HRA Minutes 04-05-1995
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MINUTES
HOUSING AND REDEVELOPMENT AUTHORITY
Wednesday, April 5, 1995 - 7:00 p.m.
City Hall
MEMBERS PRESENT:
Chairperson Al Larson, Vice Chairperson Ben
Smith, Tom St. Hilaire (tardy), and Brad
Barger.
MEMBERS ABSENT:
Everette Ellison.
STAFF PRESENT:
Rick Wolfsteller, Jeff O'Neill, and Ollie
Koropchak.
GUESTS:
Mark Ruff and Sidney Inman, Publicorp, Inc.
Kent Johnson, Ehlers and Associates, Inc.
Steve Bubul, Holmes << Graven.
1. CALL TO ORDER.
Chairperson Larson called the HRA meeting to order at 7:00
p.m.
2 .
CONSIDERA.Tl-'.2!LTO_~EVIEW A PRELIMINARY DEYELOPME~T, CONCEPT FOR
HR~.._~OT 5, E!!!"QSLL~_I_._""OJ;g-.:.....
The outstanding loan balance for Lots 5 and 6 wi thin TIF
District No.4 (IXI) is approximately $90,000 and since the
life duration of the district has expired, there is no
revenue. The interest rate on the HRA loan which was borrowed
from the City is 8%. The HRA owns Lot 5 (6.4 acres) and Ron
& Dee Johnson own Lot 6 (5.2 acres).
Developers Dean Hoglund and Ken Schwartz are looking for
industrial property to construct a 15,000 sq ft building for
an undisclosed tenant. The tenant is an existing production
company. The company currently employs 28 full-time
individuals and anticipates to hire an additional 10-12 within
two years. In order to cashflow the project TIF is proposed
to be utilized to reduce the lease rates. Rates of $2.80
square foot (triple net) for year one and $3.50 in years two
through five are needed. The company's prof i tabi 1 i ty has
turned around since its purchase from the previous owner. The
production company plans to purchase the building in five
years.
After discussion of the lot's worth, Tom St. Hilaire made a
motion to accept a purchase price of $60,000 for Lot 5, Block
3, OIP. The offer expires in 90 days and does not include the
use of TIF. Brad Barger seconded the motion and wi th no
further discussion, the motion passed 4-0.
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HRA MINUTES
APRIL 5, 1995
3 . I.NTER.Y.LEW."".9..f_f.YJ~1.J CQ.:~n:~.l.. I NC. W! TH"J1.~RK RUF~_.~.NILS !pNEY I r>!!1~.N.~.
Mark Ruff introduced Sid Inman. Mark has been with Publicorp
for seven years and Sid for eleven years. Both, had
previously worked in the public sector. Publicorp's focus is
Education, Housing, Economic and Redevelopment, TIF, contract
followup, and credi t analysis. Wi th the recent merger of
Ehlers and Associates, Inc. comes an additional focus and 40
years of experience in selling of bonds.
Publicorp works as a two-man team so a backup person is always
available and familiar with projects. Monthly billings are
itemized on an hourly rate ($105 per hour), no addition for
clerical, no mileage for Monticello, and generally do not have
contracts. A small TIF project would be approximately $2,000,
fees are negotiable or can be fixed. Turn around phone time
is within two hours.
The "but
options:
for" is handled through a response of the risk
bank, more sources, or what sources.
Publicorp does fiscal impacts for land use/public
improvements/ capi tal improvements, etc. Kent Johnson informed
HRA members that joint city/school district/community projects
with AA rating decrease interest rates. If an HRA owns a
community building and sells bonds or if pooled TIF dollars
are used as equity into a community project, financing terms
are lowered.
Chairperson Larson thanked Mark, Sid, and Kent for their
attendance. Commissioners response: Tom, Ehlers' first-class
outfit; Brad, very professional; Rick, use on trial basis;
Ben, very impressive/wide range of services; Jeff, wide range
of services/good responses; and AI, excellent presentation.
The HRA made no decision and requested Koropchak call
communi ties of equal size for a reference check. Mr. St.
Hilaire felt the HRA had received its monies worth from PRG up
until a year or year and one-half ago.
Mr. O'Neill informed HRA members that the Minnesota Sports
Federation will begin a location study the end of April for a
two-million dollar arena project. The project may be more
viable as a joint project between the school, community, and
the federation. Monticello is one of the si tes wi thin the
study.
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HRA MINUTES
APRIL 5, 1995
A clarification or definition of the role between Ehlers and
Publicorp is needed, as the City utilizes Springsted as bond
consultants. The City is satisfied with Springsted and
Springsted has the historical data of the City of Monticello.
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Tom St. Hilaire made a motion acknowledging the letter of
resignations to the Monticello Senior Housing Alliance, Inc.
from HRA Commissioners Al Larson and Brad Barger. Ben Smith
seconded the motion. Mr. Larson and Mr. Barger therefore are
relieved of any potential conflict of interests.
5.
QQfiSIDERATION TO A~f_~Qy'E THE PRIVA~E REDEVELO~M~N!~Q~JR~C~
BETW~.~N THE HRA, THE _gI':r.XJ~NQ.. TH~..l1.QJf;r-.!.g_~LLO_~ENIQJ~_JiQ.!l.~I~G
_~J;~.k~A:t!.CE, INc:__~.._
with the resignation of the two HRA commissioners from the
Alliance, the four HRA commissioners discussed the Alliance
project. Attorney Bubul informed the commissioners the
project has slowed down due to the forecasting of accounts.
Preliminary financial numbers indicate the project financing
is light. Other options are Presbyterian Homes owns the
project; increase TIF or the HRA owns the project so the City
can issue General ObI iga t ion Bonds; no response from the
Alliance as they lack members and staff; and the drafting of
the contracts/agreements is incomplete.
The Private Redevelopment Contract is incomplete because the
HRA motion of February 22 was unclear. Was the $325,830 which
included $20,000 Contingency and $20,000 Administration
intended for the senior project or for the City's potential
loss of HACA in the event the project does not qualify as a
"Qualified Housing District"? The difficulty is the $325,830
for the project keeps the rents down to qualify as a
"Qualified Housing District. If the $40,000, the assumed 10%
administration is taken off the top to cover the City's loss
of an unqualified "Qualified Housing District", the project
financing is on the edge. Rent 1 imi ts is the issue, not
income levels. For a "Qualified Housing District", it is
projected that a percentage of the one-bedroom units must rent
for $575 per month in 1995. As incomes increase, so do rents.
The HRA could amend the TIF budget increasing the total by
$42,000 to $367,830 thereafter would the Private Redevelopment
Contract be adjusted. Or Presbyterian Homes could own the
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HRA MINUTES
APRIL 5, 1995
project, not the Alliance. Presbyterian Homes would then
appoint the Alliance members. A forecast of revenues are
needed to enhance the project.
A projected annual 10% administration of $4,200 or $42,000 NPV
over 15 years, would cover the projected HACA Loss of $33,500
NPV over 15 years.
Tom St. Hilaire reiterated his objection was strictly the use
of TIF for land acquisition and not the project in itself.
HRA members agreed to amend the TIF Budget for an increase of
$42,000 for Administration costs. It was hoped the Hospital
District would consider a project cost reduction of $25,000.
6.
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Attorney Bubul explained a "Qualified Housing District" has
the same requirements as those used for Federal tax credits;
however, this project does not receive tax credits. Rents and
incomes must be reported and recorded annually as outlined in
the Commitment Agreement; otherwise, the project is in
violation of the law. This agreement is a commitment to such.
7.
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Attorney Bubul explained under this agreement the HRA
subordinates their rights under the Redevelopment Contract as
an inducement to the bank to enter into the indenture.
The underwriter has a problem with the conditional use permit.
The permit was approved based of the use for a multi~senior
housing project which has I imi ted parking needs unl ike a
multi-family project. In a worst case, the trustee is left
with an empty building with limited parking. The HRA did not
share the same views as the Planning Commission and Ci ty
Council, and felt adjoining or shared parking was available
with the Monticello Clinic.
Secondly, the underwri ter has problems wi th the potential
odors from the Waste Water Treatment Plant.
The TIF District No. 1~19 needs to be certified, the budget
amended, the contract and agreements signed prior to
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HRA MINUTES
~ APRIL 5, 1995
Legislation changes which would not prohibi t the project;
however, would add additional provisions.
Tom St. Hilaire made a motion approving modification of the
TIF Plan for TIF District No. 1-19 to increase the budget by
$42,000 for a total of $367,830 and authorizing the HRA Chair
and Executive Director to execute the Private Redevelopment
Contract, the Extended Low-Income Housing Commitment
Agreement, and the Subordination Agreement subject to no major
changes or surprises. Brad Barger seconded the motion and
with no further discussion, the motion passed unanimously.
The modification of the Plan for TIF District No. 1-19 could
be done simultaneously with and if approved, the modification
of the Plans for TIF District Nos. 1-1 through 1~11.
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Ben Smith made a motion to approve the January 26 and February
6 and 22, 1995 HRA minutes and the March 16, 1995 HRA summary.
Tom St. Hilaire seconded the motion and with no corrections or
additions, the minutes and summary were approved as written.
9,
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Attorney Bubul reported two hearings have been held in sub-
committee with regards to the proposed restriction of pooling
dollars for pre-May 1990 TIF Districts. One bill allows for
a July 1, 1995 date to approve a plan for use of the pooled
dollars. The plan must identify project costs by line items.
Hopefully, the restriction will be eliminated; however, to be
safe one needs to have a plan in place,
Koropchak indicated that to meet the proposed July 1 date, the
City Council would need to approve the modification of the
plans no later than June 26, 1995. The process is the same as
used for the establishment of a new TIF District,
O'Neill felt it was important for the Planning Commission to
be a part of the discussion to identify project costs with the
update of the Comprehensive Plan and its relationship to land
use and public improvements, Pooling dollars can be used for
transportation, utilities, community centers, etc.
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HRA MINUTES
APRIL 5, 1995
Administrator Wolfsteller projected the surplus pooling
dollars in an amount of $2.3 million, maximizing the life
duration of TIF District Nos. 1-1 through 1-11.
HRA members discussed the use of pooling dollars for essential
public improvements and non-controversial issues such Fallon
Avenue Bridge, Fallon Avenue, Waste Water Treatment Expansion,
etc.
O'Neill presented a concept used by aggressive communities who
used pooling dollars as a means of equity to encourage the
approval of referendums for projects of multi-use and non-
duplication: Community centers, senior centers, etc. O'Neill
viewed this as an HRA investment to create new wealth for a
communi ty. ~ ~
.9J}~ S -\ s -9 'S
Chairperson Larson felt the~pooling dollars should return to
the taxing jurisdictions who approved the original TIF
Districts. The truth is no taxing jurisdiction lost taxing
dollars as the increased tax dollars would not have occurred
without the use of TIF.
If the HRA developed a plan modifying the pre--1990 budgets for
public improvements, the plan could serve as an indirect way
for the City to recover its HACA Loss due to the establishment
of new TIF Districts. School districts and HRAs are not
penalized; only, Cities.
HRA members agreed to use TIF pooling dollars for essential
public improvements which require no referendum; therebye,
reducing the amount of the tax increase. HRA members did not
endorse TIF pooling dollars for non-essential uses such as
equity to encourage the approval of referendum; whereafter,
taxes are still increased for essential public improvements.
HRA members were not necessarily opposed to the development of
community centers or multi-purpose community projects, they
felt controversial issues should be by referendum therebye
allowing the citizens a choice.
Tom St. Hilaire made a motion directing HRA and City staff to
develop a list of essential services/public improvements by
line items for review and approval by the HRA at the May 3
meeting. Thereafter, would PRG be authorized to modify the
plans for TIF District No. 1-1 through 1-11. Al Larson
seconded the motion and with no further discussion, the motion
passed unanimously.
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HRA MINUTES
APRIL 5, 1995
10. 90NSIDERATION TO APPROVE GRANTI~9 A 20 FOOT E~SEME~T ON H~~_
LOT 5, BLOCK ~OIP....l- TO THE CITY OF"_MONTIC~LLO-"_
In order for the City to extend the water and sanitary sewer
lines from Dundas Road to the Klein Farm property, the City is
requesting an addi tional 20 feet to the existing 50-foot
drainage utility easement on the westerly boundary of Lot 5,
Block 3, OIP, owned by the HRA. The 50-foot easement is for
drainage of the Gwale and the 20 foot easement would be for
the installation and the maintanence of the new lines;
therebye, eliminating any conflict with potential ponding or
proximity to the City well.
One may not construct a building upon the easement; however,
it can be used for parking or driveways. The combined 20~foot
and 50-foot easements constitute a little over one-acre of the
6.4-acre lot of which the HRA has an outstanding loan balance
at 8% interest rate with the City.
Al Larson made a motion to approve granting a 20~foot easement
to the Ci ty in addi tion to the existing 50~foot drainage
utility easement on the westerly boundary of Lot 5, Block 3,
OIP. Brad Barger seconded the mot ion and wi th no further
discussion, the motion passed unanimously.
11.
CONSIDERATION TO ACCEPT THE RESIGNATION OF HRA MEMBER BEN
SMITH AND TO AUTHORIZE ADVERTISING THE VACATED HRA COMMISSION
SEAT.
Al Larson made a motion to accept the letter of resignation
from Ben Smith as an HRA Commissioner and authorized
advertising in the Monticello Times for a replacement of the
vacated commission seat. Brad Barger seconded the motion and
wi th no further discussion, the motion passed unanimously.
Chairperson Larson thanked Mr. Smith for his years of service
on the HRA. It is anticipated that the HRA and, perhaps, the
Ci ty Council will interview HRA candidates at the May 3
meeting.
12.
CONSIDERATION TO APPOINT TWO INDIVIDUALS AS REPRESENTATIvES OF
THE HRA TO THE MONTICELLO SENIOR HOUSING ALLIANG~INC.
As Steve Johnson and Ben Smi th previously had agreed to
represent the HRA on the Monticello Senior Housing Alliance,
Inc., Al Larson made a motion appointing Steve Johnson and Ben
Smith as HRA representatives to the Monticello Senior Housing
Alliance, Inc. Brad Barger seconded the motion and with no
further discussion, the motion passed unanimously.
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HRA MINUTES
APRIL 5, 1995
13. OTHER BUSINESS.
a) Project updates - Accepted as written.
b) Monthly PRG and Holmes & Graven bills were accepted by
concensus of the HRA members.
c) Tom St. Hilaire informed Koropchak to contact his office
for the name of the individual to contact at Komo
Manufacturing, St. Cloud. Koropchak has not written the
letter as requested by the HRA marketing Monticello I s
economic development efforts.
14. ADJOURNMENT.
The HRA meeting adjourned at 10:00 p.m. by a consenus of its
members.
a~ ~CI)~!J~
Ollie Koropchak, Executive Director
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