HRA Minutes 05-07-1997 Special
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MINUTES
MONTICELLO HOUSING AND REDEVELOPMENT AUTHORITY
Special meeting of May 7,1997 - 6:00 p.m.
City Hall
MEMBERS PRESENT:
Chairperson Brad Barger, Vice Chairperson Steve Andrews, Darrin
Lahr, and Dan Frie.
MEMBER ABSENT:
Bob Murray.
COUNCIL MEMBERS PRESENT: Mayor Bill Fair, Clint Herbst, and Brian Stumpf.
COUNCIL MEMBERS ABSENT: Bruce Thielen and Roger Carlson.
STAFF PRESENT: Rick Wolfsteller and Ollie Koropchak.
GUESTS:
Mark Ruff, Ehlers and Associates, Inc.
Attorney Steve Bubul, Kennedy & Graven.
1. Call to order.
HRA Chairperson Barger called the special HRA meeting to order at 6:00 p.m.
2.
Information gathering and discussion of TIF and its uses.
Mark Ruff gave a brief overview of the working relationship between the HRA and
Ehlers. The HRA hired Elhers as their financial consultant about two years ago.
Mark summarized the HRA policy: To increase property taxes to cover eligible costs over
a certain time period.
Next, Mark informed individuals that the Council actually approves the findings for the
"but for" test, but in reality the Council delegates this to the HRA.
How do you fmance a project? When the older TIP Districts were created, the use of TIF
was much freer. Today, ifwithin four years after the certification of a district no project
has occurred within the parcel(s), the parcel(s) are dropped from the district. lfwithin five
years after the certification of a district no fmance plan is set-up, the parcel(s) are dropped
from the district. The greatest financial risk is when the city sells general obligation bonds
for land purchase and demolition. Other fmance methods are the pay-as-you-go and up-
front methods from HRAlTIF Funds.
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HRA MINUTES
SPECIAL MEETING OF MAY 7, 1997
How much do you need to give in TIF assistance? Equity should be a component.
Assistance should be consistent among businesses. Example: Generally for land write-
down.
LGAlHACA Penalty - For general purposes, the Council approved and delegated to the
HRA the administration of TIP. In years 1990-1995, the penalty to cities was
approximately $.35 to $.40 for every $1.00 oftax increment. In 1995, legislators
approved the local contribution match. Five percent of the tax increment for
redevelopment district and 10% of the tax increment for economic district. This is a
commitment made at the time the district is established by either the city or HRA and the
matched dollars must go into the project. Example: Not for city engineer but can be used
for WAC/SAC. For the HRA, this must come from non-restrictive funds (the BRA
General Fund) or can be supported by the tax levy.
Lastly, Mark informed individuals that historically the State Auditor monitored TIF and
within the last couple of years the monitoring was transferred to the Department of
Revenue. Although the Department of Revenue has no enforcement powers, it has
become a political power issue and Mark cautions Cities and HRAs to work with the
Department of Revenue. The County Attorney is actually the enforcer.
3.
Adiournment.
With the City Council members need to convene the Board of Appeals meeting at 7 :00
p.m., the special HRA meeting adjourned at 7:00 p.rn.
C:J~ \<~~~--
Ollie Koropchak, Executive Director
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MINUTES
MONTICELLO HOUSING AND REDEVELOPMENT AUTHORITY
Wednesday, May 7, 1997 - 7:00 p.m.
City Hall
MEMBERS PRESENT:
Chairperson Brad Barger, Vice Chairperson Steve Andrews, Darrin
Lahr, Bob Murray, and Dan Frie.
STAFF PRESENT: Rick Wolfsteller and Ollie Koropchak.
GUESTS:
HRA Attorney Steve Bubul.
Steve Krenz, Midwest Graphics, Inc.
Jeff Congoll, Allied Companies
John Komarek, Cedrus Creek Craftsmen, Inc.
Brad Johnson, Lotus Realty Services.
1. Call to order.
Chairperson Barger called the regular meeting of the HRA to order at 7:00 p.m.
2.
Consideration to approve the April 2. 1997 HRA Minutes.
Darrin Lahr made a motion to approve the April 2, 1997 HRA minutes. Seconded by
Steve Andrews and with no corrections or additions, the minutes were approved as
written.
3.
Consideration of addin~ items to the agenda.
Koropchak introduced Steve Krenz, CEO of Midwest Graphics, Inc., and JeffCongoll,
Allied Companies. Mr. Krenz informed HRA members that over the 28-year life of
Midwest Graphics, the company has become one ofthree largest print centers in the local
trade association. Midwest Graphics is also into communications. Monticello Investment
Company, the holding company of the existing facility located at 9530 Fallon Avenue
employs 20 full-time plus temporary help. The starting wages are low-paying and
progress higher. Additionally, the company leases space at 206 Pine Street for its
telemarketing division. The company has an option on this building.
Mr. Krenz continued stating that Midwest Graphics serves Fortune 500 companies
through marketing of data, the way of today. The company does not compete with FSL
The communications service requires a higher skill. 3M, National Car Rental, Northwest
Airlines, Dayton's, and Toro are some known customers.
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HRA MINUTES
MAY 7,1997
The estimated 1997 local economic impact of wages is about $700,000. UPS is their
largest shipper as well as other local shippers, the company provides employees with an
opportunity to grow and offers good benefits. The proposed project is 36,000 sq ft
manufacturing space and 8,000 sq ft office space which could accommodate 72
telemarketers and has 100 parking spaces. Allied Companies would be the developer with
a build-to-suit to lease option. It is anticipated that the proposed project would create 22
jobs within the first year. The company plans to lease out the current Fallon Avenue
facility. The projected value of the new building is approximately 1.4 million, an attractive
facility.
The legislative requirement of "Green Acres" places an incumbrance on the Monticello
Commerce Center property. The "Green Acres" five-year window expires in year 2000.
In order to create a TIF District, any proposed facility must consist of 85% manufacturing
or production space of tangible personal property, including processing resulting in the
change in condition ofthe property. Printing is considered a manufacturing business and
if the developer/owner are willing to substantiate their product results in change and 85%
of the building is for manufacturing, TIF can be utilized. HRA members agreed the
project has merit and one member stated the overall wage/benefit package is about $12.00
per hour. Koropchak provided a time schedule for preparation of a TIF District which
would spare the developer the increased costs of sanitary sewer hook-up fee.
Steve Andrews made a motion authorizing Ehlers and Associates to begin preparation for
establishment ofTIF District No. 1-23 subject to the developer/owner providing evidence
offmdings for the "Green Acres" and "but for" tests, execution of the Pre TIF Agreement,
and submittal ofa $5,000 cashier cash. Brad Barger seconded the motion. Attorney
Bubul to work with the developer relating to "Green Acres" fmding. With no further
discussion, the motion passed unanimously. HRA members determined the proposed
project met the local TIF Policies.
4.
Consideration of request by Developer Komarek for an update relating to the development
ofTIF District No. 1-20 and the HRA review of the contract relating thereto.
Koropchak submitted a written account of the progress of the project in the agenda
supplement. John Komarek, the developer, presented the lIRA members with a letter
drafted by Attorney Brad Larson. The letter requested a one-year extension of all
performance dates within the contract and stated the delay was caused in part by the time
necessary to clear the title ofthe former Carlson property and the torrens title of the
former Gille property. Additionally, the letter addressed the confusion ofthe property
description as described within the contract and the approach taken by the city engineer to
resolve the ponding issue. Komarek noted that the Gille property had some 41 title liens
which contributed to the slow process of the yet uncleared title. Komarek indicated the
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MAY 7,1997
need perhaps for a left-turn lane to enter Prairie West from County Road 75 and also
indicated sales were a little slower than anticipated.
Attorney Bubul noted that Komarek, the developer, had been advised ofthe torrens title
relating to the Gille property. HRA members agreed and noted the role of the HRA is not
to place judgement on design standards set by the City Engineer or City Staff. Lahr noted
the Letter of Default was prepared at the direction of the HRA With the developer
agreeing to pay all costs associated with amending the contract, Steve Andrews made a
motion to amend the Private Redevelopment Contract of January 13, 1997, between
Cedrus Creek Craftsman, Inc., the HRA, and the City, extending the date of construction
commencement and completion and the date of recording and filing of the final plat for
Prairie West Second Addition by one year. Bob Murray seconded the motion and with no
further discussion, the motion passed unanimously. The commissioners felt the non-
performance by the developer was beyond the control of the developer, Cedrus Creek
Craftsman, Inc.
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Prior to leave the meeting, Attorney Bubul informed members that voting by proxy was
not allowed because of the open meeting law. Secondly, in response to the HRA's
question: What is our risk if the lIRA simplifies its Private Redevelopment Contracts?
This question arose as the HRA has been requested to amend a number of contracts. A
general form or simplified contract could be done; however, continued Bubul at times the
HRA may wish they had more leverage as in the case of TIF Districts 1-1 and 1-4.
5.
Consideration to hear an update on potential redevelopment projects by Brad Johnson.
Brad Johnson, Lotus Realty Services, informed members ofthe downtown redevelopment
projects in Chaska and Chanhassen. Johnson continued: Pushing something that isn't
happening makes redevelopment difficult. This along with title, engineering, and
acquisition problems and the perception by legislators that the use ofTIF takes away
revenues from the school districts doesn't make things easier.
Convenient retail and entertainment appear to be strengths, hotels are a risky business.
Johnson feels the Monticello Mall is not going to survive as is and sees the need to raze
and start over. His first attempt was to work with the local grocer and currently has a
second grocer under study. A drug store perhaps fits into the concept.
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Johnson informed members any consideration of a plan for a hotel in Monticello is about
three months out. In Chaska, the developer obtained the purchase option which
eliminated the relocation costs. Johnson anticipates a hotel in Monticello much the same
as Chaska: a destination hotel, full-service, excellent sales staff, meeting place with
delilbakery. The corporate level market in Monticello is weaker than in Chaska. To
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HRA MINUTES
MAY 7,1997
support the day-time business of entertainment and restaurants, housing and office
employment need to be worked into the area plan.
Johnson concluded: Redevelopment is what the community wants, it must make sense
(economical sense) and add value to a site.
6. Consideration to discuss HRA by-laws for potential amending.
Tabled until June meeting.
7.
Consideration to review the returned surveys from Blocks 54 and 64 for discussion and
further direction.
HRA members were pleased with the 100% response rate ofthe surveys mailed to
property owners in the 54 and 64 Blocks. The surveys to gage their level of interest for
entering into a purchase option. Members also agreed that perhaps any further direction
was premature until adoption of the Revitalization Plan, recognizing the potential for a
developer to secure the options, and the potential increased purchase price for a public
entity to acquire. Darrin Lahr made a motion authorizing a general note of thanks be
drafted and mailed to the property owners of Block 54 and 64. Brad Barger seconded the
motion and with no further discussion, the motion passed unanimously.
8.
Consideration to review the content ofthe Contract between the HRA and Hoisington
Koegler Group. Inc. relating to the Downtown/Rivernont Revitalization StudylPlan.
HRA members accepted the written agenda supplement update.
9. Consideration to set special meeting with Ken BartheL Veit Companies.
Mr. Barthel informed the Executive Director that a special meeting with the HRA appears
premature.
10. Consideration to appoint an HRA revresentative to a task force for defining the need and
uses and sources of a training and community center.
Steve Andrews volunteered to be the HRA representative. Brad Barger made a motion
appointing Steve Andrews as the HRA representative on the training and community
center task force. Darrin Lahr seconded the motion and with no further discussion, the
motion passed unanimously.
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HRA MINUTES
MAY 7,1997
11. Other Business.
Steve Andrews made a motion to approve the monthly HRA bills. Brad Barger seconded
the motion and with no further discussion, the motion passed nmmimously.
12. Adiournment.
The HRA meeting adjourned at 10:45 p.m.
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Ollie Koropchak, Executive Director
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