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HRA Minutes 08-21-1996 . . . MINUTES MONTICELLO HOUSING AND REDEVELOPMENT AUTHORITY Wednesday, August 21, 1996 - 7:00 p.m. City Hall MEMBERS PRESENT: Chairperson Al Larson, Vice Chairperson Brad Barger, Tom St. Hilaire (tardy), Roger Carlson, and Steve Andrews. STAFF PRESENT: Rick Wolfsteller and Ollie Koropchak. STAFF ABSENT: Jeff O'Neill. GUEST: Steve Bubul, HRA Attorney 1. CALL TO ORDER. Chairperson Larson called the lIRA special meeting to order at 7:10 p.m. 2. CONSIDERATION TO APPROVE THE AUGUST 7. 1996 lIRA MINUTES. Tabled, minutes not prepared. 3. CONSIDERATION TO DISCUSS AND ADOPT 1997 lIRA GOALS AND OBJECTIVES AND BUDGET RELATING THERETO. Koropchak suggested the lIRA members review the list of potential projects and available revenue sources and then develop a list of prioritized projects for 1997. HRA members were reminded that the operational budget for the lIRA is funded through a levy by the City and is part of the City's annual budget. In other words, the HRA budget being prepared is project driven. Koropchak divided the lIRA revenues into three potential sources: Creation of new TIF Districts, TIF and lIRA General Fund Surplus, and lIRA levy. Members concentrated on the surplus dollars after noting they were not interested in exercising their power to levy and agreed to consider creation of new TIF Districts for projects which met both the local lIRA and TIF policies and the State requirements. Based on the TIF and lIRA General Fund Cashflow projections prepared by Mark Ruff and HRA expenditures for the Fluth parcel, Prairie West redevelopment, and H-Window; the beginning 1997 balance is $117,919. The annual minimum surplus revenue anticipated is $130,000 for a total revenue balance of$247,919. On the expenditure side, the HRA 1 . HRA MINUTES AUGUST 21, 1996 anticipates a City Loss of$55,000 due to HACA and a pay-as-you-go payment of $20,000 to the H- Window. Members then proceeded to discuss goal options. Compensation of City Loss Attorney Bubul explained for audit purpose the HRA can not transfer surplus doUars into the City General Fund or pay the City directly for public improvements. If the designated public improvements are in the City's General Fund, then the HRA can compensate the City for those designated public improvements through the establishment of an lIRA Reserve Fund. Until such time the designated public improvements are constructed and the lIRA is invoiced, does the HRA approve the expenditure and make payment. Therefore, HRA members felt it is important that the Council and lIRA are in concert and are in agreement of the designated public improvements as offered or suggested by the HRA as compensation to the City for its loss of HACA. Other . Attorney Bubul further explained that the HRA's ability to continue to spend existing or future TIF Surplus doUars from old TIF Districts (pre-l 990) will perhaps again be subject to change or further restriction in the next legislative session. Legislative action is retro- active to the beginning of the year. Two options to spend the money by end of 1996 are to tie up dollars in a bond or contract based on a general list of projections. This a risk for Monticello HRA because the surplus amount is not a high amount. If the surplus amount was larger the recommendation would be to sell bonds. If capital improvements are in the City General Fund or the infrastructure is tied to a development project, tax exempt bonds are sold and 5% ofthe proceeds must be expended within 6 months and all the proceeds expended within 3 years. Taxable bonds are for development projects. Bubul suggested spending old monies for lIRA redevelopment activities (spot redevelopment) or public improvements in the City General Fund. In either case, earmarked activities must be specific inorder for the HRA to act fast. In review ofthe capital improvements list, Wolfsteller estimated realignment of Chelsea Road to take place in 1 to 2 years at an approximate cost of $200,000 for infrastructure construction. No design or slope study has been authorized by the City for the Fallon Avenue overpass. The big concern with development of the storm sewer system on the east side oftown to the Mississippi River is "who's going to pay for it'?" . With potential de-regulation of the local power plant and since the merger ofNSP and the Wisconsin company, it is heard that NSP plans to lobby for a reduction of their property valuation. Wolfsteller informed lIRA members that the city would then receive state aid like other communities and also informed the HRA that the inventory of existing industrial 2 . HRA MINUTES AUGUST 21,1996 land is good for 10 years. Barger felt the new $5,000 per acre storm sewer charge would have an effect on industrial development. HRA members agreed the City needs tax revenues and good paying jobs, agreed with the IDC, and felt a good use of the surplus dollars was the purchase of land for a future industrial park. Wolfsteller felt the Council would_ agree. HRA members noted the increased costs to run utilities and provide access to the parcel proposed for industrial use within the Comprehensive Plan compared to costs for development of the northerly 80-acre Klein parcel which the HRA offered to purchase a few years ago or development of the 60-acre City parcel (previous Remmele parcel). Bubul suggested earmarking the surplus dollars and identifying the parcel(s). Wolfsteller reported, although no guarantees about rezoning, the current zoning control has stopped the development of housing on the parcels identified in the Monticello Comprehensive Plan for industrial use. The City purchased the 250- acre Bohanon property for approximately $2,800 per acre. . Recognizing budgets are not carved in stone, Tom St. Hilaire made a motion offering to compensate the City for its estimated $75,000 HACA Loss from the TIF and HRA General Fund Surplus. One-half or $37,500 earmarked for an Industrial Development Reserve Fund and one-half or $37,500 earmarked for improvement costs associated with the realignment of Chelsea Road and the development ofthe easterly storm sewer system. The HRA agreed to match the City's contribution of$37,500 earmarked for the Industrial Development Reserve Fund with a second contribution of$37,500 making an annual contribution of$75,000 to the Industrial Reserve Fund. AI Larson seconded the motion and with no further discussion, the motion passed unanimously. Tom St. Hilaire made a second motion earmarking the remaining surplus balance of approximately $115,000 for improvement costs associated with the realignment of Chelsea Road and the development of the easterly storm sewer system. Brad Barger seconded the motion and with no further discussion, the motion passed unanimously. In addition to adopting the 1997 TIF and HRA General Fund Budget, the HRA members discussed the importance of supporting the implementation of the Downtown and Riverfront Revitalization Plan, researching the HRA's ability to develop a program to eliminate spotted residential blight, and creating new TIF Districts which meet local policy and state requirements.. 4. CONSIDERATION TO REVIEW THE COUNTER-OFFER FROM JAY MORRELL RELATING TO THE TAX INCREMENT SHORTFALL. . HRA members reviewed Mr. Morrell's letter of August 14, 1996, and the counter-offer of 3 . HRA MINUTES AUGUST 21, 1996 $2,948.79 for compensation of the $12,517.93 tax increment shortfall. The HRA had offered to split the shortfall and upon receipt of payment in the amount of$6,258.96 from Morrell, the HRA would release the two recorded documents. Morrell's counter-offer included $1,498.15 from Morrell, $1,000 from Morrell for legal compensation, and $450.64 collectable from John Plaisted. HRA members voiced various viewpoints and unanimously agreed the principle and intent ofthe agreement was clearly understood by all parties at the time the documents were executed. The intent ofthe agreement is an example of business ethics, the agreement was done in good faith and Morrell received approximately $35,000 in benefits with the reduction ofthe market value from $879,400 to $700,000 for both parcels or TIP District Nos. 1-1 and 1-4 concluded members. The agreement included a $28,000 tax increment guarantee. . Attorney Bubul informed the HRA members that the agreement had some serious problems. One, the agreement was with Plaisted, not Morrell and secondly, the two TIF Districts have independent parcel numbers with independent expiration dates. Bubul estimated defense costs to easily be $6,000 and if taken to court approximately $15,000 to $20,000. HRA members recognized their case was weak; however, they still agreed the issue was one of ethics and authorized Attorney Bubul to draft a letter to Mr. Morrell from the HRA restating the HRA's position, offer, and option to enforce their rights. Bubul to be creative and draft copy to be reviewed by the Chairperson and Executive Director prior to mailing. The HRA gave Bubul no direction to file a claim at this time. 5. OTHER BUSINESS: a) HRA members accepted the written report relating to why the special HRA meeting of August 13 was cancelled. b) Payment for completion of Task II, Hoisington Koegler Group, Inc. - Koropchak reported at the MCP meeting of August 14, Chairperson Bowen verified that the work outlined in Task II had been completed by Hoisington. Hilaire requested an accountability ofthe work completed. HRA members were invited to attend Workshop II scheduled for Tuesday, September 17, 7:00 p.m. at the High School Board Room. Michael Schroeder will give an overview of the tasks completed and will present three conceptual options of focus for development. Additionally, Larson suggested Michael Schroeder attend an HRA meeting for direct accountability. HRA members authorized payment of the $6,798.99 invoice from Hoisington. c) AI Larson made a motion to pay all other monthly bills. Roger Carlson seconded the motion and with no further discussion, the motion passed unanimously. . 4 -. . . . HRA MINUTES AUGUST 21, 1996 d) Other Business - Tom St. Hilaire expressed his concern regarding the calling and cancelation of special meetings. With business travel outside the immediate area, Hilaire has arranged his business schedule reserving the first Wednesday of the month for HRA meetings. He generally is in Monticello on Monday and Thursday. Andrews agreed and hoped HRA meetings could be scheduled in the evenings. With St. Hilaire, Barger, and Koropchak unable to attend the rescheduled Joint meeting of August 27, HRA members agreed not to attend and recommended the joint meeting be rescheduled to October 2, prior to the HRA regular meeting. 6. ADJOURNMENT. The HRA meeting adjourned at 9:45 p.m. ~~ \(d)~' Ollie Koropchak, HRA Executive Director 5