Minutes

of the

Regular Meeting Of

DETROIT LAKES DEVELOPMENT AUTHORITY

Tuesday, July 18, 2006

 4:30 PM

Conference Room

 City Administration Building

MEMBERS PRESENT:     Jim Anderson, Dixie Johnson, Matt Brenk, Tom Klyve, Mark Hagen and Greg Hildenbrand

MEMBERS ABSENT:      Tim Olson,

OTHERS PRESENT:       Larry Remmen, Community Development Director,  Al Keller, Wanda Kramer and Dave Hiltner

I.       Call To Order:

          Chairman Jim Anderson called the meeting of the Detroit Lakes Development Authority to order at 4:30 PM in the Conference Room of the City Administration Building, 1025 Roosevelt Avenue on Tuesday, July 18, 2006.  All members of the Authority having been duly notified of the meeting and the business to be transacted.

II.     Minutes:

        A motion was made by Dixie Johnson, seconded by Commissioner Mark Hagen and         carried unanimously to approve the minutes of the regular meeting held May 23, 2006.

III.    Financials:

A.      A motion was made by Commissioner Mark Hagen, seconded by Commissioner Matt Brenk and carried unanimously to approve the financial report and payment of claims for the period ending May 2006.

IV.    Old Business:

A.      None

V.      New Business

A.      Consideration to the request of PRH Investments for $336,000 in tax increment financing for 24 apartment units in Pelican River Heights

        Larry Remmen reported that Pelican River Heights Investments was requesting $336,000 in pay as you go TIF funding to assist with the construction of 24 rental units.  Larry Remmen stated that $520,000 in TIF has been approved for Pelican River Heights and a 24 unit apartment that has not been constructed yet.  This request would mean that over $850,000 in TIF would be used in this area.  Larry presented a report on the taxes to be generated by this Project. 

Estimated Tax Increment Collections For

24 Unit Rental Apartment

(Pelican River Heights Amendment #2)

Estimated Market Value                       $934,000 from assessor

Tax Capacity                                      $11,675

Estimated Taxes                                 $14,125

TIF Amount                                        $11,300

        If TIF is considered for this project, the TIF amount should be limited between $200,000 and $240,000.

        In order to qualify for TIF Funding for a housing project 20% of the units for people at 50% of median income or 40% of the units for people at 60% of median income. 

        Matt Brenk pointed out that based on the taxes generated by this project; $200,000 to $240,000 is the amount of TIF we can consider.

        Larry Remmen stated that we have exceeded our 2% of tax capacity for housing TIF but under one general rule of 10% for other TIF projects.  Placing a heavier emphasis on housing is all right.  Encouraging housing is easier to do when the market is hot;  once things cool down offering tax increment will not make housing developments happen.  The total project cost is estimated at   $2,400,000.  Steven Dewald, representing Pelican River Heights Investments said the development would be a 13 unit and 11 unit apartment style building and would either be sold as condos or used as rentals depending on the market.

        Larry Remmen pointed out that the Developers would need to make a determination on either rental or owner occupied prior to approval of any TIF financing.  The rules for owner/occupied are different.  Also, the taxes generated vary based on ownership as well. 

        Jim Anderson asked where the $200,000 to $240,000 dollar figure came from. Larry Remmen stated it was based on the assessor estimated market value for the project.  Matt Brenk asked the Developer if the project could be done with $240,000 in TIF.  Steve Dewald stated he was not sure if the project was affordable or feasible at that level of the TIF.  A $200,000 TIF would run about 15 years.  Mark Hagen was concerned about spreading TIF out over too many years.  Tom Klyve asked who developed the 2% and 10% limits for our TIF policy. Larry Remmen sated that the Detroit Lakes Development Authority developed this policy.

        Due to the uncertainty of the Developers relative to the type of housing project they plan to build and the reduced dollar amount of TIF available for this project, the Authority deferred action on this request.  Larry Remmen will meet with the Developers to clarify their plans.

B.      CONSIDERATION TO THE REQUEST OF HEARTLAND HOME CONSTRUCTION LLC FOR $260,000 IN TAX INCREMENT FINANCING FOR 28 UNITS OF OWNER OCCUPIED HOUSING – PLEASANT ACRES THREE

          Larry Remmen reported that Heartland Home Construction LLC was requesting $260,000 in TIF for a 28 unit housing development.  They are currently working on the Pleasant Acres Two Project which is 28 units of single family housing.  This   project will go on the south side of Homestead Street.

        Al Keller, one of the partners in Heartland Home Construction, stated that they pay the special assessments when they sell these homes to the end homebuyer. They also need TIF assistance to keep the home affordable and to access Greater Minnesota Housing Funds and MHFA Funds.

        This project makes sense to the City because the utilities are in place and the special assessments will be paid off when the homes are sold.  The Developer plans to develop 12 homes per year.  Pleasant Acres Three will be built out in three years.  A motion was made by Commissioner Matt Brenk seconded by Commissioner Dixie Johnson to move ahead with the TIF on this project and order preparation of the necessary documents and schedule the public hearings for $260,000 in pay as you go TIF for this project. 

        The motion carried with Tom Klyve abstaining.

C.      UPDATE ON INDUSTRIAL PARK FUNDING

          Larry Remmen reported that EDA Funding for the Industrial Park was not available         because our per capita income was too high and our unemployment was too low. A preliminary application was sent to DEED for a Business Development Public Infrastructure Grant.  Earlier this week I received a call from the State saying the funding levels for this program were greatly reduced but that $300,000 could easily be provided.  If we wanted to try for $499,000 they were not sure what our chances would be and at $900,000 our request would definitely be denied.

        After some discussion by the Board, their consensus was to go forward with a request for $499,000.

A.      VI.    Adjournment

        There being no further business to bring before the Board, the meeting was         adjourned.                                

                                                                                    Signed                                                                                                              

Larry Remmen                                                                                                    

Community Development Director