESTVATED TAXFOAM TOTAL O1CRE1ENT tET AOMV83TAATIVE
TATE 61C8BTr PENALTY OCREIF]O ItOOE
1.19
am
an
Gm
Dm
1.19
Gm
Om
003
Om
1.19
o.9D
000
000
Om
1.19
GOD
on
Om
Om
1.19
039
000
GOD
Om
1.19
Gm
ODD
4.03
OW
1.12a
10,03221
344&.97
12.u"
1.25092
1.130
1(012.1
4,921.96
ItA"
1,1092
1.19
1a,AXLr
6.739.96
14299.25
Lamm
1.120
ULM271
0790
14219.25
1,021173
1.120
MA32.21
0730.96
10.290.23
1.0am
1.120
000221
5.739.96
14219.25
%OM23
1.129
1&00721
s.239m
10.292.]3
t02023
1.129
14&432.21
SY"
1020 25
1=23
1.129
1400221
6.7394
10.90.25
1,023
1.129
Gm
Om
am
Om
1.129
400
039
Om
DOD
1.120
Gm
Qm
4.03
Om
1.120
Gm
039
am
039
1.120
ODD
039
Om
600
1.120
Gm
Gm
903
GOD
1.120
Gm
Gm
am
Om
1.129
Om
403
am
o03
o9D
_ r
64.21603
SKM425
94397.43
94MME 8
DrALDSM
IPV
NPI/
COPY
LESS
EXCESS
ADM
DICREMENT
LDA
Awl
MK34E]ENr
OOSTS
LM Awl
PENALTY
om
moo
00%
- am
an
DDD
am
GOD
nm
om
090
am
DAO
Dm
Om
Qm
019
ODD
Om
Om
Gm
000
Om
ODD
1122441
3.44187
077.11
4327.40
twa5
10.23971
4.®1.4
1,061A
15.3489
4.16033
a2n
5.71980
1677
21.17117
10206 77
9.96139
4739,06
362004
21.677.06
/404.17
928300
SIM m
3.907A
3101-W
17.62449
O NM
6.739 80
4.519.19
3I]15.41
210219
ILMOO
6,739.06
6.a91.10
4fim�4
21X1112
9,703m
6.739 80
36324.9
44.475.74
272694)
ainco
5.728.od
0115]0
4816731
20.103.44
Om
Om
000
444U71
Om
ODD
Om
000
43.15721
om
Om
039
000
44t5721
Om
Om
0w
Om
4,16771
039
Om
ODD
019
41.b721
090
o9D
Om
0OD
411.15771
000
Om
039
019
41.15!71
039
Om
Om
00D
41.157.21
Om
{19.3961
646,21663
41161•
4.157.1
Q 30.IM44
PBS -06-95 PION 02:25 PN ROGSN CORPORTION 612428TS03
QUALITY WELDING
21 800 - 129th Avenue North
Rogers, Minnesota 66374
(612) 428-4922
February 6, 1995
Ms. 011ie Yaropchak
Ecomonic Development
250 East Broadway
Monticello, Mi 55362
SUBJECT: Building Development - Quality Welding/Rogen Corporation
In 1993 Quality Welding employed 4.2 people at an average wage of
$8.00 per hour. In 1994 they employod 6.23 people at an average
wage of $8.25 per hour. At the current rate of growth, 1995 will
be 8.5 jobs at $8.50 per hour. 1996 will be 10 jobs at $9.00 per
hour and 2.997 will be 13 jobs at $9.50 per hour.
PAI
In 1993 Bogan Corporation employed 2 people at $8.00 per hour. In
1994 they employed 4.2 people at $8.50 per hour and at the current
rate of growth, we project 1995 at 6 people at $9.00 per hour. 1996
9 people at $9.50 per hour and 1997 12 people at $10.00 per hour.
Sincerely.
P/ 1 n
Johnson
Owner
RDJ/plj
HOLMES & GRAVEN
arAur®ca
STBPe6N J. BUSUL 476 PM& -7 Cwt.. lrr.Wer. 6o.mn star
Aam-y d 1A.
Dima Did (617) 777.9373
Ri mary Z 1995
011ie Koropchah
Economic Developmeal Director
City of Monticello
P.O. Box 1147
Monticello. MN 55362.9245
Dear 011ie:
TdM.w. (612)1" 6M
redJb (617)777.6,16
Enclosed is a bill inuoducad by Rep. Danis oanem that severely restricts use of in increnxm financing. I wanted
to draw your attention particularly to Section I I of the big, which sharply limits the use of increment from existing
districts that were created before May I. 1990. If that section becomes law. Incrernem from those districts must be
used to either pay bands issued before February I. 1995. or to pay under a written contract with a third parry
executed before fatamry 15. 1995.
The impact of this bill is do incrennem from pre -Miry, I. 1990 districts could be used only for projects for which
the coy or authority has ahwdy ismed bonds or entered contracts. Ibis precludes only future projects financed from
these districm even those currently anticipated in tax increment plans. It also meas the districts would be
immedicaely decertified as soon as bands or contract paymm me prepaid.
Other aspects of the bill restrict the creation of new districts. but the impact of Section 11 Is severe in your can,
as the City has exislby plan for use of increment from pro -1990 dlsataa.
You may want to contact your legislators and explain the extreme hardship this NII would mate. The City has
reasonably expand that ileac tax increment districts would remain in piece In accordance with existing laws, and
has phonal dcvelnpmenl end rtvkveM.prnent efforts in reliance m them in incl, ant revenues. Ahruptly
terminating these districts would leave no altemmives to (Lame devclaprnent efforts that hone been in phoming
stages for years.
If you have any rtuestiolm please give me a call.
Very truly yours.
dA"- 4��
Stephen,. Bubud
cc: Rick woffaeuer
.11x1.13