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EDA Minutes 04-24-2001 (Special Meeting) . . . Memhers: Absent: Staff: Guests: ANNUAL MEETING MINUTES MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY Tuesday, April 24, 2001 - 7:00 p.m. City Hall - Academy Room Chair Bill Demeules, Viee Chair Barb Sehwientek, Assist Treasurer Ken Maus, Clint Herbst, Roger Carlson and Darrin Lalu Ron Hoglund and Darrin Lahr Treasurer Riek Wolfsteller, Executive Director Ollie Koropchak, Recorder Lori Kraemer. Susic Wojchouski and Pam Campbell, DA T 1. Call to Order. 2. 3. 4. Chair Bill Demeules called the meeting to order at 7 pm. Consideration to anprove the March] 5.2001 EDA minutes. A MOTION WAS MADE BY BARB SCHWIENTEK AND SECONDED BY ROGER CARLSON TO APPROVE THE MINUTES OF TilE MARCH ]5,2001 EDA MINUTES. Motion carried with Ken Malls and Clint Herhst ahstaining. Consideration of adding or removing agenda items. None Public Hearinf.!: - Consideration to amend the Business Subsidy Criteria for the Economic Development Authority of the Citv of Monticello. Chair Demeules opened the public hearing. Demeules advised Maus and Carlson of the discussion that took place at the March meeting regarding amending the Business Subsidy Criteria. At that meeting, the EDA commissioners approved amending the GMEF Guidelines and authorized staff to direct the EDA Attorney to draft language for amendment of the GMEF Guidelines to include a Late Fee Policy of$250 plus accrued interest, after discussion regarding an industry that is consistently late with payments. The language drafted by the EDA Attorney is as follows: LATE FEE POLICY: In addition to any other amounts due on any loan, and without waiving any other 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 calender 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 . . . EDA Minutes - 4/24/01 interest will be due and payable at the same time as the amount on which it has accrued. A MOTION WAS MADE BY KEN MAUS AND SECONDED I3Y BARB SCHWIENTEK TO CLOSE THE PUBLIC HEARING. Koropehak advised the EDA that the amendment will be forwarded to the Council on May 14,2001 for approval as the guidelines state no changes to the guidelines shall be instituted without prior approval of the Council. She also advised that the members review the EDA Business Subsidy Criteria as the GMEf Guidelines state the EDA shall review the guidelincs on an annual basis. A MOTION WAS MADE I3Y BARB SCHWIENTEK AND SECONDED BY KEN MAUS TO APPROVE AMENDING THE EDA BUSINESS SUBSIDY CRITERIA AS OUTLINED ABOVE, RECOMMENDING COUNCIL CONSIDERATION ON MAY 14,2001. Motion carried unanimously. 5. Consideration to elect 200 I EDA officers. Koropchak advised that each year the EDA is required to elect officers, also stating that they can remain the same if they chose to. In order to comply with EDA Ordinance Amendment No. 172, Scction 2-3-2: The Authority shall annually elect a president, vice president, treasurer, assistant trcasurer, and secretary. Clint Herbst askcd if anyone requcsted to be removed from thc board and with no requests to be removed, he then asked if Bill Dcmeules was willing to stay on as Chair. Dcmeules statcd he was willing to remain as Chair. It was also asked of Barb Schwientck if she was willing to stay on as vice chair and she stated that shc was. Allmcmbers elected to remain the same. The current list of officers arc: President Viee President Treasurer Assistant Treasurer Secrctary Bill Demeules Barb Schwicntek Rick Wolfsteller Ken Maus Ollie Koropehak In order to comply with EDA Ordinance Amendment No. 172, Section 2-3-1: Creation: (C) Thereafter the initial appointment, all commissioners shall be appointed f()[ six-year terms, exeept that any person appointed to fill a vacancy occurring prior to the expiration of the term which his/her predecessor has been appointed shall be appointed only for the remainder of such term. 2 . . . EDA Minutes - 4/24/0 I 200 I EDA membership and 6-year term: Ron Iloglund Clint Herbst, Council Ken Maus Darrin Lahr Barb Sehwientek Bill Demeules Roger Carlson, Council 12-2001 12-2002 12-2002 12-2003 12-2004 12-2005 12-2006 A MOTION WAS MADE BY KEN MAUS AND SECONDED BY CLINT HERBST TO APPROVE OFFICERS AS STATED ABOVE, WITH NO CHANGES. Motion carried unanimously. 6. Consideration to review and accept the year-end EDA Financial Statements, Activity Report. and proposed 2001 Budget. Koropchak provided the report stating that in order to comply with EDA Ordinance Amendment No. 172, Section 2-3-6: The Authority shall prepare an annual budget projecting anticipated expenses and sources of revenue. And B: The Authority shall prepare an annual report describing its activities and providing an accuratc statement of its financial condition. Said report shall be submitted to the City Council by March 1 of each year. Koropchak provided the year-end statements, proposed budget, and activity report and asked the FDA to review and discuss prior to consideration of action. Wolfsteller and Koropchak explained the changes in language regarding appropriation and UDAG. A MOTION WAS MADE BY CLINT HERBST AND SECONDED BY BARB SCHWIENTEK TO ACCEPT THE YEAR-END FINANCIAL STATEMENT AND REPORT FOR SUBMISSION TO 'fHE CITY COUNCIL ON MAY 14,2001. Motion carried unanimously. 7. Consideration to review year-end balanccs of the GMEF, DMRF, UDAG, Minnesota Investment Fund and SCERG Funds. Koropchak provided the staff rcport advising the EDA that all GMEF loan payback payments are current as accounted for in the 2000 year-end statements. The balloon datc for GMEF No. 010 (Blue Chip) was extended from December 1,2000 to December 1, 2003. We anticipate to collect the balloon payment from the Tapper II real estate loan of $100,000 in April 28, 200 I. The Integrated Recycling Technology, Inc. $72,500 real estate loan was approved by the EDA in 2001 and anticipated to close spring/summer. 3 . . . 8A. EDA Minutes - 4/24/01 No DMRF grants were disbursed in 2000. However, two grants were approved for the Ifamond and Heaton properties in 2000. DMRF expenses included Claybaugh Preservation Architecture and EDA Attorney. Principal and interest payback will commence May 2001 on the $10,644 DMRF Hamond loan. The $100,000 EDA disbursement for the TCDC loan was from the UDAG fund account and EDA-(J-MEF account. The $500,000 State Grant to the City for 'fDCD closed in 2000. This is monics from Federal dollars, the City will retain the entire $500,000 principal and interest of 4% amortized over seven years. The EDA is the administrative body of the funds. However, because this is Federal dollars the payback dollars can not recycle into the EDA-GMEF account. And forever, each new loan by the City from these Federal dollars must meet Federal regulations and accountability such as low to moderate income jobs, Davis-Bacon Rules, etc. You will note the total dollars available to the EDA for GMEF and DMRF programs less the commitments is $681,005.81 as of April 24,2001. Koropchak advised that the DMRF balance as of December 31,2000 is $171,827.58. No action was necessary by the FDA. Consideration to discuss for approval the continued funding of the DMRF and to review thc DMRF Guidelines for possible amendmcnts. Koropchak providcd the report stating that on an annual basis, the EDA compares the over-all dollars available to assist industry and downtown businesses with the goals or objectives ofthc programs. You will note the DMRF balance is about $150,000 after deducting committed dollars. The DMRF program began in 1997 and in four years the EDA disbursed money for 7 improvement projects. Also, note the EDA Cash in Bank may start to delete as the UDAG and SCREG money is used up, subjcct to payment of balloon payments, and willingness to increase the amount of the GMEF Loan in ordcr to keep competitive. Koropchak provided an estimated market value comparison regarding the DMRF impact and information provided by Pam Campbell, as well as posed a list of questions for the EDA members to discuss. Pam Campbell, DA T Chair, providcd a list of possible changes to the DMRF that thc members may want to discuss as options. They did discuss having the flexibility to complete improvemcnts in different phases, but Campbell stated that a potential problem could be that they do not eVer complete what they initially intended. Koropchak also statcd that possibly the they could have an owncr complete one application and have them phase it imposing deadlines. Schwientek thought changing the language in the guidelines may just make it more cumbersome and also noting it has been handled on an individual 4 EDA Minutes - 4/24/0 I . basis in the past which seems to be working. Also mentioned was having tenants be allowed to apply may, but later noted that this may not be a good idea as tenants come and go and may take signage with them. Maus also added that possibly including tenants may be a good idea but that the applications should be on a per side basis, adding that if they want to come in l()lIr separate times, it would be okay noting this would be helpful for budgetary reasons. Maus also was not opposed to approving an application all at once and letting it be phases. . Koropchak asked about including the owner if a tenant applies and Maus advised that this is typical to have owner sign as well to keep them in the loop. Maus also stated that they may not want to include signage in the grants, and Wojchouski brought up awnings serving as signage. The members discussed that they need to be careful with this as awnings become outdated quite quickly. It was stated again that the EDA needs to be cautious on changing any language in the guidelines. Wojchouski also brought up the hlCt that the back sides of the buildings are very visible and need to be addressed as well, and the members should discuss the possibility of increasing the dollars if an applicant wished to improve the back side of the building. Demeules asked if it should be so much per foot as some buildings arc much larger than others. Koropchak stated maybe not amending the guidelines but take it as a case by case basis as in the case of the I--Icaton application. The members discussed putting together a type of marketing plan and Schwientek stated maybe not a marketing plan, but perhaps a letter to the owners advising them of some ideas and monies available. Maus stated lllaybe targeting a specific area per year, but maybe only one will go ahead and that would not be the outcome they want, and they discussed that this may not be the way to go. Challenges would be creating an architectural design and flow. Maus stated one thing to look at may even be just trash receptacles to start with. They discussed an owner who has already approached some owners of a particular block on trash receptacles, and the members discussed the possibility of funding certain improvements up to 100%, stating again that it may be time to focus on specific projects. The members discussed the idea of having an architect provide drawings, give costs, etc., and it was decided that maybe more thought needs to be put in place before starting anything. It was asked if possibly the City Planner may be interested in providing options, drawings, etc. Schwientek stated she would like to see a plan and cost estimates from Grittman prior to making any further decisions. Maus also stated that targeting would be a good idea, as well as f()cusing on trash receptacles and parking. The members felt there was no need to amend the EDA guidelines at this time . A MOTION WAS MADE BY KEN MAUS AND SECONDED BY BARB SCIIWIENTEK TO EXTEND THE USE OF THE APPROXIMATl: $150,000 FOR THE DMRF PROGRAM FOR ONE YEAR, REFOCUSING ATTENTION ON 5 . . . EDA Minutes - 4/24/0 I CERTAIN PROJECTS, AND AUTHORIZING STAFF TO CONTACT CITY PLANNER STEVE GRITTMAN TO PROVIDE COST ESTIMATES fOR TRASH RECEPTACLES AND PARKING, AND TO BRING TillS ITEM BACK TO TilE EDA FOR FURTHER DISCUSSION. Motion carried unanimously. Barb Schwientek also asked that Rick Wolfsteller discuss with the Public Works Director turning radius, etc., regarding the above discussions. 8B. Consideration to discuss for approval authorizing the replacement of the Liquor funds. Koropchak provided the report noting that within the March 15, 2001 agenda pack was a copy of an excerpt of the Council minutes of November 16,2000. The Council minutes indicated a discussion by Council as it applies to the EDA funds. It was suggested to the EDA Director that perhaps the EDA should initiate discussion whether to start paying back the Liquor Funds. Koropehak provided an excerpt from the EDA Business Subsidy Criteria, Original Revolving I,oan funding. Based on the year-end tinancials, the cash in bank is $773,649.81. This amount less the approved loans/funds leaves a current balance of $681 ,005.81. The UDAG-f'SI and SCREG-Aroplax dollars have been recycled into the GMEf'. The amount of Liquor Funds expended by the EDA over the years equals $383,000 The Minnesota Investment Fund- TCDC of $500,000 is meant for industrial use; however, the recycled dollars will not be intermingled with the GMEF. Principal and interest payback in 2000 was about $25,000. Koropchak stated that Lahr had posed the question to voluntarily pay the Liquor funds back, which the members felt was a reasonable request and should be looked into. Maus suggested that maybe each year a percentage of the EDA's surplus could be paid back, may want to establish a higher amount rather than decide on an amount to pay back each time. It was also suggested that the EDA may want to state a percentage, unless cash falls below a certain amount, $400,00. Koropchak listed some questions to discuss as well such as what amount if any was reserved for the DMRF?; How many and in what frequency are the GMEF balloon payments due to the EDA?; Can these funds be used for industrial park development?; Is it better to wait and let the Council make its findings?; In the future, will approved loan amounts be greater than $100,000 in order to stay competitive with the market? A MOTION WAS MADE BY KEN MAUS AND SECONDED BY ROGER CARLSON TO AUTHORIZE REPAYMENT OF THE L1QlJORFUNDS IN AN AMOUNT OF 10% OF THE GMEF CASH BALANCE, NOT TO DROP BELOW A CASH 6 . . . FDA Minutes - 4/24/0] BALANCE OF $400,000, TO BE REVIEWED ON AN ANNUAL BASIS. REPA YMENT PER THE EDA BUSINESS SUBSIDY CRITERIA. Motion carried unanimously. 9. Consideration to review GMEF No. 014 relative to late payment policy fix action to call loan. Koropchak advised that she did not send a letter or contact Lake Tool, Inc. this time, but at this date the loan payment has not paid. She also noted there is a different lender than originally and that she was not aware of this change previously, but has since contacted the new lender. This agenda item was tabled from the January 30 meeting because of the lack of quorum. The members did discuss the potential to amend the GMEF Guidelines to inelude a penalty fee which would apply to future approved loans. Koropchak was requested to inquire with the local lenders as to the amount and type of penalty fees. However, a late penalty fee would not apply to GMEF No. 014. Koropchak provided background from the January agenda and provided the most recent payment schedule. Although T. .r. Martin made a payment on February 28, they still remain delinquent for the payments due February I and March 1. Upon a notice that the EDA was going to consider calling the loan at the EDA March 15 meeting, the February 1 and March 1 payments were hand delivered on March 15. Again you will note the April 1 payment is past due. The February, 1998, 7-year loan amount was $87.500, 6.5% interest rate. Interest payments commenced the first day of the second month following the Loan Closing date and principal payments commenced on the first day of the twenty-fifth month immediately following the I,oan Closing date. Monthly principal and interest payments are $1,716.12 with last payment due April 1,2004. Remaining principal balance is $72,220.84. The GMEF Guidelines read: LATE PA YMENT POLICY: Failure to pay principal and interest when due may result in the loan being immediately called. Events of default under the Loan Agreement: (a) failure to pay when due any principal or interest on the Loan. Demeules also stated that possibly including the language of the penalty clause may be an incentive to this particular business. Also it was again stated by the members that there is no incentive to pay this loan payment on time. Herbst stated his desire to call the loan. The members discussed some options such as automatic payments, or renegotiate the loan. They also discussed that they may want to incorporate this into all future loans. 7 . . . FDA Minutes - 4/24/01 A MOTION WAS MADE BY BARB SCllWlENTEK AND SECONDED BY CLINT HERHS'T TO DIRECT STAFF TO CONTACT LEGAL CONSULTANT TO BEGIN PROCEEDINGS TO CALL THE LOAN OF T.J. MARTIN, UNLESS '1'.1. MARTIN SETS UP AN AlJTOMA TIC PAYMENT PROCESS FOR THE EDA LOAN. Motion carried unanimously. 10. Consideration to discuss the advantages and disadvantages of merging the EDA and the HRA. Koropchak advised the EDA that at the January 30, 200 I EDA meeting, the Executive Director's report indicated the Economic Development Goals for 200 I included the City of Monticello to explore combining the powers of the liRA and EDA. The commissioners were asked at that time to give some thought about the idea for discussion at the annual meeting, and Koropchak listed the following from that meeting: Advantages Disadvantages Simplicity (one stop for dcveloper.) Improves communication with Council assuming EDA would prevail. One less meeting for staff. EDA expand powers for development. Hopefully improves attendance. Less publ ic participation. HRA has power to levy. Reduces checks and balances as was original reason. TIF more complex. Also noted was that the FDA bylaws allow members living outside City limits; HRA does not. Originally EDA was established due to revolving loans, the HRA can not. It was asked whether meeting times could be movcd up to earlier in the day as this could be helpful to business owners as well who may be attending. A suggested time was 2:00 or 4:00 pm. It was also suggested to talk with Darrin Lahr to see if this would be a possibility for him as he was not at the meeting. It was felt by the members that ifboth staff and Council felt it was in the public's best interest to merge the HRA and EDA, then to do so, but not to have the HRA and EDA members decide. Schwientek asked Wolfsteller for the previous report on what was decided on this matter in the past. 11. Executi ve Director's Report. Reminded the members of the loan for Steve Budd; April 25th I-IRA special meeting discussing direction of redevelopment of Block 52; IDC members Bob Mosford and Dan Carlson resigned, new members arc Barb Schwientek, Dan Olson and Ellen Perrault. Looking at Township board person to join as well; 8 . . . EOA Minutes - 4/24/0 I Redevelopment of Amoco Site still moving forward; Front Street project moving ahead, Bostic closing on Monday; O'Connor still waiting on purchase agreement as he's asking for relocation costs for his business he is running out of his home. Koropchak stated she is looking into that and asking for documentation regarding income tax as proof of business ownership; I lans I lagen lined up to do housing in this area, deposit has been paid; tire Department would like those 3 houses for practice. 12. Other Business. None 13. Adjournment. The meeting adjourned at 9 pm. ~.4 0 ~eo der l J/v11 9