2000-07-25B~r~
•
MEETING OF THE MOUND
HOUSING AND REDEVELOPMENT AUTHORITY
MOUND, MINNESOTA 55364
JULY 25, 2000
7:00 - 7:30 P. M.
7:00 1. EXECUTIVE DIRECTOR'S REPORT
~' ~
2. APPROVE MINUTES OF JUNE 27, 2000, HRA ~ ~ Q
MEETING. d~''~"
3. RAY MAR PROPERTIES, INC AMENDED ~~
DUMPSTER AGREEMENT d-'~
• 7:10 4. DISCUSSION OF OFFICE OF STATE AUDITOR
LETTER REGARDING WESTONKA SCHOOL
DISTRICT PARCELS
7:20 5. MICHAEL DURRELL, REPRESENTING HOUSE
OF MOY, DISCUSSING PETITION TO DELAY
BEARD GROUP, INC FINAL DEVELOPMENT
AGREEMENT
7:30 6. ADJOURN
CRAFT
• HRA MINUTES -REGULAR MEETING -JUNE 27, 2000
The Housing and Redevelopment Authority of the City of Mound, Hennepin County, Minnesota,
met on Tuesday, June 27, 2000, at 7:00 p.m., in the Council Chambers at 5341 Maywood Road,
in said City.
Those present: Acting Chairperson Mark Hanus; HRA Board Members: Andrea Ahrens, Bob
Brown, and Leah Weycker. Absent and excused: Chairperson Meisel. Also in attendance were
HRA Director Pinky Charon, City Manager Kandis Hanson, City Attorney John Dean, City
Engineer John Cameron, Mound Visions Coordinator Bruce Chamberlain, and Recording
Secretary Diana Mestad. Others present: Jo Longpre, 2631 Granger Lane; Ken Custer, 5533
Shoreline; Steven Coddon, 3615 Lyric Ave, Orono; Don Richard, Barr Engineering; Lorrie Ham,
The Laker; Martin Miller, 6058 Lynwood Blvd; Milton Hentges, 6400 County Road 5; Peter
Meyer, Mound; Tony Clapp, 2180 Cardinal; John Volgstrom, 4329 N. Woodgate Lane; John
Volgstrom, 2350 Driftwood Lane; Tom and Dene Fabick, 2017 Arbor Lane; Bill and Dorothy
Netka, 2360 Commerce; Joel Krumm, Mound.
Consent Agenda: All items listed under this Consent Agenda are considered to be routine by the
Housing and Redevelopment Authority. There will be no separate discussion of these items
unless a HRA Board Member or citizen so request, in which event the item will be removed from
• the Consent Agenda and considered in normal sequence.
Acting Chairperson Hanus called the meeting to order at 7:00 p.m.
*1.0 INDiAN KNOLL MANOR CONSENT AGENDA
A. NIONTHLY BILLS
B. 1VIINUTES - NIAY 23, 2000
Brown, Weycker, unanimously.
1.1 ACCOUNTING ITEMS
A. ACCOUNTANT REPORTS
B. BANK ACCOUNTS
The HRA Director stated that the bank account information was included in the packet for
review. No action was required on this.
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Mound HRA Minutes. June 27, 2000 O
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1.2 HRA ACTION TTENiS
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A. RESOLUTION #00-14, BUDGET FOR Y/E 9/30/01
The HRA Director stated that the budget was for the year end 9/30/01 and there was not much
change from last year. She further stated that additional capital improvement money is expected
after the first of the year.
MOTION by Brown, seconded by Weycker to accept the resolution as submitted.
RESOLUTION #00-14: RESOLUTION APPROVING OPERATING
BUDGET FOR Y/E 9/30/01.
The vote was unanimously in favor. Motion carried 4-0.
1.3 INFORMATION ITEMS
A. SECRETARY COivIlvIENDATON FROM HUD
B. LETTER FROM HAROLD LUCAS
The HRA Director stated that the HRA had received a commendation from the U.S. Department
of Housing and Urban Development recognizing the HIZA as a successful performer. The HRA
• Director stated that she expected this trend to continue.
In addition, Harold Lucas, Assistant Secretary of the U. S. Department of Housing and Urban
Development has sent the HRA a congratulatory letter.
The HRA Director stated that a new caretaker has been hired and is doing a great job. Marybeth
was introduced to the H}ZA.
1.4 TENANT REPRESENTATIVE REPORT
The tenant representative was absent.
1.5 MISCELLANEOUS
The next Indian Knoll Manor meeting is July 25, 2000.
TAX INCREMENT FINANCING.
1.6 APPROVE MINUTES OF JUNE 13, 20.0.0.
MOTION by Hanus, seconded by Brown, to approve the Minutes of June 13, 2000.
• The vote was unanimously in favor. Motion carried. 4-0.
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Mound HRA Minutes. June 27, 2000 O
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• 1.7 MAXWELL STRUCTURAL AND ENVIRONMENTAL STUDIES COST
ESTIMATES.
Bruce Chamberlain, Mound Visions Coordinator spoke on this issue. He referred to the memo in
the meeting packet regarding the structural integrity of the site and the pollution that has been
discovered. He stated that he wanted to discuss the exploration and quotes. The possibilities to
consider were:
1. Structural mitigation due to poor soils needed for a proposed hotel building;
2. Soil stabilization to support a parking lot;
3. Soil investigation/remediation needed through the Petroleum Fund and
Voluntary Investigation and Clean-up Program (VIC).
The Mound Visions Coordinator stated that the cost for reviewing the first two items would be
$2,000 to $3,000 each. The cost for the consulting fees on item 3 is about $15,000 to review and
install monitoring wells. This cost is in addition to the cost of clean up. All costs for item 3 are
reimbursable through the Petroleum Fund.
Because volatile organic compounds have been found, the VIC program is necessary. The
Mound Visions Coordinator suggested reviewing the neighboring Lost Lake property at the same
time. The costs are in the $25,000 to $50,000 range depending on the level of pollution found on
• the site.
The Mound Visions Coordinator suggested doing items 1 and 2 in order to get a handle on the
building costs for the site. After those costs have been determined, the City could decide on
whether to look into grant programs for site cleanup.
Acting Chairperson Hanus asked what the point of spending money on this site was unless the
City knew this would go forward. He questioned the idea of spending money on a parcel of land
the City does not control. The Mound Visions Coordinator stated that this is a property that the
City will want to link with other properties in the future.
Acting Chairperson Hanus asked about doing the clean up on one parcel and not both. The
Mound Visions Coordinator stated that the VIC program should be done on all of the parcels so
that the area can be developed.
HRA Board Member Weycker asked about the option of talking with the current property owner
before pushing this through. Acting Chairperson Hanus stated that the City already knows where
the property owner stands.
The City Attorney stated that the price of the property has been discussed for a long time and the
problem at the moment is the preliminary cost for structural use. He stated that the desire at this
. point is to determine if this cost was realistic.
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Mound HRA Minutes, June 27, 2000 ~~r
• Acting Chairperson Hanus asked if doing just item 1 was feasible. The Mound Visions
Coordinator suggested that both items 1 and 2 be addressed, as the parking lot is also a problem.
The City Attorney stated that the parking lot maybe as big of an issue as a building or possibly
even worse.
HRA Board Member Ahrens stated that the original numbers were astronomical and wanted to
know if the Mound Visions Coordinator was now saying they were too high. The Mound Visions
Coordinator stated that the numbers were put together quickly with very and that the City
Engineer wanted to be safe and so offered a high range. The plan now was to have a structural
engineer explore the actual costs involved.
H1tA Board Member Weycker stated that she was concerned that the property owner would not
sell and wondered if someone could be talking to him during the process. The City Attorney
stated that the property owner was in the $400,00 range and the City was looking at about
$250,000 and so he was not sure what the conversation should be.
I-iRA Board Member Weycker stated that she wanted to let the property owner know that the
City is looking at the options because she is afraid that he will sell the property while the
investigation is in progress. The City Attorneys stated that it would not hurt to ask about any
immediate prospects for a new buyer.
HRA Board Member Ahrens stated that this might be a chance the City has to take in order to
move forward.
The Mound Visions Coordination stated that he liked HRA Board Member Weycker's ideas and
that he is in contact with Mr. Maxwell.
MOTION by Brown, seconded by Weycker to move forward with items 1 and 2 in
the Mound Visions Coordinator's plan including a recommendation to stay in touch
with the property owner during the process. Motion carried 4-0.
1.8 HOTEL DISTRICT DEVELOPMENT RECOMMENDATION.
The Mound Visions Coordinator stated that the City had originally entered into a preliminary
agreement with Country Inns who decided that they were not interested in Mound. That meant
the City was now looking at the possibility of an American or Super 8 motel chain. The City
decided that was not the type of facility they were interested in and the agreement was dropped.
Recently Rick and Sue Bloomquist have expressed an interest in developing a hotel. Staff feels
that the Bloomquist's can put this project together. Staff does have a concern that the hotel is a
very critical component in the overall redevelopment and feels it is too early to enter into an
agreement because Mound needs more development elsewhere in order to get the level of a
•
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Mound HRA Minutes, June 27, 2000 ~FT
facility that the City wants. Staff recommends holding on this agreement and re-evaluating this in
• six months or so.
HRA Board Member Brown disagreed with waiting because a hotel chain would be a basic
building whereas he felt there was an opportunity with the Bloomquists to have a hotel that blends
with the Visions plan and that the Bloomquists have an interest in the community. The Mound
Visions Coordinator agreed with this point, but also stated that Mr. Bloomquist has mentioned
bringing in a national franchise for his hotel proposal which again would bring a concern as to
whether it was too soon to qualify for the type of hotel the City was looking for. He stated that a
better result might be obtained in six months.
The Mound Visions Coordinator stated that the hope is to keep the Bloomquists interested until
some other projects in Mound are underway. HRA Board Member Brown stated that this might
give the Bloomquists false hope. The Mound Visions Coordinator stated that this was a concern,
but that alternatively, the Bloomquists would be asked to invest in market research and design
resulting in the same type of facility that has already been turned down.
HRA Board Member Weycker stated that because the property is still uncertain, it is too early to
make a commitment, but that she would like to see the Bloomquists stay interested.
The City Attorney stated that this was a difficult decision and that Staff was impressed by the
Bloomquists, but the issue is the current marketplace. He wanted to clarify that the Bloomquists
• were not the issue, but rather the timing of the decision was a concern.
Mr. Bloomquist addressed the Board stating that he and his wife have been talking to structural
people and that as of yet, they have no idea of what the market research will show. He stated that
he is currently not a hotel person, but that he will get what the City needs. Mr. Bloomquist
further stated that he wishes to be kept in the loop, but is not interested in a bidding war.
HRA Board Member Brown asked if there was an opportunity to give the Bloomquists a first
right of refusal such as in the Dodd case. The City Attorney stated that this was a different
situation from the Dodds, as they owned their land. He was concerned that a right of first refusal
might create false hopes and might also have an artificial impact on inflating the value of the
property that the City is trying to purchase. The City Attorney stated that he had the sense that
HRA will keep the Bloomquists in the loop.
MOTION by Ahrens, seconded by Weycker, to accept Staff's recommendation not
to enter into an agreement but to continue to keep the Bloomquists informed and to
re-evaluate this in sia months.
Ayes: 3
Nay: 1 (Brown)
Motion carried. 3-1.
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Mound HRA Minutes. June 27,.2000 IJ~
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1.9 ADDITIONAL MATTERS REGARDING RAY MAR PROPERTIES
• DEVELOPMENT.
The City Attorney stated that more information has come in. The title company is requiring the
City to provide an indemnity with respect to the property. The City acquired the railroad
property in fee simple and stated the purpose was a municipal parking lot. Because the City is
now selling this property for another purpose, the title company wants indemnity. The City
Attorney feels there is nothing to this issue and that it is not a problem to recommend that the
City do this.
Additionally, there is a disbursement agreement in the contract that provided that net proceeds of
about $70,000 would be parceled out in increments of 25%. The SPA did not approve this.
Because they need to collateralize their loan, the SPA asked that the whole amount be deposited
with them at closing to pay for construction billings as they come in. This is not subject to
discussion. Because the SPA will be disbursing the money to cover validated construction costs,
the City is still in the same position and he recommends the HRA agree with this.
A third issue is the easement area across the land laying north of the portion of property conveyed
to the Dodds. This is an access easement and also a walkway easement 6 feet wide. Agreement
was not successfully put together and the Dodds are still interested in a 6-foot easement. The
City Attorney has added this to the agreement. As part of the same scenario, there was discussion
of building up to the property line on the north, which requires that the Dodd building be slightly
• redesigned to cover the snow load. An agreement was in mind to reimburse the Dodds to cover
additional cost up to $10,000. It has now been concluded that the cost is $7,900. The cost of
this will be offset by the cost of the geo technical work ($3,050), and 1/2 the cost of the planning
of the entire property ($2,500). The City Attorney recommends that the amount of $2,500 be
paid by the City rather than the HRA. He is recommending an agreement on behalf of the City
and the Dodds to settle up when costs are known, probably in July. This will allow the City to
gain better utility of the property to the north.
Finally, is the issue of drainage and utility easements. The City Engineer and the Mound Visions
Coordinator have opened up the possibility that when a sanitary sewer force main is relocated, if
alternative route is provided, the City will not have to pay any money. The City Attorney has
drafted a dumpster agreement with the Dodds whereby the City will construct and move the
dumpster during the construction of this sewer arrangement. The City is suggesting a wooden
type of structure.
Acting Chairperson Hanus confirmed that none of the information above was in contained in the
meeting packet. The City Attorney said that only the dumpster agreement was included.
HRA Board Member Weycker asked whether the Dodds were asking to keep the 6-foot
easements and how that would be possible with the abutting building. The City Attorney said that
the walkway would remain and the new building will be built around the walkway; perhaps with
an enclosed walkway with a 2nd floor tie in; i.e., a mall type passage.
6
Mound HItA Minutes. June 27._2000 DR
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MOTION by Ahrens, second by Brown to approve the changes. Motion carried 4-0.
ADJOURNMENT:
MOTION by Ahrens, seconded by Brown to adjourn the meeting at 7:50 p.m. The
vote was unanimously in favor. Motion carried. 40.
Kandis Hanson, City Manager
Attest: Acting Chairperson Hanus
•
• 7
AGREEMENT
Execution copy
THIS AGREEMENT, made and entered into as of the _day of , 2000 by and
between the HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY
OF MOUND, a public body corporate and politic under the laws of the state of Minnesota (the
"HRA"), and RAY MAR PROPERTIES, INC. a Minnesota corporation ("Ray Mar").
BACKGROUND
I . Ray Mar is the owner of the following described tract of land ("Property"):
Lot 1, Block 1, Mound Visions Addition, Hennepin County.
•
2. At the time the property was platted, Ray Mar agreed to the dedication of a drainage
and utility easement over and across the south eight feet of the Property.
3. As consideration for such agreement, the HRA has agreed to certain obligations with
respect to a dumpster enclosure to be located within the easement area and landscapin t~ o be
located south of the building to be constructed on the Property ("Landscanin~"l, all as is fully set
out below.
RECITALS
IN CONSIDERATION of the mutual covenants hereinafter contained, the parties hereto
agree as follows:
1. Enclosure Location. Not later than 60 days prior to the completion of construction of
the building to be constructed on the Property, the parties shall agree to the location of the
dumpster enclosure. Thereafter, the location may be modified only upon the mutual agreement
of the parties.
2. Enclosure Design. Within the same time the parties will also agree to the design and
the materials. Such agreement will be consistent with any governmental requirements, and will
recognize the potential for movement of the location during periods of drainage and utility work.
3. Enclosure Construction and Landscaping. The HRA shall be responsible for
construction of the enclosure, and the Landscaping, and the cost of construction and
Landscaping. If the parties agree, Ray Mar may be authorized to contract for the actual
construction and Landscaping. The HRA shall be responsible for securing all necessary permits
and approvals for construction of the enclosure and the Landscaping. Ray Mar will join in any
applications to the extent it is required to do so as owner of the Property. Unless the parties
agree otherwise, construction of the enclosure and the Landscaping shall be substantially
completed not later than November 1,200.
4. Removal Following Construction. In the event it should ever be necessary to move
the enclosure or Landscaping to permit drainage or utility work, the HRA agrees that it will be
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responsible the removal and for the cost of any such removal; and will also be responsible, at its
• cost, for replacing the enclosure and the Landscaping at the same location, or to some other
location agreed to by the parties, following such removal.
5. Continuing Agreement. This Agreement is intended to run with the land and be
binding on and inure to the benefit of the parties hereto and their successors and assigns.
IN TESTIMONY WHEREOF, the parties hereto have set their hands as of the day and
year first above written.
HOUSING AND REDEVELOPMENT AUTHORITY
IN AND FOR THE CITY OF MOUND
By:
By:
Mark Hanus, Acting Chair
Fran Clark
Executive Director
• RAY MAR PROPERTIES, INC.
By:
STATE OF MINNESOTA }
COUNTY OF HENNEPIN
ss..
Its: President
The foregoing instrument was acknowledged before me this day of
2000, by Mark Hanus, the Acting Chair of the Housing and
Redevelopment Authority in and for the City of Mound, a Minnesota public body corporate and
politic, on behalf of the Authority.
•
Notary Public
.Bats~z
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STATE OF MINNESOTA }
COUNTY OF HENNEPIN
ss..
The foregoing instrument was acknowledged before me this day of
2000, by Fran Clark, the Executive Director of the Housing and
Redevelopment Authority in and for the City of Mound, a Minnesota public body corporate and
politic, on behalf of the Authority.
Notary Public
STATE OF MINNESOTA }
COUNTY OF HENNEPIN
ss..
The foregoing instrument was acknowledged before me this day of
2000, by ,the President of Ray Mar
Properties, Inc., a corporation under the laws of the State of Minnesota, on behalf of the
corporation.
Notary Public
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•
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•
MEMORANDUM
To: City Council and HRA
From: John Dean
Subject: July 18 Office of State Auditor Letter
On July 19.2000, our office received a copy of a letter from the Office of State Auditor (OSA)
addressed to Gino Businazo involving the inclusion of the Westonka School District property in the
Tax Increment Financing District.
Among the key points contained in the letter is the following statement:
"Based on the purchase agreement, the TIF Plan for this district, and the information
contained in the city's May 16, 20001etter, it appears that the city council's finding that the school
district parcels met the 'but for' test was not supported by the evidence available to the city council
at the time it made the finding. "
The letter went onto recommend that the TIF Plan be modified to remove the school district pazcels
from the district.
• The letter is being reviewed by myself and other attorneys in this office, and by Jim Prosser and Sid
Inman of Ehlers & Associates, Inc. Although I have not yet had an opportunity to have substantial
discussions with either Sid of Jim, I have prepared a list of options available to the City/HItA in
dealing with the letter and its implications. Sid and Jim may have additional options or comments
regarding the options by Tuesday evening.
My reaction is that the conclusions reached in the OSA letter aze incorrect on three counts:
1. There was ample evidence known to the City/HRA at the time the Plan was
approved to lead them reasonably to discount the purchase agreement.
2. The applicable statutes provide that the finding of the City/HRA is "conclusive".
The OSA should not substitute its judgment for that of the City/HRA.
3. The authority of the OSA to review the actions of the City/HRA is spelled out in
law. The OSA has not followed those procedures, and has left the HRA in limbo as to the firiure of
the school district parcels.
With that background in mind, I have listed the following options together with what I perceive to
be the "pros" and "cons" of each.
OPTIONS: (With Pros and Cons)
1. Written response to OSA detailing our disagreement with its position.
• Pros: Good opportunity to inform the public the City/HRA position.
Cons: Does nothing in terms of the decision on the TIF district.
JBD-183416v1
MU 195-2
•
2. Further discussions with OSA.
Pros: Would give opportunity to more fully set out our position both to the OSA
and to the public.
Cons: No cleaz process for OSA to further review at this point.
Experience suggests that OSA is unlikely to modify position.
3. Accept recommendation and modify the district.
Pros: Ends dispute.
Spend time on other issues.
Cons: Signifies acceptance of incorrect conclusion.
May not be able to put property back in district later.
May impact on ability to acquire playfield site within budget.
4. Imore letter and proceed with "plans".
Pros: Appropriate reaction.
a Cons: Creates impression that we aze proceeding in violation of law, and defiance
of conclusion of state agency.
Risky for developers who rely of tax increment, or City if bonds are sold.
5. Seek review of letter by ind~ndent redevelopment counsel.
Pros: Helps with public perception.
Comfort to prospective developers.
Cons: Without other actions, it really accomplishes nothing.
6. Attempt to move the Qrocess into the hands of the County Attorney and or Attorney
General for review.
Pros: Impartial resolution of the matter.
Cons: Possibility of adverse decision.
Jim Prosser and I will be present at the HRA meeting on Tuesday to discuss this in more detail.
•
JB0.183416v1
MU195-2
STATE OF MINNESOTA
JUDITH H. DUTCHER
STATE AUDITOR
OFFICE OF THE STATE AUDITOR
SUITE 400
525 PARK STREET
SAINT PAUL, MN 55103-2139
Please respond to:
Tax Increment Financing Division
505 Spruce Tree Centre
1600 University Ave. W.
St. Paul, MN » 104
(651) 296-2551 (Voice)
(651) 296-4755 (Fax)
stateauditor@osa.state.mn.us (E-Mail)
1-800-627-3529 (Relay Service)
TIF Division Phone: (651) 642-0767
TIF Division Fax: (651) 642-0769
Direct Dial: (6~ 1) 642-0837
July 18, 2000
Gino Businaro, City Finance Director
City of Mound
5341 Maywood Rd
Mound, MN 55364-1627
Re: "But For" Test for Westonka School District Parcels Included in City of Mound's
TIF District 1-2
Dear Mr. Businaro:
The Office of the State Auditor (OSA) received the city's May 16, 2000, letter in response to my
Apri125, 2000, letter regarding the Mound City Council's finding that certain parcels owned by the
Westonka School District (Independent School District #277) and included by the city in Tax
Increment Financing (TIF) District 1-2 met the "but for" test.
As the OSA's previous letter noted, in order to approve the TIF plan for TIF District 1-2, the city
council was required to find that the proposed development or redevelopment of the pazcels in the
district, in the opinion of the city council, "would not reasonably be expected to occur solely through
private investment within the reasonably foreseeable future." Minn. Stat. § 469.175, subd. 3. Before
the city council approved the TIF plan for this district on December 14, 1999, Trail Head Land
Development Corporation and the Westonka School District had entered into a purchase agreement,
dated June 24, 1999, for the sale of certain parcels included in TIF District 1-2. The purchase
agreement indicated that the school district would remove the school buildings and any underground
tanks at the school district's expense. The purchase agreement did not contain a contingency for the
buyer or seller to obtain TIF assistance. As the city's letter noted, the city has not offered to use TIF
assistance to underwrite the cost of land purchased from the school district.
The city's letter also noted that the sale of land contemplated in the purchase agreement did not
close. This does not change the fact that, at the time the city council found that development or
redevelopment of the school district's property would not reasonably be expected to occur solely
• through private investment within the reasonably foreseeable future, a private party had agreed to
pay $2,355,000 for the property and the school district had agreed to remove the buildings and any
Recycled paper with a minimum of
~~` 15% post-consumer waste An Equal Opportunity Employer
1-
OFFICE OF THE STATE AUDITOR
• Gino Businazo, City Finance Director
July 18, 2000
Page 2
underground tanks from the property at its own expense. The city's letter indicated that significant
soil correction work will need to take place on the school district's property before development can
proceed. There is nothing to indicate that the private party was not awaze of these soil condition
problems. Furthermore, the fact that the purchase agreement provided that the school district would
remove any underground tanks from the property at its own expense suggests that the private party
knew of these soil condition problems, or at least of the risk of them, at the time it entered into the
purchase agreement.
The city's letter also indicated that the city might need to include the school district's property in TIF
District 1-2 to provide sufficient revenue to pay for part of the costs of relocation of a major
highway, storm sewer improvements, replacement of public parking, utility relocation, and other
public improvements related to redevelopment of the older downtown area, which is adjacent to the
school district's property. The fact that a TIF authority needs additional revenue to finance a
redevelopment prof ect does not eliminate the requirement that every parcel included in a TIF district
must meet the "but for" test, no matter how strong maybe the TIF authority's desire to increase tax
increment revenue by increasing the number of parcels included in the district.
The OSA expresses concern over the practice of including parcels in a TIF district to capture growth
in property tax base that would likely occur solely through private investment. Such action by a TIF
authority denies other affected local governments valuable and necessary growth in property tax
base, which in turn can lead to increased local tax rates. Furthermore, it can create costs born by
every citizen within the state, since increased state education aids are paid to school districts that lose
property tax base to TIF districts. The policy rationale behind TIF-using increased property tax
revenue that otherwise would not exist to finance the development or redevelopment that generates
the increased property taxes-is thwarted when TIF-district boundaries aze drawn to include parcels
that would be developed or redeveloped without TIF assistance.
Finally, the city's letter indicated that "it is not possible to know at this time whether the school
property can be redeveloped in a manner consistent with the city's plans solely through private
investment." If this was true at the time the city council found that the development or
redevelopment of the school district's property would not reasonably be expected to occur solely
through private investment within the reasonably foreseeable future, then the city council's finding
clearly was improper.
Based on the purchase agreement, the TIF plan for this district, and the information contained in the
city's May 16, 2000, letter, it appears that the city council's finding that the school district parcels
met the "but for" test was not supported by the evidence available to the city council at the time it
made the finding. Consequently, if the city receives tax increment from these parcels, it is likely that
the OSA will forward this issue to the county attorney for review. The OSA recommends that the
city modify the TIF plan to remove the school district parcels from TIF District 1-2.
OFFICE OF THE STATE AUDITOR
• Gino Businaro, City Finance Director
July 18, 2000
Page 3
The OSA appreciates the time and attention you and other city staff devoted responding to my
previous letter. If you have any questions or comments about the information in this letter, please
call me at (651) 642-0837.
Sincerely,
~~~
William E. Connors, Director
Tax Increment Financing Division
cc: John Dean, City Attorney
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May 16, zooo
CITY OF MOUND ~' MAYVYOOO ROAO
MOUNO, MINNESOTAS5364-1687
(612) 472-0600
FAX (612) 472.0620
William E. Conners, Director
Tax Increment Financing Division
Office of State Auditor
Suite 400
525 Pazk Street
Saint Paul, Minnesota 55103-2139
Subject: Response to your letter of Apri125, 2000 -Purchase Agreement for Parcels in
TIF District 1-2
Deaz Mr. Conners:
• Your letter of Apri125, 2000 questions the inclusion of the above named parcels in the Mound
TIF District 1-2. You have requested an explanation of why the redevelopment of these parcels
would not be reasonably expected to occur solely through private investment in light of a
purchase agreement between Trail Head and the property owner, Westonka School District. In
response to your request you should know the following:
• The purchase agreement with Trail Head Land Development Corporation has lapsed.
While we were not a party to this agreement, it would appeaz that Trail Head was unable
to perform under the terms of the agreement.
• The City has not offered, at any time, to use TIF to underwrite the cost of land purchase
from the School District.
• Metro Plains Development, LLC has assumed the purchase option. However, they have
not yet completed their financial feasibility and planning study to determine if the
property can be developed, with appropriate uses. Soil studies on this site do indicate the
need for significant soil corrections for most development options..
The site is adjacent to an older downtown area that is in the process of redevelopment.
Part of the redevelopment includes relocation of a major highway, storm sewer
improvements, replacement of public pazking which will be lost due to highway
construction, utility relocation and other public improvements. Redevelopment of this site
piM•d w1 ncyCMd P•P•-
will contribute to the need to make these improvements. It may be necessary for the
• school site to contribute tax increment to pay for some of these costs.
We can expect that the property sale will not be completed if it is determined that redevelopment
is not financially feasible. Feasibility will be determined, at least in part, on the basis of
acceptable land uses, required public improvements, soil corrections and a number of other
factors. The developer has not yet completed their planning work to provide answers to these
questions. In summary, it is not possible to know at this time whether the school property can be
redeveloped in a manner consistent with the city's plans solely through private investment. We
are quite comfortable,- however, with the conclusion that the transaction contained in the Trail
Head purchase agreement will not occur.
You are encouraged to contact Larry Olson at Metro Plains Development (651-523-1246) to
verify the information contained within this letter.
Sincerely. ~~ -~ ~~
Gino Businazo
Finance Director
City of Mound
`~~
Copy: Kandis Hanson, City Manager
Jim Prosser, Ehlers 8t Associates
Larry Olson, Metro Plains Development
C:\WINDOWS\TEMP\osa.ltr.5.16.40.wpd
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STATE OF MINNESOTA
OFFICE OF THE STATE AUDITOR
JUDITH H. DUTCHER
STATE AUDITOR
surrE 400
525 PARK STREET
SAINT PAUL, MN 55103-2139
Please respond to:
Tax Increment Financing Division
505 Spruce Tree Centre
1600 University Ave. W.
St. Paul, MN 55104
(651) ?96-2551 (Voice)
(651) 296-755 (Fax)
stateauditor@osa.state.mn.us (E-Mail)
1-800-627-3529 (Relay Service)
TIF Division Phone: (65t) 642-0767
TIF Division Fax: (65l) 642-0769
Direct Dial: (651)642-0837
Apri125, 2000
Gino Businazo, Finance Director
City of Mound
5341 Maywood Rd.
Mound, MN 55364
Re: City of Mound-Purchase Agreement for Parcels in TIF District 1-2
Deaz Mr. Businazo:
The Office of the State Auditor (OSA) has received the tax increment financing (Tff) plan for Tff
District 1-2 and a copy of the published notice for the public hearing on approval of the TIF plan,
which the city provided in response to the December 30,1999, letter from Linda Thomas of our office.
I have enclosed a copy of a purchase agreement, dated June 24, 1999, for the sale of parcels with PID
numbers 14-117-24 410052,14-117-24 410011,14-117-24 41005 8,14-117-24 410010, and 14-117-
24 41 0007 from Independent School District #277 to Trail Head Land Development Corporation.
These pazcels are on the Tff plan's list of parcels included in the TIF district. The date of the purchase
agreement is before the date the Mound City Council approved the Tff plan on December 14, 1999.
The purchase agreement indicated that the seller would remove the school buildings and any
underground tanks at the seller's expense. The purchase agreement did not contain a contingency for
the buyer or seller to obtain Tff assistance. Therefore, it appears the buyer intended to purchase the
cleazed land at the price specified in the agreement even without the use of tax increment. Based on
these facts, it appears that before the city council approved the Tff plan, the developer had committed
to redevelop these pazcels solely through private investment and without the use of tax increment.
In order to approve the Tff plan, the city council was required to find that the proposed development
or redevelopment of the pazcels in TIF District 1-2, in the opinion of the city council, "would not
reasonably be expected to occur solely through private investment within the reasonably foreseeable
future." Minn. Slat. § 469.175, subd. 3. Please explain why the city council found that the
redevelopment of the parcels identified in the purchase agreement would not be reasonably expected
to occur solely through private investment.
~ Recycled paper with a minimum of An Equal Opportunity Employer
`CG' 1596 post-consumer waste
OFFICE OF THE STATE AUDITOR
• Gino Businaro, Finance Director
Apri125, 2000
Page 2
If you have any questions about this letter, please call me at (651)642-0837. Your prompt attention
to this matter would be greatly appreciated. Please respond by May 19, 2000.
Sincerely,
C~v~~~
William E. Connors, Director
Tax Increment Financing Division
Enclosure
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July 21, 2000
CITY O F MOUND 5341 MAYWOOD ROAD
MOUND, MINNESOTA 55364-1687
(612) 472-0600
FAX (612) 472-0620
TO: Mayor & City Council
FROM: Fran Clark, City Clerk
RE: HISTORY OF DOWNTOWN DEVELOPMENT & REDEVELOPMENT
Attached is information on the history of the above.
The following list are people who have been involved in one way or another with the
development and redevelopment of the downtown some dating back to 1989. They are in no
• particular order.
Mark Brewer Tim Kenealy Chic Remien
Fred Guttormson Ben Marks Paul Meisel
Judy Marshik Steve Smith Mark Kcegler
Jerry Peitrowski Jerry Longpre Dave Willete
Sharon McMenamy-Cook Bill Meyer Frank Weiland
Bill Thal Jerry Clapsaddle Mike Mueller
Bob Morgan Mark Machart Susan Ruud
Rebecca Yanisch Kathy Bcese Gene Hostetler ,
Marj Fredrichs John Larson Gerry Smith
LynDelle Skoglund Peter Johnson Ron Norstrem
Stan Drahos Karen King Ted Kcenecke
Bob Gieb Bob Tomalka Dorothy & Bill Netka
Shirley Anderson Rob Wilkening Teresa Fogerty
Ken Perbix Lonnie Weber Mark Winter
Todd Warner Ken Smith
Some of the above are or were EDC members, Planning Commissioners, and various
interested citizens.
I have also enclosed a list of Mayors & City Councilmembers from 1989 to present. The
City has also had 3 City Managers since the process of development and redevelopment
• began.
® printed on recycled paper
YEARS
SE~V D AY R
ELECTED IN 1978 TO SERVE IN
• 1979-80 TIM LOVASSEN
ELECTED IN 1980 TO SERVE IN
1981-82 ROCK LINDLAN
ELECTED IN 1982 TO SERVE IN
1983-84 BOB POLSTON
ELECTED IN 1984 TO SERVE IN
1985-86 BOB POLSTON
• ELECTED IN 1986 TO SERVE IN
1987-88 STEVE SMITH
ELECTED IN 1988 TO SERVE IN
1989-90 STEVE SMITH
ELECTED IN 1990 TO SERVE IN
1991-92 SKIP JOHNSON
ELECTED IN 1992 TO SERVE IN
1993-94 SKIP JOHNSON
i•
c_OiJNCII,MEMBER RM
2 BOB POLSTON
GORDON SWENSON
DON ULRICR
BEN V~VTTHI3ART
2 PINKY CHARON 4
BOB POLSTON
GORDON SWENSON
DON ULRICK
2 PINKY CHARON
GARY PAULSEN 4
RUSS PETERSON 4
GORDON SWENSON (RESIGNED IN 1984 AND
PHYLLIS JESSEN WAS APPOINTED)
2 PHYLLIS JESSEN 4
GARY PAULSEN
RUSS PETERSON
STEVE SMITH 4
2 DON ABEL (APPOINTED 2-20-87 TO FILL
SMITH'S UNEXPIRED TERM) 2
LIZ JENSEN 4
PHYLLIS JESSEN
SKIP JOHNSON 4
2 ANDREA AHRENS 4
LIZ JENSEN
PHYLLIS JESSEN 4
SKIP JOHNSON 4
2 ANDREA AHRENS
LIZ JENSEN 4
PHYLLIS JESSEN
KEN SMITH 4
2 ANDREA AHRENS 4
LIZ JENSEN
PHYLLIS JESSEN 4
KEN SMITH
8
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YEARS
SER EDV
ELECTED -
~ ~
IN 1994 TO SERVE IN SOUNCII.MEMBER
• 1995-96 BOB POLSTON 2 ANDREA AHRENS
MARK HANDS 4
LIZ JENSEN 4
PHYLLIS JESSEN
BEN SMITH
ELECTED IN 1996 TO SERVE IN
1997-98 BOB POLSTON 2 ANDREA AHRENS 4
MARK HANDS
LIZ ]ENSEN
LEAH WEYCREDR 4
ELECTED IN 1998 TO SERVE IN
1199-2000 PAT MEISEL 2 ANDREA AI~tENS
BOB BROWN 4
MARK HANDS 4
LEAH WEYCKER
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70
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June 2, 1981
The vote was four in favor with Ulrick abstaining.
MANAGER`S CONTRACT
Polston moved and Charon seconded a motion to table this item.
The vote was four in favor with Lindlan voting nay.
COMMENTS AND SUGGESTIONS FROM CITIZENS PRESENT
Doug Anderson commented that the Council has done a good job in stimulating
citizen involvement.
LICENSE RENEWALS
Swenson moved and Charon seconded a motion
RESOLUTION 81-190 RESOLUTION AUTHORIZING THE ISSUANCE OF LIQUOR
LICENSES TO THE AMERICAN LEGION AND DONNIE'S
ON THE LAKE
The vote was unanimously in favor.
BUDGET DISCUSSION
Ulrick moved and Swenson seconded a motion to authorize an amount not to exceed
$2,500.00 be expended to repair the city hall air conditioner on an emergency
expenditure basis.
. The vote was unanimously in favor. J
TRANSFER OF FUNDS
Ulrick moved and Swenson seconded a motion
RESOLUTION 81-191 RESOLUTION AUTHORIZING THE TRANSFER OF CERTAIN
CITY FUNDS
The vote was unanimously in favor.
Swenson moved and Charon seconded a motion to approve payment of the bills as
presented on the prelist in the amount of $7,093.24 when funds are available.
PAYMENT OF BILLS
Roll call vote was unanimously in favor.
DOWNTOWN REDEVELOPMENT COMMITTEE
Polston moved and Charon seconded a motion to request a report regarding the
available funding and stipulations for expenditure of those funds to be submitted
to the Council at the meeting of June 9, 1981.
The vote was unanimously in favor.
ARBITRATION CASE
Swenson moved and Charon seconded a motion to meet in executive session to discuss
the arbitration case.