Aug. 26--WORTHINGTON -- The Worthington City Council approved Monday night an interfund loan for administrative expenses related to the Northland Mall redevelopment.
In connection with a resolution council members approved July 28 regarding PBK Investments and the Northland Mall, city staff have been incurring administrative expenses in the preparation and establishment of a tax increment financing (TIF) district. Monday's resolution authorized the establishment of an interfund loan for the project in an amount not to exceed $50,000 with a 4 percent interest rate.
Brad Chapulis, the city's director of community and economic development, explained the process of the loan and what it will go toward.
"In working with PBK Investments, we are incurring some administrative expenses, and we've been advised by our legal council that we (the city) could be eligible for reimbursement through TIF proceeds," he said.
Loan payments would be made when there is any excess increment available after all other obligations have been paid. Chapulis said it's the opinion of city staff that the benefits of the project outweigh the costs toward the establishment of the TIF district, and that any reimbursement would be accessory to the purpose and intent of the city's involvement of the process.
Chapulis also explained where the city is thus far in these administrative expenses.
"With legal fees and our financial advisement fees, we're at the $22-26,000 range," he said. "(Since) we're looking at establishing a redevelopment district, we're going to have to look at hiring a firm to do a sub-standard assessment."
Regarding the city's chances of receiving that reimbursement, it is all up in the air.
"The chances of reimbursement ... it is a question mark," Chapulis said. "We don't know what the actual TIF eligible expenditures are going to be under the redevelopment project. Those things are trying to be worked out.
"We'll have a more definitive answer of what the developer will be requesting once we enter into a development agreement," he added.
Chapulis said there are two ways to seek reimbursement through the TIF funds. The city can do general obligation bonds, and do an "up-front TIF" with the issuance of bonds. If there is excess TIF left over on an annual basis after the debt service is paid off, the city could pay itself back. The city could also enter into as a "pay-as-you-go" arrangement, and there would be an agreed-upon annual payment.
"Keeping this gives us the best opportunity to make sure our out-of-pocket expenses are minimized, but doesn't guarantee that we might incur some," Worthington City Administrator Craig Clark said.
Chapulis echoed Clark's statement and said that such expenses would be incurred by the city in trying to establish the TIF district, and that the city was simply trying to establish an avenue to repay itself if that money is available.
The interfund loan passed unanimously.
In another matter, after the issue of the three new "Welcome to Worthington" signs was tabled during the Aug. 11 council meeting, the council approved a bid Monday from Fullerton Building Systems.
A proposal for upgraded "Welcome to Worthington" entrance signs utilizing Wells Concrete for sign faces and Reitmeier Masonry to erect the side brick pillars was brought to the city with an estimated cost for the three sign face portions of $60,000, with masonry work estimated at $24,000. Total estimated cost of the signs including foundation and dirt work is $120,000.
The consideration came following a change in pricing from a previous Fullerton Building Systems alternative for entrance signs. Fullerton, which has later indicated it would guarantee its signs for 30 years, presented a cost of $90,000 for the three proposed signs.
Council members discussed not only the different pricing options -- as the previous budgeted amounts from the city totaled $50,000 -- but also durability of the signs from each company.
"The first time Fullerton did this the interior (of the signs) ... we weren't happy with that, and then they went back and redesigned it with steel tubing on the inside," Council Member Scott Nelson said. "Then the price went up, and we didn't like that, but we ironed it out and got to the price of $90,000 (with Fullerton)."
Council member Mike Kuhle spoke on behalf of leaning toward the city's option on going with Fullerton.
"I think that with Fullerton being local, they redesigned it with structural steel and clay brick, and they actually have a good example of a 16-year product out at Holiday Inn Express on Ryan's Road," he said.
Kuhle also noted the city's original estimated budget for the signs.
"We have $50,000 budgeted and we're talking about going to $90,000 for one and possibly to $120,000 (for the other)," he said. "Fullerton, I think, for what we've got to spend and how long it's going to last, is a good solution."
The city will use funds from its undesignated unreserved fund for the remaining cost, and replenish that fund over the next five years. Additionally, the Worthington Area Chamber of Commerce could contribute up to $25,000 if passed by its board of directors. If it doesn't pass, the city will deal with the issue during budget time.
The motion to approve Fullerton for the signage passed on a 4-1 vote, with council member Rod Sankey voting against.
Council also approved a $71,000 grant for the Center for Active Living (CAL) to provide services to help rebalance and integrate long-term services and support the ability of older Minnesotans to live in the community. It was seeking proposals to improve the community's capacity to develop, strengthen, integrate and maintain home and community-based services -- such as the caregiver support and respite care network -- by optimizing independent living for persons at-risk of long-term nursing home use or spending down into medical assistance.
Center for Active Living Director Kris Hohensee applied for the grant through the Minnesota Department of Human Services Aging and Adult Services Division, which is payable over a two-year period. The funds will be used to support programing geared to assist with the aging population, and assist with improving their quality of life in their own home and creating more independence. The grant was written to focus on three sets of programming venues -- evidence based programs, exercise programs and technology programs.
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