HRA Agenda 06-01-1994AGENDA
MONTICELLO HOUSING AND REDEVELOPMENT AUTHORITY
Wednesday, June 1, 1994 - 7:00 p.m.
City Hall
MEMBERS: Chairperson Al Larson, Ben Smith, Everette Ellison, Tom
St. Hilaire, and Brad Barger.
STAFF: Rick Wolfsteller, Jeff O'Neill, and 011ie Koropchak.
1. CALL TO ORDER.
2. CONSIDERATION TO APPROVE THE MAY 6, 1996 HRA MINUTES.
3. CONSIDERATION TO APPROVE THE PRELIMINARY CONCEPT FOR USE OF
TIF ASSISTANCE FOR THE FAY -MAR METAL FABRICATOR PROJECT.
4. CONSIDERATION TO APPROVE THE EXECUTED CERTIFICATE OF
COMPLETION FOR THE DEMEULES FAMILY LIMITED PARTNERSHIP.
5. CONSIDERATION OF HRA UPDATES:
a) See Enclosure.
b) Special meeting, Senior Housing Proposals.
6. CONSIDERATION OF HRA FOLLOW-UPS:
a) Copy of Letter to the H -Window Company.
b) Final copy of executed agreement between PRG and the HRA.
C) Copy of Mr. Bubul'a letter to Mr. Pelstring.
d) Copy of a letter to Jay Morrell.
e) Copy of HRA bills.
7. OTHER BUSINESS.
a. ADJOURNMENT.
MINUTES
MONTICELLO HOUSING AND REDEVELOPMENT AUTHORITY
Wednesday, May 4, 1994 - 7:00 p.m.
City Hall
MEMBERS PRESENT: Chairperson Al Larson, Vice -Chairperson Ben
Smith, Tom St. Hilaire, and Brad Barger.
MEMBER ABSENT: Everette Ellison.
STAFF PRESENT: Rick Wolfsteller and 011ie Koropchak.
STAFF ABSENT: Jeff O'Neill.
1. CALL TO ORDER.
Chairperson Larson called the HRA meeting to order at 7:10
p.m.
2. CONSIDERATION TO APPROVE THE APRIL 6. 1994 HRA MINUTES.
Ben Smith made a motion to approve the April 6, 1994 HRA
minutes. Brad Barger seconded the motion and with no
corrections or additions, the minutes were approved as
written.
3. CONSIDERATION TO REVIEW FOR APPROVAL THE REVISED AGREEMENT
BETWEEN PUBLIC RESOURCE GROUP, INC. AND THE HRA.
Tom St. Hilaire made a motion to approve the revised agreement
between Public Resource Group, Inc. and the HRA. Brad Barger
seconded the motion. Ben Smith highlighted a few areas within
the agreement which were unclear and/or required
grammar/spelling housekeeping. Mr. Wolfstellar commented that
perhaps a flat 88,000 fee would be more advantageous then the
quoted ERG fee of not -to -exceed $4.000 plus a consultation fee
of $90 per hour for administration/reporting. This to
eliminate billing eonfubion and to discourage any thoughts of
an open-ended checkbook philosophy. Members requested Public
Resource Group, Inc. notify the HRA when such fees are to be
encountered. With no further discussion and subject to
clarification and completion of housekeeping matters
highlighted, the motion passed unanimously.
4. CONSIDERAT19k TO REVIEW FOR APCEPTANCE THE YEAR-END HRA FUND
AND TIF -DEBT SERVICE FUND SUMMARIES,
Finance Director Wolfateller highlighted the enclosed reports
and atatod the year-end HRA General Fund balance after
transfer of revenues for TIF bond debto waa $408,089. With
the life duration of TIF District No. 1-1 expired, the
Page 1
HRA MINUTES
MAY 4, 1994
district's surplus is $15,718. District No. 1-3 has one-year
left. District No. 1-12 received very little revenue as
anticipated due to its one-year construction delay. Mr.
Barger inquired as to why the HRA borrows money rather than
utilizing its General Fund surplus dollars. Ben Smith made a
motion to accept the year-end HRA Fund and TIF -Debt Service
Fund summaries. Tom St. Hiloirc seconded the motion and with
no further discussion, the motion passed unanimously.
CONSIDERATION TO APPROVE A WAIVER LETTER AMENDING THE PRIVATE
REDEVELOPMENT CONTRACT BETWEEN THE SCHULZ PROPERTIES AND THE
HRA.
Without discussion, Tom St. Hilaire made a motion to approve
the Waiver Letter amending the Private Redevelopment Contract
between the Schulz Properties and the HRA. The project
construction commencement date was extended to June 1, 1994.
Ben Smith seconded the motion which passed unanimously.
6. CONSIDERATION TO APPROVE Tl{E CERTIFICATE OF COMPLETION OF THE
PRIVATE REDEVELOPMENT CONTRACT BETWEEN THE H -WINDOW COMPANY
AND THE HRA.
Tom St. Hilaire made a motion to deny the approval of the
Certificate of Completion for the Private Redevelopment
Contract between the H -Window Company and the HRA, and
authorized preparation and mailing of a letter to the H -Window
stating reasons for the denial. Denial was due to the non -
completion of the minimum improvements within the agreed upon
completion dote of January 31, 1994, namely, the uncompleted
4,000 sq ft office space. Brad Barger seconded the motion and
with no further discussion, the motion passed unanimously.
CONSIDERATION OF I4RA UPDATES:
a) Next HRA meeting, June 1, 1994 - Senior Housing Proposals
as recommended by Barb Schwientek, Hospital Executive
Diroctor. Mr. St. Hilaire indicated he would be
returning from Iowa and hopes to make the meeting.
b) Potential TIF projects - Koropchak briefly updated member
on potential TIF projects, reported industrial land
prices quoted to Maureen Steinwall, and informed members
of a meeting held between the State and H -Window
representativeo and Koropchak regarding the Economic
Recovery Grant application. Membero suggeoted Koropchak,
again, contact Ms. Stalnwall regarding the availability
of the LIRA lot.
Page 2
HRA MINUTES
MAY 4, 1994
c) Outlot A, County Club Manor - Mr. Wolfsteller reported
that Council accepted the request for proposal submitted
by David Hornig. Mr. Hornig developed the project along
West 7 Street across from K -Mart. The three -phrase
development concept includes multi and senior rental
housing, ownership townhouses, and a neighborhood park.
The city will retain approximately 2 -plus acres for
ponding.
OTHER BUSINESS.
HRA members were updated on the Planning Commission's approval
for the rezoning of the Emmerich and Klein properties. The
Emmerich property was rezoned as per the planner's
recommendation to a multi business uses and the Klein property
to multi and single housing. Additionally, the Planning
Commission recommended updating the Comprehensive Plan and
tabled the rezoning of the Stewart Hoglund property to I-1
until completion of the traffic study. Koropchak informed the
HRA that prior 1989 TIP District surplus dollars can be used
for installation of public improvements such as the trunk line
or for land acquistion to preserve the Klein property or a
portion of the property for future industrial use. According
to our legal advisor the following would need to occur: The
Klein property must be annexed into the city, the Central
Monticello Redevelopment Project Area boundaries extended, and
the expenditures must serve a public purpose. HRA members
agreed to the consideration of utilizing TIP surplus dollars
for assistance in the preservation of the Klein Property or a
portion of the property for future industrial development.
This recommendation for the City Council meeting of May 9.
ADJOURNMENT.
The HRA meeting adjourned at 8:48 p.m.
011ie Koropchak, HRA Executive Director
Page 3
HRA AGENDA
JUNE 1, 1994
Consideration to approve the Dreliminary concent for the use
of TIF assistance for the Fav -Mar Metal Fabricator oroiect.
A. Reference and background:
Owner Ron Musich has met with city staff and with Public
Resource Group, Inc. (PRG). Mr. Musirh has verbally committed
to Monticello and is negotiating a purchase agreement with the
Landowner Shawn Weinard. The location is approximately 2.5
acres of the Monticello Commerce Center freeway exposure
property. Total anticipated purchase price is $75,000. Its
my understanding, the location would be on the south side of
Chelsea Road and to the east of SMM.
The IDC Prospect Team will be visiting the company's existing
facility in Blaine on Thursday, May 26. Although PRG has not
received all the historical financial data, they foresee the
project as doable. Enclosed is a copy of the proposed
financial package, please note the $50,000 TIF assistance
which is yet to be determined as upfront or pay-as-you-go.
Does the HRA want to writedown land at $20,000 or $15,000 per
acre? Previous land write-down assistance has been $12,500
per acre. With the increase of asking land prices to $35,000,
$30,000, and $25,000 per acre, the HRA may wish to set some
assiotance guidelines in relationship to job creation, project
size, etc,
This proposed relocation/expansion project would construct a
precast 15,000 sq ft manufacturing facility including
approximately 2,000 sq ft of office apace. Currently, the
company employs 17 full-time and anticipatee the addition of
8 to 13 within 2 years. Wages start at $6.50 ph and up which
include semi- and skilled workers: 9 welders, machine
operators, and clerical. The company is a tube fabricator or
bender with clients such as Grayco, Wagner, Polaris. The
five-year old company was purchaoed by Mr. Muoich within the
last year.
If an executed Letter of Intent, $5,000 check, cosy of the
purchase agreement, bank commitment, financials, and the visit
are received and acceptable, tale HRA may be auked to consider
approving a resolution authorizing Public Resource Group, Inc.
to begin preparation of TIF Diotrict No. 1-17.
Pago I
HRA AGENDA
L JUNE 1, 1994
B. Alternative Action:
1. A motion to approve the preliminary concept for use of
TIF assistance for the Fay -Mar Metal Fabricator project.
2. A motion to deny approval of the preliminary concept for
use of TIF assistance for the Fay -Mar Metal Fabricator
project.
3. A motion to approve a resolution authorizing Public
Resource Group, Inc. to begin preparation of TIF District
No. 1-17 for Fay -Mar Metal Fabricators, Inc.
4. A motion to table any action.
C. Recommendation:
Staff's recommendation will be given at the HRA meeting
pending the outcome of the May 26 visit and upon further
financial analysis.
D. Sunoortina Data:
Copy of the proposed financial package and projected taxes.
Page 2
MAY -25-'94 LED 10:30 ID: BDS INC. TEL N0: 786-90.14 91966 P02
PAY -MAR TUBB FABRICATORS
land • 3 mm
Building • 15,000 plate feet u $23/SP
BquVmmt
Soft Coat/Condo omy
TOTAL USES OF FUNDS
Banat (ARM, 20 yam. lit)
SBA 5% (1.59:, 20 yean, 2nd)
Equity
TO
Owner
TOTAL SOURCES OF FUNDS
DZE SERVICE
Bmr (Avg. 9%) $2,456
SBA 504 1.788
TOTAL MONTHLY $4,244
TOTAL ANNUAL $50,718
COST/SQUABS FOOT $3.40/Sgu m Foot
pncluft egu4 meo0
$ 75,000
345,000
100,000
35,�
$555,000
6273,000
222,000
50,000
10.000
5555,000
1—
RON MUSICH
REQUEST FOR ESTIMATED TAXES
ASSUMPTIONS:
15,000 sq ft precast facility
13,000 sq ft manufacturing and 2,000 sq ft office.
3 acres
17 Full-time jobs retained, 8-13 additional full-time within 2
years.
ESTIMATED TAXES
13,000 sq ft X $23.00 per sq ft - $299,000
2,000 sq ft X $32.50 per sq ft = 65,000
2 acres or 87,120 sq ft developed land X $.40 per sq ft = 34,848
1 acre or 43,560 sq ft X $.25 per sq ft 10,890
Total estimated market value for building and land $409,738
EMV = $400,000
$100,000 $309,738
.0300 .0460
$ 3,000 $ 14,248
Naw Capacity Value (NCV) $17,248
E3timatod 194 Tax Rate 1.12873
ESTIMATED TAXES $19,468
ESTIMATED ANNUAL TIF ASSISTANCE $9,500
OVER 9 YEARS APPROXIMATELY $85,500.
ESTIMATED TIF BUDGET
Estimated annual Taxes, $19,468 times 9 years =
Estimated annual HACA, 30% of taxes =
Estimated annual TIF assistance, $9,500 =
TIF range $42,000-$63,000
Proposed total direct upfront TIF assistance
$75,000 Bond, 9 yrs ® 7.5% interest s
Proposed Budget:
Land $ 50,000
Public Improvements (25% of TI) 43,804
Administration/Profession Fees 15,000
Capitalized Interest 11,250
Bond Discount 2,000
TOTAL $122,054
Interest on Bond $ 30,820
ESTIMATED TOTAL OF PROJECT $152,874
$175,215
$ 52,565
$ 85,500
$ 50,000
$105,820
TUBE
BENDING
►U
When you order
WRDING
fabricated tubae or tube
assemblles, you want It to be
right. Whether you require a
small run or the largest run
Imaginable, at FAY -MAR
ASSEMBLY Tube Fabricators we have all SERVICE
the machining, sheet metal,
tube fabricating, welding and
assernblyto meet your made.
RAr40AR Tubs Fabdentora
10501 Highway 65 N.E. • Blaine, Minnesota 55343 • U.B.A.
(612) 420-7455 • (812) 786.7248
HRA AGENDA
JUNE 1, 1994
4. Consideration to aoorove the executed Certificate of
Completion for the Demeules Familv Limited Partnership.
A. Reference and Backaround:
The HRA is asked to approve the executed Certificate of
Completion for the Private Redevelopment Contract between the
HRA and the Demueles Family Limited Partnership. On May 26,
1994, Building Official Anderson made a final inspection of
the Standard Iron facility located at 207 Dundas Road and
issued the occupancy permit. Upon issuance of an occupancy
permit, the Certificate of Completion is approved by the HRA
stating completion of the minimum improvements. In this case,
the minimum improvements being an approximate 52,000 sq ft
manufacturing facility including 16,800 sq ft of office. In
order to avoid the need to supply the SBA with a subordination
agreement, the Certificate of Completion was executed by the
HRA Chairperson and the Executive Director on May 26 and
thereafter recorded at the County by the redeveloper to
satisfy requirements necessary for the SBA real estate
closing.
For the records, therefore, the HRA is approving an executed
_ Certificate of Completion.
B. Alternative Actions:
1. A motion to approve the executed Certificate of
Completion.
2. A motion to deny approval of the executed Certificate of
Completion.
3. A motion to table any action.
C. Recommendation:
As the occupancy permit had been Issued, with legal counsel
approval, and to cooperate with the redeveloper and the
Bank/SBA cloning; the HRA Chairperson and Executive Director
foresaw no reason to wlthold execution of the document.
Therefore the recommendation Is for Alternative #1.
D. Supoortina Data;
Copy of the occupancy permit and executed certificate.
Page 1
CERTIFICATE OF COMSPLETION
WHEREAS, the Housing and Redevelopment Authority in and for the City of
Monticello. Minnesota, a public body, corporate and politic (the "Grantor"), by a
Deed recorded in the Office of the County Recorder or the Registrar of Titles in and
for the County of Wright and State of Minnesota, as Deed Document Number(s)
and I respectively, has conveyed to Demeules Family Limited
Partnership, a Minnesota limited partnership (the "Grantee"), the following
described land in County of Wright and State of Minnesota, to -wit:
Lots 7 and 8, Block Z, Oakwood Industrial Park, according to the
recorded plat thereof
and
WHEREAS, said Deed contained certain covenants and restrictions set forth
In Sections 1 and Z of said Deed; and
WHEREAS, said Grantee has performed said covenants and conditions insofar
as it is able in a manner deemed sufficient by the Grantor to permit the execution and
recording of this certification;
NOW, THEREFORE, this is to certify that all building construction and other
physical improvements specified to be done and made by the Grantee have been
completed and the above covenants and conditions In said Dead and the agreements
and covenants In Article IV of the Agreement (as described In said Deed) have been
performed by the Grantee therein, and the County Recorder or the Registrar of
Titles in and for the County of Wright and State of Minnesota Is hereby authorised
to accept for recording and to record, the filing of this Instrument, to be a
concluaive determination of the satisfactory termination of the covenants and
conditions of Article IV of the Agreement referred to in said Deed, but the covenants
created by Sections 3 and 6 of said Deed shall remain in full force and effect.
Dated: Nn+ U , 1994. HOUSING AND REDEVELOPMENT
AUTHORITY IN AND FOR THE
CITY OF MONTICELLO, MINNESOTA
By
Its C�4man
By Q-'� , , n
Its Executive Director
&=1017►
MUS -63
STATE OF MINNESOTA )
) as.
COUNTY OF WRIGHT )
On this _U day of Mnv , 1884, before me, a Notary Public within and
for said County, Personally appeared Al Terson, tome personally known, who, being
by me duly sworn, did say that he is the Chairman of the Authority named in the
foregoing instrument; that the seal affixed to said instrument is the seal of said
Authority; that said instrument was signed and sealed in behalf of said Authority by
authority of its governing body; and said Chairman acknowledged said instrument
to be the free act and deed of said Authority.
STATE OF MINNESOTA )
) as.
COUNTY OF WRIGHT )
otary Publ
PATRICIA K. KOVICH
MOTAW VUBL'c • MROIE--
SHERBURNECOUNTr
My Comm. Em. Ap8 ZA, �ipy
On this .2.fL day of M.. , 1984, before me, a Notary Public within and
for said County, pe appeared Olive lioropcbak. to we personally known,
who, being by me duly sworn, did say that she is the Executive Director of the
Authority named in the foregoing instrument; that the seal of l=d to said instrument
Is the seal of said Authority; that said instrument was signed and sealed in behalf
of said Authority, by authority of its governin:Ou4Lryb ; and said Executive Director
acknowledged said instrument to be the freeeed of said Authority.
`'
This instrument was dratted by:
HOLMES & GRAVEN. CHARTERED
470 Pfllabury Center
Mlnaeapolis. Minnesota 68609
(814) 337-8300
AUTow
ffinio-a
tqpATgICIA KUFtol. KOj
jj0T,R,SMF E+D ApURNE b
(Urfif irntt of (Orrupunry
LYit, of MONTICELLO
loppillutput of Wttillitt3 Jtt11flertiatt
This Certificate issued pursuant to the requirements of Section 306 of the Uniform Building
Code certifying that at rbc time o/ isutance this struaure was in compliance with the various
ordinance of tbt City regulating building colutruction or use. For the following:
9I-2166
93-2 1 70
tlrrt:lauifruion Offico/ManufacturinA Buildfna DIdg.FrrmllNo. 93-2200
Group B-2 Tyr.Conaructian IIN Fire7osw 6990 North Illghva7y 2
11169
Ovacr of Wlding standard Iron b Wlrevorke Inc.*ddrp Minnoaoolle. MN. 59628
BuildingAddret 207 Dundee Road (orality Monticollo. MN. 55362
8y; Gary Anderson
uilding011ki i-- 1)dr; y 26. 1996_
roar IN A cowencuoue •uci
www Ja--w
I
IDC AGENDA
MAY 19, 1994
Consideration of Prospect Updates:
a) Polycast Mfg, Inc. - Construction was delayed due to
- completion of the appraisal necessary for SBA final
approval. SBA submittal to the Mpls office is
anticipated this week thereafter the bank can complete
construction financing. The HRA's contract with the
Schulz Properties was extended to June 1. The project is
financially strong.
b) Steinwall, Inc. - Maureen informed me she was quoted an
asking price of $30,000 and $35,000 per acre for the
Monticello Commerce Center property and another source
quoted an additional $1,500 per acre for ponding. The
existing 15,120 sq ft building asking price is $580,000.
Maureen proceeds to check-out the property along East 7
Street in hopes of purchasing property this fall. On May
16, I talked with Maureen about the HRA lot for sale at
$14,000 per acre and she informed me of her strong
interest in the Big Lake FSI building at a purchase price
of $15.00 per eq ft (37,000 sq ft building for $555,000).
Steinwall's structural engineer is viewing the facility
for adaptdbility.
c) Hay -Mar Metal Fabricators - 15,000 eq ft building, 17
employees, looking at existing building or 2 acres to
build, fall move, recent purchase of this tube bending
(rails) business. Need three-year historical financials
and business plan, have met with Public Resource Group.
Easiness -owner Ron Musich is friend of land -owner Shawn
Weinard. Has leased existing facility in Blaine.
d) National trucking firm - Looking for 5 acres
to construct 12,000 eq ft precast concrete building
(3,600 sq ft office/mezzanine and 8,400 eq ft four
service bays.) Freeway exposure. Monticello Commerce or
East 7 Street ($30,000 per acre). Currently 14 office
employee projected to increase by 8-10. Had meeting May
13, parking for 40 trucks and 40 other, ordinance
compliance and willing to execute property housekeeping
covenants. Must begin construction by August 1. Has
buyer on existing building. Property taxes estimated.
e) Stamping -short & long run Was - Not with three company
officials on May 10. Proposed 25,000-30,000 eq ft Fabcon
production facility. 25 jobs currently, increased by 25
within 2 years. Decision in 30 days. Property taxes
estimated.
f) Metal fabricator of sporting goods - Met with individual
representing this company. Proposed minimum 150,000 eq
ft building to 250,000 sq ft with 15% office space. 10
acros. Currently 60 jobs, rune three shifts, light
Page 1
IDC AGENDA
MAY 19, 1996
industrial. Decision in mid June, occupancy July 95.
Thirteen year old company recently acquired a out-of-
state company. Property tax estimated.
;i :ls3tic injection molder - Lead from Brad Barger.
Proposed 30,000 to 60,000 sq ft expansion, 10% office.
100-150 employment within 2-5 years. Now has 260
employment. Initial stage of planning. Property tax
estimated.
h) Plastic injection molder - Proposed 60,000 sq ft
production, no office. 100-125 employment within two
years. Three shifts, 7 -days a week. Estimated three
million dollar project, top quality. Has accounts will
Andy Anderson. Clean company, high electrical needs.
Two plants in Chaska, current 550 employment, 80 million
dollar company. Property tax estimated and water/sewer
costs estimated based on 2.4 gallons usage per year.
Under consideration for purchase of land in 94 with fall
or spring construction. Public Resource Group package
for company through Glenco.
1) Plastic fabricator & thermoformers - Met April 14 with
owner and spouse, family owned business. Proposed
10,000-15,000 sq ft building, 21 year old company, leases
an existing building on Broadway and Central. Flexible
time frame, need willingness of younger family members to
relocate, lead from Tom St. Hilaire.
J) National distributor of photo supplies - Contact March
28, looking to lease 10,000 sq ft (2,000 eq ft office).
Decision late summer. Referenced Pheffer's building. IS
jobs, 9 year old company, looking outside Hennepin
County.
k) Frozen pretzel dough - Looking to lease 5,000-10,000 sq
ft for production. 10-15 production employees.
Relocation from North Minneapolis, owners previous
Pillsbury staff. Initial contract April 12, referenced
Pheffer building.
1) Quality Welding - No site decision as of May 5, looking
at options. 10,000 aq ft, interested in Lot 7, Thomas
Park Addition or City Lot.
M) Small electronic firm - Ropresentative looking for lease
facility of 6,000-10,000 sq ft. Referenced Pheffer's
building. This SD company has 200-300 employees, will
expand to 50-60 jobs in Minnesota community. Late fall
operational.
BRE REPORTS:
d) H -Window Company - Following a May 4 meeting between
Steve Lemme; Knut Flakk; Brad Slmenson and Dentley
A' Haugesag, Minn TED: and myself; I was informed that
Senior Loan Officer Simenson would recommend the approval
Page 2
IDC AGENDA
MAY 19, 1993
of a $250,000 Small Cities Recovery Grant for the E -
Window based the on company satisfying a list of
conditions. Although, this is a reduction from the
original request of $000,000, the R -window and City would
be very pleased.
Page 3
250 Eau Broadway
P. O. Box 1147
Moncicdlo, MN
55362-9245
Phone. (612) 295.2711
Metro: (612) 333.5739
Fax.- (612) 195-4404
Dave Curless
Bob Follmer
Rudy Buttweiler
Royal Engineering 8 Mfg. Inc.
2101 108 Lane N.E.
Blaine, MN 55434
RE: Monticello, MN
May 31, 1994
Dear Messrs. Curless, Follmer, and Buttweller:
On behalf of the City of Monticello and its Industrial Development
Committee, 1 would like to express our appreciation in having you
consider Monticello as a potential location of Royal Engineering.
I am pleased to present this preliminary proposal for financing the
project.
Based on our discussion, we understand that Royal Engineering will
require a 28,000 square foot facility located on a 8.2 -acre site in
the Oakwood Industrial Park. We also understand that Royal
Engineering is considering the purchase of new equipment.
According to these assumptions, the uses of funds for this project
are estimated as follows:
:lJ a
Land - 8.2 Acres at 914,000/Acre 5 88,800
Building - 75,000 aq ft at 830/Square Foot 8 750,000
Equipment 8 500,000
Contingency 8 75.000
TOTAL USES OF FUNDS 9114111800
We have analyzed this project to determine rhp most time and cost
effective means ut completing the necessary financing. Based on
thio analysis, we suggest the following sources of funds:
Messrs. Curless, Fullmer, and Buttweiler
May 31, 1994
SOURCES OF FUNDS
Bank (ARM,
20 years, let REM)
$
580,600
SHA 504 (7.5%,
20 years, 2nd REM)
$
565,000
OMEF (5%,
20 Year Amortization 3rd)
$
75,000
CHIP (6%,
20 years, 3rd)
$
50,000
Equity -
TIF
$
86,800
Owner
S
54,400
TOTAL SOURCES OF FUNDS $1,411,800
Assuming the adjustable rate mortgage on the bank financing
averages 9% over the term of the loan, the associated debt service
and coat-per-equare foot are as follows:
DEBT SERVICE
Bank (Avg. 9%) $ 5,225
SBA 504 4,550
GNIF 495
CHIP 360
TOTAL MONTHLY $10,360
TOTAL ANNUAL $127,560
COST/SQUARE FOOT 55.10/Square Foot
(Includes Equipment)
Based on our analysis of the future tax capacity of Royal
Engineering's new building, the property tax increment will support
the cost of land acquisition. Using this assumption, the City of
Monticello, via its Housing and Redevelopment Authority (HRA), will
"write-down" these coats on an up -front basis. Through this
mechanism, the HRA will recapture this investment over time through
the new tax increment without additional assessments to Royal
Engineering.
SUMMARY
Please be advised that this information utilizes estimates and we
would expect lower overall project costs. This financing structure
requires minimum equity investment from Royal Engineering because
of our ability to use Tax Increment Financing for over 50% of the
equity required by SBA. Based on our review of preliminary
Page 2
Messrs. Curless, Follmer, and Buttweiler
May 31, 1994
information provided by your company, we do not anticipate problems
with securing the financing as outlined; however, final approvals
are subject to review by the lending agencies.
If you have any questions or require additional information, please
call me at MTRO 333-3739 or J812) 293-2711. We look forward to
working with you.
Sincerely,
011ie Koropchak
Economic Development Director
cc: Leonard P. Kirscht, PRO
RRA File
Page 3
i
ROYAL ENGINEERING & MFG., INC.
REQUEST FOR ESTIMATED TAXES
ASSUMPTIONS:
25,000 sq ft Pabcon facility.
23,000 sq ft manufacturing and 2,000 sq ft office.
6.2 acres (HRA lot)
25 full-time jobs retained, 25 additional full-time within 2 years.
ESTIMATED TAXES
23,000 sq ft ® $23.00 per aq ft = $529,000
2,000 sq ft ® $32.50 per sq ft = $ 65,000
2 acres or 87,120 sq ft X $.40 per eq ft S 34,848
4.2 acres or 182,952 sq ft X $.25 per sq ft = $ 45,738
Total estimated market value of building & land = $674,586
E14V = $675,000.
$3,000 $575,000
.0300 =0460
$3,000 $ 26,450
New Capacity Value $ 29,450
194 Tax Rate 1.12873
ESTIMATED TAXES $ 33,241
ESTIMATED ANNUAL TIP ASSISTANCE $16,000
OVER 9 YEARS APPROXIMATELY $144,000.
l
ESTIMATED TIF BUDGET
Estimated annual Taxes, $33,241 times 9 years
Estimated annual HACA, 30% of taxes =
Estimated annual TIF assistance, $16,000
TIF range $83,600-$125,520
Proposed total upfront TIF assistance =
$120,000 Bond, 9 yrs ® 7.5% interest
Proposed Budget:
Land $ 86,800
Public Improvements (25% of TI) $ 74,792
Administration/Professlonal Bees $ 15,000
Capitalized Interest 9 18,000
Bond Discount 9 3.000
TOTAL $197,592
Interest on Bond $ 49,312
ESTIMATED TOTAL OF PROJECT $246,904
$299,169
$ 89,751
$144,000
$ 86,800
$169,312
250 East Broadway
P. O. Box 1147
MonriceUo, MN
55362-9245
Phone: (612) 2952711
Metro: (612) 333-5739
Fax- (612) 2954404
Mr. Steven Lemme
The H -Window Company
1324 East Oakwood Drive
P.O. Box 206
Monticello, MN 88362
may 11, 1994
RE: Contract for Private Redevelopment by and among the
Housing and Redevelopment in and for the City of
Monticello and the H --Window Company.
Dear Mr. Lemme:
At the Housing and Redevelopment Authority (HRA) meeting
on May 4, its members reviewed the contract between the
HRA and the H -Window Company for approval of the
Certificate of Completion.
Per ARTICLE Iv, Construction of Minimum Imarevemggte,
Section 4.3, Commencement and Comolgtion of Consjruction,
Page 9, Subject to unavoidable delays, the redeveloper
shall complete the construction of the minimum
improvements (28,600 eq ft manufacturing facility and
4,000 GQ ft office space) by January 31. 1994. Section
4.4, Certifiratg of Comvletlpn, Page 9. The HRA did not
approve the Certificate of Completion because its their
understanding that the City Building Official has iosuod
a certificate of occupancy for the manufacturing facility
only, and not for the office space. This is meant as a
written notice from the HRA as to their reason for not
approving the Certification of Completion.
Should you have any questions, please don't heatiate to
call me at 296-2711. The HRA will periodically review
the completion progress of the office space for
Certificate of Completion approval prior to December 1,
1994.
Mr. Lemme
May 11 , 1994
Page 2
Sincerely,
HOUSING AND REDEVELOPMENT AUTHORITY
IN AND FOR THE CITY OF MONTICELLO, MINNESOTA
011ie Koropchak
Executive Director
cc: TIF District No. 1-7 File
PUBLIC R_ESOURCE
GROUP, INC.
MarkevA& Development & Finance Specialists
TO:
Ms. 011ie Koropchak, Monticello HRA
FROM:
Leonard P. Kirscht
DATE:
May 13, 1994
SUBJECT:
Contract for services
Per our meeting on May 11, 1 am enclosing two copies of the revised contract between the City
of Monticello HRA and Public Resource Group, Inc. Please execute both copies and return one
copy to our office for our files.
If you have any questions please call me at (800) 642-6238. We look forward to working with
YOU.
dp
t`
I 4205 Lancasta Lone North* Suite I 10 4 Minnwpolb. Minnesota SSKI 0 (611) 5541979 0 (612) 550-9221 Fax
PUBLIC RESOURCE
t
GROUP, INC.
I
Marketing, Development B Finance Specialists
AGREEMENT BY AND BETWEEN
PUBLIC RESOURCE GROUP, INC.
and the
CITY OF MONTICELLO, MINNESOTA
HOUSING AND REDEVELOPMENT AUTHORITY
This Agreement made and entered into on the _ day of , 1994, by and
between the Housing and Redevelopment Authority of Monticello, Minnesota, a Minnesota
Municipality, (hereinafter nefemd to as *City% and Public Resource Group, Inc., a Minnesota
corporation (hereinafter referred to as 'PRG').
WHEREAS, the City of Monticello believes that communities are dynamic in the sense
that they ate constantly changing; and
WHEREAS, the City of Monticello believes that the economy of its community is shaped
by its active economic development program; and
WHEREAS, the City has initiated its economic development program through its Housing
and Redevelopment Authority and utilizes Tax Increment Financing as a key component of its
eoatomic development program; and
WHEREAS, PRG seeks to assist the continued growth of the City of Monticello to
provide economic development services and technical, professional assistance for its Tax
Increment Financing program.
4205 Lancaster Ione North* Suite 1100 ♦ Minneapolis. Mlnnesma 5501 • (612)550.1979 • (61:1550.92:1 Fax
NOW, THEREFORE, BASED UPON THE MUTUAL PROMISES AND
CONSIDERATIONS CONTAINED HEREIN, THE PARTIES HERETO AGREE AS
FOLLOWS:
I. SCOPE OF SERVICES
A. PRG will provide ongoing consultation services as requested, to the City
of Monticello to assist in the appropriate structure and implementation of
the economic oevelopment program.
R. PRG will provide marketing assistance on behalf of the city to identified
prospects on a case-by-case basis. Those services would not be
reimbursed. Such marketing assistance will include initial project review
and structuring and representation at the company's site visit to the City.
Should the marketing process extend beyond typical requirements, at the
City's option, PRG will be reimbursed on a hourly or fixed fee basis for
additional hours devoted to the project.
C. PRG will assist in maintaining communications between City staff
members, Bond Counsel, and project developers utilizing the City's TIF
assistance. As such, PRO will meet with all companies committed to the
City and maintain follow-up and coordination, as appropriate.
D. PRG will prepare Economic Recovery Grant applications on behalf of the
City. In addition at the City's discretion, other financial paclmging
services may be provided by PRG to assist City prospects.
2
E. Tax Increment Services
I
1. PRG will assist staff in providing preliminary financial review,
analysis and recommendations for the structuring of specific TIF
development proposals.
2. PRG will assist in the collection of the required technical and
financial data, draft TIF plans and coordinate the dissemination of
the plans and related material to other public agencies and will
review and confirm data with the City's bond counsel and fiscal
consultant.
3. PRO will assist in the preparation of materials for public hearings
and the presentation of the appropriate information with the City.
F. Other duties related to the city's economic development program and TDF
programs as directed by the City and\or its designated agency.
D. PAYMENT FOR SERVICES
A. The City agrees to payment for services as described in Section I, as
follows:
1. Marketing Services. Marketing services are classified as those
activities conducted on behalf of the city to assist in location of an
industry to the community. These services, at no can to the City,
include the following:
a) Preliminary project review;
b) Research and identification of potential financing services.
3
c) Initial project structuring;
d) Attendance at formal site visit to the City as representative
of the Community to discuss financing alternatives;
2. P2cjaging Services - Other. For financial packaging services,
other than Tax Increment Financing, it is the understattding that
fees associated with packaging of debt financing applications are
the responsibility of the prospective industry with the exception of
Economic Recovery Grant Applications (ERG). It is mutually
agreed that the fees associated with packaging of ERG will not
exceed 34,000 unless authorized by the City. This fee does n�
include administration/reporting associated with ERG Award.
3. Spoific Project Consultation/Coordination. Upon oommitment of
'i
a prospective industry to locate to the City, the City agrees to
utilize PRG, at its discretion, to assist in overall administrative
project consultation and follow-up, and project coordination and
completion at the rate of $90 - $110/Hour, depending on staff
assignment.
4. Establishment of Tax Increment Financing Proiects. At the City's
determination, PRG will be utilized to assist in the design and
preparation of TIF documents for the community's major projects.
Fees for these services are as follows:
F"
4
a. For completion of data preparation, processing and
certification of newly established or amended Tax
Increment Financing District - S3. .
b. The City and PRG recognize that the development of tax
increment financing projects will be conducted on a
contingency basis. City payment for services shall include
all variable staff time and expenses associated with each
project.
C. PRG will coordinate legislative requirements of Tax
Increment Financing, including provisions for accounting
for LGA and HACA penalties, with the City's Bond
Counsel or other designate.
5. Consultation for TIF =lects. The City will, at its discretion,
seek to complete the data and structuring for the community's
smaller TIF projects. On this basis, PRG will be retained on an
hourly fee of $90.00 - 51101hour depending on staff assignment"
to support the process and to complete the appropriate
documentation.
C. PRG also agrees to provide a monthly accounting of hours expended and
fees that have been generated through this omtract. It shall be PRG' and
the City's intent to provide an overall hourly average rate, consistent with
PRG stafff fee schedule.
5
i
III. ADDITIONAL PROVISIONS
A. The City and PRG reserve the right to terminate this Agreement upon 60
days written notice.
B. Each party to this Agreement binds himself and his partners, suc cessots,
executors, administrators,and assigns to the other party of this Agreement
and to the partners, successors, executors, administrators, and assigns of
such other party, in respect to all covenants of this agreement. Except as
above, neither party shall assign, sublet, or transfer his interest in this
agreement without the written consent of the other. Nothing herein shall
be construed as creating any personal liability on the part of any officer
or agent of any public body which may be party hereto, nor shall it be
construed as giving any rights or benefits hereunder to anyone other than
` the parties to this Agreement.
IN WI7NIESS WHEREOF, the parties hereto have executed this Agreement as of the day
and year first above written.
PUBLIC RESO E OROUP, INC.
_ UA 1
BY B L
PPS Patrick W. Pelstring. CEO
.ATTEST iv
P. Kiracht, t
ITS
6
HOLMES & GRAVEN
CHARTERED
STEPHEN J. BuBUL Ole PWA.f c..w. M.r.ym.. 1.m—,. UM
Almmy a Vw
T.1ep1 16121 337.93M
Duerr Did (612) 777.9229 F.Wl A. WL 7J4710
May 17, 1994
Mr. Pat Pelstring, President
Public Resource Group, Inc.
4205 Lancaster Lane N.
Suite 1100
Minneapolis, MN 55441
RE: TIF Plane
Dear Pat:
The Monticello Housing and Redevelopment Authority has requested that I touch base
with you regarding the impact of tax Increment lap changes on the drafting of tax
increment plane. Fortunately, there were no general law changes in the 1994
session, but we are still catching up with the 1993 amendments.
Since the local government aid (LGA) and homestead and agricultural credit aid
(HACA) penalty was imposed In 1990, it has been typical to require that developers
cover that lose by repaying a portion of tax increment assistance. This arrangement
has the effect of reducing the tax Increment actually available to the developer,
which has been reflected in tax increment projections that "net out" the aid loss.
As you know, the legislature restricted the above arrangement in 1993 by providing
that If developers directly or indirectly repay any tax increment assistance, the
repayment will be subject to all restrictions on tax Increment and may be spent only
for the purposes for which Increments may be spent. This means that developer
repayments may not be deposited into the City's general fund to replace LGA/HACA
!08806.
To address this change in law, the HRA and City may consider several options when
new TIF Districts are created. The options, and the effect on TIF Plane, are
summarized as follows:
In all cases, the tax increment analysis will need to highlight the LGA/HACA
Impact. The tax increment projections should show the expected increment,
with LGA/HACA loss shown In a separate column and not deducted from the
increment stream. It will also be helpful to show the present value of the
projected LGA/HACA loss, discounted at an interest rate at which the City
could reasonably invest funds.
6=70,!34
4"90-41
Pat Pelstring
May 17, 1994
Page 2
Z. The HRA may pay up to 10 percent of the increment to the City for
administration of the TIF District. This amount will recover a portion of the
LGA/HACA loss. However, no other HRA administration costs can then be
charged to that TIF District. If this option is chosen, the TIF budget will
have to reflect the 10 percent withholding of increment. Also, it would be
helpful to indicate the present value of the 10 percent withholding for
comparison with the present value of the LGA/HACA loss.
This strategy may fully compensate for the LGA/HACA toss from a
redevelopment district If the district is terminated after ten years or so. It
will not fully recover the loss from an economic development district.
Instead of paying the City an administration fee, the HRA may use tax
increment to finance various TIF -eligible public Improvements throughout the
redevelopment project area. To the extent there are Improvements that would
have been funded by City general funds, using tax increment has the effect
of replacing the LGA/HACA lose. If the HRA and City adopt this option, such
use of increment must be reflected in the TIF Plan expenditure budget. The
amount of such expenditures (in present value terms) would be calculated as
the present value of the LGA/HACA loss.
However, there are limitations on the ability to follow this strategy:
a. No more than 45 percent of the increment may be spent outside
the boundaries of the TIF District, and administrative costs are
considered to be spent outside the district. This figure will have
to be kept in mind in planning the budget of expenditures for
project -wide Improvements.
b. There may be additional limitations on use of increment
depending on the typo of TIF District. For example, at least 90
percent of the Increment from a redevelopment district must be
spent to correct the conditions that allow designation of an area
as a redevelopment district. Thus, increment from a
redevelopment district could not be used to finance street
improvements elsewhere in the project area unless those
improvements were part of an effort to redevelop substandard
buildings. Increment from an economic development district
could be used to finance public Improvements as long as the
Improvements either (I) serve manufacturing/warehouse
developments, or (U) servo the public generally, in situations
where the Improvements do not constitute assistance to private
development.
4. The City may choose simply to absorb the LGA/HACA lose, If It fools that the
lose is not significant or is balanced by other gains.
&070336
=120-4l
Pat Pelstring
May 17, 1994
Page 3
The HSA and City will need tax increment analysis that allows them to evaluate these
options and decide how to handle the aid loss. The chosen option will need to be
dratted into the final TIF Plan.
You may have other ideas about how to respond to the LGA/HACA loss. Please give
me a call if you have comments or questions.
Very truly your,
Sts
cc: 011ie Koropchak
Sick Wolfsteller
John Dean
aarwu
Wsue-4i
DES JOHNSON
May 15, 1994 Box 35u
Excelsior, Mh 5)331
Mr. Jay C. Morrell
% M&P Transport
14UI Falloa Ave.
P.O. Box 477
MuacLcello, MN 55362
SIE: Lot 6, Block 3, Oakwood Iadustrial Park, Moaticello. MN.
Uear Mr. Murrell:
Your recent telepnoue call to aid was a total surprise. You a..0 1
iadividually had au previous eoatact. You negotiated witn rioa a,Au
our attor.►ey is 1968 ragardiug this particular pareai, t:oreover,
is Deeduber 1993 it was Rua who coatected you a..d tud City ut
Monticello tit response to the City's 1993 iaquiry. At all tLweo
you were aware that Ron was aid is the parson to contact, ant mid.
Ia respouse to your call I reviewed the fila. Ro.i has made a good
faith effort to .ldg0tidte with you and the City ragardiug tnd
parcel. I also visited the site dad observed your u..auchurLzed
use of it. That is the extend of my iavolvemaut. So tnere is ao
wisuaderstaudiag. I did .tot maks day represeatatioas to you. L
did out authorize you to trespass.
As I Judi Bated in ausweriag your uaaxpectdd phoaa call, doa or nor
dtturaeya naadle all real estate matters to which I nave a,.
iaterast.
Because you expressed great reluctdace to talo to eithar Rua or
our attor ady. you aignt discuss your unauthorized use aad proposdu
purchase of the property with Robert E. Clifford 111. He wurkd
with Ru,►. To furtndr ddmoastrate my good faith la redpoadiag to
your phoua call I'll nava Bob Clifford coutact you shortly.
Vary
�truly
).yours,
jc �b���
Dee Jonason
--cc. Mr. 011ie Roropehak, Mo.►tleello HRA
HoLmn & GRAVEN
CHAaTURD
M rtme.f C .W , MYgVk 001
I
May 19. 1994
INVOICE a 49247
—,Y
CITY OF MONTICELLO TIF 01-16 — Scnulx
P O BOX 1147
MONTICELLO MN 99362-9249
For All Legal Services From
April 14, 1994 Thru April 30, 1994 As Follows:
04/14/94 SJB Official Statement revision, phone 2.90 300.00
call with L. Stumpf: document
revisions
04/14/94 SJB Review deed phone call with seller's 0.29 30. OC
attorney's office
Total Servi,:es: 14330, 00
Name Hours Rata Amount
Stephen J Subul 2.79 120.00 330.00
Total Services And Disbursements: 4330 00
1 dodan, w Wo panatly of W
60ft,
daimff,'
b Mut oro attd
tf tl Osan
of 0ainatd
John 8 Dean
HOLMES & GRAVEN
CMAINMED
rib./ Carr. YOI
(� Tiwb—a1Y771I711
May 19, 1994
INVOICE a 45246
MN 190: 41
CITY OF MONTICELLO Fedevelopment — 4eneral
P O BOX 1147
MONTICELLO MN 53362-9249
For All Legal Services From
April 6, 1994 Thru April 30, 1994 As Follows.
04/06/94 SJD Review HRA questions: prepare for 2 70 324 0O
meetings attend meeting
Total Services. $324 00
Name Hours Rete Amount
i
Stephen J Bubul 2. 70 120.00 324 00
For All Disbursements As Follows:
Photocopies 24 00
Total Disbursements: $24 00
Total Servicer And Disbursements: 43Q. CO
1 dadan, Wev psnatlY of 4m
" Wa ammo, a demmd
Wm and cd4clIno pM
d bssn
d CShimO
John 0 Dean
fes- HOLMES & GRAVEN
CHARTERED
471O�..WWh
{V`` t✓)^ �E� C��Yr. � If� 0101
` \ TbWh—wV>!laf00
May 19, 1994
INVOICE 0 45248
MONTICELLO HRA MN195:3
CITY HALL
250 E. BROADWAY
P.O. BOX 83A
MONTICELLO, MN 55362
Re: Johnson Purchase Agreement
For All Legal Services Rendered Through April 30, 1944 As Follows,
04/06/94 Conference with J. Dean: review file. 0.30
attend HRA meeting
Total Services: 0. 50 $60.00
i
Total Disbursements: 0.00
TOTAL DUES6S 0.00
I dectm . Wow pwapy of tar
MODWIL d" or do W
Is R srrd alio no pa
alp peen
e of Ctmmwe