EDA Minutes 02-10-2005
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MINUTES
MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY
Thursday, February 10th, 2005 - 4:00 p.m.
City Hall - Academy Room
MEMBERS:
Chair Bill Demeules, Darrin Lahr, Tom Perrault, Wayne Meyer
ABSENT:
Barb Schwientek, Ron Hoglund
STAFF:
Executive Director Ollie Koropchak, Recorder Angela Schumann, Rick Wolfsteller
GUESTS:
Barb Tapper, Tapper Holdings, Inc.
] . Call to Order.
Chair Demeules called the meeting to order at 4:00 PM, declaring a quorum.
2.
Consideration to aoorove the October 26, 2004 EDA minutes.
MOTION BY COMMISSIONER LAHR TO TABLE APPROV AI, OF THE MINUTES OF
OCTOBER 261h, 2004.
MOTION SECONDED BY COMMISSIONER DEMUELES. MOTION CARRIED.
3. Consideration of addin1l or removing agenda items.
NONE.
4. Public Ilearin" - Consideration to review for discussion thc oreliminarv GMEF application form
from Tappers Holdin"s. LLC.
Chairman Demcules opened the public hearing.
Koropchak reviewed her repOli, indicating that a public hearing is required by business subsidy
law relating to job creation, which will be part of the loan agreement.
Koropchak stated that the BDA is asked to review the application from Tapper's Holdings, LLC,
which requests $200,000 in a real property rehabilitation loan for a proposed 25,000 square foot
expansion to the existing facility. The proposed addition is for Strategic Equipment & Supply
Corporation, who will lease the space, as well as an additional 15,000 square feet of the existing
building. Tapper's application indicates the lease is $5.00 per square foot, with taxes paid by
owner. Strategic is committing to 40 new jobs and has indicated that the company intends to hire
50-55 employees. Strategic is a national company. The company intends to use this facility as
the northem region headquarters and control center.
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EDA Minutes - 02/10/05
Koropchak reviewed the required terms ofthe loan, stating that the estimated cost for expansion
is $1.3 million. The proposed tenant has indicated they will meet job creation and wage goals as
identified. The loan will require that an annual report is completed in terms for the wage goal.
The expansion will generate approximately $18,000 in annual tax base. The loan will assist an
existing businesses expansion. Koropchak noted that the EOA would be in the 2"d position to the
bank. The HRA will be reviewing pay-as-you go TlF financing assistance.
Koropchak stated that zoning requirements are met. Koropchak commented that she has
requested a statement of credit worthiness from the applicant's bank as required. That document
will be provided prior to Council. The EOA is allowed to lend $10,000 per job or $5,000 for
every $20,000 increase in market value. As such, using the job creation calculation, the applicant
qualifies for $400,000 in a real property rehabilitation loan. The EOA cannot authorize a loan
which exceeds 50% of remaining revolving loan fund. As of Oecember 31,2004, the revolving
loan fund balance is S825,000. Koropchak stated that, assuming the EOA authorizes a loan of
S200,000, the fund balance would be $625,000.
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Koropchak stated that thc loan terms also require that the applicant provide 10% equity or
$20,000 in the case ofthc requested $200,000 loan. The equity requirement needs to be
determined by EOA. Tapper's prefers to use collateral rather than cash as equity. The loan
would be amortized over 20 with balloon payment due in 5 years. Koropchak stated that she
believes the prime interest rate is currently at 5.5%. The EOA can do a rate of up to 1.5% below
prime. In terms of a loan fee, there is a minimum fee of $200 and the maximum fee is not to
exceed 5% of project cost. The fee is due not later than March 7''', 2005. The loan offer, if not
disbursed, becomes null and void as of August] 0''',2005. The applicant is responsible for the
cost of drafting loan documents.
Perrault asked if the estimated increase in tax base will go specifically to the City, or to the City
and other entities. Koropchak stated that amount is the jusrisdiction's total tax benefit.
Oemueles asked what type of equity is being proposed. Barb Tapper, representing Tapper's
Holdings, stated that she would need to research that matter and provide an update to the EOA at
a later date.
Lahr asked ifthe EOA has any past history with equity. Koropchak stated that it is normally
cash. Mayer asked what the standard for cash equity has been. Koropchak responded that it is
generally at least 10% of the EOA loan in the form of cash.
Oemeules clarified that the BOA had not done an expansion loan before.
Koropchak noted that Tapper's Holdings has always been current in terms of payments. This
would be the fourth loan for Tapper's.
Mayer asked ifthere would be a problem with the S20,000 cash equity. Tapper stated she would
need to verify.
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EDA Minutes - 02/10/05
lahr stated the EDA could reduce the amount of the loan, which reduces the equity needed.
Tapper stated that they havc no final commitment on the total amounts, duc to the fact that the
bids haven't come in.
lahr stated that he doesn't necessarily have an issue with using the existing structure as collateral.
Perrault asked if an approval should be contingent until this matter has been better outlined.
Koropchak stated that the approval will be contingent in any case, based on the approval of the
company's CUP application and bank financing.
Hearing no public comments, Demeules closed public hearing.
5. Consideration to approve or denv GMEr No. 024, a business subsidv, for Tapper's
Holdings, llC.
Mayer clarified that the bank's letter rcgarding credit would be provided prior to final Council
approval. Koropchak stated that the EDA's motion may also be contingent upon receiving letter,
verification of equity terms, and loan application compliance.
The EDA briefly discussed each term requirements prior to making a formal motion on the terms
of the loan.
MOTION BY COMMISSIONER lAHR TO APPROYE A GMEF LOAN OF $200,000, WITH
AMORITZA TION OYER 20 YEARS, A BALLOON PAYMENT DUE AT 5 YEARS, AND A
LOAN ORIGINATION FEE OF $200.00. APPROY AL IS SUBJECT TO LENDER
COMMITMENT, STATEMENT OF APPLICANT'S CREDlTWORHINESS, ACCEPTANCE
OF THE EXISTING BUILDING AS EQUITY, AND APPROY Al OF THE APPLICANT'S
APPLlCA TlON FOR CONDITIONAL USE PERMIT.
MOTION SECONDED BY COMMISSIONER PERRAULT.
COMMISSIONER lAHR AMENDED THE MOTION TO INCLUDE AN INTEREST RATE
FOR THE NOTE AT 2% BELOW THE FEBRUARY II TH, 2005 PRIME RA TE.
COMMISSIONER PERRAULT SECONDED TilE AMENDMENT
MOTION CARRIED UNANIMOUSLY.
6. Exccutive Director's Report
Koropchak stated that she had met with Dahlheimer representatives to discuss a possible
relocation to the Monticello Business Center. Koropchak stated that it appears that they may
have options in Big Lake, but may still consider a Monticello option. Koropchak reported that
she will be meeting tomorrow with Ken Streeter (representing Ryan Companies) to go through
what will need to happen to purchase land. Additionally, Koropchak has a meeting set with A YR
and the Mayor for the 15th to discuss relocation.
Koropehak indicated that she had spoken with an existing local business who will be looking at
relocating and expanding Oakwood Industrial Park.
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EDA Minutes - 02/10/05
Koropchak stated that she is continuing to respond to leads for the City's business park. The
Council has set a standard for a quality park that produces good paying jobs, authorizing a set of
preferred measures and covenants to create good paying jobs. As such, many of the leads do not
qualify for financing.
Commissioner Lahr, representing the Marketing Committee, stated that they had discussed how
to best sell and market the park. Koropchak indicated that WSB currently working on platting
and is expected to have a preliminary plat package for April.
Koropchak mentioned that City representatives had met with Chuck Van Heel to discuss the
potential of redevelopment ofthe theater block.
Koropchak noted that the April 26th meeting of the EDA is the annual meeting.
7. Other Business.
NONE.
8.
Adiournment.
'\10TION BY COMMISSIONER LAHR TO ADJOURN.
MOTION SECONDED BY COMMISSIONER PERRAULT.
MOTION CARRIED.
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Recor r
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