EDA Minutes 10-29-1991
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MINUTES
MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY
Tuesday, October 29, 1991 - 7:00 PM
City Hall
MEMBERS PRESENT:
Chairperson Ron Hoglund (tardy), Bob Mosford,
Clint Herbst, and Harvey Kendall.
MEMBERS ABSENT:
Barb Schwientek, Brad Fyle, and Al Larson.
STAFF PRESENT:
Ollie Koropchak.
STAFF ABSENT:
Rick Wolfsteller and Jeff O'Neill.
1. CALL TO ORDER.
With the tardiness of the Chairperson, Acting Chairperson Bob
Mosford called the EDA meeting to order at 7:00 PM.
2.
CONSIDERATION TO APPROVE THE JULY 23, 1991 EDA MINUTES.
Harvey Kendall made a motion to approve the July 23, 1991 EDA
minutes, seconded by Clint Herbst and with no additions or
corrections the minutes were approved as written.
3.
CONSIDERATION TO DISCUSS THE MAY 13, 1991 COUNCIL MINUTES.
a) GMEF GUIDELINES - Koropchak pointed out as recorded in
the July EDA minutes that the Council on May 13th had
approved the suggested amendments to the GMEF Guidelines.
However, in reference to the Council minutes the motion
included a request that the EDA give consideration to
preparing an amendment that would allow the City Council
to conduct a preliminary review of loan applications
prior to final approval by the EDA.
It was the agreement of the EDA that a preliminary review
of loan application by the Council would delay the
application process which was intented to be simple and
timely. It was suggested to provide Council with general
information of a company and its proposed project upon
the City Staff receiving a preliminary GMEF application.
b)
UDAG REPAYMENT INCOME APPROPRIATION - Koropchak pointed
out as recorded in the July EDA minutes that the Council
on May 13th had approved a motion authorizing a $90,000
(only) commitment of the UDAG repayment income to the
GMEF. However, in reference to the Council minutes the
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EDA MINUTES
10-29-91
motion authorized the commitment of UDAG repayment income
(total principal and interest of $336,000, the original
request of the EDA) to the GMEF. However, upon review of
the Council tapes the Council minutes were incorrect as
the amount committed was $90,000 as reported to the EDA
in July. It was the feeling of the Council that to
authorize the total amount of the UDAG to the GMEF at
this time would mean the Council gave up the control of
the entire UDAG payback income.
4. CONSIDERATION TO REVIEW LEGAL OPINION ON THE USE OF THE UDAG
REPAYMENT INCOME.
Koropchak referred to the letter addressed to Mr. Weingarden
on October 23, 1991 and indicated no response has been
received of Mr. Weingarden's opinion to the use of the UDAG
funds.
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Koropchak proceeded to call the HUD office and in talking to
Mr. Joles with reference to the UDAG Closeout Agreement dated
September, 1985. He stated any miscellaneous revenues spend
after five years past the Closeout Agreement date is subject
only to the CDBG basic eligible activities (570.201) and Law
105. Law 105 refers to any miscellaneous revenue used for a
for-profit business must meet the necessity and appropriation
test. This test is similiar to the TIF "but for" or the GMEF
"gap" financing clause. The miscellanous revenue is not
subject to projects which provide low to moderate income jobs,
housing, etc. No public hearing or separate accountability is
necessary. Mr. Joles indicated his willingness to respond to
an inquiry letter on the above matter which will provide the
City with a letter of documention. Such letter was written as
of October 24 and a copy was included with the EDA agenda
packet.
5.
CONSIDERATION OF AN UPDATE ON THE AROPLAX CORPORATION PROJECT.
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Koropchak updated the EDA on the status of the Aroplax project
stating the company is now considering a financial proposal
from the City of Brooklyn Park. Supposedly, the City of
Brooklyn Park will finance the total project as the City is in
need of a plastic injection molding company to compliment a
patented product request. The City of Monticello's financial
package included the write down of the land ($70,000) through
TIF, $30,000 GMEF at 6.5% interest rate over 7 years, $381,000
SBA at 9.5% over 20 years, and $462,500 Bank at 10.5% over
20/10 years. The company is financially strong and had the
privilege to shop for SBA bank commitments of which three bank
options were available. The City of Monticello has certified
the TIF District, approved the GMEF loan, and the OMNI Board
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EDA MINUTES
10-29-91
has approved the SBA loan with the SBA Board yet to make final
approval. The company proposed to construct a 23,000 sq ft
concrete facility on Lot 3, Block 2, Oakwood Industrial Park
and would employ approximately 25 people. The company made a
verbal commitment of Monticello to the EDA and the HRA,
excuted an agreement to the terms of the GMEF loan, informed
their employees of the Monticello move, and advertised for
employment in the local newspaper.
Mr. Pat Pelstring and Koropchak will meet with Mr. Jerry
Schoen on November 5th. Pelstring suggested we ask, "What it
would take to get the company to Monticello?" Koropchak asked
the EDA for their recommendation of further GMEF assistance as
the HRA/City have maximized the use of TIF.
Koropchak stated she prepared a property tax analysis based on
equal building market value, land value prices of $1.75 per
square foot (BP) to $.35 per square foot (Monti), and tax
rates of 115.885% (BP) to 87.780 (Monti). Based on those
assumptions, annual property taxes in Monticello were $20,000
less than Brooklyn Park.
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The EDA agreed that without the knowledge of details to the
competitive financial proposal the addition of any GMEF may
not be of great significance. The EDA viewed the company as
impressive and one which met the objectives of the IDC, HRA,
and EDA. Therefore, after feeling the company out and as a
last resource it was recommended for Koropchak to ask the
company what it would take for them to commit to a Monticello
location. Koropchak agreed with the EDA but cautioned the EDA
of the GMEF Guideline: Funds are to be used for gap financing
and is not intended to be used a substitute for conventional
lending. The EDA would thereafter consider the company's
additional financial request.
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CONSIDERATION TO REVIEW THE GMEF REVENUE AND EXPENDITURE
ACCOUNTS.
Koropchak reviewed the financial data provided to the EDA
members. Addi tionally, Koropchak reported that both the
Muller and Tapper's GMEF payments are current. It is the
intent of the Tapper's, Tapper's attorney, and Wright County
State Bank to close out the SBA loan the end of October with
debentures to be sold in December.
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Koropchak reported that the City Council did amend the GMEF
Guideline, Definition of Public Purpose, Paragraph 3, as
recommended by the City Attorney and EDA at the Council's
August 12th meeting.
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EDA MINUTES
10-29-91
Koropchak also noted to the EDA that in the October 23 City
Administrator's Memo to the City Council of the 1992 Proposed
Budget; the EDA's request for Council to commit additional
dollars from the Liquor Funds (if necessary) to maintain a
GMEF appropriation balance of $200,000 was included.
7. OTHER BUSINESS.
Koropchak informed the EDA of various industrial prospects
which have contacted the City or received through other
referrals.
8. ADJOURNMENT.
The EDA meeting adjourned at 8:15 PM.
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Ollie Koropchak, EDA Executive Director