EDA Minutes 08-06-1996
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MINUTES
MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY
Tuesday, August 6, 1996 - 7:00 p.m.
City Hall
MEMBERS PRESENT:
Chairperson Ron Hoglund, Vice Chairperson Barb Schwientek,
Assist-Treasurer Ken Maus, Tom Perrault, AI Larson, and Bill
Oemeules.
MEMBERS ABSENT:
Clint Herbst.
STAFF PRESENT:
Treasurer Rick Wolfsteller and Executive Director Ollie
Koropchak.
GUEST:
Don Hunter, Standard Iron & Wire Works, Inc.
1. CALL TO ORDER.
Chairperson Hoglund called the EDA meeting to order at 7:00 p.m.
2.
CONSIDERATION TO APPROVE THE APRIL 23. 1996 EDA MINUTES.
Ken Maus made a motion to approve the April 23, 1996 EOA minutes. Seconded by Tom
Perrault and with no corrections or additions, the minutes were approved as written.
3. CONSIDERATION TO ACKNOWLEDGE A STATEMENT FROM COMMISSIONER
BILL OEMEULES DISCLOSING APPLICATION FOR A GMEF LOAN.
EOA Commissioner Bill Oemeules disclosed that he is one ofthree partners in the
SELUEMED Limited Liability Partnership which is applying for a GMEF Loan in the
amount of $70,000. The machinery and equipment loan is for Standard Iron & Wire
Works, Inc. Barb Schwientek made a motion acknowledging the statement of disclosure
from Commissioner Demeules for entry into the official minutes of the EDA. Tom
Perrault seconded the motion and without further discussion, the motion passed. Yeas:
Schwientek, Perrault, Hoglund, Maus, and Larson. Nays: None. Abstention: Bill
Oemeules.
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AUGUST 6, 1996
4. CONSIDERATION TO REVIEW FOR APPROVAL THE PRELIMINARY GMEF
LOAN APPLICATION FROM STANDARD IRON & WIRE WORKS. INC.
EDA members reviewed the preliminary GMEF loan application from Standard Iron for
compliance with the GMEF Guidelines. The loan request for a $70,000 M&E loan,
amortized over 5 years. Don Hunter of Standard Iron informed the EDA that the
$490,000 horizontal machine center and the $725,000 laser cutting machine are in
operation. The in-loader, a component ofthe laser, is being assembled. The press brake
has not been purchased. Equity of $45,000 was injected by the company for purchase of
the laser and the company has carried the cost of the GMEF and CMIF dollars while
awaiting approval and disbursement ofthe GMEF loan and disbursement of the CMIF
loan.
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Eighty-five percent of the equipment purchase price is financed by the lenders and the
remaining portion by company equity and the GMEF and CMIF loans. The GMEF and
CMIF will share a second position behind the lender. The equity/GMEF leverage is
64.2%. Current financial statements submitted by the company are above acceptable. The
addition of 14 new jobs (82 currently) in two years is projected and is the result of the
purchase of the financed equipment. Job creation a mandatory criteria ofthe GMEF
Guidelines. Average wage $10.30 per hour without benefits. The remaining balance
ofthe GMEF is $150,000.
Demueles abstained from discussion of the preliminary loan application.
5. CONSIDERATION TO APPROVE OR DENY APPROVAL OF GMEF LOAN NO. 013
FOR STANDARD IRON & WIRE WORKS. INe.
The EDA finding the formal GMEF application from Standard Iron in compliance with the
GMEF public purpose and policies, Al Larson made a motion to approve GMEF Loan
No. 013, a M&E loan, for $70,000 at a fixed interest rate of 6.25% amortized over 7
years for Standard Iron. Loan fee not -to-exceed $1,050 and payable at time of closing.
GMEF legal fees the responsibility ofthe applicant. CoHateral, guarantees, and other
condition requirements to be determined and prepared by the GMEF Attorney. Loan No.
013 to share a second position with the approved $60,000 CMIF loan, behind the lender.
Projected job creation is 14 new jobs within two years (current 82). Loan No. 013 to be
disbursed from the Liquor Fund. The loan becomes null and void if funds are not
disbursed by February 6, 1997. Seconded by Tom Perrault and with no further discussion,
the motion passed. Yeas: Larson, Perrault, Hoglund, Maus, Schwientek. Nays: None.
Abstention: Bill Demeules.
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The City Council will review the approved Loan No. 013 for compliance of the GMEF
Guidelines on August 12, 1996.
6. CONSIDERATION TO DETERMINE THE ANNUAL LIOUOR FUND
APPROPRIATION'S REOUEST FOR BUDGET YEAR 1997.
With Administrator W01fsteller to begin the process for setting the 1997 City Budget in
August, EDA members reviewed the need to request dollars from the Liquor Fund.
Koropchak reviewed the estimated January 1997 cash balances of three sources of funds
for the GMEF. GMEF, $250,000; UDAG, $60,000; and SCREG, $125,000 for an
approximate cash total of$435,000. Additionally, balloon payments from two GMEF
loans are due in 1997. The approximate remaining principle amounts are Tapper, $71,000
and SMM, $41,000 for an approximate total amount of$112,000. Other GMEF balloon
payments are due in 1998, 1999, 2000, and 2001, one each year. The last year of pay backs
to the City from the SCREG is 1996 and the UDAG is 1999.
Koropchak summarized of the total $610,500 dollars lend to businesses since the EDA's
first loan approval in 1990 (including Loan No. 013), $383,000 was disbursed from the
Liquor Fund and $227,500 was disbursed from the UDAG Fund. A comparison of
requested Liquor Fund Appropriation dollars to expended Liquor Fund dollars since 1990
is $1,200,000 to $383,000.
EDA members agreed their original intent has always been to become self-sustaining.
Schwientek would like to see the BOA repay the City, without a request from the City, the
amount disbursed from the Liquor Fund ($383,000). This to confirm the EDA 's original
intent and an act of good faith. Ken Maus made a motion for the EDA to payback the
City the amount disbursed from the Liquor Fund ($383,000). Annual payback in an
amount not-to-exceed $50,000, provided the year-end GMEF non-committed balance is
greater than $250,000. Paybacks subject to annual review and approval by the EDA. Al
Larson seconded the motion and with no further discussion, the motion passed
unanimously.
Barb Schwientek made a motion that the EOA request no appropriation dollars from the
City's Liquor Fund for Budget Year 1997. AI Larson seconded the motion. Members
discussed and agreed that the appropriation's request be an annual line-item EDA
consideration. With no further discussion, the motion passed unanimously.
7.
CONSIDERATION TO DISCUSS AND REVIEW THE GMEF GUIDELINES FOR
POSSIBLE AMENDMENT.
Following discussion by EDA members relating to four options presented for extending
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EOA MINUTES
AUGUST 6, 1996
the disbursement date beyond the expiration ofthe l80-day non-performance date and the
need for an application fee, Bill Oemeules made a motion amending the provisions of the
GMEF Guidelines as follows:
LOAN FEE: Loan fee to be paid by the applicant to the EOA within 5 working days after
City Council approval of the GMEF loan. Non-refundable.
NON-PERFORMANCE EXTENSION - The l80-day non-perfonnance date can be
extended up to an additional 120 days.
1. A written request is received 30 days prior to expiration ofthe l80-day non-
performance date.
2. Approval of the EOA membership by majority vote.
The motion was seconded by Ken Maus and with no further discussion passed
unanimously. The amended Loan Fee Provision to serve as an application fee, sparing the
applicant the cost of an additional fee. The provision also encourages applicant
commitment and a timely commencement of the funded project. The new Non-
Perfonnance Extension Provision provides the applicant with an option.
The City Council to consider amending the GMEF Guidelines as recommended by the
EOA on August 12, 1996.
8. OTHER BUSINESS:
a) Accepted the written update on GMEF Loan No. 011, Tappers.
b) Consideration of Kennedy & Graven's bill on legislative changes - EOA members
discussed Invoice No. 8886 in the amount of$1,978.95. Oemueles viewed the
legal research and conference calls between Koropchak, the law firm, and
Oemeules relating to the conflict of interest issue as a benefit to the EOA and
Standard Iron and offered his business, Standard Iron, to pay Kennedy & Graven
an amount not-to-exceed $1,069.50. Additionally, Oemeules felt the EOA had
not authorized the law finn to lobby on behalf of the EOA; although, the EOA is
appreciative ofthe matter. Ken Maus made a motion accepting the rationale and
offer made by Oemeules: Standard Iron to pay $1,069.50, a portion of the
Kennedy & Graven bill. A letter to be drafted by Koropchak stating the EOA's
position to accompany the payment. AI Larson seconded the motion and with no
further discussion, the motion passed unanimously.
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EDA MINUTES
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c) EDA members received a copy ofthe Monticello Property Tax sheet as prepared
by the Minnesota Chamber of Commerce.
d) Other - None.
9. ADJOURNMENT.
The EDA meeting adjourned at 9:10 p.m.
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