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HRA Minutes 08-03-1994 . . . MINUTES MONTICELLO HOUSING AND REDEVELOPMENT AUTHORITY Wednesday, August 3, 1994 - 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: Rick Wolfsteller, Jeff O'Neill, and Ollie Koropchak. GUESTS: Developers Rick Murray and Bob Murray and Attorney Jim Casserly. 1. CALL TO ORDER. Chairperson Larson called the HRA meeting to order at 7:00 p.m. 2. CONSIDERATION TO APPROVE THE JULY 6, 1994 HRA MINUTES. Ben Smi th made a mot ion to approve the July 6, 1994 HRA minutes as written. Brad Barger second the motion and with no additions or corrections, the motion passed unanimously. 3. PUBLIC HEARING FOR AND CONSIDERATION TO ADOPT A RESOLUTION FOR THE ACQUISITION AND DISPOSITION OF RAW LANDS RELATING TO TIF DISTRICT NO. 1-17. Chairperson Larson opened the public hearing for comments or opposition to the HRA1s acquiring and disposing of raw lands relating to TIF District No. 1-17 (Fay-Mar Metal Fabricators, Inc. ) The public hearing notice appeared in the local newspaper satisfying Statutory requirements. The project is proceeding on schedule. The HRA will acquire the property from Monticello Industrial, Inc. through an assignment of interest to the purchase agreement and will dispose of the property via a quit claim deed to Ronald S. Musich. The land title will be conveyed upon compliance and execution of the Private Redevelopment Contract, TIF Plan approval, and SBA authorization/Bank closing. With no public comments or opposition, the public hearing was closed. Tom St. Hilaire made a motion to adopt the resolution authorizing the acquisi tion and disposi tion of raw lands relating to TIF District No. 1-17. Brad Barger second the motion and wi th no further discussion, the motion passed unanimously. Page 1 . . . HRA MINUTES AUGUST 3, 1994 4. CONSIDERATION TO ACCEPT THE PRIVATE REDEVELOPMENT CONTRACT BETWEEN THE HRA AND RONALD S. MUSICH AS PREPARED BY HOLMES & GRAVEN AND TO AUTHORIZE EXECUTION OF SAID DOCUMENT. Koropchak informed the HRA that the Private Redevelopment Contract between the HRA and Ronald S. Musich had the traditional terms and conditions of other approved contracts. The land write-down assistance of $50,000 will be paid upon conveyence of ti tle. Construction to begin no later than October 20 with minimum improvements completed by December 31, 1994. One major difference to the contract is site improvements are to be completed one-year from date of building permit issuance. County Assessor Doug Gruber has executed the Assessment Agreement which agrees to a minimum estimated market value of $400,000. Brad Barger made a motion to accept the Private Redevelopment Contract between the HRA and Ronald S. Munich as prepared by Holmes & Graven and authorized HRA execution of the said document. Everette Ellison second the motion and with no further discussion, the motion passed unanimously. 5. CONSIDERATION TO DISCUSS THE PRELIMINARY CONCEPT AND USE OF TIF (SOILS CONDITION DISTRICT) TO ASSIST WITH THE SOIL CORRECTION EXPENDITURES ASSOCIATED WITH THE DEVELOPMENT OF A PROPOSED RESIDENTIAL PROJECT. Koropchak informed members that the HRA was being asked to consider the use of Tax Increment Financing to assist with soil corrections (Soils Condi tion District) necessary for development of residential property. The HRA is not being asked to make any formal approvals but only to indicate a willingness to proceed with interest. Developers Rick Murray and Bob Murray of Residential Development, Inc. Chanhassen, MN, are requesting the consideration of a pay-as-you-go TIF assistance. The developers have a purchase agreement on the 74.7-acre Krautbauer property. The current plan shows a completed~ phased project of 87 single-homes, 47 twin-homes, 2 commercial facilities, 7-acre park, and ponds. Projected base value of single-home is $95,000 and twin-home is $80,000. Initially and prior to the HRA meeting, preliminary studies of the 20-year topographic maps indicated the need for TIF assistance in the neighborhood of $175,000 for correction of the mined gravel-pit. The mined gravel-pit is located within the approximate 35-acre township parcel. Of the total 74.7- Page 2 . . . HRA MINUTES AUGUST 3, 1994 acre parcel, approximately 39.7 acres are located within the city limits and 35 acres are located in the township. The township parcel would constitute the need for annexation and modification of the Central Monticello Redevelopment Project boundaries. The first issue is to determine the extent of the soil deficiencies, area requiring remedial action, and physical preparation costs, in order to meet the Statutory definition of a Soils Condition District. It is upon the recommendation of HRA Attorney Steve Bubul that the developer provide the HRA with soil condition findings as determined by engineer and survey expertise in order to determine Statutory compliance. Jim Casserly, attorney for the developers, presented a Geotechnical Evaluation Report prepared by Braun Intertec Corporation. He summarized the report stating, "In addition to necessary gravel-pit remedial action, the report indicates evidence of soil deficiencies within the entire 74.7 parcel." Based on the preliminary information received by Attorney Bubul prior to the HRA meeting, he foresees the informational findings sufficient for the establishment of the Soils Condition District. With the findings of the Geotechnical Evalution Report, project costs have already escalated. After receipt of the findings of the updated survey and the County Road 75 Access Study, the developers may consider other options. Options being to develop the entire area wi th TIF assistance, to develop only the area which makes feasible sense without use of TIF, or to not develop at this time. Valuation of twin- homes now range between $80,000 to $120,000 and the base value of a single-home along the bluff is approximately $99,000. The preliminary grading cost of $250,000 was determined using a figure of $1.00 per yard. Jeff O'Neill reported on the Planning Commission preliminary sub-division approval based on the design plan only and contingent upon: 1) Favorable report of the County Road 75 Access Study as initiated and paid for by the developers, 2) Grading and drainage plans to accommodate a feasible development, 3) Reduction of roadway from 36 ft to 32 ft with the construction of sidewalks, 4) Development of a seven-acre park development, 5-acres flat and 2-acres sloped, 5) Preservation of trees, and 6) Development of three ponds. Chairperson Larson felt the property had a lesser land value and suggested re-negotiating with the landowner because the Page 3 . . . HRA MINUTES AUGUST 3, 1994 landowner had reaped the revenues from the mined gravel-pit. Attorney Casserly understood a public entity must be concerned not to enrich a landownerj however, felt the real question was "Should the public invest to encourage an end-product?" HRA members agreed that the development cost were high and felt the gravel-pit depth was even greater. Tom St. Hilaire was open-ended without knowledge of numbers. The developers would like a decision of interest or no interest in TIF assistance as soon-as-possible. Jeff O'Neill reported the Planning Commission had not discussed the development of only one-half the property. He foresees development of one~half the property as feasible without the use of TIF or a wait approach until the market value of land increases to the point the property can develop later. Chairperson Larson reiterated that the market should dictate development in a free-enterprise system. Tom St. Hilaire said some costs do exist and wondered if this was an opportunity to remove the gravel-pit. The HRA reviewed the TIF policy considerations and determined Items 1, 2, 4, and 5 as yes, Items 3, 7, and 8 as no, and did not determine the fate of Item 7: The project shall facilitate the "clean-up" of environmentally unsound property. Ben Smith made a motion to adopt a resolution in order to advance the process for development of the property and pending receipt of further information would the HRA agree to make a decision. The motion died due to a lack of a second. Chairperson Larson recommended the item be tabled for two weeks allowing time for additional information. Tom St. Hilaire expressed a great interest in the project and the HRA agreed to Chairperson Larson's recommendation. Mr. O'Neill asked if the developers would guarantee a certain value of home. 6. CONSIDERATION TO APPOINT TWO HRA MEMBERS TO THE SENIOR- CONGREGATE HOUSING COMMITTEE AND A PROJECT UPDATE. In addi tion to Koropchak agenda background, Chairperson Larson added the start-up board would be on rotating terms. Tom St. Hilaire expressed his support of the concept only if the project was privately owned or a non-profit organization such Page 4 . . . HRA MINUTES AUGUST 3, 1994 as the Guardian Angels of Elk River. Tom St. Hilaire made a motion to appoint Al Larson and Brad Barger as HRA representatives to the Senior-Congregate Housing Committee. Ben Smith second the motion and with no further discussion, the motion passed unanimously. 7. CONSIDERATION OF PROJECT UPDATES. The HRA accepted the written project updates. 8. OTHER BUSINESS. Again, Tom St. Hilaire reiterated the previous HRA motion: The HRA authorizes no further payment to Public Resource Group from the TIF District No. 1-7 or the HRA General Account for the H-Window Company expansion. HRA members agreed. 9. ADJOURMENT. The HRA meeting adjourned at 8:30 p.m. C)~ ~6\~ ~i)~ Ollie Koropchak, HRA Executive Director Page 5