HRA Minutes 08-21-1996
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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
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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
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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'?"
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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
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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.
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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.
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HRA members reviewed Mr. Morrell's letter of August 14, 1996, and the counter-offer of
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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.
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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.
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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
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