EDA Agenda 01-27-2004
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AGENDA
MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY
Tuesday, January 27, 2004 - 4:00 p.m.
City Hall - Academy Room
MEMBERS:
Chair Bill Demeules, Vice Chair Barb Schwientek, Roger Carlson, Robbie Smith, Clint
Herbst, Ron Hoglund, and Darrin Lahr.
STAFF:
Treasurer Rick Wolfsteller, Executive Director Ollie Koropchak, and Recorder Angela
Schmann.
DAT:
Pam Campbell.
GUESTS:
Al Loch and Block 3S Property Owners.
Call to Order.
Consideration to approve the October 28,2003 EDA minutes.
Consideration of adding or removing agenda items.
Consideration to hear presentation from land owners of Block 35 and to determine if proposed
design concept meets EDA criteria.
Consideration of a request from Aroplax Corporation to extend the balloon payment date for
GMEFNo.016.
6. Executive Director's Report.
7. Other Business.
A. Tuesday, April 27, 2004, EDA Annual Meeting.
8. Adjournment.
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MINUTES
MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY
Tuesday, October 28, 2003 - 4:00 p.m.
City Hall - Academy Room
MEMBERS PRESENT:
Chair Bill Demeules, Vice Chair Barb Schwientek, Roger Carlson,
Robbie Smith, Ron Hoglund, and Darrin Lahr.
MEMBERS ABSENT:
Clint Herbst.
STAFF PRESENT: Treasurer Rick Wolfsteller and Executive Director Ollie Koropchak.
GUEST:
Al Loch, Block 35 Property Owner.
I. Call to Order.
Chair Demeules called the EDA mecting to order at 4:00 p.m.
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Consideration to approve the May 27. 2003 EDA minutes and July 29.2003 EDA
presentation summarv.
BARB SCHWIENTEK MADE A MOTION TO APPROVE THE MAY 27. 2003 EDA
MINUTES. SECONDED BY DARRIN LAHR AND WITH NO CORRECTIONS OR
ADDITIONS, THE MINUTES WERE APPROVED AS WRITTEN.
WITHOUT A QUORUM AT THE JULY 29, 2003 EDA BLOCK 35 PRESENTATION,
ROGER CARLSON ACCEPTED THE SUMMARY AS WRITTEN, SECONDED BY
RON HOGLUND,
3. Consideration of adding or removing agenda items.
None.
4. Consideration to hear response from Block 35 property owners relative to the EDA design
concept and financial packagc offer of Julv)9 and thcn determine next step.
Al Loch representing the property owners of Block 35 updatcd the EDA on the progress madc
by thc property owners since the offer presented by the EDA on July 29, 2003. The owncrs
met on August I and September 3. On October 10, all the land owners appeared to be
coming around. They agreed to scale back in order to maintain participation at 100%. The
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EDA Minutes - 10/28/03
trick to keep 100% land owner participation while balancing an acceptable rear facade
improvement with an acceptable price. Loch said EOA/City numbers won't work. Trying to
answer how can it work, the property owners had Tom Feaski talk about optional products to
reduce maintenance and costs. Materials tolerant to water run-off is key. Jay at Flicker's and
Thickpenny estimated their improvements at a cost of less than $10,000 each. The owners are
gathering more information from Craig Simonson, Advanced Awning Design, and plan to meet
again in November. Art work is estimated at $125 per lineal foot or about $3,000. Color and
cloth or vinyl choices available. If feasible and everyone is on board, Jim Agosto would draft a
document. They questioned if the product will meet OAT criteria? Hoglund said he thought
DA T criteria does not allow for back lite awnings but suggested the group check with Susie,
Chamber Office, before they go to far. He thought that was why Jay was asked to remove his.
Mike Cyr had completed some cost estimates which came back to costly. Brad Larson has
been a real support and the added extra energy needed for the group said Loch. Larson stating
the offer by the EDA/City very good and noting Block 35 is the most deteriorated block in
downtown. Block 52 will change the design of downtown if Steve Johnson's project goes
through. Loch saw this improvement as a 10-15 year band-aide fix. He has a vision of
switching the parking and buildings in the future based on the success of Block 52. Loch
questioned the flexibility of the ratio of public investment to private investment. The
commissioners inquired about discussions relative to hook-ups to the catch basin or down
spouts to the storm sewer'7 Loch asked what happens ifthcre's a cost over-run for the utility
improvements') Carlson stated the City would know when the City goes out for bids. They
can accept or reject. Can work on private property be assessed such as cost for down spout
to catch basin? If the facade costs are decreased, will the EDA commitment still stand?
Commissioners agreed this would be subject to EDA approval. The property owners plan to
be back to the EDA in January 2004. The EDA commended Loch on his progress knowing
this was not an easy task.
5.
Consideration to hear proposed renovation and expansion plan for Block 36.
Bruce Hamond requested to be on the EDA agenda and later called stating he would be oul-
of-town. He requested the EDA call for a special meeting on November 18 to hear of his
concept, construction drawings, and flmding for renovation of the building on Lot 8, Block 36
and construction of new building on Lot 9. He requested matching facade dollars. Koropchak
informed him that the DMRF program was discontinued almost two years ago and that others
have inquired about the matching funds. The EDA commissioners agreed the DMRF program
remains discontinued. Since Hamond has not been the first individual to request matching
dollars, the program must remain discontinued. If he'd been fIrst to request maybe the
commissioners would have considered rescinding their motion. They encouraged Mr. Hamond
to move forward with his project but saw no need for a November 18 meeting. Chair
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EDA Minutes - 10/28/03
Demeules volunteered to contact Mr. Hamond about the EDA's decisions.
6.
Executive Director's Report.
Koropchak reported that no sealed bids were received at the H- Window auction. One verbal
bid of $500,000 was shouted at the end.
Koropchak askcd for comments from the commissioners relative to Carol Pressley-Olson's
suggestion the EDA become the Local Development Organization for the $500,000 Federal
grant to the City, loan to TCDC. The LDO would manage the use ofthc Federal payback and
only the first re-use of the payback has to comply with fedcral regulations. The Council actually
adopts a resolution followed by an agreement, etc. With little reaction or no opposition from
the EDA, Koropchak will bring this forward to the Council after TCDC satisfies its wageljob
goals and LMI requirements.
7. Other Business.
None.
8.
Adiournmcnt.
The EDA meeting adjourned at 5:15 p.m. by a consensus of its members present.
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Ollie Koropchak, Recorder "
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EDA Agenda - 01/27/04
4. Consideration to hear presentation from land owners of Block 35 and to determine if
proposed design concept meets EDA criteria.
A. Reference and background:
Back in July 2003, the EDA presented to the land owners of Block 35 a financial package
based on meeting certain criteria. SEE ATTACHED. On October 2003, Al Loch updated
the EDA on the progress made by the land owners. SEE OCTOBER 28 MINUTES.
At this meeting, Loch and the land owners of Block 35 will make a presentation including
graphic designs and bids for awnings to the rear of individual buildings. Loch is in the process
of talking with Schluender about bids for tying roof down-spouts into the alley manholes. The
probability of this and the added costs to the alley project needs to be verified by John Simola,
Public Works Director.
The Block 35 land owners are looking for the following from the EDA:
1. Have the Block 35 landowners met the criteria (benefits) set by the EDA?
2. If so, what is the City's time frame for alley improvements and what is the next step?
3. If not, what is the next step?
Please review the original financial package, dollar amount invested by public/private sector,
and benefits prior to the meeting.
(This a proposal created and offered by the Monticello Economic Development Authority
(EDA) to foster a partnership with a portion of the owners of Block 35.)
BLOCK 35 AND EDA PARTNERSHIP
FINANCIAL PACKAGE
USES OF FUNDS - Based on estimates.
Common Area -
Parking to rear of buildings, plaza, trash improvements
(with sidewalk and curb)
Replace alley and add a second catch basis
(Without engineer fees or cost to slope private surface to
match alley)
(Engineer fees/sloping)
Block 35 Public Parking Lot Improvements
Cosmetic Facade Improvements to rear of buildings
Swiecichowski (Dino's)
Monticello Lodge #16 (Vacuum Center)
Loch Jewelers and (I" National Bank of Elk River)
Schneider (previous Office Supply)
Agosto (Law Office)
Schneider (Vacant Lot)
Larson Properties (Carlson Travel/Carlson Agency)
Schneider (Drapery Center and Pizza)
McCarty (Computer/Mexican Grocery)
Subtotal of Rear Cosmetic Facade Improvements
TOTAL USES OF FUNDS
$ 15,]00.00
$ 21,100.00
$ 17,500.00
$ 18,000,00
$ ] 0,500.00
$ 20,500.00
$ 10,500.00
$ 16.500.00
$ 75,000.00
$ 50,000.00
$ 20,000.00
$ 30,00000
$] 29,700.00
$304,700.00
SOURCES OF FUNDS
EDA - Common Area
Alley
Engineer Fees/Sloping
Subtotal EDA Investment
City of Monticello - Public Parking Lot Improvements
Budget 2000
Budget 2002
Subtotal City Investment
Business Owners - Rear Cosmetic Facade Improvements
Swiecichowski
Monticello Lodge #16
Loch Jewelers
Schneider
Agosto
Larson Properties
Schneider
McCarty
Subtotal Business Owners Investment
TOTAL SOURCES OF FUNDS
$ 75,000.00
$ 50,000.00
$ 20,000.00
$ 10,000.00
$ 20,000.00
$ 15,100.00
$ 21,100.00
$ 17,500.00
$ 18,000.00
$ 10,500.00
$ 20,500.00
$ 10,500.00
$ 16,500.00
$145,000,00
$ 30,000.00
$129,700.00
$304,700,00
SOME BENEFITS OF EDA OFFER
I. Custom friendly parking and plaza-like rear entrance.
2. Cosmetic Facade Design Benefits as outlined by Planner Steve Grittman.
3. Roof and alley drainage issue resolved.
4. Multiple visual and exposed trash containers eliminated from rear entrance.
5. Ratio of Public Investment ($175,000) to Private Investment ($129,700.) 1.35:1.0
6. Availability of EDA Low Interest Loan.
BUSINESS OWNER/EDA PARTNERSHIP
100% commitment from said property owners by January 1,2004.
Property owners enter into a Maintenance Agreement for Common Area.
Unrestricted parking spaces
Common Trash
Snow Plowing
Landscaping
Agreement recorded against property
Low Interest Loan Agreement with EDA
Guarantee Required
EDA Agenda - 01127/04
5. Consideration of a request from Aroplax Corporation to extend the balloon {lavment
date for GMEF Loan No. 016.
A. Reference and backl!round:
On January 20,2004, I received a call from Aroplax asking if the City would consider
extending their balloon payment date of December 1,2004, as an incentive. The company is
planning for the year 2004 and the need to refinance the EDA loan. The company's current
employment base is 42 full-time workers.
GMEF No. 016 was approved by the EDA on August 31, 1999, as a $100,000 real estate
loan at 6.25% fixed interest rate amortized over 20 years with a balloon payment in five years.
The EDA loan is in third position behind the lender, Stearns Bank, NA. S1. Cloud, and SBA
Debenture. The loan closing took place on December 6, 1999, and the first monthly pa}ment
of$730.93 to the EDA began January 1,2000.
The EDA loan is of good standing with a current principal balance of $88,307.03 as of January
I, 2004. Assuming loan payments remain current, the balloon payment amount due on
December 1,2004, is $85,978.12.
Previously, the EDA extended the balloon payment for one other loan due to unusual
circumstances. SEE A TT ACHED MINUTES. Additionally and due to a default on a
GMEF Loan, the EDA forgave a certain principal amount and renegotiated the loan agreement.
Here is an excerpt from the EDA Business Subsidy Criteria (GMEF Guidelines):
DEFERRAL OF PAYMENTS: I. Approval of the EDA membership by majority vote.
2. Extend the balloon if unable to refinance, verification letter from two lending institutions
subject to Board approval.
According to the 2003 Cash Flow Projections, the GMEF balance as of December 31,2003,
was projected to be $677,071.80.
The request by Aroplax is very clear, they are asking for an extension of the balloon payment
as an incentive. They have the option to refinance with their lender. At this point, I have not
called the lender to inquire about the financial status of the company.
EDA Agenda - 01127/04
B. Alternative action:
1. A motion of no interest to extend the balloon payment date for GMEF No. 016
(AroplaxCorporation) as an incentive. State reasons for denial.
2. A motion of interest to extend the balloon payment date for GMEF No. 016 (Aroplax
Corporation) as an incentive. Formal approval at a later date subject to negotiations
and upon verification of financial status and agreement by lender.
3. A motion to table any action.
C. Recommendation:
Although the City supports the Business Retention & Expansion Program which encourages
businesses to stay in town and expand, the EDA should remain consistent with its Guidelines.
There is no additional job creation, financial hardship, or unusual circumstances attached to the
request. The EDA currently has a substantial GMEF cash balance so that should not be a
concern or reason for denial.
Although Aroplax Corporation is a great asset to the City of Monticello, the City Administrator
and Executive Director recommends the EDA stay consistent with the GMEF Guidelines
(Alternative No.1). To deviate from the Guidelines for the reason "as an incentive" would
open up a can of worms. No unusual circumstance is apparent for reasons to consider
extending the balloon payment date.
D. SUDDortinl!" Data:
EDA Minutes of November 8, 2000, and except from the Business Subsidy Criteria.
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EDA Minutes - 11/8/00
The request to extend the balloon payment is not because Blue Chip "the borrower" is
unable to refinance. The request is due to the high cost of refinancing due to unusual
circumstances of the real estate parcel split for Vector Tool and the B&B Metal Stamp
buildings. The EDA Business Subsidy Criteria, GMEF Guidelines state under Deferral of
Payments: ]. Approval of the EDA membership by majority vote. 2. Extend the balloon
if unable to refinance, verification letter from two lending institutions subject to Board
approval.
The EDA noted the following:
]. Firstar Bank submitted a letter of support to extend the balloon payment date and
noted the lenderlBlue Chip loan had been paid to date according to contract terms.
2. The EDAlBlue Chip loan agreement in good standing as of October 30,2000.
3. The CMIFIBlue Chip loan agreement in good standing as of November 8, 2000.
4. Prime rate, November 8, 2000, 2:00 p.m., First Bank, 9.5%.
5. EDA-GMEF current cash balance approximately $600,000.
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Because of a timing issue and the unusual high costs associated with refinancing the real
estate loan and cost of appraisals of the split lot, Roger Carlson made a motion to extend
the balloon payment date from December 1, 2000, to December 1,2003, for GMEF Loan
No. 010 (Blue Chip Development Company) at a fixed interest rate of7.5%. Preparation
costs associated with amending and reaffirming the documents, the responsibility of the
borrower. The motion was subject to submission of credit worthy current year financial
statements or financial summary for Vector Tool from a CPA. Ron Hoglund seconded
the motion and with no further discussion, the motion passed unanimously. The requested
five year balloon date extension was reduced to three years to ensure an adequate funding
balance of the EDNGMEF and the fixed prime rate was increased to 2% below the
current prime rate to discourage similar request.
5.
Public Hearing - Consideration to adout a resolution amending the EDA Business Subsidy
Criteria.
. Based on the authorization of the EDA at their August 29,2000 meeting, a public hearing
notice appeared in the local newspaper October 26 and November 2, 2000, relative to the
proposed amendments to the EDA Business Subsidy Criteria.
The proposed amendments included an increase to the wage level (a wage of the higher of
$9.00 per hour, or at least) and other criteria affected the Legislative action. The
proposed amendments provide consistency between the HRA and the EDA Business
Subsidy Criteria.
Chair Demeules opened the public hearing for comments and hearing no public comments,
closed the public hearing.
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EDA Business Subsidy Criteria
Minimum 10% equity EDA loan
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LOAN TERrvl - Personal property term not 10 exceed life of equipment (generally
5-7 years). Real estate property maximum of 5-year maturity
amortized up to 30 years. Balloon payment at 5 years.
,
INTEREST RATE - Fixed rate not less than 2% below Minneapolis prime rate. Prime
rate per National Bank of Minneapolis on date of ED A loan
approval.
,
LOAN FEE - Minimum fee of $200 but not to exceed 1 .5% of the total loan
project- Fees are to be documented and no duplication of fees
between the lending institution and the RLF. Loan fee may be
incorporated into project cost. EDA retains the right to reduce or
waive loan fee or portion of loan fee.
'Fee to be paid by applicant to the EDA within 5 working
days after City Council approval of GMEF loan.
Nonrefundable.
,
PREP A YMENT
POLlCY -
No penalty for prepayment.
,
DEFERRAL OF
PAYMENTS -
1.
Approval of the EDA membership by majority vote.
2.
Extend the balloon if unable to refinance. verification
letter from two lending institutions subject to Board
approval.
,
LATE PAYMENT
POLlCY
Failure to pay principal or interest when due may
result in the loan being immediately called.
In addition to any other amounts due on any Joan, and
without waiving any right of the Economic Development
Authority under any applicable documents, a late fee of
$250 will be imposed on any borrower for any payment
not received in full by the Authority within 30 calendar
days of the date on which it is due. Furthermore, interest
will continue to accrue on any amount due until the date
on which it is paid to the Authority. and all such interest
will be due and payable at the same time as the amount on
which it has accrued.
, INTEREST
LlMITATION ON
GUARANTEED
DAWNMlQRD/POllCIES.10/30/00
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EDA Agenda - 01/27/04
6. Executive Director's ReDort:
A. Jobz Minnesota - Attached is a brochure prepared by MEED marketing the newly designated
tax-free zones program. The ten tax-free zones are located in the Greater Minnesota and
exclude the 11 metro-counties. St. Cloud's Fingerhut site and two downtown sites also
received designation. The program is modeled after the State ofMI and P A programs.
However, the PA designations include both Philadelphia and Pittsburgh. In lieu of the City
looking to acquire land for industrial development, do you think this program has an impact on
the success of Monticello's potential? I did fax this to Don Roberts, Sunny Fresh, and Bill
Tapper, Genereux Fine Wood Products, for input. This is the program used to keep Polaris
and Marvin Window's from expanding to WI. The intent of the program was for distressed
areas in Greater MN.
B. Demographic Change in MN - Attached info for your information. A. and B. were topics of
discussion at the EDAM Conference I attended last week.
C. United Properties - January 8 met with an individual (marketing, planning, and development)
looking along the 1-94 corridor for 50 to 500 acres to purchase for future light industrial
development. Monticello the farthest out. They need to purchase land for .25 to .50 psfprior
to infrastructure improvements in order to make numbers work. Example of parks developed:
Lake Elmo 125 acres (purchased land in 1970 and infrastructure improvements mid 1990's,
park filled in four years. Mendota Heights 250 acres, Shakopee 112 acres (lost General Mills
or was it Motors to WI). Sites suggested Osowski, Pauman, Gold Nugget, and informed of
city's negotiations and asked about potential partnership with city. Mailed info. His
perspective: With the demand for residential development, land prices have sky-rocketed and
City's cave-in to development pressure and re-zone industrial land to residential and
commercial zoning.
D. Block 52 - Met with the developer for Walgreens. No options on properties except for
Johnson's. Looking at building size configurations to fit various site configurations. Advised of
TIF deadlines: Bond refinancing May 1 and expenditures by June 30, 2004. HRA attorney and
myself think doubtful to make the time line without purchase agreements and project costs.
The Council approved zero lot setbacks on Highway 25 for Block 52.
E. FYI - I was elected to Chair the Wright County Economic Development Palinership for 2004.
F. Between now and the EDA meeting will call a couple ofleads to see if projects are moving
along for Monti.
G. Chadwick parcel - The City submitted an option a. and option b. to Chadwick on January 22.
This is the 2-3 revised letter of intent to purchase. Chadwick on vacation til January 26. Four
individuals (Barger, Frie, Van Allen, and Benedetto) are lobbying the council members
individually for the purpose of selling: The benefits of City-owned land for industrial
development. The Small Group will host a workshop with Council members at 5:30 p.m. and
6:30 p.m. on January 26 for purpose of updating and answer/question period relative potential
acquisition ofland. The Council tabled any action to purchase from the December 8, 2003, to
February 9,2004 meeting.
Demographic Change In
Minnesota
Minnesota Growing But More
Slowly
· Population growth in 90s exceeded 1.2% per
year adding 54,400 per year
· Last year population grew by 0.7% adding
34,7000
· Biggest change is migration, which is driven
by the economy
· Last year lost net 7,700 to domestic
migration; gained 14,600 international
migrants
Tom Gillaspy, State Demographer
Mn Dept of Administration
January 2004
Minnesota Grew Faster Than Its
Neighbors April 2000 to July 2002
The .Growth Coilar Grew rapidiy In The 90s
While Growth Was Modest Elsewhere
1_'
0.4%
=
=
a:
mMpJs+St..Paul
WIsconsin
1.4%
SoulhDakota
0.0%
DOlder Dewloped
Silbur-bs
_GrowtllcoU;w
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.RUlltftbeStatr
Minnesota .~_,
2.0%
United Slates bi:' '-e .
2.5%
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PercentChllnge2()()()..2O(J2
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Change from 1990 to 2000
Five-State Area County Poplllation
Humber-a.ang.
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Projected Change In Minnesota
Population 2000 to 2010
.k
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75-1f
70-74
85...
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10-14
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$1.011I Oemagr1ojN'Pf'IItotion
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"....
Twin Cities Area Counties In The Top
1 00 Growth Counties Nationally
National Rank 2000-02 Growth
Scott, Mn 8th 6.4%
Sherburne, Mn 29th 5.1%
Wright, Mn 42nd 4.6%
Isanti, Mn 84th 3.7%
SI. Croix, Wi 901h 3.7%
C.......B...au."'...al8a.0tl/y2_..,....I~.irll""5_......""""'1haI~
After 2010, Most Population Growth In
Minnesota Will Be In People Age 65+
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1970-t0 1960-90 1990-00 2000-10 2010-20 202D-3O
Slate Demographer projection
2
Minnesota Is Becoming More Diverse
From April 2000 to July 2002,
Minnesota added 105,000
People. 44% of the increase
Was in minority persons.
TwIn City
Melro
Mlnnnollo
U.s.
0% 10% 20% 30% 40%
PercenlMlnorlty
Projections For 201 O--Population
Newly released data from the Department of
Homeland Security shows 13,522 legal
immigrants from 160 countries arrived in
Minnesota in 2002 - the highest number of
legal immigrants since 1982 and 2,000
more than in 2001. Total immigrants to the
U.S. in 2002 were nearly 600 less than for
2001.
. Projected 2010 population for the state is
5,452,500. In 2000 we had 4,919,479.
. Projected increase for the decade is
533,000 people or 11 %
. Through July 2003, we increased by
140,000 or 2.8%. We are about 20,000
under our projected track for the decade.
3
i
Projection For 201 O--Households Projections for 201 O-Labor Force
. Projection for 2000 is 2,182,200, an . Labor force will increase to a range of 2,891,900
increase of 287,100 or 15.1% for the and 3,112,800, increases of between 7% and
decade. 16%.
. Biggest increases will be inlJ1arried . Uncertainty about labor force growth results from
uncertainty about migration and labor force
couples without children, up 23%, and participation, especially over 60.
people living alone, up 21 %. . Most growth will be among 45 to 64 (increase of
. These two groups will account for more 32% to 39%). Age 24 to 44 will see a decline as
than 80% of the change. much as 10%.
Projected Labor Force--2003 Some Sources of Demographic
Information
"""""
33OIlOOO . State Demographer
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3iIIIIIOOO ......Cerlsus http://www.demography.state.mn.us/
.... -G-SetluA · Census Bureau htto:/Jwww.census.aovl
2SOOOClO .-/ ..... SerIQ B
-X-SerlesC · Legislative District profiles
2OOOOlIO / -+-Serl.. 0
1500000 httpJ/WWW.demography.state.mn.uslLegProf/
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