EDA Minutes 07-25-1995
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MINUTES
MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY
Tuesday, JuJy 25, 1995 ~ 7:00 p.m.
City HaJ]
MEMBERS PRESENT:
Chairperson Ron Hoglund, Vice Chairperson Barh
Schwientak, Assistant
Kenda 11, (';1lnt Herbst,
r,ar~;i(m: and 5i 11 Dnmeulas.
Treasurer Harvey
Tom Perrault, Al
STAFF PRESENT: Ollie Koropchak, Executive Director.
STAFF ABSENT: Rick woJfstoller, Troasurer.
GUEST:
John Babcock, R-window Company.
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CALI, TO ORDER.
Chairperson Hoglund called thA EDA meeting to order at 7:00
p.m.
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CONSIP~I?,~IIQH_'J:'Qbf'J'~9YJ?",THE M~I?gf{. ...7..,.._.. 15!.9.5..1.. EDA MINUTES.
Barb Schwientek made a motion to approve thp March 7, 1995,
EDA minutes. Al [.arson second:.:~d the motion and wi th no
corrections or additions, the motion passed 6-0"1. Yeils:
Hoglund, Schwientek: Kendall: Perrault, Larson, and nomeulos.
Nays: None. Ahstention: Clint Herhst, not present on March 7.
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CONSIDERATION TO REVIEW FOR APPROVAL THE SF-CONn PREL MTNARY
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John Babcock of the H-Window Company reported the original
facility was compL:,tQd in 1987 and th,' Qxpansion compl'-.~t('d in
1993/94, Both sa If;l8 and. prof i ts have increased and the
company is growing fast. Sixty percent of the SAles were in
the commsrc ial miJ.rket; however, the res iden t ial market is
expected to become stronger with the design of a new handle
,;ind the sidp. crack window. All of the 51 manufacturing
empJoyc'C>8 fU',) ful1--time and the second-shi :ft consjst I)f a
skelton crew. Eighteen people are employed in the office.
BDA members :t'1)vjewed the GMEF loan application of Jun,:, 22,
1995, from the H-Window comp<"1.ny <:1.nd the financial analysi13
prepared by PRG.
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EDA MINUTES
,JULY 25, 1995
4 . c:;Q~::::IPE;t:!?\TIQ!'!...TQ,2l.}='l?139yg m9~_.p;rE;,2l.EPF9Y~ GMEF.J:J9.a..~. J'.rQ:.....g()I)..ti'Q~....
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After EDA members determined the $50,000 loan application from
the H--Window w.op" in c;ompl i ,U1CC, wi tb the; nMRF pnbl i c pUl'pOSO
and policy, Barb Schwientek ma.de a motion to approve GMEF LOtJ,n
No. 009, an oquipment lOAn, to thp H-Window Company. Tho loan
t t 1 5 0% . t t t . 1
't'-!rms were se.. a' ;:J. , . In eres rate 8.mor .1ZC(J. over seven
yoars; loan fee at $750; legal feos the responsibility of tho
applicant; loan becomes null and void on January 25, 1996; the
GMEF and SCERG to share a first position; collateral,
gll;::~ran tee8, and other condi t ion req\.l i rements are to be
determined and prepared by the GMEF attorney; tho GMEF loan
approval subject to SCERG closing; and loan disbursement from
the UD.AG Fund.. Al I.arson seconded the mot.ion and memlH_"r::.;
restated the rationale used in determining the loan term and
rate,
With the H-Window's request for an interest rate of 5% over 10
years, the EDA determined the reduction of the term length
from 10 years to 7 y~ars was the greater benefit of the two
GMEF provisions; loan term an!'1 interest r."te. The 7-yc,ar
amortization brings the request into compliance with the GMRF
provisjon (personal property generally 5-7 years) and recyclos
the GMEF dollars faster. The EDA members felt to additionally
impOSE' a high'-"l' intorost rate places an additional stain on a
hus i nees dur ing cr it ieal per iods. Cr i t lca 1 p";r lod::,; w::)re
defined as first fivA years of a husiness startup or during
8xpansion and f;~st-growth, This was the rationale used for
approval of the 5% interest rate rather than the guidolinc
provis ion of 6,7591; - Next, the apprnved loan supported the
EDA's philosophy and tho IDC's Business Retention and
Rxpan;-3ion Program which encourage existing industrial
husinl::"!ss,::,s to expand in Montice]lo. Lastly, the FDA
recogn ized the H--Wi ndow expans ion ha!;, more than doubled the
propC'rty I s (>st ima ted m<:'lrket va I Ill.' i3nd ha:::; i ncrear.:..;ed the ] (Ica]
employment by 15 since its 1994 application,
Koropchak reminded EDA membors that the City Council on August
14, 1995, will review Uti? l08n approved, by the BDA,. The
Counc.i] may l:'E~ver;-::;e a dE,ci sion of the EDA if the Coone;]
dE)termines the Inan WiOlS ISBu,:::':! in violation of the GMEF
Guirll?l.im$. The motion pa;-::;sed on a 7-0 vote. Staff will
request quarterly finiOlncial statements for the first two-yeiOlt's
to monitor the financial position of the company and for the
neces8ity to renew the Letter of Credit.
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BDA Tv1INUTES
.JULY 25, l00S
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APPROPRIATION FOR RECOMMENDATION IN PREPARATION OF THE CITY
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After reviewing the balances of the GMEF and other sources of
f\lnor.;: H.:'lrvey Kendal] made a motjon r('quest-ing ..-=I $100:000
appropr ia t ion from thE! 1. iqllor Fund for 1996 City BlJdUet:
prepar8tjon. Thjs to secure tho longevjty of the GMEF. It j~
anticip8.terl the \lse of the revolving loan fund m.';.\y incrf~d:.;e
cl(l~:' to I,(>(1i~c.;]..-=IhYrs nlac:ino additional :t'lo"':c.;1-ric;t.ions on the 1)::;:';
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of TIF and the Council's reluctant to use TIF because of the
RACA Penalty. Bill Demeu]es seconded the motion. EDA members
felt the GMEF encourages growth from within and agreed that
the EDA's intent .is a payback to the Liquor Fund. Thc> motion
passed unanimously.
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99_~!?IP_E~AT I O~......r9._...f..MENR..."...TR..'E GMEF' GU I DEL I NE PRO,! 1$ r9~_:_
LOAN
SIZE.
Koropchak explained this item appears on the agenda hec8.usc
the IDC BuggE'sterl using a "percentage" of the revolvjna ]CJ;';Ul
fund bal<3nc8 (or the annual approval/dL3bursement guhh::. It:
was be.] if:'vud the IDC may he confusing th:;> afH)ual Liqnor Fun(l
A:ppropriatior, 01" $200,000 with the revolving lO;::It\ fund b.d.3t"1cc
of dpproxj m<3 tol y $4-30: 000 . The IDC Waf.; concE'rtl(>(l tha t th(> EDA
have the flexibility to approve more th~n the 50% max of the
rem..-=lining balanc,: of the $200:000 in a givun Y€>i;H' jf for
example four excellent application werc received.
Koropchak and Wc;]fsteJler recommended: "A minimum nf $5,000
and 8. maximum of $100,000 per loan approval. All loan size
approvals ::HJbje,ct to avaj]ab]::! fnnch:, of the l';evolvjng loan
fund halance or not to eXCEed 50% of the remaining revolving
loan fund balance." Thc' -intent of tho loan size provjsion j;,;as
a guide to the question asked hy rnost hu.sines8c~;; "Wb...)t is trw
maximum amount of doJJar(.; available from thE' GMEF?" RDA
members felt Koropchak ar~ Wolfsteller's recommendation would
Jock jn the dollar amount and prohibJt the EDA from approving
a gre8t~r than $100:000 loan. No action was taken hy the EVA.
7. OTHER RUSINESS:
None.
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EDA MINUTES
.JI1L Y
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1995
s. ADJOURNMENT.
The EDA meeting adjourned at 8:00 p.m.
CJ~ ~Cf\U~~
OlliA Koropchak, Executive Director
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