HRA Minutes 05-01-1996
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MINUTES
MONTICELLO HOUSING AND REDEVELOPMENT AUTHORITY
Wednesday, May I, 1996 - 7:00 p.m.
City Halt
MEMBERS PRESENT:
Chairperson Al Larson, Tom St. Hilaire, and Roger Carlson.
MEMBERS ABSENT:
Vice Chairperson Brad Barger and Everette Ellison.
STAFF PRESENT:
Rick Wolfsteller and Ollie Koropchak.
GUEST:
John Komerak, Developer
Attorney Steve Bubul
Financial Consultant Mark Ruff
Bill Endres
I. CALL TO ORDER.
Chairperson Larson called the HRA meeting to order at 7:00 p.m.
2.
CONSIDERATION TO APPROVE THE APRIL 3 AND APRIL 11. 1996 HRA
MINUTES.
Larson requested an amendment to the April 3 minutes, page 3, item #5, paragraph
2: To read "his initial conversation with Katzmarek began somewhat-hostal and
ended cordial and business-like". St. Hiliare requested an amendment to the April
3 minutes, page 5, item #8, last paragraph: To read "if the HRA elects to increase
the levy, we may as well close-up shop." Roger Carlson made a motion to approve
the April 3, 1996, HRA minutes as so amended. Tom St. Hiliare seconded the
motion and with no further corrections or additions, the minutes were approved as
amended.
Roger Carlson made a motion to approve the April 11, 1996, HRA minutes. Tom
St. Hilaire seconded the motion and with 00 corrections or additions, the minutes
were approved as written.
3. CONSIDERATION TO REVIEW THE REVISED TIF SURPLUS PROJECTIONS
AND RECOMMENDATIONS FOR APPROVAL.
Mark Ruff reported on the revised TrF surplus proforma stating after some fme-
tuning the HRA has more dollars. The initial projections only included the cash
balance of the tax increment accounts while the revised projections include three
HRA accounts: TIF (restrictive funds), HRA General Fund (non-restrictive funds),
and debt service funds. At the end of tax increment year 1995, the HRA combined
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HRA MINUTES
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cash balance is approximately $485,000. It is projected, the HRA will net an annual
tax increment revenue of approximately $130,000 over the next few years. This does
not include interest income nor expenditures.
Mark reviewed his six-written recommendations with HRA members and suggested
the HRA consider an obligation to issue bonds for perhaps park proceeds or land
purchase (landbank). This an alternative to safeguard against any further restrictions
enacted by Legislators starting January 1997. Restrictions could eliminate the HRA
availability to utilize their funds. The best and most aggressive alternative would be
include the obligations into the tax increment plan prior to selling the taxable bonds.
The obligations might be considered in the fall with the focus of
downtown/riverfront and after November elections. St. Hilaire felt no harm done
if the surplus was returned to the taxpayers of the city, county, and state. It was
pointed out that no money is returned to the school district as the school district
initially received no loss.
Relating to recommendation NO.4: The expected annual HACA loss to the City is
$20,000 to $30,000 over the next 8 years. HRA members directed Mark Ruff to
prepare a list of options: "How can the HRA assist in recovery of the City's loss'?"
The direction given to prevent or eliminate any barriers between the HRA and City
Council or Administration. Mark informed members that with the direction given
the projected annual tax increment revenue would be reduced from $130,000 to
approximately $100,000.
Al Larson made a motion accepting the TIF Surplus Proforma and Projections as
prepared, authorizing Publicorp to update the TIF Proforma annually, and approving
the six-outlined recommendations for implementation. Tom St. Hilaire seconded the
motion and with no further discussion, the motion passed unanimously.
4. CONSIDERATION TO REVIEW THE REVISED ANALYSIS AND
RECOMMENDATIONS FOR THE PRAIRIE WEST PLUS REDEVELOPMENT
PROJECT FOR AUTHORIZATION TO ENTER INTO A PRE-DEVELOPMENT
AGREEMENT.
Mark Ruff reported with the reduction of 12 townhome units to 10 units within the
proposed TIF District, the projected tax increment assistance is reduced from the
original amount of $160,000 to $130,000-135,000. In order for the redeveloper to
have a reasonable sales return of 6.5%,$130,OOOTIF assistance plus the value of the
Gille parcel is necessary. Without assistance, the sales return is 2.1 %. A typical
metro sales return is 9.5%. Mr. Ruff suggested a split payment of the $130,000
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($65,000 up-front and $65,000 pay-as-you-go), City to gift $20,000 of the land value
therebye satisfying the 5 % local contribution which waives the BACA Penalty plus
the City receiving a payment of $15,000 from the BRA. It was suggested
Administrator Wolfsteller check with the County relating to the County's interest to
share in the gains of the tax-forfeited parcel. Developer Komerak said he could live
with the suggested proposal. Bill Endres reported Marquette Bank has a conditional
commitment and awaits the Redevelopment Contract relating to assistance by the
BRA and the City. Additionally, the status of the Katzmarek parcel is of vital
interest to the Bank as without cleanup the marketability of the Prairie West Project
is greatly hampered. It was recommended, the HRA meet with the City Council to
discuss both the overall concept of the project and the City's willingness to gift the
$20,000 prior to incurring unnecessary preparation costs.
Tom St. Hilaire made a motion authorizing the BRA to enter into the Pre-
Development Agreement with an effective term ending in 90 days and upon receipt
of a $5,000 cashier check from the redeveloper and requesting a special meeting with
the City Council on May 13, 6:30 p.m. Additionally, the motion included TIF
assistance in the amount of $130,000 NPV ($65,000 upfront and $65,000 pay-as-you-
go), City gift $20,000 of the value of the Gille property as the 5 % local contribution
waiving the HACA Penalty and the BRA payment to the City in the amount of
$15,000. Disbursement of upfront TIF assistance in three phases and 60/40 split
(HRA/ redeveloper) for the City and pay-as-you-go assistance. Al Larson seconded
the motion and with no further discussion, the motion passed unanimously.
In order to keep the Prairie West project on the scheduled time-line and with the
City a party to the Private Redevelopment Contract, consideration to approve the
Private Redevelopment Contract was scheduled for Council, May 28,7:00 P.M. and
for HRA, May 29, 7:00 P.M.
Additionally, Mark Ruff of Publicorp, Inc., inquired of the HRA's interest to
refinance TIF bonds which may result in a savings of $10,000 to $25,000. BRA
members agreed to refinance and instructed Mark to explore and proceed with
refinancing.
5 . CONSIDERATION TO REVIEW THE 1400 WEST BROADWAY APPRAISAL
AND PURCHASE AGREEMENT FOR CONSIDERATION TO ACQUIRE.
HRA members reviewed the Purchase Agreement of $145,000 and the Appraisal
completed by John Farrell. Appraised value, $70,000. Members evaluated potential
costs associated with the eminent domain: Relocation costs, $20,000-$35,000; costs
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associated with the eminent domain process; and attorney and relocation consultant
fees. They discussed the non-tangible benefits associated. with a direct buyout as
compared to the eminent domain process: Negative comments, protection and safety
issues, and good-wilL Additionally, the HRA discussed the likelihood of the parcel
being developed. as a portion lies within the flood plain.
Tom St. Hilaire made a motion accepting the 1400 West Broadway property at a
purchase price of $145,000. Al Larson seconded the motion and with no further
discussion, the motion passed unanimously_ The request for City Council approval
of the overall concept of the Praire West project on May 13 should include the City
accepting the 1400 West Broadway parcel as green space. BRA members questioned
if the estimated $10,000 demolition costs could serve as an offset of the local
contribution to waive HACA Penalties.
6. CONSIDERATION OF AN INFORMATIONAL ITEM RELATING TO THE
PROCESS FOR ESTABLISHMENT OF THE STORM SEWER CHARGE AND
THE PROCESS USED TO INFORM DEVELOPERS.
Without the presence of Assistant Administrator Jeff O'Neill, this item was tabled.
7.
CONSIDERA TION
DEVELOPMENT
METCALF/LARSON.
OF COUNCIL
CONTRACT
REQUEST TO ENFORCE
BETWEEN THE BRA
THE
AND
BRA members inquired to whom requested Council's consideration of this item.
Administrator Wolfsteller responded, "Charles Ehlen of Cinco Corporation asked if
the City was interested. in selling its property and at what price." HRA members
unanimously agreed to turn-down the Council's request that the HRA first attempt
to enforce the provisions of their own development agreement and re-establish the
original 20-ft easement from Locust Street. Attorney Bubul said the BRA or City
has no obligation to enforce the development agreement.
8. CONSIDERATION TO ACCEPT A LETTER OF RESIGNATION FROM
COMMISSIONER EVERETTE ELLISON AND AUTHORIZATION TO
ADVERTISE FOR A REPLACEMENT.
BRA members directed Koropchak to address of letter of thanks to Everette Ellison
and to order a plaque for presentation at a reception. Al Larson made a motion
accepting the letter of resignation from Commissioner Everette Ellison and
authorized advertising in the Monticello Times. Roger Carlson seconded the motion
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and with no further discussion, the motion passed unanimously. Resumes would be
accepted through May 24 with the intent to interview prior to or on June 5,1996, for
submittal of a recommendation to City Council on June 10, 1996.
9 . CONSIDERATION OF AN UPDATE RELATING TO THE HRA OFFER ON
THE 111 WEST BROADWAY PROPERTY.
Koropchak reported on Mr. Fluth's reaction to the HRA's offer of April 3: First
right of refusal for a period not-to-exceed three years, $100 annual renewaL Mr.
Fluth felt the $100 annual renewal was an insult and understood the HRA previous
intent as a purchase offer.
Mark Ruff informed HRA members that there are advantages to purchasing parcels
in or close to a redevelopment area (land-banking) if potential exists to get out. The
real question is one of policy. Wolfsteller informed members that a local business-
owner had made inquiries relating to city parking requirements for development of
the III West Broadway parceL Roger Carlson expressed HRA ownership of the
parcel allowed for some control. Additionally, Carlson was aware that Mr. Fluth has
received inquiries of interest to acquire. Roger Carlson made a motion approving
an offer of $37,000 (HRA appraised value), $2,500 earnest money, not-to-exceed
nine months for acquisition of the III West Broadway parcel. Al Larson seconded
the motion and with no further discussion the motion passed 2-1. Yeas: Roger
Carlson and Al Larson. Nays: Tom St. Hilaire. Reason for opposition to motion:
Removal of taxable property and discouraging private development/investment.
10. CONSIDERATION TO AUTHORIZE EXECUTION OF THE LOAN
AGREEMENT BETWEEN THE BRA AND MCP.
Tabled as modification are being made to the agreement.
11. OTHER BUSINESS.
a) HRA members ok'd the monthly HRA bills.
12. ADJOURNMENT.
The HRA meeting adjourned at 8:30 p.m.
U~ \~C1\~~~
Ollie Koropchak, HRA Executive Director
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