HRA Minutes 01-11-1995
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MINUTES
MONTICELLO HOUSING AND REDEVELOPMENT AUTHORITY
Wednesday, January 11, 1995 - 7:00 p.m.
City Hall
MEf'.1BEH.S PRESENT:
Chairperson Al Larson, Vice Chairperson Ben
Smith, Everette Ellison, Tom St. Hilaire, and
Brad Barger.
STAFF PRESENT:
Jeff O'Neill and Ollie Koropchclk.
STAFF ABSENT:
Rick Wolfsteller.
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.
CON~;1-DERATION _TO_APPROVE THE DECEMBER 7, 1994 ANQ.J2ECEMB~~ .L~
1994 HRA MINUTES.
Everette Ellison made a motion to appruve the December 7, 1994
HRA minutes. Seconded by Brad Barger and with no corrections
or additions, the minutes 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 meeting, 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 by Minnesota
Statutes, Section 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 the HRA Office
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HRA MINUTES
JANUARY 11, 1995
within one week after the commissioner became aware of the
potcIltial conflict. 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
BRA 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 BRA 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 Co~nissioners Larson and
Barger and requested the acknowledgement be recorded ill the
January 11, 1995 HRA minutes.
4.
CONSIDERATION TO READOPT THE PRELIMINARY CONCEPT APPROVAL FOR
USE OF TIF FOR THE sEl'frORHOUSING PR9_JEcT""AND"rnE-,,6J=:..pRO}'A-r; _~Q8=
AUTHORIZATION FOR RE-- IMBURSEl'1ENT...QLXEE.S ASSOCIATED. WITH THE
SENIOR HOUSING MARKET ANALYSIS.
With Vice Chairperson Smith presiding over the BRA 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 assist with the
financing the senior housing project and the approval to
authorize re-imbursement of the $5,600 fee associated with the
Senior Housing Market Analysis. Everette Ellison seconded the
motion and with no further discussion, the motion passed 3 0
2. Yeas: Tom St. Hilaire, Everette Ellison, and Ben Smith.
Nays: None. Absention: Al Larson and Brad Barger.
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CONSIDERATION TO READOPT THE RESOLUTION AUTHORIZING PRG TO
PREPARE THE TIP PLAN RELATING TO Tlf.E ESTABLISHEMNT OF TIF
DISTRICT NO. 1-19 f A ItOU~L"'1G DISTR:L9.L_
Vice Chairperson Smith directed HRA Cownissioners Ellison, St.
Hilaire, dnd himself tu consider the action taken by the BRA
on December 'If 1994 relating to the resolution authorizing PRG
to prepare the TIF Plan for the Housing District.
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HRA r-HNUTES
JANUARY 11, 1995
Commir::isioner Tom St. Hilaire made a motion to readopt the
resolution authorizing PRO to prepare the TIF Plan relating to
the establishment of TIF District No. 1-19, a Housing
District. Everette Ellison G8conded 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 tu waive the receipt of the TIF Preliminary
Agrel:::ment and $5,000 Cashier; Check, and agreed to allocate the
estimated $7,500 PRG and Legal fees and previous $5,600 Health
Planning & Management Resources, Inc. fee as Administrative
Custs. With no further discussion, the motion passed 3'-0-2.
Yeal:;;: Tom St. Hilaire, Everette Ellison, and Ben Smith.
Nays: None. Absention: Al Larson and Brad Barger.
6.
CONSIDERATION TO. ADOPT A RESOLUTION_ MODIFYINg THE
RELATING TO THE REDEVELOMETiT PROJECT NO. 1.1.. rv10DIFYING
PLANS RELATINq TO TIF DISTRICT NOS. 1-,1 THROUGH 1:-18,
APPROVING AND ADOPTING THE PLAN RELATING TO TIF DISTRICT
1--19.
PLAN
THE
Alill-
NO.
Kuropchak informed HRA Commissioners Ellison, Smith, and st.
Hilaire that the proposed 48-uni t senior housing project h<:H3
an estimated minimum market value of $1,850,000, an annual tax
increment of $42,285, and captured tax capacity of $37,454.
The HACA Loss to the city is estimated at a Net Present Value
(NPV) of $78,700 at 5.5%. This loss is waived if the project
qualifies as a "Qualifil~d Housing DL:itrlct".
At the time the agenda was distributed, the TIF Plan included
two budget optiollS of $246,000 and $390,000. Both options
included capitalized interest and discount arnounts for bond:ing
and the lesser amount of $246,000 deleted the land
acquisition. These budget amounts were NPV @ 8%.
Upon the recommendation of HRA Attorney Bubul, a third budget
option of $379,830 was submi ttEJd at the HRA meeting. The
third option included the deletion of the capi talized interest
and discount since the TIF assistance is the pay-as-you-.go
financing method, public improvement costs for utility
realignment of $12,000 and a bike/pedestrian path bridge of
$10,000 were added upon city staff recommendation, the
administrative cost was maximized at 10% of Uie projected
increment, and the contingency amount increased to utilize
available TIF dollars therebye enhancing the cash flow of the
project.
Koropchak further noted that a budget within a TIF Plan is a
guideline of identified and qualifying TIF expenditures of
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HRA ~-nNUTES
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 TIF enforcement tool for disbursement of TIF
expenditures lIes within the Private Redevelopment Contract
between the HRA and a developer, not, with the approved TIF
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.
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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
TIF District No. 1-1 through 1-18, and approving and adopting
the plan relating to the TIF 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 wers reduced to $20,000 each.
Everette EllIson seconded the motion and the motion passed on
a 3-0 .2 vote. Yeas: Tom St. Hiliaire, Everette Ellison, and
Ben Smi th. Nays: None. Absent ion: Al Larson and Brad
Barger' .
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The land acquisition was deleted because:
1. The HRA members understood the Hospital District was
donating the land as equity into the project.
2. The HRA members heard the concern raised by ci ty
staff relating to the potential release of odors from the
Waste Wutcr Treatment Plant. Staff did not support the
use of TIF for land write-down at this site location.
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3. The HRA members were informed that the All iance
requested the architect to incorporate special filters
Into the design of the building to decrease the potential
intake of outside air and that the Alliance viewed the
number of reported odors from the Treatment Ph<nt as
insignificant.
4. On December 7, the HRA members approved a resolution
authorizing PRG to prepare a TIF Plan relating to TIF
District No. 1--19 and viewed the potential odors from the
Treatment Plant as insignificant as it relates to the use
of TIF and the proposed s1 te of the senior housing
pr'oject.
5. On December 15, a meeting was held between Kirscht,
Lindl, Euhul, Wolfsteller, and Koropchak to discuss the
senior housing project costs and the structuring as it
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HRA ~HNUTES
JANUARY 11, 1995
related to TIF and the issuance of bonds. Although, the
elimination of the land acquisi tion 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 costs were available
fl'om Dan Lindl. Therefore, this meeting is the f h'st
opportunity the HRA had to revIew a proposed budget for
approval.
The administrative and contingency costs were I'educed 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-]9 and
the re imbursement of $5,600 for the Housing Market study
Analysis as Administrative Costs. Members felt a maximum
of $20,000 was sufficient and allowed for a $6,900 over-
:r'un.
2. The HRA felt a contingency of $20,000 was a
sufficient amount for over-runs.
3. The HRA felt once the budget was approved, dollars
would be expended to the maximum of the budget amounts.
4. The HRA recogrlized the option to modify the budget at
a late!' date if an increase to the budget was neceGsarTl.
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C01!SIDERA~ION ~._ REVIEW ..IRE FIRST DRAFT OF THE PRlVA_T$_
~~~.!?_r;;.y:g;.f.:..Qr.H~NT C9N_TRACT BEn~EEN THE_._HR~_~rJ.);LJ1iE r.!Q.N~LCELL~
~g: N I 0 K.tIQ.Q~ I NG~~kl!>N~~L_..1l'T c.:.-
As the senior housing project has not been fully defined nor
the project financing approved, it was premature to prepare a
first draft of the Private Development Contract. This item
will appear on the next HRA agenda.
8. CONSIDERATION TO APPROVE A NOTE IN THE AMOUNT OF $40!5QQ FROM
THE HRA TO THE MONTICELLO SENIOR HOUSING ALLIANCE I.. INC.
Attorney Bubul has prepared a Loan Agreement and Promissory
Note for HRA consideration. The interim loan is betweelL the
Monticcd 10 Senior Housing All iance, Inc. (the "Borrowerll) and
the HRA ( the II Lerlder ") and is necessary to finance the
estimated $81,000 Allio.nce expendi tures which are expended
prior to receipt of the bond funds. The prepared agreement is
for un interim loan of $40,500 at 8.5% interest rate over 120
days. DlsburGement at a minimum amount of $5,000 and upon
evidence satisfactory to the Lender of preliminary costs in
connection with the project that are due or have been paid by
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HRA fv!INUTES
JANUARY 11, 1995
the Borrower. The Hospital Board has approved a loan to the
Alliance ill the amount of $40,500 at 8.5% interest rate over
120 deJ.}s.
Koropchak noted the HRA loan would be unsecured and the
dollars must be transferred from the HRA General Fund, not the
TIF Surplus Fund, because 100% of the project expenditures
mU~3t be from within the Housing District. Additionally, no
loan dollars are to be disbursed unt i I January 24, 1995, 01'
unt i 1 the Ci ty Counei 1 readopts the :t'8solut ion to reimbu.J:'s(~
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 qUBstioIl
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
ra te over 120 days:; subjec t to an Inc lu,sion of a (; lause or
provision wi thin the agre(~ment for equal disburs::;ement and
payback of the Hospi tal and HRA loans. Everette Ell ison
::..:;cconded the motion and wi th no further discussion, the motion
passed on a 3 0 2 vote. Yeas: Tom St. Hilaire, Everette
Ellison, and Ben Smith. Nays: None. Absention: 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
Lots 9 and 10, they obtained the deed. Through a deed to the
City from Larry Flake the City obtained an easement within Lot
10. The alignment of the paved driveway today exist because
the City requested a new location for the curbcut along Lucust
Street; however, the previous City Administrator had no time
to relocate or shift the easements. Later, Metcalf & Larson
obtained a 5 ft strip along the easterly boundary of Lot 8,
wherein lies the options to block the driveway. There is no
prescriptive easement.
Brad Larson reported as the community has grown, the activity
at the post office has increased causing a number of accidents
in the area. Second} y, upon Metcal f & Lar::'lOn blocking the
driveway for snow removal, did Metcalf & Larson hear negative
comments from the public. Postal Master Jack Hutchinson does
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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 Ci ty owned the no:ctherly portion of Lots 1, 2, and 3,
Block 50 and since these properties lie within a TIF
Redevelopment District; the HRAjCity 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 thx'ee options: One, Metcalf & Lar~3on block
the access to Locust Street with a chain. O'Neill reported
Administratur Wolfs teller indicated the public has a right--to-
cross. Secondly, 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
ov.jner of the post off ice property giving 30-day notice to
close the driveway because of the inc.J:'sased potential for
liability and noting Metcalf & Larson will not be held liable.
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The HRA recommended Bl;ad Lal'GOn 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 and
noting Metcalf & Larson will not be held liable. The HRA felt
the conflict waG between the two property 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
I, 2, and 3 in order to provide an access to Linn Street for
the tenant.
10.
~LONSIDERATION TO APPROVE "g!1ANGE~_TO LIig;_ PRIVA~_E REDEVELOPMENT
CONTRACT BET~'JEEN "THE_H-=-.:s.~_ AND. RESIDENTIAL DE'{ELOI~"ME~{I_!..."".ING..:.-_
Rick Murray stated the River Mills project began in August of
1994 and since thLm a number of things occn.l:'.J:'ed causing a
change in the project concept. fvlol'tgage rates incre,;tsed,
future potential to relocate the County Road 75 and I-H94
Interchange was highlighted, realignment of the storm sewer
was sugge::.:.;ted by Ci ty EngineE'r, and commencement of
con",;truct ion (hdayed. Therefore, the project complet ion ua te
has been extended, tile total estimated mat'ket vallIe decreased:
and the construction phasing reduced from four to two.
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}~(}!'{}r.ic}-lak ricited tl~iat ~i 1neetir1g witl-j BRA Atto:r;rley Bul)til n(;~.:;,")
,3cheduled for the next day at 10: 00 a. in. to dL,cUSG thE; f :tnal
details of the Private Redovelopment Cantt'act. She sugg(~sted
the item,::; of most intorest (market value and timing) be
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HRA MINUTES
JANUARY 11, 1995
presented thereafter to the HRA. Basically, the total
1:;>stimatec'J market value has decreased by approximately $3
rt\i 11 ion from th,2 ,3.dopted TIF P Ian and the terminat ion d.a te 0 f
tI10 district would be extended by two years frorn the (lx'igillal
anticipatBd ter1uitlution ~late of 1999~
11.
.CONS1DERATION
corv1PLETIO!~ FOR
APPROVE ISSUANCE OF
AND TODD SCHULZ DBA
THE CERTIFICATE OF
m. ~~~
POL'lCAST _SPECIALTIES,
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J.'.l..,.'....
.IF C -:-
As the city Building Official issued a full Occupancy Permit
tu Roy and Todd Schulz for completion of their 16,640 sq ft
office/manufacturing facill ty on Decemb~::;t' 5, 19(J4; the HRA
declared the construction of the minimum improvements complete
a,o; per the Private Redevelopment Contract bet1tWf.1l1 the HRA and
tl-ie Sch.t11z Pl'(j[H::rties. ETveT'(~~tte Ellison Jna(lL~ a HiCit.lC;(l tc>
approve issuance of the Certificate of Completion fOr' the
Schul z Propcrt i es. Ben 3ml th secondf,d the mot ion and 1tJ 1 th no
further discussion, the motion passed 5-0.
Full occupancy permits have not been issued
Off ic ial for the H-~'Jindow or custom
improvements so no BRA action is neceesary.
by the
Canopy
Btti lclirlg
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g_TtiE~ BUSIN;:SS ~~_
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 PRe and Holme~j
& Graven billi11g~. Members inq'ulred to the progress of
r~searching for other financial consultants for HRA
consideration. Koropchak stated she has only contacted
Publicorp.
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. ADJ~QRNMENT.
The BRA meetlng adjourned at 8:45 p.m.
C2:)~ \< ~ ~g~
Ollie Koropchak, HRA Executive Director
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