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HRA Minutes 05-04-1989 . MINUTES MONTICELLO HOUSING AND REDEVELOPMENT AUTHORITY Thursday, May 4, 1989 - 7:00 PM City Hall MEMBERS PRESENT: Chairperson Al Larson, Lowell Schrupp, Everette Ellison, and Tom St. Hilaire. MEMBERS ABSENT: Ben Smith. STAFF PRESENT: Rick Wolfsteller and Ollie Koropchak. 1. CALL TO ORDER. Chairperson Al Larson called the HRA meeting to order at 7:05 PM. 2. APPROVAL OF THE MARCH 22, 1989 AND APRIL 4, 1989 HRA MINUTES. . Chairperson Al Larson indicated the March 22, 1989 HRA minutes, agenda item 4. Consideration of Review TIF Policies and Procedures did not include the HRA's rationale for the approval of the Economic Development Program Contract between the HRA and Business Development Services, Inc. Corrections to the minutes shall include the HRA's rationale for contracting with BDS, Inc. as 1) promote and enhance greater exposure of the City of Monticello, 2) potential contacts or leads for ,the City of Monticello, 3) financially economical if TIF plan not approved, no payment to BDS, Inc. if TIF plan is approved cost is passed on through, and 4) a win-win situation for all parties involved. Lowell Schrupp made a motion to approve the March 22, 1989 HRA minutes with the addition of the above named corrections, seconded by Everette Ellison the minutes stand approved as corrected by a 4-0 vote. Chairperson Al Larson suggested a report from City Staff on the status and workability of the contract with BDS, Inc. and a report on planned projects. Lowell Schrupp made a motion to approve the April 4, 1989 HRA minutes, seconded by Al Larson, the minutes stand approved as written. CONSIDERATION TO HEAR MR. FICEK'S PROPOSALS FOR THE ELDERLY TOWNHOUSE HOUSING CONCEPTS. 3. . The HRA received a copy of David Ficek's preliminary proposal for housing redevelopment. The preliminary proposal was prepared by Mr. Ficek after his visit to Monticello where he was informed of the HRA's goals, HRA Minutes - 5/4/89 Page 2 . 3. CONTINUED. . elderly housing concepts, and toured the HRA's recommended site locations. Mr. Ficek's prelimiary proposal included the phased redevelopment of all six recommended site locations. Area A). 20 single level towns and three singles, B) 16 two story towns, C) 16 single level towns, D) 12 single level towns, E) 8 two story towns and 4 houses and F) 48 two story towns. Koropchak advised the HRA members of Pat Pelstring's opinion of not recommending the HRA approve the developer's three year exclusive right to all property in the redevelopment district(s) or that the developer shall be deeded the parcels for $1.00. The HRA general consensus that they were interested to continue the process and interest of redevelopment with Mr. Ficek, however, recommended the fine tuning of the preliminary proposal to 1) the developer shall ~ have three years exclusive right to all property in the redevelopment district(s); 2) the developer shall not be deeded the parcels for $1.00, however, will be given consideration inclusive of the HRA's TIF Policy Guidelines (The HRA may provide assistance to the extent of the available project increment, to compensate the business/developer to "equalize" the project to accepted market standards; and 3) suggested Area A. proposed 20 single level towns and 3 houses was too many units. The HRA members recommended Mr. Pelstring prepare a preliminary financial account for TIF assistance for the HRA to better understand their potential role/assistance in the redevelopment. 4. CONSIDERATION TO ADOPT THE JOINT POWERS AGREEMENT BETWEEN THE HRA, THE EDA, AND THE CITY COUNCIL. Tom St. Hilaire made a motion approving the resolution authorizing the HRA to adopt the joint powers agreement between the HRA, the EDA, and the City Council. The motion was seconded by Everette Ellison and witq no further discussion passed 4-0. 5. CONSIDERATION TO REVIEW AND ADOPT RELEASING THE TAX INCREMENT PLEDGE AGREEMENT BETWEEN THE HRA AND THE CITY OF MONTICELLO. . Administrator Rick Wo1fsteller presented the HRA members with a written copy of the Tax Increment Finance Districts No. 1-1 through 1-7 estimated financial status and explained the system. The approximate 2/1/89 districts balance, exclusive of any elderly project cost paid in 1989, is $40,613. The projected district balance as of 2/90, with the assumption the pledge agreements between the HRA and the City Council are relinquished and reduced to meet statutorily requirements of 105% level of debt service coverage rather than the present 150% level of debt service coverage. is $111,101. Reports dated May 4, 1989. Mr. John Green of Holmes & Graven will prepare the resolutions for relinquishing the pledge agreements which haven't been received at the City Hall therefore Koropchak advised the HRA not to adopt the resolution but to recommend the City Council review the pledge agreement. . HRA Minutes - 5/4/89 Page 3 5. CONTINUED. Lowell Schrupp made a motion recommending the City Council review the Pledge Agreements between the HRA and the City Council is preparation of relinquishing said agreements by resolution adoption. The motion was seconded by Everette Ellison and with no further discussion passed 4-0. The Administrator further advised the HRA members that Springsted Inc. did not advise refunding the current tax increment bonds because in their opinion it did not satisfythe statutory requirement of realizing a 3% present value level of savings. Also, the $260,000 bond issuance for the elderly housing project may be a higher interest rate than originally anticipated because of increase of interest rates and the potential of this not being a tax-exempt bond. Wolfsteller will be consulting Jerry Shannon on this matter. 6. CONSIDERATION OF A NOTICE OF THE CITY'S JOINT GOVERNMENTAL UNITS MEETING. . Koropchak noted to the HRA members that the date for the joint meeting is Monday, June 5, 1989 at the new Fire Hall. Chairperson Larson informed the members of last years meeting being very positive and fruitful, and encouraged all members to attend this meeting. An agenda will be prepared by Jeff O'Neill with the meeting time and mailed in advance to all involved individuals. 7. CONSIDERATION OF AN UPDATE OF HRA PROJECTS. TIF District No. 1-8 - the Development Agreement between the HRA and Northern States Power Company is being handled by Pat Pelstring. NSP's original construction bids came in over budget, they wIll submit for second bids, however, have indicated a June beginning construction date. TIF District No. 1-2 - the Development Agreement between the HRA and Broadway Square Limited Partnership (Draft #1) was completed and the developer ~ in agreement to provide 1) a Tax Increment Guarantee, 2) Letter of Credit, and 3) state tbe Authority will turn over the site to the Redeveloper in a ready-to-build condition. City Staff recommended to the HRA that the development agreement include above named 1 and 2 items because these protect the HRA or City since the district's bond issuance debt retirement to projected tax increment is very tight and because the first two projects (Metcalf and Larson Office Complex and the River Parkview Apartment have no development agreement or assessment agreements) which . HRA Minutes - 5/4/89 Page 4 . 7. CONTINUED. . means the HRA has no guaranteed amounts to retire the debt service or any assigned minimum market values at this time on any of the three projects developed by these redevelopers- The River Parkview market value dropped from $920,000 in 1987 to $760,400 in 1988 (payable 1989). Taxes payable 1989 for the Office Complex is $6,711 (TI $5,599) and for the River Parkview is $16,504 (TI $12,5l4). Koropchak reported she had contacted Doug Gruber, County Assessor, who would agree on an estimated minimum market value for the proposed 28-unit elderly project at $800,000 ($100,000 land and $700,000 building) which would generate an approxiate tax increment of $14,841. This in comparison of the District's total annual debt retirement of $35,193.50 (Securities $4,285 and $30,193.50 for the $260,000 bond issuance at 9.25% over 18 years). And the City Staff recommended the HRA not guarantee a ready-to-build condition upon conveyance of the property because the City has no idea of the property's past historical structures and uses. The HRA general consensus was that the redevelopers need I) not provide a Tax Increment Guarantee or Letter of Credit, 2) the redeveloper will agree to a minimum market value of $800,000 for the completed 28-unit elderly project, and 3) the HRA will not guarantee the property in a ready- to-build condition upon conveyance. The HRA's rationale for this decision was 1) this redevelopment project hsa been a long time goal, 2) the redevelopment project eliminates blight, 3) the HRA approached the redevelopers with the idea or concept, 4) the redevelopers have completed other city projects and other FmHA projects, and 5) this HRA feels they are not responsible for the lack of previous development agreements and assessment agreements, however, does appreciate City Staff concerns. UNDISCLOSED COMPANY - BDS, Inc. has prepared and Koropchak delivered a financial proposal inclusive of TIF to this company. POTENTIAL SPEC BUILDING - BDS, Inc and Koropchak are working with a company and developers for a possible leased spec building. A financial proposal inclusive of TIF will be prepared. 8. CONSIDERATION TO SET UP AN ESCROW ACCOUNT FOR RESTORATION OF TOPEL'S WESTERLY WALL. . The party wall agreement between the Topels and the HRA has been e.tinquished with a ten foot easement granted to Topels, Koropchak proceeded to open an interest bearing escrow account at Wright County State Bank. Bank requirements are a needed resolution indicating the signatures required for tranaction. Lowell Schrupp made a motion to adopt the bank resolution electing Fred E. Topel and Olive M. Koropchak as determined to be qualified to order payment of money and withdraw funds from this organizations account. The motion was seconded by Tom St. Hilaire and with no further discussion passed 4-0. HRA Minutes - 5/4/89 Page 5 . 9. OTHER BUSINESS. Koropchak asked for the HRA opinion of interest to contact the Bridgewater Telephone Company who plans to construct a warehouse building on their West County Road 39 property across from the City Maintenance Building. ,The property is zoned PZ-M. Building Offica1 Gary Anderson advised Koropchak of the plans. Idea would be to use TIF to equalize the land market value in property exchanges thereby encouraging a utility warehouse in the proper zone, I-lor 1-2. The HRA advised Koropchak to follow through with the idea. The HRA thanked Rick Wo1fste11er for his District financial report. 10. ADJOURNMENT. Everette Ellison made a motion to adjourn the HRA meeting and Lowell Schrupp seconded the motion, the HRA meeting adjourned. ~ \<'(1\'0(\ ~ Ollie Koropchak HRA Executive Secretary . .