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EDA Minutes 08-08-2007MINUTES MONTICELLO ECONOMIC DEVELOPMENT AUTHORITY Wednesday, August S, 2007 - 4:00 p.m. City Hall -Academy Room MEMBERS FRESENT: Chair Bill Demeules, Vice Chair Barb Schwientek, Council members Wayne Mayer and Tom Perrault, and Ron Hoglund. MEMBER ABSENT: None. STAFF PRESENT: Executive Director Ollie Koropchak and Recorder Angela Schumann. GUESTS: Ken and Karin Curtis, Washburn Cozxiputer Group 1. Call to Order. Chairman Demeules called the meeting to order and declared a quorum. 2. Roll Call. 3. Consideration to a rove the A ri124 2007 EDA minutes. Koropchak indicated the minutes would be provided for the next meeting of the EDA. 4. Consideration of adding or removing agenda items. NONE. Chair Demuelues moved item 9 listed on the agenda as New Business up as item 5 on the agenda. New Business A. Consideration to review the relimin loan a lication for Washburn Com uter Gr_ __.oup. Koropchak reviewed the preliminary loan application, explaining that a loan application had been requested to enable a 30,000 square foot expansion as a real property rehabilitation expansion or improvement loan. Koropchak explained that the company had agreed that in exchange land for the Chelsea Road improvements, Washburn would enhance the exterior of their building and comply with parking requirements. Demeules asked Washburn representatives to briefly discuss their company. Ken Curtis explained that the company is 18 years old and currently has 63 employees. Based on current customer requests, they will need to double the size of their facility and add more employees. He indicated that Washburn repairs and services point of sale computer equipment for major retailers. Koropchak noted to the EDA that the GMEF subsidy criteria refers to job creation versus retention. So, in approving a loan amount, the EDA will need to consider whether the date of job creation would be January of 2007 or from the date of the new application. Korpochak referred to the application, discussing total uses and sources at $1,735,000. She referened the 90% job creation criteria, requiring 6 news jobs from two years of loan closing, anal that 90% of the new jobs must pay a wage of higher than $9.31 per hour. The estimated increase to total tax base is $33,665 and $21,133 to local tax base. The loan would be used as a secondary source to conventional financing and used as gap financing. EDA would be in second loan position behind conventional lender Gateway Bank and the SBA. Koropchak then reviewed the GMEF policy requirements, indicating that based on new job creation, the applicant would be eligible for $60,000, based on total job creation they are eligible for $470,000, based an increase in property value, they would be eligible for $275,000. Karapchak stated that she is recommending a loan amount of $275,000. Karopchak reminded the EDA that the loan size is not to exceed 50% of the remaining fund balance. Fifty percent of current balance is $415,355. The loan term cannot exceed a 30-year amortization, and typically the EDA has worked with the conventional lender to set a consistent term. The interest rate is required to be not less than 2% below Minneapolis prime with balloon payment due in five years. Koropchak reported that as of August 8~`, the prime rate is at 8.25%. Koropchak indicated that in terms of a loan fee, the EDA has typically set a fee of $200, which is the minimum. There is no penalty far pre-payment. Koropchak stated that it is the preference to proceed with approval as soon as possible, but the applicant has 180 days to draw on the loan. Koropchak noted that if the EDA wanted to approve a loan amount greater than $100,000, it would need to call a public hearing, as required by business subsidy by-law. B. Consideration to a rove or den a raval of GMEF Loan Na. 026 for Washburn Com uter Grou and call fora ublic hearin if necess Koropchak stated that the EDA is asked to approve ar deny GMEF Loan No. 026 far Washburn Computer Group and call for a public hearing if necessary based on the previous information. The Commissioners are asked to consider if the loan encourages economic development, if the EDA finds that it complies with the business subsidy criteria and then define the terms. Koropchak referenced that there was research completed regarding the possible use of federal dollars, but due to the requirements for compliance, it was felt that the amount that could be used would not off set the costs of compliance and reporting. Koropchak again stated that it was her recommendation that the EDA use job creation from January 27~', 2007, and approve a loan amount of $275,000. MOTION BY COMMISSIONER SCHWIENTEK TO APPROVE GMEF LOAN NO. 02b FOR WASHBURN COMPUTER GROUP IN THE AMOUNT OF $275,000 WITH A LOAN FEE OF $200, AT A b.2S% FIXED INTEREST RATE, AT A TERM CONSISTENT WITH THE CONVENTIONAL LENDER COLLATERAL, GUARANTEES, AND OTHER CONDITION REQUIREMENTS TO BE DETERMINED AND PREPARED BY THE GMEF ATTORNEY. THE GMEF LOAN APPROVAL IS SUBJECT TO A PUBLIC HEARING ON BUSINESS SUBSIDY, LENDER COMMITMENT, CREDIT WORTHINESS LETTER, BUILDING PLAN APPROVAL, AND COUNCIL RATIFICATION OF EDA ACTION. MOTION SECONDED BY COMMISSIONER HOGLUND. MOTION CARRIED, S-0. MOTION BY COMMISSIONER PERRAULT TO CALL FOR A PUBLIC HEARING ON BUSINESS SUBSIDY CRITERIA FOR PROPOSED GMEF LOAN NO. 026 FOR AUGUST 21St, 2007 AT 4:00 PM. MOTION SECONDED BY COMMISSIONER SCHWIENTEK. MOTION CARRIED, S-0. C. Consideration to review the new cit bud et form and acc t EDA 2008 Prelimin Budd Koropchak explained that in the past, the EDA has not had a formal budget. The City Finance Department has prepared worksheets based on Governmental Accounting Standards Board requirements. Koropchak reviewed the preliminary worksheets, noting goals for exploration of abio-science park, the support of a fiber optics network and options for education training facility. Koropchak then reviewed measurable workload items including GMEF loan approvals, marketing efforts, job creation and annual payroll of jobs created. Koropchak explained that for the preliminary capital improvement plan, she had budgeted a split afhio-science investment and a job training campus between the HRA and EDA over a five year period beginning in 2008. The EDA Commissioners agreed that they were satisfied with the 2008 EDA Preliminary Budget as presented. b. Bills and communications. GMEF No. 02S UCC Filing Koropchak stated that the filing information and invoices had been provided as information only. No action is required. 7. Executive Director's Re ort. Koropchak reviewed the report, highlighting that the TIF District Reports had been prepared by Paula Mastey with her assistance. The reports were due August 1st and were sent. She indicated that the marketing group had met with Rusty Fifield of HKGI to discuss the integration of bio-science goals into the comp plan. She also noted that she has had preliminary discussion with Anaka-Ramsey College and others about the possibility of developing a job/education training center in Monticello. 8. Committee Reports. A. EDA/HRA merger. Demeules reported that both the HRA and EDA are not running with the full compliment of commissioners. As such, the committee has recognized the need to proceed if a merger is the decided outcome. Demelues stated that the goal of keeping the EDA's fund balance intact and dedicated to the purpose of industrial economic development was expressed and supported during the committee meetings. There have been preliminary discussions on the makeup of the new organization. A Council workshop has been set for the 13~' of August to discuss further outcomes. Mayer stated that the workshop maybe cancelled in order to get this in front of the Council more quickly. He indicated that with both boards running short of members, now is the time to make the transition, as it seems like the organization that comes out of the merger can accomplish as much as both. Koropchak stated that she had contacted Kennedy and Graven for a timeline based off of what could be the HRA's last meeting date of September 12`i'. The indicated that it would be possible, but tight. Coucnil would need to approve resolutions on their August 27t'' meeting. The other items that needs to be decided is what powers the Council wants to designate to the new organization and which they may choose to keep. Mayer asked the other commissioners what they might recommend in terms of the makeup of the new body. Schwientek stated that as far as the structure and make-up, she would support what works in terms of the best interest of the City, although her preferences would be fvr a smaller number of members. She s toted that with a larger commission, it can be difficult to reach consensus. Mayer stated that it was his feeling that perhaps a group of seven voting members, with two of the 7 being Council members. Korapchak recommended staggered terms. Schwientek and Hoglund agreed that they would be supportive of members being property owners within the City, but not necessarily residents. 9. Unfinished business: NONE. 10. Adjournment. MOTION BY COMMISSIONER SCHWIENTEK TO ADJOURN. MOTION SECONDED BY COMMISSIONER HOGLUND. MOTION CARRIED, S-0. ~, , Recorder ;